Recent News
The Boston Fed discussed new approaches to income inequality at a conference earlier this week. At the event, Federal Reserve Chair Janet Yellen expressed concern about the rapidly increasing wealth of the richest Americans at a time when living standards for most Americans remained stagnant. Eric Rosengren, the Boston Fed president, discussed its Working Cities Challenge program, which challenged officials, nonprofits and business leaders in Massachusetts cities to collaborate on three-year plans to help transform their neighborhoods. The conference focused on the systemic causes of... Read more
In an op-ed, Senate Banking Committee Ranking Member Mike Crapo (R-Idaho) urged regulatory reform to reduce the burden on small banks. "Institutions are faced with a choice: shift resources around to accommodate regulatory compliance, or pass the compliance cost on to consumers. Whether the bank decides to close a local branch or stop offering free checking accounts, consumers lose in either scenario," Crapo wrote. Crapo called on regulators to hold a series of outreach meetings with community bankers around the country leading up to regulators' upcoming review of burdensome banking... Read more
Rose Wageman, executive vice president and chief lending officer at First Eagle Bank, was profiled by Illinois Real Estate Journal earlier this month. Wageman noted that last year was a record year for First Eagle, with loan growth up 30%. "We do a lot of construction lending and the market is hot right now,” she said. “Projects are selling out very quickly at every price point. Lots of builders are coming back into the market. When I drive through some neighborhoods, it seems there are new projects on every block... The best part of my job is working with customers, many... Read more
Broadway Financial Corporation, parent of Broadway Federal Bank, f.s.b., has advanced its recapitalization effort by raising additional common equity and extending the maturity of its floating rate junior subordinated debentures. The sale raised about $9.7 million of new equity capital from investors led by an entity affiliated with Gapstow Capital Partners. The company’s remaining debt now consists solely of $5.1 million of junior subordinated debentures. “In conjunction with the improvements in the quality and performance of our loan portfolio, we are now able to devote... Read more
With the rise of 24-hour media coverage and unpredictable user-generated content, damage control has become increasingly difficult for companies. The public generally blames companies for their failings, but do not feel sorry for companies when they are victims -- even if they were harmed by criminals, as during the Target breach. Daniel Diermeier of the Harris School of Public Policy writes that rather than hoping for sympathy, companies should play the role of heroes who come to the rescue of the perceived victims -- their customers. Diermeier also advocates institutionalizing the... Read more
Urban Partnership Bank officials have announced that the bank has passed a lending milestone, exceeding $200 million in total loans since the bank began lending in 2012. Overall, UPB has made 243 new loans in less than three years, creating or retaining approximately 2,400 new jobs in urban communities. Over 50 percent of the loans support small businesses, nonprofits and affordable housing opportunities in Chicago’s South Side. "These milestones underscore the continuing growth of the bank’s small business and commercial real estate lending and our ongoing commitment to... Read more
CDFI loan fund Partners for the Common Good seeks a chief lending and credit officer to oversee PCG’s lending and loan participation initiatives, playing a key role in cultivating institutional investor participants and new lending partners. This is a senior position which oversees a portfolio manager and team of underwriting consultants.
Community financial institutions saw a 26 percent increase in the number of hours and employees required to meet regulatory compliance demands in the third quarter of 2014, according to data released by compliance management systems provider Continuity Control. The average community bank needed to devote 653 additional hours, or the equivalent of 1.86 full-time employees, to manage the 82 new regulatory changes added in the third quarter. To meet those needs, the average institution had to spend an additional $45,264 on compliance. Industry insiders speculated the new regulations,... Read more
Thousands of Americans who lost their homes in the housing bust now face more unpleasant fallout as debt collectors chase them down for the money they still owe. By now, banks have usually sold the houses. But the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. Now, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay. Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and bad publicity. But the housing crisis... Read more
OFN will be hosting more than 1,200 CDFI practitioners, funders, investors and policy makers at the 2014 OFN Conference in Denver, Colorado October 14-17. The theme of this year’s OFN Conference is how CDFIs can work together in the future, informed by their experiences of the past 30 years. The event will feature a practitioner-driven curriculum with a focus on strategic dialogue, all directed toward aligning capital with social, economic and political justice. Registration for the conference is still open... Read more
Southern Bancorp has distributed hundreds of thousands of dollars in downtown renewal grants, startup funding and low-interest loans this year in Helena-West Helena, Ark. Matt Inman, a 27-year-old native of the town, lives in a downtown apartment above a 1,900-square-foot retail space that he renovated last year and hopes to market as a coffee shop or restaurant location. Since finishing that building, Southern has provided Inman financing to purchase two additional downtown properties which he plans to turn into retail and residential space. Brooke Gerber, project... Read more
Lending startups such as ZestFinance and LendUp are putting a high-tech spin on credit scoring. ZestFinance collects as many as 10,000 pieces of data about the poor and unbanked, then lends them money at rates as high as 390 percent. In comparison, FICO scores use just a few dozen pieces of data. ZestFinance’s machines organize facts about a loan applicant into “metavariables.” Some metavariables can be expressed only as mathematical equations. Others rank applicants in categories. An applicant whose stated income exceeds that of peers flunks the veracity test. A person who moves... Read more
The U.S. Department of the Treasury has invited public comment on proposed changes to the CDFI Certification Application. The CDFI Fund seeks comment on a number of topics, including the utility of the requested information, the expected burden of collecting the information, ways to improve the quality of information being collected, estimates of cost, and how use technology to simplify data collection. The deadline for comments is December 8th, 2014.
Thirty-five low income homeowners will get critical home repairs thanks to a $253,750 Affordable Housing Program grant from BankPlus and the Federal Home Loan Bank of Dallas. The grant will help fund Habitat for Humanity Mississippi Capital Area's Neighborhood Revitalization Initiative. This is the third grant the organization has received from FHLB Dallas and BankPlus. The organization received a $400,000 grant in 2011 and a $493,000 grant in 2012, funding a total of 65 new homes and 33 home repairs. “There is a great need in this community for projects such as this, and... Read more
Sunrise Banks' recent growth has created some major changes on the bank's strategic planning and interactions with regulators, CEO David Reiling says. As a smaller institution, the bank's talk with regulators was about how the numbers had changed since the last exam. But as the bank passed the $250 million threshold, “you were not just talking about the past, but forecasting the future,” Reiling says. The management group meets each week for 90 minutes, but instead of addressing details and specifics, the group concentrates on strategic matters, preparing for the next... Read more
The FDIC and CFPB have launched a Spanish-language version of their financial literacy training, Money Smart for Older Adults. The free tool is designed to help seniors and their caregivers identify, respond to and prevent financial exploitation, which affects millions of senior citizens each year. The instructor-led module is designed to be delivered by representatives of financial institutions, adult protective service agencies, senior advocacy organizations and law enforcement. "We know that senior citizens... Read more
Dominik Mjartan, the new CEO of Southern Bancorp Community Partners and executive vice president of Southern Bancorp, knows what it is like to crave a better life. He came to the U.S. from the former Czechoslovakia at the age of 16 with hopes of attaining the American Dream, a goal he now strives to make achievable for underbanked consumers. Mjartan emphasizes that the goals of serving the underbanked and running a profitable business are compatible. "Increasingly, the American Dream is out of reach for hardworking people," Mjartan said. CDFIs like his "are uniquely... Read more
A study by the Pew Charitable Trusts reveals that online payday lenders are often more predatory than their storefront counterparts. The report, which surveyed over 700 borrowers, found average online interest rates of 650 percent, compared to 391 percent for storefronts. Forty-six percent of online borrowers report that lenders made withdrawals that overdrew their checking accounts, twice the rate of storefront borrowers. Thirty... Read more
Urban Partnership Bank CEO Bill Farrow says his bank has revived Shorebank's mission of creating financial opportunity in Chicago and Detroit while turning around some of the troubled assets of the closed bank. For instance, Farrow estimates that Urban Partnership has saved 70 percent of the 300 failed church loans inherited from ShoreBank. Urban Partnership's lending has created or retained approximately 2,500 jobs over the past four years. It is also experimenting with new ways of reaching customers, including opening a branch in a Walmart store. The Walmart branch was a... Read more
Six years after the housing crisis, investors are snapping up a new crop of subprime bonds backed by auto loans. Ratings companies are awarding the bonds top grades and buyers have almost no way to determine the accuracy of the information those ratings use as criteria. Auto lenders also collect less information on borrowers than in mortgage lending because dealers want buyers to be able to drive off the lot that day. Subprime auto payments more than 60 days late climbed to 3.6 percent of the debt outstanding in July, from 3 percent the year before. But none of that has curbed demand for... Read more