Detailed Information on the
Credit Union Loan and Technical Assistance Grant Program Assessment

Work to monitor the status of credit unions that are designated to be eligible beneficiaries under the program to ensure that their membership still qualifies as ??low-income.??

Develop a long-term performance measures that demonstrate that credit unions are contributing to increased income, ownership, and employment opportunities for low-income customers.

Revise current annual performance measures so that performance of credit unions that serve low-income customers is tied to the performance of all credit unions.

Measure: Percentage increase in low-income designated credit unions (LICUs).

Explanation:Providing basic financial and related services in low-income communities through the increase of LICUs. The CDRLF was created to assist low-income designated credit unions in furthering financial service in low-income areas. The increasing number of LICUs reflects increased financial service in low-income areas.

Measure: Percentage increase in loans at low-income designated credit unions (LICUs).

Explanation:Keeping with providing basic financial and related services in low-income communities, loan availability for provident and productive purpose is the hallmark of credit unions. The CDRLF provides seed capital and TA assistance to LICUs to assist in the granting of loans.

Measure: Percentage increase in shares at low-income designated credit unions (LICUs).

Explanation:Share increase reflects improved ownership within the field of membership for LICUs, thus supporting the goal of providing basic financial and related services in low-income communities. The CDRLF provides seed capital and TA assistance in furthering financial services offered.

Measure: Percentage increase in assets at low-income designated credit unions (LICUs).

Explanation:Increase in assets demonstrates greater involvement by members at LICUs, improving viability and providing for increased services to members and potential members within the field of membership.

Measure: Percentage growth of average share balance in LICUs

Explanation:An increase in average share balance reflects increased ownership on a per person basis.

Measure: Percentage growth of member-business loan balances in LICUs

Explanation:Increased member business lending in LICUs reflects funding made available for small businesses thereby stimulating economic activities

Measure: Percentage growth of membership in LICUs

Explanation:Increased membership reflects added involvement in the financial mainstream, moves individuals away from alternative financial service providers (i.e. check cashers, etc.), and provides greater opportunities for homeownership, increased employment.

Measure: Average time (in days) to processing technical assistance grants

Explanation:

Measure: Average time (in days) to processing loan requests

Explanation:

Is the program purpose clear?

Explanation: The purpose of the Community Development Revolving Loan Program (CDRLF) is to support the efforts of participating low-income designated credit unions to provide basic financial and related services to residents and to stimulate economic activities in the communities they service. These efforts are intended to increased income, ownership and employment opportunities for low-income residents, and to stimulate other economic growth.

Evidence: NCUA Rules and Regulations §705.2; Federal Register Vol. 52, No. 73 dated Thursday, April 16, 1987. Deloitte & Touche Independent Auditor's Reports for Years Ended December 31, 2003, and 2002.

Does the program address a specific and existing problem, interest or need?

Explanation: The program benefits credit unions that serve low-income customers. Only credit unions with a low-income designation can participate in the Fund's program. To obtain their designation, 50.1% of the members of a low-income designated credit unions (LICUs) must have an income at or below 80% of the national median household income. (LICUs currently amount to approximately 10% of the credit union population.) CDRLF makes below-market loans and technical assistance grants available to qualifying LICUs to promote their self-sufficiency and tpo support efforts to maintain parity with mainstream credit unions. Through supporting LICUs, the program seeks to ensure that the basic financial services needs of low-income communities are served.

Evidence: CDRLF FY 2005 Budget Justification, dated October 1, 2003, June 30, 2004, financial call report information. www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: CDRLF program is duplicative of certain aspects of Treasury's CDFI Fund. CDFI Fund builds capacity through financial assistance and technical assistance investments in CDFIs and proposed CDFIs. Although certain credit unions qualify for benefits under CDFI Fund, in the past, few LICUs have benefited under CDFI Fund due to limited capacity. Low-income designated credit unions are generally smaller in asset size and do not have expertise in applying for or receiving outside funding. An advantage of having CDRLF as a part of NCUA ' the federal financial regulator and deposit insurer of the credit unions in the United States -- is access to agency staff and the examination and supervision data to monitor and assess the condition of the LICUs and ability of LICUs to achieve grant/loan purpose.

Evidence: General Guidelines for Revolving Loans -- www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003. General Guidelines for the Technical Assistance Program for Credit unions (www.ncua.gov/CreditUnionDevelopment/Programs/TA-Guidelines.pdf, www.ncua.gov/letters/2001/01-CU-14.pdf) NCUA Rules and Regulations §705.2

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The program's policies, procedures, and initiatives were revised in 2001 and are posted on the website and have routinely been provided to low-income designated credit unions. The loan and grant requests and approval amounts are posted monthly on the web, along with the financial statements of the program. An annual CPA audit is performed to assess the validity of the data and the strength of the internal controls of the program. An assessment of the grant program was recently completed by an NCUA Economic Development Specialist outside of the Office of Credit Union Development.

Evidence: http://www.ncua.gov/RegulationsOpinionsLaws/rules_and_regs/NCUA6.pdf,http://www.ncua.gov/letters/2001/01-CU-14.pdf, http://www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003. NCUA Rules and Regulations §705. Deloitte & Touche Independent Auditor's Reports for Years Ended December 31, 2003, and 2002. Memo from Director LaCreta to Executive Director Skiles dated March 23, 2004, with attachment, Subj: Technical Assistance Grant Program Assessment 1995-2003

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: NCUA's Office of Credit Union Development (OCUD) has rules and regulations in place to: ensure that resources are effectively targeted, review the appropriateness of the loan and grant requests, analyze the priority of the need and whether the credit union has the capability of self-funding the request, and make available CDRLF funding.

Evidence: www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003. www.ncua.gov/RegulationsOpinionsLaws/rules_and_regs/NCUA6.pdf, www.ncua.gov/letters/2001/01-CU-14.pdf, NCUA Rules and Regulations §705.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: Specific long-term performance measures are not in place. CDRLF is designed to facilitate the providing of that service through the low-income designated credit unions. Per the NCUA Strategic Plan -- 2003-2008, NCUA has the long-term objective of enabling credit unions to extend their financial service to those with modest means.

Evidence: NCUA Strategic Plan -- 2003-2008

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: While CDRLF has specific annual measures and targets that correlate to NCUA's Strategic Plan, timeframes for quantifiable long-term outcomes have not been developed to mark whether LICUs have achieved parity in financial growth with mainstream credit unions.

Evidence: NCUA Strategic Plan -- 2003-2008

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: CDRLF has seven annual measures that provide quantifiable means of assessing its positive impact in the credit unions' community. As exhibited in the Measures tab, the seven annual measures include percentage increases in: LICUs, loans, shares, assets, average share balance, member-business loan balances, and members.

Evidence: Office of Credit Union Development 2004 Objectives and Goals, distributed via memo to Executive Director J. Leonard Skiles on January 2, 2004.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: NCUA's Draft 2005 Annual Performance Plan incorporates new annual measures to coincide with agency goals. These goals include use of funds for LICUs.

Evidence: NCUA Strategic Plan -- 2003-2008, Office of Credit Union Development 2004 Objectives and Goals, distributed via memo to Executive Director J. Leonard Skiles on January 2, 2004.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The grantees do not commit to the program's performance measures. These measures were developed simulatenously with this PART. The program has been designed to augment the credit union borrower/grantee's own funds to further the service initiative it wishes to pursue. In the case of those technical assistance grant requests for urgent priority funding -- such as audits, and recordkeeping reconcilements -- the credit union must demonstrate that problems have been adequately addressed and improvements have been made in operations.

Evidence: www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003, www.ncua.gov/org/orgchart/ocud/TA-Guidelines.pdf, www.ncua.gov/letters/2001/01-CU-14.pdf, NCUA Rules and Regulations §705. Memo from Acting Director LaCreta to Executive Director Skiles dated May 9, 2001, re: CDRLF Community Impact Assessment, Memo from Director LaCreta to Executive Director Skiles dated March 23, 2004, with attachment, Subj: Technical Assistance Grant Program Assessment 1995-2003

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: An annual audit of the program is performed by a CPA, who reviews the financial condition of the program and assesses whether the program is following the objectives as outlined. In addition, an Inspector General (IG) audit was performed in 2003.

Evidence: Deloitte & Touche Independent Auditor's Reports for Years Ended December 31, 2003, and 2002. IG Audit -- December 31, 2003

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Congressional budget requests for CDRLF are only for the anticipated grant and loan needs of the program. Projections included in the presentations reflect the usage, supported by listing of all requesters, including requested amounts, purpose, and approved amounts. Adminstrative costs are absorbed through the agency's operating budget, with budget requests supported by anticipated resource needs that include CDRLF program needs.

Evidence: FY 2005 Budget Justification -- Congressional submission. Calendar year 2004 OCUD Budget Request -- August 2003.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: New performance measures were developed to correct CDRLF deficiencies in strategic planning. An evaluation of the grant program was completed by a regional NCUA Economic Development Specialist during the first quarter of 2004 to assess the impact of the technical assistance program since 1995. A survey of CDRLF was conducted in 2000/2001 to determine the impact CDRLF has had on the communities those low-income designated credit unions serve. Further surveys are planned.

Evidence: www.ncua.gov/CreditUnionDevelopment/Programs/TA-Guidelines.pdf, www.ncua.gov/letters/2001/01-CU-14.pdf, NCUA Rules and Regulations §705. Office of Credit Union Development 2004 Objectives and Goals, distributed via memo to Executive Director J. Leonard Skiles on January 2, 2004. Memo from Director LaCreta to Executive Director Skiles dated March 23, 2004, with attachment, Subj: Technical Assistance Grant Program Assessment 1995-2003.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: While NCUA collects credible performance data on the financial condition of the LICUs as well as information on the use of loan and grant funds, NCUA does not monitor the status of the LICU designation. After the initial desgination, NCUA does not monitor whether an LICU still has a membership where at least 50.1% of the members earn less than 80% of the national median income. NCUA receives quarterly financial and statistical call reports from all federally insured credit unions which provides the program with timely information on the condition of LICUs. This information is routinely used to assess the condition of those credit unions that have outstanding loans from CDRLF to determine any change in risk to repayment and identify the best potential borrowers from CDRLF. The program also uses the information to assess the progress of LICUs on an annual basis. The recent TA grant program assessment was developed through the use of the above information that resulted in recommendations ' and subsequent changes -- for the TA grant program's improvement.

Evidence: Quarterly 5300 financial call reports, examination report system, www.ncua.gov/CreditUnionDevelopment/Programs/TA-Guidelines.pdf, www.ncua.gov/letters/2001/01-CU-14.pdf, www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: The OCUD Director is delegated by the NCUA Board the authority to administer CDRLF loan and grant components and is charged with achieving the goals established within the annual plan. The performance of the director is compared to those goals. The performance of the managers, CEOs, and officials of the grantee credit unions are judged on any subsequent request for grants from CDRLF. Grants will be denied should it be demonstrated that the grantee did not achieve the objectives of the requests submitted.

Evidence: Delegations of Authority, OCUD Director Performance Standards, www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003, www.ncua.gov/CreditUnionDevelopment/Programs/TA-Guidelines.pdf, www.ncua.gov/letters/2001/01-CU-14.pdf, Examination Reports

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Both loan and grants are used for their intended purpose. The loan component of CDRLF requires submission of a Community Needs Plan to identify potential needs and opportunities within the community and potential uses for the loan funds. The grant component is designed as a reimbursable expense program, with the specific goal of processing request within 15 days. Prior approval is required to participate in the program and funds are disbursed upon completion of goods/service procurement and proof of expenditure. Goods/services can then be evaluated by visiting field examiners. Appropriations are clearly identified on the monthly financial statements with the computer system designed to credit the relevant appropriation for the approved grant/loan. In recent years, the program has not used all its loan funds due to decreased demand caused by low interest rates. It is expected that the demand for loan funds will increase with rising interst rates. Grants have been obligated in a timely manner.

Evidence: www.ncua.gov/CreditUnionDevelopment/Programs/TA-Guidelines.pdf, www.ncua.gov/letters/2001/01-CU-14.pdf, monthly financial statements -- www.ncua.gov/ReportsAndPlans/CDRLF/statements.html

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The program is designed to provide prompt responses to requesters, with technical assistance to be provided within 15 business days and loans within 30 business days. Automation has been used to further improve operations. Assessment of technology needs continue to determine best use of resources. The program's administrative costs are absorbed by the agency's operating budget, with that budget being provided through operating fees charged to credit unions. The office's 2004 administration budget of $800,000 includes costs for CDRLF program along with the cost for the agency's program to further financial service by all credit unions into underserved areas.

Evidence: FY 2005 Budget Justification -- Congressional submission. Calendar year 2004 OCUD Budget Request -- August 2003. www.ncua.gov/letters/2001/01-CU-14.pdf

Does the program collaborate and coordinate effectively with related programs?

Explanation: On January 27, 2002, NCUA entered into a confidentiality agreement with CDFI to disclose examination information on credit union applicants for CDFI awards. This effort was furthered through an agreement on March 19, 2003, to share examination information on current credit union CDFI awardees. A Memorandum of Agreement with the IRS was signed in September 2002 to further partnering initiatives, including the Volunteer Income Tax Assistance Initiative (VITA) program. Other initiatives (Neighborhood Reinvestment Corporation/USDA/HHS) have also been coordinated.

Evidence: CDFI/NCUA confidentiality agreements dated January 27, 2002, and March 19, 2003. IRS/NCUA Memorandum of Agreement dated September 4, 2002. TAG Initiative -- Volunteer Income Tax Assistance Initiative -- August 2003.

Does the program use strong financial management practices?

Explanation: Annual CPA audits conducted by a large, reputable firm have provided repeated unqualified reports. Internal control functions are strong, although limited staffing precludes segregation of all duties. Reconcilements and restriction of disbursements provide adequate checks and balances.

Evidence: Deloitte & Touche Independent Auditor's Reports for Years Ended December 31, 2003, and 2002. IG Audit -- Agreed Upon Procedures As of December 31, 2003.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: NCUA requires all regulations to be reviewed on a three-year basis. CDRLF is controlled under 705 of NCUA Rules and Regulations, with the program assessed through the annual CPA audit. Deficiencies in the program have been addressed through the revision of the office's mission and objective, development of procedures for CDRLF. These procedures clearly defined the objectives and procedures of the program, and resulted in the further developing of initiatives with a focus on furthering financial service in low-income areas. The website was designed to provide all relevant information concerning the program to all parties. An evaluation of the grant program was completed by a regional NCUA Economic Development Specialist during the first quarter of 2004. The evaluation assessed the activities of the technical assistance program since 1995.

Evidence: Deloitte & Touche Independent Auditor's Reports for Years Ended December 31, 2003, and 2002. IG Audit -- Agreed Upon Procedures As of December 31, 2003. www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003, www.ncua.gov/letters/2001/01-CU-14.pdf, www.ncua.gov/CreditUnionDevelopment/Programs/TA-Guidelines.pdf, www.ncua.gov/AboutNcua/org/ocud.htm

Are grants awarded based on a clear competitive process that includes a qualified assessment of merit?

Explanation: Procedures for the grant program are clearly defined in the Letter to Credit Unions issued in 2002. The loan component procedures are available on the web and are included in the application. The requests are reviewed by former safety and soundness examiners familiar with the conditions of those credit union applicants.

Evidence: www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003. www.ncua.gov/letters/2001/01-CU-14.pdf, www.ncua.gov/org/orgchart/ocud/TA-Guidelines.pdf

Does the program have oversight practices that provide sufficient knowledge of grantee activities?

Explanation: Grants are provided as a reimbursement for goods or services pre-approved where justification of expenditure is required. Loan recipients are required to submit Community Needs Plans -- to assess impact on the field of membership -- on an annual basis and are subjected to safety and soundness examination. The program's analysts have intimate knowledge in the operation of low-income designated credit unions. The analyst staff and the director have experience as safety and soundness examiners for financial institutions. With this experience, and direct access to the examination and superivsion history of the credit unions -- along with contact with current regional office and field staff -- management capabilties, challenges, and opportunities are well known.

Evidence: Deloitte & Touche Independent Auditor's Reports for Years Ended December 31, 2003, and 2002. www.ncua.gov/AboutNcua/org/ncua_board/lacreta.html, Delegations of Authority, OCUD Director Performance Standards, www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003, www.ncua.gov/org/orgchart/ocud/TA-Guidelines.pdf, www.ncua.gov/ref/letters/01-CU-14.pdf., Examination Reports

Does the program collect grantee performance data on an annual basis and make it available to the public in a transparent and meaningful manner?

Explanation: Financial and statistical reports are collected on a quarterly basis, with financial performance reports readily available through the NCUA website. Examination reports are confidential but available to OCUD staff when completed -- generally on an annual basis

Evidence: Quarterly 5300 financial call reports, examination report system, www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003, www.ncua.gov/ref/letters/01-CU-14.pdf., www.ncua.gov/org/orgchart/ocud/TA-Guidelines.pdf,

Is the program managed on an ongoing basis to assure credit quality remains sound, collections and disbursements are timely, and reporting requirements are fulfilled?

Explanation: The loan component of the CDRLF is designed to provide funding opportunities to LICUs while limiting risk to CDRLF. Loans are based on financial/managerial/operational strength of the LICU applicant and the purpose of loan. LICU borrowers are reviewed on an exception basis from information available from NCUA's examination and insurance related activities, with deliquent payments promptly identified, and appropriate notification to borrower. Tardy notification is shared with examination staff, which adds a level of scrutiny on the condition of LICU borrower. Follow-up on reporting requirements are provided through OCUD Instruction and are routinely monitored.

Evidence: www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003. OCUD Instruction OCUD-2 dated July 7, 2003.

Do the program's credit models adequately provide reliable, consistent, accurate and transparent estimates of costs and the risk to the Government?

Explanation: Loan underwriting is based on the CAMEL rating to ensure risk is mitigated. CDRLF assesses the conditions of LICU borrowers on a quarterly basis through the review of the quarterly financial call reports and recent examination and/or supervision reports, and it contacts regional directors for an assessment of potential risk in portfolio. The exam discloses the financial condition of the credit union, including net worth, as well as the examiner's rating of the management's capability of operating the credit union. A loan loss reserve/allowance is maintained and routinely adjusted based on risk within the portfolio. Financial and statistical information for CDRLF is maintained on NCUA's website and updated on a monthly basis. This information is vaildated through an annual CPA audit.

Evidence: www.ncua.gov/CreditUnionDevelopment/Programs/CDRLP.pdf; Community Development Revolving Loan Fund Guidelines revised October 2002, with revised loan documents of November 2003. OCUD Instruction OCUD-2 dated July 7, 2003. Deloitte & Touche Independent Auditor's Reports for Years Ended December 31, 2003, and 2002.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: Credit unions participating in the program are demonstrating improved service to their members, but specific long-term performance goals have not been established.

Evidence: Survey results from CDRLF participants -- memo from Acting Director LaCreta to Executive Director Skiles dated May 9, 2001. Memo from Director LaCreta to Executive Director Skiles dated March 23, 2004, with attachment, Subj: Technical Assistance Grant Program Assessment 1995-2003.

Does the program (including program partners) achieve its annual performance goals?

Explanation: The program met or exceeded all of its annual targets. Agency results reflect achievement of these objectives, and a study of those credit unions receiving TA grants demonstrates improved conditions of those institutions.

Evidence: Memo from Acting Director LaCreta to Executive Director Skiles dated May 9, 2001, re: CDRLF Community Impact Report, Memo from Director LaCreta to Executive Director Skiles dated March 23, 2004, with attachment, Subj: Technical Assistance Grant Program Assessment 1995-2003. NCUA Combined Annual Performance Report 2003 and Initial Annual Performance Plan 2004

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Congressional funding increases have not resulted in increased resource needs to process requests. Automation has been used to further improve operations. An assessment of technology needs continues to determine best use of resources.

Evidence: Congressional budget request 2004. OCUD budget request 2004.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: As designed, the program attempts to make full use of the information available internally concerning the condition of the credit union requesters. This, in conjunction with the experience and knowledge of staff, provides for a clear understanding of the needs and capabilities of requesters. Further, the office's efforts in partnering and outreach with other organizations -- public, private, and non-profit -- augments expertise in areas relating to community development.

Evidence: The dyamic in having NCUA, the federal financial regulator and deposit insurer of the credit unions in the United States, administer the CDRLF is not readily replicable. NCUA Rules and Regulations §705.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: The program receives annual unqualified CPA audits and has received IG Audits concerning the program.

Evidence: Deloitte & Touche Independent Auditor's Reports for Years Ended December 31, 2003, and 2002. IG Audit -- December 31, 2003.