In November 2019, OFN released the 21st edition of its Side by Side publication, an annual reference guide for CDFI industry practitioners, investors, and others interested in assessing the opportunity finance industry’s activity and performance. This year’s edition uses FY 2018 Annual Member Survey data from 214 OFN member CDFIs to illustrate numerous peer group analyses split by primary financing sector and asset size.
What's New in the FY 2018 Side by Side Report?
New to this year’s report, several lending sectors added peer groups due to OFN’s increased membership and shifting primary loan sectors. The Microenterprise sector added a fifth peer group, the Business sector added a seventh peer group, Community Services added a fourth group, and Housing to Individuals added a fifth group.
Three key data points from the FY 2018 annual survey are net charge-off ratios, interest rate on borrowed funds, and interest rate charged on outstanding loans receivable. Among all loan funds, the average net charge-off ratio increased from 0.95% in FY 2017 to 1.11% in FY 2018. Except for CDFIs primarily lending in the Housing to Individuals and Microenterprise sectors, whose net charge-off ratios were relatively unchanged, the Commercial Real Estate, Community Services, Consumer, and Housing to Organizations lending sectors exhibited decreases in net charge-off ratios that were more than offset by increases in the Business and Other sectors.
Additionally, while OFN member loan funds’ average interest rate paid on borrowed funds increased from 2.36% in FY 2017 to 2.45% in FY 2018, their average interest rate on outstanding loans receivable decreased from 6.39% to 6.11% respectively, suggesting a tighter overall spread. We look forward to exploring these trends in more detail in 2020.
How the Side by Side Report Can Inform Investors, CDFIs, and More
For investors, Side by Side is an excellent resource for understanding relevant aspects of the opportunity finance industry. Including key ratios on financing and operations, the report helps investors evaluate opportunity finance institutions for future investment, in addition to benchmarking current CDFI investees against their peers. With more than 34 peer groups across seven financing sectors to compare, Side by Side is a uniquely valuable resource.
For CDFIs, including non-OFN members, Side by Side is an important resource for comparing your organization’s activities and performance against peers. Peer group comparisons can inform management and operating decisions related to strategic planning and performance objectives, among other initiatives. For CDFIs in an expansion or reorganization phase, this information can help identify key differences in performance and financial composition among CDFIs operating within various lending sectors and asset sizes. Many organizations use Side by Side to inform and educate their boards of directors, funders, and investors.
How to Access the FY 2018 Side by Side Report
OFN members can download a free Side by Side report by logging into CDFI Connect and downloading a copy from the “Member Resources” section or through OFN’s publications site by clicking "Purchase" and entering the coupon code included in last week’s email. OFN allies also received an email last week with download instructions.
Investors and other non-members can purchase a copy from OFN’s publications site for $250.
If you have questions about Side by Side or other OFN research publications, please contact Lance Loethen at firstname.lastname@example.org or 215.320.4343.