News
Small banks could pay less in assessment fee premiums under a new FDIC proposal. The proposal would change the calculus used in determining assessment fees, incorporating metrics based on banks’ loan portfolios. The proposal would result in 60% of small banks paying lower premiums. The plan is intended to be revenue-neutral, reallocating a greater percentage of assessment fees to riskier institutions. It would also add a "loan mix" category in its risk assessment that takes into account the types of loans a bank holds. It would apply only to banks with less than $10 billion of assets that have been insured for at least 5 years. The proposal would go into effect one quarter after the Deposit Insurance Fund reaches 1.15%; it currently stands at 1.03%.
A new study from the Center for Responsible Lending on the cumulative costs of predatory practices finds substantial costs to borrowers, communities and the economy on the order of hundreds of billions of dollars. The study found that dealer-brokered auto loans, which often contain abusive provisions, are twice as likely to result in repossession as bank or credit union financed auto loans. Borrowers of color are up to three times more likely to receive an abusive loan compared with a white counterpart and families with annual incomes below $25,000–$35,000 are much more likely to receive an abusive loan product. Blemished credit can have a far reaching effect; one in seven job-seekers with blemished credit has been passed over for employment after a credit check.
The CDFI Fund of the U.S. Treasury has announced more than $3.5 billion in New Markets Tax Credit awards aimed at encouraging investment and economic growth in low-income urban and rural communities. A total of 76 organizations, including City First Bank of DC and Central Bank of Kansas City will receive tax credit allocation authority. The New Markets Tax Credit Program allows individual and corporate taxpayers to receive a non-refundable tax credit against federal income taxes for making equity investments in Community Development Entities. The program is estimated to have created almost 600,000 new jobs and supported the construction of more than 160 million square feet of retail, manufacturing and office space since its inception.
Appalachian Community Capital (ACC), a new central bank for Appalachian CDFIs, has announced a successful first-round investment closing. Appalachian Regional Commission is leading formation of the new CDFI which will now begin lending with support from Christiansburg-based Virginia Community Capital (VCC). ACC will allow its member CDFIs to pool their capital needs and attract bigger investors. ACC is expected to leverage $233 million—$42 million over the next 24 months alone—in private bank capital. VCC will service ACC’s loans and provide back office support through their Christiansburg office. "The entire Appalachian region will benefit from the capital ACC is providing in tandem with other CDFIs,” said Jane Henderson, VCC President and CEO.
CDBA has wrapped up the 2015 CDBA Peer Forum, a two day event featuring conversations between community development bank executives and leading community development finance experts. The 2015 Peer Forum was the largest yet, attended by nearly 70 bankers from 44 community development banks across the United States. Guest speakers included Administrator of the Small Business Administration Maria Contreras-Sweet, CDFI Fund Director Annie Donovan and Assistant Secretary for Financial Stability Tim Bowler. An election was also held at the Peer Forum in which Brian Argrett of City First Bank of D.C. was elected Chair and Robert Jones, III of Atmore, Alabama’s United Bank was elected Vice-Chair.
Andy Anderson has been named President and CEO of Bank of Anguilla. He succeeds Fred Miller, Jr., who was elected chairman of the bank’s board of directors. Anderson has been with the Bank of Anguilla since 1983. He previously held the title of chief financial officer and compliance officer and is a director of the bank. Anderson holds BBA and MBA degrees from the University of Mississippi and graduated from LSU Graduate School of Banking of the South in 1988.
New York City-based Spring Bank, in partnership with healthcare nonprofit BOOM!Health, has launched the Employee Opportunity Loan to help workers bridge the gap between their income and cost of living. Spring Bank designed the Employee Opportunity Loan to provide access to affordable small dollar loans through partnerships with local employers. The product allows employees to access small credit securely and conveniently as part of their voluntary benefit package. Loan amounts range from $1,000-$2,500 and have no minimum credit score requirement. "The product demonstrates that responsible lenders in New York City can offer alternatives to the predatory products available in person or online,” said Spring Bank President Eric Pallas.
Teri Williams, president of Boston-based OneUnited Bank, is optimistic about the future of black banking despite the struggles black banks have faced since the financial crisis. The recession was particularly difficult for black banks who served a larger percentage of moderate-to-low-income customers. But the economy is on the upswing, and OneUnited is poised to take advantage of the economic situation with a forward-looking tech strategy and new community outreach initiatives, including partnerships with local youth art programs. “It’s important for anyone to bank with institutions they trust and they feel is there to help them build wealth and financial stability,” said Williams. “Black banks have a history of servicing the communities we’re in and being a trusted source.”
The FDIC, OCC and Federal Reserve are hosting the Interagency Minority Depository Institution and CDFI Bank Conference to help preserve and promote the missions of minority depository institutions and CDFI banks. The conference focuses on the unique positioning of these institutions to make positive change in their communities. Senior officials including FDIC Chairman Martin Gruenberg, Federal Reserve Board Governor Jerome Powell and Comptroller of the Currency Thomas Curry will be featured speakers. The conference will take place at the OCC Conference Center in Washington, D.C. July 13-15. Registration is open to board members and staff of minority depository institutions and CDFI banks.
M&F Bancorp of North Carolina, one of the nation’s oldest black-owned banks, is launching an effort to revamp its business model to counter the challenges MDIs are facing. With about 60% of its customers over 60 years old, M&F is rebranding and working to reach new customers in order to serve a wider community base. "I just don't think we're going to have more African-American banks open," Sills said. "I think it is incumbent on the ones that are remaining to make sure they're relevant and they're trying to reach out to as many groups or market segments in their various communities to make sure their bank is around for the next 15 or 20 years. I just don't think you can rely totally on one segment of the community."