Is your credit union currently looking for new Non-Member deposits? If so, the CDFI Fund's Bank Enterprise Award (BEA) Program may provide a good tool to help you raise deposits from mission-aligned CDFI banks.
The BEA Program provides incentives for CDFI banks and thrifts to increase their year-over-year lending, service and investments in Distressed Communities. The activities that receive the highest funding priority are CDFI Support Activities, which include placing eligible Certificates of Deposit in CDFI-certified credit unions. These deposits in turn help CDFI credit unions increase their lending into low-income communities. For background on the BEA Program and requirements, click here.
In 2015, Inclusiv (formerly known as the Federation) and the Community Development Bankers Association (CDBA) launched a partnership to connect CDFI credit unions looking to receive non-member certificates of deposit with CDFI banks seeking to place eligible deposits. Last year, 18 CDFI banks and 11 CDFI credit unions participated in the deposit-matching campaign. Overall, the BEA Program resulted in 18 credit unions receiving $19.4 million in new deposits from 38 CDFI banks. CDFI banks were able to report and receive BEA awards based on this activity.
All deposits need to be placed in CDFI credit unions by December 31, 2019 for the upcoming Bank Enterprise Award Program funding round.
To learn more about Bank Enterprise Award Deposits and how your credit union can get involved this fall, join us Tuesday, November 5 at 2:00-3:00 pm ET for "Resources for Growth and CDFI Impact: BEA Deposits," an informational webinar featuring BEA experts from the CDFI Fund and CDBA/Partners for the Common Good, plus Cooperative Federal FCU and Hope CU -- two credit unions that have successfully leveraged this resource.
The 2019 campaign will be managed on the CapNexus platform (www.capnexus.org). CapNexus is an online platform developed and hosted by Partners for the Common Good, a national CDFI loan fund (www.pcgloanfund.org). There is NO charge to sign up or to receive deposits.
Please note that qualifications for BEA deposits differ from other CDFI Fund programs. Specifically, certified CDFI credit unions must be able to demonstrate that they have some activity in a BEA-eligible Distressed Community census tract by mapping their lending data or member services in the CDFI Fund mapping system. Credit unions receiving deposits do not need to submit materials directly to the Fund, but banks placing deposits are required to submit a form with minimal data verification from credit union activity. CDBA can assist interested credit unions with this process.
Interested CDFI credit unions can sign up for the campaign by contacting Anna Walker at CDBA at firstname.lastname@example.org or 202-689-8935 ext. 224 by November 11, 2019.
IMPORTANT INFORMATION ABOUT FY 2020 BEA FUNDING ROUND:
- For the upcoming FY 2020 BEA funding round, all Assessment Period deposits must be made by December 31, 2019.
- The CDFI Fund is not expected to publish its Notice of Funding Availability for the FY 2020 BEA Program until late Q1 2020 or early Q2 2020. The new application will not be available until that time.
- Based on past application materials published and conversations with CDFI Fund staff, we know that the requirements for CDFI Support Activities will include a form that will be similar (if not identical) to the ATTACHMENT. CDFI credit unions will need to demonstrate “integral involvement” in at least one BEA qualified Distressed Community census tract.
- We expect the application to mirror past years’, meaning that like last year, CDFI credit unions will not be required to submit a map of the BEA census tract(s) to the Fund. Only the Integral Involvement form will be submitted to the Fund, and that form will be submitted by the bank as part of their application.
- If a bank is making a deposit in a CDFI credit union, the CU will need to give the bank a completed copy of the attached form and documentation of the deposit. The bank will submit the form as part of its application. In past years, the CDFI Fund required the credit unions to submit separately from the banks, but that is no longer required as of last year.
BEA Program Requirements from FY2019
Please note, no significant changes expected for BEA Program requirements in 2020.
CDFI Support Activity means assistance provided by an Applicant or its Subsidiary to a CDFI that meets criteria set forth by the CDFI Fund in the applicable NOFA and that is Integrally Involved in a Distressed Community, in the form of the origination of a loan, Technical Assistance, or deposits if such deposits are: (1) Uninsured and committed for a term of at least three years; or (2) Insured, committed for a term of at least three years, and provided at an interest rate that is materially (in the determination of the CDFI Fund) below market rates.
From the FY 2019 BEA Application Materials (what types of CDs qualify):
Materially Below Market Rates for CDFI Deposits: Insured Certificates of Deposit (CD) placed by an Applicant in a CDFI that is a bank, thrift, or credit union must earn a rate of interest that is considered by the CDFI Fund to be “Materially Below Market.” A Materially Below Market interest rate is an annual percentage rate that does not exceed 100 percent of the rate on a U.S. Treasury bill of comparable maturity as of the date the deposit is placed. For example, for a three-year CD, use the three-year rate of the Daily Treasury Yield Curve Rate, posted for U.S. Government Securities on the Treasury website. If, at the time the CD is placed, the posted three-year rate is from the previous day, Applicants should use the posted rate. Applicants must print the rate from the website for the date a CD is placed. This sheet should be submitted with the Application as supporting documentation. If a variable interest rate is used, the CD must also have an interest rate that is Materially Below Market.
3 Year Term: CDs placed in a CDFI Partner that is a bank, thrift, or credit union must also be committed for at least three years to be considered a Qualified Activity. The maturity date of a three-year CD, should fall on the date of its three year anniversary of when the CD was placed. For example, if a three-year CD was placed on 12/31/2018 then the maturity date would be 12/31/2021.
Certificate of Deposit network or service: A CD placed by an Applicant directly with a CDFI Partner that participates in a deposit network or service may be treated as eligible under the FY 2019 NOFA, if it otherwise meets the criteria for deposits in 12 C.F.R. 1806.103(r) and the CDFI Partner retains the full amount of the initial CD through a deposit network exchange transaction. An Applicant will not receive a BEA Program award for a CD network or service unless the CDFI Partner is specifically named as a network member to the original transaction in the deposit placement agreement. A BEA Program Applicant will only receive credit for its respective share of the CD network or service provided to the CDFI Partner.
CDFI Credit Unions versus Low Income Credit Unions: Please be aware - in order for a deposit to qualify for BEA credit, the credit union MUST be a certified CDFI. The National Credit Union Administration has a designation that is called a "Low Income Credit Union." This designation is different than being a certified CDFI credit union. While deposits invested in low-income designated credit unions qualify for CRA credits, only CDs placed into CDFI certified credit unions may qualify for BEA deposits.
At Inclusiv, we believe that financial inclusion is a fundamental right. We dedicate ourselves to closing the gaps and removing barriers to financial opportunities for people living in distressed and underserved communities. Inclusiv is a certified CDFI intermediary that transforms local progress into lasting national change. We provide capital, make connections, build capacity, develop innovative products and services and advocate for our member community development credit unions (CDCUs). Inclusiv members serve nearly ten million residents of low-income urban, rural and reservation-based communities across the US and hold over $99 billion in community-controlled assets. Founded in 1974, Inclusiv is headquartered in New York, NY, with offices in Madison, WI and Atlanta, GA.