TROUBLED ASSET 

RELIEF PROGRAM

New Effort to Wind 

Down the Community 

Development Capital 

Initiative 

Report to Congressional Committees

November 2016

GAO-17-96

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-96, a report to 

congressional committees

November 2016

TROUBLED ASSET RELIEF PROGRAM

New Effort to Wind Down the Community 

Development Capital Initiative 

What GAO Found

As of September 30, 2016, the Department of the Treasury (Treasury) had 

approximately $420 million, or 75 percent, of the original Community 

Development Capital Initiative (CDCI) investment of $570 million, outstanding. 

Of the original 84 participating institutions, 55 remained. Treasury has received 

about $144 million in principal repayments and about $61 million in dividend and 

interest payments from program participants. Treasury has written off about $7 

million, which came from an investment in one institution whose assets were 

liquidated when its banking subsidiary entered receivership. Treasury’s most 

recent estimate of the program’s lifetime cost was about $104 million (as of 

September 2016).

Status of the Community Development Capital Initiative, as of September 30, 2016

As part of its ongoing effort to wind down TARP, Treasury began offering 

participating CDCI institutions an opportunity to repurchase their outstanding 

securities owned by Treasury at fair value. According to Treasury, it will only 

accept repurchase proposals that are at or above Treasury’s own determination 

of fair value. To participate in the early repurchase option, eligible institutions 

must submit a proposal to Treasury no later than November 18, 2016. Treasury 

anticipates that all proposed repurchases that are accepted will be completed by 

December 30, 2016. Representatives from bank and credit union trade 

associations with CDCI participating members told GAO that the current low 

interest rate environment and the expected increases in CDCI dividend 

payments would likely cause some of their members to pursue this early exit 

option. GAO will continue monitoring Treasury’s implementation of this option, 

including evaluating its valuation methodology. 

View GAO-17-96. For more information, 

contact Daniel Garcia-Diaz at (202) 512-8678

or GarciaDiazD@gao.gov. 

Why GAO Did This Study

Treasury established CDCI under the 

Troubled Asset Relief Program (TARP) 

in February 2010 to help banks and 

credit unions certified as Community 

Development Financial Institutions 

(CDFI) maintain services to 

underserved communities after the 

2007–2009 financial crisis. Eighty-four 

institutions originally participated in 

CDCI. The program offered favorable 

terms for raising capital, including a 

low dividend or interest rate, an 

important benefit for CDFIs that did not 

have the same access to capital 

markets as larger banks. The 

program’s initial dividend or interest 

rate of 2 percent on investments 

increases to 9 percent in 2018 for most 

of the remaining banks and credit 

unions in the program. The Emergency 

Economic Stabilization Act of 2008 

includes a provision that GAO report at 

least every 60 days on TARP activities. 

This report examines the status of 

CDCI. 

To assess the program’s status, GAO 

reviewed Treasury reports on the 

status of CDCI and documents related 

to the Early Repurchase Option. GAO 

also interviewed Treasury officials to 

examine the agency’s early repurchase 

option for the program and interviewed 

representatives from four trade 

associations whose member 

institutions received CDCI capital.

GAO provided a draft of this report to 

Treasury for its review and comment. 

Treasury provided technical comments 

that GAO incorporated as appropriate.

GAO makes no new recommendations 

in this report.
Page i GAO-17-96 Community Development Capital Initiative

Letter 1

Background 4

Most of Treasury’s CDCI Investments Remain Outstanding 6

Treasury Recently Offered a New Option for CDCIs to Exit the 

Program 10

Agency Comments 12

Appendix I GAO Contact and Staff Acknowledgments 15

Table

Table 1: Community Development Capital Initiative Terms by 

Institution Type 6

Figures

Figure 1: Status of the Community Development Capital Initiative, 

as of September 30, 2016 7

Figure 2: Status of Institutions That Received Community 

Development Capital Initiative Investments, as of 

September 30, 2016 8

Figure 3: Remaining Community Development Capital Initiative 

Investments, as of September 30, 2016 9

Contents
Page ii GAO-17-96 Community Development Capital Initiative

Abbreviations 

CDCI Community Development Capital Initiative

CDFI Community Development Financial Institution

CPP Capital Purchase Program

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer

Protection Act

EESA Emergency Economic Stabilization Act of 2008

FDIC Federal Deposit Insurance Corporation

Federal Reserve Board of Governors of the Federal Reserve System

NCUA National Credit Union Administration

OCC Office of the Comptroller of the Currency

TARP Troubled Asset Relief Program

Treasury Department of the Treasury

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Page 1 GAO-17-96 Community Development Capital Initiative

441 G St. N.W.

Washington, DC 20548

November 4, 2016

Congressional Committees

The Department of the Treasury (Treasury) created the Community 

Development Capital Initiative (CDCI) in February 2010 to help eligible, 

certified Community Development Financial Institutions (CDFI) and their 

communities cope with the effects of the 2007–2009 financial crisis.1

Through CDCI, Treasury provided capital to CDFI banks and credit 

unions by purchasing preferred equity and subordinated debt from them.2

Treasury finalized funding through CDCI in September 2010, and it made 

approximately $570 million in investments in 84 institutions.

CDCI was one of the programs implemented under the Troubled Asset 

Relief Program (TARP), which gave Treasury the authority to buy or 

guarantee up to $700 billion, later reduced to $475 billion, of the “troubled 

assets” believed to be at the heart of the financial crisis. These assets 

included mortgages, mortgage-backed securities, and certain other 

 1

CDFIs provide financing and related services to communities and populations that lack 

access to credit, capital, and financial services. Treasury’s CDFI Fund provides the 

designation, which allows CDFIs to apply for the CDFI Fund’s financial assistance. CDFIs 

include banks, thrifts, credit unions, loan funds, and venture capital funds, but only 

institutions that have a federal depository institution supervisor (banks, thrifts, and credit 

unions) could apply for CDCI assistance. The federal supervisors for this program 

currently are the Federal Deposit Insurance Corporation (FDIC), the Board of Governors 

of the Federal Reserve System (Federal Reserve), the Office of the Comptroller of the 

Currency (OCC), and the National Credit Union Administration (NCUA). During the 

application period, the Office of Thrift Supervision was also a federal supervisor, but it was 

abolished by the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act). See Pub. L. No. 111-203, § 313, 124 Stat. 1376, 1523 (2010) (codified at 12 

U.S.C. § 5413).

2

In this report, “bank” refers to banks, thrifts, and bank or savings and loan holding 

companies. Some of the institutions in the CDCI program are S-corporations, and that 

status designation of some banking institutions affects the form of Treasury’s investment. 

An S-corporation is taxed under subchapter S of chapter 1 of the Internal Revenue Code 

and thus does not pay income taxes. Instead, the corporation’s income or losses are 

divided among and passed through its shareholders.

Letter
Page 2 GAO-17-96 Community Development Capital Initiative

financial instruments, such as equity investments.3 CDCI offered CDFI 

banks and credit unions capital at relatively favorable terms, including a 

relatively low dividend or interest rate—an important benefit for CDFIs 

that may not have had the same access to the capital markets as larger 

financial institutions at the time. For example, approved CDFI banks 

issued preferred equity or subordinated debentures to Treasury with initial 

dividend or interest rates of 2 percent and 3.1 percent respectively that 

would increase to 9 percent and 13.8 percent after 8 years (in 2018).4

Treasury has continued to oversee its CDCI investments and collect 

dividend and interest payments. Some participants have redeemed their 

securities and exited the program with the approval of their primary 

federal regulators.

The Emergency Economic Stabilization Act of 2008 (EESA) includes a 

provision that we report at least every 60 days on TARP activities and 

performance.5 As a result, we have been monitoring, analyzing, and 

 3

TARP was authorized by the Emergency Economic Stabilization Act of 2008 (EESA). 

Pub. L. No. 110-343, 122 Stat. 3765 (codified at 12 U.S.C. §§ 5201-5261). EESA, which 

was signed into law on October 3, 2008, established the Office of Financial Stability within 

Treasury and provided it with broad, flexible authorities to buy or guarantee troubled 

mortgage-related assets or any other financial instruments necessary to stabilize the 

financial markets. EESA originally authorized Treasury to purchase or guarantee up to 

$700 billion in troubled assets. § 115(a), 122 Stat. at 3780 (codified as amended at 12 

U.S.C. § 5225(a)). The Dodd-Frank Act reduced Treasury’s authority to purchase or 

insure troubled assets to $475 billion. Pub. L. No. 111-203, § 1302(1)(A), 124 Stat. 1376, 

2133.

4

Preferred equity is shares of stock that give the stockholder priority dividend and 

liquidation claims over junior preferred and common stockholders. Subordinated 

debentures are a form of debt security that ranks below other senior claims on assets but 

has priority over all preferred and common shareholders. The securities that Treasury 

purchased from S-corporations have a 3.1 percent interest rate until the eighth 

anniversary of the date on which Treasury made the investment, when the rate will 

increase to 13.8 percent. However, given the tax treatment of S-corporations, these rates 

equate to effective after-tax rates of 2 percent and 9 percent, respectively (assuming a 35 

percent tax rate)—the same rates applied to securities issued by other classes of 

institutions participating in CDCI.

5

Pub. L. No. 110-343, § 116(a)(3), 122 Stat. 3765, 3785 (codified at 12 U.S.C. 

§ 5226(a)(3)).
Page 3 GAO-17-96 Community Development Capital Initiative

providing updates on TARP programs, including CDCI.6 This report 

examines the status of CDCI, including the early repayment option, 

repayments and other proceeds, as well as investments outstanding.

To assess the status of the CDCI program, we analyzed data from 

Treasury. In particular, we used Treasury’s September 2016 Monthly 

Report to Congress and the Investment Program Transaction Report 

(both published in October 2016) to determine the dollar amounts of 

outstanding CDCI investments and the number and geographical 

distribution of remaining participants as of September 30, 2016. We used 

Treasury’s Monthly Reports to Congress to determine when institutions 

fully redeemed the securities. We used data from Treasury’s September 

2016 Dividends and Interest report (published in September 2016) to 

determine the amount of dividends paid and the number of institutions 

that made full repayments. We determined that the financial information 

used in these reports is sufficiently reliable to assess the status of the 

CDCI program based on the results of our audits of TARP financial 

statements for fiscal years 2009–2015. We reviewed our own annual 

audit of the Office of Financial Stability’s financial statement, which tested 

Treasury’s internal controls over financial reporting.7 We also consulted 

our past reports on TARP and interviewed Treasury officials to inform our 

assessment of the CDCI program. We also interviewed officials from four 

associations representing banks and credit unions that received CDCI 

capital to gauge their interest in the CDCI early repurchase option.

We conducted this performance audit from July 2016 to November 2016 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

 6

See GAO, GAO Troubled Asset Relief Program: Most Community Development Capital 

Initiative Investments Remain Outstanding, GAO 16-626 (Washington, D.C.: July 5, 2016); 

GAO Troubled Asset Relief Program: Status of Remaining Investment Programs, 

GAO-16-91R (Washington, D.C.: Nov. 3, 2015); Community Development Capital 

Initiative: Status of Program Investments and Participants, GAO-15-542 (Washington, 

D.C.: May 5, 2015); Community Development Capital Initiative: Status of the Program and 

Financial Health of Remaining Participants, GAO-14-579 (Washington, D.C.: June 6, 

2014); and Troubled Asset Relief Program: Treasury Sees Some Returns as It Exits 

Programs and Continues to Fund Mortgage Programs, GAO-13-192 (Washington, D.C.: 

Jan. 7, 2013).

7

See, GAO, Financial Audit: Office of Financial Stability (Troubled Asset Relief Program) 

Fiscal Years 2015 and 2014 Financial Statements, GAO-16-147R (Washington, D.C.: 

Nov. 10, 2015).
Page 4 GAO-17-96 Community Development Capital Initiative

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Created in 2010, CDCI was one of the later TARP programs and was 

intended to help mitigate the adverse effects of the financial crisis on 

communities underserved by traditional banks. CDCI is structured much 

like the TARP Capital Purchase Program (CPP).8 For example, both 

programs provide capital to financial institutions by purchasing preferred 

equity or subordinated debt from them. Institutions are required to make 

quarterly dividend or interest payments to Treasury until they exit the 

program. Institutions are expected to repay the investments with the 

approval of their primary federal bank regulator. However, the CDCI 

program differs from CPP in several ways. First, whereas CPP provided 

assistance to a range of banks, CDCI provided financial assistance only 

to CDFIs. Second, CDCI provided more favorable capital terms than 

CPP. For example, certain CDCI preferred equity investments had an 

initial dividend rate of 2 percent, compared with 5 percent under CPP. 

The dividend rate increases to 9 percent after 8 years (starting in 2018) 

under the CDCI program compared to after 5 years under CPP. The 

terms of the rates are specified in the agreements between Treasury and 

the institutions. Finally, the CDCI program also provided assistance to 

CDFI credit unions, which were not eligible under CPP.

Treasury finalized the last of its $570 million in CDCI investments in 

September 2010. The 84 original participating institutions were 36 banks 

and 48 credit unions. Twenty-eight of the 36 banks were CPP participants 

in good standing in that program and thus were allowed to exchange their 

CPP shares for a lower-cost security rate in the CDCI program. Of these 

28 banks, 10 received additional capital under CDCI.

CDCI investment terms varied depending on the type of institution 

receiving the capital (see table 1). In general, banks received capital by 

issuing to Treasury preferred stock representing not more than 5 percent 

of their risk-weighted assets. The capital they received in return was 

generally treated as tier 1 capital for regulatory purposes, with a perpetual 

term. Federal banking regulators classify capital as tier 1—currently the 

 8

See GAO, Troubled Asset Relief Program: Capital Purchase Program Largely Has 

Wound Down, GAO-16-524 (Washington, D.C.: May 6, 2016).

Background
Page 5 GAO-17-96 Community Development Capital Initiative

highest-quality form of capital—or tier 2, which is considered weaker in 

terms of helping institutions absorb losses.9 Credit unions issued 

unsecured subordinated debentures totaling not more than 3.5 percent of 

their total assets. In exchange, Treasury provided participating credit 

unions with secondary capital that boosted their net worth until 5 years 

before the maturity date, at which point the debt eligible to be included as 

secondary capital would be reduced by 20 percent annually.10

 9

Tier 1 capital consists primarily of common equity. Tier 2 includes limited amounts of 

subordinated debt, limited amounts of loan loss reserves, and certain other instruments. 

Capital regulations issued by the banking regulators in 2013 revise the bank regulatory 

capital structure and implement higher minimum risk-based capital ratios and a new 

common equity tier 1 capital requirement, among other things. The new minimum riskbased capital ratios began to apply for certain smaller banking organizations in January 

2015. See Regulatory Capital Rules: Regulatory Capital, Implementation of Basel III, 

Capital Adequacy, Transition Provisions, Prompt Corrective Action, Standardized 

Approach for Risk-weighted Assets, Market Discipline and Disclosure Requirements, 

Advanced Approaches Risk-Based Capital Rule, and Market Risk Capital Rule, 78 Fed. 

Reg. 55340 (Sept. 10, 2013) (FDIC); 78 Fed. Reg. 62018 (Oct. 11, 2013) (Federal 

Reserve and OCC).

10According to NCUA, the purpose of secondary capital (also called supplemental, 

alternative, or contributed capital) is to provide a further means—beyond setting aside a 

portion of earnings—for low-income designated credit unions to build capital to support 

greater lending and financial services in their communities and absorb losses. As a result, 

the institutions may be less likely to fail. Secondary capital accounts must have a 

minimum maturity of 5 years, but subject to written approval of NCUA, low-income 

designated credit unions may request an early redemption exception for all or part of 

secondary capital accepted from the federal government or any of its subdivisions at any 

time after it has been on deposit for 2 years. The accounts must be established as 

uninsured, nonshare instruments. The uninsured secondary capital funds on deposit 

(including interest paid into the account) must be available to cover operating losses in 

excess of the low-income designated credit union’s net available reserves and undivided 

earnings. Funds used to cover such losses may not be replenished or restored to the 

uninsured secondary capital accounts.
Page 6 GAO-17-96 Community Development Capital Initiative

Table 1: Community Development Capital Initiative Terms by Institution Type 

Type of 

institution

Initial 

number of 

institutions

Type of 

security Size of offering

Regulatory capital 

status

Term or maturity 

(length from date of 

investment)

Dividend or 

interest rate

Bank or thrift 27 Preferred stock Not more than 5 

percent of riskweighted assets

Tier 1 capital Perpetual 2 percent for the 

first 8 years (until 

2018); 9 percent 

thereafter

S-corporation 9 Unsecured 

subordinated 

debenturesa

Not more than 5 

percent of riskweighted assets

Tier 2 capital for a 

bank or savings 

association; tier 1 

capital for a bank 

holding company

13 years for a bank or 

savings association; 

30 years for a bank 

holding company or 

savings and loan 

holding company

3.1 percent for the 

first 8 years (until 

2018); 13.8 

percent thereafter

Credit union 48 Unsecured 

subordinated 

debentures

Not more than 3.5 

percent of total 

assets and not 

more than 50 

percent of capital 

and surplus

Secondary capitalb 8 or 13 years 2 percent for the 

first 8 years (until 

2018); 9 percent 

thereafter

Source: GAO analysis of terms for Community Development Capital Initiative. │ GAO-17-96

a

In the event of liquidation of a company, unsecured subordinated debentures are generally paid after 

other bonds and debt obligations.

b

Secondary or supplemental capital is capital beyond that built through retained earnings and 

provides funding to support lending and other financial services and to absorb losses.

As of September 2016, about 75 percent of Treasury’s CDCI investment 

remained outstanding and 55 out of 84 institutions remained in the 

program. As previously stated, Treasury’s total investment for this 

program was about $570 million (see fig. 1) of which Treasury disbursed 

about $207 million through CDCI from July through September 2010 and 

about $363 million involved exchanges of investments from CPP into 

CDCI. As of September 30, 2016, Treasury had received approximately 

$144 million in principal repayments and $61 million in dividend and 

interest payments from CDCI participants. As of this date, Treasury had 

written off approximately $7 million, which came from an investment in 

one institution whose assets were liquidated when its banking subsidiary 

entered receivership. The program’s outstanding investment balance was 

$420 million.11

 11In October 2016, Treasury closed three transactions in which CDCI entities repurchased 

their outstanding Treasury securities. The figures in this section of the report do not reflect 

those transactions, which are discussed later.

Most of Treasury’s 

CDCI Investments 

Remain Outstanding
Page 7 GAO-17-96 Community Development Capital Initiative

Figure 1: Status of the Community Development Capital Initiative, as of September 

30, 2016

a

Treasury announced CDCI in October 2009. The program provided capital to institutions in 2010.

b

End date is the date on which the program stopped acquiring new assets and no longer received 

funding.

c

A total of 28 CPP banks converted from CPP to CDCI. The total amount exchanged into CDCI was 

about $363 million.

Treasury has lowered its estimates of the program’s lifetime cost over the 

last 4 years as market conditions have improved and institutions have 

begun to repay their investments. For instance, in November 2010 

Treasury estimated the program’s lifetime cost at about $287 million, but

as of June 30, 2016, estimated lifetime cost was about $104 million.

Of the 55 participants remaining in the CDCI program, 24 are banks, 5 of 

which are S-corporations, and 31 are credit unions.

12 Among the 

remaining institutions, 5 credit unions had begun to repay the principal on 

investments they received. The remaining 50 institutions had paid only 

dividends and interest. Two institutions exited the program in March and 

April 2012, respectively—the first through bank failure and the second 

through redemption. Since then other institutions have gradually exited 

 12For one remaining institution, Treasury converted the original investment into shares of 

common stock. See Department of the Treasury, Troubled Asset Relief Program, Monthly 

Report to Congress, September 2016 (Washington, D.C.: Oct. 11, 2016).
Page 8 GAO-17-96 Community Development Capital Initiative

the program (see fig. 2). Of the 29 institutions that exited the program, 27 

had done so through repayment, 1 merged with another institution, and 1 

left the program as a result of its subsidiary bank’s failure. Repayments 

allow financial institutions, with the approval of their regulators, to redeem 

their preferred shares in full. Institutions have the contractual right to 

redeem their shares at any time. However, they must demonstrate to their 

primary federal regulator that they are financially strong enough to repay 

the CDCI investments in order to receive their approval to proceed with a 

repayment exit.

Figure 2: Status of Institutions That Received Community Development Capital 

Initiative Investments, as of September 30, 2016

As of September 30, 2016, the 10 largest remaining institutions were 

banks and accounted for $286 million (68 percent) of the outstanding 
Page 9 GAO-17-96 Community Development Capital Initiative

investments (see fig. 3).13 The remaining $134 million (32 percent) was 

spread among the remaining 45 institutions (14 banks and 31 credit 

unions).14

Figure 3: Remaining Community Development Capital Initiative Investments, as of 

September 30, 2016

a

Institution is an S-corporation.

As we have previously reported, officials of trade associations that 

represent community development and minority depository institutions 

whose member institutions received CDCI capital noted that CDCI 

 13For eight banks, the interest rate is scheduled to increase to 9 percent on the eighth 

anniversary of the date on which Treasury made the investment. For one bank, the rate is 

scheduled to increase to 13.8 percent because it is an S-corporation. Treasury’s interests 

in one CDCI entity is held in common shares and therefore does not have a preferred 

dividend or interest rate.

14For 10 banks and all 18 credit unions, the interest rate is scheduled to increase to 9 

percent on the eighth anniversary of the date on which Treasury made the investment. For 

4 banks, the rate is scheduled to increase to 13.8 percent because they are Scorporations. 13 credit union subordinated debentures mature on the eighth anniversary.
Page 10 GAO-17-96 Community Development Capital Initiative

institutions have realized several benefits from the CDCI investments.15

For example, they stated that CDCI capital allowed many institutions to 

increase lending, meet customer demand, and provide access to services 

they would otherwise not have been able to provide.16

On August 1, 2016, Treasury began offering participating CDCI 

institutions an option other than full redemption to exit the program. 

Under this option, eligible institutions can repurchase the outstanding 

securities owned by Treasury at fair value for a limited period of time.17

Institutions can voluntarily participate in the early repurchase option 

because, under the original terms of the CDCI securities purchase 

agreements, Treasury cannot require institutions to repurchase their 

CDCI securities. Treasury believes that this option supports the objectives 

of winding down the remaining emergency financial crisis programs, 

recovering taxpayer investments, and helping community banks seek 

private capital to replace temporary government support.

All CDCI early repurchase proposals must come from the institution with 

the CDCI securities outstanding and must be for a repurchase of at least 

50 percent of outstanding CDCI securities. To participate in the CDCI 

Early Repurchase Option, eligible institutions must submit a proposal to 

Treasury no later than November 18, 2016. In addition to the proposal, 

participating institutions must submit their latest audited annual financial 

statements, most recent quarterly financial statements, and other 

 15Generally, minority depository institutions must have ownership of at least 51 percent by 

one or more socially and economically disadvantaged individuals. Under section 308 of 

the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Congress 

established certain minority-ownership goals for regulators, including preserving the 

number of minority depository institutions, preserving their minority character in cases of 

merger or acquisition, promoting and encouraging creation of new minority depository 

institutions, and providing for training, educational programs, and technical assistance to 

prevent insolvency. Pub. L. No. 101-73, § 308, 103 Stat. 183, 353 (codified at 12 U.S.C. 

§ 1463 note). We met with the Community Development Bankers Association, Credit 

Union National Association, National Association of Federal Credit Unions, National 

Federation of Community Development Credit Unions, and National Bankers Association.

16GAO-16-626.

17Institutions with other TARP or Treasury investments are ineligible to participate in the 

CDCI early repurchase option. 

Treasury Recently 

Offered a New Option 

for CDCIs to Exit the 

Program
Page 11 GAO-17-96 Community Development Capital Initiative

documentation to Treasury.18 Once proposals and all accompanying 

documentation are received, Treasury plans to evaluate each institution’s 

early repurchase proposal against Treasury’s determination of fair value 

of the security. Treasury plans only to accept early repurchase proposals

from eligible institutions that are at or above Treasury’s determination of 

fair value. Treasury plans to consult with the CDCI institution’s primary 

regulator prior to the closing of a transaction. Treasury anticipates that all 

repurchases of CDCI securities under this early repurchase option will be 

completed by December 30, 2016.

As of October 21, 2016, 3 of the largest 10 CDCI participants have 

repurchased their Treasury securities under the CDCI early repurchase 

option. The three participants are BancPlus Corporation, Community 

Bancshares of Mississippi, and State Capital Corporation. The aggregate 

amount received from repurchased securities was $140.8 million and 

Treasury received proceeds totaling $159.1 million over the life of the 

investments.

We interviewed officials from associations representing banks and credit 

unions that received CDCI capital to gauge their interest in the CDCI early 

repurchase option. Representatives from a credit union trade association 

that has a few CDCI participating members told us that in general the 

current low interest rate environment and the expected increase in 

dividend payments under the program would likely pique their members’

interest in the early repurchase option. In addition, according to these 

representatives and others from another credit union trade association, 

factors such as access to capital markets in the form of qualifying 

secondary capital and the desire to use existing funds to meet loan 

demand would also influence an individual credit union’s decision to 

repurchase its outstanding securities. A representative from a banking 

trade association whose member institutions received CDCI capital told 

us these members are pleased that Treasury is taking action to help them 

exit the program more quickly than they otherwise could and most of 

them would like to submit a proposal for consideration.

 18Participating institutions must also submit a report on their current capital structure and 

an explanation of the sources of capital to be used for an early repurchase and a history of 

any dividends paid on securities junior or pari passu to the CDCI securities since entering 

the CDCI program and a Pro Forma financial position after the proposed early repurchase 

to Treasury. To participate in the Early Repurchase Option, institutions also must be 

current on their dividend and interest payments on their CDCI securities, must agree to 

maintain their CDFI certification though at least September 30, 2018, and must be in 

compliance with all provisions of the CDCI securities purchase agreement.
Page 12 GAO-17-96 Community Development Capital Initiative

We will continue monitoring Treasury’s implementation of the early 

repurchase option, including evaluating its valuation methodology.

We provided Treasury with a draft copy of this report for review and 

comment. Treasury provided technical comments that we have 

incorporated as appropriate.

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of the Treasury, and other interested parties. 

In addition, this report will be available at no charge on the GAO website 

at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report.

Daniel Garcia-Diaz

Director, Financial Markets and Community Investment

Agency Comments
Page 13 GAO-17-96 Community Development Capital Initiative

List of Congressional Committees

The Honorable Thad Cochran

Chairman

The Honorable Barbara Mikulski

Vice Chairwoman

Committee on Appropriations

United States Senate

The Honorable Richard Shelby

Chairman

The Honorable Sherrod Brown

Ranking Member

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable Mike Enzi

Chairman

The Honorable Bernie Sanders

Ranking Member

Committee on the Budget

United States Senate

The Honorable Orrin G. Hatch

Chairman

The Honorable Ron Wyden

Ranking Member

Committee on Finance

United States Senate

The Honorable Harold Rogers

Chairman

The Honorable Nita Lowey

Ranking Member

Committee on Appropriations

House of Representatives

The Honorable Tom Price

Chairman

The Honorable Chris Van Hollen

Ranking Member

Committee on the Budget

House of Representatives
Page 14 GAO-17-96 Community Development Capital Initiative

The Honorable Jeb Hensarling

Chairman

The Honorable Maxine Waters

Ranking Member

Committee on Financial Services

House of Representatives

The Honorable Kevin Brady

Chairman

The Honorable Sander Levin

Ranking Member

Committee on Ways and Means

House of Representatives
Appendix I: GAO Contact and Staff 

Acknowledgments

Page 15 GAO-17-96 Community Development Capital Initiative

Daniel Garcia-Diaz, (202) 512-8678 or garciadiazd@gao.gov

In addition to the contact named above, Karen Tremba (Assistant 

Director), Tarik Carter (Analyst-in-Charge), Bethany Benitez, Lynda

Downing, Marc Molino, and Tovah Rom made significant contributions to 

the report.

Appendix I: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(101070)
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