(Editor's Note: the following is written and provided by the NCUA.)
Less than a week remains for eligible credit unions to accept their low-income designation under the fast-track application process the National Credit Union Administration recently announced.
On August 9, 2012, the NCUA informed another 1,003 of the nation's 7,200 credit unions of their low-income eligibility, and expedited the application process in an effort to increase credit union participation in a Federal relief and recovery package for drought-stricken states. Eligible credit unions must respond by September 10 in order to gain their designation as part of this fast-track process.
This is a far reaching initiative across the credit unions system, but in particular for the State of North Carolina which will more than double the number of LICUs, from 9 serving 170,645 primarily low income consumers and combined assets of $1.2 billion to 27 institutions serving 617,990 consumers and with aggregate assets of $3.8 billion.
The National Federation of Community Development Credit Unions (the Federation) has for years been a strong advocate of credit union's serving the nation's low-income and minority populations, and has played a leading role in winning special regulatory powers to strengthen the capacity of credit unions to serve low- and middle-income consumers. The Federation is partnering with the Credit Union National Association (CUNA), your State League and other credit union organizations to encourage credit unions to take action and respond by September 10.
There is no cost to accepting the designation, and doing so does not commit credit unions to exclusively serve low-income members but rather to continue striving to meet the needs of their entire membership while focusing on the particular needs of this population. This is a unique opportunity for those credit unions with a significant percentage of low-income members, as the designation provides certain privileges aimed at expanding their capacity to meet the needs of their more vulnerable members, such as:
- The authority to accept supplemental (secondary) capital (R&R §701.34), which is deeply subordinated debt that counts toward net worth;
- Exemption from the MBL limitation of 12.25 percent;
- The right to accept non-member deposits (R&R §701.32) from any source up to the greater of $3 million, or 20 percent of total shares; andAccess to the NCUA's Community Development Revolving Loan Program, which provides loans and Technical Assistance grants.
For more detailed information about these authorities, click this link to take you to the August 14 webinar the NCUA offered on this topic. For those who missed it, the Federation will host another webinar on September 25 (click here to register) that will provide an overview of the low-income designation. Starting in October, the Federation and CUNA will offer a series of monthly online events aimed at providing a more in-depth understanding of the different benefits and next steps low-income credit unions can take to maximize their impact.
The number of low-income-designated credit unions has significantly increased over the years, as credit union executives understand and embrace the socio-economic realities of the membership they serve. As of June 30, 2012, there were 1,168 low-income-designated credit unions with combined assets of almost $50 billion serving 6.5 million - primarily low-income consumers. If every eligible credit union accepts their low-income designation, then low-income credit unions would have combined assets of $140 billion, providing affordable financial services to almost 17 million predominantly low-income consumers.
If your credit union is eligible for this designation, we urge you to take action and respond to NCUA by September 10. Don't miss a chance to gain access to regulatory powers that will strengthen your credit union's capacity to better serve your members.