Overview: Overall, more than 100 million U.S. consumers are member-owners of, and receive all or part of their financial services from the nation's 6,900 credit unions. Credit unions are not-for-profit financial cooperatives, serving members who share something in common: employment, association membership, or residence in a particular geographic area. As not-for- profit cooperatives, credit unions generally offer more attractive savings and loan rates, and low or no fees. Surveys consistently rank credit unions first among financial institutions in consumer satisfaction.
Philosophy and Structure: Credit unions are democratically owned and controlled institutions, based on "people helping people" principles. Credit union boards of directors are elected by members; each member has an equal vote, regardless of how much he or she has on deposit. Only members may serve as directors, and directors serve without remuneration. Volunteers are an important credit union resource. Presently, more than 94,000 Americans volunteer for their credit unions, serving as board members, committee members, or providing other assistance. Finally, credit unions have no outside stockholders, so after reserves are set aside, earnings are returned to members in the form of dividends on savings, lower loan rates, or additional services.
Safety and Soundness: Credit unions primarily engage in consumer loans and, to a lesser degree, residential real estate loans for their members. Due to prudent lending and management practices, credit unions were not adversely affected by the economic downturn of the late 1980s, early 1990s, and last several years. Because credit unions are portfolio lenders and are member-owned cooperatives, they were not part of the recent widely-reported sub-prime crisis. Credit union asset quality remains very high, with overall loan delinquencies at 1.20 percent at mid-year, 2012. Credit union capital is 10.1 percent of total assets, and the equity ratio of the federal insurance fund, National Credit Union Share Insurance Fund (NCUSIF), has operated with an equity-to-insured share ratio of at least 1.24 percent for 20 consecutive years.
Insurance Fund: Since 1984, credit unions have operated their own federal deposit insurance fund on a pay-as-you-go basis. In that year, credit unions voluntarily deposited 1.0 percent of their insured member savings in NCUSIF, to bring its equity ratio up to 1.0 percent. This recapitalization resulted in a one-time reduction in the federal deficit. Each year, credit unions deposit sufficient funds to ensure that the fund's equity ratio is maintained at or near 1.3 percent. While the NCUSIF is backed by the full faith and credit of the U.S. government, the structure of the insurance fund ensures that only if all of the capital in the credit union movement were exhausted, would any taxpayer funds be spent on credit unions. Like other deposit insurance funds, NCUSIF protects members’ savings up to $250,000 and individual retirement accounts (IRAs) and Keoghs up to $250,000. No member has ever lost a penny of federally insured funds held in a credit union. The voluntary recapitalization of NCUSIF before problems occurred, and the mechanisms in place to keep the fund highly capitalized, illustrate credit unions' commitment to safety and soundness.
Regulation and Supervision: Federally chartered credit unions are regulated by the National Credit Union Administration (NCUA), an independent agency. NCUA's three board members are nominated by the President and confirmed by the Senate. State chartered credit unions are regulated by their state credit union department. NCUA administers the National Credit Union Share Insurance Fund (NCUSIF), and all federally-insured credit unions are subject to insurance examinations as well. No taxpayer money is used for regulating and overseeing credit unions, as all activities of NCUA and NCUSIF are funded by credit unions.
U.S. Organization: Nearly 90 percent of credit unions, both federally and state chartered, are affiliated with the Credit Union National Association (CUNA), and its state-based affiliates (leagues). CUNA maintains offices in Madison, Wis., and Washington, D.C.
Market Share: Credit unions are a small but constant presence in the financial services industry. In 2012, credit unions held about 1.7% of household financial assets, a market share that has not changed significantly in more than 25 years.
Political Involvement and Grassroots: In order to maintain the highest level of effectiveness for advocating on behalf of the needs of their consumer-owned financial institutions, credit unions have developed a strong political and grassroots network, with the ultimate goal of ensuring a voice for credit unions in the political process.
The Credit Union Legislative Action Council (CULAC), CUNA’s Political Action Committee (PAC), raised more than $4 million raised during the 2011-12 election cycle, reflecting the greater understanding among credit union activists of the importance of contributing to credit union causes and the new tools to make contributing easier to do. Following the 2011-12 cycle, CULAC ranked 10th among all federal PACs in direct candidate contributions, and 6th among trade association PACs. The partisan breakdown (52 percent to Republicans, 48 percent to Democrats) made the credit union fund among the most bipartisan (source: Center for Responsive Politics).
Through CUNA's popular Hike The Hill program, credit unions have also maintained a constant grassroots presence on Capitol Hill with regular visits to Washington by league and credit union staff and volunteers. Visits to members of Congress have been very beneficial as issues like regulatory relief and data security have been debated on the Hill. Many credit unions have also used this opportunity to educate their members of Congress about credit unions and how their commitment to their members makes credit unions stand apart from other financial institutions.
Project Zip Code is another innovative tool in credit unions' political arsenal that was started after the passage of H.R. 1151. Project Zip Code is a software program, developed by CUNA, that is run by each credit union and which counts the number of credit union members in each state and federal legislative district. The program loads counts for each district to a central Web-based database where the numbers are merged with totals from other credit unions that have run the program. By 2012, about 79 million credit union members had been identified by Project Zip Code and nearly 3,400 credit unions had participated. Identifying millions of members and presenting those numbers to elected officials continues to be extremely effective.
With the help of CUNA and the leagues, credit unions have more opportunities than ever before to make a difference in their future. A full array of political activities is presented in a checklist brochure developed by CUNA and the American Association of Credit Union Leagues, the "9 Steps to Political Effectiveness."
Promoting Economic Development at Home and Abroad: The credit union philosophy of "not for profit, not for charity, but for service" is illustrated by credit unions' commitment to fostering economic development and helping individuals attain self-sufficiency. CUNA and its members support the development work of the National Credit Union Foundation, a philanthropic organization that raises funds, makes grants, manages programs, and provides education empowering consumers to achieve financial independence through credit unions.
CUNA devotes 6 percent of every dues dollar from affiliated credit unions to international credit union development, through the activities of the World Council of Credit Unions (WOCCU). WOCCU promotes the sustainable development of credit unions and related institutions around the world to empower people to grow through access to high quality and affordable financial services. WOCCU is implementing 17 international development programs to assist credit unions and national/regional associations with rebuilding during and after conflict, providing access to the underserved, developing integrated business networks, supporting communities at risk, reconstructing after disaster, and encouraging legislative reform and regulatory system development.
Credit unions in 100 countries are a stabilizing force that gives more than 196 million diverse peoples the opportunity to practice democracy within a member-owned organization. Credit unions stimulate economic growth by offering members safe and affordable access to credit and savings services.
Statistics: (as of June 2012)
|Number of U.S. Credit Unions:
|Surplus funds (Cash, government securities, and financial institution deposits):
|Capital to Assets: