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Jan. 24, 2013 – NCUA webinar participants on Wednesday learned key strategies about maximizing service to low-income credit union members, as well as an overview of benefits and potential risks associated with the low-income credit union designation.
 
The webinar, led by Vanessa Lowe, NCUA’s economic development specialist, and Elliot Weiss, consumer access analyst for NCUA’s Office of Consumer Protection, included discussion about assessing current services to low-income membership, changes that can improve services, and low-income credit union regulatory issues.
 
Lowe recommended that LICUs examine their current business strategy and conduct an analysis of credit union members to ensure that the credit union isn’t leaving out key groups in its reach. She said 40 million U.S. households are currently unbanked or underbanked and that credit unions can do a much better job than alternative providers in serving them.
 
LICUs should identify areas of weakness and opportunity, she said, and pay close attention to their current product offerings and areas where they could introduce new products that could help low-income credit union members, such as payday alternative loans.
 
Weiss noted that the LICU designation comes with a number of benefits, but said there are also potential risks involved. The ability to access secondary capital, for example, can be used to shore up an LICU’s net worth temporarily, but the cost of funds would likely be higher than what an LICU pays to members in most cases.
 
The exemption from the member business lending limit can be used to help lend to local businesses, Weiss said, but LICUs need to be careful of too-fast portfolio growth and must maintain sound underwriting to prevent losses. On the latter point, Weiss emphasized that LICUs need strong expertise, policies and oversight in place.
 
NCUA said the webinar will soon be archived on its website.