Low-income Communities and the Great Recession
Federation Report Finds CDCUs Still Growing Despite Economy
(July 21, 2010 – New York , NY ) A new study released by the National Federation of Community Development Credit Unions (Federation) examines the impact of the financial crisis on credit unions that specialize in serving low-income populations.
These nonprofit institutions, known as community development credit unions (CDCUs), suffered significant stress but also demonstrated resilience and growth in 2009, according to the study. “Despite the enormous pain inflicted by the crisis, CDCUs remain a viable and vital resource for the recovery of low-income communities,” said Clifford N. Rosenthal, President/CEO of the Federation and co-author of the study.
The study, entitled Low-Income Communities and the Great Recession: Financial Trends in CDCUs, 2009, presents data on trends in lending, savings, operations, and balance sheets of 208 CDCUs across the United States . In 2009, these institutions served more than one-million members with aggregate assets exceeding $5 billion. The study compares CDCU performance to that of all federally insured credit unions, and also includes analysis by region and asset size.
Among the findings were these:
CDCU membership grew by 41,000 during 2009.
Deposits in CDCUs grew by 16.2%, substantially exceeding the robust growth of all federally insured credit unions.
The CDCU loan portfolio grew by 4.83% to $3.69 million.
Loan originations totaled $1.51 billion in 2009, a decline of 3% over the pace in 2008.
Return on Average Assets (ROA) was slightly negative (-9 basis points) for the typical (median) CDCU, reflecting charges to replenish the National Credit Union Share Insurance Fund.
The great majority of CDCUs remained “well capitalized” by regulatory standards, with a median net-worth ratio of 9.53%.
Net loan charge-offs totaled 1.43%.
CDCUs provided a broad array of services to help low- and moderate-income consumers preserve and build assets, ranging from Individual Development Accounts (IDAs), to no-cost checking (share drafts), to alternatives to payday lending.
Electronic copies of the 26-page report are available at no charge, with printed copies available for $20, plus shipping and handing. To request a copy of the Federation’s report, please contact Rafael O. Morales, Public Affairs & West Coast Program Officer, at:rmorales@cdcu.coop or (800) 437-8711 x206.