[Federal Register Volume 77, Number 54 (Tuesday, March 20, 2012)]
[Notices]
[Pages 16267-16270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6610]


=======================================================================
-----------------------------------------------------------------------

NATIONAL CREDIT UNION ADMINISTRATION


Community Development Revolving Loan Fund Access for Credit 
Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of Funding Opportunity.

-----------------------------------------------------------------------

    Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782, 
1784, 1785 and 1786; 12 CFR 705.

SUMMARY: The National Credit Union Administration (NCUA) is issuing a 
Notice of Funding Opportunity (NOFO) to invite eligible credit unions 
to submit applications for participation in the Community Development 
Revolving Loan Fund (CDRLF) Loan Program, subject to funding 
availability. The CDRLF serves as a source of financial support, in the 
form of both loans and technical assistance grants, for credit unions 
serving predominantly low-income members. It also serves as a source of 
funding to help low-income designated credit unions (LICUs) respond to 
emergencies arising in their communities.

DATES: The application open period is from May 22, 2012 thru December 
31, 2012. Funds may be exhausted prior to this deadline, at which time 
the program/funds will no longer be available.

ADDRESSES: Submit electronic applications via email to 
[email protected], or via facsimile to 703-519-4088.

FOR FURTHER INFORMATION CONTACT: The Office of Small Credit Union 
Initiatives, National Credit Union Administration, 1775 Duke Street, 
Alexandria, Virginia 22314-3428 or telephone (703) 518-6610.

SUPPLEMENTARY INFORMATION: 

I. Description of Funding Opportunity

    The purpose of the CDRLF is to assist specially designated credit 
unions in providing basic financial services to their low-income 
members to stimulate economic activities in their communities. Through 
the CDRLF, NCUA provides financial support in the form of loans and 
technical assistance grants to LICUs. These funds help improve and 
expand the availability of financial services to these members. The 
CDRLF also serves as a source of funding to help LICUs respond to 
emergencies. NCUA's Office of Small Credit Union Initiatives (OSCUI) 
administers the CDRLF.
    There are two components to the CDRLF, the Loan Program and the 
Technical Assistance Grant (TAG) Program. The Loan Program is primarily 
the subject of this NOFO.
    Additional information about the TAG Program, including current 
funding initiatives, amount of funds available, funding priorities, 
permissible uses of funds, funding limits, deadlines and other 
pertinent details, are periodically published in NCUA Letters to Credit 
Unions and posted on the NCUA Web site (http://www.ncua.gov/Resources/CUs/Dev/Pages/Loans.aspx).
    A. Program Regulation: Part 705 of NCUA's regulations implements 
the CDRLF. 12 CFR 705. A revised Part 705 was published on November 2, 
2011. 76 FR 67583. Additional requirements are found at 12 CFR Parts 
701 and 741. Applicants should review these regulations in addition to 
this NOFO. Each capitalized term in this NOFO is more fully defined in 
the regulations, the loan application, and the loan agreement. For the 
purposes of this NOFO, an Applicant is a Qualifying Credit Union that 
submits a complete Application to NCUA under the CDRLF Loan Program.
    B. Funds Availability: Congress has not made an appropriation to 
the CDRLF for loans for Fiscal Years 2012-2013. NCUA expects to lend 
approximately $11 million under this NOFO, derived from appropriated 
and earned funds. Monies for additional loans come from scheduled loan

[[Page 16268]]

amortizations. NCUA reserves the right to: (i) Award more or less than 
the amount cited above; (ii) fund, in whole or in part, any, all, or 
none of the applications submitted in response to this NOFO; and (iii) 
reallocate funds from the amount that is anticipated to be available 
under this NOFO to other CDRLF programs, particularly if NCUA 
determines that the number of awards made under this NOFO is fewer than 
projected.

II. Description of Loan Program

    CDRLF loans are made to LICUs that meet the requirements in the 
program regulation and this NOFO, subject to funds availability. CDRLF 
loans are generally made at lower than market interest rates.
    A. Eligibility Requirements: The regulations specify the 
requirements a credit union must meet in order to be eligible to apply 
for assistance under this NOFO. See 12 CFR 705. Following are 
additional requirements for participating in the Loan Program under 
this NOFO. In short, an Applicant must:
    [cir] Be a Qualifying Credit Union (QCU);
    [cir] Meet the underwriting standards and program requirements 
specified in the Regulations and this NOFO; and
    [cir] Complete and submit an Application (see Section III. of this 
NOFO for additional information).
    1. Low Income Credit Union Designation: A credit union must be a 
LICU, or equivalent in the case of a Qualifying State-chartered Credit 
Union, in order to participate in the CDRLF. Requirements for obtaining 
the designation are found at 12 CFR 701.34.
    B. Permissible Uses of Funds: NCUA will consider requests for funds 
consistent with the purpose of the CDRLF Program. 12 CFR 705.1. A non-
exhaustive list of examples of permissible uses or projects of loan 
proceeds are contained in Sec.  705.4 of the regulation, and include: 
(i) Development of new products or services for members including new 
or expanded share draft or credit card programs; (ii) Partnership 
arrangements with community based service organizations or government 
agencies; (iii) Loan programs, including, but not lmited to, micro 
business loans, payday loan alternatives, education loans, and real 
estate loans; (iv) Acquisition, expansion or improvement of office 
space or equipment, including branch facilities, ATMs, and electronic 
banking facilities; and (v) Operational programs such as security and 
disaster recovery.
    NCUA will consider other proposed uses of funds that in its sole 
discretion it determines are consistent with the purpose of the CDRLF 
Program, the requirements of the regulations, and this NOFO.
    C. Terms: The specific terms and conditions governing a loan will 
be established in the loan documents each Participating Credit Union 
will sign prior to disbursement of funds. Following are the general 
loan terms under the program.
    1. Maximum Loan Amount: NCUA expects that most loans made under 
this NOFO will be in an amount less than or equal to $300,000. NCUA has 
determined that loans of this size will help maximize allocation of 
this limited resource among many credit unions. However, NCUA will 
consider funding requests in excess of $300,000 from Applicants that 
demonstrate the need and capability to effectively deploy such funding; 
and have a high probability of realizing significant impact, while 
maintaining financial and operational soundness. NCUA may consider 
other factors for the approval of funding requests in excess of 
$300,000 and will be assessed on a case-by-case basis. See Section III 
and IV of this NOFO for additional information.
    2. Maturity: Loans will generally mature in five years. A credit 
union may request a shorter loan period, but in no case will the term 
exceed five years.
    3. Interest: The interest rate on loans is governed by the CDRLF 
Loan Interest Rate Policy, which can be found on NCUA's Web site at 
http://www.ncua.gov/Resources/CUs/Dev/Pages/Loans.aspx.
    4. Repayment: All loans made under the CDRLF must be repaid to NCUA 
regardless of how they are accounted for by the Participating Credit 
Union.
    (a) Principal: The entire principal is due at maturity.
    (b) Interest: Interest is due in semi-annual payments beginning six 
months after the initial distribution of the loan.
    (c) Principal Prepayment: There is no penalty for principal 
prepayment. Principal prepayments may be made as often as monthly.
    D. Conditions:
    1. Loan Agreements: Each Participating Credit Union under this NOFO 
must enter into agreement with NCUA before NCUA will disburse loan 
funds. The agreement documents include, for example, a promissory note, 
loan agreement, security agreement (if applicable). For further 
information, see Section VI. of this NOFO.
    2. Matching Funds: Part 705.5(g) of NCUA's regulations describe the 
overall requirements for matching funds. NCUA, in its sole discretion, 
may require matching funds of an Applicant, on a case-by-case basis 
depending on the financial condition of the Applicant. NCUA anticipates 
that most Applicants will not be required to obtain matching funds. 
However, each Applicant should address in the Application its strategy 
for raising matching funds if NCUA determines matching funds are 
required (see 12 CFR Part 705 and the Application for additional 
information).
    (a) Matching Funds Requirements: The specific terms and covenants 
pertaining to any matching funds requirement will be provided in the 
loan agreement of the Participating Credit Union. Following, are 
general matching requirements. NCUA, in its sole discretion, may amend 
these requirements depending upon its evaluation of the Applicant, but 
in no case will the amended requirements be greater than the conditions 
listed below.
    (i) The amount of matching funds required must generally be in an 
amount equal to the loan amount.
    (ii) Matching funds must be from non-governmental member or 
nonmember share deposits.
    (iii) Any loan monies matched by nonmember share deposits are not 
subject to the 20% limitation on nonmember deposits under Sec.  701.32 
of NCUA's regulations.
    (iv) Participating Credit Unions must maintain the outstanding loan 
amount in the total amount of share deposits for the duration of the 
loan. Once the loan is repaid, nonmember share deposits accepted to 
meet the matching requirement are subject to Sec.  701.32 of NCUA's 
regulations.
    (b) Criteria for Requiring Matching Funds: NCUA will use the 
following criteria to determine whether to require an Applicant to have 
matching funds as a condition of its loan.
    (i) CAMEL Composite Rating;
    (ii) CAMEL Management Component Rating;
    (iii) CAMEL Asset Quality;
    (iv) Regional Director Concurrence; and
    (v) Net Worth Ratio.
    (c) Documentation of Matching Funds: NCUA may contact the matching 
funds source to discuss the matching funds and the documentation that 
the Applicant has provided. If NCUA determines that any portion of the 
Applicant's matching funds is ineligible under this NOFO, NCUA, in its 
sole discretion, may permit the Applicant to offer alternative matching 
funds as a substitute for the ineligible matching funds. In this case: 
(i) the Applicant must provide acceptable alternative matching funds 
documentation within 10 business days of NCUA's request.
    3. Compliance with Past Agreements: In evaluating funding requests 
under

[[Page 16269]]

this NOFO, NCUA will consider an Applicant's record of compliance with 
past agreements, including any deobligation of funds. NCUA, in its sole 
discretion, will determine whether to consider an Application from an 
Applicant with a past record of noncompliance, including any 
deobligation (i.e. removal of unused awards) of funds.
    (a) Default Status: If an Applicant is in default of a previously 
executed agreement with NCUA, NCUA will not consider an Application for 
funding under this NOFO.
    (b) Undisbursed Funds: NCUA will not consider an Application if the 
Applicant is a prior awardee under the CDRLF Program and has unused 
grant awards as of the date of Application.

III. Application Requirements

    A. Application Form: The application and related documents can be 
found on NCUA's Web site at http://www.ncua.gov/Resources/CUs/Dev/Pages/Loans.aspx or at www.ncua.gov by entering ``CDRLF Loan 
Application'' as the keywords in the search function. NCUA will confirm 
receipt of Applications that are received by email or facsimile.
    B. Minimum Application Content: Each Applicant must complete and 
submit the following sections of the Application.
[GRAPHIC] [TIFF OMITTED] TN20MR12.042


    1. DUNS Number: Based on an Office of Management and Budget (OMB) 
policy directive effective October 31, 2003, credit unions must have a 
Data Universal Numbering System (DUNS) number issued by Dun and 
Bradstreet (D&B) in order to be eligible to receive funding from the 
CDRLF. NCUA will not consider an Application that does not include a 
valid DUNS number. Such an Application will be deemed incomplete and 
will be declined. Information on how to obtain a DUNS number may be 
found on D&B's Web site at http://fedgov.dnb.com/webform or by calling 
D&B, toll-free, at 1-866-705-5711.
    2. Employer Identification Number: Each Application must include a 
valid and current Employer Identification Number (EIN) issued by the 
U.S. Internal Revenue Service (IRS). NCUA will not consider an 
application that does not include a valid and current EIN. Such an 
Application will be deemed incomplete and will be declined. Information 
on how to obtain a EIN may be found on the IRS's Web site at 
www.irs.gov.
    3. Abbreviated Application: An Applicant requesting a loan amount 
of $300,000 or less is permitted to submit a short application form 
that limits the amount of required narrative responses. The required 
narratives will address the proposed use of funds; the credit union's 
ability to obtain matching funds, if required; and how the credit union 
will assess the impact of the funding.
    4. Narrative Responses: Each Application must include the 
narratives listed below. Applicants must adhere to page limitations 
contained in the Application instructions. NCUA will not read or 
consider narrative comments beyond the page limits specified. 
Additionally, NCUA will read only information requested in the 
Application and will not read attachments that have not been requested 
in this NOFO or the Application.
    (a) Use of Funds: Each Applicant must submit a narrative describing 
how it intends to use the loan proceeds. The narrative should 
demonstrate that the loan will enhance the products and services the 
credit union provides to its members. It also should describe how those 
enhanced products and services will support the economic development of 
the community served by the credit union.
    (b) Matching Funds: Submit a narrative describing its strategy for 
raising matching funds from non-federal sources if matching funds are 
required.
    5. Large Loans: An Applicant requesting a loan in excess of 
$300,000 is required to submit an application form that contains 
additional narrative comments supporting such request. The additional 
narrative consists of a business plan.
    (a) Business Plan: As detailed in Part 705 of NCUA's regulations, 
the business plan must: Describe the community's need for financial 
products and services and the Applicant's need for funding; summarize 
the services, financial products, and services provided by the 
Applicant; describe the Applicant's involvement with other entities; 
describe the credit union's marketing strategy to reach members and the 
community; and include financial projections.
    6. Non-federally Insured Applicants:
    (a) Additional Application Requirements: Each Applicant that is a 
non-federally insured, state-chartered credit union must submit 
additional application materials. These additional materials are more 
fully described in Sec.  705.6(b)(3) of NCUA's regulations and in the 
Application.
    (b) Examination by NCUA: Non-federally insured, state-chartered 
credit unions must agree to be examined by NCUA. The specific terms and 
covenants pertaining to this condition will be provided in the loan 
agreement of the Participating Credit Union.
    C. Submission of Application: Under this NOFO, Applications must 
submit through one of the following methods:
    (a) Email submission: [email protected].
    (b) Facsimile submission: 703-519-4088.

IV. Application Review

    A. Review Process:
    1. Eligibility and Completeness Review: NCUA will review each 
Application to determine whether it is complete and that the Applicant 
meets the eligibility requirements described in the Regulations and 
Section II. of this NOFO. An incomplete Application or one that does 
not meet the eligibility requirements will be declined without further 
consideration.
    2. Substantive Review: After an Applicant is determined eligible 
and its Application is determined complete, NCUA will conduct a 
substantive review in accordance with the criteria and procedures 
described in the Regulations and this NOFO. NCUA reserves the right to 
contact the Applicant during its review for the purpose of clarifying 
or confirming information contained in the Application. If so 
contacted, the Applicant must respond within the time specified by NCUA 
or NCUA, in its sole discretion, may decline the application without 
further consideration.
    3. Evaluation and Scoring: The evaluation criteria are more fully 
described in Sec.  705.6 of NCUA's regulations. NCUA will evaluate each 
Application that receives a substantive review on the four criteria 
categories described in the regulation: Financial Performance, 
Compatibility, Feasibility, and Examination Information and Concurrence 
from Regional Director of Qualifying Credit Unions.
    (a) Assessment of Impact: The Compatibility criteria will take into 
consideration the extent of community need and projected impact of the 
funding on the Applicant's members and community.
    (b) Effective Strategy: The Feasibility criteria will take into 
consideration the quality of the Applicant's strategy and its capacity 
to execute the strategy as demonstrated by its past performance,

[[Page 16270]]

partnering relationships, and other relevant factors.
    (c) Evaluating Prior Award Performance: For prior participants of 
the CDRLF Program, loans may not be awarded if the participant: (i) Is 
noncompliant with any active award; (ii) failed to make timely loan 
payments to NCUA during fiscal years prior to the date of Application; 
and (iii) had an award deobligated (i.e. removal of unused awarded 
funds) during fiscal years prior to the date of Application.
    4. Input from Examiners: NCUA will not approve an award to a credit 
union for which its NCUA regional examining office or State Supervisory 
Agency (SSA), if applicable, indicates it has safety and soundness 
concerns. If the NCUA regional office or SSA identifies a safety and 
soundness concern, OSCUI, in conjunction with the regional office or 
SSA, will assess whether the condition of the Applicant is adequate to 
undertake the activities for which funding is requested, and the 
obligations of the loan and its conditions. NCUA, in its sole 
discretion, may defer decision on funding an Application until the 
credit union's safety and soundness conditions improve.

V. Award Process

    A. Award Selection: NCUA will make its award selections based on a 
consistent scoring system where each applicant will receive an 
individual score. NCUA will consider the impact of the funding. In 
addition, NCUA may consider the geographic diversity of the Applicants 
in its funding decisions. When loan demand is high applications will be 
ranked based on the aforementioned.
    B. Notice of Award: NCUA will notify each Applicant of its funding 
decision. Notification will generally be by email. Applicants that are 
approved for funding will also receive instructions on how to proceed 
with disbursement of the loan.

VI. Disbursement of Funds

    A. Loan Agreement: Each Applicant selected to receive a loan under 
this NOFO must sign a Loan Agreement and a Promissory Note in order to 
receive a disbursement of funds. The Loan Agreement will include the 
terms and conditions of funding, including but not limited to the: (i) 
Loan amount; (ii) interest rate; (iii) repayment requirements; (iv) 
accounting treatment; (v) impact measures; and (vi) reporting 
requirements.
    1. Failure to Sign Agreement: NCUA, in its sole discretion, may 
rescind a loan offer if the Applicant fails to return the signed loan 
documents and/or any other requested documentation, within the time 
specified by NCUA.
    2. Multiple Disbursements: NCUA may determine, in its sole 
discretion, to fund a loan in multiple disbursements. In such cases, 
the process for disbursement will be specified by NCUA in the Loan 
Agreement.

VII. Post-Award Requirements

    A. Reporting Requirements: Annually, each Participating Credit 
Union will submit an annual report to NCUA. The report will address the 
Participating Credit Union's use of the loan funds; the impact of 
funding; and explanation of any failure to meet objectives for use of 
proceeds, outcome, or impact. NCUA, in its sole discretion, may modify 
these requirements. However, such reporting requirements will be 
modified only after notice to affected credit unions.
    1. Report Form: The annual report form will be available on NCUA's 
Web site. The loan agreement will describe the requirements more fully. 
A Participating Credit Union is responsible for timely and complete 
submission of the report. NCUA will use such information to monitor 
each Participating Credit Union's compliance with the requirements of 
its loan agreement and to assess the impact of the CDRLF Program.

VIII. Urgent Requests for Funding

    A. Funding Requests: Consistent with Sec.  705.7 of NCUA's 
regulations, NCUA will consider requests for funding on an emergency 
basis to eligible credit unions. To allow for the Agency to respond 
with maximum efficiency, such requests will be handled on a case-by-
case basis. NCUA, in its sole discretion, will determine what 
information an eligible credit union must submit, the timeframe for 
such submission, and how to evaluate such requests.
    1. Contacting NCUA: To request assistance under this provision, 
contact OSCUI as listed below.

IX. Agency Contacts

    A. Methods of Contact: For further information, contact NCUA as 
follows:
    Email: [email protected].
    Telephone: 703-518-6610 (not a toll free number).
    B. Information Technology Support: People who have visual or 
mobility impairments that prevent them from using NCUA's Web site 
should call (703) 518-6610 for guidance (this is not a toll free 
number).


    By the National Credit Union Administration Board on March 14, 
2012.

Mary F. Rupp,
Secretary of the Board.
[FR Doc. 2012-6610 Filed 3-19-12; 8:45 am]
BILLING CODE 7535-01-P