Community Dividend

2008 was a mixed year for CDCUs, report says

Published November 1, 2009  | November 2009 issue

The financial turmoil of 2008 yielded mixed results for community development credit unions, or CDCUs, according to a recent report from the CDCU industry's national membership organization.

CDCUs are federally insured credit unions that primarily serve low- and moderate-income people and communities. In Financial Trends in Community Development Credit Unions: 2008, the National Federation of Community Development Credit Unions (NFCDCU) shares findings from an analysis of year-end 2008 data from all 209 of its member CDCUs. The analysis reveals modest growth in some aspects of CDCUs' performance, coupled with modest setbacks in other areas. For example, on the positive side, total assets of CDCUs grew by 5.3 percent in 2008, or $224 million on a base of $4.3 billion, and total membership in CDCUs grew 2 percent, from 1,016,129 at year-end 2007 to 1,036,779 at year-end 2008. However, the return on average assets declined from 1.01 percent to 0.06 percent during the same period, while delinquent loans as a share of total loans increased from 2.25 percent to 2.88 percent.

Comparisons between the performance of CDCUs and the performance of all federally insured credit unions, or FICUs, suggest that CDCUs have been disproportionately affected by the economic crisis. For example, 35 percent of CDCUs had a negative return on assets in 2008, compared to 26 percent of all FICUs. In 2007, prior to the crisis, the percentages of CDCUs and FICUs with negative returns on assets were more similar, at 17 percent and 13 percent, respectively. According to the NFCDCU, the disproportionate nature of such effects stems from the fact that CDCU customers are largely low-income and are severely affected by trends like high unemployment, business failures, and mortgage foreclosures.

To access the report, visit