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CDFI CUs remain true to mission study says
WASHINGTON (4/27/12)--Community Development Financial Institutions (CDFIs) have remained true to their mission, and "have succeeded in lending to and investing in individuals and communities not served by conventional financial institutions, while maintaining loan performance standards generally equivalent to those of the conventional financial sector," the CDFI Fund said in a report.

The "CDFI Industry Analysis: Summary Report" was developed by the University of New Hampshire Carsey Institute's Center on Social Innovation and Finance, and examines the performance of 612 CDFIs between 2005 and 2010. The report examined 197 credit unions as part of the study. The study focused on capitalization, liquidity, portfolio health and risk-management issues faced by CDFIs.

The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit.

The CDFI fund report found that CDFI credit unions, and other institutions, have been "willing to take risks and serve customers with financial products that traditional capital markets are unlikely to provide."

However, the report noted, these risks, when coupled with the recent recession, created issues in some cases. While the majority of CDFI credit unions examined in the report had excellent loan quality, some CDFI credit unions experienced greater amounts of delinquent loans, higher operating expense ratios, declining earnings, and higher delinquency rates between 2005 and 2010.

Some of the risks and costs could be mitigated through certain operating procedure changes, according to the report.

For the full report, use the resource link.
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