ALEXANDRIA, Va. – NCUA said it has approved an additional 550 credit unions over the past month for low-income status under an initiative aimed at expanding access to capital in drought-stricken states, making those credit unions exempt from the congressional cap on member business loans.

Among them are some of the biggest credit unions in the country, like $2.3 billion Michigan State University FCU; $1.5 billion Polish & Slavic FCU; $1.4 billion Kern Schools FCU; $1.5 billion GTE FCU; $1.1 billion Local Fovernment Employees FCU; $1.1 billion Tyndall FCU; and $1.1 billion Barksdale FCU. Also, Fresno County FCU ($470 million); Purdue FCU ($740 million); Financial Community FCU ($685 million) Crane FCU ($400 million); Y-12 FCU ($630 million); AltaOne FCU ($560 million); Deseret First FCU ($420 million); and Greater Texas FCU ($520 million).

The low-income designation also allows those credit unions to accept non-member deposits and other forms of alternative capital and make them eligible to tap into low-rate loans and technical assistance grants provided by the agency’s Community Development Revolving Loan Fund.

NCUA had already approved almost 1,200 credit unions for its low-income designation, bringing the total to almost 1,700.

 “We thought it was important for credit unions to be made aware of their eligibility so they could take advantage of tools to better serve their members and communities,” said NCUA Chairman Debbie Matz. “We, therefore, cut red tape and made it possible for eligible federal credit unions to opt-in to the low-income designation.

“With the designation, these credit unions will now have access to important benefits, like loans and grants from NCUA’s Office of Small Credit Union Initiatives and no cap on member business loans,” Matz said. “In addition, low-income credit unions may accept supplemental capital, so if their net worth is at or near 7% of assets, they would not have to discourage deposits.”

The expanded numbers of low-income credit unions and their ability to skirt the 12.25% of assets cap on member business loans comes as a bill to increase the MBL cap is pending before Congress. The bill, however, is not likely to pass this year, making the NCUA move more urgent for many credit unions who may be approaching the MBL cap.

While the low-income designation was traditionally reserved for community development credit unions and others primarily serving poor communities, NCUA’s rules simply require that a majority of a credit union's membership meet low-income thresholds based on 2010 Census data. That means that mainstream credit unions with significant low-income communities in their fields of membership like those in large urban centers, or defense credit unions whose members are predominantly low-paid enlisted personnel, can qualify for the low-income designation.

NCUA said as many as 1,000 additional credit unions were eligible for the designation but had not applied for the formal appellation.

 

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