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WASHINGTON – Credit unions that have added underserved areas to their fields of membership have aggressively sought to market membership and services to people living in those areas, according to CUNA’s first nationwide survey of how credit unions serve low- and moderate-income members. The survey results represent the credit union industry’s first attempt, in an industry-wide way, to answer criticism that credit unions ignore the needs of people of modest means. CUNA collected the data for the Serving Members of Modest Means report during the last two quarters of 2002. The association sent questionnaires to credit unions from around the country, and to every credit union that has added an underserved area. According to NCUA, credit unions added almost 24 million potential members to their rolls from underserved areas in 2002, and CUNA Chief Economist Bill Hampel said the survey planners wanted to give those institutions a place in the results. But Hampel also noted that the association’s statisticians had analyzed the survey results so that the activity of the credit unions that had added underserved areas would not skew the overall industry picture. On average, only 7.3 months passed since the 256 credit unions that added underserved areas at the time of the survey had done so. But during that time the credit unions reported adding 615,000 new members and that those members had put $2.1 billion into savings and took out loans totaling $2.9 million. The survey broke up credit union members by a standard which, CUNA acknowledged, could not reflect every area perfectly but which would at least serve as a guideline. In the survey results, households with incomes below $20,000 were considered low income; those with incomes of $20,000 to $40,000 were considered moderate income; $40,000 to $80,000 were considered upper middle income and above $80,000 were considered upper income, Hampel said. Using these parameters, the survey showed that 85% of credit unions that responded to the survey reported offering at least one of 17 products specifically designed to serve the needs of low- and moderate-income members. Almost half of the responding credit unions offered at least five. The list of services and products ranged from Christmas and vacation club accounts, which critics have challenged as not really serving the day-to-day needs of lower and moderate income households, to risk-based lending, share-secured credit cards, targeted savings programs, payday loan alternatives and debt management education. In introducing the survey results, Hampel pointed in particular to the low amounts of money many credit unions ask members to have to start Certificates of Deposit and loans. One in three credit unions surveyed will open a Certificate of Deposit with $100 or less and more than one-third of credit unions surveyed will make loans of $100 or less. Two-thirds will make loans of $300 or less. The survey also found that 50% of credit unions participating are involved in at least one of 11 activities designed to introduce credit union membership and services to lower-income communities. The list of 11 activities include things like credit unions joining community organizations, sponsoring community organizations and events, offering free or reduced fee products in the underserved areas and advertising there. Hampel acknowledged that, to some extent, the credit unions that answered the survey were those inclined to answer it and that might have skewed the results somewhat. “We know that because of the high correlation between credit unions that completed the survey and that indicated that they had completed CUNA’s Project Differentiation program,” Hampel said. But he added that he was pleased that 43% of the over 2,500 credit unions surveyed had responded, a number that he said was “quite high” for a questionnaire of this type. Hampel also said that the association would be interested in following up the survey with another like it in about a year or so to measure the progress credit unions are making. He noted that it’s important to both document what credit unions were seeking to do with low-income members and to let other credit unions know what practices and products were working best. The courses of action open to a credit union seeking to serve lower-income people are not obvious, Hampel explained. It’s more than just taking the set of products and services that a credit union offered previously to its employed, economically stable membership and offering those to lower income members, he said. Lower-income members need different products and services and credit unions will have to innovate to offer them, he added. [email protected]

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