Experienced financial advising firms are being sought to develop a structure and “operational aspect” for the new “Mission-Driven Bank Fund” being established by the federal insurer of bank deposits to assist minority depository and community development financial institutions (MDIs and CDFIs), the agency said Wednesday.
In a release, the Federal Deposit Insurance Corp. (FDIC) said the new fund will “provide a vehicle for private sector and philanthropic investment in FDIC-insured Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs).”
The one or more financial-advisor firms selected through a competition to counsel the fund’s investing, the agency said, will have experience managing investment funds. Additionally, the agency said, prior work with MDIs and CDFIs, as well as a “deep understanding of the communities they serve,” are also preferred.
The agency defined “mission-driven banks” as those MDIs and CDFIs that commit a larger portion of their portfolios to minority, lower-income, and rural communities.
Investments in the Mission-Driven Bank Fund, the FDIC said, would assist MDIs and CDFIs to (among other things) raise capital necessary to serve communities; weather economic downturns; attract technical expertise; and acquire and use technology.
The agency said investments made in the institutions by the fund may include direct equity, structured transactions, funding commitments, and loss-share arrangements.
The FDIC said it will play no role in fund management or individual investment decisions of the fund. However, it noted it would continue to “assess the alignment of the Fund’s on-going operations with its purpose of assisting Mission-Driven Banks.”
The agency also said its new fund will target a minimal rate of return to investors, who may also choose to reinvest any returns in the fund or in aligned non-profit enterprises that support mission-driven banks.