a

GAO

United States Government Accountability Office

Report to the Chairman, Committee on 

Ways and Means, House of 

Representatives

November 2006 CREDIT UNIONS

Greater Transparency 

Needed on Who Credit 

Unions Serve and on 

Senior Executive 

Compensation 

Arrangements

GAO-07-29
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 2006

CREDIT UNIONS

Greater Transparency Needed on Who 

Credit Unions Serve and on Senior 

Executive Compensation Arrangements 

Highlights of GAO-07-29, a report to the 

Chairman, Committee on Ways and 

Means, House of Representatives 

Legislative and regulatory changes 

have blurred distinctions between

credit unions and other depository

institutions and raised questions 

about the tax-exempt status of 

credit unions. This report (1) 

assesses the effect of the Credit

Union Membership Access Act on 

credit union membership and

charters, (2) reviews the National

Credit Union Administration’s 

(NCUA) efforts to expand services

to low- and moderate-income 

individuals, (3) compares rates 

offered by credit unions with 

comparably sized banks, (4)

discusses unrelated business 

income tax issues, and (5) assesses 

transparency of credit union senior 

executive compensation. To 

address our objectives, we

obtained NCUA data on credit 

union membership, charter

changes, efforts to target those of

modest means, and executive 

disclosure requirements. We also 

analyzed Federal Reserve Board’s

Survey of Consumer Finances and 

Internal Revenue Service data. 

What GAO Recommends

To improve transparency, GAO

recommends that the NCUA

Chairman systematically track and 

monitor the progress of federal 

credit unions in serving those of

modest means and require

disclosure of credit union senior

executive compensation. NCUA 

agreed with our recommendations 

but had some concerns with the 

report. GAO addressed these 

concerns in the agency comments 

section of the report. 

Since the passage of the Credit Union Membership Access Act (CUMAA) in 

1998, larger community-based credit unions have constituted a much greater 

proportion of the industry. NCUA has approved federal community charters 

with increasingly larger geographic areas and potential for economically 

diverse membership. Much of the shift toward the larger community-based 

credit unions was due to conversions from other charters. NCUA’s approval 

of these charters appears to have been triggered by changes in the economic 

environment and financial services industry and to diversify membership to 

accomplish goals such as increasing service to those of modest means. 

NCUA has established the low-income credit union program and allowed 

adoption of “underserved areas” to increase credit union services to 

individuals of modest means. Despite increased credit union participation in

these programs and the expansion of community charters, the 2004 and 2001 

Survey of Consumer Finances indicated that credit unions lagged behind 

banks in serving low- and moderate-income households. NCUA officials told 

GAO that, given the nascent nature of its two initiatives and the relatively 

recent shift to community charters, they did not yet expect observable

changes in the data. Also, NCUA recently has undertaken a pilot effort to 

collect data on the income characteristics of credit union members. Because

limited data exist on the extent to which credit unions serve those of modest 

means, any assessment would be enhanced if NCUA were to move beyond 

its pilot and systematically collect income data. 

Based on GAO analysis, credit unions typically had more favorable rates 

than banks, particularly for consumer loans. For example, credit unions auto 

loans were 1 to 2 percentage points lower than similarly sized banks, on 

average. However, it was not clear the extent that the more favorable rates 

fully reflected the tax subsidy that credit unions receive by tax-exemption. 

The Internal Revenue Service (IRS) has been reviewing state-chartered 

credit union activities (federal credit unions are exempt) to determine 

compliance with unrelated business income tax (UBIT) requirements, but 

such determinations are difficult due to complicated criteria and because

many credit unions file group rather than individual returns. IRS stated that 

it plans to issue technical guidance in the first quarter of 2007 that the 

agency believes will help ensure credit union compliance with UBIT. 

Finally, credit union executive compensation is not transparent. Federal 

credit unions, unlike other tax-exempt organizations, do not file information 

returns, which contain data on executive compensation, with IRS. NCUA is

collecting compensation data as part of its pilot, but it is unclear whether 

NCUA will conduct future reviews. NCUA officials noted a number of 

alternatives that could be used to increase transparency, such as requiring 

federal credit unions to provide compensation information in call reports or 

require that credit unions disclose compensation data at annual meetings. 

www.gao.gov/cgi-bin/getrpt?GAO-07-29.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Yvonne Jones 

at (202) 512-8678 or jonesy@gao.gov. 
Page i GAO-07-29 Credit Union Membership and Executive Compensation

Contents

Letter 1

Results in Brief 4

Background 8

NCUA Rules Interpreting CUMAA Appear to Have Fueled Expansion 

of Community-Chartered Credit Unions 10

NCUA Programs Target Individuals of Low- and Moderate-Income, 

but Limited Data Preclude an Evaluation of Actual Service to 

Those Individuals 14

Credit Unions Offered Better Interest Rates on Some Products, but 

the Extent to Which the Benefits of Tax-Exempt Status Have Been 

Passed to Members Is Unclear 26

Lack of Guidance and Criteria for Applying UBIT to State Credit 

Union Activities Makes Determining Compliance with the 

Requirement Difficult 29

Alternatives Exist to Improve the Transparency of Credit Union 

Executive and Director Compensation 33

Conclusions 39

Recommendations for Executive Action 41

Agency Comments and Our Evaluation 41

Appendixes

Appendix I: Objectives, Scope, and Methodology 45

Effects of CUMAA and NCUA Regulations and NCUA Efforts to 

Serve Low- and Moderate-Income Individuals 45

Comparison of Interest Rates Offered by Credit Unions With Those 

at Comparably Sized Banks 47

Issues Related to the Application of UBIT to Credit Unions 49

Information on Transparency and Compensation of Executive 

Compensation 49

Appendix II: Analyses of Survey of Consumer Finances Data, 2001 and 

2004 50

Appendix III: Comparison of Interest Rates at Credit Unions and Banks 57

Appendix IV: Selected Salary Surveys for Credit Union and Bank 

Executives 76

Appendix V: Comments from the National Credit Union Administration 81

GAO Comments 97

Appendix VI: GAO Contact and Staff Acknowledgments 103
Contents

Page ii GAO-07-29 Credit Union Membership and Executive Compensation

Tables Table 1: Number, Members, and Assets of Federal Credit Unions by 

Charter Type, from 2000 through 2005 12

Table 2: Federal Credit Union Conversions to Community Charters, 

from 2000 through 2005 13

Table 3: Number of Credit Unions Approved to Expand into 

Underserved Areas, 2000-2005 18

Table 4: UBIT Income Declared and Taxes Paid by State-Chartered 

Credit Unions, 2000-2004 30

Table 5: Definition of Income Categories Used for Community 

Reinvestment Act Examinations 47

Table 6: Peer (Asset) Group Definitions, Used in Comparisons of 

Interest Rates between Credit Unions and Banks 48

Table 7: Percentages of Households Classified as Using Banks or 

Credit Unions, 2001 and 2004 51

Table 8: Median Income Benchmarks Used for Primary 

(Household) and Additional (Family) Analyses of 2001 and 

2004 SCF Data 52

Table 9: Income Categories for Primary (Household) and 

Additional (Family) Analyses of 2001 and 2004 SCF 

Data 53

Table 10: Percentages in Each Income Category for Primary 

(Household) Analysis by Customer Type, 2001 SCF 

Data 53

Table 11: Percentages in Each Income Category for Primary 

(Household) Analysis by Customer Type, 2004 SCF 

Data 54

Table 12: Percentages in Each Income Category for Additional 

(Family) Analysis by Customer Type, 2001 SCF Data 54

Table 13: Percentages in Each Income Category for Additional 

(Family) Analysis by Customer Type, 2004 SCF Data 55

Table 14: Median Income within Each Income Category for Primary 

(Household) Analysis by Customer Type, 2001 SCF 

Data 55

Table 15: Median Income within Each Income Category for Primary 

(Household) Analysis by Customer Type, 2004 SCF 

Data 56

Table 16: Median Income within Each Income Category for 

Additional (Family) Analysis by Customer Type, 2001 SCF 

Data 56
Contents

Page iii GAO-07-29 Credit Union Membership and Executive Compensation

Table 17: Median Income within Each Income Category for 

Additional (Family) Analysis by Customer Type, 2004 SCF 

Data 56

Figures Figure 1: Low Income Credit Union Growth, 2000-2005 16

Figure 2: Comparison of Income Levels of Credit Union and Bank 

Customers, from 2001 and 2004 SCF Data 22

Figure 3: Regular Savings Account Rates of Credit Unions and 

Banks with Assets of $100 Million or Less and Assets 

Greater than $1 Billion, from 2000 through 2005 27

Figure 4: Sixty-Month New Car Loan Rates of Credit Unions and 

Banks with Assets of $100 Million or Less and Assets 

Greater than $1 Billion, from 2000 through 2005 28

Figure 5: Thirty-Year Mortgage Loan Fixed Rates of Credit Unions 

and Banks with Assets of $100 Million or Less and Assets 

Greater than $1 Billion, from 2000 through 2005 28

Figure 6: Compensation Information Filed in IRS Form 990 35

Figure 7: Comparison of Interest Rates for Savings Products at 

December 31, 2000, by Asset Size 58

Figure 8: Comparison of Interest Rates for Savings Products at 

December 31, 2001, by Asset Size 59

Figure 9: Comparison of Interest Rates for Savings Products at 

December 31, 2002, by Asset Size 60

Figure 10: Comparison of Interest Rates for Savings Products at 

December 31, 2003, by Asset Size 61

Figure 11: Comparison of Interest Rates for Savings Products at 

December 31, 2004, by Asset Size 62

Figure 12: Comparison of Interest Rates for Savings Products at 

December 31, 2005, by Asset Size 63

Figure 13: Comparison of Interest Rates of Consumer Loans at 

December 31, 2000, by Asset Size 64

Figure 14: Comparison of Interest Rates of Consumer Loans at 

December 31, 2001, by Asset Size 65

Figure 15: Comparison of Interest Rates of Consumer Loans at 

December 31, 2002, by Asset Size 66

Figure 16: Comparison of Interest Rates of Consumer Loans at 

December 31, 2003, by Asset Size 67

Figure 17: Comparison of Interest Rates of Consumer Loans at 

December 31, 2004, by Asset Size 68

Figure 18: Comparison of Interest Rates of Consumer Loans at 

December 31, 2005, by Asset Size 69
Contents

Page iv GAO-07-29 Credit Union Membership and Executive Compensation

Figure 19: Comparison of Interest Rates of Mortgage Products at 

December 31, 2000, by Asset Size 70

Figure 20: Comparison of Interest Rates of Mortgage Products at 

December 31, 2001, by Asset Size 71

Figure 21: Comparison of Interest Rates of Mortgage Products at 

December 31, 2002, by Asset Size 72

Figure 22: Comparison of Interest Rates of Mortgage Products at 

December 31, 2003, by Asset Size 73

Figure 23: Comparison of Interest Rates of Mortgage Products at 

December 31, 2004, by Asset Size 74

Figure 24: Comparison of Interest Rates of Mortgage Products at 

December 31, 2005, by Asset Size 75

Figure 25: Credit Union Executive Average Base Salaries for 

2005 77

Figure 26: Bank Executive Average Base Salaries in 2004 79

Abbreviations

ABA American Banker’s Association 

CRA Community Reinvestment Act

CUMAA Credit Union Membership Access Act 

CUSO credit union service organizations 

FFIEC Federal Financial Institutions Examination Council 

IRS Internal Revenue Service 

LICU Low Income Credit Union 

MSA Metropolitan Statistical Area

NASCUS National Association of State Credit Union Supervisors 

NCUA National Credit Union Administration 

SCF Survey of Consumer Finances 

SEC Securities and Exchange Commission 

UBIT unrelated business income tax 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-07-29 Credit Union Membership and Executive Compensation

United States Government Accountability Office

Washington, D.C. 20548

A

November 30, 2006 Letr

The Honorable William M. Thomas

Chairman

Committee on Ways and Means

House of Representatives

Dear Mr. Chairman:

Changes in credit union membership restrictions and the blurring of 

distinctions in the products and services offered by credit unions and other 

depository institutions, as well as concerns about the extent to which 

credit unions are serving people of modest means, have resulted in 

questions about the tax-exempt status of credit unions. Unlike banks, 

credit unions are (1) not-for-profit entities that build capital by retaining 

earnings (they do not issue capital stock); (2) member-owned cooperatives 

run by boards elected by the membership; (3) subject to field of 

membership requirements that limit membership to persons sharing 

certain circumstances, such as a common bond of occupation or 

association; and (4) exempt from federal income tax. As a result of recent 

legal and regulatory developments, the National Credit Union 

Administration (NCUA) has approved progressively larger geographicbased fields of membership for federal credit unions, including areas as 

large as whole counties or major metropolitan areas. Additionally, credit 

unions are increasingly offering products and services similar to those 

provided by banks, such as real estate and business loans. With the 

expansion of credit union membership and products, concerns have been 

raised whether the tax- exempt status of credit unions provides an unfair 

competitive advantage over comparably sized banks and the extent to 

which credit unions remain unique in terms of the population they serve 

versus that served by other depository institutions. 

Credit unions can be chartered by the federal government or by a state 

government. NCUA has oversight authority for federally chartered credit 

unions; the states have primary oversight responsibility for state-chartered 

credit unions. NCUA also provides share insurance to all federally 

chartered and most state-chartered credit unions. As of December 2005, 

there were nearly 8,700 federally insured credit unions—about 5,400
Page 2 GAO-07-29 Credit Union Membership and Executive Compensation

federally chartered and 3,300 state-chartered—with about $679 billion in 

total assets.1

 

Under the Federal Credit Union Act, federal charters are subject to a field 

of membership requirement.2

 The act provides for three types of federal 

credit union charter—single common bond, multiple common bond, and 

community.3

 A single common-bond credit union has a field of membership 

that comprises one group having a common bond of occupation or 

association. In a multiple common-bond charter, the field of membership 

comprises more than one group, with each group having a common bond of 

occupation or association (within the group).4

 In a community charter, the 

membership comprises persons or organizations within a “well-defined 

local community, neighborhood, or rural district.” 

Although they are exempt from federal income tax, both federally and 

state-chartered credit unions do pay other taxes at the federal and state 

levels. For example, both types of credit unions pay federal employment 

taxes such as social security tax on behalf of their employees. According to 

the National Association of State Credit Union Supervisors (NASCUS), 

most states impose real property taxes on state-chartered credit unions;

1

According to NCUA, there are fewer than 500 nonfederally insured (privately insured or 

uninsured) state-chartered credit unions. Nonfederally insured credit unions are not subject 

to NCUA regulation. This report focuses strictly on federally and state-chartered credit 

unions that have member deposits insured by the National Credit Union Share Insurance 

Fund. 

2

12 U.S.C. § 1759 (2000). State credit union chartering acts typically include similar field of 

membership restrictions. For example, see Tex. Fin. Code Ann. 122.051 (Vernon 2005).

3

The Credit Union Membership Access Act of 1998, Public Law 105-219 (Aug. 7, 1998), 112 

STAT. 914, amended the Federal Credit Union Act to allow multiple-group chartering, 

subject to limitations that NCUA must consider when granting charters, and limited new 

community charter applications to well-defined local communities.

4

In a multiple-bond credit union, the original number of members in each group must be 

fewer than 3,000, unless a statutory exception applies. 12 U.S.C. § 1759(b), (d). The 

numerical requirement does not apply to persons or organizations within an underserved 

local community, neighborhood, or rural district. 12 U.S.C. § 1759(c)(2). The act also 

contains other exceptions to the numerical requirement, as well as a grandfather provision. 

See 12 U.S.C. §§ 1759(d)(2), (c)(1).
Page 3 GAO-07-29 Credit Union Membership and Executive Compensation

and in a few states, federally chartered credit unions are subject to state 

real property taxes.5

 

As part of the House Ways and Means Committee’s continuing oversight of 

the tax-exempt sector, you asked us to review a variety of credit union 

issues.6

 The objectives of this study were to (1) assess the effect of the 1998 

Credit Union Membership Access Act (CUMAA) on federal credit union 

membership and charter expansion; (2) review NCUA’s efforts to expand 

credit union services to low- and moderate-income individuals; (3) 

compare rates offered by credit unions with rates at comparably sized 

banks, as one indicator of how tax-exemption might benefit credit union 

members; (4) discuss issues associated with the application of the federal 

unrelated business income tax (UBIT) to credit unions; and (5) assess the 

transparency of credit union executives and board member compensation.

To assess the effect of CUMAA on federal credit union membership and 

charter expansion, we obtained data from NCUA regarding charter types 

and membership, including data on recent new charter approvals, 

conversions, and expansions.7

 To review NCUA efforts to expand credit 

union services to low- and moderate-income individuals, we obtained 

information from NCUA on its low-income credit union program and recent 

underserved area expansions.8

 We also obtained and analyzed the Board of 

Governors of the Federal Reserve System’s (Federal Reserve) 2004 Survey 

of Consumer Finances (SCF) to assess the extent to which credit union 

members were of low- and moderate-income households and discussed 

with NCUA officials their effort to measure the income levels of credit 

union members. To compare rates offered by credit unions with those of 

5

NASCUS Profile Credit Union Supervisory and State Regulatory Structures, 2005-2006 

Edition. NASCUS represents the 48 state governmental agencies and U.S. territorial 

agencies that charter, regulate, and examine the nation’s state-chartered credit unions. 

6

On November 3, 2005, the House Ways and Means Committee held a hearing to review the 

credit union tax exemption in which GAO discussed issues regarding the tax-exempt status 

of credit unions. See GAO, Financial Institutions: Issues Regarding the Tax-Exempt 

Status of Credit Unions, GAO-06-220T (Washington, D.C.: Nov. 3, 2005).

7

Federally insured credit unions are required to report their potential as well as actual 

membership to NCUA. Potential membership is an estimate of the maximum number of 

members that could join a credit union. Throughout this report, the term membership refers 

to actual credit union members unless otherwise noted.

8

As discussed previously, CUMAA permits federal multiple-bond credit unions to include 

underserved areas in their field of membership, regardless of size and location. 
Page 4 GAO-07-29 Credit Union Membership and Executive Compensation

comparably sized banks, we obtained and reviewed rate data on more than 

15 loan and savings products to identify any systematic differences. To 

facilitate our discussion of issues related to the application of UBIT to 

credit unions, we reviewed provisions of the Internal Revenue Code, 

Federal Credit Union Act, judicial decisions, and Internal Revenue Service 

(IRS) documents concerning the unrelated business income tax (UBIT) and 

the taxation of credit unions. We also obtained and analyzed IRS data 

regarding its activities to identify state-chartered credit union activities 

subject to UBIT. To provide information on transparency of compensation 

of credit union executives and board members, we discussed 

compensation reporting requirements of credit unions with IRS and 

obtained publicly available data regarding the compensation of board 

members and senior executives of credit unions and banks. Appendix I 

provides additional information about our scope and methodology. We 

conducted our work in Washington, D.C., and San Francisco from 

November 2005 through November 2006 in accordance with generally 

accepted government auditing standards. 

Results in Brief Since the passage of CUMAA in 1998 and subsequent changes in NCUA 

regulations, the credit union industry has experienced dramatic growth in 

the number of credit unions with community-based charters. NCUA revised 

its regulations after the passage of CUMAA, making it easier for federal 

credit unions to qualify for community charters that served large 

geographic areas such as entire counties. From 2000 through 2005, the 

overall number of federally chartered credit unions declined, but the 

number of federal community-chartered credit unions more than doubled 

(from 523 to 1,115). The assets of all three types of federal credit unions 

grew by about $140 billion between 2000 and 2005, and the assets held by 

community credit unions nearly quadrupled (from $27.1 to $104.4 billion). 

Charter conversions largely drove the increase in numbers of community 

credit unions, with more than 90 percent of the growth in community 

charters resulting from conversions by multiple-bond credit unions. 

According to NCUA officials, the changes were necessary to maintain 

competitiveness against more expansive membership regulations in some 

state charters, enhance the safety and soundness of credit unions, and 

allow credit unions to serve more diverse memberships, including 

individuals of modest means. 

Although NCUA has taken actions to make credit union services available 

to individuals of modest means, information that directly measures the 

income levels of credit union members continues to be limited. In addition 
Page 5 GAO-07-29 Credit Union Membership and Executive Compensation

to looking at community chartering as a way to serve those of modest 

means, NCUA has established two initiatives to enhance the availability of 

credit union services to individuals of modest means—the low-income 

credit union program and permitting the adoption by credit unions of 

“underserved areas,” regardless of the credit union’s location. Federal 

credit union participation in both of the initiatives has risen since 2000—for 

example, federal credit unions receiving NCUA approval to expand into 

underserved areas increased from 40 in 2000 to 641 at the end of 2005. 

However, the most recent available information on the income of credit 

union members—the Federal Reserve’s 2004 SCF—indicated that credit 

unions continued to lag behind banks in the percentage of their customers 

or members that were of low- and moderate-income households. Our 

analysis of the 2004 SCF indicated that 31 percent of households that only 

and primarily used credit unions were of modest means versus 41 percent 

for households that only and primarily used banks. As an approximation of 

income levels, SCF data have certain limitations for measuring the income 

characteristics of credit union members and should be interpreted with 

caution. NCUA commented that because of the relative newness of 

community charter expansion and observed increase in participation of the 

low-income and underserved area efforts, it would take time before 

changes in the income profiles of credit union members could be reflected 

in the data. Because of the limitations of available data such as the SCF, 

NCUA has undertaken a pilot program to estimate the income levels of 

credit union members. However, because of limitations in the sample size, 

the survey will not allow NCUA to make statistically valid conclusions on 

member income by specific charter type or about specific services 

provided to members of various incomes. 

Our analysis of interest rates for 15 loan and savings products indicated 

that credit unions seem to offer more favorable rates than those of 

comparably sized banks, particularly for consumer loans. For example, 

rates that credit unions charged for car loans averaged about 1 to 2 

percentage points lower than rates offered by similarly sized banks, and 

credit union rates averaged 0.4 percentage points higher for regular savings 

accounts. This difference was slightly more pronounced as the size of the 

institutions increased. In contrast, rates that credit unions and banks 

charged for mortgage loans were virtually the same; and, in limited cases, 

banks offered better mortgage rates on average than similarly sized credit 

unions. However, our analysis of deposit and loan rate data does not fully 

identify how the tax-exemption of credit unions might benefit credit union 

members. For example, tax-exemption may enable credit unions to reduce 

fees they charge for services provided to members. In addition, credit 
Page 6 GAO-07-29 Credit Union Membership and Executive Compensation

unions can finance additional services and add to desired or required 

reserves through untaxed retained income.

IRS has been reviewing many types of state-chartered credit union 

activities to determine if they should be subject to UBIT. Groups 

representing state-chartered credit unions and the Credit Union National 

Association have stated that IRS has not provided sufficient guidance on 

what credit union activities are or are not subject to UBIT. According to IRS 

officials, IRS is planning to issue technical advice on credit union activities 

subject to UBIT. State-chartered credit unions paid more UBIT in 2004 than 

in 2000, but many state-chartered credit unions are permitted to be 

included in a group rather than an individual information return—Return of 

Organization Exempt from Income Tax (Form 990). The practice of 

providing aggregate returns effectively makes it more difficult for IRS to 

scrutinize state-chartered credit union operations to determine whether 

they are subject to UBIT. However, IRS officials told us that the additional 

technical advice the agency will be providing will specify its position on 

credit union activites that are subject to UBIT and should improve credit 

union compliance with the statute. 

Executive compensation for federal credit unions is not transparent, 

largely because federal credit unions are not required to publicly file 

information on executive compensation. The importance of transparency 

and disclosure of executive compensation have become an important topic 

as highlighted by the Securities and Exchange Commission’s (SEC) recent 

rule making for publicly held companies.9

 Similarly, for not-for-profits, the 

disclosure of such information helps support oversight of these tax-exempt 

entities. However, unlike most other tax-exempt organizations, federal 

credit unions are not required to provide IRS with Form 990s that contain 

publicly disclosed information such as executive compensation. NCUA 

legal opinions have stated that member access to credit union records is 

generally a matter of state law. In those opinions, NCUA observed that 

members of federal credit unions are owners of the institution, similar to 

shareholders of corporations, so the members should look to state 

corporate law on matters such as access to federal credit union records. In 

one opinion, the NCUA attorney referred to the general rule in most states 

that shareholders are entitled to inspect corporate minutes and other 

records for appropriate purposes. However, it was not clear to what extent 

9

SEC Final Rule, 17 C.F.R. Parts 228, 229, 232, 239, 240, 245, 249 and 274, Release Nos. 33-

8732; 34-54302; IC-27444; File No. S7-03-06.
Page 7 GAO-07-29 Credit Union Membership and Executive Compensation

credit unions or their members were aware of this general right or how 

difficult or easy it would be for credit union members to obtain executive 

compensation data. We identified a few credit union and bank trade group 

surveys that address executive compensation for their respective 

industries. While these surveys provided an indication of compensation 

patterns, the surveys generally had methodological limitations—selfselected samples, small sample sizes, or incomplete information on total 

compensation and benefits—that precluded a direct comparison of credit 

union executive compensation with that of similarly sized banks. As part of 

its pilot program to obtain information on the income characteristics of 

credit union customers, NCUA has also collected data on credit union 

executive compensation and has reported the average salaries of specific 

positions with the credit union industry. However, the information, which is 

stratified into two subsets, reported salary information for (1) credit unions 

with assets less than $50 million and (2) credit unions with assets greater 

than $50 million. Additionally, this information only provides a snapshot of 

executive compensation for a single time period. Finally, NCUA officials 

told us that they are exploring various options to provide greater 

transparency in credit union executive compensation, such as amending 

NCUA’s call report data to require federal credit unions to submit 

compensation and benefit data for senior executive officers or requiring 

that credit unions make credit union salary information available to their 

members for inspection at their public meetings. 

This report includes two recommendations to NCUA’s Chairman to 

systematically track the performance of federal credit unions in providing 

financial services to members of modest means and improve the 

transparency of credit union executive compensation to enhance 

accountability of credit unions to the public and to their members.

We provided a draft of this report to the Chairman of NCUA and the 

Commissioner of IRS for their review and comment. We received written 

comments from NCUA that are summarized below and reprinted in 

appendix V. In addition, we received technical comments from IRS that 

have been incorporated into this report as appropriate. In its written 

comments, NCUA indicated that the agency’s staff have recommended that 

the NCUA board consider taking actions consistent with the 

recommendations made in our report. However, NCUA indicated in its 

comment letter that it had concerns with certain aspects of the draft report. 

Specifically, NCUA’s letter stated that it was inaccurate and inappropriate 

to measure the success of federally chartered credit unions in serving 

persons of modest means by reference only to the low- and moderate-
Page 8 GAO-07-29 Credit Union Membership and Executive Compensation

income categories associated with the Community Reinvestment Act 

(CRA). Additionally, NCUA’s letter stated that our income category 

benchmarks were inconsistent with the specific definitions used by the 

other federal financial regulators for CRA compliance. NCUA’s letter also 

stated that the SCF was not designed for reliable income comparisons 

between credit union members and bank customers. As we noted in the 

report, neither the Federal Credit Union Act nor NCUA have established 

definitions as to what constitutes modest means. Thus, consistent with our 

2003 report, we used low- and moderate-income households as a proxy for 

persons of modest means for the purposes of our analysis. Our analysis not 

only included comparisons between credit unions and banks of low- and 

moderate-income households but also middle and upper income 

households for both the 2001 and 2004 SCF. This analysis shows that 

between 2001 and 2004 credit unions continued to serve a higher 

proportion of middle- and upper-income households and a smaller 

proportion of low- and moderate-income households than did banks. The 

primary difference between our income categories and those used for CRA 

purposes was the use of national rather than local Metropolitan Statistical 

Area (MSA) median income as a benchmark for the various income 

categories. We use the national measure since the SCF is a national survey, 

and we did not have sufficient geographic information to conduct a MSAlevel analysis. While we agree that the SCF was not specifically designed to 

conduct comparative analyses of income levels of bank and credit union 

customers, the SCF provides the best data currently available to undertake 

such a comparison. SCF is a respected source of publicly available data on 

financial institution and consumer demographics that is nationally 

representative and was the only comprehensive source of publicly 

available data that we could identify with information on financial 

institutions and consumer demographics. Additional NCUA comments are 

discussed at the end of this report and in appendix V. 

Background Both federally and state-chartered credit unions are exempt from federal 

income taxes.10 However, their exempt status arises from different 

provisions of federal law. Federal credit unions are specifically exempt 

from federal and state income taxes under a provision of the Federal Credit

10As previously noted in the introductory paragraphs of this report, federally and most statechartered credit unions are also exempt from state income and franchise taxes and pay 

other taxes at the federal and state levels. 
Page 9 GAO-07-29 Credit Union Membership and Executive Compensation

Union Act.11 State-chartered credit unions are exempt under a provision of 

the Internal Revenue Code that describes as exempt, “Credit unions 

without capital stock organized and operated for mutual purposes and 

without profit.”12 The code also imposes UBIT on state-chartered credit 

unions, but not on their federally chartered counterparts.13 

The tax-exempt status of credit unions originally was predicated on the 

similarity of credit unions and mutual financial institutions. Section 

11(a)(4) of the Revenue Act of 1916, the statutory forerunner of section 

501(c)(14)(A), exempted from federal income tax “cooperative banks 

without capital stock organized and operated for mutual purposes and 

without profit.” The exemption of credit unions stems from an opinion of 

the Attorney General, 31 O.A.G. 176 (1917), holding that credit unions 

organized under the laws of Massachusetts were so similar to cooperative 

banks as to come within the scope of section 11(a)(4). IRS regulations 

subsequently applied this ruling to credit unions generally.14

While other institutions lost their exemption in the Revenue Act of 1951, 

Congress specifically retained the exemption for credit unions by removing 

cooperative banks, savings and loan societies, and building and loan 

associations from exemption and inserting credit unions in their place.15 

The Senate Finance Committee report accompanying the Revenue Act of 

1951 stated that the exemption of mutual savings banks was repealed to 

establish parity with other banking institutions because the savings banks

1112 U.S.C. § 1768.

1226 U.S.C. § 501(c)(14)(A).

1326 U.S.C. § 511(a)(2); see also 26 U.S.C. § 501(c)(1), which, in combination with the 

exemption for federal credit unions under the Federal Credit Union Act, excludes them 

from UBIT.

14See also T.D. 3179, which amended Art. 515(3), section 231, Regs. 45, Revenue Act of 1918 

to read: 

“Cooperative banks without capital stock organized and operated for mutual purposes and 

without profit are exempt. Credit unions, such as those organized under the laws of 

Massachusetts, being in substance and in fact the same as cooperative banks, are likewise 

exempt from tax.”

15Pub. L. No. 82-183 § 313.
Page 10 GAO-07-29 Credit Union Membership and Executive Compensation

had become functionally similar to those other institutions.16 According to 

the Senate report, tax-exempt status gave mutual savings banks the 

advantage of being able to finance growth out of untaxed retained earnings, 

while competing corporations (commercial banks) paid tax on income 

retained by the corporation. The report stated that the exemptions for 

savings and loan associations had been repealed on the same ground. The 

report did not state why the tax-exempt status of credit unions was 

preserved. 

Credit unions are an important, but relatively small segment of the financial 

industry. According to NCUA and Federal Deposit Insurance Corporation 

data, federally and state-chartered credit unions represented 7.5 percent of 

all deposits and shares insured by the federal government as of December 

31, 2005. Additionally, credit unions typically are much smaller than banks 

and thrifts in terms of total assets. For example, NCUA data indicated that 

approximately 88 percent of federally chartered credit unions had $100 

million or less in assets with 83 percent having assets less than $50 million 

as of September 30, 2005. According to NCUA, the average size of a 

federally chartered credit union was $73.2 million in total assets and the 

median asset size was $11 million.

NCUA Rules 

Interpreting CUMAA 

Appear to Have Fueled 

Expansion of 

Community-Chartered 

Credit Unions

Since the passage of CUMAA in 1998 and subsequent NCUA rule changes, 

NCUA has approved community charters with increasingly larger 

geographic fields of membership—for example, covering entire cities or 

multiple counties. Since 2000, community-chartered credit unions have 

nearly tripled their membership and nearly quadrupled their assets. Most of 

the new community charters approved between 2000 and 2005 were 

charter conversions by multiple-bond credit unions rather than new credit 

unions. According to NCUA, community charters offer credit unions 

greater opportunity than single- and multiple-bond credit unions to 

diversify their membership base, thereby contributing to the institution’s 

economic viability and ability to serve all segments of the community, 

including those of modest means. 

16S. Rep. No. 82-781 (1951) at 22, 25.
Page 11 GAO-07-29 Credit Union Membership and Executive Compensation

NCUA Regulations 

Interpreting CUMAA Set the 

Stage for Growth of 

Community Charter Credit 

Unions 

CUMAA is the most recent statute affecting field of membership 

requirements of federally chartered credit unions. In 1998, the Supreme 

Court determined that NCUA had erroneously interpreted the Federal 

Credit Union Act to permit federally chartered credit unions to have 

multiple common bonds.17 In response, Congress passed a provision in 

CUMAA to specifically permit multiple-bond credit unions subject to a 

general limitation on the number of members sharing a particular common 

bond. Also in CUMAA, Congress amended the provision of the act 

permitting the federal community charter by changing the description of its 

field of membership from “groups within a well-defined neighborhood, 

community, or rural district” to “persons or organizations within a welldefined local community, neighborhood, or rural district.”18

Subsequent to the passage of CUMAA, NCUA revised its regulations to 

approve community charters consisting of larger geographic areas of 

coverage and potential members. For example, NCUA recently approved 

one credit union for a community charter covering the entirety of Los 

Angeles County. Thus, an estimated 9.6 million persons who live, worship, 

and go to school or work in the county and businesses and other legal 

entities within county boundaries qualify for membership in this credit 

union.19 We reported in 2003 that previous NCUA regulations required 

credit unions to document that residents of a proposed community area 

interacted or had common interests.20 Credit unions seeking to serve a 

single political jurisdiction (e.g., a city or a county) with more than 300,000 

residents were required to submit more extensive paper work. However, 

NCUA revised its regulations in 2003, defining a local community as any 

city, county, or political equivalent in a single political jurisdiction, 

17National Credit Union Administration v. First National Bank & Trust Company 522 

U.S. 479 (1998).

18Pub. L. No. 105-219 § 101(b)(3); see 12 U.S.C. § 1759 (1994).

19According to NCUA officials, the 9.6 million potential membership figure for this credit 

union was based on the 2001 Census Bureau estimate of the population of Los Angeles 

County. Potentially, the credit union’s membership could be larger than the population of 

Los Angeles County since individuals who live outside the county but worship or work in 

the county would be eligible to join the credit union.

20See GAO, Credit Unions: Financial Condition Has Improved, but Opportunities Exist to 

Enhance Oversight and Share Insurance Management, GAO-04-91 (Washington, D.C.: Oct. 

27, 2003).
Page 12 GAO-07-29 Credit Union Membership and Executive Compensation

regardless of population size and eliminated the documentation 

requirements. 

As shown in table 1, the number of community-chartered federal credit 

unions doubled from 2000 through 2005, while the number of multiple-bond 

credit unions declined by about 22 percent. In spite of the recent decline, 

multiple-bond credit unions remain the largest group of federally chartered 

credit unions in number and in total membership and assets. However, 

community-chartered credit unions overtook multiple-bond credit unions 

as the largest of the three federal charter types in terms of average 

membership and average size in terms of assets beginning in 2003. 

Table 1: Number, Members, and Assets of Federal Credit Unions by Charter Type, from 2000 through 2005 

Federal Credit Unions 2000 2001 2002 2003 2004 2005

Number

Single 2,512 2,401 2,256 2,106 1,987 1,893

Multiple 3,045 2,933 2,842 2,684 2,534 2,385

Community 523 783 855 986 1,051 1,115

All charters 6,080 6,117 5,953 5,776 5,572 5,393

Actual members (in millions)

Single 7.0 7.1 7.0 7.0 6.8 7.3

Multiple 30.8 29.5 29.1 27.8 26.8 26.0

Community 5.2 7.2 8.4 11.4 13.3 14.6

All charters 42.9 43.8 44.6 46.2 46.9 47.9

Assets (in billions)

Single $43.3 $49.4 $54.4 $58.9 $62.1 $70.8

Multiple $168.8 $180.2 $196.6 $202.2 $204.7 $202.6

Community $27.1 $40.5 $50.3 $75.4 $91.9 $104.4

All charters $239.2 $270.1 $301.2 $336.6 $358.7 $377.8

Average membership (in thousands)

Single 2.8 2.9 3.1 3.3 3.4 3.9

Multiple 10.1 10.1 10.3 10.3 10.6 10.9

Community 9.9 9.2 9.8 11.6 12.6 13.1

All charters 7.1 7.2 7.5 8.0 8.4 8.9

Average assets (in millions)

Single $17.3 $20.6 $24.1 $28.0 $31.3 $37.4

Multiple $55.4 $61.4 $69.2 $75.3 $80.8 $85.0
Page 13 GAO-07-29 Credit Union Membership and Executive Compensation

Source: NCUA.

Growth of Federal 

Community Charter Credit 

Unions Has Been the Result 

of Charter Conversions 

Rather than New Credit 

Union Charter Approvals

To a large degree, the increase in number, membership, and assets of 

community charter credit unions can be attributed to charter conversions 

rather than to new credit union charter approvals. Between 2000 and 2005, 

NCUA approved 616 applications for federal community charters. Of these 

616 approved federal community charters, 600 were conversions from 

single- or multiple-bond credit unions while only 16 were for new credit 

union charters. As shown in table 2, the vast majority of the conversions to 

community charters—549 or about 92 percent—involved multiple-bond 

credit unions. 

Table 2: Federal Credit Union Conversions to Community Charters, from 2000 

through 2005

Source: NCUA.

According to NCUA, 

Community Charters Allow 

Federal Charters to Remain 

Viable and Can Provide 

Opportunities to Diversify 

Membership

NCUA officials indicated that changes in chartering policy have been 

triggered by factors such as the continued viability of federal credit unions 

in a changing economic environment and financial industry developments. 

NCUA believes that community charter expansion allows federal credit 

unions to attract a more diverse membership base. According to the 

officials, this in turn can enhance a credit union’s economic viability, safety 

and soundness, as well as provide greater opportunities to serve members 

of modest means. For example, officials explained that single- and 

Community $51.8 $51.8 $58.8 $76.5 $87.5 $93.6

All charters $39.3 $44.2 $50.6 $58.3 $64.4 $70.1

(Continued From Previous Page)

Federal Credit Unions 2000 2001 2002 2003 2004 2005

Year From single-bond From multiple-bond Total

2000 8 81 89

2001 10 83 93

2002 5 86 91

2003 14 121 135

2004 5 75 80

2005 9 103 112

Total 51 549 600
Page 14 GAO-07-29 Credit Union Membership and Executive Compensation

multiple-bond credit unions often tend to be organized around employer or 

occupationally based associations, which in turn creates greater economic 

risk exposure since the membership base is intertwined with the economic 

cycles of a particular employer or occupation.21 Additionally, NCUA 

officials noted that employer or occupational bonds result in a greater 

concentration of members with middle rather than lower incomes. Since 

community charters are organized around geographically based 

associations, credit unions would be able to provide individuals from a 

broad range of occupations and income levels in these communities with 

access to their products and services. However, community based credit 

unions would be vulnerable to regional downturns in the economy.

NCUA Programs Target 

Individuals of Low- and 

Moderate-Income, but 

Limited Data Preclude 

an Evaluation of Actual 

Service to Those 

Individuals

NCUA has established and increased participation in two programs and 

policies that are specifically designed to make credit union services more 

available to individuals of low- and moderate-income. NCUA’s Low Income 

Credit Union (LICU) program is designed to assist credit unions that can 

demonstrate that a majority of their members have a median household 

income less than 80 percent of the national household income or make less 

than 80 percent of the average for all wage earners. NCUA also has made it 

easier for federal credit unions, regardless of location, to expand their 

fields of membership into underserved areas (areas experiencing economic 

difficulty). Although federal credit unions increasingly have participated in 

these efforts in recent years, lack of data on the income levels of credit 

union members has made it difficult to determine how effective these 

programs have been in providing services to individuals of modest means. 

But, the limited existing data on income levels of credit union customers 

suggest that credit unions continue to lag behind banks in the proportion of 

customers that are of low- and moderate-income. NCUA has undertaken a 

pilot effort to capture information on the income characteristics of credit 

union members, but the data will not allow NCUA to reach statistically 

valid conclusions by charter type.

21For example, a Federal Reserve Bank of Atlanta research paper concluded that “there are 

material benefits of credit union membership diversification and that these benefits derive 

from expanded investment opportunities and reduced concentration risk.” See W. Scott 

Frame, Gordon V. Karels, and Christine McClatchey, “The Effect of the Common Bond and 

Membership Expansion on Credit Union Risk,” Federal Reserve Bank Atlanta Working 

Paper No. 2001-10, April 2001.
Page 15 GAO-07-29 Credit Union Membership and Executive Compensation

NCUA Encouraged Growth 

of Low Income Credit 

Unions and Adoption of 

Underserved Areas, but 

Cannot Quantify Impact of 

Programs on Use of Credit 

Union Services by 

Individuals of Modest 

Means 

As we reported in 2003, it has been generally accepted that credit unions 

have a historical emphasis on serving people with “small” or “modest” 

means. Congressional findings contained in CUMAA linked the tax-exempt 

status of credit unions, in part, to their “specified mission of meeting the 

credit and savings needs of consumers, especially persons of modest 

means.”22 NCUA incorporated this emphasis into its current strategic plan, 

which gives its mission as “facilitating the availability of credit union 

services to all eligible consumers, especially those of modest means 

through a regulatory environment that fosters a safe and sound credit 

union system.” According to NCUA officials, the changes in chartering 

requirements should allow credit unions to serve a more diverse 

membership, including those of modest means. 

In addition to approving more community charters, NCUA has encouraged 

credit union activity in other areas in an attempt to make credit union 

services more available to low-income individuals and underserved areas. 

According to NCUA, its LICU program is designed to assist credit unions 

serving predominantly low-income members in obtaining technical and 

financial services.23 Credit unions that receive a low-income designation 

receive certain opportunities, such as the following:

• greater authority to accept deposits from nonmembers such as 

voluntary health and welfare organizations;

• access to low-interest loans, deposits, and technical assistance through 

participation in NCUA’s Community Development Revolving Loan Fund;

22Pub. L. No. 105-219 § 2(4).

23Section 701.34 of NCUA’s Rules and Regulations defines the term “low-income members” 

as those members who make less than 80 percent of the average for all wage earners as 

established by the Bureau of Labor Statistics or whose annual household income falls at or 

below 80 percent of the median household income for the nation as established by the 

Census Bureau.
Page 16 GAO-07-29 Credit Union Membership and Executive Compensation

• ability to offer uninsured secondary capital accounts and include these 

accounts in the credit union’s net worth for the purposes of meeting its 

regulatory capital requirements;24 and

• a waiver of the aggregate loan limit for member business loans.

From 2000 through 2005, the number of LICUs grew from 632 to 1,032, an 

increase of more than 63 percent (see fig. 1). 

Figure 1: Low Income Credit Union Growth, 2000-2005

Credit union expansion into underserved areas also has increased in recent 

years. From 1994 through 1998, NCUA rules permitted federal credit 

unions, regardless of charter type, to include residents in low-income 

communities and associations in their fields of membership. 

24A “secondary capital instrument” is either unsecured debt or debt that has a lower priority 

than that of another debt on the same asset. These subordinated debt instruments are not 

backed or guaranteed by the federal share insurance funds.

Number of credit unions

Source: NCUA.

Year

0

200

400

600

800

1,000

1,200

2000 2001 2002 2003 2004 2005
Page 17 GAO-07-29 Credit Union Membership and Executive Compensation

In 1998, CUMAA expressly recognized that multiple-bond credit unions 

would be authorized to serve persons or organizations within an area that 

was underserved. The Federal Credit Union Act defines an underserved 

area as a local community, neighborhood, or rural district that is an 

“investment area” as defined by the Community Development Banking and 

Financial Institutions Act of 1994—that is, experiencing poverty, low 

income, or unemployment.25 NCUA’s Chartering and Field of Membership 

Manual (Interpretive Ruling and Policy Statement 03-1 or IRPS 03-1) 

allowed credit unions to include underserved areas in their fields of 

membership, without regard to location or changes to their charter type.26 

For example, NCUA recently approved a credit union in the state of 

Maryland to serve residents within an area of Washington, D.C., determined 

to be “underserved.” Between 2000 and 2005, the number of credit unions 

receiving NCUA approval to adopt underserved areas grew from 40 to 641. 

As shown in table 3, the largest proportion of the 641 credit unions 

approved through year-end 2005 were multiple-bond credit unions (410 or 

64 percent), followed by community-chartered credit unions (196 or 31 

percent). 

25Section 103(16) of the 1994 act defines “investment area” as follows: “The term 

‘investment area’ means a geographic area (or areas) including an Indian reservation that— 

(A) (i) meets objective criteria of economic distress developed by the Fund, which may 

include the percentage of low-income families or the extent of poverty, the rate of 

unemployment or underemployment, rural population outmigration, lag in population 

growth, and extent of blight and disinvestment; and (ii) has significant unmet needs for 

loans or equity investments; or (B) encompasses or is located in an empowerment zone or 

enterprise community designated under section 1391 of title 26.” 12 U.S.C. § 4702(16).

26According to NCUA’s Chartering and Field of Membership Manual, a federal credit union 

that desires to include an underserved community in its field of membership must first 

develop a business plan specifying how it will serve the community. At a minimum, the 

business plan, must identify the credit and depository needs of the community and detail 

how the credit union plans to serve those needs. The credit union will be expected to 

regularly review the business plan to determine if the community is being adequately 

served. The regional director may require periodic service status reports from a credit union 

about the underserved area to ensure that the needs of the community are being met as well 

as requiring such reports before NCUA allows a federal credit union to add an additional 

underserved area.
Page 18 GAO-07-29 Credit Union Membership and Executive Compensation

Table 3: Number of Credit Unions Approved to Expand into Underserved Areas, 2000-2005

Source: NCUA.

a

As of December 2005, seven state-chartered credit unions formerly had been federally chartered and 

had approved underserved areas.

However, recent changes in NCUA policies may limit the growth of the 

underserved areas program. In connection with a lawsuit instituted in 

November 2005, NCUA stopped permitting single-bond and community 

federal credit unions to include underserved areas in their fields of 

membership. This had the effect of allowing access only for multiple-bond 

credit unions, which is permitted specifically in a provision of the Federal 

Credit Union Act.27 In the lawsuit, the American Banker’s Association 

(ABA) challenged NCUA’s approval of community-chartered credit unions 

adding underserved areas to their field of membership. ABA argued that 

NCUA misinterpreted the Federal Credit Union Act by allowing a 

community federal credit union to expand into several communities in 

Utah. ABA contended that the Federal Credit Union Act allows multiplebond credit unions, but not community-chartered credit unions, to add 

underserved areas to their fields of membership. In response, NCUA 

subsequently amended its chartering regulations to limit the adoption of 

underserved areas to multiple-bond credit unions. NCUA’s final rule, 

incorporating these amendments, took effect on July 28, 2006.28 On July 20, 

2006, ABA announced that it had agreed to dismiss its lawsuit.

Year-end

Multiple-bond federal 

credit unions with 

underserved areas

Community-chartered 

federal credit unions with 

underserved areas

Single-bond federal credit 

unions with underserved 

areas

Total federal credit unions 

with approved underserved 

areasa

2000 22 17 0 40

2001 120 66 6 196

2002 238 127 14 386

2003 314 150 18 489

2004 369 170 24 570

2005 410 196 28 641

2712 U.S.C. § 1759(c)(2). 

2871 Fed. Reg. 36667 (Jun. 28, 2006). 
Page 19 GAO-07-29 Credit Union Membership and Executive Compensation

Despite the expansion into underserved areas and the LICU program, 

NCUA cannot specifically quantify the extent to which these programs 

have increased use of credit union services by individuals of modest 

means. As we reported in 2003 and will discuss in the following sections, 

limited data are available that specifically measure the income levels of 

credit union members and the services used by individuals of modest 

means. As a result, although NCUA data indicate increased adoption of 

underserved areas and increased participation in the LICU program, data 

do not exist to specifically show the extent to which these programs have 

increased services provided to individuals of modest means. 

Federal Reserve Survey 

Data Suggest that Credit 

Unions Continued to Serve a 

Lower Proportion of Lowand Moderate-Income 

Households than Banks

Despite the shift toward community charters and the increase in the 

number of credit unions participating in NCUA’s low-income and 

underserved programs, our analysis of data from the Federal Reserve’s 

2004 Survey of Consumer Finances (SCF) indicated that credit unions had 

a lower proportion of customers who were of low- and moderate-income 

than did banks.29 These results were similar to the results of our analysis of 

the Federal Reserve’s 2001 SCF data, which we discussed in our 2003 

report.30

29The SCF is conducted every 3 years and is intended to provide detailed information on the 

balance sheet, pension, income, and other demographic characteristics of U.S. households 

and their use of financial institutions. We used the term “household” rather than “family,” 

since the reporting unit of SCF more closely resembles the Census Bureau’s definition of 

“household” than its definition of “family.” It should be noted that SCF was not specifically 

designed to conduct comparative analyses of income levels of bank and credit union 

customers; however, SCF provides the best data currently available to undertake such a 

comparison. See appendix II for more information on our methodology and analysis of the 

SCF.

30GAO, Credit Unions: Financial Condition Has Improved, but Opportunities Exist to 

Enhance Oversight and Share Insurance Management, GAO-04-91 (Washington, D.C.: Oct. 

27, 2003). The analysis presented in this section employs the same methodology as in our 

2003 report.
Page 20 GAO-07-29 Credit Union Membership and Executive Compensation

We combined the 2004 SCF data into two main groups—households that 

only and primarily used credit unions (credit union customers) and 

households that only and primarily used banks (bank customers).31 We 

then computed the proportions of credit union customers and bank 

customers in each of these four income categories—low, moderate, middle, 

and upper. We based our income categories on criteria that financial 

regulators use to assess compliance with the Community Reinvestment 

Act, which is intended to encourage depository institutions to help meet 

the credit needs of the communities that they serve. Specifically, (1) a lowincome household had less than 50 percent of the national median 

household income; (2) a moderate-income household had an income of at 

least 50 percent, but less than 80 percent, of the national median household 

income; (3) a middle-income household had an income of at least 80 

percent, but less than 120 percent, of the national median household 

income; and (4) an upper-income household had an income of at least 120 

percent of the national median household income. We estimated that 14 

percent of credit union customers were of low-income and 17 percent were 

of moderate-income, compared with 24 percent and 16 percent for banks. 

We found the difference between the proportion of low-income customers 

at banks and credit unions to be statistically significant (that is, the 

evidence suggested that the difference between the two was not simply the 

result of chance). Moreover, we estimated that 20 percent of credit union 

customers were of middle-income and 49 percent were of upper-income, 

compared with 18 percent and 41 percent for banks. We found the 

difference between the proportion of upper-income customers at banks 

and credit unions to be statistically significant as well. 

In an effort to assess the extent to which credit unions served people of 

“modest means,” we combined households with low- or moderate-incomes 

into one group (as a proxy for modest means) and combined households

31We based our methodology for determining these classifications on work that Jinkook Lee, 

a professor and researcher at Ohio State University, performed. See Jinkook Lee and 

William A. Kelly Jr., “Who Uses Credit Unions?” (Prepared for the Filene Research Institute 

and the Center for Credit Union Research, 1999, 2001). Individuals who “primarily” used 

credit unions placed more than 50 percent of their assets in credit unions and those who 

“primarily” used banks placed more than 50 percent of their assets in banks. The term “use” 

refers to a household’s placement of assets in a checking, savings, or money market 

account.
Page 21 GAO-07-29 Credit Union Membership and Executive Compensation

with middle or upper incomes into another group.32 We found that 31 

percent of credit union customers were of “modest means,” compared with 

41 percent of bank customers, suggesting that banks served a higher 

proportion of people of “modest means.” The difference between banks 

and credit unions was statistically significant.

As shown in figure 2, the proportion of credit union customers that were in 

the upper-income category grew from 2001 to 2004. This increase, from 43 

percent to 49 percent, was statistically significant. Thus, the statistically 

significant difference between banks and credit unions in serving people of 

“modest means” that we documented in our 2003 report using 2001 data 

appears to have persisted in the 2004 data. Moreover, we found the decline 

from 2001 to 2004 in the proportion of credit union customers in the 

“modest means” category to be statistically significant. Additionally, the 

relatively high percentage of households in the moderate- and middleincome categories that used credit unions (37 percent) in the 2004 SCF may 

be reflective of credit union membership traditionally being based on 

occupational- or employer-based fields of membership. 

32As in our 2003 report, we were unable to find a definition of “modest means.” Thus, we 

used the group consisting of low- and moderate-income households as a proxy for the 

purposes of our analysis. 
Page 22 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 2: Comparison of Income Levels of Credit Union and Bank Customers, from 

2001 and 2004 SCF Data 

Note: Totals may not equal 100 percent due to rounding.

However, NCUA officials told us that since growth in the agency’s 

programs to expand services to lower-income persons and undeserved 

areas are relatively recent, it was probably too soon to expect any changes 

in the SCF data, with respect to customer income. Further, NCUA felt that 

it would take time for any results to appear in the data, as credit unions 

seeking to expand into new areas and reaching new types of customers 

would face a learning curve in their efforts. Additionally, NCUA officials 

stated that since most of the conversions to the community charter 

occurred within the last 5 years, within a reasonable period they expected 

to see a change in the customers these credit unions were serving. It should 

also be kept in mind that the latest available data from SCF are 2-years old, 

so any more recent changes would not be reflected in our analysis.

As we noted in our 2003 report, limitations in SCF data preclude its use in 

drawing definitive conclusions about the income characteristics of credit 

union members. Additional information—especially about the income 

0 20 40 60 10 30 50 70 90 80 100

Upper income

Middle income

Moderate income

Low income

2004

2001

2004

2001

Year

Credit

unions

Percentage

Banks

Sources: GAO and Federal Reserve.

16.4

24.2

25.7

14.5

19.3

16.4

16.1

16.6

21.7

18.1

17.5

20.2

42.6

41.3

40.7

48.8
Page 23 GAO-07-29 Credit Union Membership and Executive Compensation

levels of credit union members receiving consumer loans and other credit 

union services—would be required to assess more completely whom credit 

unions serve. As further noted in our 2003 report, NCUA has noted that 

credit union members were likely to have higher incomes than 

nonmembers because credit unions are occupationally based. As NCUA 

and others have noted—because of the statutory limitations on who can 

join federal credit unions—credit union membership is largely based on 

employment, and credit unions are restricted to the income composition of 

the individuals within fields of membership containing employed 

individuals. However, as we noted earlier, SCF provides the best data 

currently available regarding the income characteristics of credit union 

members.

To determine how sensitive our results were to our income categorization, 

we used median family income in addition to median household income to 

analyze the 2001 and 2004 SCF data.33 We found similar results using both 

median family and household income. Recognizing the limitations of the 

SCF and other available data, our 2003 report suggested that Congress 

consider requiring NCUA to obtain data on the extent that credit unions 

provided loans and other services to low- and moderate-income 

households within each federally insured credit union’s field of 

membership.34 

NCUA Has Pilot Survey to 

Measure Income of Credit 

Union Members, but Will 

Not Be Able to Use Results 

to Determine What Services 

Members at Various Income 

Levels Receive 

In response to your Committee’s concerns regarding the lack of available 

information to evaluate credit union member income and services, NUCA 

undertook a data collection effort to profile federal credit union member 

income information, identify the credit union services offered to credit 

union members, and provide information on the compensation of credit 

union executives. (We discuss executive compensation in more detail later 

in this report). As of August 31, 2006, NCUA had completed its data 

collection phase, as agreed with the Office of Management and Budget 

33See appendix II for greater detail on the SCF analyses we performed. In SCF, a household 

unit is divided into a ‘‘primary economic unit’’ (PEU) and everyone else in the household 

unit. The PEU is intended to be the economically dominant single individual or couple 

(whether married or living together as partners) and all other persons in the household unit 

who are financially interdependent with that economically dominant person or couple. The 

Census Bureau’s definition of “family” excludes the possibility of one-person household 

units, but its definition of “household” allows for them.

34GAO-04-91, p. 83.
Page 24 GAO-07-29 Credit Union Membership and Executive Compensation

under the Paperwork Reduction Act, which is intended to minimize the 

paperwork burden for nonprofit institutions.35 

NCUA took a random sample of 481 federal credit unions and relied on two 

different data collection methods to determine member incomes. NCUA 

officials told us they intended to compare the results of the two methods to 

determine the extent of any income differences and identify which of the 

two approaches might be relied upon in the future. One method involved 

obtaining information such as a credit union member’s zip code from 

NCUA’s Automated Integrated Regulatory Examination System to make 

projections of median household income. The other method involved using 

the street address and zip codes of credit union members and applying a 

software package that uses geo-coding to determine median family income 

averages. The officials told us that the software package is widely used in 

the banking industry to help make income determinations for fair lending 

examinations. 

NCUA also gathered information from the credit unions on the type of 

services the institutions offer to their members, including services that may 

be of value to members with lower incomes or little financial experience. 

Using the same sample of credit unions, NCUA collected information on 

whether or not certain services are provided by the credit union. For 

example, NCUA gathered information on the extent to which the sampled 

credit unions offer low-balance checking accounts and whether they offer 

some type of financial literacy training.

NCUA officials stated to us that there are limitations of the data collection 

effort. First, although the information collected represents a statistically 

valid random sample of the federal credit union population and will provide 

information on the income levels of overall federal credit union members, 

the data will not enable NCUA to make statistically valid conclusions by 

charter type or make conclusions about the extent of credit union services 

being provided to various income levels. The officials explained that to do 

so would require a larger and more time-consuming data collection effort, 

requiring an increase in sample from the current effort of 481 to a sample of 

almost 1,200 credit unions. According to the officials, a larger sample 

would not allow them to meet their goal to report results by year-end 2006. 

35The Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35) was intended, 

among other things, to minimize the paperwork burden for nonprofit institutions that 

results from the collection of information by or for the federal government.
Page 25 GAO-07-29 Credit Union Membership and Executive Compensation

NCUA indicated that despite these limitations, the data collected will add 

to the agency’s knowledge and should be valuable in deciding what actions, 

if any, might be appropriate over the longer term. At the time of our 

discussions, NCUA had not developed benchmarks to use as a measure for 

a “modest means” category related to member income data. NCUA 

indicated that its data collection effort will help the agency better 

understand the concept of “modest means” in relation to geographically 

dispersed, limited, and diverse fields of membership. NCUA’s data 

collection effort represents 61 percent of all credit unions because the 

regulator has oversight authority for federally chartered credit unions, 

while state governments have responsibility for overseeing the remaining 

39 percent of the credit unions (state-chartered credit unions). Finally, 

while NCUA’s data collection effort will be useful for establishing a 

baseline, NCUA officials stated that there are no plans to gather the 

information on a continual or routine basis. 

In response to a March 2006 congressional request, National Association of 

State Credit Union Supervisors (NASCUS) officials told us they and state 

regulatory agencies have initiated a data collection effort for statechartered credit unions. NASCUS will collect some information similar to 

that collected in the NCUA pilot, such as membership income and 

executive compensation.36 However, NASCUS also will collect data in two 

additional areas: credit union service organizations (CUSO) and UBIT.37 

NASCUS is using a methodology similar to NCUA’s to determine member 

income levels. According to NASCUS, they have developed a representative 

sample by applying different weights to unique state credit union 

characteristics, including size, field of membership, and charter type. 

Credit unions selected in the representative sample will respond to a 

questionnaire developed by state regulatory agencies. The questionnaire 

addresses membership, CUSOs, UBIT and executive compensation. As of 

September 2006, the officials indicated that the data collection effort had 

started, and that they expected the results to be available in the first 

quarter of 2007.

36To determine executive compensation for state-chartered credit unions, NASCUS is 

requesting information from credit unions in the states that file a consolidated IRS Form 

990. State-chartered credit unions are required to file this form, which includes executive 

compensation information. 

37A credit union service organization is a corporation, a limited liability corporation, or 

limited partnership owned by one or more credit unions that provides services such as 

insurance, securities, or real estate brokerage, primarily to credit unions or members of 

affiliated credit unions. 
Page 26 GAO-07-29 Credit Union Membership and Executive Compensation

Credit Unions Offered 

Better Interest Rates 

on Some Products, but 

the Extent to Which 

the Benefits of TaxExempt Status Have 

Been Passed to 

Members Is Unclear

Our analysis showed that credit unions tended to offer better interest rates 

than similarly sized banks for a variety of products and loans, but rate data 

alone cannot be used to determine the extent to which the benefits of tax 

exemption have been passed to members. We obtained and analyzed rate 

data for various savings products offered by credit unions and banks from 

2000 through 2005 and found that credit unions on average offered higher 

rates than comparably sized banks.38 Similarly, the rate data that we 

obtained for various loan products indicated that on average credit unions 

tended to offer lower interest rates than comparably sized banks, 

particularly for consumer loans such as automobile loans. However, it is 

important to note that interest rates during the period covered by our 

analysis were at historic lows. 

As seen in figure 3, rates offered by credit unions from 2000 through 2005 

on regular savings accounts on average were higher than those offered by 

similarly sized banks. However, the differences among the rates of 

comparably sized credit unions and banks tended to get larger as the size of 

the institutions increased. For example, for institutions with assets of less 

than $100 million, the difference between credit unions and banks averaged 

about 0.15 of a percentage point in this period, while the difference for 

institutions with assets greater than $1 billion averaged almost 0.7 of a 

percentage point. More recently, the gap in rates between larger credit 

unions and banks closed considerably; in the greater than $1 billion asset 

range, the gap was more than 1 percentage point in 2000, but about one-half 

of 1 percent in 2005. We observed similar trends throughout the period for 

other savings products such as money market accounts and certificates of 

deposit (see app. III).

38We engaged Datatrac Corporation—a market research and information technology 

company specializing in the financial services industry—to gather and analyze data on loan 

and savings products that thousands of credit unions and banks offered from 2000 through 

2005. Datatrac calculated average rates for each of the products for all institutions (divided 

into five distinct asset classes) over this period. See appendix III for more information on 

our rate analysis methodology and results.
Page 27 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 3: Regular Savings Account Rates of Credit Unions and Banks with Assets of $100 Million or Less and Assets Greater 

than $1 Billion, from 2000 through 2005

The difference between credit unions and banks was more pronounced for 

consumer loans. For example, over the 6-year period, the rates that credit 

unions charged for 60-month new car loans tended to be lower than the 

rates charged by similarly sized banks, by 1 or 2 percentage points. As 

shown in figure 4, the trend was consistent for the larger asset category as 

well. However, unlike savings products, the rate differences between credit 

unions and banks for car loans widened in 2005. These trends held true for 

rates for other consumer products such as credit cards. 

Institution 

assets range

Percentage rates offered by year

$100 million

or less

Greater than

$1 billion

2000 2002 200 2001 3 2004 2005

Credit unions

Banks

Sources: GAO and Datatrac.

1.9%

1.6

1.9

1.1

1.3 %

1.1

1.5

.8

.8%

.7

.9

.5

.7 %

.7

.9

.5

.8%

.8

1.1

.6

2.8

2.5

3.1

2.0

%
Page 28 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 4: Sixty-Month New Car Loan Rates of Credit Unions and Banks with Assets of $100 Million or Less and Assets Greater 

than $1 Billion, from 2000 through 2005

Although credit unions charged lower interest rates for consumer loans, 

similarly sized credit unions and banks charged virtually identical rates on 

larger loans such as mortgages, from 2000 through 2005 (see fig. 5). In some 

limited instances, banks offered lower rates than similarly sized credit 

unions. Also, larger institutions in general offered lower rates than smaller 

institutions. 

Figure 5: Thirty-Year Mortgage Loan Fixed Rates of Credit Unions and Banks with Assets of $100 Million or Less and Assets 

Greater than $1 Billion, from 2000 through 2005

a

Data based on responses of less than 10 institutions.

Institution 

assets range

Percentage rates offered by year

$100 million

or less

Greater than

$1 billion

2000 2002 200 2001 3 2004 2005

Credit unions

Banks

Sources: GAO and Datatrac.

6.7%

7.8

6.6

7.6

6.0%

7.3

5.8

7.1

5.0%

6.8

4.7

6.6

5.0%

6.6

4.7

6.6

5.7%

7.1

5.7

7.2

8.4

9.3

8.1

9.5

%

Institution 

assets range

Percentage rates offered by year

$100 million

or less

Greater than

$1 billion

2000 2002 200 2001 3 2004 2005

Credit unions

Banks

Sources: GAO and Datatrac.

7.2%

7.3

7.2

7.3

6.2%

6.3

6.2

6.1

6.0%

6.1

5.9

6.0

5.9%

6.0

5.9

5.8

6.4%

6.5

6.3

6.3

7.7

8.0

7.6a

7.5

%
Page 29 GAO-07-29 Credit Union Membership and Executive Compensation

Our analysis of deposit and loan rate data for credit unions and banks does 

not fully identify how the tax-exemption of credit unions might benefit 

credit union members. First, there may be other reasons for differences in 

rates beside tax differences. For example, loan rates may differ because of 

differences in borrower characteristics, such as creditworthiness, or 

because of geographic market differences. In addition, tax-exemption may 

benefit members in other ways than through loan and deposit rates. Credit 

unions might also charge lower fees than they otherwise would for services 

and products provided to members. We did not identify any comprehensive 

studies or data sources that addressed differences in fees charged by credit 

union and banks on a national basis. Unlike banks, credit unions can 

finance additional services and add to desired or required reserves through 

untaxed retained income. As a result of tax-exemption, credit unions may 

retain more income to add to reserves or to finance additional services than 

they would if they were taxed. 

Lack of Guidance and 

Criteria for Applying 

UBIT to State Credit 

Union Activities Makes 

Determining 

Compliance with the 

Requirement Difficult 

As stated earlier, state-chartered credit unions are subject to tax on 

unrelated business income while federal credit unions specifically are 

exempt. IRS has several ongoing examinations of state-chartered credit 

unions to determine which of their activities are subject to UBIT. Credit 

union trade groups have stated the need for guidance regarding the 

activities that IRS has determined to be subject to UBIT; IRS has stated that 

it plans to issue technical advice in 2007 after completing its reviews. 

Furthermore, the practice of allowing group statewide filings has made it 

more difficult for the IRS to scrutinize the activities of individual 

institutions to ensure compliance with the UBIT statute. IRS officials 

asserted that the agency plans to issue technical advice on the application 

of UBIT to state credit union activities, which they stated should improve 

credit union compliance with the statute. 

IRS Has Questioned Which 

State Credit Union Activities 

Should Be Subject to UBIT

UBIT is a tax on income derived by a tax-exempt entity from a trade or 

business that is regularly carried on and not substantially related to the 

exercise or performance of the purpose or function constituting the basis 

for the entity’s exemption. Under the Internal Revenue Code, statechartered credit unions are subject to UBIT, but federal credit unions are 

not subject to the tax because they are exempt federal instrumentalities
Page 30 GAO-07-29 Credit Union Membership and Executive Compensation

under a provision of the code.39 As shown in table 4, the amount of income 

subject to UBIT reported by state-chartered credit unions and the related 

taxes paid nearly doubled from 2000 through 2004 and totaled more than $5 

million over this period. 

Table 4: UBIT Income Declared and Taxes Paid by State-Chartered Credit Unions, 

2000-2004

Source: IRS.

a

Negative income (UBIT losses) are not included in the UBIT income figures.

As credit unions have increased the types of products and services that 

they offer, certain product offerings by state-chartered credit unions have 

resulted in IRS examining whether state-chartered credit unions are using 

their tax-exempt status to conduct business unrelated to their exempt 

purposes. In November 2005, an IRS commissioner informed the Congress 

of an IRS review of certain activities of state-chartered credit unions for 

purposes of UBIT.40The IRS has been reviewing activities that included the 

following:

• the sale of optional credit life insurance and credit disability insurance 

to members that would pay off the loan balances with the organization, 

if the borrower died or became disabled;

• the sale of “guaranteed auto protection” insurance, which pays the 

automobile loan balance in the event of loss or destruction of a vehicle 

to the extent it exceeds the value of the vehicle;

39See 26 U.S.C. §§ 501, 511; 12 U.S.C. § 1768.

Tax year Total UBIT incomea Total taxes paid

2000 $2,565,056 $691,094

2001 3,642,903 927,896

2002 9,820,709 1,281,938

2003 3,788,412 1,050,767

2004 4,646,782 1,377,726

Total $24,463,862 $5,329,421

40Statement of Steven T. Miller, Commissioner, Tax-Exempt and Government Entities 

Division, Internal Revenue Service, in testimony before the full committee of the House 

Committee on Ways and Means (Nov. 3, 2005).
Page 31 GAO-07-29 Credit Union Membership and Executive Compensation

• the sale of automobile warranties; 

• the sale of cancer insurance;

• the sale of accidental death and dismemberment insurance;

• ATM fees charged to nonmembers;

• the sale of health or dental insurance;

• the marketing of mutual funds to members; and

• the marketing of other insurance and financial products.41

According to IRS officials, the agency had 50 ongoing examinations of 

state-chartered credit unions for UBIT purposes as of September 2006.

Determining the applicability of UBIT to state credit union activities is a 

complicated proposition because it depends on the relationship of the 

activities to credit unions’ tax-exempt purposes or functions. However, as 

IRS stated in a Technical Advice Memorandum, neither the Internal 

Revenue Code nor IRS regulations enumerate the functions of a credit 

union exempt under section 501(c)(14) of the code.42 The tax-exemption is 

based on what can be described as structural features, specifically the 

institution’s mutuality and nonprofit operations, whether it is organized 

and operated in accordance with state law, and whether its members share 

a common bond.43 

Groups Representing state-chartered credit unions and the Credit Union 

National Association have stated that IRS has not provided sufficient 

guidance on which credit union activities are or are not subject to UBIT. 

According to IRS officials, IRS is planning to issue specific information in 

the form of Technical Advice Memoranda as a result of its examination of

41Statement of Steven T. Miller.

42Technical Advise Memorandum 9548001 (Mar. 23, 1995).

43See G.C.M. 34612, Exempt Status of State Chartered Credit Unions (Sept. 14, 1971); see also 

G.C.M. 37467 Exemption from Tax On Corporations – Credit Unions (Mar. 21, 1978), 

G.C.M. 38348.
Page 32 GAO-07-29 Credit Union Membership and Executive Compensation

credit union UBIT activities in the first quarter of 2007.44 IRS believes that 

the Technical Advice Memoranda will more clearly articulate specific 

activities of state-chartered credit unions that can be subject to the tax and 

improve compliance with the statute.

Group Filings Make It More 

Difficult for IRS to 

Scrutinize the Activities of 

Individual Credit Unions

Not-for-profit entities that generate more than $1,000 in unrelated business 

income are required to disclose on Form 990 that they have generated such 

income and whether they have filed an Exempt Organization Business 

Income Tax Return (Form 990-T) with IRS declaring the income and related 

UBIT liability. State-chartered credit unions are required to file Form 990, 

and Form 990-T if they generate unrelated business income in excess of 

$1,000. However, according to IRS officials, an IRS ruling allows state 

regulatory authority in some states to file forms 990 on a groupwide basis; 

that is; one form can be filed on behalf of all state-chartered credit unions 

in a particular state.45 Thus, a state-chartered credit union located in one of 

those states could generate taxable unrelated business income without 

having to file a Form 990, individually. According to IRS officials, the group 

ruling applies to 34 states, and group returns in about 21 of those states 

have been filed in recent years. Of the 21 states, only 1 has asserted on the 

Form 990 that UBIT was generated in that state. 

IRS stated it would be able to positively verify if an individual credit union 

declaring unrelated business income in excess of $1,000 on its Form 990 

also filed a Form 990-T. However, the agency currently does not have a 

process in place to review group returns to ensure that the credit unions 

filed the Form 990-T. As a result, IRS cannot systematically determine if 

credit unions that were included in group returns and generated unrelated 

business income properly filed a Form 990-T declaring such income and 

paid UBIT. According to IRS officials, the group exemption process was 

instituted to relieve IRS of the burden of individually processing a large 

number of applications from organizations sharing a common affiliation 

44Technical Advice Memoranda are issued in response to technical or procedural question 

that develop during proceedings on the interpretation and proper application of tax law, tax 

treaties, regulations, revenue rulings, notices, or other precedents published by the Office of 

Chief Counsel. Proceedings include the examination of a taxpayer’s return.

45IRS requires that every year, each local organization (in this case, credit union) authorize 

in writing the central organization that prepares the group return to include it in the group 

return and must declare, under penalty of perjury, that the information it submits to be 

included in the group return is true and complete.
Page 33 GAO-07-29 Credit Union Membership and Executive Compensation

and that are operated for the same general purpose. For example, IRS 

noted that some organizations, including churches and veterans 

organizations, have a great number of subordinate organizations that are 

similarly situated. IRS officials agreed that requiring all state-chartered 

credit unions to file an individual Form 990 could enhance the agency’s 

ability to scrutinize the activities of individual credit unions to determine 

whether they were subject to UBIT. However, officials also noted that it 

was not clear if the benefits of eliminating the group filing exemption 

would exceed the costs—both to IRS as well as to the individual credit 

unions. Specifically, officials noted that credit unions that are currently 

included in group returns would each need to file for recognition as a taxexempt organization and incur annual costs to prepare and file individual 

Form 990. Moreover, IRS officials noted that they expect that the Technical 

Advice Memoranda that the agency is planning to issue in early 2007 would 

improve credit union compliance with UBIT filing requirements. 

Alternatives Exist to 

Improve the 

Transparency of Credit 

Union Executive and 

Director Compensation 

Federal credit union executive compensation is not transparent. Federal 

credit unions are not required to file reports, including the IRS Form 990 

required for most other tax-exempt organizations that would provide 

information on executive and director compensation. NCUA legal opinions 

have stated that member access to credit union records is generally a 

matter of state law but that federal credit union members “have inspection 

rights similar to those enjoyed by a shareholder in a corporation” and that 

“the general rule in most jurisdictions is that a shareholder is entitled to 

inspect corporate minutes and other records as long as he has a proper, 

nonvexatious purpose.”46 However, we could not determine to what extent 

credit unions and credit union members were aware of this information. 

We identified a number of credit union and bank executive compensation 

surveys, but data and methodological limitations precluded us from making 

direct comparisons of executive compensation. NCUA has collected 

executive compensation information for federal credit unions as part of its 

efforts to assess who credit unions serve. 

46NCUA Letters 06-0127B (Feb. 6, 2006); 96-0541 (Jun. 14, 1996); and 89-0525 (Jun. 8, 1989).
Page 34 GAO-07-29 Credit Union Membership and Executive Compensation

Public Reporting of 

Executive Compensation 

for Federal Credit Unions Is 

Limited and Regulator 

Scrutiny of Compensation Is 

Primarily Reviewed for 

Safety and Soundness 

Concerns 

The issue of transparency and disclosure of executive compensation has 

become an important topic, both for tax-exempt entities and publicly held 

companies. Credit union members bear some similarity to public company 

shareholders in that they are “owners” and vote for boards of directors that 

are entrusted to oversee executive compensation. The importance of 

disclosure of executive and director compensation was illustrated in recent 

changes adopted by SEC in July 2006 to increase transparency and 

disclosure by public companies and reflect the increasing focus on 

corporate governance and director independence. According to SEC, the 

objective was to provide investors with a clearer and more complete 

picture of the compensation earned by a company’s principal executive 

officer, principal financial officer, highest paid executive officers, and 

members of its board of directors. 

In contrast, credit union executive compensation is not transparent 

because credit unions are not required to file publicly available reports 

such as the IRS Form 990 that disclose executive compensation data. For 

tax-exempt organizations, IRS has noted that some members of the public 

rely on Form 990 as the primary or sole source of information about a 

particular organization. Most tax-exempt organizations with gross receipts 

that are normally more than $25,000 are required to file the Form 990 

annually. IRS also uses these forms to select organizations for 

examinations. Figure 6 shows the compensation information collected on 

the Form 990. 
Page 35 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 6: Compensation Information Filed in IRS Form 990

On August 23, 1988, IRS issued a determination that federal credit unions 

are not required to annually file a Form 990 because of their status as taxexempt instrumentalities under section 501(c)(1) of the Internal Revenue 

Code. Also, as noted previously, some state-chartered credit unions file 

through a group filing process (21 states in 2004). For these states, IRS 

receives only the name and addresses of individual credit unions. As a 

Source: IRS.
Page 36 GAO-07-29 Credit Union Membership and Executive Compensation

result, scrutiny of the compensation of credit union executives and other 

key personnel is limited. 

Additionally, boards of directors of credit unions receive limited 

compensation because the directors serve in nonpaid positions. According 

to the Federal Credit Union Act, no member of a federal credit union board 

may be compensated; however, a federal credit union may compensate one 

individual who serves as an officer of the board.47 Although the credit union 

may not pay its board of directors a salary, it may provide or reimburse 

directors for such things as mileage; insurance, including life, health, and 

accident insurance; and travel expenses. In contrast, bank boards of 

directors may receive fees such as an annual retainer for serving on the 

board, profit sharing, professional fees, and other bonuses. Also, according 

to one bank survey, about half of the banks that responded indicated that 

their compensation fees were based strictly upon attendance.

According to NCUA, executive compensation is assessed during the credit 

union’s examination to determine its reasonableness as it relates to safety 

and soundness concerns. As stated in our 2003 report, NCUA recently 

moved from an examination and supervision approach that primarily was 

focused on reviewing transactions to an approach that focuses resources 

on high-risk areas within a credit union.48 To complement the risk-focused 

approach and allow NCUA to better allocate its resources, the agency 

adopted a risk-based examination program in July 2001. NCUA officials 

explained that supervisory examinations, including reviews of credit union 

executive compensation, follow a risk-focused approach. The officials told 

us that examiners would review executive compensation in instances of 

safety or soundness concerns, such as compensation arrangements that 

significantly exceeded compensation paid to persons with similar 

responsibilities in credit unions of similar size and in similar locations. 

NCUA also stated that since it has not found a systemwide issue with 

executive compensation, it has not considered it necessary to collect or 

aggregate executive compensation data. Additionally, we found NCUA’s

4712 U.S.C. §§1761(c) and 1761a.

48GAO-04-91, p. 42.
Page 37 GAO-07-29 Credit Union Membership and Executive Compensation

guidance on compensation similar in content with the Federal Financial 

Institutions Examination Council’s (FFIEC) Interagency Guidelines 

Establishing Standards for Safety and Soundness.49

At various times, credit unions and others have questioned whether 

members have the right to obtain and inspect credit union information, 

including salary data. NCUA legal opinions have stated that member access 

to credit union records is generally a matter of state law, and federal credit 

unions should look to the appropriate state corporate law. In a letter dated 

June 14, 1996, NCUA’s Associate General Counsel said that federal credit 

union members “have inspection rights similar to those enjoyed by a 

shareholder in a corporation” and that “state law determines the types of 

information and documents, and the degree of access, available to 

shareholders/members.”50 The letter stated that “the general rule in most 

jurisdictions is that a shareholder is entitled to inspect corporate minutes 

and other records as long as he has a proper, nonvexatious purpose.” 

However, it is unclear to what extent federal credit union members and 

credit union personnel are aware of a member’s right to inspect records, or 

how difficult or easy it would be for credit union members to obtain 

information such as salaries.

Industry Surveys That 

Address Executive 

Compensation Are Limited, 

and NCUA Has Released Its 

Compensation Data

We could not identify any surveys or studies that directly compared credit 

union executive compensation with compensation provided by similarly 

sized banks. However, we did identify a few credit union and bank trade 

group surveys that address executive compensation for their respective 

industries.51 Credit union and bank trade group officials told us that these 

surveys generally are used to help their industries gauge comparable pay by 

job title and an institution’s asset size. 

49According to its Web site, FFIEC is a formal interagency body empowered to prescribe 

uniform principles, standards, and report forms for the federal examination of financial 

institutions by the Federal Reserve, the Federal Deposit Insurance Corporation, NCUA, the 

Office of the Comptroller of the Currency, and the Office of Thrift Supervision and to make 

recommendations to promote uniformity in the supervision of financial institutions.

50Letter from Richard S. Schulman, NCUA Associate General Counsel, Re: Aberdeen Proving 

Ground Federal Credit Union, NCUA 96-0541 (Jun. 14, 1996).

51Credit Union National Association, 2005-2006 Complete Credit Union Staff Salary 

Survey and America’s Community Bankers, 2005 32nd Annual Compensation Survey.
Page 38 GAO-07-29 Credit Union Membership and Executive Compensation

Several limitations exist that preclude us from directly comparing credit 

union and bank executive compensation. While these surveys provided 

information on the cash compensation by job title, institution, and asset 

size, the surveys did not provide detailed information on the other forms of 

compensation received to allow a direct comparison of credit union and 

bank executive compensation. Some benefits include items such as 

retirement plans, stock options (for bank executives), employment 

contracts, severance pay, and perks such as vehicle allowances. Due to the 

lack of consistency and availability of data beyond cash compensation in 

these surveys, it is difficult to make any overall comparisons between 

credit union and bank executive compensation. Other limitations to these 

surveys include, in some instances, low response rates for the three 

executive positions (chief executive officer, chief financial officer, and 

chief operating officer). Further, the data collected in these surveys were 

based on self-reported information from the survey participants. Appendix 

IV provides more detail on the survey limitations and the results of 

executive compensation for credit unions and banks that responded to 

their respective surveys. 

As mentioned previously, NCUA has collected credit union executive 

compensation data and reported compensation information on the topthree executive positions—chief executive officer, chief financial officer, 

and chief operating officer. NCUA collected 2005 compensation 

information from the IRS Form 1099 and Form W-2 (wages and salary 

data). NCUA officials told us that the sample size will enable them to 

project industry averages for the federal credit union population and be 

stratified into two statistically valid subsets based on the asset size of the 

credit unions surveyed. However, the NCUA effort provides a snapshot of 

federal credit union compensation for a single year, 2005, and it is unclear 

whether NCUA will conduct future reviews of credit union executive 

compensation. 

NCUA also suggested alternative methods of collecting compensation 

information and increasing the transparency of the information. During our 

review, NCUA indicated that it was considering amending the quarterly 

“call reports” that all federally insured credit unions are required to submit 

to NCUA to include compensation and benefit data for senior executive 

officers. Call reports are available for public inspection, and NCUA 

routinely reviews them. Currently, the call report collects only aggregate 

data on employee compensation and benefits. Additionally, NCUA officials 

indicated that requiring credit unions to disclose credit union salary 

information to members during public meetings would be another 
Page 39 GAO-07-29 Credit Union Membership and Executive Compensation

alternative for increasing the transparency of executive and director 

compensation.

Conclusions Since the passage of CUMAA and subsequent changes to NCUA regulations 

that permitted credit unions to serve larger geographic areas and enlarged 

fields of membership, community-chartered federal credit unions have 

grown in number and asset size. As a result, the common bonds of 

occupation or employment that traditionally existed between credit union 

members have become attenuated, blurring one of the historical 

distinctions between credit unions and other depository institutions. But, 

credit unions do retain distinctions in terms of structure and governance, 

and they retain their tax-exempt status. 

One perceived rationale for the credit union tax exemption, expressed by 

Congress, is the notion that credit unions serve individuals of small or 

modest means. Yet, it is difficult to determine to what extent credit unions 

actually serve individuals of modest means. Although NCUA has 

established programs to expand services to this group, the relative 

newness of the programs, combined with the absence of long-term, 

continuing, and systematic collection of data on the income of credit union 

members, currently preclude an assessment both of the programs’ 

effectiveness and overall industry performance. However, limited data 

(SCF) suggest that in both 2001 and 2004, credit unions had a smaller 

proportion of low- and moderate-income customers than banks. NCUA 

officials have noted that it may be too soon for data to fully reflect NCUA 

initiatives and industry activities and that growth in the community charter 

will allow credit unions to draw members from larger and more diverse 

populations, including people of modest means. 

While NCUA has taken steps to identify the income levels of credit union 

members, several limitations in NCUA’s data collection effort will make it 

difficult to fully assess the extent to which credit unions have been serving 

low- and moderate-income populations. Notably, the data will not stratify 

information about member incomes by specific charter types or identify 

the specific financial services that credit union members have been using. 

Obtaining more detailed information on credit union member income and 

the financial services they used could help NCUA track the performance of 

credit unions and help monitor progress over time. Furthermore, this 

information would provide Congress and the public with clear evidence 

that, as CUMAA notes, credit unions were accomplishing their “specified 

mission” of “meeting the credit and savings needs of consumers, especially 
Page 40 GAO-07-29 Credit Union Membership and Executive Compensation

persons of modest means.” However, the NCUA effort, while laudable, 

currently is confined to a pilot project. The value and utility of the 

information collected would be greatly enhanced if NCUA were to move 

beyond a pilot and continue the data collection effort and address some of 

the limitations of the pilot. 

Although state-chartered credit unions have increased the amount of UBIT 

paid in recent years, determining which credit union activities are subject 

to the UBIT is difficult. IRS is currently conducting examinations of statechartered credit unions and plans to release technical advice early in 2007 

that the agency believes will more clearly explain which credit union 

activities are subject to the UBIT. While state-chartered credit unions are 

required to file information returns (Form 990), the group that are filed 

constrain IRS’s ability to scrutinize credit union activities related to UBIT 

because they convey little information about individual credit unions. 

However, IRS is planning to issue technical advice describing specific state 

credit union activities that may be subject to the UBIT to help ensure state 

credit union payment of the tax. 

Finally, the transparency of executive compensation is an important issue 

for private and public companies alike. In the private sector, SEC’s recent 

efforts to increase the transparency of publicly held companies underscore 

the importance of enhancing accountability and greater disclosure of 

information. In contrast, credit union executive compensation is not 

transparent due to the lack of information available to the public. Increased 

public opportunities to review executive salaries would promote greater 

credit union accountability, similar to requirements for publicly held 

companies. While the Form 990 is an avenue for increasing both the 

quantity and transparency of publicly available information about 

executive compensation at credit unions, federal credit unions are not 

required to file the form. However, the public could be given other 

opportunities to review credit union activities. For example, NCUA could 

require all federally insured credit unions to include compensation and 

benefit data for senior executive officers in the call reports that are 

submitted on a quarterly basis—an option that NCUA officials indicated 

was under current consideration. Or, NCUA could require federal credit 

unions to disclose or make available credit union records, such as senior 

executive salary information, to members during annual meetings. 
Page 41 GAO-07-29 Credit Union Membership and Executive Compensation

Recommendations for 

Executive Action

To help ensure that credit unions are fulfilling their tax-exempt mission of 

providing financial services to their members, especially those of low or 

moderate incomes, we recommend that the Chairman of NCUA 

systematically obtain information on the income levels of federal credit 

union members to allow NCUA to track and monitor the progress of credit 

unions in serving low- and moderate-income populations. NCUA’s recent 

pilot survey to measure the income of credit union members could serve as 

a starting point to obtain more detailed information on credit union 

member income. Ideally, NCUA should expand its survey to allow the 

agency to monitor member income characteristics by credit union charter 

type, obtain information on the financial services that low- and moderateincome members actually use, and monitor progress over time. 

To increase the transparency of executive compensation and enhance 

accountability of credit unions, we recommend that the Chairman of NCUA 

take action to ensure that information on federal credit union executive 

compensation is available to credit union members and the public for 

review and inspection. To achieve this, NCUA may want to consider 

options such as requiring federal credit unions to include specific 

information on executive compensation in call reports or issuing 

regulations that would require all federal credit unions to make executive 

compensation information available to members of credit unions at annual 

meetings.

Agency Comments and 

Our Evaluation

We provided a draft of this report to the Chairman of NCUA and the 

Commissioner of IRS for their review and comment. We received written 

comments from NCUA that are summarized below and reprinted in 

appendix V. In addition, we received technical comments from IRS that 

have been incorporated into this report as appropriate. 

In its comment letter, NCUA indicated that the agency’s staff have 

recommended that the NCUA board consider taking actions consistent 

with the recommendations made in our report. NCUA, however, expressed 

concerns with certain important aspects of the draft report. In particular, 

NCUA stated in its letter that a meaningful comparison between federally 

chartered credit unions and other financial institutions should include an 

in-depth assessment of their structural and governance differences. NCUA 

also noted that the substantive differences among federal credit unions in 

charter types and fields of membership significantly impact, among other 

things, who credit unions serve and how they operate and provide services. 
Page 42 GAO-07-29 Credit Union Membership and Executive Compensation

We agree that there are important structural and governance differences 

between credit unions and other depository institutions, which are 

highlighted in the report. For example, page one of the draft and current 

report notes that credit unions, unlike banks, are (1) not-for-profit entities 

that build capital by retaining earnings (they do not issue capital stock); (2) 

member-owned cooperatives run by boards elected by the membership; (3) 

subject to field of membership requirements that limit membership to 

persons sharing certain circumstances, such as a common bond of 

occupation or association; and (4) exempt from federal income tax. 

Additionally, we agree that differences in charter types and fields of 

membership are important factors that should be considered in assessing 

who credit unions serve. However, as we note in the report, statistically 

reliable data on credit union members by charter type and field of 

membership were not available at the time of our review. The lack of this 

type of data was the primary basis for the report’s recommendation that 

NCUA systematically obtain information on the income levels of federal 

credit union members. We are encouraged by NCUA’s pilot effort to obtain 

information on the income levels of federal credit union members and 

continue to believe the value of the information collected would be greatly 

enhanced if NCUA were to continue its data collection efforts and address 

some of the limitations of the pilot.52 Specifically, NCUA’s data collection 

efforts could be strengthened by (1) providing benchmark data, such as 

general population income statistics or other appropriate measures, to 

allow comparisons with the data collected on the income levels of credit 

union members; (2) obtaining data on the extent of services offered by 

credit unions (e.g., free checking accounts, no charge ATMs, low-cost wire 

transfers, etc.) are being used by income category; (3) expanding the data 

collection effort to allow the results to be projectable by charter type; and 

(4) conducting the study on a systematic or periodic basis to assess the 

extent of progress over time. 

NCUA’s letter also stated that it was inaccurate and inappropriate to 

measure the success of federally chartered credit unions in serving persons 

of modest means by reference only to the low- and moderate-income 

categories associated with the Community Reinvestment Act. Specifically, 

NCUA noted that there was legal and historical evidence that the term 

modest means, as used by Congress in the context of the Federal Credit 

Union Act, is intended to include a broader range of individuals than those 

52See NCUA, Member Service Assessment Pilot Program, A Study of Federal Credit Union 

Service (Washington, D.C.: Nov. 3, 2006), available at www.ncua.gov. 
Page 43 GAO-07-29 Credit Union Membership and Executive Compensation

in low- and moderate-income categories. As we noted in the report, neither 

the Federal Credit Union Act nor NCUA have established definitions as to 

what constitutes modest means. Thus, we used the group consisting of lowand moderate-income households as a proxy for persons of modest means 

for the purposes of our analysis. This allowed us to use the definitions 

established for the Community Reinvestment Act as the basis for income 

categories used on our analysis. Our analysis not only included 

comparisons between credit unions and banks of low- and moderateincome households but also middle and upper income households for both 

the 2001 and 2004 SCF. This analysis shows that between 2001 and 2004 

credit unions continued to serve a higher proportion of middle- and upperincome households and a smaller proportion of low- and moderate-income 

households than did banks. 

In its letter, NCUA noted that our income category benchmarks were 

inconsistent with the specific definitions of the CRA categories the other 

federal financial regulators used—specifically the use of national versus 

local median income for our benchmarks. Because the most 

comprehensive and statistically reliable data available on the income 

characteristics of credit union and bank customers at the time of our 

review—the Federal Reserve’s Survey of Consumer Finances—were 

nationally representative, we used national median income measures as the 

basis for our income categories whereas the categories used for the 

Community Reinvestment Act are based on more local measures.

NCUA’s letter also expressed concerns about the reliability of conclusions 

reached using the Federal Reserve’s Survey of Consumer Finances data. 

Specifically, NCUA noted that the SCF was not designed for reliable 

income comparisons between credit union members and bank customers. 

As we noted in our draft and current report, we agree that the SCF was not 

specifically designed to conduct comparative analyses of income levels of 

bank and credit union customers; however, SCF provides the best data 

currently available to undertake such a comparison. As we reported in 

2003, we analyzed the SCF because it is a respected source of publicly 

available data on financial institution and consumer demographics that is 

nationally representative and because it was the only comprehensive 

source of publicly available data that we could identify with information on 

financial institutions and consumer demographics. Moreover, our draft and 

current report noted limitations in SCF data that preclude drawing 

definitive conclusions about the income characteristics of credit union 

members. NCUA also provided additional detailed written comments as an 
Page 44 GAO-07-29 Credit Union Membership and Executive Compensation

enclosure to its letter, which we have reprinted in appendix V with our 

responses. 

As we agreed with your office, unless you publicly announce the contents 

of this report earlier, we plan no further distribution until 30 days from the 

date of this letter. At that time, we will send copies of the report to the 

Ranking Member, House Committee on Ways and Means; other interested 

congressional committees and subcommittees; the Chairman, NCUA; and 

the Commissioner, IRS. We will make copies available to others upon 

request. In addition, the report will be available at no charge on the GAO 

Web site at http://www.gao.gov.

If you have any questions concerning this report, please contact Yvonne D. 

Jones at (202) 512-8678. Contact points for our Office of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

See appendix VI for a list of other staff who contributed to the report.

Sincerely yours, 

Yvonne D. Jones

Director, Financial Markets

and Community Investment
Page 45 GAO-07-29 Credit Union Membership and Executive Compensation

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

Our report objectives were to (1) assess the effect of the 1998 Credit Union 

Membership Access Act (CUMAA) on federal credit union membership and 

charter expansion, (2) review the National Credit Union Administration’s 

(NCUA) efforts to expand credit union services to low- and moderateincome individuals, (3) compare rates offered by credit unions to 

comparably sized banks as one indicator of how tax-exemption might 

benefit credit union members, (4) discuss issues associated with the 

application of the federal unrelated business income tax (UBIT) to credit 

unions, and (5) assess the transparency of credit union executives and 

board member compensation. 

Effects of CUMAA and 

NCUA Regulations and 

NCUA Efforts to Serve 

Low- and ModerateIncome Individuals

To study the impact of CUMAA on federal credit union membership and 

charter expansion, we reviewed and analyzed the legislative history for 

CUMAA and compared its provisions with NCUA interpretive rulings and 

policy statements in effect before and after the enactment of CUMAA. In 

addition, we interviewed NCUA officials and industry representatives and 

met with credit union and banking trade groups including the National 

Association of Federal Credit Unions, National Association of State Credit 

Union Supervisors (NASCUS), Credit Union National Association, 

America’s Community Bankers, and Independent Community Bankers to 

obtain their viewpoints on how CUMAA and NCUA regulation affected 

credit union chartering and field of membership. To obtain information 

about state credit union chartering and fields of membership, we held 

discussions and reviewed documentation provided by NASCUS. Finally, we 

obtained electronic files from NCUA that contained annual call report 

financial data (Form 5300) of all federally chartered credit unions for yearends 2000 through 2005. The information included the number of credit 

unions, actual and “potential” membership (that is, people within a credit 

union’s field of membership but not members of the credit union), assets, 

charter approvals, charter conversions, and charter expansions. 

To identify the results of NCUA programs intended to expand credit union 

services to low- and moderate-income individuals and underserved areas, 

we analyzed NCUA call report data for the low-income-designated credit 

unions and credit unions that expanded into underserved areas for yearends 2000 through 2005. The data included information on the number of 

credit unions participating in these programs, their asset size, and their 

membership. 

We reviewed NCUA-established procedures for verifying the accuracy of 

the Form 5300 database and found that the data are verified on a yearly 
Appendix I

Objectives, Scope, and Methodology

Page 46 GAO-07-29 Credit Union Membership and Executive Compensation

basis, either during each credit union’s examination or through off-site 

supervision. In addition, we cross checked the December 2000 to 

December 2002 data that we recently received with the same data in our 

2003 report. We determined that the data were sufficiently reliable for the 

purposes of this report. 

Further, we analyzed existing data on the income levels of credit union 

customers. Specifically, we analyzed both the 2001 and 2004 releases of the 

Board of Governors of the Federal Reserve System’s (Federal Reserve) 

Survey of Consumer Finances (SCF). The SCF is conducted every 3 years 

and is intended to provide detailed information on the balance sheets, 

pension, incomes, and demographics of U.S. households and their use of 

financial institutions.1

 Because some households use both banks and credit 

unions, we performed our analyses based on the assumption that 

households can be divided into four user categories—those who use credit 

unions only, those who primarily use credit unions, those who use banks 

only, and those who primarily use banks.2

 “Primarily use” banks (or credit 

unions) means placing more than 50 percent of a household’s assets in 

banks (or credit unions). As in our prior report, we created four income 

categories that are based on those used by financial regulators as part of 

Community Reinvestment Act examinations—low, moderate, middle, and 

upper—to classify these households (see table 5).3

 As in our 2003 report, 

we were unable to find a definition of “modest means”; thus, to assess the 

extent to which credit unions served people of “modest means,” we 

combined households with low- or moderate-incomes into one group as a 

proxy for modest means.

1

We use the term, “household,” rather than “family,” since the subject group of the SCF more 

closely resembles the U.S. Census Bureau’s definition of “household” than its definition of 

“family.”

2

Our analysis was based on an approach developed by Jinkook Lee of Ohio State University. 

See Jinkook Lee and William A. Kelly Jr., “Who Uses Credit Unions?” (Prepared for the 

Filene Research Institute and the Center for Credit Union Research, 1999, 2001).

3

The Community Reinvestment Act is intended to encourage depository institutions to help 

meet the credit needs of the communities in which they operate, including low- and 

moderate-income neighborhoods, consistent with safe and sound banking operations. It was 

enacted by the Congress in 1977 (12 U.S.C. 2901).
Appendix I

Objectives, Scope, and Methodology

Page 47 GAO-07-29 Credit Union Membership and Executive Compensation

Table 5: Definition of Income Categories Used for Community Reinvestment Act 

Examinations

Source: 12 C.F.R. 228.12(n).

Finally we discussed with NCUA officials the design and methodology of its 

ongoing pilot project to measure the income levels of federal credit union 

members. We also discussed with NASCUS officials their effort to measure 

the income levels of state-chartered credit union members. 

Comparison of Interest 

Rates Offered by Credit 

Unions With Those at 

Comparably Sized 

Banks 

To compare the rates of credit unions with those at comparably sized 

banks, we engaged the services of Datatrac Corporation—a market 

research, information technology company specializing in the financial 

services industry—to provide data on 15 loan and savings products offered 

by credit unions and banks.4

 Datatrac calculated the average rates for each 

of these products by five distinct peer groups for asset size, for about 2,000 

credit unions and 4,000 banks (see table 6). 

Categories Definitions

Low income Income less than 50 percent of the Metropolitan Statistical Area’s 

(MSA) median income

Moderate income Income at least 50 percent and less than 80 percent of the 

MSA’'s median income

Middle income Income at least 80 percent and less than 120 percent of the 

MSA’s median income

Upper income Income at least 120 percent or more of the MSA’s median 

income

4

Datatrac is a privately held company that specializes in financial industry research. 

Specifically, Datatrac monitors and analyzes rate trends on popular deposit and lending 

products for thousands of financial institutions nationwide. Institutions voluntarily provide 

data to Datatrac on a weekly basis for inclusion in the company’s database.
Appendix I

Objectives, Scope, and Methodology

Page 48 GAO-07-29 Credit Union Membership and Executive Compensation

Table 6: Peer (Asset) Group Definitions, Used in Comparisons of Interest Rates 

between Credit Unions and Banks 

Source: GAO.

We established the peer groups based on the institution’s size as measured 

by total assets for banks and credit unions. Datatrac obtained asset 

information for each institution by combining information in its database 

with call report data for each institution. Datatrac computed average rates 

for institutions overall and for all institutions within analysis groups. In 

computing these simple averages, individual institution rates were not 

weighted to reflect loan volume or other measures of size. 

Datatrac provided us with an electronic file containing information for 2000 

through 2005. The information included (1) institution type, (2) average 

rate, (3) maximum rate, (4) minimum rate, (5) standard deviations, (6) 

product name, (7) quarter and year, and (8) institution counts. We 

interviewed Datatrac officials to confirm that they followed industry 

accepted protocols to ensure data integrity, including input and processing 

controls. We also reviewed Datatrac’s methodological documentation. In 

addition, we conducted reasonableness checks on the data we received 

and identified data gaps in the year-end 2003 information. Datatrac 

examined its processing procedures and explained to us that its cut-off 

date was incorrectly designated 1 week later than planned. At the same 

time, Datatrac also verified that the same problem did not exist in any other 

quarters of the years 2000 through 2005. Datatrac provided us an updated 

electronic file reflecting the corrections. We determined that the revised 

data were sufficiently reliable for the purposes of this report. 

Group Asset size of institution

I Total assets of $100 million or less

II Total assets greater than $100 million, but less than or equal to $250 million

III Total assets greater than $250 million, but less than or equal to $500 million

IV Total assets greater than $500 million, but less than or equal to $1 billion

V Total assets greater than $1 billion, but less than or equal to the asset size, 

rounded up to the nearest billion dollars, of the largest credit union 
Appendix I

Objectives, Scope, and Methodology

Page 49 GAO-07-29 Credit Union Membership and Executive Compensation

Issues Related to the 

Application of UBIT to 

Credit Unions

To review issues related to the application of UBIT to credit unions, we 

reviewed the legislative history of UBIT and the historical basis for the taxexempt status of credit unions and met with representatives of the Internal 

Revenue Service (IRS) to discuss UBIT filing and reporting requirements. 

We also discussed with IRS officials their examinations of unrelated 

business activity at state-chartered credit unions and development of 

policies and procedures in this area. We also obtained information from 

IRS on the number and types (group versus individual) of Return of 

Organization Exempt from Income Tax (Form 990) and Exempt 

Organization Business Income Tax Return (Form 990T) filings by statechartered credit unions and the amount of unrelated business income 

reported and taxes paid by state-chartered credit unions for tax years from 

2000 through 2004.

Information on 

Transparency and 

Compensation of 

Executive 

Compensation 

To provide information on the transparency and compensation of credit 

union executives and board members, including an assessment of the 

availability of compensation data to credit union members and a 

comparison of executive compensation at credit unions and comparably 

sized banks, we interviewed officials at NCUA and IRS to discuss executive 

compensation reporting requirements. We obtained and analyzed examiner 

guidance on compensation from NCUA and the other federal banking 

regulators—the Federal Deposit Insurance Corporation, Federal Reserve, 

Office of the Comptroller of the Currency, and Office of Thrift Supervision. 

We also met with credit union and banking trade groups including the 

National Association of Federal Credit Unions, NASCUS, Credit Union 

National Association, America’s Community Bankers, and Independent 

Community Bankers to identify publicly available data regarding the 

compensation of credit union and bank senior executives. We reviewed and 

analyzed selected credit union and bank compensation surveys. For more 

information on the surveys and our analysis, see appendix IV. We also met 

with NCUA to discuss their efforts to collect federal credit union executive 

compensation.
Page 50 GAO-07-29 Credit Union Membership and Executive Compensation

Appendix II

Analyses of Survey of Consumer Finances 

Data, 2001 and 2004 ApendxiI

Using the methodology that we employed in our prior report, data from the 

2001 and 2004 releases of the Federal Reserve SCF that we analyzed 

indicated that credit unions continued to serve a lower proportion of lowincome households than banks for the years analyzed.1

 As we reported in 

2003, we analyzed the SCF because it is a respected source of publicly 

available data on financial institution and consumer demographics that is 

nationally representative and because it was the only comprehensive 

source of publicly available data with information on financial institutions 

and consumer demographics that we could identify. While it is the best 

publicly available data that we could identify, there are limitations in SCF 

data that preclude drawing definitive conclusions about the income 

characteristics of credit union members. In an effort to provide greater 

context, in this appendix, we also present the results of additional analyses 

of the 2001 and 2004 SCF data that we conducted.

The SCF is conducted every 3 years and is intended to provide detailed 

information on the balance sheet, pension, income, and other 

demographics of U.S. households and their use of financial institutions.2

The survey is based on approximately 4,500 interviews and represents a 

sample of more than 100 million households. For each of the 2001 and 2004 

SCF releases, we combined the SCF data into two main groups—

households that only and primarily used credit unions (credit union 

customers) and households that only and primarily used banks (bank 

customers).3

 Our analyses of 2001 and 2004 SCF data indicated that, among 

households that used a financial institution, those households that we 

1

See GAO, Credit Unions: Financial Condition Has Improved, but Opportunities Exist to 

Enhance Oversight and Share Insurance Management, GAO-04-91 (Washington, D.C.: Oct. 

27, 2003).

2

We use the term “household” rather than “family” since the reporting unit of the SCF more 

closely resembles the U.S. Census Bureau’s definition of “household” than its definition of 

“family.” The Census Bureau’s definition of “family” excludes the possibility of one-person 

household units, but its definition of “household” allows for them. See Brian K. Bucks, 

Arthur B. Kennickell, and Kevin B. Moore, “Recent Changes in U.S. Family Finances: 

Evidence from the 2001 and 2004 Survey of Consumer Finances,” Federal Reserve Bulletin, 

Mar. 22, 2006, A3.

3

Those who “primarily” used credit unions placed more than 50 percent of their assets in 

credit unions, and those who “primarily” used banks placed more than 50 percent of their 

assets in banks. The term “use” refers to a household’s placement of assets in a checking, 

savings, or money market account. Our methodology for determining these classifications 

was based on work that Jinkook Lee, a professor and researcher at Ohio State University, 

performed. See Jinkook Lee and William A. Kelly Jr., “Who Uses Credit Unions?” (Prepared 

for the Filene Research Institute and the Center for Credit Union Research, 1999, 2001).
Appendix II

Analyses of Survey of Consumer Finances 

Data, 2001 and 2004 

Page 51 GAO-07-29 Credit Union Membership and Executive Compensation

identified as being bank customers outnumbered those that we identified 

as being credit union customers by a large margin (see table 7).4

 Because 

such a high percentage of the U.S. population represented by the SCF only 

used banks, the data obtained from the SCF are particularly useful for 

describing characteristics of bank users but much less precise for 

describing smaller population groups, such as those that only used credit 

unions. It should be noted that SCF was not specifically designed to 

conduct comparative analyses of income levels of bank and credit union 

customers, and the pool of bank customers is not necessarily comparable 

to the pool of credit union customers. 

Table 7: Percentages of Households Classified as Using Banks or Credit Unions, 

2001 and 2004

Sources: GAO and Federal Reserve.

We found that credit union customers had a higher median income than 

bank customers in both the 2001 and 2004 SCF releases. In the 2001 SCF, 

the median income of all households was $39,000; bank customers had a 

median income of $40,000 and credit union customers had a median 

income of $44,000. In the 2004 SCF, the median income of all households 

was $42,000; bank customers had a median income of $43,000 and credit 

union customers had a median income of $50,000.

We computed the proportions of credit union customers and bank 

customers in each of four income categories—low, moderate, middle, and 

upper. As in our 2003 report, we based our income groups on income 

categories used by financial regulators for federal Community 

4

In our analyses of SCF data, we specify banks to include both commercial banks and 

savings and loan institutions. Percentages reflect the households using financial institutions 

as a percentage of all financial institution users and exclude those households that did not 

use a financial institution (sometimes referred to as “unbanked”). 

Percentage of households (among all households 

using a financial institution)

Financial institution usage 2001 SCF data 2004 SCF data

Only used credit unions 8 8

Primarily used credit unions 13 14

Primarily used banks 17 15

Only used banks 62 63
Appendix II

Analyses of Survey of Consumer Finances 

Data, 2001 and 2004 

Page 52 GAO-07-29 Credit Union Membership and Executive Compensation

Reinvestment Act examinations in an effort to provide a consistent 

framework given that “modest means” is not clearly defined.5

 For our 

primary analysis of 2001 and 2004 SCF data, we used 2000 and 2003 median 

household income as reported by the U.S. Census Bureau; for our 

additional analyses of 2001 and 2004 SCF data, we used 2000 and 2003 

median family income as reported by the U.S. Census Bureau (see tables 8 

and 9). It should be noted that the categories that we use here, which we 

introduced in our 2003 report, are based on a national median income 

measure whereas the categories used for Community Reinvestment Act are 

based on more local measures.

Table 8: Median Income Benchmarks Used for Primary (Household) and Additional 

(Family) Analyses of 2001 and 2004 SCF Data

Sources: GAO and U.S. Census Bureau.

5

See appendix I for more information.

Analysis

2001 median 

SCF family 

income

2001 median 

SCF 

household 

income

2004 median 

SCF family 

income

2004 median 

SCF 

household 

income

Primary N/A $42,151 N/A $43,318

Additional $50,890 N/A $52,680 N/A
Appendix II

Analyses of Survey of Consumer Finances 

Data, 2001 and 2004 

Page 53 GAO-07-29 Credit Union Membership and Executive Compensation

Table 9: Income Categories for Primary (Household) and Additional (Family) 

Analyses of 2001 and 2004 SCF Data

Source: GAO.

As noted earlier in the report, our (primary) analysis of 2004 SCF data 

suggested that credit unions served a lower proportion of households of 

modest means (low- and moderate-income households, collectively) than 

banks, a result consistent with the finding in our 2003 report analyzing the 

2001 SCF data (see tables 10 and 11). 

Table 10: Percentages in Each Income Category for Primary (Household) Analysis 

by Customer Type, 2001 SCF Data

Sources: GAO and Federal Reserve.

Note: Income benchmark is the median household income for 2000.

Income category Primary analysis Additional analysis

Low Income less than 50 percent of 

the median household income 

(2001: less than $21,076; 2004: 

less than $21,659)

Income less than 50 percent of 

the median family income (2001: 

less than $25,445; 2004: less 

than $26,340)

Moderate Income at least 50 percent and 

less than 80 percent of the 

median household income 

(2001: at least $21,076 but less 

than $33,721; 2004: at least 

$21,659 but less than $34,654)

Income at least 50 percent and 

less than 80 percent of the 

median family income (2001: at 

least $25,445 but less than 

$40,712; 2004; at least $26,340 

but less than $42,114)

Middle Income at least 80 percent and 

less than 120 percent of the 

median household income 

(2001: at least $33,721 but less 

than $50,581; 2004: at least 

$34,654 but less than $51,982)

Income at least 80 percent and 

less than 120 percent of the 

median family income (2001: at 

least $40,712 but less than 

$61,068; 2004: at least $42,144 

but less than $63,216)

Upper Income at least 120 percent or 

more of the median household 

income (2001: at least $50,581; 

2004: at least $51,982)

Income at least 120 percent or 

more of the median family 

income (2001: at least $61,068; 

2004: at least $63,216)

Income category

All SCF 

respondents

Credit union 

customers

Bank 

customers

Low 27.0 16.4 25.7

Moderate 16.6 19.3 16.1

Middle 17.6 21.7 17.5

Upper 38.9 42.6 40.7
Appendix II

Analyses of Survey of Consumer Finances 

Data, 2001 and 2004 

Page 54 GAO-07-29 Credit Union Membership and Executive Compensation

Table 11: Percentages in Each Income Category for Primary (Household) Analysis 

by Customer Type, 2004 SCF Data

Sources: GAO and Federal Reserve.

Note: Income benchmark is the median household income for 2003.

In an effort to determine how sensitive these results were to our income 

categorization, we also used the median family income for 2000 and 2003 to 

analyze the 2001 and 2004 SCF data. As shown in tables 12 and 13, the 

results from our additional analyses were similar to those of our primary 

analysis. While the median family income was higher than the median 

household income in each year, the results continue to suggest that a 

greater proportion of bank than credit union customers were of modest 

means. This difference between banks and credit unions was statistically 

significantly different from zero in the 2004 SCF; there was also a 

statistically significant decline in the proportion of credit union customers 

of modest means between the 2001 and 2004 SCF data. Thus, while the 

results of our analyses should not be considered definitive, they do suggest 

that any impact from the recent efforts by NCUA to increase credit union 

membership among the underserved and low- and moderate-income 

households have not yet appeared in the data.

Table 12: Percentages in Each Income Category for Additional (Family) Analysis by 

Customer Type, 2001 SCF Data

Sources: GAO and Federal Reserve.

Note: Income benchmark is the median family income for 2000.

Income category

All SCF 

respondents

Credit union 

customers

Bank 

customers

Low 24.9 14.5 24.2

Moderate 16.6 16.6 16.4

Middle 17.8 20.2 18.1

Upper 40.7 48.8 41.3

Income category

All SCF 

respondents

Credit union 

customers

Bank 

customers

Low 33.8 23.2 32.3

Moderate 18.6 23.6 18.2

Middle 16.7 21.6 16.5

Upper 30.9 31.7 33.1
Appendix II

Analyses of Survey of Consumer Finances 

Data, 2001 and 2004 

Page 55 GAO-07-29 Credit Union Membership and Executive Compensation

Table 13: Percentages in Each Income Category for Additional (Family) Analysis by 

Customer Type, 2004 SCF Data

Sources: GAO and Federal Reserve.

Note: Income benchmark is the median family income for 2003.

We also considered the median income of bank and credit union customers 

within each of our income categories for both the primary and additional 

analyses to assess whether there were any notable differences between 

credit union and bank customers (see tables 14 through 17). We found that 

the income characteristics of the customers tended to be similar; however, 

the median income in the upper-income category tended to be higher for 

bank customers.

Table 14: Median Income within Each Income Category for Primary (Household) 

Analysis by Customer Type, 2001 SCF Data

Sources: GAO and Federal Reserve.

Note: Income benchmark is the median household income for 2000.

Income category

All SCF 

respondents

Credit union 

customers

Bank 

customers

Low 31.6 20.2 31.0

Moderate 18.6 21.1 18.3

Middle 18.1 20.6 18.6

Upper 31.7 38.2 32.2

Median income within category

Income category Credit union customers Bank customers

Low $13,000 $13,000

Moderate 28,000 27,000

Middle 40,000 41,000

Upper 74,000 83,000
Appendix II

Analyses of Survey of Consumer Finances 

Data, 2001 and 2004 

Page 56 GAO-07-29 Credit Union Membership and Executive Compensation

Table 15: Median Income within Each Income Category for Primary (Household) 

Analysis by Customer Type, 2004 SCF Data

Sources: GAO and Federal Reserve.

Note: Income benchmark is the median household income for 2003.

Table 16: Median Income within Each Income Category for Additional (Family) 

Analysis by Customer Type, 2001 SCF Data

Sources: GAO and Federal Reserve.

Note: Income benchmark is the median family income for 2000.

Table 17: Median Income within Each Income Category for Additional (Family) 

Analysis by Customer Type, 2004 SCF Data

Sources: GAO and Federal Reserve.

Note: Income benchmark is the median family income for 2003.

Median income within category

Income category Credit union customers Bank customers

Low $13,000 $13,000

Moderate 28,000 28,000

Middle 42,000 43,000

Upper 86,000 86,000

Median income within category

Income category Credit union customers Bank customers

Low $16,000 $15,000

Moderate 33,000 33,000

Middle 51,000 50,000

Upper 83,000 98,000

Median income within category

Income category Credit union customers Bank customers

Low $17,000 $15,000

Moderate 34,000 34,000

Middle 52,000 51,000

Upper 97,000 101,000
Page 57 GAO-07-29 Credit Union Membership and Executive Compensation

Appendix III

Comparison of Interest Rates at Credit Unions 

and Banks ApendxiI

Data that we obtained indicate that credit unions offer more favorable rates 

on average than similarly sized banks for a number of savings products and 

consumer loans. However, similarly sized credit unions and banks 

appeared to offer virtually the same rates on mortgage loans, such as 15- 

and 30-year fixed-rate mortgages. We engaged the services of Datatrac 

Corporation—a market research and information technology company, 

specializing in the financial services industry—to gather and analyze data 

on loan and savings rates for 15 loan and savings products (5 consumer 

loan, 3 mortgage loan, and 7 savings products) that were offered from 2000 

through 2005 at about 2,000 credit unions and 4,000 banks.1

 Financial 

institutions voluntarily provide data to Datatrac on a weekly basis for 

inclusion in the company’s database. Therefore, information presented is 

not necessarily statistically representative of the entire banking and credit 

union industry. 

Datatrac calculated the average rates for each of these products by five 

distinct asset size peer groups:

• total assets of $100 million or less;

• total assets greater than $100 million, but less than or equal to $250 

million;

• total assets greater than $250 million, but less than or equal to $500 

million;

• total assets greater than $500 million, but less than or equal to $1 billion; 

and

• total assets greater than $1 billion, but less than or equal to the asset 

size, rounded up to the nearest billion dollars, of the largest credit 

union.

Datatrac computed average rates for institutions overall and for all 

institutions within analysis groups. In computing these simple averages, 

individual institution rates were not weighted to reflect loan volume or 

other measures of size. While Datatrac Corporation’s database contained 

1

Datatrac is a privately held company that specializes in financial industry research. 

Specifically, Datatrac monitors and analyzes rate trends on popular deposit and lending 

products for thousands of financial institutions nationwide. 
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 58 GAO-07-29 Credit Union Membership and Executive Compensation

data provided by about 2,000 credit unions and 4,000 banks, data were not 

always obtained from all the credit unions and banks for every product 

and/or time period in each of the five asset groupings. We identify all 

instances in which the information presented was based on rate data 

provided by less than 10 institutions. Additionally, because averages based 

on a small number of institutions may be unreliable, we did not report 

instances when rate data was provided by less than 5 institutions. 

Figures 7 through 23 provide a detailed comparison of rates on savings and 

loan products offered by credit unions to those at similarly sized banks for 

the 6-year period spanning from 2000 to 2005. 

Figure 7: Comparison of Interest Rates for Savings Products at December 31, 2000, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Money

market account

Regular savings

($1K)

Interest checking

($5K)

3-month CD

($10K)

6-month CD

($10K)

1-year CD

($10K)

5-year CD

($10K)

Credit unions

Banks

Sources: GAO and Datatrac.

2.75 %

2.54

2.75

2.43

2.88

2.30

2.98

2.19

3.09

1.99

4.16

3.47

4.16

3.41

4.29

3.59

4.13

3.55

4.39

3.53

1.85%

1.95

1.77

1.82

1.77

1.74

1.88

1.44

1.79

1.28

5.12%

4.75

5.08

4.79

5.26

4.69

5.22

4.71

5.57

4.68

5.80%

5.49

5.89

5.50

5.96

5.43

5.92

5.43

6.11

5.56

6.20%

5.84

6.28

5.86

6.37

5.80

6.26

5.76

6.45

5.56

6.58%

6.17

6.67

6.14

6.69

6.05

6.55

6.03

6.69

5.85

%
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 59 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 8: Comparison of Interest Rates for Savings Products at December 31, 2001, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Money

market account

Regular savings

($1K)

Interest checking

($5K)

3-month CD

($10K)

6-month CD

($10K)

1-year CD

($10K)

5-year CD

($10K)

Credit unions

Banks

Sources: GAO and Datatrac.

1.91 %

1.55

1.80

1.46

1.96

1.35

2.10

1.33

1.94

1.12

2.18

1.58

2.07

1.56

2.19

1.42

2.08

1.37

2.06

1.22

1.21%

1.11

1.05

.99

1.14

.89

1.16

.81

1.15

.63

2.32%

2.08

2.29

2.05

2.34

1.96

2.28

1.97

2.32

1.78

2.61%

2.38

2.57

2.29

2.60

2.21

2.60

2.21

2.57

1.95

2.85%

2.66

2.82

2.57

2.89

2.49

2.88

2.50

2.84

2.22

4.16%

3.96

4.12

3.97

4.30

4.03

4.36

4.04

4.61

4.07

%
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 60 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 9: Comparison of Interest Rates for Savings Products at December 31, 2002, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Money

market account

Regular savings

($1K)

Interest checking

($5K)

3-month CD

($10K)

6-month CD

($10K)

1-year CD

($10K)

5-year CD

($10K)

Credit unions

Banks

Sources: GAO and Datatrac.

1.32 %

1.08

1.27

1.01

1.39

.90

1.46

.85

1.49

.78

1.51

1.07

1.46

1.05

1.54

.92

1.54

.88

1.48

.80

.81%

.73

.74

.67

.79

.58

.83

.55

.80

.46

1.67%

1.46

1.65

1.41

1.66

1.33

1.74

1.29

1.72

1.18

1.95%

1.73

1.91

1.65

1.90

1.57

1.99

1.50

1.95

1.35

2.24%

2.03

2.24

1.95

2.22

1.85

2.26

1.75

2.29

1.62

3.90%

3.59

3.97

3.59

3.99

3.53

3.97

3.48

4.08

3.35

%
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 61 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 10: Comparison of Interest Rates for Savings Products at December 31, 2003, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Money

market account

Regular savings

($1K)

Interest checking

($5K)

3-month CD

($10K)

6-month CD

($10K)

1-year CD

($10K)

5-year CD

($10K)

Credit unions

Banks

Sources: GAO and Datatrac.

.98%

.73

.94

.66

1.00

.58

1.03

.56

.95

.51

.49%

.48

.48

.41

.47

.36

.54

.33

.47

.30

1.12%

1.01

1.13

.95

1.11

.91

1.22

.88

1.17

.86

1.35%

1.26

1.33

1.17

1.35

1.13

1.41

1.07

1.36

1.00

1.61%

1.51

1.62

1.42

1.64

1.39

1.69

1.30

1.64

1.23

3.33%

3.13

3.44

3.11

3.49

3.09

3.53

3.09

3.63

3.09

.80

.71

.76

.61

.89

.57

.89

.52

.92

.46

%
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 62 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 11: Comparison of Interest Rates for Savings Products at December 31, 2004, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Money

market account

Regular savings

($1K)

Interest checking

($5K)

3-month CD

($10K)

6-month CD

($10K)

1-year CD

($10K)

5-year CD

($10K)

Credit unions

Banks

Sources: GAO and Datatrac.

1.00%

.77

1.00

.73

1.03

.67

1.07

.62

1.03

.56

.46%

.50

.44

.43

.45

.39

.46

.36

.48

.33

1.44%

1.28

1.50

1.28

1.52

1.28

1.62

1.28

1.75

1.24

1.74%

1.65

1.85

1.63

1.86

1.65

1.93

1.64

2.07

1.60

2.14%

2.04

2.30

2.04

2.31

2.08

2.38

2.07

2.52

1.98

3.98%

3.68

4.10

3.73

4.13

3.72

4.14

3.71

4.22

3.62

.73

.69

.71

.62

.82

.60

.83

.52

.94

.46

%
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 63 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 12: Comparison of Interest Rates for Savings Products at December 31, 2005, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Money

market account

Regular savings

($1K)

Interest checking

($5K)

3-month CD

($10K)

6-month CD

($10K)

1-year CD

($10K)

5-year CD

($10K)

Credit unions

Banks

Sources: GAO and Datatrac.

.82 %

.84

.82

.77

.94

.73

.93

.63

1.09

.58

1.39

1.08

1.47

1.08

1.50

1.02

1.61

.95

1.67

.94

.51%

.63

.50

.60

.53

.52

.48

.46

.61

.42

2.60%

2.36

2.71

2.39

2.73

2.38

2.87

2.34

3.09

2.35

3.14%

2.93

3.30

2.99

3.29

2.96

3.46

2.91

3.55

2.88

3.66%

3.46

3.81

3.50

3.80

3.51

3.89

3.42

3.97

3.38

4.60%

4.37

4.63

4.36

4.62

4.33

4.68

4.24

4.75

4.15

%
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 64 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 13: Comparison of Interest Rates of Consumer Loans at December 31, 2000, by Asset Size

Note: Data is not reported for credit card (classic) and banks with $100 million or less due to an 

insufficient number of reporting institutions (less than 5). 

a

Data is based on responses of less than 10 institutions.

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit card

(classic)

Used car

(36-month)

Used car

(48-month)

New car

(48-month)

New car

(60-month)

Credit unions

Banks

Sources: GAO and Datatrac.

13.7%

13.4

16.7

13.4

16.0

13.3

14.8

12.6

15.8

8.5%

10.0

8.4

10.0

8.6

9.9

8.4

10.0

8.7

10.1

8.7%

10.0

8.6

10.0

8.6

10.0

8.5

10.0

8.6

10.2

8.2%

9.1

8.2

9.1

8.3

9.2

8.1

9.2

8.1

9.5

8.4%

9.3

8.3

9.3

8.3

9.2

8.2

9.3

8.1

9.5

a

a
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 65 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 14: Comparison of Interest Rates of Consumer Loans at December 31, 2001, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit card

(classic)

Used car

(36-month)

Used car

(48-month)

New car

(48-month)

New car

(60-month)

Credit unions

Banks

Sources: GAO and Datatrac.

12.5%

14.7

13.0

13.8

12.9

14.6

12.6

14.5

12.1

14.0

6.9%

8.6

6.7

8.5

6.7

8.5

6.6

8.2

6.9

8.3

7.0%

8.6

6.7

8.5

6.7

8.5

6.7

8.2

6.9

8.3

6.6%

7.8

6.4

7.6

6.4

7.7

6.4

7.5

6.6

7.6

6.7%

7.8

6.5

7.7

6.5

7.7

6.4

7.6

6.6

7.6
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 66 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 15: Comparison of Interest Rates of Consumer Loans at December 31, 2002, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit card

(classic)

Used car

(36-month)

Used car

(48-month)

New car

(48-month)

New car

(60-month)

Credit unions

Banks

Sources: GAO and Datatrac.

12.4%

13.1

12.6

13.2

12.9

13.5

12.0

13.7

12.0

13.1

6.2%

8.0

5.9

7.9

5.7

7.7

5.7

7.7

5.8

7.7

6.3%

8.0

6.0

7.9

5.8

7.8

5.8

7.7

5.9

7.7

5.9%

7.2

5.7

7.2

5.5

7.1

5.5

7.0

5.7

7.1

6.0%

7.3

5.8

7.3

5.6

7.2

5.5

7.1

5.8

7.1
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 67 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 16: Comparison of Interest Rates of Consumer Loans at December 31, 2003, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit card

(classic)

Used car

(36-month)

Used car

(48-month)

New car

(48-month)

New car

(60-month)

Credit unions

Banks

Sources: GAO and Datatrac.

12.1%

12.1

12.5

12.3

12.4

12.5

11.6

13.0

11.4

12.6

5.1%

7.4

4.8

7.3

4.6

7.1

4.7

6.9

4.8

7.3

5.3%

7.4

4.9

7.3

4.8

7.2

4.8

6.9

4.9

7.3

4.9%

6.7

4.6

6.5

4.5

6.4

4.5

6.3

4.7

6.6

5.0%

6.8

4.7

6.6

4.6

6.5

4.6

6.4

4.7

6.6
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 68 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 17: Comparison of Interest Rates of Consumer Loans at December 31, 2004, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit card

(classic)

Used car

(36-month)

Used car

(48-month)

New car

(48-month)

New car

(60-month)

Credit unions

Banks

Sources: GAO and Datatrac.

11.7%

11.8

12.3

12.4

12.4

12.4

11.6

12.5

11.5

12.3

5.1%

7.2

4.9

7.1

4.8

7.1

4.8

6.9

4.8

7.2

5.2%

7.3

5.0

7.2

4.9

7.1

4.9

6.9

4.9

7.2

4.8%

6.6

4.7

6.4

4.6

6.3

4.7

6.3

4.7

6.5

5.0%

6.6

4.9

6.6

4.7

6.4

4.7

6.4

4.7

6.6
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 69 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 18: Comparison of Interest Rates of Consumer Loans at December 31, 2005, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit card

(classic)

Used car

(36-month)

Used car

(48-month)

New car

(48-month)

New car

(60-month)

Credit unions

Banks

Sources: GAO and Datatrac.

11.9%

14.7

12.3

14.4

12.4

13.3

11.9

13.8

11.8

13.8

5.8%

7.7

5.7

7.7

5.7

7.7

5.6

7.5

5.7

7.7

5.9%

7.8

5.8

7.8

5.8

7.8

5.7

7.6

5.8

7.8

5.5%

7.0

5.6

7.0

5.5

7.1

5.4

6.9

5.6

7.1

5.7%

7.1

5.7

7.1

5.6

7.2

5.5

7.0

5.7

7.2
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 70 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 19: Comparison of Interest Rates of Mortgage Products at December 31, 

2000, by Asset Size 

a

Data is based on responses of less than 10 institutions.

Institution 

assets range

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

7.4%

7.7

7.4

7.4

7.3

7.3

7.4

7.3

7.2a

7.2

7.7%

8.0

7.6

7.7

7.6

7.6

7.5

7.7

7.6a

7.5

9.3%

9.9

9.3

9.5

9.0

9.6

9.1

9.2

8.7

9.3

15-year

fixed-rate

30-year

fixed-rate

80% home equity

line-of-credit

Credit unions

Banks

Sources: GAO and Datatrac.

Percentage rates offered by product
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 71 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 20: Comparison of Interest Rates of Mortgage Products at December 31, 

2001, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

6.8%

6.9

6.6

6.8

6.7

6.8

6.7

6.7

6.7

6.8

7.2%

7.3

7.2

7.2

7.2

7.3

7.2

7.3

7.2

7.3

6.3%

6.0

6.0

5.8

6.0

5.8

5.7

5.6

5.6

5.4

15-year

fixed-rate

30-year

fixed-rate

80% home equity

line-of-credit

Credit unions

Banks

Sources: GAO and Datatrac.
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 72 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 21: Comparison of Interest Rates of Mortgage Products at December 31, 

2002, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit unions

Banks

Sources: GAO and Datatrac.

5.9%

5.9

5.6

5.8

5.6

5.6

5.5

5.6

5.6

5.5

6.2%

6.3

6.1

6.2

6.2

6.2

6.1

6.3

6.2

6.1

5.5%

5.5

5.1

5.2

5.2

5.1

5.0

4.8

4.5

4.6

15-year

fixed-rate

30-year

fixed-rate

80% home equity

line-of-credit
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 73 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 22: Comparison of Interest Rates of Mortgage Products at December 31, 

2003, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit unions

Banks

Sources: GAO and Datatrac.

5.5%

5.6

5.4

5.4

5.3

5.3

5.2

5.3

5.1

5.3

6.0%

6.1

6.0

6.0

5.9

6.0

5.9

6.0

5.9

6.0

4.9%

4.9

4.3

4.8

4.3

4.5

4.2

4.4

3.8

4.1

15-year

fixed-rate

30-year

fixed-rate

80% home equity

line-of-credit
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 74 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 23: Comparison of Interest Rates of Mortgage Products at December 31, 

2004, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

Credit unions

Banks

Sources: GAO and Datatrac.

5.6%

5.8

5.3

5.3

5.2

5.2

5.2

5.3

5.2

5.3

5.9%

6.0

5.9

5.9

5.8

5.8

5.8

5.8

5.9

5.8

5.2%

5.6

4.9

5.4

4.8

5.2

5.0

5.1

4.4

4.8

15-year

fixed-rate

30-year

fixed-rate

80% home equity

line-of-credit
Appendix III

Comparison of Interest Rates at Credit 

Unions and Banks

Page 75 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 24: Comparison of Interest Rates of Mortgage Products at December 31, 

2005, by Asset Size

Institution 

assets range

Percentage rates offered by product

$100 million

or less

Greater than $100

million, but less

than or equal to 

$250 million

Greater than $250

million, but less

than or equal to 

$500 million

Greater than $500

million, but less

than or equal to

$1 billion

Greater than

$1 billion

15-year

fixed-rate

30-year

fixed-rate

80% home equity

line-of-credit

6.2%

6.3

5.9

6.2

5.9

5.9

5.9

5.9

5.8

5.9

6.4 %

6.5

6.3

6.4

6.3

6.3

6.3

6.3

6.3

6.3

6.8%

7.4

6.8

7.3

6.9

7.4

6.9

7.4

7.0

7.2

Credit unions

Banks

Sources: GAO and Datatrac.
Page 76 GAO-07-29 Credit Union Membership and Executive Compensation

Appendix IV

Selected Salary Surveys for Credit Union and 

Bank Executives ApendxiIV

Credit union and bank survey information we obtained provides an 

indication of executive base salaries for the respective industries. The 

credit union and bank salary survey data we identified had a key 

limitation—the information was not directly comparable because of 

differences in the underlying sampling strategies and data gathering 

methodologies. Also, while both surveys report the types of cash 

compensation received for their industry executives (i.e., salary and 

bonuses), we were not able to identify and compare other forms of benefits 

that an executive might typically receive in a compensation package.

There were a number of other limitations in the data that we identified. In 

some instances, the information collected for each of the surveys involved 

a sample of members belonging to their respective trade group 

associations. The data collection periods for each of the surveys were 

different. For instance, the credit union survey collected salary 

information between January and May 2005, while the bank survey 

collected information during 2004. The bank survey also provides general 

information on other benefits such as savings incentive plans, pension 

plans, and paid time off benefits for which we do not have comparable 

information in the credit union survey. Also, cash compensation reported 

for the credit union survey includes base salary, incentives, and bonuses, 

while the bank survey reported base salary, bonus, and profit sharing 

compensation. Finally, the cash compensation information presented for 

these surveys are grouped in different asset size ranges. The credit union 

survey presents information based on 13 asset size categories, while the 

bank survey presents information based on 7 asset size categories. 

Credit Union Salary and 

Other Cash Compensation 

Data

According to the Credit Union National Association’s 2005 to 2006 

Complete Credit Union Staff Salary Survey, the average base salary of 

credit union presidents, chief executive officers (CEO), and managers for 

those credit unions responding increased 4.8 percent from the previous 

year’s survey. In addition to base salary, more than half (55 percent) of 

credit union presidents, CEOs, and managers also received other forms of 

cash compensation such as incentives or bonuses. For CEOs, incentives 

averaged $9,634, while bonuses averaged $4,993. The survey also noted 

that bonuses continue to be more common than incentives (45 percent 

compared with 5 percent receiving these payments, respectively in 2004). 

As shown in figure 25, the average credit union base salary for the CEO 

position was about $78,000 while the average base salaries for the chief 

financial officers (CFO) and chief operations officers (COO) was 

approximately $73,000 and $64,000, respectively. However, national 
Appendix IV

Selected Salary Surveys for Credit Union and 

Bank Executives

Page 77 GAO-07-29 Credit Union Membership and Executive Compensation

averages should be viewed with care since executive salaries also vary by 

region and the size of the credit union. 

Figure 25: Credit Union Executive Average Base Salaries for 2005

Similarly, according to the survey for those credit unions responding, credit 

union executives, including CFOs and COOs, experienced about a 2 

percent increase in average salary over the previous year. Of those that 

responded to the survey, approximately 27 percent of CFOs received 

incentives, which averaged $5,963, and 38 percent received a bonus which 

averaged $4,650. Additionally, approximately 21 percent of COOs received 

incentives which averaged $5,678, while 47 percent received a bonus that 

averaged $3,578.

The number of responses for the survey questions on the three credit union 

executive positions also varied from question to question and across the 

different asset categories. For instance, a total of 773 credit unions 

0

50

100

150

200

250

300

350

1,000+

600-1,000

3

400-600

00-400

200-300

100-200

70-100

3

50-70

0-50

20-30

10-20

5-10

1-2

2-5

President/CEO/Manager salaries

Dollars in thousands

Credit union asset size (dollars in millions)

0

50

100

150

200

250

300

350

1,000+

600-1,000

3

400-600

00-400

200-300

100-200

70-100

3

50-70

0-50

20-30

10-20

5-10

1-2

2-5

Chief financial officer salaries

Dollars in thousands

Credit union asset size (dollars in millions)

0

50

100

150

200

250

300

350

1,000+

600-1,000

3

400-600

00-400

200-300

100-200

70-100

3

50-70

0-50

20-30

10-20

5-10

1-2

2-5

Chief operating officer salaries

Dollars in thousands

Credit union asset size (dollars in millions)

Average

Source: GAO analysis of CUNA survey data.
Appendix IV

Selected Salary Surveys for Credit Union and 

Bank Executives

Page 78 GAO-07-29 Credit Union Membership and Executive Compensation

responded to the president/CEO question, but the responses by asset 

category ranged from a low of 16 responses by credit unions with assets of 

$1 to $2 million to a high of 113 responses by credit unions with assets of 

$100 to $200 million.1

 A total of 330 credit unions responded to the CFO 

question, while the responses by asset category ranged from a low of 2 

responses by credit unions with assets of $5 to $10 million to a high of 74 

responses by credit unions with assets of $100 to $200 million. Finally, 268 

credit unions responded to the COO question, while the responses by asset 

category ranged from a low of 2 responses by credit unions with assets of 

$5 to $10 million to a high of 65 responses by credit unions with assets of 

$100 to $200 million.

Bank Salary and Other Cash 

Compensation Data

According to America’s Community Bankers 2005 Compensation Survey, 

the national average base salary for those banks responding to the survey 

for CEOs was up 13.2 percent from the 2004 reported average. The average 

bonus/profit sharing payment for CEOs was $73,129. Similarly, the national 

average base salary for those banks responding for CFOs was up 10.8 

percent from 2004, while the average bonus/profit sharing compensation 

was $28,700. The base salary for those banks responding for COOs was up 

8.8 percent from 2004, while the average bonus/profit sharing 

compensation was $32,697. As shown in figure 26, the average bank base 

salary for the CEO position was about $213,000 while the average base 

salaries for the CFO and COO was approximately $121,000 and $141,000 

respectively. As mentioned previously, national averages should be viewed 

with care since executive salaries also vary by region and by asset size. 

1

According to the Credit Union National Association’s salary survey, as part of the 

methodology, nearly all affiliated credit unions with $100 million or more in assets were sent 

a survey. Stratified random samples of credit unions with $1 million to $100 million in assets 

were also sent the survey. Thus, larger credit unions were given a greater chance of being 

selected for the survey to ensure a high degree of accuracy for these credit unions and 

weighted to adjust for the overrepresentation of the larger credit unions. Weighting is a 

standard survey analysis procedure designed to adjust estimates to account for different 

rates of selection within sample strata, which ensures that results are not biased by a 

specific group of credit unions.
Appendix IV

Selected Salary Surveys for Credit Union and 

Bank Executives

Page 79 GAO-07-29 Credit Union Membership and Executive Compensation

Figure 26: Bank Executive Average Base Salaries in 2004 

The bank executive survey responses also varied by the total number of 

respondents and by the different asset categories.2

 For instance, a total of 

358 banks responded to the president/CEO question, while the responses 

by asset category ranged from a low of 16 banks with assets up to $50 

million to a high of 74 banks with assets of $101 to $200 million. A total of 

256 banks responded to the CFO question, while the number of responses 

by asset category ranged from a low of 2 banks with assets up to $50 

million to a high of 49 responses by banks with assets of $501 million to $1 

billion. Finally, 187 banks responded to the COO question, while the 

response rates by asset category ranged from a low of 8 banks with assets 

President/CEO/Manager salaries

Dollars in thousands

Bank asset size (dollars in millions)

Chief financial officer salaries

Dollars in thousands

Bank asset size (dollars in millions)

Chief operating officer salaries

Dollars in thousands

Bank asset size (dollars in millions)

Average

Source: GAO analysis of ACB survey data.

0

50

100

150

200

250

300

350

400

450

0

50

100

150

200

250

300

350

400

450

1,000+

501-1,000

101-200

201-300

301-500

51-100

50 or less

1,000+

501-1,000

101-200

201-300

301-500

51-100

50 or less

1,000+

501-1,000

101-200

201-300

301-500

51-100

50 or less

0

50

100

150

200

250

300

350

400

450

2

The America’s Community Bankers survey cautions against comparing peer group data 

among the various asset sizes due to the differences in bank types. That is, banks with assets 

up to $50 million disproportionately are mutual institutions, while banks with assets of more 

than $1 billion disproportionately are stock banks. 
Appendix IV

Selected Salary Surveys for Credit Union and 

Bank Executives

Page 80 GAO-07-29 Credit Union Membership and Executive Compensation

up to $50 million to a high of 38 banks in both the $101 to $200 million and 

$501 million to $1 billion categories. Due to the small number of responses 

in some instances, the results of this data should be viewed with caution.
Page 81 GAO-07-29 Credit Union Membership and Executive Compensation

Appendix V

Comments from the National Credit Union 

Administration ApendxiV

National Credit Union Administration

1775 Duke Street – Alexandria, VA 223414-3428 - 703-518-6300

November 14, 2006

Yvonne D. Jones

Director, Financial Markets

 and Community Investments

Government Accountability Office

441 G St., NW

Washington, DC 20548

Dear Ms. Jones:

Thank you for the opportunity to review and comment on the draft GAO Report

(Report) entitled “Greater Transparency Needed on Who Credit Unions Serve

and on Senior Executive Compensation Arrangements.” On behalf of the

National Credit Union Administration (NCUA), I would like to express our

appreciation for the professionalism of your staff and our gratitude for the

dialogue that occurred through the course of GAO’s study. NCUA believes that

dialogue was helpful in developing a better mutual understanding of the

complexity of the issues addressed in the Report and the conflicts that arise

when considering the mission and purpose of federal credit unions (FCU) in the

context of today’s financial marketplace.

It is unfortunate GAO did not have available at the time of drafting the Report the

results of NCUA’s Member Service Assessment Pilot Program (MSAP)

(Enclosure 1), since MSAP includes significant new data on FCUs. Importantly,

MSAP provides meaningful and accurate information on FCU membership

profiles, as well as an assessment of the data collected. This assessment is

critical for an objective analysis of the data. It also demonstrates any

conclusions reached must consider FCU structure and operations, and the

significant differences between other financial institutions and FCU charter types.

As outlined in greater detail in the enclosed response to the Report (Enclosure

2), NCUA does have continued concerns with certain important aspects of the

Report. NCUA believes that a meaningful comparison between FCUs and other

financial institutions must include an in-depth assessment of their structural and

governance differences. Furthermore, comparisons among FCUs must consider

charter types and field of membership differences. These substantive

differences significantly impact who credit unions serve, how they operate and

provide services, how they develop and maintain their net worth and working

capital, and how they affect the continued viability of the FCU system. Such a

framework is missing in the Report, thus limiting its reliability.

NCUA also believes it is inaccurate and inappropriate to measure the success of

FCUs in serving persons of modest means by reference only to the low- and

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

See comment 1.
Appendix V

Comments from the National Credit Union 

Administration

Page 82 GAO-07-29 Credit Union Membership and Executive Compensation

2

moderate-income categories associated with the Community Reinvestment Act 

(CRA), as these categories only extend to families at or below 80 percent of the 

median income. There is ample legal and historical evidence that the term 

modest means, as used by Congress in the context of the FCU Act, is intended 

to include both below average wage earners and a broader class of working 

individuals generally. Further, GAO elected to use income category benchmarks 

that are inconsistent with the specific definitions of the CRA categories used by 

the other federal financial regulators. Using broad income categories and 

equating modest means to low- and moderate-income individuals precludes a 

valid assessment of the economic demographics of FCU membership.

Additionally, NCUA has serious concerns about the reliability of conclusions 

reached using the Federal Reserve’s Survey of Consumer Finance (SCF) data.

The SCF was not designed for reliable income comparisons between credit union 

members and bank customers. Other concerns, addressed in Enclosure 2, 

include the importance of credit union membership limits, the effects of recent 

trends in community chartering, and proper recognition of NCUA’s efforts to 

target services to lower income individuals. 

Regarding the recommendations made in the Report, NCUA staff recommended 

in MSAP that the NCUA Board consider whether it is appropriate to gather 

additional membership data to further enhance NCUA’s efforts in expanding 

credit union service to low- and moderate-income individuals. NCUA staff also 

recommended that the NCUA Board consider evaluating alternative approaches 

to collecting and aggregating executive compensation on an FCU system basis.

Notwithstanding the continued concerns listed above and described in greater 

detail in Enclosure 2, I again want to emphasize our great appreciation for the 

efforts of your staff and their willingness to consider our concerns and engage in 

open and meaningful dialogue.

Sincerely,

J. Leonard Skiles 

Executive Director 

Enclosures: 1. Report to the NCUA Board on the Member Service Assessment 

 Pilot Program (MSAP), dated November 3, 2006 

 2. NCUA’s Detailed Response to GAO’s Draft Report GAO-07-29
Appendix V

Comments from the National Credit Union 

Administration

Page 83 GAO-07-29 Credit Union Membership and Executive Compensation

- 1 - Enclosure 2 

NCUA’s Detailed Response to GAO Draft Report GAO-07-29 “Greater 

Transparency Needed on Who Credit Unions Serve and on Senior 

Executive Compensation Arrangements” 

The following discussion addresses our primary concerns with the GAO Draft 

Report, GAO-07-29 (Report). These concerns include: (1) inaccurate use of lowand moderate-income as a proxy for modest means; (2) inappropriate use of 

income categories ostensibly based on CRA categories; (3) improper reliance on 

the Federal Reserve’s Survey of Consumer Finance; (4) insufficient discussion of 

the structure and framework of FCUs; (5) insufficient discussion of NCUA’s 

efforts to enhance service to low- and moderate-income individuals; and (6) 

incomplete data on executive compensation. 

1. GAO’s Definition of “modest means” 

It is inaccurate for GAO to define the term modest means as only including lowand moderate-income individuals. To use a proxy definition for modest means, 

although convenient for drafting the Report, contradicts clear congressional intent 

and disregards important statutory mandates on whom FCUs can serve. NCUA 

strongly believes that using the terms modest means and low- and moderateincome individuals interchangeably creates confusion and a perception 

inconsistent with statutory intent and regulatory policies put in place to achieve 

that intent.

While the Report recognizes in footnote 30 on page 26 that there is no commonly 

accepted definition of modest means, the following statement on page 6 equates 

low- and moderate-income to modest means: 

[T]he Federal Reserve’s 2004 Survey of Consumer Finance (SCF) -

- indicates that credit unions continued to lag behind banks in the 

percentage of their customers or members that were of low- and 

moderate-income households. Our analysis of the 2004 SCF 

indicated that 32 percent of households that only and primarily used 

credit unions were of modest means (emphasis added). . . . . 

The history of the Credit Union Membership Access Act of 1998 (CUMAA)1

demonstrates congressional intent when the term “modest means” was used.

This term was first introduced in proposed amendments to the FCU Act in 1998 

describing the mission of credit unions. Although these amendments were not 

adopted in the final version of CUMAA, the House Report accompanying the 

proposed bill noted: “Section 204 reaffirms the continuing and affirmative 

obligation of insured credit unions to meet the financial services needs of persons 

 

1 Pub. L. No. 105-219, 112 Stat. 913 (August 7, 1998).

See comment 2.
Appendix V

Comments from the National Credit Union 

Administration

Page 84 GAO-07-29 Credit Union Membership and Executive Compensation

- 2 - Enclosure 2 

of modest means, including those with low- and moderate-incomes, 

consistent with safe and sound operation.”

2

The Senate Report followed a similar usage in referring to section 204 of the bill.

Specifically, the Senate Report also discussed the calling of credit unions to 

serve the entire range of membership and to provide “affordable credit union 

services to all individuals of modest means, including those with low- and 

moderate-incomes, within the field of membership of such credit union.”

3

These congressional views reflect the clear understanding that the term modest 

means indicates a meaning broader than individuals with low- and moderateincome, and those that meet the definition of modest means must also be within 

the field of membership (FOM). In this respect, the term, though not specifically 

defined, conforms explicitly with its earlier counterpart, “small means,” as a 

shorthand reference to members of the broad working class.

CUMAA also served notice that outreach programs to reach low- and moderateincome individuals, and the support for credit unions designated to serve lowincome memberships, should still continue. Additional authorities granted to lowincome designated credit unions, and the ability for multiple common bond FCUs 

to adopt underserved areas are also consistent with a more expansive definition 

for modest means. 

2. Use of CRA-type definitions for income levels 

The Report, in footnote 27 on page 24, provides an explanation for the use of the 

Federal Reserve’s Survey of Consumer Finance (SCF) and income categories, 

and states: 

We [GAO] based our groups on income categories used by 

financial regulators for federal Community Reinvestment Act 

examinations intended to encourage depository institutions to help 

meet credit needs in all areas of the communities that they serve: 

(1) a low-income household had an income of less than 50 percent 

of the national median household income; (2) a moderate-income 

had an income of at least 50 percent of but less than 80 percent of 

the national median household income; (3) a middle-income 

household had an income of at least 80 percent of but less than 

120 percent of the national median household income; and (4) an 

upper-income household had an income of at least 120 percent of 

the national median household income. 

 

2

 H.R. REP. NO. 105-472, at 22 (1998)(emphasis added). 

3

 S. REP. NO. 105-193, at 11 (1998)(emphasis added). 
Appendix V

Comments from the National Credit Union 

Administration

Page 85 GAO-07-29 Credit Union Membership and Executive Compensation

- 3 - Enclosure 2 

This footnote does not accurately reflect the income categories established by 

the federal financial regulators for CRA examinations and contradicts Table 5 in 

Appendix I of the Report. The income categories identified in the Code of 

Federal Regulations for CRA purposes are based on median family income as a 

percent of metropolitan statistical area (local area) median family income. 4 The 

income categories utilized in the Report use median household income as a 

percent of national (not local area) median household income. Although the 

Report utilizes median family income in its additional analysis, this not only 

contradicts the SCF’s methodology, but also does not correct for CRA 

inconsistency. Consequently, the statement that the income levels used are 

similar to those used in other governmental programs is misleading and implies 

the analyses are based on CRA income categories when, in fact, the income 

categories are GAO-defined.

Additionally, footnote 27 illustrates CRA is intended to “encourage depository 

institutions to help meet credit needs in all areas of the communities that they 

serve. . .” Given 80 percent of FCUs are occupational or associational based, 

the CRA-type categories have limited, if any, applicability for the assessment of 

FCUs.

3. Basing Assessment on the Federal Reserve’s Survey of Consumer 

Finance

NCUA recognizes the lack of reliable data to serve as a basis for valid 

conclusions regarding income distribution of FCU members at the time of the 

drafting of the Report. NCUA also accepts that the SCF was the only source of 

data available that provided income figures, albeit of limited application, for FCU 

members.5

 As correctly pointed out by GAO, the SCF was not designed to 

analyze credit union member income distribution or make comparisons between 

credit union members and bank customers. For example, the SCF does not 

provide proportional representation of credit union members and bank customers 

necessary to develop valid conclusions pertaining to income distribution.

Notwithstanding these known deficiencies, the SCF is the primary source for the 

conclusions reached in the Report, which has the potential for misleading 

assessments about whom credit unions serve compared to banks. 

Additionally, throughout this study NCUA discussed with GAO various means of 

presenting the SCF data. In NCUA’s view, the use of a single chart, on page 27 

in the body of the Report, using broad income categories, limits the reader’s 

ability to draw objective conclusions. Although Appendix I includes additional 

 

4

 See 12 C.F.R. §§ 228.12(b) and (m)(Federal Reserve), 345.12(b) and (m)(FDIC), 25.12(b) and (m)(OCC), and 

563e.12(b) and (m)(OTS). 

5

 The number of households primarily using credit unions included in the 2004 SCF is only 14 percent of those surveyed. 

The number of FCU member households included in this small number is unknown. See page 63 of the Report. 

See comment 3.

See comment 4.
Appendix V

Comments from the National Credit Union 

Administration

Page 86 GAO-07-29 Credit Union Membership and Executive Compensation

- 4 - Enclosure 2 

comparisons, they are also insufficient for providing a comprehensive view of 

member incomes. 

The use of additional tables, in the body of the report, depicting the same data in 

various ways would have allowed a more complete view of member incomes.

For example, the Federal Reserve uses income percentiles in its assessment of 

the SCF, which provides a more objective presentation of income distribution 

than the broad income categories used in the Report. Table 1 presents the data 

used in the Report based on these income percentiles.

Table 16

Percentage of Members/Customers within Income Percentile

Primary and Only Users 2003

Percentile of Income Annual Income Ranges Credit Unions Banks 

Income pct < 20 $0 to $18,900 11.5% 19.2% 

Income pct: 20-39.9 $18,901 to $33,900 18.8% 20.0% 

Income pct: 40-59.9 $33,901 to $53,600 23.2% 20.7% 

Income pct: 60-79.9 $53,601 to $89,300 24.8% 20.2% 

Income pct: 80-89.9 $89,301 to $129,400 13.2% 9.4% 

Income pct: 90-100 > $129,400 8.5% 10.6% 

Further, including both average and median incomes for comparative purposes, 

rather than using only median as reflected in the Report, provides for a more 

complete view of member incomes. According the SCF results and as 

demonstrated in Table 2, while credit union members have the highest median 

income, bank customers have the highest average income. 

Table 27

Median and Average Income Comparison 

2003

Total SCF Credit Union Banks 

Median $42,000 $50,000 $43,000 

Average $68,778 $62,572 $74,211 

There are also technical inconsistencies in the Report’s methodology. For 

example, as stated on page 28: “To determine how sensitive our [GAO’s] results 

were to our income categorization, we used median family income in addition to 

median household income to analyze the 2001 and 2004 SCF data. We found 

similar results using both median family and household income.” However, this 

comparison does not accomplish its stated objective. The use of the median 

 

6

 Table compiled by NCUA to illustrate other alternatives for SCF data analysis. 

7

 Table compiled by NCUA to illustrate other alternatives for SCF data analysis using the median income included in the 

Report.
Appendix V

Comments from the National Credit Union 

Administration

Page 87 GAO-07-29 Credit Union Membership and Executive Compensation

- 5 - Enclosure 2 

family income for comparison is inconsistent with the SCF methodology, which 

utilized median household income. Therefore, this comparison does not add 

validity to the results of the study since it only changes the comparative 

benchmark.

4. Providing a limited framework for credit union membership assessment 

Although the Report correctly recognizes that credit unions retain their distinction 

in terms of structure and governance, it does not provide a framework that would 

allow for an appropriate interpretation of the assessments presented. For 

example, factual background information about credit unions and their important 

differences from banks, which is vital for an understanding of this issue, is not 

adequately addressed. To fully understand and assess any data that attempts to 

compare credit union members with depositors in other types of financial 

institutions, the Report should include discussion of the following: 

A. Statutory limitations on FCU membership 

MSAP data confirms the importance of the statutory mandate concerning 

common bond when assessing membership profiles. It also confirms that 

comparisons with other financial institutions, as well as among different chartertypes of FCUs, are difficult. FCUs are chartered as cooperatives to serve 

individuals only within their FOM. They are, therefore, limited in whom they can 

serve and are restricted to the income composition of the individuals within their 

allowed FOM. It is misleading to draw definitive conclusions about the success 

of FCUs in serving individuals and groups outside their traditional membership 

base without fully focusing on their authorized FOMs. This is particularly 

important in view of the fact that, as of December 2005, approximately 80 

percent of all FCUs had single-or multiple-common bond charter types based on 

occupation or association. The implication of this FOM concentration, based 

primarily on working individuals, is far reaching within the context of assessing 

the membership profile of FCUs. 

Understanding statutory limitations on who can join FCUs is critical in conducting 

an objective assessment of the FCU system membership profile, any policy 

consideration on who benefits from credit union services, and the impact of FCUs 

on the financial sector. The statutory limitations also emphasize the differences 

between FCUs and banks and draw into question the reasonableness of any 

general comparison between income distribution of FCU members and bank 

customers. To conduct a reasonable comparative assessment of whom FCUs 

and banks serve, both types of institutions would need to have a similar structure 

and other characteristics. Although community-chartered FCUs and community 

banks may share some similarities relative to location, structurally, communitychartered FCUs remain cooperatives with the limitations of building capital/net 

worth, geographic constraints, and numerous other restrictions. 

See comment 5.
Appendix V

Comments from the National Credit Union 

Administration

Page 88 GAO-07-29 Credit Union Membership and Executive Compensation

- 6 - Enclosure 2 

B. Composition of the FCUs 

The Report provides an extensive review of the characteristics and growth 

patterns of community-chartered FCUs. However, the proportion of FCUs that 

are community-chartered, the need for charter conversions to ensure continued 

viability, and the challenges community-chartered FCUs face when converting 

from a single or multiple common bond charter, as well as other issues, are not 

thoroughly addressed. For example:

1. Despite recent growth in FCU community charters, they still only represent 

approximately 20 percent of FCUs and 30 percent of FCU membership.

This is a significant portion of the FCU system, but, as noted in the Report, 

this growth has primarily been within the last five years. Additionally, it 

should be emphasized that much of this growth is a result of FCUs 

converting from an already existing occupational or associational FOM.

Instead, the Report concentrates on the growth of this subset when 

characterizing the entire FCU system, in particular the perceived “blurring” 

of the distinction between FCUs and other depository institutions.

2. A thorough assessment of the causes for the recent community charter 

conversions is not provided. The primary reason for these conversions 

has been to ensure continued viability of FCUs in changing economic and 

financial industry environments. A review of several examples documents 

this point. Clearview FCU (formally US Airways); Bethpage FCU (formally 

Grumman); JAX FCU (formally Jacksonville Naval Base); and New 

Cumberland FCU (formally New Cumberland Army Depot Defense 

Distribution Center) all converted to community charters in response to 

changes in their primary sponsors.

3. The time necessary to successfully implement a different business model 

when converting to a community charter is not adequately addressed.

This is critical since the cutoff for the SCF data is 2003, yet the period 

under review extends to and includes 2005. Consequently, the SCF does 

not allow for an assessment of any appreciable changes based on the 

recent growth of FCU community charters, as the majority of the 

conversions to a community charter have occurred since 2000, and 192 

have occurred since 2003. Since the growth of community charters is 

discussed at length, it should also be fully explained that relative to the 

overall issue of reaching out to low- and moderate-income individuals, the 

impact of this growth can not be expected to be represented in the SCF 

data. Because the SCF does not overlay the time period of the review, its 

relevance is further diminished. 

4. The intent of NCUA’s regulations pertaining to community charters is not 

accurately described. On page 1 the Report states: “As a result of recent 

See comment 6.

See comment 7.

See comment 8.
Appendix V

Comments from the National Credit Union 

Administration

Page 89 GAO-07-29 Credit Union Membership and Executive Compensation

- 7 - Enclosure 2 

legal and regulatory developments, field of membership requirements for 

credit unions have been relaxed – member groups now can include 

anyone who lives, works, worships, or attends school in areas as large as 

whole counties or major metropolitan areas.” This statement suggests 

that the affinity requirement (lives, works, worships...) of NCUA’s field of 

membership rules and the geographic limits on community charters are 

recent developments. That suggestion is not accurate. Both of these 

NCUA regulatory policies predate CUMAA. NCUA did grant community 

charters prior to CUMAA that encompassed whole counties and 

metropolitan areas. It is true that the documentation requirements for 

single political jurisdictions were reduced through regulatory amendments 

that post-dated CUMAA, but that change was based on NCUA’s 

experience in chartering communities constituting a single political 

jurisdiction.

5. The size and extent of the community charters approved by NCUA are not 

appropriately represented. By using the approval of Los Angeles County, 

on page 13, as an example of a community charter conversion, it 

misrepresents the size of the community charter conversions commonly 

authorized. The data provided to GAO reflects the average population 

size for those community charter conversions approved during the period 

from 2000 to 2005 was 304,886, and the median size was 125,000. 

6. The Report states in the Highlights, as well as on page 6 and elsewhere, 

that NCUA’s change in chartering policy is “triggered partly by concerns 

about competing with states with more expansive credit union chartering 

rules. . .” It is inaccurate to indicate that FOM parity with state-chartered 

credit unions is a primary objective when revising FOM policies for FCUs.

Although this issue has surfaced during the regulatory comment period on 

proposed policy changes, it has not been a factor in NCUA’s policy 

making.

C. The size and market share comparison of credit unions and banks 

Although the Report attempts to compare credit unions to banks, it does not 

provide a framework for an objective analysis, which, in addition to the 

membership limitations discussed above, should reflect the relative industry 

position of the two types of financial institutions.

As with all institutions in the financial industry, FCUs have evolved to ensure their 

continued viability. Since 1934, dramatic changes in the overall economic 

environment in which FCUs must operate have occurred. These changes have 

required that FCUs adapt in order to meet the financial needs and expectations 

of their members. Specifically, in the last forty years, changing demographics in 

the United States were characterized both by the loss of numerous well-paying 

blue collar jobs in the manufacturing sector and an increasing disparity in the 

See comment 9.

See comment 10.

See comment 11.
Appendix V

Comments from the National Credit Union 

Administration

Page 90 GAO-07-29 Credit Union Membership and Executive Compensation

- 8 - Enclosure 2 

income range between persons in the working class and the upper class.

Operational evolution can be seen at several levels, including the offering of a 

wider range of services to a more broadly defined FOM. Fundamentally, 

however, even though some FOMs are broader today, FCUs have adhered to 

and preserved the integrity of both the common bond and their cooperative 

structure, which is reflected in regulatory policies.

In addition, the types of services FCUs now increasingly offer have changed. As 

with the common bond, FCUs have found it necessary to adapt in order to meet 

member expectations and demand for products and services. On page 1 the 

Report states “credit unions are now allowed to offer many products and services 

similar to those provided by banks, such as real estate and business loans.”

Such a conclusion, however, fails to adequately assess the changing economic 

environment. Further, this statement misrepresents the services credit unions 

have historically provided. FCUs, for example, have been offering member 

business loans since their inception, often providing loans to entrepreneurs 

initiating a small business. As to the issue of mortgage lending, the FCU Act first 

authorized mortgage lending for FCUs in 1978. State-chartered credit unions in 

several states, most notably in the New England area, have provided this type of 

lending since the 1950s.

In regard to rate comparisons, the Report recognizes the rate differences 

between banks and credit unions on savings and lending products. However, it 

should further recognize the interest rate environment during the period of the 

GAO review when interest rates were at historic lows. An assessment of the 

interest rate environment alone may have explained the reason for the 

decreasing gap in the rate paid on savings. This analysis is also crucial in 

assessing the mortgage rates since these loans of long-term maturity 

significantly affect the asset/liability management and ultimately the safety and 

soundness of a financial institution. 

Additionally, as shown in Table 3, credit unions are an important, but relatively 

small, segment of the financial industry. This size disparity draws into question 

the appropriateness of the comparison and conclusions in the Report. 

See comment 12.

See comment 13.
Appendix V

Comments from the National Credit Union 

Administration

Page 91 GAO-07-29 Credit Union Membership and Executive Compensation

-9- Enclosure 2

Table 3

Banks and Other Financial Institutions

Insured by Federal Deposit Insurance

Corporation8

Credit Unions Insured by NCUSIF

(Federally-Insured Credit Unions)9

Year

Total

Federally

Insured

Deposits

Commercial

Banks

Savings

Banks

Total

FDIC

Insured

% of

Total

Federal

Credit

Union

State

Credit

Union

Total

NCUSIF

Insured

% of

Total

2005 7,718,597 6,073,333 1,067,845 7,141,178 92.5% 321,831 255,588 577,419 7.5%

2004 7,140,323 5,592,825 991,376 6,584,201 92.2% 308,318 247,804 556,122 7.8%

2003 6,482,630 5,028,866 925,423 5,954,289 91.8% 291,485 236,856 528,341 8.2%

Dollars shown in millions

NCUA also has concerns relating to the asset groups used in the Report for the

comparison between banks and credit unions. The smallest group size used for

comparative purposes in the Report is $100 million or less in assets. It is not

disclosed, however, that approximately 88 percent of FCUs fall into that category,

with 80 percent having assets less than $50 million as of September 30, 2005. It

should also be noted that the average asset size of FCUs is $73.2 million with

the median asset size just $11 million.

5. NCUA’s efforts to target credit union services to low- and moderateincome individuals

One of GAO’s stated objectives was to review NCUA’s efforts to expand credit

union services to individuals of low- and moderate-income. The Report correctly

focuses on two principal programs in this context: (1) NCUA’s Low-Income

Credit Union (LICU) program; and (2) NCUA’s strategic efforts to encourage

FCUs to expand services into specifically designated underserved areas. It also

correctly notes that NCUA’s support for these programs has resulted in increased

participation in both programs by FCUs in recent years.

It is, however, inaccurate and inappropriate to use these programs to define and

assess service to people of modest means as they are specifically targeted to

low-income individuals. The legislative history of the law creating the LICU

program indicates that its purpose was “to encourage saving and provide access

to credit for low-income persons, and to bring consumer education into poverty

areas. . . .”10 This congressional action reflects recognition that the low-income

segment of the community is less financially capable, without assistance or

special consideration, of supporting a credit union bound by the traditional

constraints of common bond and cooperative structure. With its focus on the

new term “low income,” Congress acknowledged that the traditional FCU

8 Information obtained from FDIC Statistics on Banking: A Statistical Profile of the United States Banking Industry as

published by FDIC, Division of Insurance and Research, for 2003, 2004, and 2005. 

9

 Information obtained from Yearend Statistics for FICUs as published by the National Credit Union Administration for 

2003, 2004, and 2005. 

10 115 Cong. Rec. S13997 (May 27, 1969) (statement of Sen. Scott). 

See comment 14.

See comment 15.
Appendix V

Comments from the National Credit Union 

Administration

Page 92 GAO-07-29 Credit Union Membership and Executive Compensation

- 10 - Enclosure 2 

membership base must necessarily be different, and broader. Although 

Congress recognized the difference, it did not believe an amendment to the 

overall statutory purpose for FCUs, which at that time was service to persons of 

“small means,” was required.

Instead, Congress implicitly endorsed FCU service to the traditional membership 

base and specifically directed that NCUA should supply its own definition of low 

income for purposes of implementing the provisions of the new law. By 

regulation, NCUA did so, specifying that the term low income means individuals 

who make less than either 80 percent of the average for all wage earners, as 

established by the Bureau of Labor Statistics, or whose household income is at 

or below 80 percent of the national median household income as established by 

the Census Bureau.11

To qualify for low-income designation, a credit union must have more than 50 

percent of its membership consisting of individuals defined as low income. This 

was a specific initiative by NCUA to recognize credit unions that predominately 

served a low-income population but were challenged in providing additional 

services and/or programs to their members. This initiative opened opportunities 

for these credit unions to obtain additional capital from philanthropic 

organizations and assistance from the Department of the Treasury’s Community 

Development Financial Institution Fund (CDFI), the NCUA’s Community 

Development Revolving Loan Fund (CDRLF), and other organizations to 

enhance and expand services to the low-income population. 

Page 20 of the Report accurately describes the other unique characteristics of 

LICUs and correctly notes LICUs grew in number between 2000 and 2005, from 

632 to 1,032, a 63 percent increase. This result was achieved with NCUA’s 

vigorous encouragement and evidences dramatic success in NCUA’s effort to 

increase service to low-income members. Although NCUA has not collected 

income and service usage data, the descriptive analyses conducted by NCUA on 

the data collected in MSAP reflect LICUs and FCUs with underserved areas are 

serving a relatively greater proportion of low- and moderate-income individuals 

than the FCU system as a whole.

A more comprehensive analysis of the reasons that underlie NCUA’s recent 

policy change concerning expansion into underserved areas is warranted. The 

American Bankers Association sued NCUA, challenging the decision to allow a 

community based FCU to expand its service into an underserved area. The 

fundamental issue in the case was the authority of NCUA to authorize any FCU, 

regardless of charter type, to expand into underserved areas. The Report should 

explain that settlement of the lawsuit resulted in the prohibition of single-bond 

and community FCUs from adopting underserved areas. This prohibition, which 

 

11 12 C.F.R. § 701.34(a)(2). As originally implemented, NCUA’s rule used 70 percent of median as the relevant 

percentage indicator of “low income.” The rule was changed to its current usage of 80 percent in 1993.

See comment 16.
Appendix V

Comments from the National Credit Union 

Administration

Page 93 GAO-07-29 Credit Union Membership and Executive Compensation

- 11 - Enclosure 2 

is contrary to congressional intent, inhibits the ability of both types of FCUs to 

increase service to low- and moderate-income individuals who are outside the 

credit union’s FOM.

In addition, the Report on page 22 uses Washington, D.C. as an example of an 

underserved area approved by NCUA without regard to location. This 

presentation is misleading. It is not explained that once an FCU identifies an 

area meeting the underserved requirement, as defined in Section 103(16) of the 

Community Development Banking and Financial Institutions Act of 1994,12 it must 

apply to NCUA to add the area to its field of membership. A detailed marketing 

plan, emphasizing how the FCU plans to reach out and serve all individuals in the 

underserved area, must be submitted. A detailed business plan must also be 

submitted indicating how the FCU will meet the needs of the individuals in the 

underserved area by describing the products (e.g., free checking, micro-credit 

loans) and services (e.g., bilingual staff, financial education seminars) the credit 

union offers or is planning to offer. Once approved to serve a specific 

underserved area, the credit union must maintain or open an office or service 

facility in the underserved area within two years.

Other outreach initiatives by NCUA to increase service to underserved individuals 

have not been sufficiently acknowledged or described. NCUA has initiated 

several programs focused on assisting LICUs and on providing all credit unions 

with best practices to consider when converting to community charters or adding 

underserved areas. Since 1987, NCUA has administered the CDRLF, which was 

established by Congress, to provide technical assistance grants and low-cost 

loans for any LICU interested in enhancing service to its membership. Under 

NCUA’s auspices, the CDRLF has granted 273 loans totaling $40.5 million, and 

1,923 grants totaling $5.8 million. 

In addition to the CDRLF, the Access Across America initiative, announced in 

February of 2002, incorporated NCUA’s activities for small and low-income 

designated credit unions, as well as those FCUs adopting underserved areas.

The program was designed to partner with federal government agencies and 

other organizations to identify and facilitate use of resources available for credit 

unions to assist in their efforts to serve low- and moderate-income individuals.

Workshops continue to provide partnering opportunities with federal government 

agencies, as well as non-profit and private organizations. This initiative has 

resulted in NCUA entering into Memoranda of Agreement with the Internal 

Revenue Service, Operation Hope, and the Department of Agriculture, each of 

which committed to provide assistance in sharing opportunities with participating 

credit unions. Moreover, NCUA maintains a working relationship with the 

Department of Health and Human Services, CDFI, and Fannie Mae to provide 

opportunities for credit unions to expand the products and services particularly 

useful to those members with low- and moderate-incomes. 

 

12 Pub. L. 103-325, 108 Stat. 2163 (Sept. 23, 1994)(codified at 12 U.S.C. §§ 4701 et seq.).

See comment 17.
Appendix V

Comments from the National Credit Union 

Administration

Page 94 GAO-07-29 Credit Union Membership and Executive Compensation

- 12 - Enclosure 2 

As an adjunct to the Access Across America initiative, the Partnering and 

Leadership Successes program was introduced in 2003 to provide best practices 

in serving members and marketing to potential members in all credit unions, 

especially in underserved areas and communities. The agency coordinates 

widely attended workshops where a mix of credit unions present programs 

focused on serving low- and moderate-income individuals. A few of these 

programs include partnering opportunities with the Neighborhood Reinvestment 

Corporation, Latino outreach, and micro-business lending opportunities with the 

Small Business Administration.

In conjunction with these workshops, numerous Letters to Credit Unions have 

been published that augment the workshops, providing information to the credit 

union system about opportunities available to enhance service and marketing to 

individuals in underserved areas.13 Two early examples of these letters include 

the February 2002 Letter to Federal Credit Unions, Letter No. 02-FCU-02 titled 

Partnership Opportunities with IRS, which introduced the credit union system to 

the Volunteer Income Tax Assistance program, and the September 2001 Letter 

to Federal Credit Unions, Letter No. 01-FCU-06 titled Financial Education 

Curriculum, which announced FDIC’s new Money Smart Financial Education 

Curriculum.

The overall objective of NCUA’s initiatives is to provide increased opportunities 

for FCUs to diversify their membership profile and to assist small and low-income 

designated credit unions as they manage their operations in compliance with the 

increasing number of complex laws and regulations. If successful, the viability of 

some low-income designated FCUs will be preserved, thus further enhancing the 

opportunity for low- and moderate-income individuals in their FOM to join and 

participate in the financial services offered by small and low-income designated 

FCUs.

Each of these initiatives was in direct response to CUMAA. But these types of 

initiatives have long been a part of NCUA’s, or its predecessor agency’s, 

regulatory fabric. There have been others, such as the 1960s era initiative, 

undertaken jointly with the Office of Economic Opportunity, to establish FCUs to 

serve low-income communities, the drive to increase the number of LICUs, and 

the regulatory encouragement to add underserved areas.

More recently, in 1993, NCUA created the Office of Community Development 

Credit Unions which is dedicated to ensuring the long-term viability of small and 

low-income designated credit unions. Today this activity is handled by the Office 

of Small Credit Union Initiatives (OSCUI), which has expanded considerably in 

terms of staff, resources, and programs.

OSCUI conducts regional and national training workshops on a variety of topics 

to help small and low-income designated credit unions succeed. For example, in 

 

13 NCUA Home Page – http://www.ncua.gov – Letters to Credit Unions, 2001 to 2005. 
Appendix V

Comments from the National Credit Union 

Administration

Page 95 GAO-07-29 Credit Union Membership and Executive Compensation

- 13 - Enclosure 2 

2006 to date, OSCUI has held fifteen national workshops covering subjects such 

as establishing financial literacy programs, disaster recovery planning, and 

compliance with the Bank Secrecy Act. In addition to the national workshops, 

OSCUI coordinates with NCUA’s regional offices to conduct smaller roundtable 

training sessions focused on the needs of small and low-income designated 

credit union officials. 

6. Transparency of Executive Compensation 

NCUA agrees with the conclusion that credit union executive compensation is not 

readily transparent. Absent compensation information captured by IRS Form 

990, it can be difficult for FCU members to ascertain the exact compensation and 

benefits received by their executives. In the past, NCUA, while not objecting to 

disclosure of this information, has deferred to applicable state law on whether 

compensation and benefit information should be disclosed. 

As the Report points out, staff have indicated more efficient methods to capture 

and disseminate executive compensation information in lieu of filing Form 990.

Such methods include: (1) amending NCUA’s regulations to require FCUs to 

include executive compensation information in their annual reports; (2) requiring 

the reporting of such information in NCUA’s quarterly call reports; or (3) 

amending the standard FCU Bylaws to require disclosure of compensation 

information during an FCU’s annual membership meeting. These and other 

methods may be considered by the NCUA Board in evaluating the transparency 

of executive compensation. 

While NCUA agrees FCU executive compensation is not readily transparent, 

several matters in the Report warrant clarification. They include: 

1. Despite the absence of a standardized reporting mechanism, NCUA does 

not ignore the issue of executive compensation. Contrary to the 

implication on page 45, NCUA does assess executive compensation 

during the examination process primarily to determine its reasonableness 

as it relates to safety and soundness. There has never been a systemwide issue relating to executive compensation. As such, NCUA has not 

considered it necessary to collect or aggregate executive compensation 

data.

2. On Page 42, it is implied that MSAP is deficient because it does not collect 

executive compensation information for banks, thereby preventing a direct 

comparison between FCUs and banks. However, it is not within NCUA’s 

authority to collect data from banks or thrifts. Additionally, since this is not 

a safety and soundness issue for the credit union system, NCUA’s 

authority to collect executive compensation extends only to FCUs.

3. Comparing executive compensation of FCUs and banks was not a stated 

objective for GAO’s study. Attempting to make a direct comparison is not 

See comment 18.

See comment 19.
Appendix V

Comments from the National Credit Union 

Administration

Page 96 GAO-07-29 Credit Union Membership and Executive Compensation

- 14 - Enclosure 2 

only irrelevant to the issue of transparency, but is impossible given the 

differences in the forms of compensation available to FCU versus bank 

executives. For example, as the Report notes, stock options and stock 

bonuses are routinely paid to bank executives, but are unavailable to 

credit union executives. Nevertheless, the discussion of this matter 

seems to imply that somehow credit union executive compensation may 

be askew. Only by delving into the data provided in Appendix IV of the 

Report is it clear that credit union executives on average make 

significantly less than their banking counterparts.

4. Since the Report addressed comparisons between senior officers of credit 

unions and banks, it should have also included a more detailed 

comparison between directors of credit unions and banks. It neither 

discusses nor includes any data regarding the compensation paid to 

directors of banks, which in some instances can be rather lucrative. At 

least some discussion would have been appropriate, especially since FCU 

boards are comprised of volunteers.14 Including such data and discussion 

would have made for a more thorough and accurate comparison of 

executive compensation. 

5. The Report states on page 48 that MSAP will not stratify executive 

compensation by asset size of credit unions. This is not accurate. MSAP 

compensation data can be stratified into two statistically valid subsets 

based on asset size of the credit unions surveyed. In addition, limited 

descriptive conclusions can be derived from the data about other asset 

subgroups.

7. Conclusion 

As referenced in MSAP and this response, NCUA recognizes the difficulty in 

addressing the issues of membership profiles and the transparency of executive 

compensation in the absence of comprehensive data. NCUA also understands 

that the time allotted for completion of the Report did not allow for consideration 

of the MSAP data and similar data being compiled by NASCUS. Although the 

Report includes significant new detail and qualifies its reliance on the SCF, 

NCUA anticipates the general conclusions reached will be reported without the 

appropriate qualifiers. In order to assure a complete and thorough understanding 

of the FCU system, NCUA suggests that GAO include in its Report the 

information and data contained in MSAP. It is also suggested that the 

completeness of the Report would be further enhanced by inclusion of the data 

now being collected by NASCUS, thus allowing for a thorough assessment of the 

entire credit union system. 

 

14 Pursuant to the FCU Act, no member of an FCU board may be compensated; however, an FCU may compensate one 

individual who serves as an officer of the board. For example, if the credit union’s paid CEO is also a member of the 

board. See 12 U.S.C. §§ 1761(c) and 1761a. 

See comment 20.

See comment 21.

See comment 22.
Appendix V

Comments from the National Credit Union 

Administration

Page 97 GAO-07-29 Credit Union Membership and Executive Compensation

The following are GAO’s comments on the National Credit Union 

Administration’s letter dated November 14, 2006.

GAO Comments 1. As noted in NCUA’s letter, we did not receive the results of its pilot 

survey on the membership profile of federal credit unions (Member 

Service Assessment Pilot Program) in time to include it as part of our 

study. The report can be found at NCUA’s website www.ncua.gov.

2. NCUA questioned GAO’s use of low- and moderate-income as a proxy 

for the term modest means. As we note in our 2003 and current report, 

neither the legislative history of the Federal Credit Union Act, as 

amended, nor NCUA have established definitions as to what constitutes 

modest means. As a result, we used the low- and moderate-income 

categories that we defined in our 2003 report, which are based on what 

the other federal financial regulators use for Community Reinvestment 

Act purposes, as a proxy for modest means. Moreover, both citations 

identified by NCUA in the House and Senate reports for the bill that 

ultimately was enacted as CUMAA specifically identify low- and 

moderate-income as components of what is referred to as modest 

means. We agree that the term modest means also indicates a meaning 

broader than individuals with low- and moderate-income. Further, our 

analysis included comparisons between credit unions and banks of 

households with middle- or upper-incomes. This analysis showed that 

between 2001 and 2004 credit unions continued to serve a higher 

proportion of middle- and upper-income households and a smaller 

proportion of low- and moderate-income households than did banks. 

3. NCUA stated that the text in footnote 27 of the draft report did not 

accurately reflect the income categories that the federal financial 

regulators established for CRA examinations. The text in question has 

been moved up into the body of the report and modified to more clearly 

state that our categories were based on, but not identical to, that used 

by the other federal financial regulators for CRA purposes. The primary 

difference between our income categories and those used for CRA 

purposes was the use of national median income rather than local 

metropolitan statistical area median income as a benchmark for the 

various income categories. We use the national measure since the SCF 

is a national survey. Further, we agree with NCUA’s assertion that 

occupational and associational based credit unions have restricted 

membership bases, which limit their ability to serve all income 

categories. However, as we note in the report, although the number of 
Appendix V

Comments from the National Credit Union 

Administration

Page 98 GAO-07-29 Credit Union Membership and Executive Compensation

credit unions with single or multiple common bonds have been 

decreasing since 2000 and the number of credit unions with more 

inclusive community charters have been increasing, 2001 and 2004 SCF 

data indicated that credit unions continue to serve a higher proportion 

of middle- and upper-income households than banks. 

4. NCUA questioned our use of SCF data as the primary source for 

conclusions reached in the report regarding the income characteristics 

of credit union members. We believe that the report as stated clearly 

outlines the limitations of SCF data in conducting the analysis, but as 

we noted in our prior report, the SCF is the only source of 

comprehensive data to conduct such an analysis. We agree that there 

are other ways of analyzing and presenting these data. However, we 

believe that figure 2 in our report provides a valid comparison of bank 

and credit union customers in the SCF data. In addition, it uses the 

methodology of our 2003 report, which allows us to directly compare 

the results of our 2003 report with our current report. We focus on the 

median income, as we did in our prior report, since this measure is less 

susceptible to the influence of extreme values than the mean. As noted 

in the report, we performed an additional analysis using the median 

family income to provide additional context to our analysis within the 

same methodological framework.

5. NCUA suggested that our report does not provide a framework for 

understanding the effect of statutory limitations on federal credit 

unions when comparing the income distribution of federal credit union 

members and bank customers. We explicitly acknowledged the 

importance of these limitations in our 2003 report and have added some 

additional text to reflect these limitations in our current report. 

Nevertheless, we believe that our analysis of SCF data on the income 

levels of credit union members versus bank customers provides 

important contextual information on the extent, if any, that credit union 

members are different from individuals that use banks. The lack of data 

on the income distribution of credit union members by charter type 

was one of the primary factors behind our recommendation that NCUA 

expand its pilot survey to allow the agency to systematically obtain and 

monitor credit union member income data by charter type.

6. NCUA stated that the report does not thoroughly address the 

proportion of federal credit unions that are community chartered. We 

believe our report addresses this issue correctly, as originally 

presented. Both in table 1 of our report and the related text, we note 
Appendix V

Comments from the National Credit Union 

Administration

Page 99 GAO-07-29 Credit Union Membership and Executive Compensation

that despite the growth in community charters, multiple-bond credit 

unions remain the largest group of federally chartered credit unions in 

number, total membership, and assets. However, as we noted in our 

report, it is important to emphasize that community-chartered credit 

unions overtook multiple-bond credit unions as the largest of the three 

federal charter types, in terms of average membership and average size 

in terms of assets, beginning in 2003.

7. NCUA stated that the report does not thoroughly address the agency’s 

position on the need for charter conversions to ensure continued 

viability. We believe our report addresses this issue correctly, as 

originally presented. As noted in our report, we attributed to NCUA 

some of the causes for growth in the community charter, including the 

agency’s belief that community charter expansion allows federal credit 

unions to attract a more diverse membership base that can enhance a 

credit union’s economic viability or safety and soundness as well as 

provide greater opportunities to serve members of modest means. We 

further note in our report that NCUA explained that single- and 

multiple-bond credit unions often tend to be organized around 

employer or occupationally based associations, which in turn creates 

greater economic risk exposure since the membership base is 

intertwined with the economic cycles of a particular employer or 

occupation. Finally, we cite a Federal Reserve Bank of Atlanta research 

paper, which concluded that there are material benefits of credit union 

membership diversification and that these benefits derive from 

expanded investment opportunities and reduced concentration risk.

8. NCUA stated that the time necessary to successfully implement a 

different business model when converting to a community charter is 

not adequately addressed. We believe our report addresses this issue 

correctly, as originally presented. Specifically, the report cites NCUA’s 

belief that it would take time for any results to appear in the SCF data 

as credit unions seeking to expand into new areas and reaching new 

types of customers would face a learning curve in their efforts. Our 

report further notes that the latest available data from SCF are 2-years 

old, so any more recent changes would not be reflected in our analysis. 

9. NCUA stated that the intent of NCUA’s regulations pertaining to 

community charters was not accurately described. Specifically, NCUA 

stated that introductory text in the draft report suggested that the 

affinity requirements of NCUA’s field of membership rules and the 

geographic limits on community charters are recent developments. 
Appendix V

Comments from the National Credit Union 

Administration

Page 100 GAO-07-29 Credit Union Membership and Executive Compensation

NCUA noted that both of these regulatory policies predated CUMAA. 

We have clarified the text of our report to reduce the potential for 

confusion by stating that since the passage of CUMAA, NCUA has 

approved progressively larger geographic-based fields of membership. 

10. Text has been added to reflect the average and median population size 

of community charter conversions approved from 2000 to 2005. 

11. NCUA stated that we inaccurately attributed its change in chartering 

policy as being triggered partly by concerns about competing with 

states having more expansive credit union chartering rules. As we 

reported in 2003, NCUA stated to us at that time that a major reason for 

its regulatory changes was to maintain the competitiveness of the 

federal charter in a dual (federal and state) chartering system. In 

subsequent discussions with NCUA they indicated that it would be 

more accurate to attribute changes in chartering policy to factors such 

as the continued viability of federal credit unions in changing economic 

and financial industry developments. We have modified the text of our 

report to reflect the influence of these factors. 

12. Text has been added to reflect that credit unions historically have had 

the ability to offer real estate and business loans.

13. Text has been added to the report to recognize that interest rates during 

the period of our credit union and bank rate analysis were at historic 

lows. 

14. Text has been added to the background section of the report based on 

the information provided by NCUA in its comment letter regarding the 

proportion size of the credit union industry in comparison with other 

federally insured depository institutions and the relatively small size of 

most federally chartered credit unions. However, it is important to note 

that the disparity in size between the credit union and banking 

industries does not affect our rate analysis methodology or our 

conclusions since that analysis is broken out by asset groupings, 

starting with institutions with assets of $100 million or less.

15. NCUA stated that it was inaccurate and inappropriate to use its LowIncome Credit Union program and underserved area expansion 

program to define and assess service to people of modest means. As 

noted previously, we used low- and moderate-income as a proxy for 

modest means due to a lack of a legislative or regulatory definition or 
Appendix V

Comments from the National Credit Union 

Administration

Page 101 GAO-07-29 Credit Union Membership and Executive Compensation

other criteria. Moreover, we note that NCUA’s regulations for its 

underserved program includes criteria (area in a metropolitan area 

where the median family income is at or below 80 percent of the 

metropolitan area median family income or the national metropolitan 

area median family income) that is roughly similar to that used to 

define low- and moderate-income for CRA purposes (less than 80 

percent of the median family income for the Metropolitan Statistical 

Area). 

16. We clarified in the report that both single-bond and community credit 

unions are currently not permitted to include underserved areas in their 

fields of membership. As noted in the report, the American Bankers 

Association contended that the Federal Credit Union Act allows 

multiple-bond credit unions, but it does not specifically identify single 

or community credit unions to add underserved areas to their field of 

membership.

17. We added additional information in the report on NCUA’s criteria for 

federal credit unions applying to include underserved areas in the 

credit union’s field of membership. However, we disagree with NCUA’s 

assertion that the example we provided in our report is misleading. 

18. We clarified in the report that NCUA examiners assess executive 

compensation during the examination process primarily to determine 

its reasonableness as it relates to safety and soundness, but that since it 

has not found a systemwide issue with executive compensation, NCUA 

has not considered it necessary to collect or aggregate executive 

compensation data.

19. NCUA noted that our characterization of NCUA’s Member Service 

Assessment Pilot implies that the pilot is deficient because it does not 

collect executive compensation information for banks; thereby, 

preventing a direct comparison between federal credit unions and 

banks. It also noted that it is not within NCUA’s authority to collect data 

from banks or thrifts and that its authority to collect executive 

compensation data extends only to federal credit unions in the context 

of credit union safety and soundness issues. We do not intend to imply 

that collecting compensation data from banks is the responsibility of 

NCUA but point out the lack of available data that would allow a direct 

comparison of credit union and bank executive compensation.
Appendix V

Comments from the National Credit Union 

Administration

Page 102 GAO-07-29 Credit Union Membership and Executive Compensation

20. NCUA indicated that comparing executive compensation of federal 

credit unions and banks was not a stated objective for our study and 

that attempting to make a direct comparison is impossible, given the 

differences in the forms of compensation available to federal credit 

unions versus bank executives. We acknowledge that comparing 

executive compensation of federal credit unions and banks was not a 

stated objective for this study. Our report text merely points out that 

due to the lack of consistent, available, and transparent compensation 

data for credit unions, any overall comparison is difficult. For this 

reason, we did not provide bank executive compensation data in the 

main body of the report or make any direct comparisons between 

credit union and bank executive compensation. However, we believe 

that inclusion of bank executive compensation data in the appendix 

provides a useful benchmark on selected executive positions. 

21. NCUA noted that the report neither discusses nor includes any data 

regarding the compensation paid to directors of banks and that 

including such data and discussion would make a more thorough and 

accurate comparison of executive compensation. We acknowledge this 

point and added some additional discussion on bank director 

compensation for context. 

22. Our original characterization of NCUA’s Member Service Assessment 

Pilot was based on a discussion with NCUA officials. We have revised 

the text of the report to reflect that compensation data that NCUA 

obtained can be stratified into two statistically valid subsets based on 

the asset size of the credit unions surveyed.
Page 103 GAO-07-29 Credit Union Membership and Executive Compensation

Appendix VI

GAO Contact and Staff Acknowledgments ApendxiVI

GAO Contact Yvonne D. Jones, (202) 512-8678 or jonesy@gao.gov

Staff 

Acknowledgments

In addition to the above contact, Harry Medina, Assistant Director; Janet 

Fong; May Lee; John Lord; Donald Marples; Edward Nannenhorn; Jasminee 

Persaud; Carl Ramirez; Barbara Roesmann; Paul Thompson; and Richard 

Vagnoni made key contributions to this report.

(250275)
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To 

have GAO e-mail you a list of newly posted products every afternoon, go to 

www.gao.gov and select “Subscribe to Updates.”

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to:

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Congressional 

Relations

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548

Public Affairs Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548