Basic Information About Credit Unions *
Overview
More than 89 million U.S. consumers are member-owners of, and receive all or part of their financial services from the nation's 8,538 credit unions. Credit unions are not-for-profit financial cooperatives, serving members who share something in common: employment, association membership, or residence in a particular geographic area. As not for profit cooperatives, credit unions generally offer attractive savings and loan rates, and low or no fees. Surveys consistently rank credit unions first among financial institutions in consumer satisfaction.
Philosophy and Structure
Credit unions are democratically owned institutions based on "people helping people" principles. Members elect credit union boards of directors; each member has an equal vote, regardless of how much he or she has on deposit. Only members may serve as directors, and directors serve without remuneration. Volunteers are an important credit union resource. Presently, more than 102,000 Americans volunteer for their credit unions, serving as board members, committee members or providing other assistance. Finally, credit unions have no outside stockholders, so after reserves are set aside, earnings are returned to members in the form of dividends on savings, lower loan rates or additional services.
U.S. Organization
Overall, nearly 90 percent of credit unions, both federally and state-chartered, representing more than 90 percent of total credit union assets, are affiliated with the Credit Union National Association (CUNA), and its state-based affiliates (leagues).
New York State Credit Union League
The New York State Credit Union League has worked "to serve and support credit unions" since 1917. As the trade association for 499 not-for-profit, member owned credit unions in New York; the League promotes the health and well-being of the credit union movement at the national, state and local level. It is the fifth largest league in the country and has over 100 employees.
The League provides services in the following areas: Communications, Compliance, Education and Training and Governmental Affairs. Value-added products and services provided by the League include: Covera Card Solutions, ATM Services, CUC Mortgage, Incite! Marketing and UsNet Universal Sharing Network.
New York Credit Union Foundation
The New York Credit Union Foundation was originally established in 1970 as the Sidney Stahl Memorial Foundation Trust. Its purpose was to assist New York credit union volunteers and employees with their education and training needs. Named after credit union pioneer and former League Managing Director Sidney Stahl, the Foundation has played a significant role in strengthening the New York credit union movement.
The Foundation as we know it today has a new mission: to support projects that fulfill the credit union philosophy of "people helping people" through education and by providing financial resources.
In 2003, the New York Credit Union Foundation granted nearly $10,000 to managers, employees, and volunteers of New York credit unions for educational purposes. The Foundation also serves as a conduit for financial aid to the victims of natural disasters, including the 1995 bombing of the Alfred P. Murrah Building in Oklahoma City, the 1998 ice storm that paralyzed northern New York, the 1999 tornado that struck Mechanicville, New York, a Disaster Relief Fund that assisted the family of any credit union member—from any state or country—who perished in the terrorist attacks of 9-11, as well as credit unions impacted by the Asian tsunami and Hurricane Katrina.
Safety and Soundness
Credit unions primarily engage in consumer loans, including residential real estate loans, to their members. Due to prudent lending and management practices, credit unions were not adversely affected by the economic downturn of the late 1980's, early 1990’s and the last several years and few are being adversely affected in the current economic downturn. Credit union capital is 10.9 percent and the equity ratio of the federal insurance fund, National Credit Union Share Insurance Fund (NCUSIF), has operated at no lower than 1.24 percent for 16 consecutive years.
Insurance Fund
Since 1984, credit unions have operated their own federal deposit insurance fund on a pay-as-you-go basis. In that year, credit unions voluntarily deposited 1 percent of their insured member savings in NCUSIF, to bring its equity ratio up to 1.0 percent. This recapitalization resulted in a one-time reduction in the federal deficit. Each year, credit unions deposit sufficient funds to ensure that the fund's equity ratio is maintained at or above 1.3 percent. While the NCUSIF is backed by the full faith and credit of the U.S. Government, the structure of the insurance fund ensures that only if all of the capital in the credit union movement were exhausted, would any taxpayer funds be spent on credit unions. Like other deposit insurance funds, NCUSIF protects member deposits to $100,000. The voluntary recapitalization of NCUSIF before problems occurred, and the mechanisms in place to keep the fund highly capitalized, illustrates credit unions' commitment to safety and soundness.
Regulation and Supervision
The National Credit Union Administration (NCUA), an independent agency, regulates federally chartered credit unions. NCUA's three board members are nominated by the President and confirmed by the Senate. State-chartered credit unions are regulated by the New York State Banking Department. NCUA administers NCUSIF, and all federally insured credit unions are subject to insurance examinations as well. No taxpayer money is used for regulating and overseeing credit unions, as all activities of NCUA and NCUSIF are funded by credit unions.
Market Share
Credit unions are a small, but constant presence in the financial services industry. Credit unions held 1.8 percent of household financial assets as of December 2004, according to Federal Reserve data, and have held a share below 2 percent since 1980.
Promoting Economic Development at Home and Abroad
The credit union philosophy of "not for profit, not for charity, but for service" is illustrated by credit unions' commitment to fostering economic development and helping individuals attain self-sufficiency.
*updated June, 2007
New York State Credit Union League, Inc. & Affiliates
P.O. Box 15118, Albany, New York 12212-5118 | 19 British American Boulevard, Latham, New
York 12110
800-342-9835 | Fax 518-437-8284
Copyright © 2007 New York State Credit Union League, Inc.
