NCUA Looking at Underserved Data in a New Light and Shares with Congress

ALEXANDRIA, Va.-NCUA is trying to find new ways of demonstrating credit unions’ service to the underserved by “tak[ing] existing data and sift[ing] it in a different way,” according to agency Chairman Dennis Dollar. In response to a General Accounting Office study last fall and to combat the calls by the banking industry and some lawmakers to bring credit unions under the Community Reinvestment Act, NCUA is attempting to unveil new data on how credit unions are still performing their primary mission without creating the added burden of collecting more data. In a booklet Dollar sent to all members of the Senate Banking and House Financial Services Committees last week, the agency shared its findings with the lawmakers that have the most influence over credit unions and greater knowledge of the issue. “The charts presented herein clearly demonstrate the positive results NCUA sought four years ago when we began encouraging federal credit unions to adopt underserved neighborhoods into their fields of membership as authorized by Congress in your passage of the 1998 Credit Union Membership Access Act and implemented as a part of our agency’s Access Across America initiative,” Dollar wrote in the cover letter accompanying the data. In a bound package of five pages filled with charts, NCUA reported that federal credit unions adopting underserved areas since 2000 experienced savings growth of 13.46% in contrast to the average 10.32% among all federal credit unions. Additionally, lending growth for these credit unions was nearly double (12.50%) that of all credit unions, which grew at 7.89%. “Again, it is impressive that federal credit unions adopting underserved areas are growing their savings and lending at rates that are 30% and 58% greater than the respective rates in all federal credit unions for savings and lending,” Dollar wrote. The data also shows credit unions that have adopted underserved areas since 2000 have had an average membership growth rate of 4.36% as opposed to 1.29% across all federal credit unions. “In short, the credit unions adopting undeserved areas are growing their membership at a rate that is 237% greater than the federal credit union community as a whole,” according to Dollar’s letter. With time, these credit unions will penetrate further into those areas, he emphasized in an interview. Since 2000, 494 federal credit unions have adopted 1,021 underserved areas. Burdening credit unions with new data collection is not the way to go here, Dollar said. He reasoned that 52% of credit unions adding underserved areas are under $50 million in assets. These are also the ones that would be hardest hit by new reporting requirements and the agency does not want to deter them from expanding their service into underserved areas, he explained. Dollar’s letter vowed that NCUA would continue to seek new ways of using existing data to demonstrate credit unions’ efforts in underserved communities. He reminded the lawmakers that NCUA established a working group following the GAO report that is still looking for new ways to analyze the numbers. He added that he realizes this report will not suit those who want to see credit unions under CRA, but could persuade others who have been saying more information is necessary. The chairman pointed out that last year, NCUA was able to release information on credit union membership growth for those who have adopted underserved areas. This year that effort has delved further down in to loan and share growth and the agency may come up with more detailed data into the future as NCUA breaks down the data further each year, he said. Dollar’s letter concluded, “This report makes a compelling case that our Access Across America initiative is showing an impressive return in its early years. These federal credit unions are demonstrating their heartbeat for service by daily reaching out to provide the lower-cost financial services needed so desperately by many unbanked communities as an alternative to the higher-cost outlets that so often proliferate these neighborhoods.” [email protected]