Maximizing Your Credit Union’s Potential with a Low-Income Designation
Learn how credit unions can qualify for and benefit from a Low-Income Designation with insights and tools from industry experts in this webinar.
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For credit unions today, achieving sustainable growth amid economic pressures and regulatory complexities requires leveraging every strategic advantage available. One often-overlooked but powerful tool is obtaining a Low-Income Designation (LID) from the NCUA.
In this webinar, our industry experts detailed how LID can provide significant operational and financial benefits to credit unions. The session explored what LID is, why it matters, how to obtain and retain it, and the tools available to support credit unions along the way.
Understanding the Low-Income Designation
Jason Rusten, Advisory Director at CUCollaborate, highlighted the critical competitive pressures credit unions face today. With consolidation shrinking the total number of credit unions dramatically—from nearly 24,000 in 1970 to just under 4,800 today—there's increasing demand on remaining institutions to do more with less.
"LID-designated credit unions consistently outperform their non-LID peers in both asset growth and return on assets," Rusten noted. Over the past decade, LID credit unions averaged 9.4% asset growth annually compared to just 7% for their counterparts without the designation.
Strategic Advantages of LID
Lara Gooding, Senior Advisory Consultant at CUCollaborate, outlined key regulatory advantages available exclusively to LID credit unions:
- Non-Member Deposits: Ability to accept up to $3 million or 50% of total shares, supporting strategic growth such as mergers and acquisitions.
- Exemption from Business Loan Cap: Freedom from the standard member business loan cap, enhancing lending capabilities.
- Access to Grants and Low-Cost Loans: Eligibility for technical assistance and CDRLF funding.
- Use of Secondary Capital: Subordinated debt can count toward net worth, boosting financial resilience.
- Expanded Membership Opportunities: Federal community credit unions can include individuals affiliated with community organizations or volunteer services, broadening their member base.
Gooding emphasized, "The LID qualification relies on achieving a majority of members who meet low-income criteria, with specific guidelines on qualifying based on geography, student status, and military affiliation."
Proven Paths to LID Attainment
There are two primary methods to attain LID status:
- Actual Membership Analysis: Assessing existing membership data, ensuring over half the members reside in low-income qualifying areas or otherwise meet criteria.
- Potential Membership Strategy: (For Federal Community Credit Unions) Leveraging expansions into geographies with significant low-income populations, thereby enhancing eligibility.
The webinar also emphasized the importance of meticulous data cleaning and enrichment—addressing incomplete or inaccurate records to maximize eligibility.
Leveraging Technology for Efficiency
Technology is a critical accelerator in the LID attainment process. CUCollaborate's software suite—AnalyzeCU, ExpandCU, and the LID API—enables credit unions to:
- Rapidly identify qualifying members and geographies.
- Execute targeted outreach and marketing campaigns.
- Streamline eligibility tracking and reporting.
"Our tools significantly accelerate the path to designation," Gooding explained. "They allow credit unions to visualize opportunities, enrich data effectively, and stay compliant through changing census data."
Partner Spotlight: National Auto Loan Network
Marco Rasic, President and CEO of NALN, highlighted how strategic partnerships could accelerate credit unions’ LID attainment. He shared success stories from credit unions leveraging NALN’s forward-flow lending programs, resulting in a high percentage of new LID-eligible members.
"Through targeted marketing campaigns, we've seen over 80% of borrowers qualify as low-income, substantially boosting our partner credit unions’ LID percentages quickly and effectively," Rasic noted.
Q&A Highlights
Q: What if we’re considering moving or opening a second branch in the same county or a fast-growing zip code? Can the software help with that?
A: Yes. While the webinar didn’t include a live demo of this new feature, CUCollaborate’s Branch Market Model Assessment allows credit unions to evaluate potential expansion areas using deposit growth potential and population trends. It generates branch market scores and identifies neighborhoods with strong growth indicators. While it doesn’t provide real estate data, it can guide you toward the most promising geographic targets for new branches.
Q: Does ExpandCU show whether a particular Select Employee Group (SEG) is already served by another credit union?
A: Yes. ExpandCU includes a Field of Membership (FOM) search tool that allows users to input a SEG name and search across national FOM data to determine if a credit union is already serving that group. CUCollaborate also supplements this with manual research when needed, especially in complex or overlapping cases.
Q: Can the platform tell us if our existing branch footprint is optimal or if we should consider consolidation?
A: Absolutely. While ExpandCU provides the mapping and analysis tools to explore this, CUCollaborate also offers more bespoke research engagements to help credit unions evaluate whether their current branch network is optimized—and where consolidation, expansion, or repositioning could improve performance.
Final Thoughts
As the webinar concluded, the speakers reinforced LID’s strategic value. "In an increasingly competitive environment, Low-Income Designation is more than regulatory status—it's a powerful growth lever," Rusten summarized.
For credit unions considering LID or exploring ways to strengthen their current designation, CUCollaborate's team, coupled with technology and strategic partners like NALN, provide a robust framework to succeed.
📅 Schedule a meeting with our team to discuss your credit union's LID strategy!
Low-Income Designation
