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August 1, 2016

Community Development Capital Initiative Early Repurchase Option

Dear CDCI Participant:

As a participant in the Community Development Capital Initiative (CDCI), we are writing to 

inform your institution of an early repurchase option offered by the U.S. Department of the 

Treasury (Treasury) as part of its ongoing effort to wind down the Troubled Asset Relief 

Program (TARP). Since the authority to invest money through TARP ended in October 2010, 

Treasury has focused on winding down TARP programs in a manner that balances speed of exit 

with maximizing returns to the taxpayer. In doing so, Treasury has adhered to a set of core 

principles for managing its ownership interest in private firms, including seeking to dispose of its 

ownership interests as quickly as practicable. Consistent with these goals, Treasury will consider 

proposals from CDCI participants to repurchase their outstanding securities owned by Treasury 

pursuant to the CDCI program at fair value.

This opportunity for early repurchase is being offered to participating CDCI institutions for a 

limited period of time on a voluntary basis, subject to the requirements detailed below. Under the 

terms of the Securities Purchase Agreement (SPA) executed in connection with the issuance of 

the CDCI securities, Treasury cannot require institutions to repurchase their CDCI securities and 

no such change is contemplated.

Early Repurchase Eligibility and Process

Eligibility

Only institutions currently in the CDCI program are eligible to submit an early repurchase 

proposal at fair value, and only the institution itself can repurchase its CDCI securities 

(they may not be purchased by a third party). 

Participating institutions must submit an early repurchase proposal that meets all of the following 

criteria:

1. The institution has CDCI securities outstanding and seeks to repurchase at least half of all 

outstanding CDCI securities;

2. The institution is current on dividend/interest payments on its CDCI securities;

3. The institution agrees to maintain its Community Development Financial 

Institution(CDFI) certification through at least September 30, 2018;

4. The institution is in compliance with all provisions of the CDCI Securities Purchase 

Agreement (SPA) and related documents, including the dividend restrictions found in 

Section 4.2(b) of the SPA and, in the case of bank thrifts, section 3(c) of the CDCI 

certificate of designations (COD), and the executive compensation rules found in Section 

4.1(e) of the CDCI SPA (section 4.1(f) for S-Corps).
Procedure and Timing

CDCI institutions that wish to participate in this early repurchase option must submit to Treasury 

the enclosed proposal form and required supporting documentation prior to the Submission 

Deadline of Friday, November 18, 2016 at 5:00PM ET. Treasury will evaluate proposals on a 

rolling basis, beginning on Monday, August 8, 2016, and will seek to accept or decline such 

proposals within 15 business days of receipt

In order for Treasury to fully evaluate an early repurchase proposal, the following additional 

information/supporting documentation is required along with your proposal submission:

1. Latest audited annual financial statements (balance sheet, income statement, regulatory 

capital, etc.) for both the bank and bank holding company (if applicable), or credit union.

2. Most recent quarterly financial statements (balance sheet, income statement, regulatory 

capital, etc.) for both the bank and bank holding company (if applicable), or credit union.

3. A report on the current capital structure of the institution and a detailed explanation of the 

source(s) of capital to be used for an early repurchase.

4. Pro forma financial position after the proposed early repurchase (balance sheet, 

regulatory capital, etc.) for both the bank and bank holding company (if applicable), or 

credit union.

5. Detailed history of dividends paid on any securities junior or pari passu to the CDCI 

securities since entering the CDCI program.

Institutions should send their proposal form and the supporting documentation to

cdci@treasury.gov.

Evaluation Process

Treasury will evaluate early repurchase proposals against Treasury’s determination of fair value 

of the security. Fair value will be determined by Treasury in its sole discretion based exclusively 

on financial assessments of Treasury continuing to hold the CDCI security (i.e., no liquidity 

discounts or adjustments based on factors other than the intrinsic fair value of the security).

Treasury will only accept early repurchase proposals from institutions that it deems eligible, and

only if such proposal is at or above Treasury’s determination of fair value. Treasury is under no 

obligation to accept any offer.

This letter, the enclosed proposal form, and further information regarding the early repurchase 

process will be posted on our website here: https://www.treasury.gov/initiatives/financialstability/TARP-Programs/bank-investment-programs/cdci/Pages/CDCI-Early-RepurchaseOption.aspx. To the extent a proposal is accepted, further instructions regarding the required 

closing documentation and process will be sent at that time. Please note that, as part of the 

standard closing process, Treasury will consult with your 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 Friday, December 30, 2016.
Treasury believes that the plan outlined in this letter 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. If you have any 

questions please feel free to contact us at cdci@treasury.gov.

Best Regards,

Trevor Montano

Chief Investment Officer

U.S. Department of the Treasury

CC: Mark McArdle, Deputy Assistant Secretary, Office of Financial Stability

Justin Hall, Investment Manager, Office of Financial Stability