Inclusiv/Capital Conversations: Liquidity Resources and Strategies for CDCUs to Continue Lending In Times of Uncertainty

Inclusiv/Capital Conversations: Liquidity Resources and Strategies for CDCUs to Continue Lending In Times of Uncertainty

On April 12th, 2023, Inclusiv/Capital and Primary Financial, a Credit Union Service Organization, hosted a special Inclusiv/Capital Conversation to discuss liquidity resources and strategies for Community Development Credit Unions (CDCUs) and Community Development Financial Institutions (CDFIs) to increase their mission-driven lending, even in these uncertain times.

Over the last few years, many credit unions have experienced a whiplash – from unprecedented levels of deposits during the early days of the pandemic, to new liquidity challenges as those funds have been lent our or withdrawn.  Coupled with the sustained high interest rate environment and competition from other financial institutions, some credit unions have struggled to attract and retain adequate liquidity to support their full range of community-focused lending.

During this session, Inclusiv/Capital representatives Jack Caplan  and Cathi Kim walked through the quarterly trends and financial outlook for community development credit unions.  The session also included a discussion on how can credit unions access additional funding to continuously support their members and deliver on their community development missions while maintaining an eye on long-term preservation and service expansion during this next phase of economic recovery.

Chris Lewis, President/CEO of Primary Financial, an Inclusiv partner on the Social Impact Deposits Platform, discussed regulatory benefits for low-income designated credit unions such as non-member deposits and how CDCUs can use resources such as SimpliCD, the Inclusiv Social Impact Deposits Platform and DTC offerings to support their lending and liquidity needs.

Inclusiv/Capital also discussed the Federal Reserve Bank's Term Funding Program to help credit unions and banks meet the needs of their depositors in light of a changing interest rate environment. The program allows financial institutions to pledge assets held before March 12, 2023 – including mortgage-backed securities from government sponsored entities, Participation Certificates from the Small Business Association, U.S. Treasuries, and many other assets - as collateral in exchange for a cash advance equal to the value of those assets at par.  Advances are for a term of one year and must be requested before March 11, 2024. Financial institutions can check their eligibility and learn how to participate here.

View the presentation slides here, and a recording of the webinar here (Passcode: Tr?8qA*W).

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