According to statistics provided by the NCUA, the vast majority of low-income credit unions aren’t exceeding the statutory member business lending cap of 12.25% of assets, even though unlimited MBLs are a much-publicized benefit of LICU status.
Original low-income credit unions that were approved for LICU status before the agency announced a new “opt-in” program Aug. 7 reported 5.8% of their assets were in member business loans as of March 31.
Comparatively, the 1,003 credit unions that received the opt-in offer from NCUA report member business loans represent 2.4% of their assets.
Although MBLs as a percentage of assets are nearly twice as high for the original LICU group, the figure pales in comparison to the 12.25% cap.
Additionally, most of the original LICUs don’t offer member business lending: only 27% do, according to the NCUA’s statistics. Of the opt-in LICU group, 24% are already offering member business loans.
The numbers take the wind of the sails of the banking lobby, which strongly objected to the NCUA’s new opt-in program, saying it defied the will of Congress by circumventing pending legislation that would raise the MBL cap to 27.5% of assets.
The 1,003 opt-in credit unions, which range from the $6.7 billion Security Service FCU of San Antonio to the $40,000 Richard Allen FCU of Philadelphia, were offered low-income status as part of a new streamlining process which allows them to simply opt-in with a reply and skip the usual paperwork required by NCUA.
Other benefits of low-income credit union designation include grant eligibility, authorization to obtain supplemental capital and the ability to accept non-member deposits.
The initiative was part of a White House drought relief and recovery package.
