NCUA Webinar Offers LICU Operating Tips
Low-income credit unions (LICUs) got some tips on how they can improve their own operations and increase member service during a Wednesday National Credit Union Administration webinar.
The NCUA in 2012 informed 1,003 federal credit unions of their eligibility to become low-income credit unions (LICUs), and 676 have accepted. As a group, the newly designated LICUs serve more than 7.7 million members and manage more than $66 billion in combined assets. (NCUA Photo)NCUA Office of Small Credit Union Initiatives Economic Development Specialist Vanessa Lowe noted that an estimated 20% of Americans are considered unbanked or underbanked, and may be using alternative financial service providers such as check cashing firms.
She encouraged LICUs to find ways to reach these potential credit union members. Credit unions can do a better job than alternative financial services providers that sometimes use predatory tactics against these unbanked individuals, she said. Lowe said LICUs could examine their membership composition and the types of products they offer to identify opportunities to strengthen their own services and attract and better serve potential members.
Lowe also noted the resources LICUs can access through REAL Solutions and other National Credit Union Foundation programs.
The webinar also addressed the general benefits of the LICU designation, which include the ability to accept supplemental capital and an exemption from the member business lending (MBL) cap under certain circumstances. LICU-designated credit unions are also eligible for Community Development Revolving Loan Fund grants and low-interest loans and may accept deposits from non-members.
NCUA staff said they are working on ways to help state chartered credit unions qualify for LICU designations.
NCUA Office of Consumer Protection Consumer Access Analyst Elliot Weiss noted that LICUs may use supplemental capital to shore up their net worth, and said a section of the NCUA's incidental powers regulation may allow credit unions to offer check cashing and other services to non-members. Credit unions do not have to offer services to nonmembers, but the resources are out there if they choose to do so, he said.
However, Weiss told credit unions to be careful about which products they offer and whom they offer those products to. LICU benefits offer advantages, but can also lead to unforeseen losses if they are not properly managed, he said. These benefits can help a credit union's business strategy, but should not be a credit union's only business strategy, Weiss noted.
The webinar will be posted on the NCUA's website in the coming weeks, and questions that were not addressed during the webinar will also be posted.