U.S. Treasury Announces Second ECIP Application Round; Applications Due Jan. 31
Jan. 25, 2023 — The U.S. Department of the Treasury’s second application round of Emergency Capital Investment Program funding closes January 31, 2023. Treasury anticipates between $160 million and $340 million will be available for investment in qualified institutions in the second round. Applications are due January 31, 2023, at 11:59 p.m. Eastern.
For more information, click here to visit the U.S. Treasury’s website.
Credit unions participating in the second round of ECIP funding and that meet the eligibility requirements under the NCUA’s Subordinated Debt rule may also apply for regulatory capital treatment under the pre-approval requirements outlined in the rule.
As in the ECIP’s first round, Treasury requires approved, qualified financial institutions to select a maturity of either 15 or 30 years during the closing process. Currently, the NCUA’s Subordinated Debt rule limits the maximum maturity of Subordinated Debt Notes to 20 years.
Last September, the NCUA Board issued a notice of proposed rulemaking to, among other things, provide flexibility on the maximum maturity of Subordinated Debt Notes. The Board is currently reviewing comments received on this rulemaking and will consider a final rule in the first half of 2023.
In the meantime, a credit union applying to the NCUA for regulatory capital treatment should indicate in its application that it would elect either the 15- or 30-year maturity in the event the NCUA Board finalizes the September 2022 proposed rule permitting a longer maturity period. If the Board does not finalize the proposed changes, second-round issuances will be subject to the 20-year maturity limit in the current Subordinated Debt rule.
The NCUA encourages credit unions to submit their Subordinated Debt applications to the appropriate NCUA supervision office by February 28, 2023. Contact your appropriate supervision office with any questions about the application process.
(Oct. 22, 2021) Eligible low-income credit unions (LICUs) may accept 30-year subordinated debt investments from a Treasury program meant to encourage the institutions to augment efforts to support small businesses and consumers, NCUA announced Thursday.
In a letter to credit unions (LTCU 21-CU-11) Thursday, the agency said the LICUs may accept the subordinated debt investments from the Treasury Department’s Emergency Capital Investment Program (ECIP). In addition, the agency said, the credit union may treat the investment as secondary capital in accordance with NCUA regulations. That is, provided that the LICU has an agency-approved secondary capital plan by year’s end.
According to NCUA Board Chairman Harper, the policy will allow ECIP-participating credit unions to fulfill that statutory mission and advance economic equity and justice. “Going forward, the NCUA will pursue additional action to permit ECIP funding to count as regulatory capital for the entire time it is held,” he said.
The agency’s subordinated debt rule, adopted in January, includes a 20-year limitation on the regulatory capital treatment of “Grandfathered Secondary Capital,” NCUA said. That is defined as any secondary capital issued under a secondary capital plan that was approved by the NCUA before Jan. 1, 2022. The agency indicated it plans, in the future, to clarify that ECIP participating credit unions may count ECIP funding as regulatory capital for the entire time it is held.
NCUA said the latest LTCU is the second step in a three-step process for ensuring credit unions can use ECIP. The first step was a proposed rule issued earlier this year to allow eligible credit unions to accept ECIP funding in 2022 without having to fill out a new subordinated debt application after the effective date of the new rule. The third step, according to the agency, will be more NCUA action – “sometime in 2022” — to permit ECIP funding to count as regulatory capital for the entire time it is held.
LINK:
NCUA LTCU 21-CU-11: Emergency Capital Investment Program Participation
(July 16, 2021) A 14-day application extension is among the “clarifications and amendments” planned for the capital investment program created for community development financial institutions (CDFIs) and minority depository institutions (MDIs) in the face of the coronavirus crisis, NCUA reminded late last week.
NCUA drew attention to the extension in an “NCUA Express” item made public July 8. The extension is part of revisions being made to the Emergency Capital Investment Program (ECIP) developed by Treasury last year to assist CDFIs and MDIs that may be disproportionately affected by the financial impacts of the COVID-19 pandemic.
In a July 1 announcement, Treasury said the deadline to submit an application under the ECIP would be extended by 14 days once guidance is published by Treasury (which, as of Thursday, had not been released). The previous deadline was July 6. No other details were provided on the planned. clarifications and amendments.
The ECIP was established under the Consolidated Appropriations Act, 2021. Under this program, Treasury will provide up to $9 billion in capital directly to depository institutions that are certified CDFIs or MDIs. The funding may be used to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers – especially those in low-income and underserved communities – that may be disproportionately impacted by the economic effects of the COVID-19 pandemic. Treasury says it will set aside $2 billion for CDFIs and MDIs with less than $500 million in assets and an additional $2 billion for CDFIs and MDIs with less than $2 billion in assets.
Revisions to already-submitted applications made be requested via Treasury; see the link below.
LINK:
Treasury Emergency Capital Investment Program
(May 14, 2021) NCUA is encouraging credit unions to participate in a May 24 webinar explaining (and answering questions about) the U.S. Treasury’s Emergency Capital Investment Program (ECIP), which has extended its application period to July 6.
The 75-minute webinar, “An Overview of the Emergency Capital Investment Program,” will be held at 3 p.m. ET, the agency said in a release.
The ECIP was established under the Consolidated Appropriations Act, 2021. Under the program, Treasury provides up to $9 billion in capital directly to credit unions and other depository institutions that are certified community development financial institutions (CDFIs) or minority depository institutions (MDIs). The funding may be used to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers – especially those in low-income and underserved communities – that may be disproportionately impacted by the economic effects of the COVID-19 pandemic.
Treasury says it will set aside $2 billion for CDFIs and MDIs with less than $500 million in assets and an additional $2 billion for CDFIs and MDIs with less than $2 billion in assets.
NCUA Board Chairman Harper has repeatedly encouraged credit unions to learn more about the program.
Registration for the webinar is open; participants may submit questions in advance by email at [email protected]; questions submitted by May 18 will receive priority, NCUA said.
LINKS:
Federal Financial Regulators to Hold Webinar on Emergency Capital Investment Program