This Just In ...
OCC’s Four Districts Report on New Opportunities for Banks

Western District

San Joaquin Valley Small Business Partnership

Wells Fargo Bank, the Fresno Regional Foundation, and the Valley Small Business Development Corporation have entered into a partnership to support economic development and jobs in California’s Central San Joaquin Valley. The partnership provides capital for small businesses and farms in an area that extends north to Sacramento.

Seeking to leverage funding, Wells Fargo provided a $1 million equity-equivalent (EQ2) investment to the Fresno Regional Foundation, an organization in existence since 1966 that provides leadership and a strong balance sheet for philanthropic efforts in the Central Valley. The foundation in turn invested the funds in the Valley Small Business Development Corporation, one of California’s 11 Small Business Financial Development Corporations, to further capitalize its Direct Small Business Loan Program. The program provides loans to small businesses and farms throughout the Central San Joaquin Valley and in Sacramento, Monterey, and eastern Los Angeles counties.

For more information, visit Valley Small Business Development Corporation or call Stan Tom at (559) 438-9680.

Southern District

New Tennessee Revolving Loan Fund for Economic Development

Pathway Lending and the state of Tennessee recently announced the creation of the $25 million Tennessee Small Business Jobs Opportunity Fund to provide access to capital for small businesses in all 95 Tennessee counties.

This revolving loan fund is intended to enhance current economic development efforts by maximizing statewide job creation and business expansion. The fund provides below-market rate loans with flexible financing options. The fund is designed to enhance the existing financial services available to small businesses in the state.

The Tennessee General Assembly appropriated $10 million to create the Small Business Jobs Opportunity Fund in the 2010–2011 fiscal year budget. Pathway Lending, formerly known as Southeast Community Capital, administers the fund and is raising an additional $10 million to $15 million in capital from financial institutions.

The Tennessee Bankers Association has assigned “Endorsed Product” status to Pathway Lending for its member banks as a Community Development Financial Institution providing Community Reinvestment Act qualified investments. Specifically, financial institutions that invest in the Tennessee Small Business Jobs Opportunity Fund receive a 10 percent annual franchise and excise tax credit for 10 years from the state of Tennessee, based on the investment amount. The program is designed so participating banks can receive 100 percent of their invested capital back through the tax credit.

For more information, e-mail Clint Gwin or Hank Helton or call (615) 425-7171.

Northeastern District

New Hampshire State Tax Credits

The New Hampshire Community Development Finance Authority was created in 1983 to support affordable housing, economic development, and community development activities targeting low- and moderate-income citizens in New Hampshire. To achieve its mission, the authority uses several programs, including the Community Development Investment Program, which is a state tax credit program that provides for-profit businesses (including banks) opportunities to support community development projects throughout the state.

Under the Community Development Investment Program, qualified nonprofit organizations and municipalities engaged in community development activities apply for state tax credit awards through the New Hampshire Community Development Finance Authority. Organizations receiving tax credit awards must raise money for their specific projects within certain time frames. For-profit businesses can invest cash, securities, or property to help fund these various housing, economic, or community development projects. In exchange for these donations, the businesses receive a 75 percent state tax credit. Examples of recent tax credit opportunities include funding to construct a community center to provide programs and services for at-risk families and youth; funding to support the expansion of a state-wide food bank; funding for the construction of a community health center; and funding for a program providing foreclosure prevention assistance.

To learn more, call Chris Conlogue, Community Development Operations Manager, at (603) 717-9111, or visit the New Hampshire Community Development Finance Authority Web site.

Central District

Investments in Habitat for Humanity Loans

Krambo Corporation is a San Francisco-based registered broker-dealer (a Financial Industry Regulatory Authority/Securities Investor Protection Corporation (FINRA/SIPC) member) that privately places securities with institutional investors. In 2009, Krambo began arranging opportunities for investors to purchase either whole home mortgage loans from nonprofit Habitat for Humanity (HFH) affiliates or securities backed by those loans.

These loans and securities are frequently purchased by banks seeking earnings and Community Reinvestment Act consideration. HFH affiliates use cash from the sale of the loans or the securities to build more affordable housing. The affiliates typically retain servicing rights along with the right and obligation to replace a loan in severe default with a comparable but current loan or to repurchase the nonperforming loan.

HFH has about 1,500 affiliates operating in all 50 states, building affordable homes and working with lower-income families to prepare them for home ownership. The affiliates then provide purchase mortgage financing to those families at 0 percent interest. Based on 5,294 sales in 2009, The Wall Street Journal recently ranked the HFH network the eighth-largest homebuilder in the United States.

Since 2009, when it began offering this service to HFH affiliates, Krambo has arranged the placement of loans or securities for four HFH affiliates in two states; Krambo has 10 more HFH placements in process in three additional states. For HFH affiliates, these transactions yield a high percentage of the face amount of the mortgages. For bankers, they offer earning assets that have the potential to provide Community Reinvestment Act consideration.

For more information, visit Krambo’s Web site or e-mail Merrill Burns or call (415) 281-4100.