Secondary Capital Helps Credit Unions Create Lasting Social Impact in Low-Income Communities
FOR IMMEDIATE RELEASE
Phoenix, AZ – (September 23, 2015) – Cathie Mahon, CEO of the National Federation of Community Development Credit Unions, announced today an investment of $10 million by Bank of America in the Federation’s Community Development Investment Program. This funding commitment will launch a new secondary capital loan product, funding investments in high performing credit unions. The first three recipients of these funds include Freedom First Federal Credit Union, IH Mississippi Valley Credit Union, and Suncoast Credit Union, each to receive $1 million.
“The Federation is thrilled to partner with Bank of America to develop this new secondary capital product to increase services and community development impact in low-income communities,” says Ms. Mahon. “This infusion of secondary capital into the credit union system will enable several of our high-capacity member institutions to grow their services and increase safe and affordable lending to consumers who might otherwise turn to predatory lenders.”
The Federation is the national advocate on behalf of credit unions with a mission of community development and the primary lender of secondary capital to credit unions. In April of this year, the Federation applauded NCUA for working together on a major improvement to secondary capital for low-income credit unions, providing clear and objective measures by which credit unions can apply and be approved for pre-payment of secondary capital. At the time the Federation predicted “this positive change will spur greater investment into the credit union system.”
Secondary capital loans, subordinated, long-term debt available to credit unions that are low-income designated, is one of many Federation investments, initiatives and innovations to help low-income people and communities achieve financial independence through credit unions.
“We’re proud to have partnered with the Federation to invest in community development credit unions – helping to meet the financial needs of low-income families, and we look forward to continuing to support these efforts,” said Dan Letendre, CDFI Managing Director, Bank of America.
Barbara Stephens, former CEO of Houston Metropolitan FCU and Chair of the Federation’s Investment Committee, encourages credit unions to apply for Federation secondary capital, “Secondary capital can be used by growing community development credit unions to expand affordable lending to local communities. The Federation’s Community Development Investment Program looks forward to deploying Bank of America’s investment over the coming year.”
The Federation now offers two types of secondary capital loans products – Secondary Capital I which includes an expected balloon repayment of principal, and Secondary Capital II, which includes expected repayments of amortized principal.
For more information about Federation secondary capital, including rates and terms, visit ww.cdcu.coop/investing/investment-offerings-for-credit-unions/secondary-capital or contact email@example.com.
About the Community Development Investment Program
The CDI Program provides capital resources to its member CDCUs seeking funds to increase liquidity, boost net worth, mitigate risk and introduce innovative products. The CDI Program has invested more than $100 million in CDCUs since its inception in 1982.
About the Federation
The National Federation of Community Development Credit Unions is a certified CDFI Intermediary representing community development credit unions that provide credit, savings, transaction services and financial education to more than 4 million residents of low-income urban, rural and reservation-based communities across the United States, and hold over $32.5 billion in community-controlled assets. Founded in 1974, the Federation is headquartered in Lower Manhattan with offices in Madison, WI. The Federation offers a wide range of advocacy, educational, training, investment, marketing, and outreach programs to support and assist CDCUs. For more information about the Federation and its programs, please visit www.cdcu.coop.