WASHINGTON — While having long been strong supporters of U.S. Treasury Department's Community Development Financial Institutions Fund, credit unions have not always received as much from the Fund as they might have. This year is not one of those years.
Credit unions received over $5 million in technical and financial assistance grants from the U.S. Treasury Department's Community Development Financial Institutions Fund during the latest round of awards.
The awards hike the amount given to CUs by almost $2 million over last year, according to the National Federation of Community Development Credit Unions, which itself received $600,000.
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The Federation said its award is intended primarily for secondary capital investments and Predatory Relief and Intervention Deposits (PRIDEs) in member CDCUs. The predatory relief deposits are considered "risk sharing deposits", the Federation said, that can be used to collateralize loans made by credit unions to fight predatory or abusive lending.
The Federation shares the risk on these loans by assuming the risk on 25 to 40% of the loan principal. Any losses to those loans are shared pro-rata between the credit union and the Federation. When the deposits mature, the credit union repays the Federation the original deposit amount minus the Federation's share of losses realized on secured anti-predatory loans, the Federation explained.
This year, for the first time, in addition to data about how many recipients in each category received money the Fund also published the number of applications received in each category. Including this data indicated showed that the Fund made grants to about 41% of the credit union applications it received for this round of funding versus 36% of the loan funds which applied for grants, the Fund said.
The Fund announced two types of grant awards. Financial assistance awards that credit unions can use to help build a credit union's capital, strengthen existing programs and launch new ones and technical assistance awards that must be used to help a credit union improve some aspect of its existing technical or back office operations.
Overall, in addition to the Federation, seven credit unions won awards from the CDFI Fund this year and, as usual, they represented a fairly diverse group of recipients.
The $282 million ASI Federal Credit Union, headquartered in Harahan, Louisiana, received just over $959,000 which it will use for net capital and to help maintain a recently restored net capital ratio after losses due to the 2005 Gulf Coast hurricanes. It will use its Technical Assistance award for staff training, computers, salary support and to hire two new bilingual branch managers–one each for the Vietnamese and Spanish-speaking communities in South Louisiana, the Fund said.
In relatively nearby Jackson Mississippi, the $54 million Hope Community Credit Union will use its $480,000 CDFI award to continue making loans related to hurricane recovery development.
"Since Hurricanes Katrina and Rita, the credit union has provided 1,500 emergency loans to people and businesses waiting for insurance and government payments," the Fund wrote. "Hope will use its FY07 Financial Assistance award to expand its loan products into two new service areas–Gulfport/Biloxi and Memphis."
The Fund awarded the $21 million Generations Community Credit Union, headquartered in Durham, North Carolina, almost $955,000. The fund noted that more than 90% of the credit union's members are African-American and more than 80% are low-income. In addition to standard financial products and services, the CU offers a range of loan products for asset-building, first-time homebuyers, refinancing, and second mortgages. Members have the opportunity to engage in one-on-one financial counseling to build or repair their credit, the fund said
The credit union will use its Financial Assistance award to help leverage deposit funds to make additional mortgages and will use its Technical Assistance award to purchase online banking technology, security upgrades for its branches, and marketing materials. In addition, it will develop a market needs assessment study in order to build capacity in delivering low-cost services.
Two other credit unions in North Carolina, the $50 million Latino Community Credit Union and the $291 million Self Help Credit Union, both headquartered in Durham also won awards. Latino was awarded $860,000 and Self-Help $487,000 and both will use the money to enhance and strengthen their lending programs.
In New York the $6 million Brooklyn Cooperative Federal Credit Union received almost $394,000 to expand its lending and services into the Bedford Stuyvesant neighborhood and a technical assistance award that will be used for staff salaries and to train loan officers, the Fund said.
The last credit union to receive money this year is the almost $13 million Syracuse Cooperative Federal Credit Union. Syracuse Cooperative will use its Financial Assistance award to replenish its loan capital as it prepares to purchase and operate a new office in an underserved, low and moderate-income neighborhood, the Fund said.
It will use its Technical Assistance award to help fund staff for the new office and undertake a market analysis for a field of membership expansion. It will also seek to train new and existing staff and purchase technology, the Fund added.
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