Banks that operate more like fintechs outcompete their more traditional competitors on certain financial products, researchers at the Federal Deposit Insurance Corp. found. The study used a new measure of technology adoption at banks to look at Paycheck Protection Program loan volumes in the second quarter of 2020. Banks in the top 15% for tech adoption made more loans than similarly sized competitors by 9 percentage points — and they gained customers outside their usual markets more often, the data showed. The findings prove the importance for community banks of adopting technologies fintechs use, such as cloud computing and online loan applications. In responding to the findings, analysts say banks that have not integrated those technologies should devise a strategy for doing so.
Can a social media site help stanch the flow of community banks selling themselves? Independent Bankers Association of Texas President and CEO Christopher Williston thinks his group's Bankers Helping Bankers service just might. The IBAT is pitching Bankers Helping Bankers, which matches banks with similar technology profiles, to other trade groups, primarily state associations like itself that are affiliated with the Independent Community Bankers of America. It aims to make Bankers Helping Bankers available to every community bank in the country. "We can unabashedly, unequivocally say we want Bankers Helping Bankers to be part of what saves community banking," Williston said in an interview. The platform's basic value proposition lies in giving bankers a straightforward, free means of evaluating technology options — a task small institutions often struggle with.
Federal Deposit Insurance Corporation (FDIC) Acting Chairman Martin J. Gruenberg released last week the following statement and summary of the FDIC's priorities for the coming year: "The FDIC's core mission is to maintain stability and public confidence in the U.S. financial system. The FDIC carries out this mission through its responsibilities for deposit insurance, banking supervision, and the orderly resolution of failed banks, including systemically important financial institutions. Banking supervision encompasses safety and soundness and consumer protection, both of which are essential to this important mission. While there are many pressing issues the FDIC will have to address this year, key priorities are: the Community Reinvestment Act; climate change; the Bank Merger Act; crypto-assets; and the Basel III capital rule. All of these priorities will require close collaboration among the federal banking agencies. I also want to acknowledge the extraordinary dedication of the FDIC staff who will be critical to carrying forward the work on these priorities. In addition, I want to recognize Chairman Jelena McWilliams for her contributions to the FDIC, in particular for her commitment, which I share, to diversity and inclusion and minority depository institutions."
The recent decision by Twin Cities-based Sunrise Banks to sell two of its former branch buildings to local nonprofits illustrates the commitment of the company and its CEO David Reiling. Sunrise Bank announced in December 2020 that it would close two branches — one on University Avenue and Vandalia Street, the other on the city's east side — and transfer customers to its University Avenue branches on Marion Street and Como Avenue. The $1.9 billion Sunrise also has a pair of offices across the Mississippi in Minneapolis. The bank worked closely with the nonprofit Creative Enterprise Zone on the sale of the Vandalia location. That space will be shared by two nonprofits: Habitat for Humanity of Minnesota and the Northcountry Cooperative Foundation. The other former branch, on Arcade Street near Johnson High School, was acquired by the Twin Cities Community Land Bank on behalf of 30,000 Feet, a nonprofit arts and culture organization serving Black youth. The site will be used for after-school programming near Johnson High School, where more than 4-in-5 students receive free and reduced lunches.
Rohit Chopra, the director of the Consumer Financial Protection Bureau, raised hackles by launching a broad inquiry last week into so-called junk fees charged on run-of-the-mill financial products such as loans, mortgages and credit cards. "Service charges inflate ticket prices, resort fees hike our costs to stay in hotels, and our phone bills are often laden with mystery charges," Chopra said in a Jan. 26 press call. "These junk fees make it harder for us to choose the best product or service, since the true cost is hidden. Banking is no different." But this initiative has led bankers, consumers and policy experts to ask what exactly makes a fee a junk fee? Many bankers and lenders insist that fees they charge are related to specific types of work or services performed, and existing laws and regulations already prohibit excessive fees, so it isn't clear what problem the inquiry is designed to solve.
Darrin Williams, an attorney and former Arkansas state representative, wasn't interested when Southern Bancorp, Inc. approached him about a leadership position in 2013. His wife, however, reminded him of how rewarding he'd found it to facilitate a financial principles course at his church. Williams reconsidered and became CEO of Southern Bancorp, a group of three community development financial institutions (CDFI): Southern Bancorp Inc., the holding company; Southern Bancorp Bank, a $2 billion-asset community bank headquartered in Arkadelphia, Ark.; and Southern Bancorp Community Partners, a $40 million nonprofit loan fund. Since then, Williams has developed a strong vision of how community banks and CDFIs can partner to build more prosperous communities. "CDFIs are economic and financial first responders for people who are not well served by traditional banks," he says. "I'm issuing a call to action for community banks and CDFIs to work better together."
Special purpose credit programs (SPCPs)—which allow banks to offer credit on favorable terms to borrowers who have suffered economic disadvantage and share common characteristics (e.g., race or income)—could provide the kind of homeownership boost to Black communities today that the New Deal provided to white people in the 20th century. We have previously shown how the effects of generations of systemic racism and economic exploitation make credit less accessible and more expensive to Black borrowers. These conditions drive the 30 percentage-point homeownership gap between Black and white households, and they contribute to the higher costs and smaller returns Black homeowners experience.
Arkadelphia, Ark.-based Southern Bancorp Inc., the holding company for Southern Bancorp Bank, agreed to acquire Marion, Ark.-based FCB Financial Services Inc. and subsidiary Premier Bank of Arkansas. The terms of the transaction were not disclosed. Southern Bancorp Bank has about $2 billion in assets, while Premier Bank of Arkansas has about $200 million in assets and three branches operating in Marion, West Memphis and Jonesboro, Ark., according to a news release. The acquisition is expected to close in the second quarter. With the deal, Southern Bancorp locations across Arkansas and Mississippi will grow to 54. With the acquisition, Southern Bancorp will enter Crittenden, Ark., with two branches to be ranked third with a 11.62% share of about $1.34 billion in total market deposits, and Craighead, Ark., with one branch to be ranked No. 19 with a 0.35% share of roughly $3.67 billion in total market deposits, according to S&P Global Market Intelligence data.
The Paycheck Protection Program (PPP) provided small businesses with roughly $800 billion dollars in uncollateralized, low-interest loans during the pandemic, almost all of which will be forgiven. With 93 percent of small businesses ultimately receiving one or more loans, the PPP nearly saturated its market in just two months. We estimate that the program cumulatively preserved between 2 and 3 million job-years of employment over 14 months at a cost of $170K to $257K per job-year retained. These estimates imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms. Program incidence was highly regressive, with about three-quarters of PPP funds accruing to the top quintile of households. This compares unfavorably to the other two major pandemic aid programs.
Quontic Bank Holdings Corp., the parent company of Quontic Bank, announced today that it has appointed 10 members to a newly created Black and Hispanic Community Development Advisory Board. The advisory board will allow Quontic to formally engage experts involved in non-profit, financial literacy, and organizations supporting equitable access to affordable housing development and ownership to Black and Hispanic populations. This advisory board will work closely with Quontic's existing advisory board that advises on Quontic's geographic investment area, the greater New York City metropolitan area, as well as Quontic's nationwide reach to underrepresented low-income populations.