News
Southern Bancorp of Arkadelphia, Ark. is buying Bank of Bolivar County, a small $15.9 million-asset Mississippi Delta bank. Bank of Bolivar County has two locations: one full-service office and one limited service branch. These will build on Southern Bancorp Bank's presence in Bolivar County, where it currently operates one branch. The acquisition marks a step forward for Southern Bancorp's efforts to increase the availability of capital to Mississippi residents; the bank is also in the process of adding its third branch in Hot Springs, Miss.
The modifications to Dodd-Frank included in the recent omnibus bill marks what could be the first in a series of attempts to modify the regulatory legislation. With Republican majorities taking hold in the House and Senate and some Democrats showing willingness to compromise on the legislation, Wall Street advocates see an opportunity to secure less restrictive regulations. Among the likely flashpoints is a proposal to restructure the CFPB by allowing Congress to set its budget and setting agency policy with a bipartisan commission rather than a single director. Regulatory relief is also a likely target, including new requirements that agencies pursue more cost-benefit analysis when writing rules.
The Senate has adjourned for the year without acting on a bill that would require one of the seven members of the Fed’s board of governors to be a community banker. The Senate had initially approved the measure, inserted into a bill passed by the House that extended the federal terrorism insurance program. But the Senate was unable to pass the final bill before adjourning. Sen. David Vitter (R., La.) proposed the legislation, saying a person with small-bank experience would act as a balance to board members from academic backgrounds. He plans to resurrect the proposal as a standalone bill and will look for opportunities to amend it to other pieces of legislation.
Urban Partnership Bank has announced it is now a certified CDFI in Detroit and Wayne County, Michigan, affirming the bank's commitment to the Detroit area. The bank was also recertified in Chicago, Cook County and Illinois. In addition, the bank has announced that their board of directors is now a 12-member team with the addition of Michael Lewis. Lewis served as regional president and executive vice president of the Chicago Metro Region of BMO Harris Bank until his retirement in 2013. “The CDFI designations and the addition of Mike Lewis to our board further underscore our commitment to serve neglected communities and build a better future,” said Urban Partnership Bank CEO William Farrow.
OneUnited Bank will be providing a $10,000 gift to jump start the Employ Miami-Dade initiative. The goal of the initiative is to centralize resources for locals to get workplace readiness training and jobs. Employ Miami-Dade will first target the construction industry, helping local workers get hired by the construction firms which are tackling the county's current building boom. Trainees who qualify will receive a bi-weekly stipend of $250, initially funded by OneUnited's $10,000 gift. OneUnited's commitment to the initiative will extend long-term; the bank will provide workers financial education, helping them establish banking relationships and create budgets. “We want to share knowledge of how to save for a rainy or sunny day,” Williams said.
A new report examines the relationship between rapid growth of nonperforming loan servicing costs and tight mortgage credit standards. In 2013, the annual cost of servicing a nonperforming loan was 15 times that of servicing a performing loan—$2,357 versus $156. In addition, the cost of servicing nonperforming loans has risen almost twice as fast as performing loans -- from $482 in 2008 to $2,357 in 2013, a 489 percent increase. As a result, servicers charge riskier borrowers higher, sometimes unaffordable, rates. The report cites Fannie and Freddie's compensatory fees charged on tardy foreclosures, inconsistent Federal Housing Administration foreclosure timelines and vague property preservation and conveyance standards as causes of the growing costs.
Community Bank of the Bay is bucking the trend of fewer branches, moving its Danville, California office to a larger location and adding a loan office in San Mateo. The bank was initially advised by its financial backers that a branch wasn't needed as banks increasingly opt for online- and mobile-banking options. But along the way, they had a change of heart. "A branch is a bit of a security blanket. There are those 'emergency times' when you need to run into a bank," said CEO Bill Keller, citing the need to get a cashier's check or explore loan options to complete a deal. The bank hopes the move will foster its close connection to the Danville community. "To me that's the real value of the CDFI designation," Keller said. "It clearly articulates what we're all about."
Sunrise Banks fought to buy American Bank of St. Paul in federal bankruptcy court Tuesday. American Bank's holding company, American Bancorporation, filed Chapter 11 bankruptcy in May after creditors said they were owed $48 million due to missed payments on investor securities. American Bancorporation subsequently auctioned both its subsidiaries, American Bank and community development organization AmeriNational Community Services Inc. (ACS). The auctions generated a $17 million offer from Deerwood Bank for the bank's assets and a $15.2 million offer for ACS from investment firm OSP Group. But Sunrise Banks wants the court to consider its combined bid. Sunrise argues their bid is $100,000 less than the winning bids, but would be cheaper than two separate deals and more likely to win approval from regulators.
CBW (formerly The Citizens Bank of Weir) has been rebuilt to offer high-tech services not available at even the largest banks. Former Google employee Suresh Ramamurthi and his wife, Suchitra Padmanabhan, bought the tiny bank in 2009. Working with a team of software engineers, they have used it as a testing ground for a range of innovative financial services. Most promising is an instant payment system similar to wire payments — but much cheaper. The transfers rely on a custom built back-end that instantly rates the risk of transactions using 20 to 40 factors, including a customer’s transaction history and location. The fees from this service and others dwarfs the money that CBW makes in Weir; in the last quarter, the bank earned $60,000 from its loans and $720,000 from the rest of its business.
Albina Community Bank provided financing for a new 4-story, 57-unit apartment building in Portland, Oregon's Kenton neighborhood. The new building is a transit oriented development project with solar electric panels on the roof and bike parking on the first floor. The building was designed to reflect the historic nature of Oakland's Kenton neighborhood and will feature art and architectural features created by local businesses. “This project aligns perfectly with our mission and focus as a [CDFI]. We look forward to supporting this new development in the Kenton community,” said Cheryl Cebula, president and CEO of Albina Community Bank.