Q4 2014 Report to INVESTORS - Opportunity Finance Network

Q4 2014
Report to INVESTORS
Public Ledger Building • 620 Chestnut Street, Suite 572 • Philadelphia, PA 19106
P: 215.923.4754 • E: [email protected]
About Opportunity Finance Network
Opportunity Finance Network (OFN) is the nation’s leading network of community
development financial institutions (CDFIs), with 251 high-performing CDFI Members
that provide financing to benefit low-income and low-wealth people and places in all
50 states, and manage more than $11 billion in capital. OFN’s mission is to lead
CDFIs and their partners to ensure that low-income and low-wealth people and
communities have access to affordable, responsible financial products and services.
Headquartered in Philadelphia, OFN has assets of more than $125 million, 39 fulltime employees, and an annual gross operating budget of $10 million, as of
December 31, 2014. OFN is led by a 12-person executive team that draws
experience from all sectors of the financial industry to drive six key program areas:
financing, strategic initiatives, public policy, knowledge sharing, strategic consulting,
and strategic communications. OFN also functions as the leading voice for the CDFI
industry through presentations, articles, and public relations.
Contents
Financing………………………………………………………………………………………………………………
2
Strategic Initiatives…………………………………………………………………………………………… ..
3
Public Policy………………………………………………………………………………………………………… .
5
Knowledge Sharing………………….………………………………………………………………………… ..
7
Strategic Consulting……………………………………………………………………………………….……
8
Strategic Communications………………………………………………………………………………… ..
9
Appendix A: Financial Performance……………………………………………….……………………
11
Appendix B: Organizational Update…………………………………………………………………… .
12
Appendix C: Membership……………………………………………………………………….…………….
13
Appendix D: Detailed Financial Information…………………………………………..……… …..
14
Report to Investors
1
Financing
OFN Financial Services includes the OFN
Financing Fund, which makes loans to and
investments in Member CDFIs. OFN Managed
Asset Services underwrites and manages the
socially responsible investments of clients.
Investing in CDFIs via the OFN
Financing Fund. As of 12/31/14,
OFN’s Financing Fund had $110.6
million in loans and investments
outstanding or committed, including $58.2 million in loans outstanding under
the NEXT Awards. In 2014, OFN closed eleven loans totaling $13.5 million.
Managing Assets for CDFI Investors. OFN provides underwriting and
monitoring services for third-party investments in CDFIs, leveraging its
underwriting and CDFI expertise to make it easier for institutional investors to
invest in CDFIs. In 2014, OFN underwrote eight loans for third-party clients.
Issuing Bonds. OFN is an approved Qualified Issuer under the CDFI Fund
Bond Guarantee Program, helping creditworthy CDFIs access long-term,
affordable capital. Under this new Federal Credit Program, CDFIs can borrow
up to 30 years at a small premium to U.S. Treasuries. In August 2014, OFN
closed a $100 million bond with a Member CDFI under the inaugural 2013
Bond Approval Round.
New Markets Tax Credit Program. OFN was awarded a $15 million Round
10 New Markets Tax Credit (NMTC) allocation in 2013. In 2014, OFN
successfully closed two NMTC transactions totaling $10 million, both of which
relate to new Federally Qualified Health Care Facilities. OFN’s NMTC strategy
is to increase OFN’s Members’ access to NMTC allocation, as OFN believes its
Members can deliver greater impact than other Community Development
Entities. OFN’s NMTC strategy fits within OFN’s overall financing strategy to
lead the industry in efficient, scalable, and affordable financing products that
can provide significant new capitalization for its Member CDFIs.
Green Finance. In 2012, OFN announced a new source of funding available
to Members. Thanks to a $5 million investment in OFN from Bank of
America’s Energy Efficiency Finance Program, Member CDFIs can apply for
loan capital to finance energy efficiency building retrofits, which will create
jobs and reduce energy costs in low income communities. OFN has been
accepting applications from CDFIs interested in low-cost (as low as 3%),
long-term (up to 10 years) loans to finance energy efficiency improvements
for building owners. In addition to direct lending to CDFIs, OFN may
participate with CDFIs on loans to borrowers who meet the program criteria.
As of Q4 2014, OFN closed four energy efficiency loans with outstanding
balances totaling $4.25 million.
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Strategic Initiatives
Strategic Initiatives develops and executes key industry initiatives that increase
capital, resources, capacity, and/or visibility for the opportunity finance industry.
Strategic Initiatives works on initiatives that are cross-functional (involving several
OFN departments) and multi-year.
The Wells Fargo NEXT Awards for
Opportunity Finance recognizes and
rewards high-performing CDFIs that
demonstrate compelling strategies to
expand coverage in low-income, low-wealth,
and other disadvantaged communities. In
2014, the NEXT Awards subtheme was The
Future of Housing Finance, and partners
included Wells Fargo, the MacArthur
Foundation, and the Kresge Foundation. The
NEXT Awards awarded a total of $8.35
million in 2014 to the NEXT Opportunity Awardees—Florida Community Loan Fund,
New Jersey Community Capital, and Rural Community Assistance Corporation—and
the Seed Capital Awardee, Impact Seven. OFN celebrated the accomplishments of
these Awardees at the NEXT Awards ceremony at the OFN Conference. At the
ceremony, OFN also announced a new NEXT partner for 2015, Prudential, and a new
theme of Consumer Financial Services. Please visit nextawards.org to read
success stories, read press releases, and watch videos of Awardees.
Create Jobs for USA. In November 2011, OFN partnered with Starbucks to launch
Create Jobs for USA, which mobilized donations from individuals, Starbucks, and
other corporations and small businesses to provide capital grants to CDFIs to support
job creation and retention. The Create Jobs for USA Fund, housed within OFN,
awarded 120 CDFIs with capital grants. Since the Fund’s inception, it has achieved
the following:
$15+ MM
Donations from more than 800,000 individuals and corporations
$106+ MM
Total supported lending to community businesses
5,000+
Jobs created and retained
OFN is publishing a series of three reports related to the results of and lessons
learned from Create Jobs for USA. OFN published the first paper, “Six Lessons
Learned from Create Jobs for USA,” in June 2014 and the second paper, "CDFI
Practices in Jobs Data Collection and Tracking: Lessons Learned from Create Jobs for
USA," in October 2014. Please visit ofn.org/create-jobs-usa to read the papers and
learn more about the initiative.
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Performance Counts. Performance Counts is an industry-led collaborative effort to
develop industry standards and best practices around financial statements and
financial management, and serve as an industry forum for sharing information,
documents, and ideas on these topics. In 2014, Performance Counts published its
second paper on "CDFI Portfolio Reporting: Definitions, Accounting Treatment, and
Reporting Guidance" and launched an online community for CFOs and other financial
professionals from CDFIs to facilitate exchange of documents, ideas, resources, best
practices, and other information. Please visit the Performance Counts webpage to
read the paper.
Talent Development. OFN’s emerging strategy for talent development seeks to
recruit, train, and retain a qualified and capable work force for the opportunity
finance industry for the next ten to twenty years. OFN’s talent strategy has four
components: Leadership, Diversity, Education, and Career Development. In 2014,
OFN partnered with Carsey School of Public Policy at University of New Hampshire in
to offer a new training course on the fundamentals of the CDFI industry. OFN also
developed new resources to expand university and CDFI relationships, available
here. OFN partnered with NYU's Stern undergraduate business school to develop and
pilot Stern’s Opportunity Finance Program, which included placing ten students at
CDFIs in summer 2014.
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Public Policy
OFN’s “2014 CDFI Opportunity Agenda”
continues to pursue three areas: CDFI
Resources, CDFI Participation and Access,
and CDFI Operating Environment. In
addition to these issues, OFN’s public
policy work also focuses on Member
engagement, the participation of CDFIs in
OFN’s policy and advocacy work, and the
support of Members in being effective
advocates.
The flurry of legislative activity around the end of the 113th Congress late in 2014
brought significant activity to issues on the CDFI Opportunity Agenda. Congress and
the Administration took final action on:
Appropriations for the CDFI Fund, providing $230.5 million for the
program for FY 2015—a $4.5 million increase over the prior year. The bill
included $152.4 million for Financial Assistance and Technical Assistance
awards, $15 million for Native CDFIs, $18 million for the Bank Enterprise
Award Program, and $22 million for Healthy Foods Financing. It also waived
the match requirements for the Native American, Small and Emerging CDFI
Assistance, and Healthy Foods Financing components.
Continuation of the CDFI Bond Guarantee Program through FY 2015 at
$750 million, extending access to an important new resource for CDFIs.
A one-year extension of the New Markets Tax Credit Program with
$3.5 billion in annual credit authority provided for 2014.
Funding for the Capital Magnet Fund. Federal Housing Finance Agency
Director Mel Watt directed Fannie Mae and Freddie Mac to begin contributions
to fund the Capital Magnet Fund, a program administered by the CDFI Fund to
support affordable housing and related economic development. A version of
the CMF was also included in the housing finance policy reform bill considered
by Senators, but legislative activity stalled this summer.
OFN also worked to support CDFI access to programs across the federal government,
talking with or weighing in on issues at the Small Business Administration, the
Department of Commerce, and the Department of Housing and Urban Development.
OFN’s ongoing advocacy and information-sharing around the Federal Home Loan
Bank System supported an increase in the number of non-regulated CDFI Members
from 18 to 29 in 2014.
In 2014, OFN built the groundwork for expanding its state-level advocacy in 2015.
OFN published the annual State Legislation and Advocacy Report, highlighting CDFI
coalition-building activity, advocacy, and programs to which CDFIs secured new or
Report to Investors
5
increased access. OFN staff have worked with CDFIs in California, Michigan, and
Pennsylvania organizing around policy initiatives. This assessment of state-level
strategy has also played out in OFN’s continued work on the State Small Business
Credit Initiative.
All of OFN's policy and advocacy activity was informed by the work and activity of
involved Member CDFIs. The highlight of OFN’s grassroots work was the May
Advocacy Day, which featured a 300% increase over 2013 in the number of nonBoard activists. Participants in 2014 included Board Members and a group of 49
individuals from 44 CDFIs varying in size and focus. These individuals attended 95
meetings, mostly on Capitol Hill with leaders of committees considering issues
impacting CDFIs, but also with the Board of Governors of the Federal Reserve, the
Small Business Administration, the Office of the Comptroller of the Currency, and the
Federal Housing Finance Administration.
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Knowledge Sharing
Knowledge Sharing transforms the CDFI field with
training, research, and analysis. In 2014, Knowledge
Sharing produced three of OFN’s most widely
recognized programs: the annual OFN Conference,
the annual Small Business Finance Forum, and the
Citi Leadership Program for Opportunity Finance.
From October 14-17, OFN held the 30th annual
Opportunity Finance Network Conference in Denver, CO, which featured more
than 60 breakout and networking sessions and attracted more than 1,100 attendees,
including representatives from CDFIs, banks, foundations, and government. The
opening plenary, President and CEO Mark Pinsky’s State of the Industry speech, and
table discussions at OFN Connect, a plenary meeting, all focused on diversity,
inclusion, and equity in the CDFI industry, kicking off a bold initiative to address this
issue at OFN and at CDFIs across the industry. Attendee feedback was
overwhelmingly positive, though there were a few, but not unexpected, critics.
From June 9-10, OFN held the third annual Small Business Finance Forum in
Chicago. Supported by the Goldman Sachs Foundation and Goldman Sachs 10,000
Small Businesses, the Surdna Foundation, and Capital One, the Forum attracted 140
representatives from 64 CDFIs, mission-driven lenders, and other organizations
involved in small business finance. The Forum—the only CDFI industry event that
focuses exclusively on the small business sector—offered CDFI small business
lenders a unique opportunity to network with, learn from, and do business with each
other, federal funders, and other small business experts. Attendees discussed a
range of issues including today’s predatory environment for small business loans, the
SBA’s Community Advantage Program, and how CDFIs can collaborate with state and
local governments to enhance their small business programs.
In 2014, OFN launched the two-year Citi Leadership Program for Opportunity
Finance pilot program—an industry-wide talent development initiative designed to
help new leaders, capitalize on the experience of current leaders, and build a
leadership that reflects the diverse communities CDFIs serve. Funded by the Citi
Foundation, the program cultivates leadership skills at three career stages:
Emerging, Mid-Career, and Executive. 50 selected Leaders held in-person meetings
in Philadelphia and at the OFN Conference, where they learned what it takes to be a
transformational leader in the CDFI industry. OFN worked with the Wharton School of
the University of Pennsylvania to develop the program’s unique leadership
curriculum, which included mountaineering case studies, outdoor experiences,
classroom discussions, and conference calls with peers. In program evaluations,
leaders indicated that they learned new skills and ways of thinking, and greatly
appreciated focusing on their own development as leaders while forming lasting
bonds with other leaders in the industry. In December, OFN conducted a competitive
application process and selected 48 leaders for the 2015 class of the program.
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Strategic Consulting
OFN has provided consulting services to CDFIs and their partners for more than 20
years. OFN’s Strategic Consulting practice provides a suite of services aligned with
the needs of clients that include: 1) Industry Capacity Builders, such as government
agencies or large CDFI investors; 2) CDFI Investors, such as banks, foundations, and
socially-responsible investors; and 3)
Existing or Emerging CDFIs, which hire OFN
to design strategies or implement tactics
related to entering the CDFI industry or
achieving high performance.
In 2014, Strategic Consulting worked on
engagements with major foundations,
financial institutions, nonprofits, the federal
government, social investors, and others.
Highlights include:
Capacity Building in Baltimore. Supported by the Annie E. Casey
Foundation, a project to strengthen the economic development infrastructure
of Baltimore CDFIs remains on target. In addition to regularly scheduled
roundtable convenings, Baltimore CDFIs were represented at community
events and dedicated OFN staff began conducting one-on-one meetings,
which have led to the identification of common themes among participating
Baltimore CDFIs. These themes will inform future roundtable meeting
discussions and initiatives. As a result of these findings, OFN is actively
scoping one-to-one technical assistance engagements, and is developing a
website to broaden the profiles of these Baltimore CDFIs. OFN expects to
launch the website in early spring 2015.
Goldman Sachs 10,000 Small Businesses Financing Initiative. The first
year of this three-year initiative, designed to support a significant increase in
small business financing by CDFIs and other mission-driven lenders,
concluded with the selection of the 24 mission-driven small business lenders
for the Small Business Finance Collaborative. The Finance Collaborative builds
on the concepts introduced during three two-day national training workshops
for mission-driven small business lenders held in the summer of 2014.
Workshop participants included 115 small business lending professionals
representing 85 lenders from around the country, and participation in a
summer workshop was a prerequisite for Finance Collaborative applicants.
Finance Collaborative participants, chosen through a competitive process, will
receive intensive technical assistance and participate in peer-learning
opportunities over two years to create and implement ambitious and
customized growth plans to dramatically increase their small business lending
to underserved communities. The Finance Collaborative cohort will contribute
to learnings and resources that will benefit the expansion of responsible
financial services to small businesses in the United States.
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Strategic Communications
Strategic Communications pursues
awareness, visibility, and reputationbuilding for the opportunity finance field
by crafting a breathtaking brand for OFN
and the CDFI industry, telling OFN’s story
via public relations and corporate
communications, connecting Members and
Partners to the brand, driving integrated
marketing campaigns, and attracting
broad audiences—including policy makers,
corporations, and consumers—to lay the
foundation for the opportunity movement.
OFN seeks to make CDFIs a household resource. By promoting a CDFI brand
with broad appeal, OFN will drive more capital, policy change, and partnerships to
support CDFIs and create positive social impact. OFN’s brand is “opportunity
finance.” OFN’s brand promise is: “We believe in opportunity. For all.”
Strategic Communications builds the brand. In 2014, Strategic Communications
completed a refresh of OFN’s corporate identity and extended OFN’s new brand to
OFN’s business cards, data sheets, PowerPoint templates, and other collateral.
Strategic Communications also published a Style Guide and trained staff on
branding, and instituted a Brand Hero Award to recognize staff who live OFN’s brand
values every day. Three staff received recognition in 2014.
OFN’s Public Relations work provides OFN and CDFIs with national visibility.
In 2014, OFN earned 300 high-quality media placements in trade and mainstream
media, including the Wall Street Journal, NBC News Latino, and PBS Newshour.
To illustrate the impact of CDFIs, Strategic Communications curates and
produces Borrower Stories. In 2014, OFN produced 17 new Borrower Stories to
illustrate CDFI impact in diverse communities, including small businesses in
Philadelphia, PA, San Francisco, CA, and Jackson, MS; facilities in Omaha, NE, Las
Vegas, NV, and Torrington, CT; and affordable housing in Gary, IN, and Kansas City,
MO. Stories appear online and in OFN’s policy and media outreach efforts throughout
the year.
Strategic Communications connects OFN Members to the brand. In 2014, OFN
created cdfihistory.ofn.org, an archive of 30 years of CDFI history that features three
CDFIs Making History videos, more than 45 oral histories, as well as documents
and photos from the past 30 years. OFN also updated or produced 152 total Member
Profiles, key one-page summaries of individual Members’ impact numbers and
success stories. OFN delivered customized Brand videos to 19% of its membership.
Strategic Communications publishes industry news via OFN channels. In
2014, OFN drove a 75% growth in traffic (4,400 to 7,700 users) to its primary
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website OFN.org. OFN published 11 issues of its monthly newsletter,
Opportunities, and grew subscribers 67% (1,994 to 3,338 users). CDFI Connect,
OFN’s mobile news service for CDFIs, has maintained a daily three-story minimum
since its inception in 2013. OFN features regular posts on social media, and has more
than 7,000 followers across its social channels. It also manages an active listserv,
CDB-L, which has 4,400 subscribers and experiences daily postings.
Strategic Communications delivers integrated marketing campaigns to drive
results for OFN’s key initiatives. The 2014 OFN Annual Conference featured a
“Learn. Join. Lead” theme, which drove high attendance and engagement via a
postcard, microsite (7,000 users), emails, and an onsite, branded visual experience.
Strategic Communications also supported the Youth Opportunity Pledge, 2014 Wells
Fargo NEXT Awards for Opportunity Finance, Goldman Sachs 10,000 Small
Businesses Financing Initiative, Citi Leadership Program for Opportunity Finance, and
Advocacy Day with carefully crafted key messages and outreach programs.
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Appendix A: Financial Performance
Attached are OFN's unaudited financial statements as of 12/31/14. A highlight of
financial performance based on the unaudited financial statements is as follows:
Operating Performance. For the quarter ending 12/31/14, OFN posted a
higher than budgeted unrestricted operating surplus of $288M (change in
unrestricted net assets from operations before unrealized gains/losses). In
2014, OFN budgeted a $218M or 2% operating surplus. For the quarter
ending 12/31/14, OFN had a self-sufficiency ratio of approximately 66.3%,
which represents the percentage of operating expenses (excluding passthrough grants) that were covered though earned income sources. For the
quarter, OFN generated $8.9 million in unrestricted operating revenue (net of
interest expense and loan loss reserves), which included approximately $5.25
million in net earned income and $3.66 million in grants/donations (including
net assets released from restriction). Of the net earned income,
approximately 40.6% is from net financing income and the balance is
membership dues and fees from Consulting, Create Jobs for USA, Knowledge
Sharing, and other programs.
Balance Sheet. As of 12/31/14, OFN’s total assets were $125 million,
representing an approximate $13 million or 12% increase from FYE 12/31/13.
OFN's net asset ratio remained strong at 38.4% as of 12/31/14, and OFN's
adjusted net asset ratio (which excludes temporarily restricted net assets for
operations and pass-through grants) was 36.7% as of 12/31/14.
Portfolio Performance. As of 12/31/14, OFN’s loans and investments
outstanding were approximately $105.9 million, representing an increase of
$8 million from 9/30/14. In addition, OFN had an additional $4.75 million in
loan and investment commitments as of 12/31/2014. OFN's allowance for
loan losses represented 3.31% of Gross Loans and Investments, as of
12/31/2014. OFN continues to re-evaluate the portfolio regularly and adjust
risk ratings and loan loss reserves as appropriate. OFN currently has no
delinquencies greater than 30 days, and OFN has not experienced a chargeoff in its financing history.
Credit Rating. In July 2013, OFN was rated for the first time by Aeris
(formerly known as CDFI Assessment and Ratings System [CARS], Inc), an
external credit rating agency for the CDFI industry. OFN was awarded a
1AAA+ rating, the highest rating possible, awarded to less than 5% of the
CDFI industry. In July 2014, Aeris completed its annual rating review process.
OFN maintained its 1AAA+ rating.
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Appendix B: Organizational Update
OFN’s core senior management team and Board of Directors remain strong.
Senior Staff additions. Three new Executive Staff
members were hired during 2014. Nancy Santiago
Negrón started her role as Chief External Affairs
Officer on June 16. Nancy joins OFN from the
Obama Administration, where she has served in
senior positions at the Department of Labor and
Department of Education. She brings exceptional
communications, management, team building,
partnership, policy, and philanthropic experience.
Her career has centered on her commitment to
creating opportunities for low-income, low-wealth,
and other disadvantaged people and communities.
Robin Odland filled the Executive Vice President,
Financial Services vacancy during August. Robin
had previously led OFN’s business development activity in Financial Services
for the past two years and has more than twenty-five years of experience in
the financial services industry, including at the National Cooperative Bank and
Capmark. He has led the rollout of OFN’s New Markets Tax Credit and Healthy
Food Financing Programs, and helped manage completion of both OFN’s 2013
and 2014 Bond Guarantee applications.
Liz Lopez joined OFN as the Executive Vice President, Public Policy in October.
Liz has eight years of private sector experience advising clients in the
formulation of national legislative policy and building strong relationships with
internal and external partners to achieve clients’ objectives. Liz has regularly
worked with House and Senate leadership, the minority caucuses (Asian,
Black, Hispanic, and Native American) and other key Washington
stakeholders. She has assisted clients in lobbying efforts primarily in the
areas of appropriations, education, tax, transportation, and
telecommunications.
Board of Directors. During Q2 2014, Eric Belsky resigned from his position
on the Board of Directors. Eric accepted a position with the Board of
Governors of the Federal Reserve and as a result resigned from his outside
affiliations. Eric was a valued member of the Board since 2010.
At the October 2014 Annual Conference in Denver, CO, OFN Members elected
two (2) Board Members from seven (7) nominees:

Chrystel Cornelius, Executive Director, First Nations Oweesta
Corporation

Shane Jett, Executive Director/CEO, Citizen Potawatomi Community
Development Corporation
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Appendix C: Membership
OFN welcomed 19 new Members in 2014, bringing Membership to a total of 251.
Affordable Homes of South Texas – McAllen, TX
Border Federal Credit Union – Del Rio, TX
Building Hope – Washington, DC
Capital Fund Services – Lansing, MI
Capital Good Fund – Providence, RI
City First Enterprises – Washington, D.C.
Communicating Arts Credit Union – Detroit, MI
DGE Federal Credit Union – Washington, DC
ECDC Enterprise Development Group – Arlington, VA
First Children’s Finance – Minneapolis, MN
Guadalupe Federal Credit Union – Sante Fe, NM
Hawaii First Federal Credit Union – Kamuela, HI
Lower Valley Credit Union – Sunnyside, WA
MariSol Federal Credit Union – Phoenix, AZ
Metro Community Development – Flint, MI
NorthCoast Federal Credit Union – Bellingham, WA
Tiwa Lending Services – Yselta Pueblo, NM
Union County Economic Development Corporation – Cranford, NJ
Wisconsin Native Loan Fund – Lac du Flambeau, WI
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Appendix D: Detailed Financial Information
Unaudited Financial Statement
Portfolio Monitoring Report
Financing Fund Report
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14
OPPORTUNITY FINANCE NETWORK
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
PERIOD ENDED DECEMBER 31, 2014 (UNAUDITED)
WITH COMPARATIVE INFORMATION FOR 2013 (AUDITED)
As of December 31, 2014 (Unaudited)
GENERAL
FINANCING
CJ4USA
As of December 31, 2013 (Audited)
TOTAL
GENERAL
FINANCING
CJ4USA
TOTAL
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Interest and other receivables
Current portion of grants receivable
Short-term investments
Current portion of loans receivable
Allowance for loan losses, current
TOTAL CURRENT ASSETS
$
NONCURRENT ASSETS
Loans receivable - net of current portion
Community development investments
Amortized loan fees
Allowance for loan losses, noncurrent
Net Loans & Investments Receivable - noncurrent
$
-
Grants receivable - noncurrent
Long term investments
Equity investments in CDFIs
Furniture and equipment, net
TOTAL NONCURRENT ASSETS
OTHER ASSETS
TOTAL ASSETS
9,735,585
324,492
25,000
21,678
10,106,755
4,870,867
3,300,853
253,205
6,333,913
(230,634)
14,528,204
$
95,390,004
4,000,000
(6,665)
(3,258,139)
96,125,200
-
4,103,002
159,143
100,387,345
-
161,626
161,626
85,641
875
875
14,607,327
324,492
3,325,853
274,883
6,333,913
(230,634)
24,635,834
-
95,390,004
4,000,000
(6,665)
(3,258,139)
96,125,200
$
3,595,351
469,088
546,834
600,133
5,211,406
$
8,137,412 $
3,350,000
110,076
5,826,112
(195,111)
17,228,489
1,319
1,319
11,734,082
469,088
3,896,834
710,209
5,826,112
(195,111)
22,441,214
-
80,855,216
4,000,000
(9,945)
(2,936,240)
81,909,031
-
80,855,216
4,000,000
(9,945)
(2,936,240)
81,909,031
-
3,155,565
3,934,995
407,679
89,407,270
-
-
3,155,565
3,934,995
407,679
153,537
89,560,807
51,545
-
4,103,002
159,143
161,626
100,548,971
85,641
$ 125,270,446
$
5,416,488
$
106,635,759
$
1,319
$
112,053,566
$
$
$
$
$
$
$
$
546,959
60,689
607,648
$
$
$
$
1,855,000
1,855,000
$
$
$
$
-
$
$
$
$
546,959
60,689
1,855,000
2,462,648
$ 10,354,022
$
114,915,549
$
875
$
$
$
$
$
$
$
$
335,000
15,000,000
15,335,000
$
$
$
$
-
153,537
153,537
51,545
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable and accrued expenses
Deferred Revenue
Grants Payable
Current portion of notes payable
TOTAL CURRENT LIABILITIES
NONCURRENT LIABILITIES
Notes payable net of current portion
Other Liabilities net of current portion (Note 1)
432,094
5,305,000
5,737,094
767,094
5,305,000
15,000,000
21,072,094
-
53,085,000
3,000,000
-
53,085,000
3,000,000
-
58,595,000
3,000,000
-
58,595,000
3,000,000
TOTAL LIABILITIES
5,737,094
71,420,000
-
77,157,094
607,648
63,450,000
-
64,057,648
NET ASSETS
Unrestricted
Unrestricted - Designated for Financing
Temporarily restricted - Operations
Temporarily restricted - Pass Thru Grants
Temporarily restricted - Financing
3,585,853
1,031,075
-
4,344,297
23,587,147
1,787,531
13,776,574
875
-
7,930,150
23,587,147
1,031,075
1,788,406
13,776,574
3,407,717
1,401,123
-
1,192,082
23,507,601
2,500,666
15,985,410
1,319
-
4,599,799
23,507,601
1,401,123
2,501,985
15,985,410
TOTAL NET ASSETS
TOTAL LIABILITIES AND NET ASSETS
4,616,928
$ 10,354,022
43,495,549
$
114,915,549
$
875
48,113,352
875
$ 125,270,446
KEY RATIOS
Net Assets/ Total Assets
(Net Assets + EQ2)/ Total Assets
Adjusted Net Asset Ratio (Note 2)
Months of Operating Liquidity (Note 3)
4,808,840
$
5,416,488
38.4%
40.8%
36.7%
5.5
Note 1: Other liability is Equity Equivalents from 1 investor.
Note 2: Adj Net Asset Ratio = (Unrestricted Net Assets + Temporarily Restricted NA for Financing) / (Total Assets - Net Assets for Pass-Through Grants)
Note 3 : Months of Operating Liquidity = Cash & Cash Equiv + ST inv in Gen'l Fund /Projected Average Monthly Operating Exp (excl. LLR)
Consolidated financial statements include Opportunity Finance Network, NCCA General Partner LLC, and OFN GP LLC
2/16/2015 11:47 AM
43,185,759
$
106,635,759
1,319
$
1,319
47,995,918
$
112,053,566
42.8%
45.5%
40.2%
5.2
OPPORTUNITY FINANCE NETWORK
CONSOLIDATED STATEMENT OF ACTIVITIES
YEAR-TO-DATE DECEMBER 31, 2014 (UNAUDITED)
WITH COMPARATIVE INFORMATION FOR 2013 (AUDITED)
2014 (Unaudited)
TEMPORARILY
UNRESTRICTED RESTRICTED
TOTAL
2014 BUDGET
2013 (Audited)
TEMPORARILY
UNRESTRICTED
RESTRICTED
TOTAL
OPERATING ACTIVITIES
REVENUE AND SUPPORT
Grants and Donations
Grants for Operations
Donations & Other Contributions
Net Assets Released from Restrictions - LLR
Net Assets Released from Restrictions - Operations
Net Grants and Donations
$
NET EARNED INCOME
Interest on Loans
Interest on Portfolio CDs
Interest Expense and Fees
Loan Loss Reserve Expense
Net Financing Income
Dues
Fees - Consulting
Fees - Conference
Fees- Contract Income from CARS
Fees - Financial Services
Fees - NMTC
Fees - Knowledge Sharing
Fees - Strategic Initiatives
Fees - Other (incl. expense reimbursement income)
Investment Income - Interest
Investment Income - Realized Gains/Losses
NET EARNED INCOME
1,345,000
607
312,045
2,001,572
3,659,224
$
3,405,597
120,034
(1,033,518)
(357,422)
2,134,691
349,525
1,116,837
663,317
92,750
411,809
183,751
57,625
82,414
13,730
135,467
9,528
5,251,444
TOTAL NET REVENUE AND SUPPORT
8,910,668
OPERATING EXPENSES - FUNCTIONAL LINE ITEM
Personnel & Benefits
Contractor
Direct Program Expenses
Occupancy Expense
CARS Operating Grant
Indirect Expense
TOTAL OPERATING EXPENSES (exc. Int Exp & LLR)
4,242,895
814,290
2,029,509
364,609
200,000
971,001
8,622,304
CHANGE IN OPERATING NET ASSETS BEFORE
UNREALIZED GAIN OR LOSS
-
(673,670)
-
(673,670)
(30,687)
6
NET CHANGE IN OPERATING NET ASSETS
-
257,683
2,984,947
607
2,985,554
$
3,405,597
120,034
(1,033,518)
(357,422)
2,134,691
349,525
1,116,837
663,317
92,750
411,809
183,751
57,625
82,414
13,730
135,467
9,528
5,251,444
-
288,364
Unrealized Gains/losses- investments in idle funds
Net unrealized gains (losses) - investments in CDFIs
1,639,947 $
(312,045)
(2,001,572)
(673,670)
(673,670)
409,980
4,123,208
4,533,188
$
3,187,216
120,000
(992,473)
(480,095)
1,834,648
433,622
1,523,946
608,748
126,000
712,500
264,250
41,500
70,376
750
93,370
5,709,710
1,275,000
94,802
242,463
1,922,425
3,534,690
$
3,034,187
120,025
(1,134,194)
(273,014)
1,747,004
322,706
1,454,404
557,382
138,000
24,430
37,381
54,327
110,438
3,136
171,460
17,226
4,637,894
2,172,334 $
(242,463)
(1,922,425)
7,446
-
3,447,334
94,802
3,542,136
3,034,187
120,025
(1,134,194)
(273,014)
1,747,004
322,706
1,454,404
557,382
138,000
24,430
37,381
54,327
110,438
3,136
171,460
17,226
4,637,894
-
8,236,998
10,242,898
8,172,584
7,446
8,180,030
4,242,895
814,290
2,029,509
364,609
200,000
971,001
8,622,304
4,737,798
1,164,807
2,751,921
355,913
200,000
814,285
10,024,724
3,956,699
1,074,782
2,045,409
330,410
654,984
8,062,284
-
3,956,699
1,074,782
2,045,409
330,410
654,984
8,062,284
(385,306)
218,174
110,300
7,446
117,746
(30,687)
6
-
(155,040)
3
-
(155,040)
3
(415,987)
218,174
(44,737)
7,446
(37,291)
CAPITAL AND PASS-THROUGH ACTIVITIES
REVENUE AND SUPPORT
Grants for Financing - Loan/Investment Capital
Grants and Donations for Pass-thru Grants
Pass-Through Income CARS
Other Contributions
Net Assets Released from Restrictions - Capital
Net Assets Released from Restrictions - Pass-thru Grants
TOTAL NET REVENUE AND SUPPORT
EXPENSES
Pass-Through Expenses - CARS
Pass-Through Grants to CARS
Pass-Through Grants to CDFIs (1)
TOTAL EXPENSES
NET CHANGE IN CAPITAL AND PASS-THROUGH NET ASSET
TOTAL CHANGE IN NET ASSETS
TOTAL NET ASSETS - BEGINNING OF YEAR
TOTAL NET ASSETS - END OF PERIOD
$
1,147,000
893,430
2,005,215
961,513
5,007,158
893,430
961,513
1,854,943
3,152,215
3,409,898
28,107,399
$ 31,517,297
KEY RATIOS
Unrestricted Operating Margin (excl. unreal. & in-kind)
Earned Operating Revenue (gross) /Total Exp (excl pass-thru & unreal. & in-kind
Gross Spread on Total Funds
Gross Spread on Financing Fund Outstandings
$
- $
247,935
(2,005,215)
(961,513)
(2,718,793)
(2,718,793)
(3,392,463)
19,888,518
$ 16,496,055
1,147,000
247,935
893,430
2,288,365
850,000
850,000
$
15,472
740,138
2,166,966
2,922,576
893,430
961,513
1,854,943
850,000
850,000
739,466
950,000
1,216,966
2,906,432
433,422
-
16,144
17,435
218,174
47,995,917
$ 48,013,352
47,995,917
48,214,091
3.2%
66.3%
2.7%
2.9%
Note 1: Pass-through grant expense includes pass-through grants for the NEXT Awards and Create Jobs for USA.
Consolidated financial statements include Opportunity Finance Network, NCCA General Partner LLC, and OFN GP LLC
2/16/2015 11:46 AM
$
$
(28,593)
$
28,135,992
28,107,399
$
- $
332,673
390,000
(2,166,966)
(1,444,293)
-
739,466
950,000
1,216,966
2,906,432
(1,444,293)
(1,428,149)
(1,436,847)
21,325,365
$ 19,888,518
1.4%
63.8%
1.9%
2.9%
15,472
332,673
1,130,138
1,478,283
(1,465,440)
$
49,461,357
47,995,917
OFN Portfolio Report - Q4-2014
12/31/2011
12/31/2012
12/31/2013
12/31/2014
LOANS - Oustanding
CDFI Loans
Participation Loans
Total Loans
$ 66,492,625
$
3,685,072
$ 70,177,697
$ 73,757,060
$
4,600,228
$ 78,357,288
$ 80,143,538
$
6,537,791
$ 86,681,329
$
$
INVESTMENTS - Outstanding
Certificate of Deposit
Equity Investments
Total Investments
$
4,000,000
$
612,145
$ 4,612,145
$
$
$
$
$
$
$
$
$
TOTAL LOANS & INVESTMENTS ($) - Outstanding
TOTAL # OF BORROWERS
TOTAL # OF INVESTEES
$ 74,789,842
37
4
$ 83,012,411
37
4
$ 91,089,008
46
3
$ 105,883,060
69
1
Total Loan/Equity Commitments, not yet funded
$
$
$
$
PORTFOLIO COMPOSITION
Risk Rating (a)
Outstanding ($)
Borrower (#)
6,477,375
4,000,000
655,123
4,655,123
4,295,310
% of
Outstanding
4,000,000
407,679
4,407,679
5,303,109
% of
Outstanding
95,260,713
6,463,204
$ 101,723,917
4,000,000
159,143
4,159,143
4,754,914
% of
Outstanding
% of
Outstanding
$
0
0% $
0%
0
0% $
0%
0
0% $
0%
0
0%
0%
Strong ($)
Borrowers (#)
$
38,084,222
10
51% $
27%
30,695,651
8
37% $
22%
30,938,376
10
34% $
22%
41,812,361
21
40%
30%
Acceptable ($)
Borrowers (#)
$
22,748,475
18
31% $
49%
42,879,812
19
52% $
51%
52,136,785
26
57% $
57%
57,889,067
39
54%
57%
Acceptable with Care (formerly Watch) ($)
Borrower (#)
$
13,345,000
9
18% $
24%
8,781,825
10
11% $
27%
7,606,168
10
8% $
22%
6,022,489
9
6%
13%
Substantard ($)
Borrower (#)
$0
0
0%
0%
$0
0
0%
0%
$0
0
0%
0%
$0
0
0%
0%
Doubtful ($)
Borrower (#)
$0
0
0%
0%
$0
0
0%
0%
$0
0
0%
0%
$0
0
0%
0%
TOTAL (Loans + CD; Equity Investments excluded)
$ 74,177,697
Geography
Rural
Urban
$
$
30,516,380
44,322,697
41% $
59% $
28,160,123
54,852,288
34% $
66% $
26,050,000
64,631,329
29% $
71% $
35,009,143
55,972,868
38%
62%
Primary Type of Financing
Housing
Microenterprise/Business
Personal Development
Community Service
$
$
$
$
31,118,337
27,624,770
5,000,000
11,095,970
42%
37%
7%
15%
40,066,150
24,195,459
5,000,000
13,750,802
48%
29%
6%
17%
48,770,900
25,513,991
5,000,000
11,396,438
54%
28%
6%
13%
46,612,333
26,504,911
5,000,000
11,364,767
52%
30%
6%
13%
$
2,970,000
6
13,680,000
11
53,600,000
14
4%
19%
19%
35%
76%
45%
2,701,022
7
20,354,101
14
55,100,000
14
3%
20%
26%
40%
71%
40%
4,832,352
9
23,211,186
14
52,100,000
15
6%
24%
29%
37%
65%
39%
7,691,402
10
29,366,222
26
63,310,699
16
8%
19%
29%
50%
63%
31%
Size of CDFIs
Less than $20 million
Borrower (#)
Between $20 and $50 million
Borrower (#)
Greater than $50 million
Borrower (#)
$
$
$ amount of Largest Borrower (includes NEXT)
Largest borrower as % of loans/investments outstanding
Subordinated debt, Secondary Capital & Equity Investments/Equity Capital + EQ2 (b)
$ 82,357,288
$
$
$
$
$8,100,000
10.8%
6.5%
$ 90,681,329
$
$
$
$
$8,100,000
9.8%
7.0% < 30%
$ 105,723,917
$
$
$
$
$8,100,000
8.9%
6.4% < 30%
per policy
$8,100,000
7.8%
4.4% < 30%
per policy
per policy
PRODUCTION
$ amount in Pipeline (including loans approved but not closed)
# of loans in Pipeline (including loans approved but not closed)
Loans Closed - YTD
Green Financing Loans ($)
Green Financing Loans (#)
$
$
9,944,000
7
-
$
7,900,000
10
$
11,400,000
11
$
$
1,000,000
1
$
2,750,000
3
$
$
1,000,000
1
$
2,000,000
1
$
1,000,000
1
0
-
9,925,000
24
0
Healthy Food Financing Loans ($)
Healthy Food Financing Loans (#)
$
Other Loans ($)
Other Loans (#)
$
15,603,200
8
$
13,710,000
9
$
16,600,000
12
$
20,650,000
17
TOTAL LOANS CLOSED ($)
TOTAL LOANS CLOSED (#)
$
15,603,200
8
$
15,710,000
11
$
21,350,000
16
$
21,650,000
18
$
18,000,000
11
$
13,450,000
11
0
TOTAL LOANS CLOSED ($) (new loans only, excluding renewals)
PERFORMANCE
# of borrowers not in compliance with financial covenants
$ amount of loans > 30 days delinquent
Charge offs $
# of loans restructured in loan portfolio (c)
$ amount restructured in loan portfolio
2
$0
$0
1
$0
$0
2
$0
$0
0
$0
$0
1
$200,000
1
$150,000
1
$600,000
0
RESERVES FOR LOANS
Loan Loss Reserves ($)
Loan Loss Reserves (% of loans)
$
2,472,423
3.5%
$
2,741,840
3.5%
$
3,131,969
3.6%
$
3,443,318
3.4%
Opportunity Finance Network - 2014 Financing & Capitalization Summary Report
Capitalization Summary
Summary as of:
Debt Capital
Equity Equivalent Capital
Equity
Total Financing Fund Capital
$
$
$
$
LESS: Liquidity Reserve (7.5% of non-NEXT)
$
Total Capital Available
Actual
Interim
12/31/13
12/31/14
60,625,000
3,000,000
40,734,002
104,359,002
(2,521,875)
$
$
$
$
$
101,837,127
$
$
2,858,338
$
104,695,465
Loans & Investments Outstanding: Financing Fund
Loans & Investments Outstanding: NEXT Awards
Total Loans & Investments Outstanding
Commitments: Financing Fund
Total Outstanding and Committed
$
$
$
$
$
Capital Available for Financing (before adjustments)
$
Committed Loans / Lines of Credit
Investor Repayments (within 180 days):
LESS: Additional Liquidity Reserve allocation
Total Adjustments
$
$
$
$
Capital Available for Financing (after adjustments)
$
PLUS: Loan Loss Reserves
Total Financing Capital Available (including LLR)
Financial Health Ratios
$
Actual
12/31/12
60,450,000
3,000,000
40,685,093
104,135,093
(2,133,750)
$
$
$
$
$
68,085,000
3,000,000
41,708,018
112,793,018
(2,331,375)
102,001,343
$
$
3,131,354
$
3,488,773
$
105,132,697
$
113,950,416
38,012,411
45,000,000
83,012,411
4,254,506
87,266,917
$
$
$
$
$
38,589,008
52,500,000
91,089,008
9,303,109
100,392,117
$
$
$
$
$
45,883,060
60,000,001
105,883,061
4,255,534
110,138,595
17,428,548
$
4,740,580
$
3,811,821
$
$
$
$
8,500,000
(1,705,000)
(509,625)
6,285,375
$
$
$
$
9,000,000
(25,000)
(673,125)
8,301,875
25,730,423
$
11,025,955
$
110,461,643
7,600,000
(570,000)
7,030,000
10,841,821
Actual
Actual
Interim
12/31/12
12/31/13
12/31/14
0%
0%
3.44%
0%
0%
3.44%
0%
0%
3.29%
Financial Capital
- Equity as a % of Total Financing Capital
- Equity (including EQ2) as a % of Total Financing Capital
39.0%
41.9%
39.1%
42.0%
37.0%
39.6%
Lending Spread Analysis (excluding NEXT Awards)
- Weighted Average Lending Portfolio Return
- Weighted Average Cost of Capital
- Gross Lending Margin on Portfolio Outstandings
4.66%
1.74%
2.92%
4.61%
1.42%
3.19%
4.23%
1.34%
2.90%
Asset Quality
- Deliquency Ratio (>90 days + Non-accruals / Total Outstanding Loans)
- Charge Off Ratio
- Loan Loss Reserve (% of total loans outstanding)