Bronx-based Spring Bank is launching “Borrow and Save,” a credit building product designed to help borrowers bridge income gaps without resorting to payday loans. "Borrow and Save" is a 6 to 12 month loan of up to $1,500 with no minimum credit score requirement. The loan is underwritten on the basis of an individual’s demonstrated ability to cover payments. One quarter of the loan is placed in a free savings account that is available when the loan is repaid. The goal is to help borrowers break the cycle of unsustainable borrowing, improve their credit scores and move toward healthier savings habits.
In a video interview with Forbes Magazine, Beneficial State Bank CEO Kat Taylor discussed the bank's new social impact metrics, its rebranding from OnePacific Coast Bank and the power of community development banking. "If you think about any of the practices in the world that we need to change, they're all enabled and amplified by finance," Taylor said. "Finance -- and the banking system in particular -- is what amplifies the whole money supply and facilitates commerce. It's what allows growth and when we get it right, it's very very good and when we get it wrong it's very very bad. So it seemed particularly important to us to suggest a way of banking that would actually be beneficial."
Consumers are banking less often on desktop computers as an increasing number of people turn to mobile phones, ATMs and even branches to handle their finances, a survey released by the American Bankers Association's finds. The Internet led the pack in the poll, with 31 percent of depositors saying that handling transactions on a laptop or personal computer is their most commonly used method. But that's down from 39 percent in 2013. Meanwhile, mobile banking, branches and ATMs all showed gains. Branches and ATMs ranked second and third. Ranking fourth was mobile banking, which garnered 10 percent of responses, up from 8 percent the prior year. A separate study found that check deposit via smartphone app doubled in 2013 from the previous year.
Alternative lenders that can turn around a deal within a couple of days or offer loans that last just a few months could disrupt lending – but critics warn their flexibility and speed come at a price. Annual percentage rates on the loans can soar above 100 percent, and there can be steep fees and penalties for things like prepayment. Some lenders have even been accused of hiding APRs from borrowers. "125 percent APR for a loan is just not OK in my book," says Mark Pinsky, president and chief executive of Opportunity Finance Network, a CDFI advocacy organization. But alternative lenders counter that APR is not the best way to judge the short-term loans.
Southern Bancorp Community Partners' new Community Champions program aims to provide up to $8,000 in home purchase or renovation assistance to teachers, nurses, police officers, firefighters and other local public servants. The program is one of four Southern Bancorp projects funded with a grant from the U.S. Department of Housing and Urban Development. “The Community Champions program rewards those who leverage their time and talents for the good of our community by helping them make Helena their long-term home," said Brooke Gerber, Community Champions coordinator and Southern Bancorp consultant. Other programs Southern Bancorp is facilitating in partnership with HUD include the Helena Jobs Incentives, the Riverside Renewal Project and the Helena Start-up Challenge.
Despite the outcry surrounding the new Qualified Mortgage rule instituted in January, mortgage data have shown little evidence of change to the Fannie Mae, Freddie Mac or Ginnie Mae markets and minimal impact on the loans banks hold in portfolio. Researchers believed they would find a reduction in the number of interest-only loans, fewer loans to borrowers with high debt-to-income ratios, less small loans and reduced adjustable rate mortgage share. Instead, researchers saw each of these indicators remain relatively stable. The authors theorize that the rule’s impact was muted because credit standards had already been tight before the rule went into effect, and because most of the lending is being done through GSEs or Ginnie Mae, which are not yet subject to the rule.
Pan American Bank has been out and about in the community, sponsoring booths at Chicago-area events. The bank sponsored a booth at Melrose Park, Illinois' Our Lady of Mount Carmel Feast, the longest running religious feast in the United States. Pan American showed their support with free giveaways and fresh roses which were distributed to the participants of the procession on Sunday. Pan American also sponsored a booth at the 4th Annual 5k Safe Run to End Homelessness, an event organized by A Safe Haven, a non-profit organization dedicated to helping homeless achieve self-sufficiency.
The U.S. Treasury Department has guaranteed $325 million in new bonds to help support economic development opportunities in low-income and underserved communities through the CDFI Bond Guarantee Program. The program is designed to help CDFIs fill a financing gap in underserved areas by providing long-term, fixed rate capital. Four institutions received the bond guarantees in the inaugural round. Clearinghouse CDFI will receive $100 million on account of a bond issued by Opportunity Finance Network; Community Development Trust, LP will receive $125 million on account of a bond issued by the Community Reinvestment Fund; Local Initiatives Support Corporation and Enterprise Community Loan Fund, Inc. will each receive $50 million on account of two bonds issued by Bank of America CDFI Funding Corporation.
Southern Bancorp has agreed to acquire the Bank of Bolivar County, which operates two branches in the Mississippi communities of Shelby and Mound Bayou. “Across the country, we’re seeing a trend of small, rural community banks closing their doors due to increased regulatory costs and declining profit margins,” said Southern Bancorp, Inc. CEO Darrin Williams. “And larger banks are usually unwilling to purchase them... Southern, however, is different. Our mission is to focus on rural, distressed markets, because we understand that without access to responsive and responsible financial capital... more businesses will close, more jobs will be lost, and ultimately, these communities will disappear.”
Amazon's launch of its new mobile card reader, Amazon Local Register, presents direct competition to mobile card processor Square as well as banks that offer their own mobile card readers, such as PNC, BBVA and Bank of America. The new Amazon reader has a low introductory swipe fee of 1.75% that will last through the end of 2015. After that period, the rate will bump up to 2.5% -- still below Square's 2.75%. Amazon is able to keep its pricing so low because many of its customers have pre-registered their bank account numbers for ACH transactions, which are less expensive than credit cards. For now, however, Square maintains an advantage in terms of the scope of its business support products, which include appointment-scheduling services, small-business lending and interactive receipts.