WASHINGTON (10/32/14)--David Meyer, acting program manager for the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund certification, compliance monitoring and evaluation department, said Wednesday that credit unions are often natural fits for the CDFI program, since many credit unions are already involved in the types of activities the CDFI program is intended to promote.
Those activities include offering financial services to low-income and economically distressed communities. As of Sept. 30, credit unions represented 241 of the 917 CDFIs around the country.
The webinar, hosted by the National Federation of Community Development Credit Unions, included a look at the past and present of credit union CDFIs. CDFI is a certification provided by the U.S. Treasury's CDFI Fund that allows them to expand financial services in economically distressed communities.
The CDFI certification program began in 1994, but credit unions were originally slow to seek certification. That began to change in 2010, due to the launching of the Community Development Capital Initiative, which provided long-term secondary capital loans at low rates.
The program required a low-income designation from the National Credit Union Administration and CDFI certification, and since 2010 there has been a 46% net increase in CDFI-certified credit unions.
Missouri has the most CDFI credit unions, with 27, and those credit unions make up 84% of that state's CDFIs. Other states with the most CDFI credit unions, and their market share, include Louisiana (44%), New York (25%), California (20%), Texas (42%), Hawaii (69%), Michigan (45%), Washington (35%), Florida (32%) and Alabama (44%)
"One of the most notable states missing from that list, in my opinion, is Pennsylvania, which has the highest concentration of low-income designated credit unions, but has not risen in the ranks in terms of CDFI certified credit unions," said Mark Kudlowitz, acting program manager of the CDFI program and native initiatives.
Kudlowitz also examined several of the common misconceptions about CDFI credit unions, including that they don't provide the same services as regular credit unions, or that they are not as financially viable as other financial institutions.
"While that might have been the case at one time, it does not appear to be the case now ... they are active lenders, they are a well-capitalized institutions as a group, and their return on assets compares favorably to low-income designated credit unions as a whole and mainstream credit unions," he said.
The webinar also contained the following statistics about services offered by CDFIs:
- Specialized loans: Almost 60% offer credit builder loans, almost 50% offer share secured credit cards, more than 33% offer micro business and micro consumer loans, 25% offer payday alternative loans and nearly 10% offer refund anticipation loans;
- High-tech member services: More than 80% provide ATM and debit card programs, account balance inquiries and access to online account histories; more than 70% provide e-statements, phone and audio response systems and online bill payments; and more than 50% provide online loan applications and mobile banking; and
- Financial services: More than 80% offer no-cost share drafts, wire transfers and share certificates with low minimum balances; 70% offer money orders, check cashing and business share accounts; almost 60% offer surcharge-free ATMs; 30% offer international remittances and 17% offer individual development accounts.
A recording of the webinar will be posted to the federation's website next week.
The webinar included data from a federation
commissioned by the Credit Union National Association's Community Credit Union Committee about CDFI credit unions and a Federal Reserve Bank of Cleveland
on CDFI lending.