(April 14, 2010 – New York, NY) Responding to a request by the Federation, the National Credit Union Administration (NCUA) and the U.S. Department of the Treasury have agreed to modify viability standards for credit unions applying to the Community Development Capital Initiative (CDCI).

According to a letter from Tawana James, Director of NCUA’s Office of Small Credit Union Initiatives, “NCUA has adjusted its evaluation criteria with respect to non performing loans... [and the] new formula will give greater weight to LICU’s cushion against delinquencies even in worst-case scenarios… Preliminary review of the latest data indicates that by using NCUA’s new formula, additional LICUs will qualify for CDCI without matching funds,” her letter read.

NCUA’s complete “viability” letter to the Federation is available by clicking here.  

“We are very gratified that NCUA and Treasury have recognized the distinct operating characteristics of credit unions serving low-income communities,” explained Federation President/CEO Cliff Rosenthal.  “We hope these new standards will indeed make it possible for many more credit unions to apply by the April 30 deadline.”

In addition to these changes to CDCI viability standards, the Federation also scored major victories advocating for Treasury and NCUA to push back program deadlines in order to allow for maximum participation by credit unions.  Based on the recently amended deadlines, credit unions have until April 30 to apply for CDCI funds and CDFI certification from Treasury, and until May 10 to submit CDCI-required Secondary Capital Plans to NCUA.

“We truly appreciate both Treasury’s and NCUA’s flexibility in addressing the needs of credit unions applying to this program,” said Rosenthal. “These funds were made available precisely because the eligible institutions are operating in some of America’s most distressed communities, and the more of them that are able to participate, the greater the impact will be on the people they serve.”

About the Community Development Capital Initiative

Announced in February by Treasury Secretary Timothy Geithner, CDCI is a program through 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 counts toward their regulatory net worth.  Eligibility for the CDCI program is determined by NCUA in conjunction with Treasury.  Highly rated credit unions that are well capitalized qualify readily, in the absence of material negative trends.  Credit unions that fall below that standard may still qualify for funds if they are able to obtain matching secondary capital from non-governmental sources.

In addition to extensive outreach with NCUA and Treasury officials on CDCI program parameters, the Federation recently announced that it is committing $1 million in secondary capital to serve as match for member CDCUs to receive Treasury Funds.

Pablo DeFilippi, Associate Director of Membership Development, stressed that “the Federation is committed to helping CDCUs apply for CDCI funds by providing technical assistance to members on all aspects of the program and its various applications. We are also offering extensive consulting services to other credit unions interested in applying,” he added. Credit unions seeking assistance should contact Pablo DeFilippi at: pablo@cdcu.coop or (800) 437-8711 x304.

Additional information about the CDCI program is available by clicking here.

© 2010 National Federation of Community Development Credit Unions.