News
Southern Bancorp’s 2014 annual report shows continued financial success for the bank and growing social impact. Since acquiring several institutions in 2009, Southern has significantly increased investment in their communities. The bank has tripled capital investment levels in Blytheville, Ark. since acquiring First National Bank and increased lending significantly in Trumann and El Dorado. The bank also made new acquisitions in 2014 that expanded its coverage into Eudora, Arkansas and Mound Bayou, Mississippi, high-poverty areas with few banking options. “We have yet again reached record profitability, and more importantly, we have created audacious goals for ourselves over the next decade, centered on affordable housing, job creation, and savings,” said CEO Darrin Williams.
Two new studies by researchers at Stanford and Harvard Universities highlight the effect of neighborhood amenities in creating disparities between white and black families. The Stanford study found that among white and black families with similar incomes, white families are much more likely to live in good neighborhoods — with high-quality schools, day-care options, parks, playgrounds and transportation options. In fact, the typical middle-income black family lives in a neighborhood with lower incomes than the typical low-income white family. The findings are particularly striking in light of findings of a recent study from Harvard researchers which found children whose families received public housing in better neighborhoods earned 31% more as adults than otherwise similar children placed into worse neighborhoods.
A new report by the Federal Reserve Bank of Boston finds that users of reloadable prepaid cards increasingly use their cards as a substitute for services provided by traditional banking accounts. Owners of reloadable prepaid cards who do not have checking accounts comprise 4.8 percent of U.S. adults. People without checking accounts were almost twice as likely to own a prepaid card as those who do have checking accounts. People with low household income were much more likely to own a prepaid card; 49 percent of people with household income below $25,000 own a prepaid card. About 33 percent of prepaid card holders without a checking account receive income to a card.
United Bank is opening a new business incubator to support the formation of new ventures in Atmore, Alabama. The bank plans to use the incubator to support the development of multiple businesses, supplying basic infrastructure and providing reduced rents to allow entrepreneurs time to grow and develop their businesses. “We are a [CDFI],” said United Bank Vice President and Business Banker Larry Strain. “And an advantage of being one is that it allows us to go outside the normal bank role and help develop the community’s business environment... The ideal is people who need office space, manufacturing on a small scale or people who might sell on the Internet and need fulfillment space. We are looking to provide a place that businesses can grow out of.”
The CDFI Fund has announced a 5 session nationwide listening tour to solicit public opinion as it crafts its new strategic framework. The tour aims to collect feedback on underserved community needs, areas for improvement and innovation and data use. The CDFI Fund encourages the participation of certified CDFIs, community development trade groups, foundations, local and state government entities, and others interested in community economic development. “The CDFI Fund views this listening tour as a unique opportunity for constructive dialogue to support the growth and success of CDFIs and the communities that they serve,” said CDFI Fund Director Annie Donovan. Register for the sessions here.
BankPlus is providing responsible short-term loans and financial education as part of the New Roots Credit Partnership, an initiative aimed at combating payday lending in Mississippi. The partnership is a collaboration between the Mississippi Center for Justice, banks and local employers. Since 2013, BankPlus has partnered with employers to run more than 50 three-hour classes for employees, teaching participants the basics of credit, how to create a household budget and how to save money. “These are people who aren't familiar with banking, it hasn't been a family tradition with them, so the idea of coming into a business institution and turning over their money to us and writing checks, that's a foreign idea for them," said Jack Webb, the chief retail banking officer at BankPlus.
Regulators are going beyond CRA ratings when assessing M&A deals amidst outspoken criticism from community advocates. Last year, the OCC required Valley National Bancorp to strengthen its overall CRA plan before acquiring 1st United Bank amidst pressure from community groups. The groups charged that, even though Valley National had received a “satisfactory” CRA rating, its CRA record in its New York City market was weak. Many banks looking into M&A deals are now beefing up their CRA plans and making them the centerpiece of their efforts to assuage community groups and regulators. When it comes to revising CRA plans, “it’s about making responsible loans and a commitment to the credit needs of the community,” said John Taylor, president and CEO of National Community Reinvestment Coalition.
The NCUA has proposed changes that would make it easier for credit unions to lend to businesses, making them more formidable competitors with banks and other lenders for commercial trade. The revisions would eliminate requirements that credit union borrowers personally guarantee loans as well as a provision that imposes 80% loan-to-value cap on collateral offered as security. The NCUA also expects to increase the amount of loans a credit union can make to a single borrower while lifting a cap on an institution's aggregate construction and development lending. Credit unions would still have to adhere to the current statutory cap limiting business lending to roughly 12.25% of total assets.
Chicago, Illinois-based First Eagle Bank was one of three banks awarded the Illinois Bankers Association Community Service Award. The Illinois Bank Community Service awards honor financial institutions in the state that demonstrate a strong commitment to community service. First Eagle Bank has maintained an “Outstanding” CRA rating since 2009 and has undertaken a number of community development initiatives, including providing an $850,000 subsidy to Mercy Housing Lakefront through the Federal Home Loan Bank of Chicago Affordable Housing Program. First Eagle has also partnered with the Chicago Housing Authority on its Student Internship Program, designed to provide job readiness training and placement opportunities for CHA residents.
The latest issue of the Southern Bancorp Mission News is out with details on a range of Southern's recent initiatives. Southern Bancorp's policy team is encouraging savings among low-income individuals by working with lawmakers on implementation of the American Savings Promotion Act. The federal legislation allows banks and credit unions to encourage savings with Prize Linked Savings programs -- cash-prizes awarded through savings raffles. Prize Linked Savings programs are fun, no-risk methods of encouraging customers to open savings accounts and make regular deposits. Southern Bancorp worked with Arkansas state legislators to craft regulation of the program in the state.