Letter outlines new methodology for counting military as ‘low-income’ credit union members

Designating military personnel as “low-income” credit union members, announced May 7, requires some changes in how the federal credit union regulator counts those members – but that won’t require federally insured credit unions (FICUs) to do anything, as their federal regulator will handle the back-office actions, the regulator said in a letter Thursday.

In a letter to credit unions (LTCU 20-CU-16), the National Credit Union Administration (NCUA) said its May announcement that military personnel would be designated as “low-income members” required a methodology change to how the agency calculates the number of low-income members of the institution for determining the “low-income credit union” (LICU) designation from the agency.

NCUA said its primary methodology for determining low-income status is to geocode members’ addresses obtained through credit union exams, and assign incomes based on those addresses. “However, the geocoding process cannot account for military personnel with Army/Air Post Office (APO) or Fleet Post Office (FPO) mailing addresses,” the agency said. “As a result, they were excluded from the analysis as to whether the majority of the credit union’s membership are low-income members.”

To correct for that, the agency said in the letter that it would no longer exclude members with an APO or FPO mailing address. Instead, the agency said it will now total the number of members with the military mailing address. NCUA said those members will be included in the total number of members served, and a percentage will be reflected as low-income members in determining whether the majority of the credit union’s members are low-income.

“This change to the low-income designation methodology will be handled by the NCUA — it does not result in any additional burden or requirements for credit unions,” the letter stated.

The agency intends to apply the new methodology immediately, noting that it does not generally retain member address data after performing the geocoding.

Additionally, NCUA acknowledged that an APO or FPO mailing address may not cover all military members at credit unions (and may limit some credit unions serving military members from qualifying for low-income status). To make up for that, and to qualify for the designation, the agency suggested credit unions provide additional information, such as:

  • A list identifying members who are active-duty military personnel.
  • “Granular data” for military members, including active-duty and members of the Reserve and the National Guard. Data could include actual income, paygrade, years of service, or rank of its military members.
  • “Any relevant analysis” that demonstrates that all or some portion of the credit union’s military membership, including active-duty and members of the Reserve and the National Guard, qualify as low-income.

NCUA LTCU 20-CU-16: Low-Income Designations: Qualification of Military Personnel