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Federation offering 1M to match CDCI investments
NEW YORK (3/11/10)--To help more community development credit unions (CDCUs) qualify for Community Development Initiative (CDCI) funds, the National Federation of Community Development Credit Unions' board has voted to make an additional $1 million in secondary capital available as matching funds for member CDCUs that might not be immediately eligible for CDCI investments. The initiative from the U.S. Department of the Treasury has launched a program in which low-income credit unions (LICUs) certified as Community Development Financial Institutions (CDFIs) can obtain up to 3.5% of their assets as secondary capital, which will count toward their regulatory net worth. Eligibility for the CDCI program will be determined by the National Credit Union Administration (NCUA) along with the Treasury Department. Highly rated credit unions that are well-capitalized are expected to qualify readily, in the absence of material negative trends. Credit unions that fall below that standard may still qualify for funds if they can obtain matching secondary capital from non-governmental sources. Federation Board Chairman Randy Chambers, chief financial officer of Self-Help CU in Durham, N.C., commented on the Treasury’s new initiative. “We believe the CDCI program is a unique opportunity for low-income credit unions to rebuild the net worth that was eroded over the past year by the corporate meltdown, share insurance charges, and the troubled economy,” he said. “While our resources are limited, we plan to do whatever we can to help our members access these funds.” The federation has been the primary private-sector provider of secondary capital since 1996. Based on Treasury’s guidelines, the CDCI program will invest secondary capital at 2% for eight years, after which the rate escalates to 9% as an incentive for institutions to repay the money. “We have no doubt that most credit unions will repay CDCI funds by the eight-year mark, so they won't be encumbered by the high rate of funds for the last five years,” said Cliff Rosenthal, federation president/CEO. Applications are due April 2. Credit unions that are not yet CDFI-certified and want to apply for CDCI must submit their certification applications to the CDFI Fund by April 15. They also must submit a secondary capital plan to NCUA by May 3, Rosenthal said. The federation will help CDCUs apply for CDCI funds by providing technical assistance to its members on all aspects of the program and its applications. The federation also offers extensive consulting services to other credit unions interested in applying. For more information, use the link or contact Associate Director of Membership Development, Pablo DeFilippi at Pablo@cdcu.coop or call 800-437-8711, ext. 304.
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