PHOENIX–Bank of America is making a $10-million investment in the National Federation of Community Development Credit Unions’ Investment Program.
According to the Federation, the funding commitment will launch a new secondary capital loan product, funding investments in high performing credit unions. The first three recipients of the funds include Freedom First Federal Credit Union, IH Mississippi Valley Credit Union, and Suncoast Credit Union, each of which will receive $1 million.
The announcement was made during the Federation’s annual meeting here.
“The Federation is thrilled to partner with Bank of America to develop this new secondary capital product to increase services and community development impact in low-income communities,” said Federation President/CEO Cathie Mahon. “This infusion of secondary capital into the credit union system will enable several of our high-capacity member institutions to grow their services and increase safe and affordable lending to consumers who might otherwise turn to predatory lenders.”
The Federation said that secondary capital loans, subordinated, long-term debt available to credit unions that are low-income designated, is one of many Federation investments, initiatives and innovations to help low-income people and communities achieve financial independence through credit unions.
“We’re proud to have partnered with the Federation to invest in community development credit unions – helping to meet the financial needs of low-income families, and we look forward to continuing to support these efforts,” said Dan Letendre, CDFI managing director, Bank of America.
The Federation is encouraging credit unions to apply for secondary capital. It now offers two types of secondary capital loans products – Secondary Capital I which includes an expected balloon repayment of principal, and Secondary Capital II, which includes expected repayments of amortized principal.
More information can be found at www.cdcu.coop/investing/investment-offerings-for-credit-unions/secondary-capital or contact cdinvestment@cdcu.coop.