Updated January 25, 2024

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EMERGENCY CAPITAL INVESTMENT PROGRAM

U.S. Department of the Treasury

Frequently Asked Questions

on Legal Agreements, Closing Process, and the ECIP Interim Final Rule

Table of Contents

1. If an ECIP recipient effectuates a charter change or conversion, becomes owned by a new holding 

company, or undergoes another corporate transaction after closing the transaction, can the ECIP 

instruments remain outstanding? ..............................................................................................................2

2. Can ECIP instruments be redeemed at the option of an ECIP recipient, or at the direction of 

Treasury?...................................................................................................................................................2

3. Will Treasury exercise the registration rights in Annex E of the Securities Purchase Agreement for 

banking organizations? .............................................................................................................................2

4. One of the closing conditions in the Securities Purchase Agreement is that the recipient must 

deliver to Treasury a written opinion from counsel to the recipient in substantially the form as in an 

Annex to the Securities Purchase Agreement. Will all institutions be required to provide this legal 

opinion? ....................................................................................................................................................2

5. The deadline for approved institutions to confirm their intent to participate, the amount of ECIP 

instruments they intend to issue, and their preferred transaction closing windows is April 4, 2022. Will 

institutions be able to modify their responses after this date? ..................................................................3

6. Under the ECIP Securities Purchase Agreements, an ECIP recipient that is a CDFI as of the ECIP 

closing date is prohibited from revoking its status as a CDFI and must “use its reasonable best efforts to 

prevent its status as a CDFI from being changed.” How does an ECIP recipient remain in compliance 

with this provision if it loses its CDFI certification? ................................................................................3

7. Treasury has adopted an interim final rule (IFR) that establishes restrictions on capital 

distributions for ECIP participants (31 CFR Part 35 Subpart B). Section 35.23(b)(1) of the IFR requires 

ECIP participants that are not credit unions to obtain Treasury approval before making capital 

distributions that exceed their “eligible distributable income.” Under what circumstances will Treasury 

consider granting approval for a capital distribution that exceeds the limits in the IFR?.........................3
Updated January 25, 2024

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1. If an ECIP recipient effectuates a charter change or conversion, becomes owned by a new 

holding company, or undergoes another corporate transaction after closing the transaction, 

can the ECIP instruments remain outstanding?

If the issuer of ECIP instruments undergoes a corporate transaction but will continue to exist 

as a legal entity, the ECIP instruments are not required to be redeemed.

If the issuer of ECIP instruments sells, transfers, conveys, or leases all or substantially all of 

its assets to any other party (including to a newly formed entity or to a holding company), 

then Section 4.2(a) of the Securities Purchase Agreement would be triggered, requiring the 

successor, transferee or lessee party to assume the due and punctual performance and 

observance of the covenants, agreements and conditions of the Securities Purchase 

Agreement, including, if applicable, the issuance by the successor party of equivalent ECIP 

instruments. Any such successor entity must also be eligible, at the time of the transaction, to 

participate in the ECIP unless Treasury’s prior written approval is obtained. 

2. Can ECIP instruments be redeemed at the option of an ECIP recipient, or at the direction of 

Treasury?

Redemptions of the ECIP instruments are governed by the transaction documents – Section 5 

of the Senior Preferred Certificate of Designations; Section 6.10 of the Credit Union 

Securities Purchase Agreement; and Section 6.10 of the S-Corp/Mutual Securities Purchase 

Agreement. Under those provisions, holders of the ECIP instruments “have no right to 

require redemption or repurchase of any” of the instruments.

3. Will Treasury exercise the registration rights in Annex E of the Securities Purchase 

Agreement for banking organizations?

As stated in Section 4.1(h) of the Senior Preferred Securities Purchase Agreement and 4.1(i) 

of the S-Corp/Mutual Securities Purchase Agreement, the recipient must comply with the 

terms and conditions of Annex E only upon the request of Treasury or any holder of the 

instruments to which the registration rights are assigned. Treasury may determine at a future 

date whether to exercise its registration rights.

4. One of the closing conditions in the Securities Purchase Agreement is that the recipient must 

deliver to Treasury a written opinion from counsel to the recipient in substantially the form 

as in an Annex to the Securities Purchase Agreement. Will all institutions be required to 

provide this legal opinion?

Treasury intends to waive the requirement for recipients to provide a legal opinion at closing 

for institutions that meet all three of the following conditions: (i) the institution is issuing 

subordinated debt; (ii) the institution has $500 million or less in total assets, based on the 
Updated January 25, 2024

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methodology and data used by Treasury during the application review process; and (iii) 

Treasury’s ECIP investment in the institution is $25 million or less. 

5. The deadline for approved institutions to confirm their intent to participate, the amount of 

ECIP instruments they intend to issue, and their preferred transaction closing windows is 

April 4, 2022. Will institutions be able to modify their responses after this date?

Institutions may modify their responses at any time on or before April 4, 2022 by contacting 

ecip@treasury.gov. Treasury will use the information received in the closing response forms 

to plan and schedule closings, and our expectation is that all institutions will issue the amount 

indicated in their closing response form. Any deviation from those amounts may affect the 

institution’s ability to close the transaction.

6. Under the ECIP Securities Purchase Agreements, an ECIP recipient that is a CDFI as of the 

ECIP closing date is prohibited from revoking its status as a CDFI and must “use its 

reasonable best efforts to prevent its status as a CDFI from being changed.” How does an 

ECIP recipient remain in compliance with this provision if it loses its CDFI certification?

If an ECIP recipient loses its CDFI certification but reapplies for certification with a 

complete and accurate application within 18 months from the date of decertification, 

Treasury will deem the ECIP recipient to be using its reasonable best efforts to prevent its 

status as a CDFI from being changed. Treasury may provide further guidance on additional 

steps an ECIP recipient that is decertified as a CDFI should take to continue to remain in 

compliance with this requirement under the ECIP Securities Purchase Agreement if its reapplication for CDFI certification is unsuccessful.

7. Treasury has adopted an interim final rule (IFR) that establishes restrictions on capital 

distributions for ECIP participants (31 CFR Part 35 Subpart B). Section 35.23(b)(1) of the 

IFR requires ECIP participants that are not credit unions1to obtain Treasury approval before 

making capital distributions that exceed their “eligible distributable income.” Under what 

circumstances will Treasury consider granting approval for a capital distribution that exceeds 

the limits in the IFR?

The restrictions on capital distributions in Section 35.23 of the IFR promote the integrity of 

ECIP by promoting the use of ECIP investments to provide loans, grants, and forbearance for 

small businesses, minority-owned businesses, and consumers, especially in low-income and 

underserved communities, including persistent poverty counties, that may have been 

disproportionately impacted by the economic effects of the COVID–19 pandemic, in 

1 Participants that are credit unions are also subject to restrictions on capital distributions as set out in 31 CFR § 

35.23(b)(2). The process outlined in this FAQ only applies to Participants that are not credit unions. Credit unions 

that seek Treasury approval to make capital distributions in excess of the limits set out in 31 CFR § 35.23(b)(2) 

should contact ECIP@treasury.gov. 
Updated January 25, 2024

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accordance with the statutory purpose of the program. The restrictions help ensure that ECIP 

investments are not used to fund undue distributions or compensation for an ECIP 

participant’s shareholders or executives.

If an ECIP participant believes that special circumstances justify a capital distribution in 

excess of the limitations under the IFR, it may request Treasury approval to make such a 

distribution. ECIP participants should submit any such request to ECIP@treasury.gov at least 

90 days before the date of the proposed distribution. Treasury will consider requests that 

meet the following criteria:

1. The ECIP participant’s primary federal banking regulator has confirmed in writing 

that it has approved (or does not object to) the proposed capital distribution, or the 

ECIP participant has confirmed that no such approval is required. In addition, if the 

ECIP participant is a bank holding company or savings and loan holding company 

and the capital distribution requires approval of the primary federal regulators of any 

of its bank or savings and loan subsidiaries, such regulators must confirm in writing 

that they have approved (or do not object to) the capital distribution.

 

2. An executive officer of the ECIP participant has represented in writing that (a) the

proposed capital distribution is permissible under applicable federal and state law and 

regulation and the participant’s organizational governance documents (e.g., charter 

and bylaws) and (b) all required regulatory or stockholder approvals have been or, 

prior to the making of the capital distribution, will be, obtained.

3. The ECIP participant will remain “well capitalized” under the FDIC’s Prompt 

Corrective Action Guidelines2after the proposed capital distribution, calculated as of 

the end of the most recently completed fiscal quarter for which the Participant has 

filed a Call Report, without including the amount of the ECIP investment. 

4. The ECIP participant has credibly demonstrated in writing that the proposed capital 

distribution would not impair the ECIP participant's ability to use the entirety of the 

benefit of its ECIP investment to increase its ECIP-related activities, including 

providing loans, grants, and forbearance for small businesses, minority-owned 

businesses, and consumers, especially in low-income and underserved communities, 

including persistent poverty counties, that may have been disproportionately impacted 

by the economic effects of the COVID-19 pandemic.

5. The ECIP participant has demonstrated that its rationale for the proposed capital 

distribution includes at least one of the following:

a. the request relates to a one-time capital distribution in connection with a 

repurchase of shares to enable a conversion from C-Corporation to SCorporation status, a mutual-to-stock conversion, or a bona fide restructuring 

conducted for the purpose of enabling a reasonably foreseeable initial public 

offering by the participant;

2 12 CFR § 324.403.
Updated January 25, 2024

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b. if the participant is an S-Corporation, the proposed share repurchase is 

intended to ensure that the participant maintains its S-Corporation status;

c. the proposed capital distribution is limited and routine (e.g., regular dividends, 

a share repurchase program, or share repurchases effected pursuant to a 

Participant’s equity compensation programs), consistent with the participant’s 

historical practices in 2019 and 2020, and does not significantly exceed the 

participant’s level of limited and routine capital distributions during this time 

period, measured by reference to the percentage of outstanding shares to be 

purchased in the case of share repurchases or by reference to percentage of net 

income in the case of dividends; or

d. the participant's eligible distributable income during the relevant look-back 

period under the IFR has been negatively impacted by a significant 

nonrecurring or nonoperating expense, in the absence of which the proposed 

capital distribution would have complied with the IFR, and the participant has 

reported positive net income without any adjustments for at least the four 

quarters following the most recent quarter in which the significant 

nonrecurring or nonoperating expense occurred.

Any request for approval must be credibly supported with adequate documentation, such as:

1. Audited consolidated annual financial statements for the two most recently completed 

fiscal years for which financial statements are available, and unaudited consolidated 

quarterly financial statements for each completed fiscal quarter thereafter for which

financial statements are available.

2. The ECIP participant’s projected income statement and balance sheet as of the end of 

the current fiscal year.

3. A pro forma balance sheet, including capital ratios, as of the end of the most recently 

completed fiscal quarter for which the ECIP participant has filed a Call Report, giving 

effect to the proposed capital distribution and excluding the amount of the ECIP 

investment from calculations of equity, capital ratios, and related figures.

This FAQ only applies to ECIP participants that are not credit unions. ECIP participants that 

are credit unions are subject to restrictions on capital distributions under 31 CFR 35.23(b)(2). 

Credit unions that wish to request Treasury approval to make capital distributions in excess 

of the limits set out in the IFR should contact ECIP@treasury.gov.