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.
A stretch of Frelinghuysen Avenue in Newark's South Ward will soon have a bank branch again. Industrial Bank is planning to open a location at 550 Frelinghuysen Avenue near Haynes and Meeker Avenues. The company submitted an application to the Federal Deposit Insurance Corporation in order to proceed with the proposal, according to a branch establishment notice. Industrial Bank is based in Washington, DC. and most of its locations can be found in the district or its Maryland suburbs. The company expanded to Newark just over two years after the Treasury Department’s Office of the Comptroller of the Currency shut City National Bank down.
The Federal Reserve Board on Thursday released a discussion paper that examines the pros and cons of a potential U.S. central bank digital currency, or CBDC. It invites comment from the public and is the first step in a discussion of whether and how a CBDC could improve the safe and effective domestic payments system. The paper does not favor any policy outcome. "We look forward to engaging with the public, elected representatives, and a broad range of stakeholders as we examine the positives and negatives of a central bank digital currency in the United States," Federal Reserve Chair Jerome H. Powell said. The paper summarizes the current state of the domestic payments system and discusses the different types of digital payment methods and assets that have emerged in recent years, including stablecoins and other cryptocurrencies. It concludes by examining the potential benefits and risks of a CBDC, and identifies specific policy considerations.
The new Virginia Small Business Resiliency Fund program launched with more than $9.7 million in grants for 12 projects throughout the state, former Gov. Ralph Northam announced Jan. 13. The fund, developed by the Department of Housing and Community Development, expands access to capital and technical assistance for small businesses adversely or disproportionately affected by the COVID-19 pandemic, according to a news release. Additionally, the state is granting $1.5 million to Virginia Community Capital’s Economic Equity Fund Initiative to provide low-cost financing for 15 or more small-, women-, and minority-owned businesses while expanding its loan loss reserve and building internal capacity by hiring a technical assistance provider for clients and borrowers.
The Center for Disability-Inclusive Community Development (CDICD), managed by National Disability Institute (NDI), announced today the three winners and their partners of its Second Annual Inclusive Community Development Awards: True Link Financial and Sunrise Banks; Life Asset, a Community Development Financial Institution (CDFI); and Goodwill Industries of East Texas and Prosperity Bank. The purpose of the awards is to raise the visibility of financial institutions' and community-based organizations' activities that are promising and exemplary in support of low- and moderate-income (LMI) individuals with disabilities to improve their financial stability and health and be more active participants in adding value to our nation's economy.
At the moment the Great Recession hit in 2008, America boasted 215 minority-owned banks. Today, only 146 so-called "minority depository institutions" remain. That decline, a trend that might be termed "The Great Winnowing," began well before the bottom fell out of the nation's housing market, and it reflects, in part, a broader trend toward consolidation within the world of finance. But Washington has also played an egregious role. Recent congressional funding boosts in these institutions are a good start. But to end the vicious cycle, Washington must be much more aggressive given the inevitable dips in the economy.
A group of community banks is poised to fulfill a high-tech goal it set last year: to let customers buy and sell bitcoin on mobile banking apps. An estimated 300 banks, some of which unveiled their plans in June, will go live in the first or second quarter with this service with the help of the fintech NYDIG. The banks, the American Bankers Association and the Independent Community Bankers of America have made investments in the company as part of the effort. Several regulatory and security concerns have been worked out in the months since the initial announcement, and partnerships and integrations between NYDIG and the banks’ existing technology vendors have been completed, according to participants. The initiative addresses a need customers have clearly expressed, banking and trade group officials said.