Low Income Credit Unions Shine

Low Income Credit Unions Shine

Button to Download the Current issue of Jumbo Rate News nowA Gallup survey conducted last month asked credit union members, "In what way can your credit union support you and your family during this situation?" The most urgent needs cited were:

  • Increase Peace of Mind. Provide the relief needed to get through this crisis.
  • Build Hope. Continually be there with guidance and solutions.
  • Reduce Unnecessary Stress. Make it easy to reach staff and tools when needed.

These may seem on the surface to be both universal and self-evident, however, according to Gallup, credit union members are getting hit harder by COVID-19 disruptions than the "Average American." What's more, there appears to be a direct correlation between the amount of suffering by the member and the satisfaction with the credit union as it relates to looking out for the member's financial well-being.

There are over 2,600 credit unions with low-income designations. And, while this was not part of the Gallup survey, we can imagine that their members are among the hardest hit. Perhaps that's why the National Credit Union Administration (NCUA) just committed over $1.3 million in emergency grant money to eligible low-income credit unions. Those with less than $100 million in assets will receive priority.

The maximum award is $10,000 and will be awarded on a first-come, first serve basis until either May 22nd or until the funds are exhausted, whichever comes first. (With nearly 1,800 low-income credit unions with less than $100 million in assets, we can be fairly certain that the money will run out before the time.)

Fortunately, there are a lot of low-income credit unions that are not waiting for grant money to lend a helping hand. For example, 5-Star Charter Oak FCU, Waterford, CT, a $1.2 billion community credit union serving New London and Windham counties, has provided $35,000 in emergency grants to food pantries and meal programs operating throughout its service area.

This is in addition to what the credit union is offering for its members. Like most financial institutions, Charter Oak is offering loan deferments, skip-a-payment options, and of course, re-working of loans altogether for those in need.

Another low-income credit union stepping up to the plate in a big way is 5-Star Travis Credit Union, Vacaville, CA. In addition to offering $1 million in support to local community partners in Yolo County, Travis Credit Union also pledged to match up to $4 million in donations made to the Travis Credit Union Foundation by other organizations, corporations or individuals.

Barry Nelson, president and CEO of Travis Credit Union shared this message, "We are making immediate investments to support the organizations who are in the business of people helping people, and we are here, as we have been for nearly 70 years, to serve our community. Credit unions are built for times like this."

These are some of the things that credit unions can due to achieve the urgent needs cited by the Gallup survey. These, and of course, helping members on an individual basis, which most are doing as well.

Travis Credit Union can be found about two-thirds of the way down the list on page 7. It is among the top 50 low-income credit union lenders in the nation. (Charter Oak FCU is among the top 300.) The top 50 low-income credit union lenders for 2019 are listed on page 7. All 50 are currently rated 5 or 4-Stars by Bauer (i.e. recommended by Bauer).

Along with their asset size, you'll find total loans (a subset of assets), the credit union's capital ratio (indicates how big a cushion it has to absorb losses), Bauer's Adjusted Capital Ratio (the capital ratio recalculated to exclude problem loans already on the books-ideally this would be the same or very close to the capital ratio), Texas Ratio (another measure of troubled loans, in this case, a lower ratio is better. A ratio exceeding 100% indicates severely troubled loan quality.) And finally, we included the percentage of loan growth for calendar 2019.

With unemployment at a record high, we will expect loan quality to suffer, but getting people past this crisis and on their feet is the first priority. When members do well, so will the credit unions.
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