News
Wall Street banks are scaling back their role in supporting debt sales that have helped online lending companies double their originations every year since 2010. Historically, investment banks have earned fees by helping lenders pool and store their loans until enough are aggregated for sale to investors. But now, a number of Wall Street firms are considering limits to their financing for companies that lend to higher-risk borrowers. The caution comes in response to a May ruling by the U.S. Appeals Court in Manhattan, which threatens to remove a protection that non-bank lenders have relied on to make high-interest loans. The core issue is whether alternative lenders can pay a bank in an unregulated state to make loans to borrowers in other jurisdictions, where the interest rates could be considered usurious.
OneUnited Bank and BankPlus were recognized last week in ICBA's Top Community Bank Leaders in Social Media list. More than 6,000 community banks throughout the nation were eligible to be part of the list and nearly 300 banks were nominated. Community banks were chosen based on their engagement with fans and followers, the content distributed on their social media platforms, the number of followers they have and the frequency of posting new content. “It is an honor for us to be recognized by ICBA for our efforts on social media because we see it as a unique, essential and vital channel for communicating with our customers and community," said OneUnited Bank President & COO, Teri Williams.
Banks that remain in the Troubled Asset Relief Program face limited options for exiting the nearly seven-year-old initiative. The Treasury Department still holds securities in 21 banks, compared to 707 when the program was at its height. The ranks have shrunk as banks exit the program or have their shares auctioned off to private investors. Now, many of the banks remaining in the portfolio are the more challenging prospects. "Treasury is continuing to implement the three-pronged exit strategy" for Tarp, a Treasury spokesman said. "That strategy includes waiting for those banks that are able to repay in full in the near future to do so, restructuring the investments in limited cases, and selling investments through auctions in cases where the bank is not expected to pay in the future."
Alden McDonald, President and CEO of CDFI Bank Liberty Bank says the Hurricane Katrina recovery in New Orleans is far from complete. Despite a rising narrative of a recovery that has transcended racial boundaries, a black homeowner was more than three times more likely than a white one to live in a flooded part of town — and the legacy of that disparity lingers on. Today, there are still 100,000 fewer black residents living in New Orleans than at the time of Katrina. In the aftermath of the storm, Liberty committed itself to getting its customers back on their feet, with generous grace periods on home and other loans. Its efforts continue today in the form of its $20 million Gentilly Homeowner Initiative, which helps families return to the city and rebuild.
City National Bank of New Jersey in Newark has completed a $20 million recapitalization. The $257 million-asset bank raised capital from several investors including Skopos Impact Fund, Prudential Insurance Co. of America and Industrial Bank of Washington, D.C. The recapitalization will allow City National to continue as a certified CDFI. “For more than four decades, City National Bank has worked to revitalize urban areas. We are excited that a number of top-tier impact investors have deemed our efforts worthy of support,” said City National Bank President and CEO Preston Pinkett. City National Bank continues to operate under a December 2010 consent order from the OCC.
Urban Partnership Bank of Chicago is in discussions with the FDIC on a buyout of two agreements under which the agency shares losses on hundreds of millions of old ShoreBank loans still on UPB's books, according to sources familiar with the matter. Urban Partnership hopes the buyout will allow it to secure enough cash to shore up its capital base. When the FDIC seized ShoreBank and transferred its assets and deposits to newly created Urban Partnership in 2010, the agency agreed to share losses on ShoreBank's commercial and residential loans, an arrangement scheduled to expire Sept. 30 exposing the bank to full future losses. Urban Partnership still has well over $300 million in loans covered by the FDIC agreements.
A new profile of The Bank of Kilmichael tells how a family owned community bank is bringing tailored financial services to small towns in Mississippi. The Bank of Kilmichael was formed in 1904 and has been in the hands of the Mortimer family for four generations. It is the kind of Southern hospitality bank where employees know their customers by name. “The bank’s employees have remained loyal to that friendly customer service,” said Buddy Mortimer, president and CEO of the bank. “As a certified CDFI, we have demonstrated a track record of effectively serving these un-banked areas with loan and deposit services.” Bank of Kilmichael intends to expand to a fourth branch in Eupora, Mississippi later this month.
CDBA member Virginia Community Capital seeks a community programs and impact manager to oversee the implementation, management and supervision of the bank’s advisory services and community programs. This position works to identify, build and implement programs to support VCC’s mission based lending. Among other duties, this person also manages research projects evaluating VCC’s community impact.
National Community Investment Fund (NCIF) has opened registration for the 2015 NCIF Development Banking Conference to be held November 19 and 20 in Chicago, Illinois. The conference will bring together representatives of mission based banks, involved regulators and interested investors. The topic of this year's conference is "The Impact We Make" and will revolve around defining the future of the mission-oriented banking industry, reimagining business models, social impact metrics and innovative strategies for success. Register for the conference here.
Housing mobility, the idea of moving poor families into wealthier neighborhoods where they have access to better schools and services, has been gaining traction in recent weeks. The Supreme Court upheld a decision that forced the state of Texas to shift the construction of affordable housing to areas where little such housing exists. President Obama released a new rule for the way HUD distributes housing money, requiring regions to more carefully integrate their housing stock. But housing integration has downsides. Building new affordable housing in wealthy areas takes investment away from the downtrodden areas that most need it. Moving poor children to better schools can help those individual students, but does nothing to improve the sub-par schools they left behind.