NEW YORK – The National Federation of Community Development CUs is making an additional $1 million in secondary capital available as matching funds for member credit unions not immediately eligible for a Treasury Dept. program offering capital infusions.
Treasury’s Community Development Capital Initiative allows low-income credit unions certified as Community Development Financial Institutions to obtain up to 3.5% of their assets as secondary capital, which will count toward their regulatory net worth. Eligibility is determined by NCUA in conjunction with Treasury Dept.
The Federation noted that 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 are able to obtain matching secondary capital from non-governmental sources, thus the new program from the Federation.
Based on Treasury's guidelines, the CDCI program will invest secondary capital at a rate of 2% for eight years, after which the rate escalates to 9% as an incentive for institutions to repay the money.
