ALEXANDRIA, Va. (Aug. 8, 2014) – Two years after the National Credit Union Administration announced its low-income credit union initiative, 2,107 federally insured credit unions now have the low-income designation, the agency said today.
Together, these credit unions have 23.6 million members and $218 billion in assets. More than 70 percent of the low-income designated credit unions are also small credit unions, with assets of less than $50 million.
“NCUA introduced the low-income credit union initiative two years ago as part of my Regulatory Modernization Initiative,” NCUA Chairman Debbie Matz said. “This was a significant easing of a regulatory burden for those credit unions that were eligible for the designation. These credit unions have expanded access to affordable financial services to low- and moderate-income members, developed financial literacy programs and increased their own service capacity through staff training.”
Low-income credit unions are often the only insured depository institutions serving low-income and underserved areas, Matz said. They provide affordable financial services and make investments to help stabilize communities and encourage growth. They promote financial security as a source of capital for small businesses and by providing loans that help members purchase homes, buy cars or send children to college.
Matz announced the initiative Aug. 7, 2012. The agency notified more than 1,000 federal credit unions of their eligibility and informed them of the streamlined application process, essentially pre-qualifying them for the low-income designation and asking if they would like to accept.
To qualify as a low-income credit union, a majority of a federal credit union’s membership must meet low-income thresholds based on 2010 Census data. The designation offers several benefits to credit unions, including:
- An exemption from the statutory 12.25 percent cap on member business lending, which expands access to capital for small businesses and helps credit unions diversify portfolios.
- Eligibility for Community Development Revolving Loan Fund grants and low-interest loans.
- Eligibility for nomination for free NCUA consulting.
- Ability to accept deposits from non-members.
- Authorization to obtain supplemental capital.
The chart below summarizes the growth of low-income credit unions, members and assets since the start of the initiative.
In addition to making the designation process easier, NCUA has provided grants from the Community Development Revolving Loan Fund for training, collaboration and new product and service development; coordinated with the National Association of State Credit Union Supervisors to help state-chartered credit unions determine their eligibility to become a low-income credit union; and provided information, including three webinars on strategic issues for serving low-income credit union members.
A fact sheet on the benefits of the low-income credit union designation is available online here.
NCUA is the independent federal agency created by
the U.S. Congress to regulate, charter and supervise
federal credit unions. With the backing of the full
faith and credit of the United States, NCUA operates
and manages the National Credit Union Share
Insurance Fund, insuring the deposits of more than 101
million account holders in all federal credit
unions and the overwhelming majority of
state-chartered credit unions. At
Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.