Press Release

October 19, 2017

Contact: Richard Loconte, 212-709-1691


DFS Issues Guidance Facilitating Low-Income Designation Of New York State-Chartered Credit Unions

Action Enhances Access to Financial Services by Low-Income Communities

Taking action to enhance the provision of financial services to low-income New Yorkers, Financial Services Superintendent Maria T. Vullo today announced that the New York State Department of Financial Services (DFS) is issuing guidance to all New York State-chartered credit unions setting forth its methodology for evaluating the designation of a New York State chartered credit union as a “low-income credit union,” on par with federal credit unions.

“DFS supports the growth of New York State-chartered credit unions, which often play an important role in providing financial access and affordable financial services to local communities across the state,” said Superintendent Vullo.  “New York State chartered credit unions serving predominantly low-income members must be supported in their efforts to meet the needs of their members. This action is an important step in helping state-chartered credit unions meet the needs of their members.”

To obtain a designation as a “low-income credit union,” a New York State chartered credit union must satisfy the requirements of Section 450-a (5) of the New York Banking law and Section 701.34(a) of the Regulations of the National Credit Union Administration (NCUA) to ensure that they are serving predominantly low-income members.  Each section contains two “eighty percent tests” for a low-income designation.  These tests require that a majority of the credit union’s members make 80% of the average income of all wage earners, or their family income falls below 80% of the median U.S. household income, or that family or individual income is 80% or less than the median family or individual income for the metropolitan area in which the member resides or in the national metropolitan area, whichever is greater.

A New York State chartered credit union wishing to be designated as a low-income credit union can demonstrate that it satisfies the 80% test by providing supporting documentation to DFS or, alternatively, DFS can use a geographic method, also used by the NCUA, for such evaluation.

The low-income designation provides credit unions with additional sources of funding and resources, including the ability to accept non-member deposits, eligibility to participate in the NCUA’s Community Development Revolving Loan Program, and exemption from the loan limit requirements for member business loans.

The NCUA and the National Association of State Credit Union Supervisors have jointly announced a streamlined process to determine the eligibility of state-chartered credit unions.  Under this process, DFS can provide the NCUA with the member geographic data of a New York State-chartered credit union.  The NCUA will use that data to evaluate whether the credit union is eligible for a low-income designation.  DFS retains the sole authority to make the low-income designation for New York State chartered credit unions.

A copy of the guidance can be found here.