Contents

A Look Inside…

Investing for Social Equity

Strategic Investments in CDVC Funds

Financing a Small Business: Ryla Teleservices

KHIC: An Experienced Fund Sponsor

Small Business Investment Companies

Rural Business Investment Companies: Designed to Promote Small Rural Enterprises

NMVC: Helping Equity Flow into Distressed Communities

Wells Fargo: Investing with a Passion

CDVC Due Diligence Checklist

More about CDVC

This Just In…OCC’s Districts Report on New Investment Opportunities for Banks

 

Investment Resources for Part 24 Authority

Part 24 Resources on the Web

Common Part 24 Questions

CD Investment Precedent Letters

Investments in National/Regional Funds

Fourth Quarter 2006
Part 24 Investments

Regulation and CD-1 Form

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OCC's Community Affairs Department

(202) 874-5556

CommunityAffairs
@occ.treas.gov

Articles by non-OCC authors represent their own views and are not necessarily the views of the OCC.

 

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A Look Inside...

A worker at Cal-Organic Farms unpacks carrots.

A worker at Cal-Organic Farms unpacks carrots, one of many vegetables grown there. Cal-Organic, owned by Grimmway Farms, is located in Lamont, California, at the southern most end of the San Joaquin Valley, known as one of the world’s premier agricultural growing regions. Grimmway Farms is a portfolio company in the Pacific Community Ventures (PCV) Fund and meets its community development investment criteria.

In this issue of Community Developments Investments, we explore community development venture capital (CDVC) funds, a relatively new investment option that might have a place in your bank’s future. As Kerwin Tesdell, president of the Community Development Venture Capital Alliance explains in his overview of the industry, CDVC funds provide equity financing to growing businesses in underserved communities, as well as market-rate financial returns for their investors. Often these investments receive positive consideration in a bank’s Community Reinvestment Act (CRA) examination.

Also in this issue, Wells Fargo Vice President and Team Leader Lee Winslett highlights how his bank evaluates the risks and reward of investing in CDVC funds and shares the story of his bank’s investments funds in California, New Mexico, and Montana. We learn how community development venture fund managers earn competitive returns while pursing a second set of social bottom line objectives in Ray Moncrief’s article on running a 30-year-old CDVC that invests in rural Appalachia. Mr. Moncrief is the chief operating officer for Kentucky Highlands Investment Corporation. Finally, to help you evaluate the investment methods and their potential risks, Fred Mendez, director of community reinvestment at Silicon Valley Bank, shares 10 tips for vetting a CDVC investment.

CDVC investments can be made under the 12 CFR 24 authority when the fund’s investments directly or indirectly benefit low- or moderate-income communities and families by fulfilling the needs for housing, supplying vital services, or creating jobs. Any CDVC fund you want to invest in should assure your institution that its investments fulfill those guidelines.

As in other editions of Community Developments Investments, OCC’s Community Affairs Officers report on new investment opportunities from around the country. They are available to answer your questions about these investments or community development venture capital investing.

CDVC is maturing as an investment option and becoming more like traditional venture capital. Even while the industry adopts traditional venture capital strategies, it continues to maintain a set of second bottom-line goals that reflect community development.

Today’s CDVC funds are using advanced management tools, talent. and technology to attract new investors and to achieve faster results. Those upgrades, combined with CDVC funds’ community and economic development focus, makes them an investment worthy of careful consideration.

Barry Wides
Deputy Comptroller
Community Affairs

Community.Affairs@occ.treas.gov