$3.5 Million Available; Credit Unions Should Review Eligibility Before Applying.
Credit unions eligible for Community Development Revolving Loan Fund grants in 2023 can apply between May 1 and June 30, the National Credit Union Administration announced today.
“This year, we have new opportunities for credit unions that are considering applying for a 2023 CDRLF grant,” NCUA Chairman Todd M. Harper said. “Congress more than doubled the CDRLF funding for 2023 and added minority depository credit unions as eligible institutions. So, both low-income credit unions and minority depository institutions can now use CDRLF grants to build capacity, invest in their communities, reach under-resourced populations, and provide their members with products and services to strengthen their economic security.”
The agency will administer approximately $3.5 million in CDRLF grants to the most-qualified applicants, subject to the availability of funds. Grants will be awarded in five categories:
- Underserved Outreach (maximum award of $50,000) — Helping credit unions expand safe, fair and affordable access to financial products and services to underserved communities and improve the financial well-being of their members;
- MDI Capacity Building (maximum award of $50,000) — Preserving MDI credit unions and increasing their ability to thrive and serve minority populations;
- Consumer Financial Protection (maximum award of $10,000) — Ensuring credit unions have the resources and expertise to protect credit union members, raise awareness of potential frauds, and facilitate access to fair and affordable financial services;
- Digital Services and Cybersecurity (maximum award of $10,000) — Providing assistance to credit unions to modernize information and security systems to better protect themselves and their members from cyberattacks; and
- Training (maximum award of $5,000) — Strengthening credit unions through succession planning, leadership development, staff education, and professional development.
During this year’s funding round, the NCUA is also piloting two new grant initiatives that eligible credit unions may apply for:
- Impact Through Innovation (maximum award of $100,000) — A pilot initiative addressing underserved communities by focusing on banking deserts, affordable housing, credit invisibles, and fintechs; and
- Small Credit Union Partnership (maximum award of $100,000) — A pilot initiative helping small credit unions pool their resources to help them achieve their growth objectives.
Interested credit unions are encouraged to read the Notice of Funding Opportunity(opens new window). Grant requirements, application instructions, and other important information are available on the grants program page of NCUA.gov. Grant applications must be submitted online through the NCUA’s CyberGrants portal(opens new window). Credit unions with other questions about CDRLF grants may contact the NCUA’s Office of Credit Union Resources and Expansion at [email protected].
Eligibility Requirements
The 2023 CDRLF grant round is open to credit unions with either a low-income designation or certification as a minority depository institution. A credit union applying for a CDRLF grant must have an active account with the System for Award Management, or SAM, and a unique entity identifier number they will receive when they register for a SAM account.
Credit unions with an existing registration with SAM must recertify and maintain an active status annually. There is no charge for the SAM registration and recertification process. SAM users can register or recertify their account by following the instructions for registration(opens new window).
Credit unions with additional questions about the low-income designation may contact the NCUA’s Office of Credit Union Resources and Expansion at [email protected]. Questions about the MDI designation or the NCUA’s MDI Preservation Program should be sent to [email protected].
(Sept. 10, 2021) More than 100 low-income credit unions (LICUs) were awarded grants totaling $1.5 million to expand their outreach to underserved communities and improve digital services and security, the federal credit union regulator said last week.
The grants awarded to the 105 credit unions, NCUA said, were offered through the agency’s Community Development Revolving Loan Fund (CDRLF).
According to NCUA, the grants ranged from $1,500 to $50,000 to credit unions in 35 states and the District of Columbia. The agency said 16 credit unions were first-time grant recipients, and 33 were minority depository institutions. Awards were made in two categories: Underserved outreach (for 22 grants totaling $1,006,190), and digital services and cyber security (for 83 grants totaling $529,517).
The agency said it received 280 grant applications seeking more than $4.6 million.
LINK:
NCUA Awards Grants to Assist Low-Income Credit Unions
(June 11, 2021) Congratulations to Virginia’s Robert “Bob” Hughes retired as deputy director of the State Corporation Commission Bureau of Financial Institutions on May 28 after 41 years of service … Retiring NASCUS leader Lucy Ito is profiled in the American Banker (a trade publication) this week, focusing on NASCUS’ efforts to bring transparency and equity to the overhead transfer rate – which the article notes was a singular accomplishment during her nearly seven-year turn at the helm of the association. (To see the full text of the article, see the link below – subscription required) … Requiring financial institutions to report information on account flows for tax reporting purposes “would be a complex undertaking” with significant compliance burdens that may outweigh whatever benefits result, according to a letter sent from financial institution trade groups (including those representing credit unions) to a House subcommittee this week. The letter essentially cautions lawmakers about taking the step, which was proposed last week by President Joe Biden (D) in his 2022 budget. Under the proposal, all deposit, loan and investment accounts at financial institutions (including credit unions) for persons and businesses would be subject to a $600 “de minimus” gross inflow reporting threshold. The provision is designed to increase taxpayer compliance with income reporting … There is just a bit more than two weeks left for low-income designated credit unions to seek Community Development Revolving Loan Fund (CDRLF) grants, including minority depository (MDI) mentoring grants, NCUA said the week. The deadline is June 26 to apply for the approximately $1.5 million in CDRLF grants to the most-qualified applicants, subject to the availability of funds, the agency said. There are three categories of grants: underserved outreach (maximum award of $50,000); MDI mentoring (maximum award of $25,000); and digital services and cybersecurity (maximum award of $7,000).
LINKS:
American Banker — Lucy Ito’s legacy: Lowering a vexing regulatory cost for credit unions (subscription required)
(June 4, 2021) An increase in appropriations in 2022 for NCUA’s Community Development Revolving Loan Fund (CDRLF) was requested this week by agency Board Chairman Todd Harper in NCUA’s annual report to Congress on the fund’s 2020 activities.
Harper, however, sought no specific amount of dollar increases. However, in the report, he noted that the CDRLF was able to fund just about half of the $7.6 million in total requests for technical assistance grants and loans from low-income-designated credit unions last year,
To bolster his request, the NCUA chairman in the report noted that NCUA last year devoted nearly all of the fund’s efforts to help credit unions and their members meet the significant challenges posed by the COVID-19 pandemic. “Because demand regularly exceeds the amount of available funds for these grants, and because low-income credit unions are more likely to serve communities disproportionately impacted by COVID-19, I urge Congress to increase appropriations for CDRLF grants in 2022,” Harper stated. “With more funding, the agency could increase the number of credit unions receiving grants and increase the size of the grants it makes, deepening the program’s impact in underserved communities.”
Congress created the CDRLF to stimulate economic development in low-income communities served by credit unions; all appropriations go to eligible credit unions. The fund is administered by the NCUA.
LINK:
NCUA: CDRLF Funds Have Positive Impact on Communities, Credit Unions
(April 9, 2021) Approximately $1.5 million in awards to support digital services and cybersecurity, mentoring of small minority depository institution (MDI) credit unions, and service to underserved communities will be available to low-income-designated credit unions during 2021, NCUA said this week. The awards are made available through the Community Development Revolving Loan Fund (CDRLF); applications are accepted from federally insured credit unions that have the agency’s “low-income” designation. Non-federally insured, state-chartered credit unions may also apply; these institutions will have to complete additional application forms and agree to be examined by the NCUA to receive the funds, the agency said … New York has adopted a law creating clarity for the issue of legacy LIBOR-based contractsthat mature after mid-2023 and do not have effective fallbacks. Most LIBOR-based contracts expire before June 2023 (and the use of the reference rate is generally prohibited after the end of this year). However, there are some legacy contracts that are set to continue past the mid-year 2023 deadline – and nearly all of those, according to the Federal Reserve Bank of New York’s Alterative Reference Rate Committee (ARRC) are written under by New York law. The new measure requires the legacy contracts to adopt an alternative rate (such as the ARRC’s Secured Overnight Financing Rate (SOFR)) – or face the contracts being declared void.
LINKS:
Community Development Revolving Loan Fund Access for Credit Unions (Federal Register)
ARRC Endorses Decision to Sign New York State LIBOR Legislation into Law
(Feb. 19, 2021) While four funds administered by NCUA all earned unmodified or “clean” audit opinions for 2020, the agency’s inspector general still outlined a number of 2021 challenges for credit unions that could have an impact on continuing that audit performance, according to a report issued this week.
The agency said its auditor, KPMG LLP, issued unmodified opinions for the National Credit Union Share Insurance Fund (NCUSIF), the agency’s operating fund, the Central Liquidity Facility (CLF), and the Community Development Revolving Loan Fund (CFRLF).
In issuing the audit opinions, the agency’s office of inspector general (OIG) also outlined as the major challenges in 2021 for credit unions (and the funds) to be: cyber threats, technology-driven changes to the financial landscape, interest-rate risk, membership trends, and a recovery from the coronavirus crisis.
“We believe the economy and credit unions’ recovery from the COVID-19 pandemic will be the NCUA’s greatest management challenge going forward in 2021 and possibly beyond,” the OIG report states.
“Even if the economy continues to recover as expected, the operating environment for credit unions over the next two years could prove to be more difficult than in prior years, and credit union performance could deteriorate,” the report adds. “Credit unions should plan for a range of economic outcomes that could affect their performance and resource needs.”
In the other areas, the report notes:
Cyber threats: “Credit unions’ increasing use of technology exposes the credit union system to increasing cyber-attacks. Specifically, malware, ransomware, distributed denial of service (DDOS) attacks, and other forms of cyber intrusion affect credit unions of all sizes and will continue to require ongoing measures for containment,” and pose significant dangers to the safety and soundness of credit unions, according to the report. The report urges credit unions to continue to harden, monitor, and enhance the security of their systems.
Technology changes: In addition to products that pose competitive challenges to credit unions by mimicking deposit and loan accounts (mobile payment systems, pre-paid shopping cards, peer-to-peer lending), credit unions will also face challenges from financial technology (fintech) companies in underwriting and lending, the report asserts. “Fintech companies may be able to automate these services at a cost below levels associated with more traditional financial institutions but may not be subject to the same regulations and safeguards that credit unions and other traditional financial institutions face. As these companies and products gain popularity, credit unions may have to be more active in marketing their products and services and rethink their business models.”
Interest-rate risk (IRR): NCUA and credit unions will need to focus on managing and mitigating interest-rate risk, the report states. Deposit rates have fallen since the start of 2020 and will likely remain low, pressuring credit unions to offer competitive deposit rates to avoid deposit attrition. Meanwhile, credit unions that rely primarily on investment income may find their net income remaining low or falling.
Membership: NCUA and credit unions face the challenge of an aging demographic, the report states, “and unfortunately, these same membership concerns continue.” The report claims that although overall credit union membership continues to grow strongly, close to half of federally insured credit unions had fewer members at the end of the third quarter of 2020 than a year earlier. “All credit unions need to consider whether their product mix is consistent with their members’ needs and demographic profile,” the report states.