11 CUs Receive Community Development Designation from Treasury - National Federation of Community Development Credit Unions

Federation Assistance “Instrumental” Say CDCUs

(May 3, 2012 – New York, NY) The National Federation of Community Development Credit Unions (Federation) has welcomed the increased pace of credit unions certified as community development financial institutions (CDFIs) by the U.S. Department of the Treasury. Eleven credit unions were certified in the first quarter of 2012 alone, nearly matching the 12 credit union certifications in all of 2011. Ten of the newly certified credit unions are Federation members, and seven received direct certification assistance from the Federation’s CU Breakthrough™ consulting service.

Over the past three years alone, the Federation has helped nearly 100 credit unions obtain CDFI certification or recertification, by using a specialized CU Breakthrough™ methodology that has greatly streamlined the CDFI certification application process.

The new CDFI-certified credit unions YTD are:

1st Valley CU (San Bernardino, CA)
Cross Valley FCU (Wilkes-Barre, PA)
ERDA FCU (New York, NY)
Financial Health (Clarian FCU)
Forward Financial CU (Niagara, WI)
Manatee Community FCU (Brandenton, FL)
Mid-Cities Financial CU (Compton, CA)
Military and Civilian (MAC) FCU (Fort Wainwright, AK)
Nueva Esperanza Community CU (Toledo, OH)
UBC Southern Council Industrial Workers FCU (Minden, LA)
Xavier University Employees FCU (New Orleans, LA)

CDFI designation, which certifies these community-based lenders as providers of critical services to low- and moderate-income communities and other target markets, has become increasingly important and allows certified institutions to apply for grant funding from the CDFI Fund and other sources to expand their services and increase their impact.

At Mid-Cities Financial CU (Compton, CA), one of the newly CDFI-certified institutions, CEO Malia Keller spoke highly of the assistance she received from the Federation. “We couldn’t have received our certification without the National Federation of Community Development Credit Unions,” she said. “As with most government application processes, CDFI certification is long and tedious, but the Federation was instrumental in helping us throughout the detailed application process. Their knowledgeable staff was able to assist us in quickly collecting the data we needed to support our CDFI status and to address any questions or concerns throughout the process,” she said.

“The CDFI Fund has been the single largest source of growth capital for community-based lenders, providing almost $1.3 billion to CDFIs nationally, including $120 million to CDFI-certified credit unions since 1996,” explained Federation Director of Membership Pablo DeFilippi. “The CDFI Fund itself just released a report that shows how credit unions leverage almost $10 in asset growth for each dollar increase in net assets, so these grants have been a billion-dollar boost to credit unions in underserved communities.”

DeFilippi explained that CDFI certification is a major focus for the Federation. “We help member CDCUs and other credit unions to apply for this important designation,” he said. “Once certified, we assist them in securing CDFI awards to strengthen their outreach and impact in the communities they serve.”

“We are pleased to see more credit unions receiving their certification and would like to recognize the positive progress we have seen under the leadership of Bob Mulderig, the new Program Manager of Certification, Compliance Monitoring and Evaluation at the CDFI Fund. This first quarter alone, the CDFI Fund has approved almost as many applications for certification from credit unions as they did during all of 2011. That's significant progress and we really appreciate their efforts,” DeFilippi added.

A History of Supporting Credit Unions

The Federation led the coalition that advocated for creation of the CDFI Fund in the mid-nineties, and its departing CEO, Clifford N. Rosenthal, wrote the concept paper that later became the basis for the CDFI Fund.

Established by the Riegle Community Development and Regulatory Improvement Act of 1994, as a bipartisan initiative, the CDFI Fund provides certified CDFIs with monetary awards and the allocation of tax credits to promote access to capital and spur local economic growth in urban, rural and reservation-based low-income communities nationwide.

In New York State, the CDFI-certified Southern Chautauqua FCU (Lakewood, NY), a long-time member of the Federation, was recently recognized as the fastest growing credit union in New York by Callahan and Associates, in the $50 to $100 million asset category. The credit union has grown to over $54 million in assets, serving more than 10,000 members, and according to CEO, John Felton, much of the CDCU’s growth was made possible by capital infusions from the CDFI Fund. “The awards we have received since becoming certified, including over $1.7 million in secondary capital from Treasury’s Community Development Capital Initiative, helped strengthen our capital levels to over 10%, enabling us to expand our product offerings and grow our membership more rapidly without diluting our net worth,” he said.

“The awards allowed us to grow as quickly as our community needs dictated. Without these awards from the CDFI Fund, we would have been forced to grow at a much slower pace. No doubt, the result would have been detrimental to community residents who would have otherwise been forced to meet their credit needs at fringe financial service providers and other predatory lenders,” he added. “As a community development credit union, an important part of our mission is to strengthen the financial well being of both our members and the community at large. Thanks to the assistance and encouragement from the Federation, and of course, the capital we have received from the CDFI Fund, our credit union is making a greater impact than ever before, and that is something we are very proud of,” he said.

Felton’s credit union values root back to age five, as the credit union was located in the basement of his parent’s home. “It’s in my blood, as we have expanded our footprint to include 5 branches and more than 30 employees; the message from my parents’ basement is carried through each and every member or community interaction. As our members prosper, the credit union succeeds.” The opportunity to expand has enabled us to be a resource to our members and to the residents of Chautauqua County.

“The CDFI Fund is among the few sources providing this type of patient growth capital,” said DeFilippi. “We want to see more credit unions realize their potential by taking advantage of these resources, which the Federation has fought so long and hard to secure.”

“Our work with the CDFI Fund literally predates the legislation that created the agency,” said DeFilippi. “CDCUs have been, and continue to be, an integral segment of the CDFI industry representing well over 20 percent of all CDFIs, but there are still many CDCUs and other low-income credit unions that are not taking advantage of the opportunity that CDFI designation presents.”

“We have seen more credit unions become aware of the benefits of CDFI designation, and for those looking for assistance with certification or in applying for funds, the Federation is here to help,” DeFilippi added.