Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
A report by the CFPB delves into peoples' financial lives with a focus on how they understand and achieve financial well-being. The investigation is part of a broader effort on the part of the CFPB to establish best practices for financial literacy training. Using findings from qualitiative interviews, the CFPB found four broad behaviors that contribute to financial well-being: managing money, research/knowledgeseeking, planning/goal-setting, and follow-through. The report concludes that financial literacy programs must seek to go beyond increasing consumers’ knowledge of financial facts, helping consumers develop the skills, experience and familiarity and self-confidence to meaningfully engage in those behaviors that will help increase their financial well-being.
Mel Watt, director of the Federal Housing Finance Agency, defended his efforts to expand credit access at a hearing of the House Financial Services Committee. Republican lawmakers objected to the FHFA’s decision to allow the GSEs to guarantee mortgages with as little as a 3 percent downpayment. They also blasted a decision to delay an increase to the fees Fannie and Freddie charge to guarantee mortgages — the increase was designed to reduce the presence of GSEs in the housing market. And they complained about the FHFA’s decision to end a six-year suspension of payments into affordable housing trust funds. “These are not risky loans,” Watts pushed back. “We have made that assessment based on research, not based on politics.”
The Federal Reserve has released a report and recommendations intended to speed up the US payments system. The proposed changes would move payments to near real-time, a big change from the current ACH system which can take several days. Fed staff said that the Federal Reserve might consider taking a more direct role if the private sector can’t offer the services alone. But the report is also careful to stress that any Fed action would be closely coordinated with big banks, which have opposed changing the payment system because of concerns over costs. The report states that although the business case of banks investing in real-time payments appears neutral to slightly negative in the near term, it could create substantial benefits for banks, including new fee-based services.
Melanie Stern, Spring Bank's Director of Community Lending, appeared on radio show Gotham Connections to discuss Spring Bank's new Borrow and Save program: "Borrow and Save takes the traditional payday model and turns it on its head... It's a small amount of credit up to $1,500 that has a unique twist--that 25% of the loan is kept in a savings account. The goal there is to help people build savings, give people an opportunity to build their credit profile and also to break the habit of repeat lending... On the consumer side, to date, we've had to write off one loan in the amount of $600. So the notion that people of modest means cannot be good borrowers -- we're hoping to put the lie to that."
Chicago-based CDFI Bank Seaway Bank & Trust has been slapped with a consent order by the FDIC and the Illinois Division of Banking. The order requires the bank to hold elevated capital levels, strengthen management, halt dividend payments to investors and beef up controls to detect money-laundering and other criminal activity by customers. The order, which the bank consented to without admitting or denying charges of unsafe or unsound banking practices, requires Seaway to boost its “Tier 1” capital to 8 percent of its assets within 60 days. The bank would need to raise nearly $8 million to hit that benchmark. The order will also bar Seaway from seeking acquisitions or paying dividends to its investors.
Virginia Community Capital made significant advancements in its impact lending goals, providing over $259 million in financing for 407 community impact projects across Virginia as of December 2014. The company has financed eight healthcare centers, supported 3,367 jobs and funded nearly 5,000 affordable housing units. Recently, VCC provided a gap construction loan to the Park Brothers to build Round Hill Meadows, a 120 unit mixed-income neighborhood consisting of 60 market rate and 60 affordable apartment homes. The affordable apartments will be critical in the town of Orange, Va., which has a 5.3 percent unemployment rate, a 11.1 percent poverty rate and a large demand for more affordable housing rental properties.
Beneficial State Bank is planning construction of a new 11-story mixed-use building built with both environment and community in mind. The building will contain branches of both Beneficial State Bank and Albina Community Bank. The proposal will also provide space for B-corps—socially responsible companies that pursue social mission alongside profit. Many of the units would be set aside as affordable housing. "Our mission would be to have a high proportion for the housing be affordable, if not all of it," said Beneficial State CEO Kat Taylor. "We're still gathering stakeholders. We'll have a big input process. But we own the site and I think we have in terms of impact a really high-quality product to offer."
Financial Institutions Inc., the Warsaw, N.Y., parent of Five Star Bank, will be the latest in a string of banks settling charges of redlining. The company has agreed to pay $900,000 and open two branches in Rochester, N.Y., to settle charges it excluded minority neighborhoods in the area from its mortgage business. New York Attorney General Eric Schneiderman's action against Evans Bank, based on claims the Hamburg, N.Y. bank had redlined predominantly black neighborhoods in Buffalo, appears likely to go to trial. Providence, R.I. recently dropped a lawsuit against Santander Bank, based on claims that bank has scaled back lending in black and Latino neighborhoods, after the bank agreed to give $1.3 million in grants to support low-income neighborhoods in the city.
Albina Community Bank, based in Portland, Oregon, has announced Jeff Aden has joined the bank as Senior Vice President and Chief Lending Officer. As the bank’s Chief Lending Officer, Aden will be responsible for all consumer, commercial and real estate loan production activities in the bank. Aden has 30 years of commercial banking experience in Oregon, including previous management roles at Banner Bank and Sterling Savings Bank. “We are pleased that Jeff has agreed to join the team at Albina Community Bank,” said Cheryl Cebula, bank President and CEO. “Jeff brings a wealth of experience and knowledge in our market, and we look forward to his contribution towards growing the bank’s loan portfolio.”
Industrial Bank has earmarked $80,000 in the form of five grants that will help local small businesses get a leg up on the competition. The grants will include four Enterprise Awards, each in the amount of $15,000, and one President’s Award in the amount of $20,000. "The benefits for receiving this grant are endless and we, along with our partners, came up with this strategy hoping that it would make a significant difference in advancing companies from our community forward," said Industrial Bank President B. Doyle Mitchell, Jr. "It’s a shot in the arm for a business whose revenue totals less than $1 million annually... Entrepreneurship is growing in and around the District and we believe that a lot of new jobs will come from start-up companies."