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Preserving Minority Depository Institutions June 2020

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Preserving Minority Depository Institutions June 2020 National Credit Union Administration Preserving Minority Depository Institutions June 2020 2019 Annual Report to Congress www.NCUA.gov This page intentionally left blank National Credit Union Administration Table of Contents Table of Contents Introduction to the Report ���������������������������������������������������������������������������1 A Note on the COVID-19 Pandemic ������������������������������������������������������������������������������������������������������� 1 Key Terms and Definitions ����������������������������������������������������������������������������3 Executive Summary ��������������������������������������������������������������������������������������5 MDI Financial Performance in 2019 ����������������������������������������������������������������������������������������������������� 5 MDI Preservation Activities in 2019 ������������������������������������������������������������������������������������������������������ 5 Financial Performance of MDI Credit Unions in 2019 ������������������������������7 MDI Credit Union Preservation Program ��������������������������������������������������11 Chartering New MDIs ����������������������������������������������������������������������������������������������������������������������������11 Assisting MDIs through NCUA’s Examination Program�����������������������������������������������������������������������12 Preserving the Present Number of MDIs ���������������������������������������������������������������������������������������������12 Preserving MDIs’ Minority Character ���������������������������������������������������������������������������������������������������13 Providing Funding, Technical Assistance, Training, and Educational Programs �������������������������������13 Training and Educational Programs �����������������������������������������������������������������������������������������������������15 Looking Forward �����������������������������������������������������������������������������������������16 Freedman’s Bank Forum ����������������������������������������������������������������������������������������������������������������������16 NCUA’s MDI Forum ��������������������������������������������������������������������������������������������������������������������������������17 MDI Mentoring Program �����������������������������������������������������������������������������������������������������������������������18 Other Initiatives �������������������������������������������������������������������������������������������������������������������������������������18 Appendix 1: Financial Trends in Minority Depository Institutions – Dec� 31, 2019 ���������������������������������������������������������������������19 Appendix 2: 2019 Minority Depository Institution Grant Recipients �����29 Appendix 3: Minority Depository Institutions by State ����������������������������31 2019 Annual Report to Congress | Preserving Minority Institutions i Introduction to the Report The National Credit Union Administration The NCUA’s Office of Credit Union Resources (NCUA) is pleased to submit to Congress its and Expansion (CURE) administers the seventh Annual Report on Preserving Minority Minority Depository Institutions (MDI) Depository Institutions, which describes the Preservation Program and exists to support composition and financial performance of and assist the growth of all credit unions, with the minority depository institutions (MDIs) a particular focus on low-income-designated the NCUA supervised during 2019 and the credit unions and minority institutions� More agency’s actions to preserve and promote specifically, CURE is responsible for: them� ■ Chartering and field-of-membership; This report is submitted pursuant to Section ■ Grant and loan programs, including 308 of the Financial Institutions Reform, administration and management of Recovery, and Enforcement Act of 1989 the Community Development Revolving (FIRREA) and Section 367 of the Dodd-Frank Loan Fund (CDRLF); Wall Street Reform and Consumer Protection ■ MDI Preservation Program; and Act of 2010� ■ Training� The NCUA’s mission is to provide, through Some of CURE’s programs, including grant regulation and supervision, a safe and and loan funding, have specific eligibility sound credit union system, which promotes requirements, while others, such as training, confidence in the national system of are open to all credit unions� On an ongoing cooperative credit� Further, the agency basis, the NCUA is focused on improving the protects consumers, insures the deposits of ways it assists these institutions, particularly credit union members, and safeguards the with regard to growing and serving their National Credit Union Share Insurance Fund members� (Share Insurance Fund) from losses� A Note on the COVID-19 Pandemic As this Annual Report to Congress on responded decisively to the needs of the Preserving Minority Institutions was being nation’s credit unions and has been working prepared, the world was confronted by the tirelessly to fulfill its critical mission of novel coronavirus (COVID-19), a pandemic protecting the safety and soundness of the that is profoundly affecting the global 5,236 credit unions that we oversee� economy and all its citizens� Since the COVID-19 emergency began, the NCUA has 1 National Credit Union Administration Introduction to the Report In that regard, we wish to express deep community of credit unions works together gratitude to the NCUA’s 1,141 employees to get through this unprecedented situation, for their unwavering dedication and fidelity it will undoubtedly emerge stronger for it� to our agency’s mission� Each day, they Together, and in the ethos of “people helping put forth their best efforts to protect the people,” we will rise to the challenge� nation’s system of cooperative credit� As the 2019 Annual Report to Congress | Preserving Minority Institutions 2 Key Terms and Definitions CURE: Office of Credit Union Resources and designation offers several benefits for credit Expansion unions that qualify, including the ability to accept non-member deposits, an exemption Field of Membership: A credit union’s field from the member business lending cap, of membership defines who is eligible to join eligibility for technical assistance grants and the credit union� Depending on the credit loans, and the ability to obtain supplemental union’s charter, a field of membership can capital from organizations, such as banks or include individuals who: outside investors� ■ Are members of an association (like a Member: A person who uses a credit union civic association or religious institution) is referred to as a member rather than a or part of a community (like a county customer� This is because a credit union or town); member actually owns a portion, or share, of ■ Are employed in a particular their credit union� This differs from a bank, occupation, like a firefighter or teacher; which is owned by its shareholders, not its ■ Are a part of an underserved area, like customers� A credit union member also has a rural county; or the ability to determine the credit union’s ■ Who share a common bond, such as board of directors through a democratic those who work at a factory or those election� who work for the factory’s suppliers� Minority Depository Institution (MDI): FIRREA: Financial Institutions Reform, This term is used to describe a credit union Recovery, and Enforcement Act of 1989 that has a majority of its current or potential membership composed of minorities (in this Low-Income-Designated Credit Union: case Black American, Hispanic American, The Federal Credit Union Act allows the NCUA Asian American, or Native American) and a to designate a credit union as low-income majority of minority members on its board of if it meets certain criteria� This designation directors� gives these credit unions a greater ability to help stimulate economic growth and provide NCUA: National Credit Union Administration affordable financial services in communities that have been historically underserved� Safety and Soundness: Federal and state To qualify as a low-income credit union, a supervision of credit unions is designed to majority of a credit union’s membership must provide for a financially stable system that meet certain low-income thresholds based meets the financial needs of credit union on data from the U�S� Census Bureau� The members, as well as to prevent runs and 3 National Credit Union Administration Key Terms and Definitions panics by providing assurances that funds is funded by premiums paid by credit unions, deposited will be protected from loss� A credit which is one percent of the shares or deposits union is considered to be safe and sound if it at credit unions� It is backed by the full faith is being run effectively and is compliant with and credit of the United States� The Share all applicable laws and regulations� Insurance Fund insures individual accounts up to $250,000, and a member’s interest The National Credit Union Share in all joint accounts combined is insured up Insurance Fund (Share Insurance Fund): to $250,000� The fund separately protects This fund provides deposit insurance for IRA and KEOGH retirement accounts up to member accounts at all credit unions that are $250,000� federally insured� The Share Insurance Fund 2019 Annual Report to Congress | Preserving Minority Institutions 4 Executive Summary Credit unions are member-owned and board members are minorities� A “minority” -controlled, not-for-profit, cooperative
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