NCUA Announces Change to Include Military Personnel When Calculating LICU Designations


The National Credit Union Administration introduced a new provision that will now allow military service members and their families to count toward calculations for low-income-designated credit unions. Benefits of the low-income designation include the lifting of the member business lending cap, the ability to take secondary capital and non-member deposits, and access to grants through the NCUA’s Community Development Revolving Loan Fund. This key change creates greater access to capital for military members who want to start Main Street businesses.

Under the new rule, military personnel will be categorized similarly to students attending colleges, universities, and vocational or technical schools, the agency said.

“This is a great step in being more inclusive when it comes to the members of the military,” said NCUA Chairman, Rodney Hood. “Because so many military members are just getting started, they may not have much experience in working with financial institutions, at least not yet. Currently, the NCUA encourages higher education by counting students in our methodology, and under my direction, the agency has determined we can encourage military service in a similar way.”

Last year, Rep. Denny Heck, (D-WA-10) led the effort to pen a Northwest congressional delegation letter to the NCUA, asking the regulator to count members of the military in the calculation for the low-income designation.

“Credit unions were founded with a mission of helping communities, especially low-income ones, lift themselves up. Nowhere is that more important than around military bases. Thanks to this rule change, military credit unions in the South Sound and elsewhere will finally have the full range of tools to help their members save and invest in their future.”
— Rep. Denny Heck (D-WA-10)

Back in 2013, Global Credit Union, based in Spokane, spent the better part of a year trying to get the low-income designation.

After submitting a Low-income Designation Analysis to the NCUA in January, Global was told that it did not qualify, as its qualifying members amounted to 45.98% — nearly 5% lower than the minimum 50% + 1 threshold. However, the credit union found that 2,398 of its military members with APO and FPO mailing addresses had not been included in the initial submission. Had those members been included, Global would have met the criteria for low-income designation.

The credit union then reached out to John Trull, VP of Regulatory Advocacy at the Northwest Credit Union Association, to go over a breakdown of the data and see if there were opportunities to include more members in the analysis.

“While there was not much John could do for us at the time, it is very clear that he heard our voice of concern in not being able to include our military members,” said Jack Fallis, President and CEO of Global. “He was instrumental in assisting us in the initial application process and continued to check in with us along the way until we not only had a qualified LID Analysis, but also a low-income credit union designation.”

Global finally qualified as a low-income-designated credit union in December 2013 and currently uses the designation to apply for grants. In 2019, Global applied for a CDRLF Training Grant and was awarded $5,000 to use toward a customized leadership development workshop.

Knowing this issue affected other credit unions in the region, Global spent months working alongside the Defense Credit Union Council to address it with NCUA Board Members.

“It is great to see that when there is a technical issue that is excluding a certain group of members, in our case, military members, from an opportunity, we can work together with our Association and the Defense Credit Union Council to bring the issue to light with the NCUA and make change happen,” Fallis said.

The NCUA’s recent decision is very welcome news for other credit unions located near military bases, like Harborstone Credit Union, based in Tacoma.

“Having served in the military and now working closely with our military members and the greater JBLM community, I can tell you that the financial challenges service members face don’t change when they have a change of station or are deployed overseas,” said Mark Minickiello, Vice President of Community Development at Harborstone. “The low-income designation provides great value to credit unions engaged in financial inclusion and empowerment, and this change will hopefully provide even more opportunities for credit unions.”

John Trull commended Northwest credit unions for their staunch advocacy and dedication to military families.

“This is a meaningful change that will allow credit unions to provide members of the military greater access to business loans and capital to build their financial futures,” Trull said. “We recognize Chairman Hood, Board Member Harper, and Board Member McWatters for their leadership, as well as the team at the NCUA who spent countless hours working on this solution.”

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Posted in Advocacy News.