Low Income Designation: Benefits and Opportunities
The National Federation of Community Development Credit Union (the Federation) is pleased to invite you to a complimentary webinar on September 25 at 2 PM EST that will focus on the benefits and opportunities the Low Income Designation brings about to eligible 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 played a leading role in winning special regulatory powers to strengthen the capacity of credit unions to serve low- and middle-income consumers.
As you know, this past August, 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. As a result and a month after that announcement, 553 federal credit unions across the country have accepted the designation. These newly designated LICUs serve 5.9 million members and manage more than $49 billion in combined assets.
This is a far reaching initiative for the credit unions system, as significantly expands the number of credit unions that serve predominantly low income consumers. There are now 1,721 low income designated credit unions, providing services to 12.4 million predominantly low income consumers and with combined assets of $100 billion. If every eligible credit union accepts their designation, then LICUs would have combined assets of $140 billion, providing affordable financial services to almost 17 million consumers.
The low income designation provides 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; and
· Access to the NCUA's Community Development Revolving Loan Program, which provides loans and Technical Assistance grants.
How can you use these new authorities to increase institutional capacity to meet the needs of LMI consumers? Join our session next Tuesday September 25 at 2 PM EST. To register just click here.