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Low-Income Communities and the Great Recession: Financial Trends in Community Development Credit Unions, 2009

October 2010

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Summary :

Throughout 2009 and beyond, the United States and much of the world suffered through an unprecedented financial crisis.Community development credit unions (CDCUs) were hurt by the broader forces that affected all credit unions. But as institutions that serve low-income, low-wealth communities, many suffered disproportionately, because they had a smaller cushion of net worth to fall back on. No year in recent history has been harder for the CDCU movement.

This report summarizes financial trends for CDCUs based on official published data for the years ending December 31, 2009 and 2008 respectively.1 Our year-over-year comparison looks at the 208 member institutions of the National Federation of Community Development Credit Unions that were active at both points in time. These institutions, located in 42 states and the District of Columbia, serve more than one-million members in urban, rural, and reservation-based communities. They range widely in size, from less than $1 million in assets to well more than a billion dollars. Many are designated “community development financial institutions” (CDFIs) by the federal CDFI Fund, and the great majority have been officially designated by their regulators as “low-income.” While the financial profiles of CDCUs vary, their common denominator is their commitment to promoting and delivering savings products, affordable credit, basic transaction services, and trusted financial information to low‐income people, typically with special outreach to minority communities.

CDCUs have been part of the financial landscape for low-income communities for decades – on average, more than 30 years. They have demonstrated their resilience through many business cycles. Although 2008-09 brought major setbacks, CDCUs ended 2009 serving more members, with more deposits, and greater community-owned net worth than ever before. Their strength and commitment will be essential to the recovery of the nation’s low-income communities.