WASHINGTON (5/20/14)--The National Federation of Community Development Credit Unions and the Credit Union National Association together have created a white paper to assess the impact of Community Development Financial Institution (CDFI) certification on the performance of credit unions.
The federation has been certified by the U.S. Treasury Department's CDFI Fund since 1996 as the only national intermediary exclusively devoted to CDFI credit unions. Since then, it has served as the leading advocate and provider of technical assistance and consulting services to help credit unions obtain, retain and capitalize on CDFI certification.
The purpose of the Treasury's CDFI program is to use federal resources to invest in CDFIs, including credit unions and banks, and to build their capacity to serve low-income people and communities that lack access to affordable financial products and services.
The paper, prepared by the federation and CUNA's Community Credit Union Committee, compares CDFI certified credit unions with peer groups of low-income designated and mainstream credit unions and identifies important similarities and differences, using data from the CDFI Fund and NCUA 5300 Call Reports for fiscal years 2009 and 2013. The data was used to analyze the institutional performance and community development profile of 173 credit unions that were CDFI certified as of Dec. 31, 2013.
Several of the paper's key findings include:
The paper concludes by saying that while a CDFI certification alone will not make a credit union successful, it can be used a building block and to achieve growth and impact underserved markets.
The paper also notes the regulatory benefits enjoyed by CDFI credit unions, such as their exemption from the 12.25% of assets cap on member business loans and from the Consumer Financial Protection Bureau's Ability-to-Repay and Qualified Mortgage requirements for mortgage lenders that took effect in January 2014. It notes that such exemption reflect regulators' recognitions that CDFI credit unions are mission-driven institutions working to provide products and services that meet low-income communities' needs.
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