Introduction
It is a great honor to be here once again for the National Community Investment Fund's Annual Development Banking Conference. I would like to thank David J. McGrady, the Chairman of NCIF's Board of Trustees, for his very kind introduction.
I would also like to thank Saurabh Narain and the staff of NCIF for making this conference possible and for providing such a valuable forum for community development banking professionals from all over the country to exchange information and ideas.
Thanks, too, to all of you who have traveled to Chicago for this event. Your presence here today is a testament to your commitment to serving underserved communities, and I salute you for your tremendous dedication and hard work.
Envisioning the future
Now, I have had an opportunity to review the agenda for this conference, and I must say, I believe that these next two days could prove to be a very significant point in the development of our industry. I wholeheartedly support your efforts to forge a new vision of the future of community development banking.
Indeed, I believe you have chosen the perfect time - in the words of the conference theme - to reimagine the work of CDFI banks.
We are at the beginning of an exciting, new era for the CDFI industry. CDFIs have received unprecedented recognition and support in recent years, and we can all be very proud of the tremendous progress we have made.
At the same time, however, I believe we can ensure our continued success only if we recognize that the progress we have made is just the beginning. Our real challenge now - and our real opportunity - are to use the new resources with which we have been entrusted to raise our industry to new heights.
So your timing is perfect. This is the ideal moment to look deeply at the state of community development banking and to envision a new way forward, with a focus not only on what achievements are possible within our own capabilities, but also on the greater impact we can have through collaborative efforts.
As you go about the task of envisioning the future of community development banking during the next two days, I encourage you to be bold. Remember why you do the work you do, and be guided by your compassion for people and communities that have been left out of the economic mainstream. Have faith in your experience, your skill, and your creativity.
I also encourage you to be pragmatic. Learn about the resources that are available to you now and use them. Find new partners and work with them. And, may I suggest, if you are not already doing so, start by working with the CDFI Fund, because we are here to support you.
In the past two months alone, the CDFI Fund has certified 27 community development banks and holding companies as CDFIs. That is an impressive number, and a sign of real progress.
But many community development banks that are eligible for CDFI certification have still not become certified. I strongly encourage all of you that aren't certified to explore its many benefits. Being certified as a CDFI is the best way for you to access the programs the CDFI Fund offers, and to start expanding your impact in the communities you serve.
New opportunities for community development banks
I mentioned that CDFIs have received unprecedented support in recent years, and that is certainly true.
President Obama is clearly a strong supporter of community development finance. His Administration has taken a number of steps to expand the role of CDFIs in generating economic recovery, most notably increasing funding for the CDFI Fund for each of the past two fiscal years. The President's FY 2011 budget continues to indicate his strong support for the CDFI Fund's role in the recovery.
Such support adds up to unprecedented opportunities for CDFIs - and for your organizations in particular, because the CDFI Fund offers a number of programs specifically designed to strengthen community development banks.
For example, we have provided more than half a billion dollars in new funding for CDFI banks, thrifts, and credit unions through the Community Development Capital Initiative (CDCI). These investments were made in 84 CDFIs in 26 states, the District of Columbia, and Guam in order to enable them to expand their work in communities by supporting small businesses and families that have been hit hardest by the economic downturn.
In recognition of the critical work of CDFIs, the CDCI enables CDFI banks and thrifts to receive capital investments at very attractive rates - a dividend rate of two percent, compared to five percent under the Capital Purchase Program. To encourage repayment while recognizing the unique circumstances facing CDFIs, the dividend rate increases to nine percent after eight years, compared to five years under the Capital Purchase Program.
The CDCI has been a significant accomplishment for the CDFI Fund and for the CDFI industry.
We also have a number of new initiatives in the works within the Treasury Department for community development banks. Among these is the Small Business Lending Facility (SBLF), which was created by the passage of the Small Business Jobs Act of 2010. Its purpose is to provide community banks with help for small business lending.
In addition, we continue to offer a variety of other important programs at the CDFI Fund from which community development banks can benefit, including the CDFI Program, which provides Financial Assistance and Technical Assistance Awards to certified CDFIs, as well as the New Markets Tax Credit and Bank Enterprise Awards.
It is very rewarding to note that, as the CDFI Fund's support for community development banks continues to grow, so does the number of community development banks that is eligible to use them.
I mentioned that the CDFI Fund has certified 27 community banks as CDFIs in the past two months. As of November 10, 2010, a total of 131 banks, thrifts, and depository institution holding companies have become certified CDFIs. That is 14 percent of the total number of CDFIs now certified by the CDFI Fund.
This is a great increase and I hope the numbers will continue to grow. I would like to commend NCIF for everything it is doing to identify community development banking institutions and for encouraging them to become CDFIs. NCIF has been an excellent partner for the CDFI Fund, and together we are making real progress.
One perceived barrier to CDFI certification and our award programs for banks has been a concern over reporting requirements for the transaction level data. The CDFI Fund will be making changes to our Community Investment Impact System that will reduce the reporting burden for depository institutions in this area by approximately 70 percent.
So when I say that the CDFI Fund is here to support you, I really mean it.
Reaching new heights
As much as I believe that this is a new era for CDFIs, I also realize that to many of you whose organizations are struggling with the effects of the economic downturn in your own communities, the present era may not seem so exciting. If that is the case, believe me, I understand. I am well aware of the difficult economic conditions that you and your communities have faced and continue to face, and I do not wish to minimize the very real challenges you must meet today before you can start on a new road to tomorrow.
However, while the recession has created many serious challenges for community development banks and CDFIs, and for the communities they serve, it has also done something else. It has demonstrated just how important - how absolutely vital - the work of community development banks and other CDFIs truly is.
The communities you serve have been among the hardest hit by the recession, and it has never been clearer than it is today that community development banks and CDFIs offer these communities the economic lifelines they so desperately need. Community development banks have stepped up and filled the gap at a time when many traditional lenders have reduced their lending and their interactions with the smaller and distressed loan customers.
Indeed, our industry's profile has never been higher
So can we really reach new heights? I believe we can. And there are two reasons why I believe this.
The first reason is that I believe in our industry's capacity for innovation. For evidence of that, we need look no further than NCIF itself.
NCIF has been a pioneer in the development of analytical tools to measure the impact of the community development banking industry and to attract private sector and socially responsible capital to the industry.
Through its innovative Social Performance Metrics, NCIF is measuring the social impact of community development banks in America's most economically vulnerable communities. It has also developed a standard reporting format that clearly communicates impact in a way that is useful to both institutions and funders. These dashboards," as they are called, provide a concise picture of an institution's activity in low- and moderate-income communities, as well as key financial data.
Clearly, NCIF is committed to taking community development banking to the next level, and I hope that you will be guided by that same pioneering spirit during the next two days as you reimagine your industry's future.
The second reason is that I believe in our industry's capacity for collaboration. In my experience, some of the most powerful solutions come from partnerships. These can be not only among community development banks, but also between different types of CDFIs and between government agencies and private organizations.
And we don't have to look far for evidence of success. For example, Sunrise Community Banks, a CDFI banking group comprising three locally owned banks in Minneapolis and St. Paul, has created the Sunrise Homeownership Alliance, an innovative and highly collaborative initiative designed to renew neighborhoods throughout the Twin Cities metropolitan area.
Through the Alliance, Sunrise secures deposits from foundations and socially responsible investors, and makes loans to local nonprofits that provide financing to aspiring homeowners unable to qualify for conventional mortgage loans. Organizations such as the Sunrise Community Banks have harnessed the deposits of their customers to fuel crucial community development initiatives. University Bank - a Sunrise Community Bank - has used Socially Responsible Deposit Funds to finance 34 properties with Urban Homeworks, serving as a catalyst for an innovative model that pairs accessible housing with volunteer mobilization to stabilize neighborhoods heavily affected by foreclosures.
And in Arkansas, Southern Bancorp, America's largest rural development bank, has initiated the Delta Bridge Project, an extraordinarily ambitious plan for community economic development in Phillips County, one of the state's poorest regions.
Created in partnership with the Walton Family Foundation, the Delta Bridge Project presents a comprehensive plan for community development in five areas: economic development, housing, education, leadership development, and health care. It brings together resources from a wide range of sources, including federal, state, and municipal organizations, foundations, economic development agencies, key regional leaders, legislators, commercial businesses, and local residents, and has become a model for revitalizing other communities in the Delta.
These are just two examples of our industry's capacity for collaboration. I could cite countless more from CDFIs throughout the country. But the efforts of Sunrise Community Banks and Southern Bancorp offer a perfect illustration of what our industry can achieve when we work together. These organizations are bold in their vision and pragmatic in their tactics, and they are helping to show us all the new heights that our industry can reach.
In closing, I would like to thank NCIF once again for this opportunity to speak.
And to all of you, I offer my very best wishes for your success during this conference and beyond. May your new vision for the future of community development banking generate opportunity and prosperity for your organizations and for the communities you serve.
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