What the update to the NCUA’s LID Workbook could mean for your credit union

In April, the NCUA updated its Low-Income Designation (LID) Area Workbook, an overview of all geographic areas in the United States and Puerto Rico classified as “low-income,” a criteria met when a majority of an area’s residents fall below the agency’s low-income threshold. These determinations are based on data from the US Census Bureau’s American Community Survey, which collects “detailed population and housing information” across the country, and the changes to the workbook are the result of moving from the 2019 numbers to the most-recently available survey from 2020.

The revised data has led to some major changes to qualifying areas that credit unions either already holding a LID or considering applying for the designation should be aware of. Since NCUA regulations state that to both attain and retain a LID, more than 50% of a credit union’s membership must reside in a low-income area, even the smallest variations in the data can play a big role in eligibility.

Broadly speaking, the new workbook reveals the number of LID-eligible individuals across the country has decreased by 6.3 million, with 55.17% of the total population eligible today compared with 57.39% a year ago. And while this naturally means several credit unions’ current or perspective designations could be affected, the trend was not entirely negative, with certain new opportunities also being created in the process.

A more in-depth analysis on the state and even county level is therefore necessary to truly understand the shifting terrain.

States Where the LID Population Increased

The LID population rose in only four states, with Florida seeing by far the greatest overall increase at 397,510 people (+0.84%). The largest percentage increase, meanwhile, belongs to Idaho, which saw its eligible population rise by 4.63% to 104,376 in total.

South Carolina also witnessed more than a percentage point lift, with 104,616 newly eligible individuals (+1.09%), while Louisiana gained 19,455 people altogether, good for a 0.41% rise.

States Where the LID Population Decreased

Everywhere else on the state level, the LID population declined, in some cases significantly so. Massachusetts, for instance, lost both the greatest number of eligible individuals (-790,053) and percentage (-11.68%), while California (-714,850) and Texas (-514,486) both saw their LID population decrease by over half a million people.

Behind Massachusetts, the biggest percentage decreases were in Montana (-10.43%), Vermont (-9.17%), Wyoming (-8.4%) and Maryland (-7.23%).

Counties Where the LID Population Increased

Changes on the county level proved to be even more drastic and there were eight counties across the country which saw their LID-qualifying percentage go from 0% all the way to 100%. Interestingly, of these, half were Texas counties, despite the state’s overall loss in LID-qualifying population.

Less surprising is that Florida had two counties in the top three in terms of LID population increase, with Pasco County (+228,892) and Escambia County (+100,820) together combining for more than 80% of the state’s overall gains.

Counties Where the LID Population Decreased

Naturally, much as with the state-level data, a drop in LID-qualified population was the norm for the majority of counties nationwide and a total of 15 altogether dropped from 100% qualifying down to 0%. That four of these counties are located in Montana should not come as a surprise considering the state’s overall percentage decline.

Further, certain states’ overall LID population declines could be directly tied to changes in specific counties. In Massachusetts, for instance, more than a quarter of the state’s total decrease came from the previously 100%-qualifying Hamden County alone, where the LID population dropped by 225,187 people.

Takeaway

The data revealed by the NCUA’s new LID Workbook show, more than anything, just how much the landscape can shift in a single year. In order to mitigate this, it’s vital for both current and prospective LID credit unions to stay informed and up to date on all changes to understand how they will affect qualifying status.

However, rather than seeing only the negative aspects of the overall LID population decline, credit unions should implement the updated data to target potential new members to both help their institutions grow while at the same time either attaining or retaining their eligibility.