FDIC Releases Resource Guide to Help Financial Institutions Evaluate Opportunities to Collaborate with Community Development Financial Institutions
by: Anna DeSimone
May 8, 2014 the FDIC announced in Financial Institution Letter FIL-26-2014 that the agency has produced a resource guide, Strategies for Community Banks to Develop Partnerships with Community Development Financial Institutions.
The guide was created to help inform FDIC-supervised institutions of strategies to meet community credit and development needs and receive consideration under the Community Reinvestment Act (CRA) through collaboration with community development financial institutions (CDFIs).
The 64-page guide covers the following key topics:
- CDFI organizational structures
- Financing approaches
- Evaluation of bank/CDFI partnership opportunities
- Regulatory context and bank/CDFI partnerships
- Case examples of partnership options
- The resource guide provides information to help community banks identify and evaluate opportunities to partner with CDFIs.
- CDFIs are specialized financial institutions that provide products and services to underserved markets and include community development banks and bank holding companies, as well as credit unions, loan funds, and venture capital funds.
- CDFIs fill a niche in the financial services industry by providing credit to markets that may be difficult for traditional banks to serve. CDFIs offer flexible underwriting standards; combine a range of below-market financing with their own resources; and provide technical assistance, such as credit counseling, business training, and consumer education, with their lending activities to help ensure that borrowers use credit and capital effectively.
- Loans to and investments in qualifying CDFIs may help banks meet their CRA obligations. Under the CRA, community development activities can be delivered directly through, or in cooperation with, a CDFI partner that serves an area that includes the bank’s assessment area. Any investment in or loan to a CDFI should be based on appropriate due diligence and in accordance with prudent banking principles.
- CDFI partner that serves an area that includes the bank’s assessment area. Any investment in or loan to a CDFI should be based on appropriate due diligence and in accordance with prudent banking principles.
About the Author
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
Comments are closed.