Wraps to be taken off ‘Mission-Driven Bank Fund,’ with anchor, founding investors revealed

A new fund aimed at facilitating capital investments in minority depository institution (MDI) and community development financial institution (CDFI) banks will be formally launched Thursday (Sept. 16), the federal insurer of bank deposits said Wednesday.

In a release, the Federal Deposit Insurance Corp. (FDIC) said the launch of the Mission-Driven Bank Fund would be announced by agency Board Chairman Jelena McWilliams at a 9:30 a.m. press conference Thursday.

The agency said McWilliams would also announce the fund’s anchor and founding investors. She will also, the FDIC said, describe “this unique framework to preserve and promote these mission-driven institutions and to amplify their impact in lower income urban and rural communities.”

The agency has said one of the objectives of the fund is to create an opportunity for MDIs and CDFIs to make pitches for funding tailored to their business models, strategic plans, and vision for building the future. In April, the FDIC said it was also incorporating a feature for the fund manager to make available advisory services including strategic, financial, operations, and technology consulting support to complement the capital investments provided by the fund.

“Mission-driven banks” are described by the FDIC as those MDIs and CDFIs that commit larger portions of their portfolios to minority, lower-income, and rural communities. Investments in the Mission-Driven Bank Fund, the FDIC has 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 “anchor investors” and founding investors were selected, the agency has said, through a competition to counsel the fund’s investing. Under the rules of the competition, the investors were required to have experience managing investment funds and with prior work with MDIs and CDFIs, as well as a “deep understanding of the communities they serve.”

Investments made in the institutions by the fund may include direct equity, structured transactions, funding commitments, and loss-share arrangements, according to the agency.