OFN / CFED Briefing

Dan Betancourt, President and CEO

Community First Fund

Lancaster, Pennsylvania

February 22, 2010

www.commfirstfund.org

Organizational Overview

• Private, non-profit community development financial institution (CDFI) founded in 1992

• Provide loans to small and mid-sized businesses, affordable housing developers, non-profit organizations

• Provide training and technical assistance

• Lending Offices in Lancaster, York, Reading, Harrisburg, Exton

• Since 1992, Community First Fund haso Provided more than 800 loanso Disbursed over $32 million in loans

50% to Persons of Color 30% to women

Organizational Overview Small Cities Strategy

• Community First Fund is committed to reducing the concentration of poverty in small cities and boroughs in Central Pennsylvania

• Community First developed its Small Cities Strategy too create opportunities for building wealth in lower income communities through

business and real estate ownership;

o support entrepreneurship and the creation of jobs to bolster the economy in cities;

o increase the availability of quality, affordable housing and mixed income housing in cities;

o support nonprofit organizations which provide life enhancing community services for local residents

Loan Types

• Small business: up to $35,000– For both start-up and existing businesses

• Mid-sized business: $35,000 up to $500,000+– Typically been in business for two years or more

• Community development– For non-profits and community development organizations

• Real estate– Affordable housing (rental and for sale)– Business real estate in downtowns and lower income communities– Market-rate housing in downtowns– Mixed-income housing– Mixed-use projects

• Approved SBA 7(a) Lender and Community Express Lender

Our financing needs

Need for longer term investments to allow longer term financing for affordable housing and real estate

Need for equity or equity like products (EQ2)

Utilization of bond market to provide financing for CDFI’s

Opportunities with FHLB Membership

• Stable and affordable source of liquidity for community development lending activities

• Leverage CDFI equity and private sector financing to serve more customers

Opportunities

Increase our impact in small cities by expanding loan products for small business, business real estate and non profits and community services

May offer the ability to expand affordable housing products

Membership allows access to other FHLB programs that complement our mission

Challenges

• Requirement to pledge collateral will transform the nature of balance sheet. Reduced flexibility, perceived shift risk to unsecured creditors (banks, individuals, foundations)

• Collateral requirements are more restrictive than any other current source of investment• Loan to Value maximum of 80%• ineligible collateral• “domino effect” with existing unsecured creditors?

Challenges• Lending values assigned to collateral are deeply

discounted

• Capital stock cost; stock is fluctuating non cash asset

• Potential for additional regulation, and covenants, “domino effect” of more restrictive covenants with other investors

• Perceived to have more value to single product lenders than to multi-product, small cities lender

Challenges

Generally do not meet the “long-term home mortgage” requirement (five years or greater)

Longer term housing lending will impact liquidity

Potential limitation of borrowing dependent on performance of the FHLB and its members’ performance

Visit our web sitewww.commfirstfund.org