NEW YORK (3/6/09)--The National Federation of Community Development Credit Unions has developed a new Express Application for community development credit unions (CDCUs) needing secondary capital. The move is in response to the recent economic downturn and the potential cost of the Corporate Credit Union Stabilization Program on CDCUs nationwide. The new application process will allow the federation to target investments in CDCUs proactively in times of uncertainty and concern. It is expected to speed up the application process for qualified CDCUs, helping support the services CDCUs provide their low- and moderate-income communities. Secondary capital is a subordinated debt counted as net worth in credit union financials. Secondary capital can be a vital instrument to help keep credit unions viable as they continue to serve low-income communities in the current economic environment, the federation said. To apply for the Secondary Capital Application Express Path, credit unions must meet the following criteria based on their Dec. 31, 2008 financials:
* A net asset ratio greater rate than 6.5%; * A return on assets greater than 0%; * Delinquencies/total loans less than 6.25%; and * Loans/assets greater than 50%.
The application requires:
* January and February results plus a three-year financial projection; * Most recent delinquency report; * Most recent business plan. The credit union does not need to create a new plan for this application; * At least three years of lending experience; * Must be a CDCU member of the federation for at least three months at the time of disbursement; and * Must meet National Credit Union Administration regulatory eligibility standards for secondary capital (low income designation plus filing of a secondary capital plan).
CDCUs may request only up to 25% of equity capital--reserves plus undivided earnings-- as of Dec. 31, 2008. The total amount of the request through the express path should not exceed $150,000. The Express Path Application deadline is April 3. For more information, use the link.