2022 is off to a roaring start for our credit union clients! So far this year, CU Strategic Planning has successfully ushered 20 credit union Community Development Financial Institution Certifications through the approval process with Treasury’s CDFI Fund. 2021 saw high demand for CDFI certifications, as our CEO Stacy Augustine wrote about for CUinsight, creating a backlog of applications that meant credit unions were waiting months longer than anticipated for notification. The Fund now appears to be moving through this backlog, making it possible for the newly-certified to apply for CDFI Fund grants. These grants must be used to support generating economic growth and opportunity in some of our nation's most distressed communities. For more than a decade, we have helped credit unions achieve CDFI status and have guided credit unions through the CDFI funding process to earn more than $770 million for our clients. Brooke Van Vleet, CEO at InRoads CU, one of the recently CDFI Certified credit unions, said, “We are thrilled to have the certification process completed – it’s a culmination of many months of work by my team as well as our CU Strategic Planning partners – and can’t wait to begin to fully explore and leverage this designation to better serve our communities. “We plan to pursue an FA grant this year and have already been developing this application while we were awaiting final word on our certification. We also want to understand other opportunities that are available to CDFIs to partner with organizations in our community to serve those in need.” Credit unions approved in just the first few weeks of the new year include: We also officially got word on Dec. 29, 2021, that CoastHills FCU was also approved as a CDFI, so we want to celebrate them as well! CU Strategic Planning provides strategic and tactical business planning services for credit unions with a focus on community development. Our work with CDFIs and DEI consulting allows us to fulfill our mission to unlock opportunities for credit unions to change lives and their communities. Van Vleet continued, “When we first started exploring certification, we considered the streamlined process that was previously available. When that wasn’t available to us, I talked to many other CEOs who had partnered with CU Strategic Planning on this complex process. I’ve known CEO Stacy Augustine for many years and was excited to get to work with her again! The entire CUSP team was so easy to work with and kept us apprised throughout the process.”

CU Strategic Planning recently helped VyStar Credit Union earn its certification as a Community Development Financial Institution. VyStar, a $13 billion organization headquartered in Jacksonville, Fla., plans to leverage future CDFI grant funds it receives to expand its service in underserved and vulnerable markets. “Earning the right to be called a Community Development Financial Institution is central to the values VyStar stands for as an organization,” Chief Lending Officer Jenny Vipperman explained. “We believe in the importance of reflecting the communities we serve, and that means meeting individuals where they are and helping improve their financial wellness with fairness, compassion and integrity. That’s why we employ a diverse, talented staff and remain committed to making our high-quality products and services available to people of all different backgrounds. It is why we also support a broad range of community partners who share in our commitment to positively impact the world around us.” CDFI-certified lenders are eligible for CDFI Fund grants, which support generating economic growth and opportunity in some of our nation's most distressed communities. Mission-driven financial institutions that take a market-based approach to supporting economically disadvantaged communities with injections of capital into neighborhoods that lack access to financing. Vipperman added, “Credit unions serve more rural, low-income and minority areas than other financial institutions, and it remains critical that we offer inclusive services that improve the financial lives of individuals from various geographic locations and backgrounds. We want to be a trailblazer in our industry and remove the limitations that may be holding back other credit unions. Our successes in this area encourage other credit unions to make decisions with confidence and in turn serve more underserved members.” “VyStar truly demonstrates that credit unions continue serving their intended purpose—providing affordable financial services for people of all backgrounds, especially those who are most financially and socioeconomically disenfranchised,” CU Strategic Planning AVP of Certification Services Carrie Ostrem said. “Our work makes it easy to show up every day and unlock opportunities for credit unions and their communities. Congratulations, VyStar!” VyStar appreciated the guidance it received from CU Strategic Planning. “We are thankful to the CU Strategic Planning team for their leadership throughout this process and look forward to fulfilling the responsibility that comes with this honor,” Vipperman concluded.

The work we do with credit unions allows them to make real differences in the lives of their members and communities. This could be through CDFI certification or grant writing, strategic planning, product design, partnership creation or any of our other many services. And as part of this work, we get to hear the wonderful member impact stories that illustrate what credit unions are doing to unlock opportunities in the communities they serve. We will be highlighting some of these stories here. Consolidated Community Credit Union has a member that has lived and worked in Portland, Oregon for over 20 years. He doesn’t have permanent citizenship paperwork or a social security number, so he pays his taxes using something called an ITIN – an individual tax identification number. This member was wanting to purchase a home and had saved a full 20 percent for his down payment, but due to his ITIN status he had been turned down by more than ten lenders over the past five years. The last quote he received was for a 5-year adjustable-rate mortgage at 7.99%, but even that loan fell through. Consolidated worked with this member and evaluated his application, and funded his loan at 4.66% APR for a 30-year fixed rate mortgage. This member is finally a homeowner thanks to the credit union’s willingness to look at the individual and not let his lack of citizenship be a strike against him. CDFI Certified credit unions have countless stories like these to share; we’re proud to highlight a few from our clients.

Half a billion dollars goes to CU Strategic Planning clients in one day; more than all historical and outstanding secondary capital combined December 14th was a history-making day for the entire credit union system, for individual credit unions and for one credit union consultancy. CU Strategic Planning, a firm that exclusively serves credit unions, was responsible for obtaining $500 million in secondary capital for 21 credit unions through Treasury’s Emergency Capital Investment Program. According to Callahan & Associates, between 1997 and 2019, $50 million was deployed by Inclusiv, the largest provider of secondary capital to credit unions outside of the federal government. Inclusiv’s advocacy on behalf of its members supported the Treasury’s ECIP in the CARES Act. In 2010, credit unions received $70 million from the Treasury’s Community Development Capital Initiative. In February 2021, Catalyst Corporate Credit Union reported that 75 credit unions had $344 million in outstanding secondary capital. The achievement of 100% approval for 21 credit unions is also a significant accomplishment for CU Strategic Planning because historically NCUA approval has been difficult to obtain. CreditUnions.com reported that the NCUA denied 15 of 18 secondary capital requests made by CU Capital Market Solutions between 2017 and 2019. “This a wonderful accomplishment for our amazing credit union clients, and our team led by CFO Sharon Hall,” said CU Strategic Planning CEO Stacy Augustine. “Hall’s leadership in this historic achievement comes from decades of deep experience with CDFI and low-income designated credit union financial projections. She led the team to accomplish what has never been done before.” This good news for CU Strategic Planning and its clients came days after the U.S. Treasury CDFI Fund announced the FY2021 FA/TA Awards, which resulted in CU Strategic Planning’s clients receiving $20 million in grants, with an average client award more than $100,000 more than peer credit unions. “This was a big year for CDFI-certified credit unions,” Chief Strategic and Advocacy Officer, Mike Beall said. “We knew our team needed to step up to the plate as the only consultancy experienced with Treasury’s prior CDCI in 2010 and the largest writer of CDFI grants for credit unions. There’s never been a year like this. Funding for CDFIs was 50 times greater than any year prior—reaching $12 billion.” To prepare for the increased volume of work, CU Strategic Planning nearly doubled its number of employees. Augustine credits rigorous process documentation, a partnership with TransUnion, thorough training, mentoring and investment in tools as allowing the firm to maintain its quality of work while increasing the number of credit unions it serves. CU Strategic Planning’s credit union clients receiving ECIP funding ranged in assets size from less than $5 million to more than $10 billion in asset size, and the investments deployed range from $900,000 to $175 million. In total, $8.7 billion in ECIP investments were approved by Treasury, including $2 billion to credit unions.

CU Strategic Planning is proud to announce that the grant applications we facilitated for our clients make up nearly half of all of this year's CDFI FA awards for credit unions, totaling $20 million. In terms of dollars won, CU Strategic Planning clients won 59% of all funds awarded to credit unions outside of Puerto Rico. Credit unions will leverage these funds to serve more hard-working people across the country. Financial Partners Credit Union, for example, was awarded $690,000 in CDFI grant funding to develop products that assist low-income renters on the brink of eviction pay off rent in arrears, along with refinancing high-interest debt and auto loans to improve household financial stability for those critically affected by the COVID-19 pandemic. Using the funding as loan loss reserves, Financial Partners will originate an additional $16 million in Eviction Prevention, Debt Consolidation and Buy Here-Pay Here Auto Refinance loans to prevent the displacement of low-income, minority consumers most affected by the pandemic. Approximately 400,000 households in the Los Angeles-area became vulnerable to eviction once the moratorium was lifted earlier this year, according to UCLA Luskin Institute on Inequality and Democracy. Financial Partners’ strategy will focus on L.A., with an emphasis on the Promise Zones of South LA (SLATE) and LA Promise Zone, where poverty and COVID have hit hardest. The credit union will work in partnership with property owners of the approximate 14,000 tenant units the credit union has financed. Loans and counseling will provide tenants assistance through relationships with the property managers, legal aid agencies and community partners. “We are incredibly proud of all our clients, like Financial Partners Credit Union, and the work they do each and every day to provide relief to families in distressed communities,” CU Strategic Planning CEO Stacy Augustine said. “CDFI credit unions work tirelessly to battle financial inequities and unlock the opportunities in their communities. We’re happy to facilitate the solutions credit unions provide through our CDFI grant efforts on their behalf.” CU Strategic Planning’s winning Base FA applications were awarded $109,274 more on average than other credit union award winners. "We feel it’s important that the quality of our consulting creates ROI that more than covers the expense of working with us," said Mike Beall, Chief Advocacy Officer. CU Strategic Planning also wrote the application for the credit union that won the single largest award this year—Canton School Employees FCU at $870,000. In total, 248 CDFIs, including 67 credit unions, earned awards totaling $119 million in Base Financial Assistance grants. The awards announced today for CU Strategic Planning clients help CDFI credit unions serve low- to moderate-income families. The firm has now won more than $270 million in grants for credit unions from the Treasury Department’s CDFI Fund.

The following is the written statement of Stacy Augustine, CU Strategic Planning's President and CEO, provided to the CDFI Fund Advisory Board in preparation for the September 30 Community Development Advisory Board meeting (rescheduled and held on November 30). On behalf of CU Strategic Planning and its clients, I wanted to thank CDFI Fund Director Jodi Harris, CDFI Fund staff and Advisory Board members, for your commitment to increasing economic opportunities, equitable access to capital and financial inclusion, helping move America forward as a more just nation. CU Strategic Planning was founded in 2008 with the board-approved mission of unlocking opportunities for not-for-profit credit unions, allowing them to change lives and their communities. This is the North Star that guides our strategic priorities and the work of our 26-member staff. CU Strategic Planning is the leading provider of community development services to not-for-profit credit unions serving low to moderate income people, distressed communities, and other marginalized, underserved populations. While we are not a trade association, the breadth of our stakeholders is as significant as peer organizations. CU Strategic Planning also acts as the administrator of Community Development Certified Financial Counseling, and manages the non-profit National Council for Financial Opportunities. Stakeholders Represented by this Comment Letter Over the years, CU Strategic Planning has worked with 127 of 356 credit unions currently certified as CDFIs (37% of the overall total). During FY2020, CU Strategic Planning worked with clients that were successful in obtaining 21% of overall FA funding and nearly 50% of all credit union FA funding. This funding resulted in the deployment of more than $1.4 billion in loans as a result of the CDFI Fund’s investment. These funds were deployed throughout 1,500 branch locations across 36 states. What issues are CDFI credit unions addressing? Credit unions are the only not-for-profit consumer depositories serving as CDFIs. As a result, they represent front-line protection for at-risk-consumers and serve as the primary CDFIs reversing critical damage from the unconscionable rates and fees of predatory lenders. Below is a small sampling of factual, qualitative impacts from not-for-profit credit union CDFIs receiving organizational grants from the CDFI Fund: New Orleans Firemen’s Federal Credit Union, New Orleans, LA: The credit union helped a member who needed to transition to permanent disability because of illness. By refinancing the member’s outstanding personal and vehicle loans with the credit union and other lenders, the credit union was able to reduce the member’s monthly payments from $1,024/month to $513 per month, keeping costs within her reduced monthly budget. Day Air Credit Union, Dayton, OH: By financing a mortgage with no money down, the CDFI saved a young couple the cost of private mortgage insurance, which would have extended their payments on the loan by an estimated 10 years. Rent on a similar house would have cost the members an additional $600/month over what they were paying on the mortgage, which meant that the borrowers were both saving money as part of their monthly budget and building equity. Financial Partners Credit Union, Los Angeles, CA: After reviewing a long-time member’s credit report, the CDFI discovered the member was paying out over $600 per month in minimum payments on credit card balances over $22K and at 20%+ interest rates. Even making the minimum payments wasn’t sufficient to pay down the balances. The credit union consolidated his debt into one monthly payment saving him almost $200/month on payments. In turn, the member’s credit improved and he soon qualified for a vehicle loan to purchase a much-needed vehicle to retain employment. El Paso Area Teachers Federal Credit Union, El Paso, TX: When a member lost her job during the pandemic, she struggled to make her vehicle payments while only receiving Social Security income. By refinancing the vehicle from 18% interest to 4.99% interest, and extending the term of the loan out to 60 months, the credit union reduced her monthly payments from $422 to $247, making it possible to retain her vehicle and look for a new job. Innovations Federal Credit Union, Panama City, FL: A member contacted Innovations wanting to start his own hauling business after his career as a defense contractor was cut short following hurricane storm damage to his employer’s office. Seeing the overwhelming amount of debris in the area caused by thousands of fallen trees and shredded building materials—having his own home partially destroyed—and with local resources stretched thin, the member purchased a truck, trailer and several dumpsters, thus launching his own debris clean-up business. Because there were no other lenders offering start-up business loans in the storm-damaged area, Innovation’s microenterprise loan saved the member an estimated $7,497 over the life of the 60- month loan compared to national online small business lending platforms, and launched a new career. Industrial Credit Union, Bellingham, WA: An elderly wheelchair-bound member needed financing for home improvements. She had modest income and a home in such poor condition that it couldn’t be used to secure a loan. Neither the member’s current mortgagor (Wells Fargo) nor other lenders were willing to finance the electrical and septic repairs needed to maintain the home’s habitability. Industrial refinanced the member’s mortgage using the home’s raw land as security, giving her access to the funds needed for repairs and saving her $40,560 over the life of the loan. The Importance of CDFI Fund Investment in Credit Unions Consumer depositories operate in the most highly regulated environment of all CDFIs. Venture capital and loan fund CDFIs do not have regulatory agencies that conduct regular examinations. These examinations can lead to regulatory orders limiting lending to Target Markets most in need of resources, under the rubric of safety and soundness. Loan loss reserves and capital reserves represent critical tools needed to gain and maintain regulatory support for increased lending to low income Target Markets within regulatory safety and soundness parameters. To help families in crisis recover from the destabilizing impacts of COVID-19, the origination of loans from consumer depositories is more critical than ever before. Policy Considerations Over the past thirteen years, CU Strategic Planning has submitted almost 150 CDFI certifications and 137 award-winning Financial Assistance and Technical Assistance grant applications on behalf of 98 community development-oriented credit unions. Past experience with these mission-driven organizations, their certifications, business plan development, strategies and grant applications allows us to offer the following insights to the CDFI Fund Advisory Board backed both by qualitative insights and quantitative research. Emerging CDFI Financial Assistance Requirements The CDFI Fund adopted a policy in 2019 making 2020 the first year that an Emerging CDFI could not submit a Financial Assistance application with a pending certification. Had this policy been in place over the past decade, the CDFI Fund would not have awarded $53,511,265 in Financial Assistance Awards to 58 credit unions that we work with. Nearly 60% of the credit unions that received FA Award funding working with CU Strategic Planning received it in a year that an application was submitted concurrent to the approval of its CDFI certification. The result of this policy is that over $500 million would not have been invested in primarily low-income, persistent poverty, or majority minority regions. This funding provides loan loss reserves and capital reserves that are critically needed in the current economic environment—needed to stabilize households impacted by COVID. With current certifications taking more than six months to approve (and in many cases extending seven to eight months before approval), we urge the CDFI Fund and Advisory Board to change this policy with the next FA grant cycle. Certification Timing Our stakeholders currently have 24 CDFI certification applications pending approval. The average certification approval has taken six months during 2021 where previously the CDFI Fund had a practice and commitment to reviewing applications within a 60 day period. The impact of this delay has been tremendous, excluding 85 CU Strategic Planning applicants with pending applications from participating in CDFI-administered programs such as Financial Assistance, the Rapid Response Program and the Emergency Capital Investment Program which provides subordinated debt as secondary capital. There is no more significant tool to increase credit union lending with regulatory support than secondary capital. Certification: Community Development Mission A certified CDFI must have a primary mission of promoting community development and directing its activities toward improving the social or economic conditions of underserved people or communities. To date, the CDFI Fund has based part of its determination of community development mission by looking at an applicant’s mission statement. However, a mission statement is not always a good representation of an organization’s true mission. By way of background, because credit unions are governed by democratically elected representatives from the credit union’s membership that are almost entirely contributing their time as volunteers, credit union mission statements sometimes lack the polish and specificity of larger corporation, instead emphasizing service to the credit union’s members and financial stability. Credit union mission statements are often developed by this group of volunteers as part of a planning session. As a result, in our experience, their missions can be somewhat generic. A mission statement is just part of the evidence of whether an organization has a community development mission. We’d encourage the CDFI Fund to consider creating the assumption that any applicant that can show the deployment of over 60% of its total loan volume to an eligible market (or perhaps a slightly higher benchmark) already has a primary mission of promoting community development, in an effort to reduce paperwork and burden. Applicants that fail to meet this standard could then be required to demonstrate a primary mission with additional documentation. CU Strategic Planning works with applicants seeking certification with a poorly crafted mission statement to adopt updated mission statements that better reflect the credit union’s commitment to community development. Current requirements for certification require this mission to be in place for a year before the certification application is approved. While it’s reasonable to establish standards that ensure that applicants aren’t making mission statement changes in order to qualify for certification—these are applicants that already have a track record of providing service to qualified Target Markets. Streamlining the certification process becomes critically important in the current economic environment as not-for-profit credit unions offer lending products that help consumers recover from the pandemic, including: eviction prevention, debt consolidation, credit building, first depository accounts, second chance checking, and flexible auto refinancing on older motor vehicles designed to eliminate predatory loans with interest rates at and above 29%. These products are essential to help stabilize households coming out of this sustained COVID 19 economic crisis that has kept many from full employment. Use of Financial Services to Calculate Primary Mission to Target Market CU Strategic Planning urges the CDFI Fund Advisory Board to work with the CDFI Fund to continue to look for ways to qualify organizations as CDFIs using the delivery of Financial Services to a qualified Target Market. Financial Services represent crucial lifeline services for low income consumers allowing them to build credit and dramatically reduce check cashing fees. In theory, an applicant that could show that 60% of all overall services provided to a qualified Target Market should qualify as a CDFI—whether those services are provided through Financial Products, Development Services or Financial Services. Historically, the difficulty in illustrating service to Target Markets without underwriting is a lack of evidence that the service recipient qualifies as part of the Target Market (in other words, without underwriting information, how does the organization providing the service prove that the recipient is low income?). While this makes the calculation of service to the Target Market more challenging, occasionally the most rewarding outcomes come with challenges. Perhaps geographic information or proxy information could be used to provide statistically valid evidence. We appreciate the CDFI Fund’s willingness to consider these factors, allowing for the certification of organizations that may serve the lowest income consumers.

The work we do with credit unions allows them to make real differences in the lives of their members and communities. This could be through CDFI certification or grant funding, assisting with business plans, product design, partnership creation or any of our other many services. And as part of this work, we get to hear the wonderful member impact stories that illustrate what credit unions are doing to unlock opportunities in the communities they serve. We will be highlighting some of these stories here. This story comes from St. Tammany FCU in Louisiana. At the time, the credit union’s lobby was closed due to COVID-19, so drive-thru was providing full service to members. One day near the end of the month, a member drove up and asked for his monthly statement. The teller asked if he wouldn’t want to wait a couple of days until the new statements dropped for a more current report, but he replied that needed the statement right away for a payday loan company. The teller asked how much money he needed, and said that the credit union could probably help; the member only needed around $350.00. He had been unable to work for ten days because his wife had contracted COVID, which meant he had to quarantine as well. As a result, his previous paycheck was only $19.22. He needed to buy groceries, gasoline and formula for his baby. St. Tammany gave him their P.A.L. loan, a payday alternative loan, right at the drive-thru! This member was so grateful and the credit union was very happy to be able to help him. The credit union loan saved him around $150 in fees and interest, right at the time he needed it the most to provide for his family. CDFI Certified credit unions have countless stories like these to share; we’re proud to highlight a few from our clients.

The work we do with credit unions allows them to make real differences in the lives of their members and communities. This could be through CDFI certification or grant funding, assisting with business plans, product design, partnership creation or any of our other many services. And as part of this work, we get to hear the wonderful member impact stories that illustrate what credit unions are doing to unlock opportunities in the communities they serve. We will be highlighting some of these stories here. This story is about a long-time Financial Partners Credit Union member who had recently applied for a new auto loan. This member had a great payment history, but wasn't approved for his requested loan amount due to his elevated debt-to-income ratio. In reviewing his credit report and discussing the response to his loan application, the credit union representative noticed that this member was paying over $600.00 per month in minimum payments to high interest credit cards. The rep learned this debt was a result of his spouse’s costly medical procedure. The member expressed that having such high credit card balances was especially frustrating because he couldn’t get his balance down — even though he was making all of his payments on time, and even making additional payments on top of the minimum. He felt stuck with this debt. Financial Partners was able to restore this member’s peace of mind and improve his financial state with a debt consolidation loan. He’s now on the road to get out of debt faster with a single monthly payment that improves his cash flow by almost $200 a month, and in the long run he’ll save thousands in interest. So the member was able to start reducing his total debt and lower his debt-to-income ratio. Once he did that, the credit union was even able to approve his auto loan for the full amount requested. CDFI Certified credit unions have countless stories like these to share; we’re proud to highlight a few from our clients.

The work we do with credit unions allows them to make real differences in the lives of their members and communities. This could be through CDFI certification or grant funding, assisting with business plans, product design, partnership creation or any of our other many services. And as part of this work, we get to hear the wonderful member impact stories that illustrate what credit unions are doing to unlock opportunities in the communities they serve. We will be highlighting some of these stories here. A Carolina Foothills Federal Credit Union member had essentially no credit when she first opened her account. She was a single mother with three kids, one of whom had a disability. She was working part-time, trying to make ends meet and take care of her children all at the same time. As a result, the only place she had been able to afford to rent an apartment was in a dangerous part of town. One day she came into the credit union to speak to a representative. She explained that someone had been shot right outside their door the previous day, and her kids had witnessed the shooting. She was scared and was desperate to move, in order to provide a safer, more stable living situation for them. Her dream was to one day be able to own a three-bedroom home with a yard, so her kids could have a safe place to play and grow up. The representative worked with her, and continued to work with her over the course of a number of months, in order to get her financially ready for a mortgage. Finally, last summer she was approved for a mortgage and moved into her new home. Recently, she came into the credit union in order to show staff photos of her house and the yard where her kids can now safely play. She said she was so thrilled to own a home all by herself, and not worry about a safe, stable home for her family. CDFI Certified credit unions have countless stories like these to share; we’re proud to highlight a few from our clients.

CU Strategic Planning leads industry, maintains 100% approval record Arapahoe CU received its Community Development Financial Institution certification this year. The credit union enlisted CU Strategic Planning, the No. 1 CDFI certification and grant consultancy for credit unions, to guide the team toward a successful result for the credit union and its members. “Arapahoe Credit Union is excited to be able to expand our existing commitment to our local communities,” Arapahoe CU CEO Scott Ferndelli said. “Adding resources will allow us to reach even more lower income consumers and help improve their financial well-being.” Receiving certification opens a number of possibilities for Arapahoe to improve service to its members. Shauna Exstrom, vice president of corporate administration, said the credit union would be seeking grant funding through the Treasury Department’s CDFI Fund. She explained further, “A grant would greatly expand Arapahoe CU’s ability to reach an underserved segment of our community. These resources could be used in a variety of ways, from increased communication to offsetting loan losses.” While CU Strategic Planning Director of Certification Services Carrie Ostrem has enjoyed the opportunity to guide scores of the company’s clients through the CDFI certification process, each one is special and unique. “Arapahoe CU’s commitment to serving its community’s most vulnerable is energizing and infectious. We were very happy to help the credit union unlock the opportunities in its local Denver community,” she said. “CU Strategic Planning provided fantastic communication and coordination,” Arapahoe CU COO Christine Eckhardt said. “The process was a bit intensive, but the support and guidance Arapahoe CU received was incredibly efficient, timely and helpful.”

In response to the NCUA's October 20 Letter to Credit Unions, CU Strategic Planning submitted the following comments: October 27, 2021 Melane Conyers-Ausbrooks, Secretary of the Board National Credit Union Administration 1775 Duke Street Alexandria, Virginia 22314-3428 Subject: Proposed Rule on Subordinated Debt, RIN 3133-AF38 Dear Ms. Ausbrooks: CU Strategic Planning is pleased to take this opportunity to offer comments on the NCUA’s proposed regulation on subordinated debt. CU Strategic Planning is a consultancy working with Low Income Designated and CDFI certified credit unions to develop comprehensive business plans, projections and compliance reports that support increasing service to low-to-moderate income populations, while safeguarding the NCUSIF and ensuring credit union safety and soundness. Our track record includes the development of 232 award-winning comprehensive business plans and related projections, submitted to the U.S. Treasury CDFI Fund as CDFI TA/FA, NACA, RRP and CDCI applications, resulting in Treasury's investment of $250,000,000 into 129 credit unions in 35 states. This investment was made primarily in the form of loan loss reserves and capital reserves, and in 2011 in the form of subordinated debt as secondary capital as part of Treasury’s previous CDCI program. It is with this historical understanding that we respectfully submit the following comments for consideration. We are aware that the NCUA Board finalized its rule on subordinated debt in December 2020, and that you are now proposing to amend the definition of “grandfathered secondary capital” in a way that would encompass secondary capital issued to the United States Government or affiliated entities under applications approved before January 1, 2022, irrespective of the date of issuance. You have stated that “the proposed change would benefit eligible low-income credit unions (LICUs) that are either participating in the U.S. Department of the Treasury’s (Treasury) Emergency Capital Investment Program (ECIP) or other programs administered by the U.S. Government that can be used to fund secondary capital, if they do not receive the funds for such programs by December 31, 2021.” The NCUA had initially proposed to extend the expiration of regulatory capital treatment for these issuances to 20 years from the date of issuance or January 1, 2042, whichever date comes last. First and foremost, CU Strategic Planning is supportive of the guidance announced by the NCUA in its October 20, 2021 Letter to Credit Unions that authorizes the acceptance of subordinated debt investments by eligible low-income credit unions from Treasury’s Emergency Capital Investment Program. This change from earlier proposed policy makes sense on two levels: 1) it recognizes the essential need for flexibility in planning for the capital needs of a subset of credit unions that need access to a greater variety of balance sheet tools, and 2) it aligns the timeframe (30 years) with what is being proposed by Treasury under its ECIP standards. There was no obvious reason for this inconsistency, and we are pleased that NCUA addressed it in this manner. CU Strategic Planning recommends additional changes to the proposed regulation: Allow membership capital deposits to be counted as equity. When a credit union is formed, initial capital contributions (membership capital) represent an important initial stake, allowing the institution to begin doing business. Credit unions carry this capital on their books, but as non-stock entities, they are constrained in how they can deploy this capital. The NCUA should allow credit unions to count this type of capital as equity, similar to practices of other member-owned cooperatives. This is not only logical, as the capital’s ownership function would be preserved, but would also enable credit unions to more prudently and proactively use this additional capital to enhance member service offerings. Classify non-member deposits as equity and not deposits (liabilities). Low Income Designated credit unions can accept non-member deposits and secondary capital. Secondary capital enhances the credit union’s net worth and the non-member deposits do not. In most cases, non-member deposits are provided to the credit union to help support the lending activity needs of the low income communities. Typically, deposit from the low income members are not enough to support the credit union’s lending demands. Non-member deposits come from “community social investors”, non-profits and foundations that are aligned with the mission of the credit union and want to invest in their communities. Although needed, non-member deposits can decrease the net worth of a credit union. These investments should not be counted as deposits, but instead as equity and accounted for as an investment in the credit union’s mission. Give all federally insured credit unions access to the benefits of secondary capital. Finally, we strongly recommend that the NCUA continue its efforts to amend the Federal Credit Union Act to approve secondary capital for all federally insured credit unions, not just Low Income Designated ones. The benefit of increasing/strengthening the capital position of depository institutions is self-evident, and in the case of cooperative, member-owned not-for-profit credit unions, this would be a logical step that, if undertaken would make credit union balance sheets more durable and flexible, enhance taxpayer protections by supplementing the cushion between a credit union and potential losses to the National Credit Union Share Insurance Fund, and augment the ability of credit unions to serve the consumer finance marketplace. In short, a win-win-win. We are aware that this requires Congressional action, and we stand ready to assist you in this endeavor. Again, we appreciate this opportunity to offer comments, and encourage you to contact us if you have any questions or suggestions. Very truly yours, Stacy S. Augustine, President/CEO

On Oct. 12, the NCUA announced it has opened the doors for credit unions with both a low-income and minority depository institution designation to apply for the National Credit Union Administration’s MDI mentoring grants now through Oct. 29. These are not the long-awaited $1.75 billion CDFI grants, referred to as the Emergency Support & Minority lending Program. “We try to look out for any credit union’s bottom line,” said Stacy Augustine, CU Strategic Planning’s President/CEO. “Eligible credit unions should consider applying for these grants on their own because the grants were designed by the NCUA as a readily accessible resource.” So what’s the difference, then, between the NCUA program and the Treasury Department’s Minority Depository Institution grants that are still to come? NCUA MDI Mentoring Grants The 2021 Community Development Revolving Loan Fund (CDRLF) Grant Round will provide approximately $100,000 to low-income credit unions for the Minority Depository Institution Mentoring initiative. NCUA states the purpose of the MDI Mentoring initiative is to encourage strong and experienced credit unions to provide guidance to small MDI credit unions to increase their ability to thrive and serve low-income and underserved populations. Funding approval, up to $25,000, will be based on the applicant’s ability to demonstrate a well-developed plan for the mentoring assistance it would receive from the mentor credit union. Not to worry: NCUA put safeguards in place via a contract that the mentor will not merge with the mentee credit union for at least five years after the mentorship, which lasts 12 months. Awardees and their mentors must commit to participating in a cohort that will receive training and technical assistance from the NCUA throughout the project period. These awards will be announced by the NCUA on Dec. 15. 2021. More information is available at the NCUA’s website. CDFI Grants – the Emergency Support & Minority Lending Program At the end of 2020, President Donald Trump signed the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (H.R. 133) into law, which provides for more than $12 billion in supplemental appropriations toward banks and credit unions certified by the Treasury Department as Community Development Financial Institutions. One of the initiatives under this appropriation is to make low-cost, long-term capital investments to MDIs and other CDFI minority lending institutions. According to the Office of the House Financial Services Committee, $1.75 billion of these funds will be available to provide additional grants and financial assistance to depository and non-depository CDFIs, including $1.2 billion earmarked for the minority lending institutions category. MDIs are defined as predominantly serving minority communities or meet other standards for accountability to minority populations as determined by the CDFI Fund. CU Strategic Planning’s grant writing services are focused on those applications requiring technical expertise and in-depth knowledge of the US Treasury CDFI Fund, and we expect the Emergency Support & Minority Lending Program applications to require that expertise. We are awaiting the announcement from the Treasury about this program, and will be ready to serve our clients the day the program opens. The Impact of MDIs MDIs have a long history in the U.S. of lending to communities of color. While regulators have a mandate to preserve and promote MDIs, the number of MDI banks (143 as of September 30, 2021) and MDI credit unions (509 as of June 30, 2021) has declined by about one-third over the decade following the 2008 Great Recession. Additionally, 1,163 CDFIs embrace a similar mission of delivering affordable lending options to economically disadvantaged communities, especially those in low- to moderate-income and minority communities. The disproportionate impact of the COVID-19 pandemic further disadvantaged these vulnerable communities, but CDFIs and MDIs maintained their focus on helping businesses in their target areas minimize the economic effect. Get Assistance for the Process CDFI experts are the heart of CU Strategic Planning, and we can work with your credit union every step of the way, from determining eligibility to winning CDFI MDI and other financial assistance grants. Let us show you how we can help your credit union.