Notice and request for comments.
Currently, the Community Development Financial Institutions Fund (the “Fund”), within the Department of the Treasury, is soliciting comments on the indicators it will use to measure a community development financial institutions' performance in four areas: Community development impact, financial strength, portfolio quality, and management.
Written comments should be received on or before October 10, 2003, to be assured of consideration.
Address all comments to: Donna Fabiani, Manager for Financial Strategies and Research, Community Development Financial Institutions Fund, U.S. Department of the Treasury, 601 13th Street, NW., Suite 200 South, Washington, DC 20005, PLUMcomment@cdfi.treas.gov, or fax (202) 622-3569.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Donna Fabiani, Manager for Financial Strategies and Research, Community Development Financial Institutions Fund, U.S. Department of the Treasury, 601 13th Street, NW., Suite 200 South, Washington, DC 20005, PLUMcomment@cdfi.treas.gov, or fax (202) 622-3569.End Further Info End Preamble Start Supplemental Information
Title: PLUM: CDFI Performance Rating System.
Abstract: The Fund's mission is to expand the capacity of financial institutions to provide credit, capital and financial services to underserved populations and communities in the U.S. The Fund's strategic goal is to improve the economic conditions of underserved communities by providing capital and technical assistance to community development financial institutions (“CDFIs”), capital to insured depository institutions, and tax credit allocations to community development entities (“CDEs”), which provide credit, capital, financial services, and development services to these markets. The Fund certifies entities as CDFIs and CDEs.
The Fund has over three hundred CDFIs in its CDFI Program investment portfolio. To better manage this portfolio and to better target its limited resources, the Fund is developing a performance rating system that will rank CDFIs according to their overall financial strength and their potential for creating community development impact. The PLUM rating system will assess a CDFI's performance relative to that of its peers. Each CDFI will be scored in four components: Performance effectiveness (i.e., community development impact); Leverage, liquidity and solvency; Underwriting; and Management. These four component scores will then be aggregated into a single PLUM rating.
The Fund plans to use PLUM to monitor the Fund's portfolio of CDFI awardees, recognize and communicate best practices for community development finance, underwrite CDFIs, and target the Fund's technical resources to CDFIs that need to improve their performance. PLUM can be a valuable tool for CDFIs. CDFIs can use PLUM to conduct self-assessments and improve their performance, compare their performance to their peers and industry standards, and identify best practices to strive for over time.
The Fund is making major investments in technology to collect and store the data needed for PLUM analyses. PLUM analyses for non-regulated institutions will be based on data collected through the Community Investment Intelligence System (CIIS), the Fund's new data collection system. PLUM analyses for regulated institutions will be based on their CAMEL rating for the “L,” “U,” and “M” components (provided the Fund has access to the CAMEL rating), as well as community development impact data collected through CIIS. CIIS will collect and store CDFIs' transaction-level and institution-level data. The system is being designed to communicate, where possible, with the technology CDFIs currently use, thereby facilitating the transfer of large volumes of data to the Fund. The Fund's contractor, E F Kearney, will work with CDFIs in the system design phase with the goal of developing a sophisticated yet user-friendly web-based data transmission process. The Fund expects to implement CIIS in December 2003.
To view the proposed PLUM indicators, visit the Fund's Web site at www.cdfifund.gov and click on “CDFI Fund seeking comments on PLUM.”
Request for Comments: Comments submitted in response to this notice will Start Printed Page 47636become a matter of public record. Comments are invited on all aspects of PLUM, but commentators may wish to focus particular attention on: (a) The appropriateness of the indicators for measuring a CDFI's community development impact, financial condition, portfolio quality, and management capacity; (b) other indicators that may better measure CDFI performance; (c) the Fund's use of PLUM to monitor its portfolio of CDFI awardees; (d) the Fund's use of PLUM in underwriting; (e) the ability of the Fund to access CAMEL ratings for regulated institutions; (f) the number of peer groups needed to have meaningful peer analysis in the diverse community development field; (g) the number of years of data needed for reliable peer group analysis; (h) awardee and external audience's access to PLUM scores (i.e., should the Fund publicly share PLUM scores); and (i) the frequency with which the Fund should calculate PLUM scores for each CDFI.Start Signature
Dated: August 1, 2003.
Tony T. Brown,
Director, Community Development Financial Institutions Fund.
[FR Doc. 03-20337 Filed 8-8-03; 8:45 am]
BILLING CODE 4810-70-P