PNC BANK INVESTS $20 MILLION IN LOCAL INITIATIVES SUPPORT CORPORATION TO FUEL GROWTH IN UNDER-RESOURCED COMMUNITIES NATIONWIDE

Rhea-AI Summary

PNC Bank invests $20 million in LISC to boost economic opportunity in rural counties and metro areas. The funding includes a 10-year $10 million EQ2 investment and a $10 million three-year term loan. The innovative funding aims to support community development efforts and attract private capital into under-resourced communities.

Financial Analyst

The $20 million investment by PNC Bank into LISC is a significant infusion of capital into community development, which can have broad implications for local economies. The dual nature of the investment, split between a 10-year Equity Equivalent (EQ2) investment and a more traditional term loan, highlights a strategic approach to funding. The EQ2 is particularly noteworthy as it functions similarly to equity, providing LISC with enhanced financial flexibility.

From a financial perspective, PNC Bank's investment may indicate a long-term strategy aimed at fostering economic growth in under-resourced areas, which could lead to an expansion in customer base and potential revenue streams. Moreover, this move might be seen as an investment in PNC's brand as a socially responsible entity, potentially attracting investors who prioritize corporate social responsibility in their investment decisions.

Economic Development Expert

The investment in LISC by PNC Bank represents a significant commitment to economic development in rural and metropolitan areas. The use of an EQ2 investment is particularly innovative, as it allows CDFIs to leverage capital in a way that mimics equity, giving them greater leeway to invest in long-term community projects without the immediate pressure of repayment that comes with traditional debt. This could lead to more sustainable community development and potentially create a model for other financial institutions to follow.

For the communities involved, this could mean improved access to capital for small businesses, particularly those owned by historically underserved demographics. The ripple effects of such investments often include job creation, increased economic activity and improved community services, which can contribute to overall economic stability and growth.

Market Research Analyst

Understanding the impact of PNC Bank's investment on the broader market requires analyzing the potential for community development investments to drive economic growth. Investments in small businesses and infrastructure within underserved areas can unlock market potential that traditional lenders may overlook. This can create a competitive edge for PNC Bank as a leader in community-focused investment.

Furthermore, the success of these investments could set a precedent for other financial institutions, potentially leading to an industry-wide shift towards more equity-like funding models for CDFIs. This would not only diversify the types of financial products available in the market but also could stimulate new economic activity in areas that have been historically underfunded.

Innovative Equity-Like Funding Will Support Long-term Community Investment Strategies

NEW YORK, March 28, 2024 /PRNewswire/ -- PNC Bank has invested $20 million in the Local Initiatives Support Corporation (LISC) to expand the organization's efforts to boost economic opportunity and growth in thousands of rural counties as well as across 38 metro areas in the United States.

PNC Bank's funding includes both a 10-year, $10 million Equity Equivalent (EQ2) investment as well as a more flexible $10 million three-year term loan. EQ2 is an innovative debt tool that offers nonprofit community development financial institutions (CDFIs) like LISC the chance to raise capital with features that are similar to an equity investment.

"We continue to see that patient, flexible and risk tolerant EQ2 financing has become an increasingly important lever for community lenders to attract additional private capital into under-resourced communities," said Rey Ocañas, managing director, PNC Community Development Banking. "With this 10-year commitment, PNC remains laser-focused on our efforts to strategically deploy low-cost capital into transformative initiatives that advance economic empowerment and prosperity where it's needed the most."

LISC is one of the country's largest community development organizations, and it will use PNC's capital to support a range of new and existing community investment efforts, such as small business programs for entrepreneurs without ready access to conventional financing—including those owned by women, people of color and veterans. PNC Bank and LISC have collaborated on a number of significant investments in recent years spanning retail, health, education, and job training centers, as well as quality affordable housing and services.

"With this capital, PNC has made a remarkable commitment to the well-being of families and communities, with a ripple effect that will support economic growth long into the future," said Michael Pugh, LISC CEO. "This is also a major investment in the infrastructure of community development," he added, "helping us support our local partners as they scale up proven strategies for social, economic and environmental impact."

About PNC Bank
PNC Bank, N.A., is a member of The PNC Financial Services Group, Inc. (NYSE: PNC). PNC is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.

About LISC
LISC is one of the country's largest community development organizations, helping forge vibrant, resilient communities across America. We work with residents and partners to close systemic gaps in health, wealth and opportunity and advance racial equity so that people and places can thrive. Since our founding in 1979, LISC has invested $29.7 billion to create more than 489,000 affordable homes and apartments, develop 81.4 million square feet of retail, community and educational space and help tens of thousands of people find employment and improve their finances. For more, visit www.lisc.org.

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SOURCE Local Initiatives Support Corporation (LISC)

What is the amount of investment PNC Bank made in LISC?

PNC Bank invested $20 million in the Local Initiatives Support (LISC).

What is the innovative debt tool mentioned in the press release?

The innovative debt tool mentioned is Equity Equivalent (EQ2) investment.

How will LISC utilize the capital from PNC Bank?

LISC will use the capital to support new and existing community investment efforts, including small business programs for entrepreneurs without ready access to conventional financing.

What type of organizations benefit from EQ2 financing?

Nonprofit community development financial institutions (CDFIs) like LISC benefit from EQ2 financing.

Who is the managing director of PNC Community Development Banking mentioned in the press release?

Rey Ocañas is the managing director of PNC Community Development Banking.