ALEXANDRIA, Va.-The banking industry has called into questionwhether credit unions, particularly large ones, continue to servetheir mission, but new data from NCUA seems to say otherwise.Information disclosed by NCUA Dec. 6 showed that 62 of 146 federalcredit unions between $250 million and $500 million in assets, or42.47%, have adopted a total of 182 underserved areas with morethan 23 million potential members. Next highest were the creditunions with more than $1 billion in assets at 38.89% adoptingunderserved areas. Twenty-one of these 54 federal credit unionshave adopted 80 underserved areas, or an average of about foureach. Next are the credit unions between $500 million and $1billion with 37.84% adopting underserved areas. Study the chartsshown here from NCUA for further details. “What this shows is thatthe larger you are, the more likely you are to have underservedareas,” NAFCU Chief Economist Tun Wai said. “In reality, it showsthe commitment of those with the ability to serve underservedareas.” CUNA Vice President of Communications and Media OutreachPat Keefe was not surprised by the data. “NCUA reports thatmillions more underserved people are now eligible formembership.Over time, as more persons avail themselves of creditunion membership, we expect the number of those served byunderserved areas to grow,” he commented. However, American BankersAssociation Senior Economist Keith Leggett said this informationdoes not directly address the complaints raised by hisorganization. “Our accusation has been that there is not anydocumentation that they are truly serving the underserved.Washington, D.C. is designated as an underserved community, but arethe services targeted to the poor section of the city or to themore affluent section? NCUA has no way of knowing what the creditunion is doing because they don't measure it.” According to Wai,that is not exactly true. He pointed out that the credit union mustsubmit a business plan when it adopts an area, which admittedly mayhave to be tweaked as circumstances change, but he feels NCUAmonitors “the effort and commitment of these institutions.” Keefeindicated 2003 Home Mortgage Disclosure Act data, which showedcredit unions making a larger proportion of their loans to low- andmoderate-income (LMI) borrowers (24.2%) than banks (23.2%). Creditunions were far more likely to approve a LMI borrowers' application(75% for credit unions and 47% for banks). Additionally, the growthof loans to LMI and minority borrowers at credit unions farexceeded banks in the two-year period ending in 2003. “However, asthe Ways and Means Committee hearing illustrated,” Keefe said,“there is more that can be done to be sure policymakers understandand recognize that credit unions are, indeed, successfully reachingout to underserved areas. CUNA believes addressing this issueshould be done in a measured way that best suits the needs ofcredit unions and their members.” In aggregate, 668 of 5,440federal credit unions (12.28%) had adopted underserved areas as ofDec. 6, according to NCUA figures. -

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