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Cliff Rosenthal, Executive Director June 10, 2005

Community Development Credit Unions: A Tale of Two Movements?.

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Cliff Rosenthal, Executive Director June 10, 2005

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    2. Community Development Credit Unions: A Tale of Two Movements? “It was the best of times, it was the worst of times…” A Tale of Two Cities Charles Dickens

    3. Vital Signs: Robust Growth in 2004 The Federation’s CDCU Members: Total Assets -- up $377 million, to $3.35 billion Total Membership -- up by 66,241 to 896,835 Net Worth -- up by $41 million to $320 million

    4. CDCUs Outpaced all FICUs by Many Measures.

    5. The “Typical” (Median) CDCU Did Well.

    6. But …. small credit unions are an endangered species!

    7. CDCUs lost: 25 (11% of our members) All CUs <$10 million lost: 8.4% All CUs lost: 3% (>300 of 9,500 CUs)

    8. Mergers and Liquidations, 2004-05: 11% of Federation Membership! Liquidated (3) Brooklyn Ecumenical FCU (NY) Appalachian Development FCU (OH) Austin/West Garfield FCU (IL) Merged (22) Westshore Com. FCU (MI) Caswell CU (NC) Denver CDCU (CO) Citizens East CDCU (PA) North Florida FCU (FL) Henry Street Settlement FCU (NY) Little Haiti-Edison FCU (FL) York Citizens FCU (AL) Washington County FCU (TX) JCC FCU (OH) Perquimans CU (NC) LexLinc CDFCU (KY South End FCU (MA) New Horizons FCU (PA) United Communities FCU (DE) Chattachoochie FCU (GA) North Gulfport Com. FCU (MS) Chatham-Lee CU (NC) Hacienda Community CU (OR) Weld FCU (CO) South End FCU (MA) NOME FCU (LA)

    9. Profile of Merged/Liq. CDCUs

    10. LexLinc CDFCU

    11. LexLinc: Liquidated 6/05

    12. Why the failures? Top 10 List Layoffs/deteriorating economy Loss of sponsor or grant support Mismanagement Failure to thrive (esp. new CDCUs) Unsustainable/poorly planned growth (branches) Prompt Corrective Action (PCA) Fraud Can’t compete Lack of succession for board “Reg Crush”

    13.

    14. Highlights, 2004-05 $3.7 million invested in CDCUs Fighting predatory lending $250,000 in Apple Grants to CDCUs to promote alternatives to payday lending $1.5 million in PRIDEs (Predatory Relief and Intervention Deposits) outstanding or committed “Antidotes to Payday Lending” CDCU Mortgage Center $1 million seed grant from CDFI Fund Linkages with PHH Mortgage; CU Partners LLC established

    15. More Highlights CDCU Institute™: peak attendance NCUA support for scholarships CDFI Fund: “Return of SECA”: 6 CDCUs won FA awards = $3.373 million 14 CDCUs received T. A. awards = $621,445

    16. Membership 24 new member CDCUs Our total membership down only slightly, from 225 to 224. New members range from < $1 million to more than $100 million.

    17. New Members, 2004-05 Kootenai Valley FCU (Libby, MT) Mendo Lake CU (Ukiah, CA) Queens Cluster FCU (Bayside, NY) S.A.M.P. Scranton FCU (Scranton,) PA Ashoka CU (Boulder, CO) Saint John A.M.E. FCU (Niagara Falls, NY) St. Margaret’s CU (St. Louis, MO) Dress Makers’ CU (New York, NY) West Texas CU (El Paso,TX) Chicanos por la Causa FCU (Phoenix, AZ) Deere Community Federated CU (Ottumwa, IA) Ka’u FCU (Na’Alehu, HI) Morning Star FCU (Tulsa, OK) Table Rock FCU (Shell Knob, MO) Macedonia Baptist FCU (Mt. Vernon, NY) Central Dallas FCU (Dallas, TX) Harlem Heights FCU (NY, NY) St. Phillip’s FCU (NY, NY) Jemez Valley CU (Jemez Springs, NM) TCC CU (Dallas,TX) Sturgis Community FCU (Sturgis, SD) El Barrio FCU (NY, NY) Greater Harrisburg Comm. CU (Harrisburg, PA) New Life CU (Philadelphia, PA) Total = 24

    18. Community Development Partners Increased to 29 credit unions. Six of the 10 largest credit unions. $50 billion in assets, 5 million members

    19. Community Development Partners, May 2005 Navy Federal CU State Employees’ CU (NC) Orange County Teachers FCU Boeing Employees CU (WA) Patelco CU (CA) State Employees FCU (NY) Visions FCU (NY) Ukrainian FCU (NY) Suffolk FCU (NY) IBM Metro FCU (NY) Anheuser-Busch CU (MO) Suncoast Schools FCU (FL) Sunmark FCU (NY) North Jersey FCU (NJ) T&C FCU (MI) Water & Power CU (CA) Andrews FCU (MD) Vantage CU (MI) Arrowhead CU (CA) SCE FCU (CA) Cincinnati Central CU (OH) Houston Municipal Employees CU (TX) The Summit FCU (NY) Bay FCU (CA) Community Educators CU (FL) Hughes FCU (AZ) LA DOTD FCU (LA) Lafayette FCU (MD) Tremont CU (MA)

    20. A Closer Look

    21. Capitalization Program Invested in CDCUs: $250,000 in APPLE (anti-predatory) $3.7 million in other investments (Deposits, PRIDEs, equity grants) Bridge Grants: $500,000 to other CUs (+CDCUs) Obtained New & Increased Investments Mennonite Mutual Aid ($1 million) Catholic Healthcare Initiatives (+$250,000) National Co-operative Bank FSB ($250,000) ***Pending: $3 million from Bank of America

    22. Governmental Affairs: NCUA Federation Testimony on Capital to NCUA – Helen Godfrey, Melissa Marquez Chairman JoAnn Johnson at Federation’s Financial Literacy Day in New York Federation co-sponsored NCUA “PALs” workshops – Boston, Orlando, St. Louis, Rochester (NY) NCUA “White Paper – Guidance for Examining CDCUs Federation meeting with Regional Directors and top Washington staff Campaign to get set-aside of funding for CDCU Institute

    23. Governmental Affairs and Public Policy “SACI” Attack: Bush Administration effort to eliminate CDFI & other Community Development Programs Proposal slowed/halted? Community Reinvestment Act (CRA) and Credit Unions Federation opposed extension of CRA to large credit unions

    24. Education and Training CDCU Institute™ “Each One, Teach Many”: Your Path to Financial Freedom

    27. The CDCU Institute™ 2004 4th graduating class. Total grads, 199-2004: 41 30 scholarships (tuition, room, board) from NCUA in 2004 2005 New location and format: Madison, Aug. 15-20 At least 30 scholarships Grant from National Credit Union Foundation

    28. The CDCU Institute™ 2004 4th graduating class. Total grads, 199-2004: 41 30 scholarships (tuition, room, board) from NCUA in 2004 2005 New location and format: Madison, Aug. 15-20 At least 30 scholarships Grant from National Credit Union Foundation

    29. Financial Literacy: “Each One, Teach Many” Total Train-the Trainer seminars to date: 498 trainers 7,956 community members 2004-05 sites: NJ, NY, CA, NH, VA, IL, NC, CA, PA, DC, WA Funding: J.P. Morgan Chase, Citibank, North Fork Bank, Mizuho Foundation Financial Literacy Day: October 22, 2004 In the works: Disability module for “Your Path to Financial Freedom”

    30. Technical Assistance Helped 21 CDCUs with CDFI Fund applications ? good year for funding Helped avert mergers and regulatory downgrades Assisted CDCU/CDCU mergers and helped maximize NCUA assistance Assistance to organizing groups (telephone consultations, manuals, site visits)

    31. AmeriCorps*VISTA 21 VISTA members in 17 CDCUs, 11 states – with more on the way. VISTA members raised more than $400,000 in grants and donations for CDCUs in 2004 7 VISTAs coordinated VITA/EITC campaigns 1,100 filings $1.3 million in refunds ($500,000 EITC) New initiative: VISTAs in disability orgs.

    32. Federation Networks Faith-based CUs 83 CUs – 37% of Federation membership Merger losses: two over 2 years Faith-based CU Conference New York Community Financial Network Record attendance at sessions, including NJ Harlem networking breakfast Financial Literacy Day 2004 (Union Settlement FCU) NY State CDFI Coalition: $1 million for state CDFI Fund

    33. Networks Latino CU Network Meeting in Puerto Rico Service to immigrants: study underway Proposal to host association of Latino CU professionals Youth CU Programs Enhanced participation in 2005 Annual Meeting

    34. Disability Outreach Network World Institute on Disability training sessions at CUs Federation addresses at national disability conferences Financial literacy module in process (funded by Mizuho) 8 VISTA placements in Disability Service Organizations

    35. Research CDFI Data Project New Publication: “Financial Trends in CDCUs” New: Custom Peer group analysis for all CDCUs New: “CDCU Affiliate Structures”

    36. Opportunity: Seize it. Make it. Defend it. Key strategies for 2005-06 Launch the CDCU Secondary Market. Expand the Community Development Partners initiative. Assure the future of the CDCU Institute™ Fight to preserve CDFI Fund

    37. Launch the CDCU Secondary Market The CDCU Mortgage Center™: Bringing affordable mortgages to low-income communities

    39. Goals Purchase > $250,000 in mortgages this year. Purchase/resell $15 million in three years. Create market for co-op loans, manufactured (“mobile”) housing loans. Link to a mutual fund and Wall Street to increase supply of capital. Engage C.D. Partners and other credit unions as sellers and purchasers of affordable mortgages.

    41. Community Development Partners

    42. Why is the CD Partners Program Important?

    43. Possible Activities CD Partner to provide operational support to CDCU Latino/State Employees Back office Technology assessment/support/advice Shared branches Internships/exchanges between CDCUs & partners Train CDPartner staff at CDCU Institute™

    44. Assure the Future of the CDCU Institute™ Continue advocacy with NCUA Seek Congressional earmark Seek CDFI Fund support Develop other revenue sources Expand curriculum & enrollment

    45. Fight to preserve CDFI Fund (and other community development programs). Sack “SACI” by: Working through CDFI Coalition Mobilizing our members Mobilizing CUNA, NAFCU

    46. Looking Ahead: Our Long-Term Challenges Where is the CU industry going? Where do CDCUs fit? What will/should our membership look like? A sustainable future for the Federation: what’s the business plan(s) Planning for Success(ion)

    47. A time to say “Thanks!”

    48. Our Members, Our leaders, and our Volunteers To our members who have supported us To Chairwoman Rita Haynes and the Executive Committee--Robert Jackson, Michael Chan, Sally Edward, Barbara Black Board Members Melissa Marquez, Joy Cousminer, John Dupree, Jr., Sharon Saulters, Eunice Rogers, Helen Godfrey Smith, Arnell Willis, Suzette Cowell, Hiram Crawford, Gustavia Cole, Marvin Jensen, Robert Coleman Alternates: Eddie Ayers, Gwen Parker, Saundra Scales, Harold Foster

    49. … thanks to The Annual Meeting Committee Local Host Committee

    50. To our Funders & Sponsors Ford Foundation Heron Fdn. CDFI Fund CUNA CUNA Mutual NCUF JPMorganChase HSBC Bank U.S. Central CU CA League Annie E. Casey Fdn. Patelco CU Bank of America PHH & CU Partners Mennonite Mutual Aid Washington Mutual Citibank

    51. … and our Coalition Partners CDFI Coalition National Disability Institute/National Cooperative Bank University of Iowa School of Law Southern New Hampshire University School of Community Eco. Development World Institute on Disability

    52. … and to our Staff Ayokah Harrison-Holmes Rafael Morales Michael Strange Irene E. Prince Oulga Caesar Valerie Harrison Ivania Rodriquez Sara Batterton Alice Greenwald Ken Tiongson Thomas Henry Valerie Harrison Pamela Owens Brian Gately Greg Gemerer Aysatou Jobarteh

    53. And for the Recognition… National Credit Union Foundation Herb Wegner Awards to Cliff Rosenthal (Individ.Achievement) Opportunities (Vermont Development) CU (Org.) African-American Credit Union Coalition Pete Crear Lifetime Achievement Award to --Rita L. Haynes (Aug. 12, Bahamas)

    54. National Federation of Community Development Credit Unions 120 Wall Street, 10th Floor New York, NY 10005 800-437-8711 / 212-809-1850 www.cdcu.coop The Federation. Helping Credit Unions Do More.

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