Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
The CDFI Fund has announced five free webinars provided as part of the Capacity Building Initiative's "Expanding CDFI Coverage in Underserved Areas" series. The webinar series is intended to address the gaps in CDFI service coverage in underserved communities and will cover training topics developed for the series' in-person training sessions. The webinars are Expansion Strategies for Growth, Part One: Operational Efficiencies (October 6, 2015), Using Market Analysis for Expansion (October 27, 2015) Expansion Strategies for Growth, Part Two: Technology, People, Culture, and Leading Organizational Change (November 17, 2015), Marketing Strategy, Tactics, and Storytelling (December 8, 2015), Understanding CDFI Impact (January 12, 2016).
Dominik Mjartan, CEO of Southern Bancorp Community Partners hopes to level the economic playing field for the underserved. Mjartan said success should not be determined by ZIP code. Living in Helena-West Helena -- a place where Southern is active in economic development -- shouldn't mean people there can't be upwardly mobile. Southern Bancorp makes about $56 million a year in loans in Helena-West Helena’s Phillips County. In the last three years, Southern invested an additional $3 million focused on job creation and downtown revitalization. “To us, profit is a secondary focus," Mjartan said. "That's not to say it's subordinate. We see profit as a means to accomplish our mission." He said, "Southern makes capitalism work for folks who don't have access to capitalism."
Sunrise Banks of Minneapolis, Minn. won a $2.2 million NEXT Opportunity Award to expand TrueConnect, its small-dollar, affordable employer-based loan. The Wells Fargo NEXT Awards for Opportunity Finance support innovations that transform how the unbanked and underbanked access responsible personal financial products and services. Sunrise Banks' convenient alternative to predatory loans integrates with employers’ payroll systems through the bank's proprietary software. Sunrise has successfully piloted True Connect with three employers and plans to expand the product. “The NEXT award will help bring TrueConnect to scale nationally and offer a safe loan alternative for those 26 million Americans who do not have a credit score,” said David Reiling, Sunrise Banks CEO.
Doyle Mitchell, CEO of Industrial Bank of Washington, D.C., testified before the United States House Committee on Small Business Subcommittee on Economic Growth, Tax and Capital Access. His testimony focused on the impact of community bank regulatory burdens such as Dodd-Frank on small business lending. “The exponential growth of regulation in recent years is suffocating community banks’ ability to serve their small business customers," Mitchell said. "Compliance has become a major distraction for community bank managers. Any community banker will tell you that their job has fundamentally shifted from lending and serving customers to struggling to stay on top of ever-changing rules and guidance.”
In a new report, Opportunity Finance Network writes that the financial and portfolio performance of CDFIs is on par with those of conventional banks. In their analysis, based on a dataset of 209 OFN member CDFIs (predominantly loan funds), CDFIs averaged 15 percent loan growth per year. Their cumulative net loan loss rates were 1.5 percent -- on par with that of FDIC-insured institutions. The members have been responsible for over $35 billion in cumulative financing, development of 1.5 million housing units and the creation of 721,000 jobs. The CDFI lending was also highly targeted at underserved populations: 75 percent of CDFI clients are low-income, 52 percent are minority and 48 percent are female.
CDBA members and CDFI banks as a whole had a record year accessing Bank Enterprise Awards (BEA) and CDFI Program awards. Of the 83 banks receiving BEA funding, 67 were CDFI certified and 42 were CDBA members. This year’s BEA also continued a trend toward more prizes for community banks; 98% of the $18.1 million awarded went to banks with assets of less than $10 billion. CDFI banks also had a record year accessing the CDFI program awards. The 12 banks and bank holding company awardees received awards totaling $14.4 million (9 percent of the total awards), the largest amount ever awarded the CDFI banking industry. Eleven of the 12 banks and bank holding companies that received CDFI Program awards were CDBA members.
Community Bank of the Bay is supporting research into sustainable deep sea habitats by sponsoring the Marine Applied Research & Exploration (MARÉ)'s 3rd Annual MARÉ Soirée. Community Bank of the Bay's partnership with MARÉ is part of the bank's Bay Area Green Fund, which offers bank accounts that support financing of local and environmentally sustainable projects and businesses. "When I launched MARÉ in 2003, an accountant at Save the Bay recommended Community Bank of the Bay as a nonprofit-friendly bank that also gives back to the community," says MARÉ Executive Director Dirk Rosen. "Over the years, they've offered stellar customer service, helped us grow and shared our commitment to a healthy, sustainable environment. We couldn't ask for a better partner and are proud to be a part of their conservation efforts."
OneUnited Bank is among a new wave of banks using innovative technology to redefine the bank branch experience. OneUnited President Teri Williams says the changes made at OneUnited have made the branch both a place of business and a meeting place for the community. “A lot of people are going in when there’s a problem or an opportunity,” Williams said. “Because of the decrease in the middle – the day-to-day transactions – banks are repurposing their branches.” Now, OneUnited’s branch in Liberty City, Florida is used as a community resource center. The branch hosts community events and fundraisers as well as financial literacy classes, Williams said, which in turn attract more customers to the branch.
A former steel factory in St. Louis is being converted into a new business park thanks in part to New Markets Tax Credits provided by Central Bank of Kansas City. The site, now vacant, has a long history going back to 1870, when it began operations as a steel factory. It later served as a coal gasification and coke production facility until 1987, when it was abandoned. Now, developer Green Street St. Louis is revitalizing the site with an approximately $70 million makeover. Steve Kramer, U.S. Bancorp CDC’s senior vice president, said redeveloping the site has been a goal of city officials since the late 1990s, but Central Bank of Kansas City's New Markets contribution was key to getting the project underway.
U.S. bank earnings rose 7% in the second quarter over last year, although other measures of bank profitability remained depressed. The 6,348 U.S. banks earned $43 billion in the second quarter, a 7.3% increase from the same period a year ago. Banks boosted their loan balances by $185 billion, or 2.2%, compared with the first quarter of this year, the highest quarterly increase since 2010. They showed 2.8% growth in commercial and industrial loans compared with the previous quarter, a 3.1% increase in credit card balances and 1.3% growth in residential mortgage loans. Net interest margin, a measure of what banks earn on loans, remained depressed as the Federal Reserve maintains rock-bottom rates. Banks’ net interest margin was 3.06% in the second quarter, below the prior-year rate of 3.15%.