BALTIMORE, Md. (6/10/13)--Community development and other small credit unions promote economic empowerment and "are often the only federally insured institutions in low-income communities," and the National Credit Union Administration will continue to support them, NCUA Chairman Debbie Matz told attendees of the National Federation of Community Development Credit Unions' 39th Annual Conference on Serving the Underserved on Friday.
The NCUA currently aids these institutions through regulatory relief measures, shorter examinations, streamlined low-income designations, and expanded services from the Office of Small Credit Union Initiatives, she said.
"Your mission is more important than ever," Matz said. "As long as you stay true to your mission of member service, while NCUA stays true to our mission of safety and soundness, the future will be as rewarding as the past," she added.
"Low-income credit unions continue to lead the nation in loan growth, while charge-offs remain below the national average. Among credit unions that have had a low-income designation since 2009, return on average assets doubled," Matz said.
The NCUA chairman also discussed many of the challenges faced by small credit unions, including capital losses. "More than a third of credit unions under $50 million in assets are unprofitable," she noted. "That means they're losing capital, and if they're losing capital, they're in danger of falling below the Prompt Corrective Action (PCA) threshold."
Credit unions that fall below the PCA threshold face long odds against recovering while remaining independent, Matz emphasized. To protect their future, she encouraged small credit unions to maintain a capital cushion well above 7%. Credit union directors and management should also "develop a sound strategic plan, design strong internal controls, and practice thorough due diligence" to create a capital cushion, she added.
For Matz's full remarks, use the resource link.