To qualify as a low-income credit union, a simple majority of 50.1% of membership must live in low-income areas, based on 2010 Census data. Benefits of LICU status include an exemption from the 12.25% statutory cap on member business lending, eligibility for Community Development Revolving Loan Fund grants and low-interest loans, the ability to accept deposits from nonmembers and authorization to obtain supplemental capital.

The NCUA sent eligible credit unions a notification letter Aug. 7, informing them of the program. A simple affirmative reply to the opt-in offer will allow them to avoid the usual paperwork required of the approval process and begin utilizing LICU benefits immediately.

The $147 million Hope Credit Union of Jackson, Miss., has been an LICU since it was chartered in 1994. CEO Bill Bynum said serving low-income communities has its challenges, but the additional planning and attention to projections and risk management are worth the effort.

According to financial performance reports posted online by the NCUA, Hope's numbers include a 5.31% delinquency rate and 0.17% ROA as of June 30. Bynum said low-income communities often lack the safety net that members in wealthier communities enjoy, like the ability to borrow money from family members. However, actual losses are low–charge-offs typically run around 1% or less–thanks to good relationships with members. And Bynum said financials also reflect that the credit union has been in growth mode, merging with struggling credit unions that also serve distressed areas.

“We help [members] develop a plan, and use financial counselors that work with our members, and technical assistance partners that will sit down with them and help them think through their challenges. … We make sure we have the tools in place to support our members,” he said.

While credit unions nationwide bemoan a lack of new loans, Hope reported 6.41% year-to-date loan growth as of June 30. About 40% of the credit union's loan portfolio is made up of business loans, with Hope generating between $30 million and $45 million in small business loans each year. Borrowers run the gamut, from rural hospitals and community health clinics to manufacturers and retailers, Bynum said.

Bynum said Hope is also a Small Business Administration lender and offers USDA guaranteed loans, because the programs help the credit union mitigate risk so it can leverage more deposits into loans. As of June 30, Hope's loan-to-share ratio was 97.5%. Bynum said not only is there plenty of loan demand in his underserved communities, demand is at the highest point he's seen in the credit union's 18-year history.

Pam Owens, interim president/CEO of the National Federation of Community Development Credit Unions, said her organization is excited about the NCUA's opt-in program and hopes many eligible credit unions participate.

“So many credit unions have been serving low- and moderate-income communities for years, but due to staff resources and time, they haven't pursued low-income designation,” she said. “Now they can be recognized for the work they do, and hopefully this will open up other resources that are available to low income credit unions.”