Association Funds, Investments & Access to Capital - First Citizens Bank Board of Directors Seminar

This seminar, presented by Nicole from First Citizens Bank's community association banking division and hosted by KS Management, focused on the financial management, protection, and strategic lending options for community associations. Key Themes Fiduciary Responsibility and FDIC Protection Board members are tasked with protecting association funds while ensuring liquidity and competitive returns. The FDIC limit is $250,000 per tax ID per financial institution. When associations exceed this limit, strategies like using sweep accounts (Insured Cash Sweep) or Certificate of Deposit Account Registry Services (Cedars) help maintain full FDIC protection by distributing funds across multiple banks. Investment Best Practices The primary goal is the preservation of principal. A reserve study is essential for accurate, long-term financial planning. High-risk investments like stocks or Bitcoin are discouraged; safe, low-risk options such as money market accounts, CDs, and laddered CDs are preferred. Lending and Capital Improvements Loans are not inherently negative and can serve as vital safety nets or tools to complete necessary capital projects in a single phase, which is often more cost-effective than phasing. Loan collateral typically consists of the association's accounts receivable. Associations must meet specific criteria, such as low delinquency rates, to qualify for various loan products, including lines of credit, quick-term loans, and standard-term loans. Operational Support The bank and management company work together to provide education, financial analysis, and operational support to boards on a complimentary basis. Centralizing financial activity helps with fraud detection and transparency.