Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
Ridgeland, Miss.-based BankPlus is the winner of the American Bankers Association Community Commitment Award in the Nontraditional Borrower and Underbanked category. BankPlus was honored for turning people who thought a bank loan or checking account was beyond their reach into customers. Their CreditPlus product provides borrowers a small-dollar, short-term loan designed as an alternative to payday loans. Since launching CreditPlus in 2008, BankPlus has signed up 22,223 unbanked or underbanked Mississippians who attended one of 642 money-management sessions. "What’s great about this is that they are showing results in what they are doing,” said Corey Carlisle, the ABA’s senior vice president for bank community engagement.
Construction financing from Virginia Community Capital will facilitate the renovation of a historic department store building in Petersburg, Va. into a mixed use building featuring artist studios, gallery space, mixed-income housing and commercial storefronts. The Butterworth Flats will include 45 mixed-income apartments, a majority serving incomes of less than 80 percent of area median income and a commercial storefront. “VCC was delighted to help this important downtown Petersburg project come to life,” said VCC Senior Loan Officer, Dawn DeHart. “The downtown area should benefit from the affordable housing units, as well as the cultural aspects of the art studios and galleries.”
CDBA member Beneficial State Bank, based in Oakland, Calif., was named the winner of this year’s Promontory Empowerment Awards in the CDFI Banking category. The Empowerment Awards recognize innovative programs that provide or encourage safe, fair financial services in underserved communities. All of the finalists in the CDFI banking category were CDBA members, including BankPlus, Carver Federal Savings Bank and Southern Bancorp. The Empowerment Awards are sponsored by Washington, D.C.-based consulting firm Promontory Financial Group. “These projects help underserved communities across the country by making innovative, responsible banking products available and accessible,” said Promontory founder and CEO Gene Ludwig.
The CDFI Fund has opened the 2015 round of the New Markets Tax Credit (NMTC) Program, making available up to $5 billion in tax credit allocation authority. The NMTC Program spurs investment of private sector capital into distressed communities by providing a tax credit to corporate or individual taxpayers who make qualified equity investments in designated Community Development Entities (CDEs). The CDEs, in turn, invest the capital raised into projects and businesses in low-income communities. The deadline for submission will be Wednesday, December 16, 2015. The CDFI Fund will also be holding two Q&A conference calls to answer application questions on Tuesday, October 27 at 2:00 p.m. ET and Thursday, October 29 at 3:30 p.m. ET.
A technical problem blocked account access for holders of one of the most popular prepaid cards, RushCard. RushCard’s problems started over the Columbus Day weekend, when it switched from one processing technology provider to another. Customers reported problems gaining access to their funds, swamping the company’s telephone service center and website. RushCard, founded in 2003 by the hip-hop impresario Russell Simmons, said on Tuesday that the problem had been mostly fixed. But thousands continued to experience difficulties. RushCard has been criticized previously for charging its largely unbanked customer base substantial fees for ATM withdrawals and for each point-of-sale transaction.
A new report by the GIIN and the Carsey School of Public Policy provides an overview of the U.S. Community Investing field: the types of intermediary organizations raising investments, the range of available investment products and the types of investors active in the space. The principal challenge facing CDFI banks, the authors write, is the lack of liquidity of equity investments. CDFI bank stocks are generally not publicly traded and few mission-driven banks who have publicly offered stock have been able to continue as independent entities. As a result, investors must generally hold on to their equity investments for long time frames. However, CDFI banks are also innovating; for example, Southern Bancorp is exploring an equity raise in which it would use its Employee Stock Ownership Plan to provide a takeout mechanism for shareholders.
In the Deep South, shriveling job prospects for the high-school-educated and scant state support for the poor have combined with more timeworn social problems to diminish the chances of a middle-class life for somebody born into poverty. In Mississippi, the 86 members of Ruleville Central’s senior class attended a school given an F grade by the state. Some new graduates went off to local colleges. Others lacked money or test scores. One turned down an offer from his dream school because of the cost. The school’s guidance counselor said she can count on her hand the ones who will finish college. Often, those who do graduate these underperforming schools find themselves searching for low-paying jobs in states that have been reluctant to fund programs that help the poor.
The CFPB has finalized a rule that will require new fields to be submitted for the Home Mortgage Disclosure Act (HMDA). The rule is intended to shed more light on consumers’ access to mortgage credit with new data including the property value, term of the loan, and the duration of any teaser or introductory interest rates. Financial institutions will be required to provide more information about mortgage loan underwriting and pricing, such as an applicant’s debt-to-income ratio, the interest rate of the loan and the discount points charged for the loan. Some small financial institutions and institutions that operate outside of MSAs will be exempt from the new rule. Most of the provisions of the final rule will take effect on January 1, 2018, with the first report submission due March 1, 2019.
The CFPB backed off some of its initial plans in its final rule requiring lenders to collect more data from mortgage borrowers, but industry representatives warned the agency had not gone far enough. Though the agency dropped some datasets it initially proposed to collect last year, some lenders said the final rule was still going to be overly burdensome, particularly for smaller institutions. There also remain privacy concerns from both industry and consumer groups. Lenders must now report the address of the home, which could pose additional risks. "The CFPB's final rule [adds] to the excessive regulatory burdens for many community banks, which will further restrict access to credit in local communities," said Camden R. Fine, president and chief executive of the Independent Community Bankers of America.
United Bank of Atmore, Ala. is helping local students receive free books by working with literacy nonprofit First Book. First Book provides access to free new books for children in need. United Bank will pay shipping and handling to send the books to Pre-K and kindergarten students at Perdido Elementary School. In addition to delivering the books, United Bank Executive Assistant Tonya Lambert took time to read a story in each of the classrooms. "The best part about the initiative is that students can bring the books home and don’t have to return them," said Lambert. “They said, ‘you mean I don’t have to bring this book back? This is my own book?’”