Oliver Wyman provides critical insight on non-financial payment reporting data or “alternative data”, which can improve access to credit for millions of Americans by overcoming two key limitations of today’s best lending practices and enhancing the accuracy of existing credit scores.
Tucked away in the last month’s regulatory form report by the Treasury Department was a nascent effort to reform the way regulators implement the Community Reinvestment Act (CRA). The CRA, a law intended to compel banks to offer loans and financial services to low- and moderate- income areas, has been criticized by community groups as out of step with modern banking practices. The report said that regulators need to “better align the benefits arising from banks’ CRA investments with the interest and needs of the communities they serve.”
Amidst soaring housing costs, the Bay Area has a well-documented shortage of affordable homes. The East Bay Asian Local Development Corporation (EBALDC) has recently launched the new Oakland Healthy Neighborhoods Fund, whose investors will purchase apartment buildings at risk of converting to higher rents and then restrict rent increases for eligible low- and moderate-income residents. Beneficial State Bank is one of several CDFIs and nonprofit organizations partnering with EBALDC to ensure that these renters can stay in their homes.
The Consumer Financial Protection Bureau (CFPB) recently announced the appointment of new consumer experts from outside the federal government to the Consumer Advisory Board, Community Bank Advisory Council, Credit Union Advisory Council, and Academic Research Council; the four bodies will provide advice to CFPB leadership on a broad range of consumer financial issues. Among the new appointees to the Community Bank Advisory Council is Max Yates, Senior Executive Vice President and Chief Risk Officer of BankPlus in Ridgeland, Mississippi. Yates is a member of the CDBA Board of Directors.
A recent survey of 219 US banks conducted by the American Bankers Association found that 87% do not have a formal payments strategy. 70% do not analyze payments data to gain insights into customer behavior. New payment technologies such as digital currencies, person-to-person payment apps, real-time payments, and mobile wallets threaten to erode the indispensable role that small banks have long played in their customers’ lives. There are certain steps that small banks should take to better position themselves for the payments revolution.
Vernon, Alabama is just a dozen miles from Caledonia, Mississippi, but the Bank of Vernon took 11 years to cover that distance. On June 28th, representatives and officials gathered at the ceremonial opening of the bank’s new branch in Caledonia’s primary retail area. The tiny town of 1,100 residents has been without a bank branch for 15 years, but it is growing steadily. “We’ve got some great plans for the area, and we appreciate the support of the people of Caledonia,” said Bank of Vernon CEO Andy Johnson.
The Federal Reserve just published its 2016 Small Business Credit Survey examining current small business conditions and credit environment. Forbes reports on the results: although big banks are still the major lenders, small business owners are having trouble accessing credit. Owners are constantly exposing themselves to risk because they cannot find adequate financing options. While many are turning to online lenders, SBA loans are a largely underutilized resource.
A report quietly released by the Treasury Department supports the perforamnce of the Bank Enterprise Award (BEA) program, saying there is "clear evidence" it helps recipients provide financial services to the must underserved communities.
In June, the Greater Minnesota Housing Fund announced the identities of 7 public and private investors that have raised over $25 million to acquire and preserve 1,000 unsubsidized, affordable rental units in the Twin Cities. The fund comes at a critical time for the region, which has recently lost thousands of once-affordable rentals. Sunrise Banks was a major investor in the new initiative.
Thanks to an $84,000 Affordable Housing Program (AHP) grant from Community Bancshares and the Federal Home Loan Bank of Dallas (FHLB Dallas), 12 low-income families in George and Greene counties in Mississippi will receive significant upgrades to their homes, most of which lack basic air conditioning. The George/Greene Habitat for Humanity (HFH) will spearhead the renovations. “We are a rural Mississippi affiliate with no major industry in our network,” said George/Greene HFH Executive Director Sue Trosclair. “We have to raise our own funds, so this grant is very important to us.”