REPORT TO INVESTORS FY 2015 - CIC: Chicagoland's Leading ...The Annual Performance and Credit Review...

222 S. Riverside Plaza, Suite 2200, Chicago, IL 60660 (312) 258-0070 www.cicchicago.com

Annual Performance and Credit Review

And its Affiliate, Community Initiatives Inc. (CII)

The Annual Performance and Credit Review Committee was established by investors and board members to prepare an annual report on the state of CIC's

principal business for current and new investors.

REPORT TO INVESTORS

FY 2015

2

To: CIC Investors

This Performance and Credit Review reports on the lending activities and

programs of Community Investment Corporation and its affiliate,

Community Initiatives Inc., for FY 2015. The achievements of CIC and CII

are made possible by many investors, who, over the years have made CIC

the Chicago area’s leader in the rehabilitation and preservation of

affordable rental housing. CIC is committed to using your investments

effectively and efficiently. Thank you for your continued support.

Here are some of the highlights of FY 2015 that are more fully described

in the report:

Lending Programs

• CIC renewed the Multifamily Note Purchase Agreement (NPA)

with $265.7 million in commitments from 37 investors. This will

make $200 million available for multifamily lending over the next

five years.

• CIC provided $30 million in loans and grants to acquire, rehab, and

preserve 1,342 units of affordable rental housing and 35

commercial units in 25 Chicago communities and 3 suburbs, all of

which were affordable to households at or below 80% of area

median income.

• Of this total, CIC approved 53 loans for $23.1 million for 730 units

under the Multifamily NPA.

• CIC approved 11 Energy Savers loans for $627,000 to finance

energy conserving retrofits in buildings with 222 units and began

to administer On-Bill Repayment for multifamily properties.

• CIC began lending under the 1-4 Unit Rental Redevelopment Loan

Program. CIC approved $5.5 million in 12 loans for 105 rental

units.

• Multifamily delinquencies were reduced to 6.3% (from 8.1% in FY

2014).

• There were $2 million in losses on an overall investor portfolio of

$225 million. All losses were absorbed by the Investor Loan Loss

Reserve and no losses were passed through to participating

investors.

• Investors in the Multifamily Loan Program received a return of

2.6%, 1.8% above the rolling three-year average for Treasury

Notes.

Community Development Activities

• Property Management Training provided training for 1405

participants, bringing the total of people trained since 1998

to more than 15,000.

• 81 buildings with 1,474 units recovered under the Troubled

Buildings Initiative, bringing its total to 488 buildings with

9,807 units since 2003.

• CII acquired and transferred 43 buildings with 211 units to

new owners to rehab and preserve.

• CII continued to coordinate redevelopment efforts in West

Woodlawn and East Chatham.

• The Preservation Compact worked with public agencies to

preserve affordability in 5 publicly assisted properties with

700 units.

• On a national level, CIC was instrumental in raising the issue

of credit availability for small multifamily buildings, which led

to new programs and goals for FHA, Fannie Mae, and Freddie

Mac.

Financial Condition and Performance of CIC and CII

• CIC achieved a Net Operating Surplus of $276,000 and an

increase in Unrestricted Net Assets of more than $2 million to

$26.1 million. Overall Net Assets increased to $29.1 million.

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Table of Contents Page

Board and Committee Members 4

Overview and Organization 5-7

CIC Lending Programs 8-18

FY 2015 Lending Report 9-10

Multifamily Loan Program 11-16

Energy Savers Program 17

1-4 Unit Lending Program 18

CIC/CII Community Development Activities 19-22

Property Management Training 20

Community Initiatives Inc. (CII) 21-22

Troubled Buildings Initiative

Distressed Condominium Program

Acquisition and Disposition Program

Micro Market Recovery Program

The Preservation Compact 23

Financial Condition and Performance of CIC/CII 24-26

Exhibits

1. List of Purchasers Participating in the CIC Multifamily NPA 27

2. Management Structure 28

3. CIC Multifamily Program by Fiscal Year of Approval 29

4. Multifamily Program Flex Fund 30

5. Multifamily Program Outstanding and Delinquency Rates 31

6. Multifamily Program Delinquencies by Year of Approval 32

7. CIC Loan Underwriting and Loss Reserve Policy for Multifamily Loans 33

8. Loan Losses on CIC Loans Originated since 1984 34

9. Loss Reserve Balances 35

10. Multifamily Investor Net Return on Notes 36

11. CIC/CII Consolidated Operating Revenue and Expenses 37

12. CIC/CII Consolidated Net Assets 38

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PERFORMANCE AND CREDIT REVIEW COMMITTEE MEMBERS Timothy Hadro, Byline Bank David Hinman, Fifth Third Bank

R. Patricia Kelly, TCF Bank Robert Webster, Sycamore Associates

John Markowski, CIC Michael Bielawa, CIC

Thomas Hinterberger, CIC Guiseppe Papavero, Controller, CIC

CIC BOARD MEMBERS

Mitchell Feiger, President, CEO, MB Financial Inc.* (Board Chair)

Susanne Cannon Karen Case, The Private Bank

David Dykstra, Wintrust Financial Corp.* Scott Ferris, BMO Harris

Timothy Hadro, Byline Bank David Hinman, Fifth Third Bank

R. Patricia Kelly, TCF Bank Saul Klibanow, Klibanow Strategic Consulting LLC

Robert Marjan, Urban Partnership Bank John Markowski, Community Investment Corp.*

John Mertz, Bank of America Patrick Nash

Javier Nunez, The Northern Trust Company* Andrew Salk, First Eagle Bank

Thurman Smith, PNC Community Dev. Bank* Daniel Watts, Forest Park National Bank & Trust

Robert Webster, Sycamore Associates* * Executive Committee Member

CIC MULTIFAMILY LOAN COMMITTEE

Martin Babbo, The Northern Trust Brooke Cullen, Wintrust Commercial Real Estate

Chas Hall, Leaders Bank Tania Kadakia, BMO Harris

Ken Kreisel, First Bank of Highland Park Michael McGovern, Associated Bank

David Patchen, Fifth Third Bank James Turner, The Private Bank

Stephen Gladden, Ill. Housing Dev .Authority** Tracy Sanchez, Chicago Dept. Planning and Dev. **

** Non-voting Member

CIC 1-4 UNIT PROGRAM LOAN COMMITTEE

Lynn Backofen, First Saving Bank of Hegewisch Brooke Cullen, Wintrust Commercial Real Estate

Faruk Daudbasic, First Eagle Bank Jim Huffan, Leaders Bank

Loretta Minor, BMO Harris Bank Morgan Kim, PNC Bank

Katherine M. Vanberschot, The Northern Trust Bank Terry Young, Urban Partnership Bank

CII BOARD MEMBERS (Affiliate Company)

Saul Klibanow, Klibanow Strategic Consulting LLC John Markowski, CIC

William Pileggi, Consultation and Arbitration Reinhard Schneider

Thurman Smith, PNC Community Dev. Bank Robert Webster, Sycamore Associates

5

Overview and Organization

• The Committee's twenty-third annual Performance and Credit

Review confirms that CIC knows its core business well and

remains centrally focused on its mission of stabilizing the

Chicago area's low and moderate income communities by

financing the acquisition and rehabilitation of affordable

multifamily housing stock safely and soundly while generating

a fair return to investors.

• Community Investment Corporation (CIC) is a not-for-profit

501(c)(3) corporation. Incorporated in 1973, CIC’s mission is to

be the leading force in neighborhood revitalization through

innovative financial programs. In pursuit of this mission, CIC

has become the leading lender for the acquisition,

rehabilitation, and preservation of affordable rental housing

throughout the Chicago metropolitan area. Since 1984, CIC has

provided $1.2 Billion to finance the acquisition and

rehabilitation of 55,000 units of rental housing in the Chicago

area. CIC provides one of the very few sources of capital for

redeveloping and maintaining affordable rental housing,

primarily located in low and moderate-income communities.

CIC exercises sound management and fiscal prudence in its

operations.

• CIC is managed as a self-sustaining Social Enterprise,

generating income through its operations to cover its costs and

generating an operating surplus while maintaining a focus on

its mission. The surplus gives CIC the means to initiate new and

expand existing programs. CIC has been certified by the U.S

Department of the Treasury as a Community Development

Financial Institution (CDFI) since 1996. In FY 2015, CIC received

a $750,000 grant from the CDFI Fund to aid CIC in its mission.

• CIC is a pooled risk lender. CIC’s successful programs are the

direct result of the long-term program support of the

Chicagoland investing institutions for CIC’s Multifamily Loan

Program. In FY 2015, CIC renewed the Multifamily Note

Purchase Agreement for another five years. CIC has been able

to maintain the strong support of its investors for the past 30

years by providing a fair return for their investment and not

passing through any losses since 2001. With the renewal of the

NPA, CIC will be able to continue to approve loans under the

renewed program through March 15, 2020, and the

participants are committed to purchase notes backed by the

mortgages through September 15, 2020. The participation

includes 37 investors with $265,700,000 in note purchasing

commitments. (See Exhibit 1.)

• CIC’s affiliate company, Community Initiatives Inc. (CII), is also

a not-for-profit 501(c)(3) corporation, incorporated in 2002.

The corporation was created to more directly engage in real

estate activities to further the mission of CIC. CII’s governing

board is elected by the CIC Board. Specifically, CII preserves

troubled and deteriorating low- and moderate-income

residential buildings through:

1. A receivership program with court directed rehab

and maintenance;

2. The purchase of delinquent mortgages and

distressed properties and then eventual sale of

property to competent ownership; and

3. The re-assembly and return to the rental housing

stock of buildings that have been lost through

failed and/or fraudulent condominium

conversions.

4. Coordinated redevelopment efforts in targeted

areas.

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Overview and Organization

• CIC is well equipped to manage its programs. CIC's top

executives each have many years of experience in real estate

lending and community development. Throughout the

company, most senior and mid-level managers have been with

CIC for many years. (See Exhibit 2.)

• The Loan Committee is composed solely of senior lending

officers of investing institutions. As provided in the Note

Purchase Agreement, the committee must represent at least

51% of the total committed dollars.

• CIC's Board is composed of leading banking professionals and

community leaders in the Chicago area. The Board provides

oversight for CIC through regular meetings, an executive

committee, and other committees. The Board has established

the following committees:

1. Executive Committee - Reviews policy issues between

board meetings, reviews company goals, sets officer

compensation levels and incentive awards, functions as

nominating committee, and counsels staff on an ongoing

basis as needed. Reviews annual budget with CIC staff,

recommends action to full Board, reviews annual audit

report with company's auditors (Crowe Horwath) and

presents the report to the full Board.

2. Performance and Credit Review Committee - Prepares

annual report to the Board and investors on company's

performance, policies, loan portfolio, credit process and

controls.

3. Portfolio Oversight Committee – The committee is the

Board’s liaison to the Loan Committee. The committee

works with the Loan Committee and CIC staff to

implement the risk rating system and provides advice

and counsel to CIC staff regarding timely, streamlined

reports on loan delinquencies and loan losses; watch list

procedures and policies; establishment of appropriate

loan loss reserves; and other matters regarding

management and reporting on the loan portfolio.

4. Access to Capital Committee – Guides the process of

raising capital for CIC’s lending activities, including

renewing the Multifamily Note Purchase Agreement and

developing other sources of funding. This group guides

the strategy for approaching investors to finance CIC

programs and weighs the relative risks and benefits of

various new sources of funding. In 2015, the committee

successfully led the effort to renew the Note Purchase

Agreement for CIC’s Multifamily Loan Program for

another five years.

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CIC/CII Balances Two Objectives

________________________________________________________________________________________________________________________

Improve the condition of and increase the supply of rental units that

are affordable to low and moderate income households.

Steps

• Provide fairly priced financing for acquisition and rehab of

multifamily housing.

• Provide professional construction, property and management

training/assistance.

• Encourage the use of the most cost effective labor and

materials.

• Provide financing for energy efficient upgrades to lower utility

bills.

• Make efficient use of private and public funds.

Generate fair return to investors.

Steps

• Provide acceptable yield on every loan.

• Minimize investors’ risk of loss through:

o Loan being approved by investor Loan Committee.

o CIC Loss Reserve Policies.

o Large investor base to share risk.

o Portfolio concentration limits.

• Remit payments monthly.

• Service loans in-house.

• Capitalize on experience. Multifamily rehab lending has been

CIC’s core business since 1984.

8

Outline

CIC Lending Programs

1. Multifamily Loan Program

2. Energy Savers Loan Program

3. 1-4 Unit Loan Program

CIC/CII Community Development Activities


9

FY 2015 Lending Report

In FY 2015, in the midst of an economy that continues to present great

challenges, CIC provided $30 million in financial assistance for 1,342

units of affordable rental housing throughout the Chicago area. CIC

continued to pursue its mission with vigor, expertise, and

effectiveness. CIC continues to lend and persevere in its mission to

provide capital for the redevelopment of affordable housing, most of

which is located in our region’s low and moderate-income

communities. CIC continues to exercise sound management and fiscal

prudence in its operations.

In FY 2015, CIC approved and closed or had closings pending for:

• 53 loans with $23.1 million in the Multifamily Loan

Program, for 706 residential units and 24 commercial

units for a total of 730 units.

• 11 loans with $627 thousand in Energy Savers Retrofit and

OnBill financing for 222 housing units (169 unduplicated

by the Multifamily Loan Program).

• 12 loans with $5.5 million in the new 1-4 Unit Rental

Redevelopment Program.

• Of these units, 100% of the units in the buildings were

affordable at 80% of area median income, 88% of the

units were affordable at 60% of area median income, and

67% of the units were affordable at 50% of area median

income.

• All loans approved by CIC were located in low and

moderate-income census tracts in the city and suburbs of

Chicago.

• Of the 81 loans originated by CIC, 76 loans (94%) were

made in Chicago communities and 5 loans (6%) were in

the suburbs.

# $ M

Multifamily Program NPA

20 Yr Term 3Yr Adj 8 2.0

10 Yr Term 3yr Adj 15 7.7

10 Yr Little Rehab 3Yr Adj 29 12.2

Flex Loans 1 1.2

Total NPA Multifamily Program 53 23.1

2nd Mortgages

Energy Retrofit Lending 6 0.2

OnBill Lending 5 0.4

CIC InHouse Loans 5 0.7

Total 2nd Mortages 16 1.3

1-4 Program Loans

1st Mortgages 6 4.4

2nd Mortgages 6 1.1

Total 1-4 Program 12 5.5

TOTAL LENDING 81 29.9

Grants

TIF Vacant Bldg. Grant 1 0.3

Financial Assistance FY2015

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FY 2015 Lending Report

FY 2015 CIC TRANSACTIONS BY PROGRAM AND COMMUNITY:

*Plus 35 commercial units

**Plus 24 commercial units

PROGRAMS M/F

REGULAR

M/F

FLEX

ENERGY

2ND'S

1-4 Unit

Program

CIC

LOANS

TOTAL

LOANS

UNITS CIC

GRANTS

CHICAGO COMMUNITY # $ # $ # $ # $ # $ # $ # $

ALBANY PARK 1 330,000 1 330,000 7

AUBURN-GRESHAM 3 1,149,000 1 50,559 4 1,199,559 45

AUSTIN 1 172,000 1 1,234,055 2 1,406,055 66 71,000

AVALON PARK 2 468,000 2 468,000 9

CALUMET HEIGHTS 1 280,000 1 280,000 10

CHATHAM 10 2,987,250 1 30,000 11 3,017,250 118

CHICAGO LAWN 1 168,000 1 168,000 6

EAST GARFIELD PARK 1 218,000 1 218,000 6

ENGLEWOOD 1 303,000 1 303,000 11

GRAND BOULEVARD 1 29,164 1 29,164 6

GREATER GRAND CROSSING 7 6,182,098 7 6,182,098 202

HUMBOLDT PARK 1 354,000 1 354,000 69 250,000

MORGAN PARK 2 484,000 2 484,000 9

NORTH LAWNDALE 5 1,098,850 5 1,098,850 31

ROSELAND 1 160,000 2 1,800,000 3 1,960,000 40

SOUTH CHICAGO 4 1,133,000 1 46,280 2 414,000 7 1,593,280 45

SOUTH DEERING 4 2,318,000 4 2,318,000 41 -

SOUTH LAWNDALE 2 575,000 2 575,000 30

SOUTH SHORE 4 3,052,000 3 193,693 3 98,643 10 3,344,336 172

UPTOWN 1 359,424 1 359,424 92

WASHINGTON PARK 1 295,000 1 200,000 2 495,000 143

WEST ENGLEWOOD 1 155,000 1 155,000 6

WEST GARFIELD PARK 1 29,857 1 29,857 0

WEST RIDGE 1 580,000 1 580,000 10

WOODLAWN 3 1,258,000 1 43,825 4 1,301,825 31

TOTALS 49 20,450,198 1 1,234,055 9 423,378 12 5,484,000 5 658,067 76 28,249,698 1,205 321,000

SUBURBAN COMMUNITYARLINGTON HEIGHTS 2 203,100 2 203,100 96

BERWYN 2 1,270,000 2 1,270,000 36

ROUND LAKE BEACH 1 195,000 1 195,000 5

TOTALS 3 1,465,000 2 203,100 0 0 5 1,668,100 137 0

PROGRAM TOTALS 52 21,915,198 1 1,234,055 11 626,478 12 5,484,000 5 658,067 81 29,917,798 * 1342 321,000

M/F NPA PROGRAM TOTALS 52 21,915,198 1 1,234,055 53 23,149,253 ** 706

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1. FY 2015 Multifamily Loan Program Report

• In FY 2015, CIC approved 53 loans for a total of $23.1 million under

the Multifamily Loan Program. These loans financed the

acquisition and rehab of 706 residential and 24 commercial units.

• In FY 2015, in response to a low interest rate environment and a

desire to promote diversification in the loan portfolio, the CIC Loan

Committee approved 29 ($12.2 million) loans with a 10 year term

and a more competitive interest rate than the standard

Multifamily loan, for properties requiring little or no construction.

This program has been well received in the market place in FY

2015. CIC expects continued interest in this product in FY 2016.

• Among the 53 Multifamily loans approved in FY 2015, there was 1

loan approved through the innovative Flex Fund Program for $1.2

million. Created in 1998, the Flex Fund enables CIC to use a portion

of the Multifamily Loan Program loan pool for “Innovative and

Complex” lending in order to reach unmet neighborhood needs or

stimulate an increased level of rehab activity in neighborhoods

needing an intervention stimulus. In order to achieve this goal, LTV

and Debt Service Coverage Ratio (DSCR) underwriting ratios can be

less stringent than standard Multifamily loans. It is expected that

these loans will carry more risk. Since 1998, CIC has originated 207

Flex loans for $134 million. Currently, the portfolio of Multifamily

loans sold to investors contains $34 million in Flex loans. (See

Exhibit 4 for a more detailed description of the Flex Fund program.)

• For several years, CIC’s lending activity has confronted the

economic challenges of Chicago’s low and moderate income

communities – areas that have endured high unemployment rates

and depressed real estate values. The overall portfolio and the

credit process, however, remain strong; losses and delinquencies

are within manageable limits for a portfolio of CIC's age and

composition. (See Exhibits 5 through 9.)

• In total, at the close of FY 2015, CIC’s Multifamily Loan Program

portfolio stands at $225 million of notes sold to investors.

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1. Multifamily Loan Program Portfolio Performance and Credit Process

• Delinquencies on Multifamily Loan Program loans in the

portfolio of notes sold to investors are lower than last year, $14.1

million (6.3%) as of 9/30/2015 versus $18.6 million (8.1%) as of

9/30/2014. (See table below and Exhibits 5 and 6.) As compared

to 9/30/2014, non-performing loans (90 days past due plus

foreclosures and workouts) have been reduced from $10.3

million to $8.8 million (3.9% of notes sold).

• REO properties increased from $2.6 million in FY 2014 to $5.4

million in FY 2015 as long delayed foreclosures were able to

move through the court system. CIC projects that any further

losses resulting from the sale of REO or delinquent loans will be

covered by CIC’s Multifamily Investor Loan Loss Reserve.

• Flex loans were 7.6% delinquent and 3.76% non-performing,

slightly higher than the rates in the overall portfolio.

Summary of Delinquent Multifamily Loan Program

Loans sold in Notes:

Delinquent Loans 9/30/2014 9/30/2015

$M % $M %

30 days 5.9 2.6 5.1 2.3

60 days 2.4 1.0 0.2 0.1

Sub Total 8.3 3.6 5.3 2.4

90+ Days 4.5 0.0 6.5 2.9

Foreclosure 5.8 4.5 2.3 1.0

Workout 0.0 0.0 0.0 0.0

Sub Total 10.3 4.5 8.8 3.9

Total 18.6 8.1 14.1 6.3

REO Properties 2.6 1.1 5.4 2.4

• With the initiation of the 2010 Multifamily Note Purchase

Agreement, CIC established an Investor Loan Loss Reserve from

which CIC reimburses note holders for any losses of principal on

notes sold. The loan loss reserve account was initially funded with

$1.2 million from CIC. In addition, from CIC's collection of the loan

servicing fee, CIC deposits monthly the sum equal to one-half of

one percent (.5%) from the .875% servicing fee into the Investor

Loan Loss Account.

• In November 2013, the CIC Board and the investors agreed to

amend the Note Purchase Agreement to increase the funding of

the reserve for three years. The investors are funding the reserve

with an additional 50 basis points from their return and CIC is

contributing 25 more basis points from corporate income. This

additional payment began with the 12/15/2013 remittance by

increasing the servicing fee 50 basis points to 1.375%. CIC

projects that with the increased funding the reserve will cover

projected losses through the end of 2016. At that time, the CIC

Board will decide whether this increase should be continued,

reduced or discontinued. (See Exhibit 7.)

13


The Multifamily Loan Program Portfolio incurred $2 million in loan losses in FY 2015 (.9% of the $225 million portfolio balance at 9/30/2015). (See

Exhibit 8.) Investors participating in the current NPA and the Investor Loan Loss Reserve program were covered 100% for any principal loss from the

Investor Loan Loss Reserve (See Exhibit 7 and 9.) CIC projects the reserve to be adequate to cover all Specific Losses in the Portfolio and leave a

balance in the reserve of almost $1.7 million in November 2016.

Beginning

Balance Charges % Portion Deposits

Ending

Balance

Portfolio

Balance

Note Purchasers' Restricted Reserve FY 2015 $2,671,120 -$2,007,703 0.89% $2,529,771 $3,193,188 $224,896,901

• On Multifamily Loan Program loans not sold to investors (loans in

construction), CIC absorbs any related losses as required by the

NPA.

• Loans are approved by the Multifamily Loan Committee, which is

composed of senior representatives of investing institutions that

are actively participating as Note Purchasers. The committee must

represent at least 51% of the total committed dollars. (Current

members of the Loan Committee are listed on page 3.) Loans of

$300,000 or less are approved by CIC management and reported

to the Loan Committee.

• The Loan Committee is composed solely of representatives of the

Participating Note Purchasers.

• The Credit Process Review: The Credit Process Review is

performed every two years by a participating Note Purchaser. The

most recent review was performed by The Private Bank. The

review is based on CIC’s portfolio as of 9/30/2014, and the report

is dated March 2015. The results of the exam were “satisfactory.”

14


The CIC Board and company management take the following steps to mitigate potential investor risk:

Loan Structure:

• Adhere to sound underwriting standards and credit

process.

• Perform sensitivity analysis for maximum adjustments for

all loans.

• Limit exposure to any single project to a maximum of $5

million. Limit total exposure to any single borrower to

$7.5 million ($10 million with board approval).

• Personal recourse to borrower as a norm.

• Careful review and monitoring of the contractors and the

construction progress.

Shared Risk:

• Funded Investor Loan Loss Reserve pursuant to the Note

Purchase Agreement - Investors and CIC fund the

reserve monthly. (See Exhibits 7 and 9.)

• All loans shared proportionately based on investor

commitments.

Loan Servicing:

• Performed by CIC on all loans.

• Increased Loan Servicing staff in response to challenging

economic conditions.

• Increased efforts to maintain close contact with

borrowers.

• Employ early intervention and workouts where

appropriate.

• Access other resources such as Energy Savers and

various sources for grants.

• Annual inspections of all properties with additional

inspections scheduled for problem loans.

• Annual financial reports for each property and current

DSCR.

Portfolio Reviews:

• All delinquent loans and loans in construction reviewed

monthly by Loan Committee.

• Bi-Weekly review of status of delinquent loans and REO

by CIC Senior Management.

• Quarterly Status review of the Watch List of the portfolio

by Portfolio Oversight Committee.

• Bi-annual Credit Process Review conducted by a team

from investing bank(s).

• Board Portfolio Oversight Committee provides advice

and counsel and acts as Board liaison to the Loan

Committee.

Diversification:

• In the areas of highest concentration, risk is spread

across multiple borrowers and properties.

• Loans have been made for projects in 67 Chicago

Communities and in 53 different surrounding

communities in the metropolitan area.

15


In FY 2014, the CIC Board approved a new Risk Rating System. The

new system enhances CIC’s reporting on the portfolio. The ratings are

included in the FY Annual NPA Report for the period ending 9/30 and

the Mid-Year NPA Report ending 3/31, which are sent to all investors.

The system was developed with input from the Portfolio Oversight

Committee of the CIC Board and from the CIC Loan Committee. The

following chart lists the risk ratings at the close of FY 2015:

Rating $ Balance # of

Loans Percentage Current

Pass $120,776,526 225 54% 100%

Acceptable $54,007,002 120 24% 99%

Special Mention $33,626,683 68 15% 78%

Substandard $8,010,858 14 3% 43%

Doubtful $1,300,947 4 1% 25%

Loss $7,147,885 17 3% 0%

Total $224,869,901 448 100%

16

1. Return to Multifamily Note Purchasers

CIC's program is designed to balance its dual goals of pursing its

affordable housing mission while providing a fair return to investors

and minimizing investor loss exposure.

• The net weighted yield of the notes sold under the Multifamily

NPA to investors for the twelve months of FY 2015 was 2.6%

the same as FY 2014. The decrease in the weighted return from

previous years is partially due to the additional 50 basis points

to fund the Investor Loan Loss Reserve which became effective

11/1/2013.

• Since most loans in the portfolio are three year adjustable

mortgages based on the three year Treasury rate plus 2.5 or

3.5 points at the time of adjustment, CIC compares the

investor net weighted yield to a three year rolling average of

the three year Treasury rate. When Treasury rates decrease,

the margin between CIC’s net yield and the Rolling Average 3-

year Treasury increases. When the Treasury rates increase, the

margin between CIC’s net yield and the Rolling Average 3-year

Treasury decreases.

• For the past 27 years, the investors’ net weighted return has

averaged 6.2%, and for the last five years the portfolio margin

between the 3 year Treasury’s 3 year rolling average has

averaged 2.4%. (See Exhibit 10.)

• With the Multifamily NPA amended to increase deposits into

the Investor Loan Loss Reserve, CIC passes through to investors

all funds (principal and interest) received, less 1.375%, (0.375%

to CIC for loan servicing and 1.000% for deposit into the

Investor Loan Loss Reserve). In addition, CIC deposits another

0.250% into the reserve from CIC corporate income.

• Until 2010, multifamily loans issued by CIC adjusted every 3

years at 2.5% over 3-year Treasuries. In 2010, CIC changed the

adjustment on new loans to a spread of 3.5% over Treasuries.

In response to the historically low interest rates, CIC also

instituted a floor on all approved loans, currently 4.75% for a

3-year ARM. All loans approved since 3/15/2015 have ten year

terms. The Limited Rehab Loans carry a floor of 4.25%.

• The Loan Committee sets the initial rate on CIC loans. This rate

adjusts every three or five years after the month of

commitment. The loans are sold to investors after construction

has been completed and the building is operating at a 1.1

DSCR. Typically, this is six and twelve months after the Loan

Committee approves the loan. Therefore, the first adjustment

on a three-year adjustable rate loan usually occurs 24 to 30

months after the sale of the loan to the investors.

17

2. Energy Savers Lending Program

• Since 2008, CIC and its partner, Elevate Energy (formerly known as

CNT Energy), have offered the Energy Savers program to help

multifamily building owners reduce their operating costs by

conserving energy and cutting their utility bills. Energy Savers has

become the most successful program of its kind in the country. By

increasing the energy efficiency on their buildings, building owners

are able to provide comfortable and secure units with affordable

rents.

• In FY 2015, CIC approved 11 loans for $627 thousand, for 222

affordable housing units. (169 of these units were unduplicated by

the Multifamily Loan Program.)

• Since the inception of Energy Savers, 133 loans for $15.8 million

and 58 grants for $2.8 million have been approved, representing

6,500 units. On average, CIC is providing financing of about $2,850

per unit to fund energy conserving retrofits. Overall, 24,000 units

have been retrofitted representing 43% of the units receiving

Energy Assessments from Elevate Energy.

• Building owners achieve significant reductions in their energy use

and operating expenses as a result of the energy retrofit

improvements to their properties. On average, owners are

achieving savings of 30% in their energy use and cost. Energy

Savers retrofits have benefitted the environment by reducing CO2

emissions and the carbon footprint of properties. Tenants have

experienced enhanced comfort, and the reduced operating costs

have helped keep rents affordable. Most of the units retrofitted

through Energy Savers loans have rents that are affordable to

tenants with household incomes at or below 60% of the Area

Median Income.

• To implement the Energy Savers Loan Fund, CIC has received

Program Related Investments and grants from partners for more

than $22 million which have been used as loan capital, loan loss

reserves, grant capital, and marketing and operating funds. These

partners include the MacArthur Foundation, the Bank of America

Community Development Corporation, the Grand Victoria

Foundation, the City of Chicago, the U.S. Department of Energy,

and the Chicago Metropolitan Agency for Planning. These

commitments from partners have enabled CIC to offer the Energy

Savers program in the seven metropolitan Chicago counties and

the city of Rockford.

• In FY 2015, CIC began to originate “On Bill” Energy Loans. These

loans are repaid as part of the monthly utility bills and not secured

by mortgages, thus providing Energy Retrofit Financing for

properties that are unable to take secured subordinate debt.

Payments on these loans are guaranteed by the utility companies.

Institution Amount

Energy Program Related Investments

Bank of America $8,000,000 10 year PRI

MacArthur Foundation $6,000,000 13 year PRI

Energy Program Grants

Bank of America $500,000

City of Chicago $1,750,000

Chicago Metropolitan Agency for Planning $5,600,000

Grand Victoria Foundation $1,000,000

Total $22,850,000

18

3. 1-4 Lending Program

• In FY 2014, CIC launched the 1-4 Unit Rental Redevelopment Loan

Program with $26 million in lending capital from 11 financial

institutions and the MacArthur Foundation.

• A $2.2 million Grant from the Attorney General provides a loss

reserve for the program.

• The program is intended to provide long-term financing for

investor owned 1-4 unit buildings in target neighborhoods that

have suffered from foreclosure and abandonment. 1-4 unit

buildings constitute nearly half of Chicago’s rental housing stock.

• In FY 2015, under the 1-4 Unit Program, CIC approved 12 loans for

$5.5 million for buildings with 105 residential units. (See Exhibit 3.)

The first Note Sale for this program is occurring in December 2015.

• The Loan Committee for the 1-4 Program is comprised solely of

participating Note Purchasers.

*CIC is using a $5 million PRI from the MacArthur Foundation to fund

its participation in the 1-4 unit note sales.

I-4 Unit ProgramFirst Mortgage Purchasers Commitments Percent

BMO Harris 4,000,000 25%

First Eagle Bank 500,000 3%

First Savings Bank of Hegewisch 1,500,000 9%

Lake Forest Bank 750,000 5%

Leaders Bank 1,000,000 6%

North Shore Community Bank 750,000 5%

Northbrook Bank 750,000 5%

The Northern Trust Company 4,000,000 25%

Urban Partnership Bank 2,000,000 13%

Village Bank 750,000 5%

Total 16,000,000 100%

Second Mortgage Purchasers

PNC Commnuity Development Company, LLC 5,000,000 50%

Communtiy Investment Corporation* 5,000,000 50%

Total 10,000,000 100%

19

Outline




3. 1-4 Unit Lending Program



20


PROPERTY MANAGEMENT TRAINING:

• In July of 1998, CIC launched its Property Management

Training program (PMT), an initiative designed to provide

information and resources to owners and managers of

multifamily rental properties. Since its inception, the

program’s centerpiece has been its four-evening course

entitled The Basics of Residential Property Management. PMT

also offers sessions that concentrate on a single topic, such as

boiler repair, landscaping, rodent control, marketing, and

tenant screening. In the last several years, CIC has given

special attention to helping landlords succeed in the midst of

a very difficult economy. PMT sessions are offered at a variety

of locations throughout the metropolitan area, including

meeting facilities of investor banks. Since 1998, PMT has

provided training to more than 15,000 owners and managers.

Through this program, CIC is constantly expanding and

strengthening the pool of qualified apartment building

owners/investors.

• In FY 2015, CIC provided 70 training sessions attended by 1,405

current or prospective managers/owners of affordable

housing. Staff also produced a regular column in the CIC

Newsletter and answered over 1,700 requests for assistance

coming directly to CIC or referred to CIC by the City of

Chicago’s 311 hotline for landlords and building managers.

Grants received to offset costs of the

Property Management Training Program:CIC Investor: FY 2015

Bank of America 15,000

BMO Harris NA 10,000

Citibankntrust Financial Group 25,000

FifthThird 5,000

First Eagle Bank 2,000

Forest Park National Bank 500

MBFinancial 5,000

PNC Bank 24,000

The Northern Trust 25,000

The PrivateBank 10,000

Urban Partnership Bank 2,000

U.S. Bank 17,500

Wintrust Financial Group 15,000

Total 156,000

City of Chicago, DHED: 34,296

21

COMMUNITY INITIATIVES INC. (CII):

TROUBLED BUILDINGS INITIATIVE (TBI):

In FY 2003, CIC initiated the Troubled Buildings Initiative (TBI), which is

run under its affiliate company, Community Initiatives, Inc. (CII). The

purpose of the program is to use code enforcement to improve

physical conditions and property management in buildings rather than

to result in abandonment and demolition. Troubled buildings are

referred to CII from a variety of sources, including community groups,

the Police Department, and the Departments of Buildings, Planning

and Development, and Law. CII and the city departments make

Housing Court more effective in getting owners to rehab or sell to

someone who will fix these buildings. As of September 30, 2015, CII is

the court appointed receiver on 43 buildings. Buildings placed in the

program are the properties most in need of repair and present the

most problems to their communities. Through the program, TBI has

taken action on 830 buildings with 14,701 housing units, and 488

buildings with 9,807 units have been recovered under the program.

The following chart briefly shows the scope and status of buildings in the TBI program:

Status FY 2015 2003 to

2015

1. Buildings Recovered 81 488

Units 1,474 9,807

2. Buildings Demolished 2 67

Units 37 866

3. Buildings Addressed by the Program *52 830

Units *732 14,701

*New building and units added to program in FY 2015)

22


DISTRESSED CONDOMINIUM PROGRAM:

• Since 2007, CII staff has been tracking troubled condominiums

both in and outside of Housing Court. CII has identified over

250 distressed condominium buildings and has worked with

lenders to develop disposition strategies for these properties.

CII has counseled lenders, developers, and government

agencies on the plight of distressed, and often fraudulent,

condominium transactions. Since 2009, CII has been working

with the City of Chicago to acquire, stabilize, and transfer all

individual condominium units in targeted buildings to single

owner/developers to de-convert the buildings back to viable

multifamily rental buildings.

• Working with lenders, title companies and government

agencies, CII was instrumental in creating the Illinois

Distressed Condominium Act (DCA). The Act increases court

and governmental authority to de-convert failed

condominium buildings into multifamily rental housing.

Under the Illinois Distressed Condominium Act, which took

effect in January 2010, local municipalities can petition the

court to void condo declarations in failed conversions and

issue deeds for the re-assembled buildings. CII is working

closely with the City of Chicago to implement the DCA.

• In FY 2015, CII acquired seven distressed condo units, filed

deconversion orders on 10 buildings, and sold 8 re-assembled

buildings with 64 units. Since 2009, CII has acquired 289 condo

units, filed deconversion orders on 86 buildings with 851 units,

and sold a total of 57 buildings with 581 units for conversion

back to rental housing.

MULTIFAMILY ACQUISITION AND DISPOSITION PROGRAM:

Community Initiatives, Inc. (CII) established the Acquisition and

Disposition Program to expedite the transfer of troubled multifamily

housing to new owners who will rehab and provide good

management for the buildings. In FY 2007, the MacArthur Foundation

provided a $2 million Program Related Investment to support the

effort. In FY 2015, 7 properties with 160 units were acquired and

transferred to capable new owners. All expenditures were recovered,

and the fees generated support the program. Since 2003, 213

properties with 3,739 affordable multifamily apartment units have

been acquired and transferred to capable new owners and preserved.

1-4 UNIT ACQUSITION PROGRAMS:

As a complement to the new 1-4 Unit Rental Redevelopment Loan

Program, CIC applied for and received a $5 million grant from the

JPMorgan Chase Foundation to further address conditions in 1-4 unit

buildings. As part of this collaborative effort, CIC is coordinating the

activities of Neighborhood Housing Services (NHS) and Chicago

Community Loan Fund (CCLF), and is using its own portion of the grant

to acquire distressed 1-4 unit properties in order to facilitate the

assembly of buildings for CIC’s loan program. CCLF and NHS are using

their grant proceeds to provide loan capital for owner occupants and

investors to redevelop distressed 1-4 unit buildings. Under this

program in FY 2015, CII acquired 91 buildings and sold 32 buildings to

qualified developers to rehab and manage as rental properties.

MICRO MARKET RECOVERY PROGRAM:

In FY 2012, CIC/CII entered into a three year contract with the City of

Chicago to coordinate redevelopment efforts in West Woodlawn and

East Chatham under the Micro Market Recovery Program (MMRP), a

neighborhood redevelopment initiative targeting 13 small geographic

areas in Chicago that have experienced significant disinvestment and

foreclosure. In each area, the City of Chicago is fostering the

redevelopment of vacant single family and multifamily buildings by

targeting and coordinating multiple programs and resources, and by

working with partners, including CIC/CII. Since the beginning of FY

2014, CII has also been functioning as liaison to all 13 target areas for

multifamily initiatives.

23


THE PRESERVATION COMPACT:

In FY 2011, CIC became the coordinator of The Preservation Compact.

Supported by a three-year grant from the MacArthur Foundation, the

Compact brings together the region’s public, private and nonprofit

leaders to promote policies to preserve affordable rental housing in

Cook County. Through a Leadership Committee and working groups,

the Preservation Compact has focused on the following:

• Expanding Energy Retrofits: Energy Savers, a Preservation

Compact initiative, has resulted in a 30% reduction of energy

use for retrofitted buildings. To expand available capital for

retrofits, the Compact supported state legislation expanding

on-bill financing to multifamily properties, and helped

negotiate a subcontract between CIC and the on-bill

administrator. In 2015, to further bolster the program, utility

companies requested $11.5 million in increased funding for

on-bill financing.

• Expanding financing for 5-49 unit buildings: The Compact

identified the lack of financing available for 5-49 unit buildings

in low and moderate income markets, and raised the issue on

the national level. In response, HUD has issued a final rule for

a new risk-share program for small multifamily buildings, and

FHFA added new subgoals for Fannie Mae and Freddie Mac

relative to this housing stock.

• Developing Preservation Strategies for 1-4 unit buildings: The

Compact help inform, develop, and launch CIC’s $26 million

loan program in early 2014. In October, 2014, The Compact

coordinated a workshop for over 80 developers and owners to

highlight CIC’s 1-4 unit program, as well as other available

resources for 1-4 unit buildings.

• Coordinating Public Agencies: The Compact convenes an

Interagency Council of city, county, state, and federal

agencies to develop and pursue strategies to preserve

publicly funded properties at risk of being lost from the

affordable housing stock. In the past three years, Compact

partners have helped preserve 12 assisted properties with

2,240 units, with 5 properties and 700 units preserved over

the past year. In FY 2015, staff also hosted a workshop for 80

owners regarding resources available to preserve assisted

properties.

• Through The Preservation Compact, CIC was also a key

participant in Chicago’s efforts to preserve SROs and to revise

the City’s Affordable Requirements Ordinance.

24

Outline




3. 1-4 Unit Lending Program



25


CIC’s financial condition is sound, and the business continues to be well

managed. (See Exhibits 11 and 12.) The spread between revenues and

expenses remains positive. Revenues from operations have consistently

exceeded expenses. The Operating Surplus this year was $166,000 for CIC

and $110,000 for CII. CIC/CII, on a consolidated basis, has generated an

operating surplus each year for the past 30 years.

In addition to the operating surplus, CIC also achieved an overall

growth of Unrestricted Net Assets of more than $2 million in FY 2015.

This was achieved through a combination of grant income and

release of formerly Restricted Net Assets for CIC programs.

At the end of FY 2015, CIC/CII has $29.1 million in Total Net Assets.

Restricted Funds are $3.0 million (10%), which are grant funds

received by CIC for restricted uses such as TIF grants to CIC customers

and Loan Guarantees. The Unrestricted Net Assets of $26.1 million

(90% of the Total Net Assets) are board controlled. (See Exhibit 12.)

FY 2015 CIC CII Consolidated

Operating Surplus $166,000 $110,000 $276,000

Net Assets Beginning

Balance

Change

FY2015

Ending

Balance CIC CII

CIC Unrestricted $23,072,976 $1,898,589 $24,971,565 $24,971,565

CII Unresricted $1,067,775 $109,582 $1,177,357 $1,177,357

Total Unrestricted $24,140,751 $2,008,171 26,148,922

CIC Restricted $4,340,731 -$1,390,403 $2,950,328 $2,950,328

Total Net Assets Consolidated $28,481,482 $617,768 $29,099,250 $27,921,893 $1,177,357

26


In its early years, CIC directed its operating surplus primarily into building

CIC's general reserves or unrestricted funds. In recent years, in response to

market conditions and CIC’s assumption of additional liability for

Multifamily loans before they are sold to investors beginning with the 2010

NPA, a large portion has been allocated to loss reserves, including a “CIC

Owned Loan Loss Reserve.”

On Multifamily Loan Program loans not sold to the investors (loans in

construction or held for sale in notes), CIC absorbs any related losses as

required by the Multifamily NPA. On these loans and other CIC owned

loans, CIC took a $355,440 charge and had $211,358 in recoveries in FY

2015.

The analysis of the CIC Owned portfolio at the end of FY 2015 indicated

that the CIC Owned Loan Loss Reserve was overfunded. The analysis

indicated that the status of the CIC owned loans had improved and that the

size of the portfolio had decreased. As a result, CIC took out $200,000 and

deposited it into the Multifamily Investor Loan Loss Reserve as part of CIC’s

funding commitment to that reserve.

In addition to the CIC Owned Loan Loss Reserve contra asset account, CIC

maintains a Designated Net Asset Account set aside for losses associated

with the Regency Portfolio and the General Board of Pensions (GBOP) fixed

rate pool. CIC’s liability for the Regency Portfolio is capped at the balance

in the reserve. CIC’s liability for the GBOP portfolio is capped at 10% of the

outstanding portfolio.

CIC originally sold $49 million in mortgages to Regency in 2003. Today, the

current balance stands at $4.4 million, which CIC continues to service.

CIC sold $24 million in fixed rate mortgages to the General Board of

Pensions (GBOP) of the United Methodist Church. As part of the

agreement, CIC retained a 1% share of each mortgage and is obligated to

absorb first losses up to an additional 9% of the loans. CIC maintains a

reserve account of $900,000, which represents almost 50% of CIC’s

potential obligation.

At the close of FY 2015, the following chart reflects the activity in the

reserve accounts for CIC owned loans.

*Represents 10% of total outstanding portfolio balance of $18 million.

CIC LOSS RESERVES Loan Loss Reserve Contra Asset Account:

Beginning

Balance

FY 2015

Charges

FY 2015

Released

FY 2015

Recovery/Deposit

9/30/2015

Balance

Portfolio

Balance

CIC Owned Loan Loss Reserve $1,763,532 -$355,440 -$200,000 $211,358 $1,419,450 $22,100,000

Board Designated Net Asset Loan Loss

Reserves:

Regency Portfolio (off Balance Sheet) $1,191,713 $89,554 $1,281,267 $4,400,000

General Board of Pensions Fixed Rate Pool

(off Balance Sheet) $900,000

$900,000 $1,800,000*

LIST OF PURCHASERS PARTICIPATING IN THE CIC MULTIFAMILY NOTE PURCHASE AGREEMENT AS OF 9/30/2015:

Exhibit 1

Purchasers $ %

Northern Trust $40,000,000 15.1%Bank of America $30,000,000 11.3%BMO Harris $25,000,000 9.4%Citi $20,000,000 7.5%PNC $20,000,000 7.5%Fifth Third $17,500,000 6.6%First Midwest Bank $10,000,000 3.8%Private Bank $15,000,000 5.6%Associated Bank $10,000,000 3.8%MB Financial $10,000,000 3.8%First Bank of Highland Park $6,100,000 2.3%Byline Bank $6,000,000 2.3%Wintrust Bank $5,000,000 1.9%First Bank & Trust of Illinois $4,800,000 1.8%FirstMerit Bank $4,000,000 1.5%Leaders Bank $4,000,000 1.5%Northbrook Bank & Trust Co. $4,000,000 1.5%Inland Bank & Trust $3,000,000 1.1%Lake Forest Bank & Trust Co. $3,000,000 1.1%Standard Bank & Trust $3,000,000 1.1%Bridgeview Bank $2,000,000 0.8%Community Bank of Oak Park River Forest $2,000,000 0.8%First American Bank $2,000,000 0.8%First Eagle Bank $2,000,000 0.8%Liberty Bank for Savings $2,000,000 0.8%Oxford Bank $2,000,000 0.8%Urban Partnership Bank $2,000,000 0.8%First Savings Bank of Hegewisch $1,800,000 0.7%Amalgamated Bank of Chicago $1,500,000 0.6%Barrington Bank & Trust $1,000,000 0.4%Delaware Place Bank $1,000,000 0.4%Forest Park National Bank & Trust $1,000,000 0.4%Hinsdale Bank & Trust $1,000,000 0.4%Hoyne Savings Bank $1,000,000 0.4%International Bank of Chicago $1,000,000 0.4%Old Plank Trail Community Bank $1,000,000 0.4%Town Center Bank $1,000,000 0.4%Total $265,700,000 100.0%

Commitment

27

MANAGEMENT STRUCTURE:Community Investment Corporation

and its affiliateCommunity Initiatives Inc.*

Board of Directors

President/CEOJohn Markowski8 years with CIC

37 years in Industry

Vice President ofCommunity Initiatives, Inc.

Angela Maurello20 years with CIC


Acquisition and Disposition Program

Troubled Buildings Initiative

Distressed Condo Program

Micro Market Recovery Program

Treasurer/CFOThomas Hinterberger28 years with CIC


Office Manager and HRMonica Kirby 19 years with CIC

Accounting

Inv. & Mgmt Reporting

Information SystemsCIOGiuseppe Papavero10 years with CIC

Senior Vice PresidentMichael Bielawa30 years with CIC


Loan Originations

Construction Risk ManagerMatthew Greene13 years with CIC31 years in iIndustry

Supervisor of Loan ServiciingSilvia Prado16 years with CIC

Director ofThe Preservation Compact

Stacie Young5 years with CIC


Policy Coordination to Preserve Affordable Rental Housing

Board Committees - Executive - Performance and Credit Review - Access to Capital - Portfolio Oversight

Exhibit 2

*Community Initiatives Inc. (CII) is a 501(c)(3) Not for Profit Corporation and is an affiliate of Community Investment Corporation (CIC). CIC is the sole member of CII and CIC has sole authority to elect the Board of CII. CII does not have employees, and all activities are performed by CIC on a consulting basis.

Strategic Communications and Marketing - Katie Donohue - 2 years with CIC; 11 years in Industry

Property Management Training - Taft West - 17 years with CIC; 35 years in Industry

28

CIC MULTIFAMILY LENDING BY FISCAL YEAR OF APPROVAL:

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 150

5

10

15

20

25

30

35

40

45

50

55

60

65

70

$ M

ILLI

ON

CIC RAL Reg. Prg. ($MM) CIC RAL Flex Reg. Prg. ($MM) CIC Fixed Rate Prg. ($MM)Energy Loans ($MM) 1‐4 Program

Avg Loan per Unit ($TH) 12 12 13 13 17 18 18 18 17 19 17 18 17 22 22 20 24 24 27 31 20 31 24 24 35 35 31 24 25 28 30 32

Number Units 1101 1099 1255 941 1210 752 1317 1671 2335 2182 1936 970 1429 901 2288 2088 1497 1848 2064 2010 2825 1498 2313 1849 1969 1849 1565 1576 1474 725 1059 730Avg per Loan ($TH) 283 317 315 364 656 419 686 714 800 843 914 680 571 444 557 532 600 549 519 525 643 580 878 710 971 878 754 567 673 456 408 435

Loan Volume ($MM) 13 13 17 12 21 13 24 30 40 43 32 17 24 20 49 42 36 45 55 62 63 47 56 44 67 64 49 41 43 21 31 23

% Closed 90 80 75 87 78 78 85 84 86 91 78 58 81 76 91 89 90 84 85 90 87 82 86 89 86 87 87 92 87 91 89 93CIC Loans Closed (#) 46 41 54 33 32 31 35 42 50 51 35 25 42 45 88 79 60 82 106 118 98 81 64 62 70 73 65 67 55 41 55 49

CIC Loans Approved (#) 51 51 72 38 41 40 41 50 58 56 45 43 52 59 97 89 67 98 124 131 113 99 74 70 81 84 75 73 63 45 62 53

Exhibit 3

MLP Statistics:

29

MULTIFAMILY PROGRAM FLEX FUND

Flex Fund loans This fund was initiated in 1998 to reach unmet neighborhood needs or stimulate an increased level of rehab activity in neighborhoods needing an intervention stimulus. In order to achieve this goal, LTV and D/C underwriting ratios can be less stringent than standard RAL loans. Of the 207 Flex Fund Loans for $134 million originated under the program, 136 Flex Fund Loans have been sold to the Investors for $90 million of which $52 million has been repaid. There have been losses on 7 loans in the amount of $4.7 million. Two of these loans were not sold to the Investors and the losses were sustained by CIC. The $3.0 million in losses on the other five loans was absorbed by the Investor Loan Loss Reserve. No losses have been experienced by the NOTE PURCHASERS PARTICIPATING IN THE LOSS RESERVE POROGRAM under the Flex Fund loan program.

According to the current Note Purchase Agreement, the aggregate principal amount of all Flex Fund Program loans may not exceed 20% of the total dollar commitments of the Purchasers. Currently, the aggregate principal of all Flex Fund Loans is $34.0 million, or 12.8% of the $265.7 million in Purchaser commitments. In addition, total Flex Fund Loans sold to the Purchasers is limited to 20% of total loans sold in any 12 month period. In the past 12 months there were 3 Flex Fund Loans sold for $1.8 million, which is 5.7% of the $31.4 million total loans sold.

Exhibit 4

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total /Avg

Number of Loans (#) 15 16 17 18 16 15 14 16 12 17 13 10 6 4 9 4 4 1 207Value of Loans ($MM) 10 7 10 7 7 8 6 12 11 15 11 11 4 1 6 5 3.0 1 134

Average LTV (%) 92 82 86 103 97 87 78 86 106 73 90 91 80 80 84 104 91 68 86

Average D/C Ratio 1.2 1.5 1.4 1.2 1.2 1.5 1.2 1.2 1.2 1.2 1.2 1.3 1.3 1.2 1.3 1.2 1.2 1.2 1.3

Portfolio ($MM) 7.9 14.1 15.6 12.9 18.4 16.4 13.2 17.9 22.1 18.6 32.4 37.2 40.4 38 38 38.9 34% of Total Portfolio 5.6 8.9 9.5 8.6 18.9 14.6 10.5 13.6 16.7 14.1 17.1 18.9 18.8 16.2 16 16 15

Value of Flex Loans $MM 1.8

% of All Loans Sold 5.7

Principal ($MM) 34

Commitments ($MM) 265.7% of Commitments 12.8

Approved Flex Loans

Flex Fund Loans as the Portion of EOY Balance of Loans Sold:

Flex Fund Loans Sold in Previous 12 Months:

Principal of All Flex Fund Loans as a Percentage of Purchaser Commitments:

30

63

84

109

144150

157164

148141

158 163151

100110

126132 133 133

189199

215

234 233 230 225

+ ++

+ +

+

+ ++ +

+

+

+

++

+ +

++

+ + +

+ ++

6

5

3 3

7

4 4

3 3

4

6

4

6

5

2 2

4

5

6 6 6

9 9

8

6

91 92 93 94 95 96 97 98 99 00 01 02 03* 04 05 06 07 08 09 10 11 12 13 14 150

20

40

60

80

100

120

140

160

180

200

220

240

260

$ Mi llion

0

2

4

6

8

10

12

14

16

% Delinquent

$ Portfolio Balance % Delinquent+$MM REO Property 3 3 3 2 1 1 1 1 1 1 0 0 0 0 0 1 0 2 1 1 2 2 2 3 5

$MM Workout 0 0 0 0 5 3 0 3 2 3 0 1 1 0 0 0 0 0 7 0 5 4 5 0 0$MM Delinquent 4 4 3 5 5 3 6 2 2 3 9 5 5 5 3 3 5 7 5 11 8 16 15 19 14

Exhibit 5MULTIFAMILY PROGRAM NOTES OUTSTANDING AND DELINQUENCY RATES:

The red delinquency percentage line on the chart includes loans 30 days or more delinquent, loans in Foreclosure and in Workout. The delinquency percentage line does not include REO.

Note: There were no loans in Workout at 9/30/2015.

* 2003: In September of FY2003, CIC sold $50 million in portfolio mortgages to Regency Bank, allowing CIC to create the new Stimulus Fund from increased servicing income on the $50 million.

31

MULTIFAMILY PROGRAM DELINQUENCIES BY FISCAL YEAR OF APPROVAL: Exhibit 6

'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '140

5001,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,000

DEL

INQ

UE N

T LO

AN

S ($

0 00)

30-60 days90 or More Days and ForeclosuresWorkout

REO ($M) 0 0.6 0 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,000

30-60 days90 or More Days and ForeclosuresWorkout

REO ($M) 0 0.6 0 0 0 0 0 0 0 0.6 0.8 0 0.2 1.2 1.5 0 0.5 0 0 0 0

9/30/2014 9/30/2015Total Loan Delinquencies (Including Foreclosures) 18.7 million 14.1 million

Total Workout None NoneTotal REO 2.6 million 5.4 million

Grand Total (REO plus Delinquencies) 21.3 million 19.5 million

DELINQUENCIESBY FISCAL YEAROF APPROVALAS OF 9/30/2014:

DELINQUENCIESBY FISCAL YEAROF APPROVALAS OF 9/30/2015:

32

Exhibit 7CIC LOAN UNDERWRITING AND LOSS RESERVE POLICY FOR MULTIFAMILY LOANS:

In accordance with the Multifamily Program Note Purchase Agreement:

UNDERWRITING:Under policies established by the Board of Directors and the Loan Committee, CIC currently offers loans with the following terms: PROGRAM Regular FLEX Minimum Rehab Energy Savers 2nd Mgt.Max. Loan to Value 80%‐3 year ARM Can be > 80% 75% 90% including 1st mortgage

70%‐5 year ARM 3 year ARM 3 year ARM Fixed 3% Energy Savers/5.99% OnBillRate Adjustment 350 basis pts 350 basis pts. 350 basis pts (above Comp. Treasury) Max Loan to Cost 80% 95% 80% 100% of energy workMinimum Equity 20% 5% 20% Fees & Construction InterestMinimum DSCR 1.25 1.15 1.25 at 6% 1.15 (including 1st mortgage)Pre‐Payment Penalty No No 3‐2‐1‐0 NoFloors Initial Rate Initial Rate Initial RateInitial Rates are set by the Loan Committee.

LOSS RESERVE POLICY:With the initiation of the 2010 Note Purchase Agreement, CIC has established an Investor Loan Loss Reserve from which CIC reimburses note holders for losses of principal on notes sold. The loan loss reserve account was initially funded with $1.2 million from CIC. In addition, from CIC's monthly collection of the loan servicing fee, CIC deposits monthly the sum equal to one‐half of one percent (.5%) from the .875% servicing fee into the restricted loan loss reserve account. In November of 2013, the CIC Board and the investors agreed to amend the Note Purchase Agreement to increase for 3 years the funding of the reserve. The investors are funding the reserve with an additional 50 basis points from their return and CIC is contributing 25 more basis points from corporate income. This additional payment began with the 12/15/2013 remittance by increasing the servicing fee 50 basis points to 1.375% for the month of November. CIC projects that with the increased funding, the reserve will cover the projected losses through the end of 2016. At that time, the initial funding will be re‐evaluated by the CIC Board of Directors.

Mutifamily Investor Loss Reserve Activity FY 2015

10/1/2014 FY 2015 FY 2015 9/30/2015 Balance Charges Deposits Balance

2,671,120 (2,007,703) 2,529,771 3,193,188 CIC absorbs all losses on Multifamily Program loans not sold to the investors. For loans to become eligible for sale to the Investors under the Note Purchase Agreement, the following

conditions must be met: ‐ Construction is complete; ‐ Loan is not in default; and ‐ Project has achieved a 1.1 debt service coverage ratio (DSCR).

33

100 12

614396 529

31585 76

371 24943

538314237

161

407

373

20

546

83

7 9 2 4

793

643

1256

744

2645

2025

54 139

650

385

770

220

413

385

311

355294

385

266

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

0

500

1000

1500

2000

2500

3000

3500

$ Th

o usand

Loss sustained by the CIC Loss Reserve Under Previous NPA Loss Passed through to NPA Investors ($1.9 million Cumulative, or 0.19% of $946 million of Purchased Notes)Loss Sustained by Current 2010 NPA ReserveLoss on REO not sold in Notes ‐ Charged to CIC ReservesLoss Sustained by Regency Reserve

Loss as % of Portfolio 0.5 0.01 0.45 0.34 0.56 0.4 0.05 0.06 0.22 0.08 0.42 0.02 0.3 0.36 0.79 0.41 0.61 0.36 0.94 0.85* Portfolio Balance $M 5 18 28 24 37 33 43 63 84 135 162 168 172 173 171 167 183 189 188 180 192 192 207 214 220 256 285 307 317 316 306 281

Losses by Year $TH 0 0 0 0 0 0 54 337 12 614 557 936 688 85 96 371 139 795 43 0 0 0 0 0 650 923 2255 1255 1944 1131 2950 2381

LOAN LOSSES ON CIC LOANS ORIGINATED SINCE 1984: Exhibit 8

* NOTE: 1984 to 1992 Portfolio Balance $M = Notes Sold to Purchasers. 1993 to 2015 Portfolio Balance $M = Notes Sold to Purchasers plus In‐House and Construction CIC loans, Regency Sale Loans and Fixed Rate Pool.

FISCAL YEAR

34

300 300 440

1396 1744 1419

100 200734 829 833 675 723 1041 1390 1695 1956 1806 1906

1407 1506 1556 1606 1657 1956 2019

2412 2192 1639

16391639

163913001335 1675

19752100 2200 2250 2300 2350

23501750

870 1284

1172

24712671 3193

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

0

504

1008

1512

2016

2520

3024

3528

4032

4536

5040

5544

6048

6552

7056

7560

8064

8568

Thou

sand

s

CIC Contra Asset Account CIC Net Asset Loss Reserve CIC Flex Program Reserve

Noteholders' Restricted Reserve Regency Loan Sale Loss Reserve General Board of Pensions ‐ Fixed Rate Pool Loss Reserve

* CIC In House Loans ($MM) 37 31 41 30 39 42 47 31 47 56 52 52 49 22Noteholders' Balance ($MM) 43 63 84 109 144 150 157 164 148 141 158 163 151 100 110 126 132 132 133 189 199 215 234 233 230 225

Regency Balance ($MM) 49 41 36 29 25 21 16 15 12 8 7 6 4

GBOP Balance ($MM) 7 15 19 20 24 24 23 22 21 19

LOSS RESERVE BALANCES AS OF 9/30/2015: Exhibit 9

*CIC In House loans includes loans funded by CIC plus RAL loans in construction waiting to be sold to Noteholders.

10071151 1278

1403 1515 16911462 1134

250550

850900

900 900

1019

900

1014

Note: In 2010, CIC combined the Regular and Flex loss reserves into the “CIC Net Asset Loss Reserve” and initiated the “Noteholders’ Restricted Reserve”.

900

1609

FISCAL YEAR

1183

900900

1281

35

+

+

+ ++

++ + + + + + + +

+

++ +

++ +

++

+ + + +

*

*

** *

* ** *

* ** * * *

**

* ** *

* **

* **

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 AVG0

1

2

3

4

5

6

7

8

9

10

11

12

% R

ETU

RN

Investor Net Return3 yr.Roll.Avg. 3 YR TNOTEMargin

*+

Investor Net Return 9.9 9 8.5 8.4 7.5 7.1 6.4 6.8 7.6 7.3 6.8 6.7 6.4 6.6 6 5.3 4.7 4.8 5.7 5.5 4.9 4.6 4.1 3.6 3.3 2.6 2.63 yr.Roll.Avg. 3 YR TNOTE 8 8.4 8.1 7 5.8 5.2 5.6 6 6.2 5.8 5.6 5.6 5.4 4.8 3.4 2.7 2.8 3.6 4.3 4 2.9 1.8 1.2 0.8 0.6 0.6 0.8

Margin 1.9 0.6 0.4 1.4 1.7 1.9 0.8 0.8 1.4 1.5 1.2 1.1 1 1.8 2.6 2.6 1.9 1.2 1.4 1.5 2 2.8 2.8 2.8 2.7 2 1.8

Note: The CIC INVESTOR return is calculated by averaging each month's net interest remitted (Gross Interest less Service Fee 375 basis pts less Funding to Loss Reserve 1.00 basis pts less Principal Losses) divided by the month's beginning portfolio balance. CIC operates on a fiscal year ending September 30. CIC rates quoted represent full year averages. Individual Investor spreads will vary depending on loan mix, funding policy, and Investor share of losses.

MULTIFAMILY NPA INVESTOR NET RETURN ON NOTES AS OF 9/30/2015: Exhibit 10

6.24.51.7

Note: In November 2013 the NPA was amended to increase the Investor Deposit from Interest to Loss Reserves by 50 basis points. CIC also increased its funding from Net Assets by 25 basis points.

36

CIC/CII CONSOLIDATED OPERATING REVENUE AND EXPENSES:

Note: CIC operates on a fiscal year ending September 30.

-

-

- - - - - - - - - - - - - - - - --

- -- - -

-- -

- --

+

+

+ + + + + ++ + + + + +

++ + + + +

+ ++

+ ++

+ ++

++

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

00.51

1.52

2.53

3.54

4.55

5.56

6.57

7.58

8.59

‐0.5‐1

‐1.5‐2

$ Mi llion

Revenue Operating Expenses Operating Surplus+ -

Exhibit 11

Beginning in 2010, with the start of the new Note Purchase Agreement, CIC reduced the servicing fee it retains as income by 25 basis points and placed this portion into the Multifamily Restricted Investor Loss Reserve. This resulted in a reduction of income to CIC in FY 2010 and subsequent years.

37

CIC/CII CONSOLIDATED NET ASSETS AS OF 9/30/2015 = $29.1 MILLION:

Exhibit 12

$24.1

$4.3

$26.1

$3.0

Unrestricted Restricted

9/30/2015$29.1 million

$26.1 million Unrestricted$3.0 million Restricted

9/30/2014$28.4 million

$24.1 million Unrestricted$4.3 million Restricted

38

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