CDFI Credit Unions Perform Better: Onsite Coverage

cu times logo

CDFI Credit Unions Perform Better: Onsite Coverage

By David Morrison May 16, 2014

DETROIT – Despite working in some of the nation's most economically depressed areas, credit unions that received community development grants performed as well or better than credit unions that did not.

That was one of the conclusions drawn in a report from CUNA and the Inclusiv that compared the two.

Terry Ratigan, senior development consultant for the National Inclusiv researched CDFI Certification: A Building Block for Credit Union Growth, which the organization released Friday at its 40th annual conference.

According to the report, 61 credit unions received $102.7 million in grants from the U.S. Treasury Department's Community Development Financial Institution Fund between 2009 and 2013. During that time, those credit unions collectively increased their total loans by $1.5 billion and their total assets by $2.4 billion.

The CDFI credit unions gained $23.70 in assets for every dollar in CDFI grant money received, the report noted, adding that despite mergers,99%of the CDFI money granted since 1996 remained at work in credit unions.

Even though there were only 173 CDFI certified credit unions in fiscal year 2013, the paper noted their median number of members stood at 5,255 compared to a median of 3,211 for 4672 mainstream credit unions.

In addition, those 173 CDFI credit unions had median total assets of $28.3 million while the median among the mainstream credit unions stood at $25.7 million.

The CDFI credit unions also had higher median loan to asset ratios,62%versus50%for the mainstream median, and higher returns on assets,0.27%for the CDFI credit unions versus18%for the mainstream credit unions.

Only a mainstream median net worth ratio of11.5%was higher than the CDFI median of10.4%.

In addition, despite their reputation for being more high-touch than high-tech credit unions, the CDFI credit unions used a broader variety of high-tech products and services more quickly than their peers.

“The high-transactional needs of low-income communities pushed CDFI credit unions to lead the way with innovative services such as online and mobile banking, bill payment services, online loan applications and 24/7 access to account information,” the organizations reported.

And, as a group, CDFI's tend to put more of their assets to work as loans, the report said.

The report also noted that fully half of all credit unions open today are located within census tracts that would make them eligible for CDFI recognition.

“Credit unions that make a strategic decision and take decisive action to address the needs of these underserved communities can become eligible for CDFI certification,” the report said.

Stay Connected

Sign up to recieve news & updates from Inclusiv