OFN / CFED Briefing Dan Betancourt, President and CEO Community First Fund Lancaster, Pennsylvania February 22,

Organizational Overview Private, non-profit community development financial institution (CDFI) founded in 1992 Provide loans to small and mid-sized businesses, affordable housing developers, non-profit organizations Provide training and technical assistance Lending Offices in Lancaster, York, Reading, Harrisburg, Exton Since 1992, Community First Fund has o Provided more than 800 loans o Disbursed over $32 million in loans  50% to Persons of Color  30% to women

Organizational Overview Small Cities Strategy Community First Fund is committed to reducing the concentration of poverty in small cities and boroughs in Central Pennsylvania Community First developed its Small Cities Strategy to o create opportunities for building wealth in lower income communities through business and real estate ownership; o support entrepreneurship and the creation of jobs to bolster the economy in cities; o increase the availability of quality, affordable housing and mixed income housing in cities; o support nonprofit organizations which provide life enhancing community services for local residents

Loan Types Small business: up to $35,000 –For both start-up and existing businesses Mid-sized business: $35,000 up to $500,000+ –Typically been in business for two years or more Community development –For non-profits and community development organizations Real estate –Affordable housing (rental and for sale) –Business real estate in downtowns and lower income communities –Market-rate housing in downtowns –Mixed-income housing –Mixed-use projects Approved SBA 7(a) Lender and Community Express Lender

Our financing needs  Need for longer term investments to allow longer term financing for affordable housing and real estate  Need for equity or equity like products (EQ2)  Utilization of bond market to provide financing for CDFI’s

Opportunities with FHLB Membership Stable and affordable source of liquidity for community development lending activities Leverage CDFI equity and private sector financing to serve more customers

Opportunities  Increase our impact in small cities by expanding loan products for small business, business real estate and non profits and community services  May offer the ability to expand affordable housing products  Membership allows access to other FHLB programs that complement our mission

Challenges Requirement to pledge collateral will transform the nature of balance sheet. Reduced flexibility, perceived shift risk to unsecured creditors (banks, individuals, foundations) Collateral requirements are more restrictive than any other current source of investment Loan to Value maximum of 80% ineligible collateral “domino effect” with existing unsecured creditors?

Challenges Lending values assigned to collateral are deeply discounted Capital stock cost; stock is fluctuating non cash asset Potential for additional regulation, and covenants, “domino effect” of more restrictive covenants with other investors Perceived to have more value to single product lenders than to multi-product, small cities lender

Challenges  Generally do not meet the “long-term home mortgage” requirement (five years or greater)  Longer term housing lending will impact liquidity  Potential limitation of borrowing dependent on performance of the FHLB and its members’ performance

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