Positive Financial Impact
Banks are required to fulfill CRA lending and investment requirements each year. Typically, those activities only provide full CRA credit one time. However, Foundation loans and investments receive full credit in each exam, allowing banks to direct more dollars toward standard rate lending.
Foundation Participation |
VS. |
Alternative CRA Funding |
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| 7 Year Loan at 1.00% |
Standard Loans at 5.00% |
CRA Loans at 3.00% |
Standard Loans at 5.00% |
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| Year 1 | $1,000,000 | $6,000,000 | Year 1 | $1,000,000 | $6,000,000 | |
| Year 2 | same $1,000,000 loan | $6,000,000 | Year 2 | $2,000,000 | $5,000,000 | |
| Year 3 | same $1,000,000 loan | $6,000,000 | Year 3 | $3,000,000 | $4,000,000 | |
| Year 4 | same $1,000,000 loan | $6,000,000 | Year 4 | $4,000,000 | $3,000,000 | |
| Year 5 | same $1,000,000 loan | $6,000,000 | Year 5 | $5,000,000 | $2,000,000 |
|
| Year 6 | same $1,000,000 loan | $6,000,000 | Year 6 | $6,000,000 | $1,000,000 |
|
| Year 7 | same $1,000,000 loan | $6,000,000 | Year 7 | $7,000,000 | 0 |
|
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$7 million of CRA credit with $1 million loaned TOTAL INCOME OF $2,240,000 |
$7 million of CRA credit with $7 million loaned TOTAL INCOME OF $1,890,000 |
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Additional Profit from Foundation Participation = $350,000AdditionalYield = 1.00%Note: Most banks are examined every 24 months. Even under this scenario, the Foundation investment still produces additional yield. |
Assumptions
- Bank needs $1,000,000 CRA credit in each of the next seven (7) years.
- Current rate of 7 year U.S. Government Agency Bond is 3.00%.
- Bank’s standard lending rate is 7 year agency rate is +2%
Foundation
- Bank commits $1,000,000 to the Foundation in the form of a loan; rate equals collateral (3.00%) less 1.00% to Foundation.
- Bank commits $6,000,000 to other loans at its standard lending rate.
Alternative
- Bank commits $1,000,000 each year to CRA qualifying loans at 3.00%, net of loan loss/reserves and administrative overhead.
- Bank commits the balance of $6,000,000 to other loans at its standard lending rate.
Transforming Lives
With the support of our partners, the Senior Housing Crime Prevention Foundation transforms the lives of vulnerable nursing home residents. It is hard to overstate the transformative effect a bank can have on the life of an elderly person by removing fear from their lives — fear of neglect, fear of theft, fear of needing equipment and not knowing where to turn. Click on the stories below to learn more about how Senior Crime Stoppers is transforming lives every day.
Marquez Hillard Story
Marquez’ Life changed in a second but with the help of Senior Crime Stoppers, his wish for a new wheelchair came true. More
Carolyn Denny Story
The SHCPF has helped to open the pathways of communication for Carolyn with a new laptop. More
Regulatory Letters
