Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
When Ridgeland, Miss.-based BankPlus started offering its Credit Plus product as a safe alternative to payday loans, CEO Bill Ray expected most of the business would be from financially precarious low-income borrowers. But Ray was surprised to find that many customers were not low-income -- rather, they were middle-income borrowers who had fallen on hard times and "never had any financial literacy training and got caught up in the payday lending habit." The product offers low-interest loans up to $1,000 for consumers who agree to open accounts at the bank and enroll in a financial literacy seminar. To date, 14,500 have received consumer loans from the bank and 80% of those borrowers still have accounts at the bank.
The CDFI Fund is soliciting public comment on the Bank Enterprise Award Program Application. The CDFI fund has asked for specific comment on the practical utility of data being collected in the application and how they can enhance the quality of that information. The Fund also seeks input on the burden of assembling the data and suggestions for easing the burden, including through technology. In addition, the Fund has requested estimates of costs of operation required to provide the requested information. All comments must be submitted by February 23, 2015.
Virginia Community Capital President and CEO and CDBA Chairman Jane Henderson has been appointed to Virginia Governor Terry McAuliffe's Commonwealth Council on Bridging the Nutritional Divide. The council aims to eliminate childhood hunger with nutritional assistance programs, increase access to healthy local foods, and facilitate local healthy-living initiatives. Virginia Community Capital is doing its part with a loan to Seven Hills Food, which plans to open a meat processing facility in Lynchburg. The plant is expected to create a new market for local farmers while creating 43 jobs. “VCC is excited to be able to help Seven Hills Food expand meat processing capacity across Virginia, thereby increasing the Commonwealth’s residents’ access to local foods," said Senior Loan Officer Dawn DeHart.
Southern Bancorp of Arkadelphia, Ark. is buying Bank of Bolivar County, a small $15.9 million-asset Mississippi Delta bank. Bank of Bolivar County has two locations: one full-service office and one limited service branch. These will build on Southern Bancorp Bank's presence in Bolivar County, where it currently operates one branch. The acquisition marks a step forward for Southern Bancorp's efforts to increase the availability of capital to Mississippi residents; the bank is also in the process of adding its third branch in Hot Springs, Miss.
The modifications to Dodd-Frank included in the recent omnibus bill marks what could be the first in a series of attempts to modify the regulatory legislation. With Republican majorities taking hold in the House and Senate and some Democrats showing willingness to compromise on the legislation, Wall Street advocates see an opportunity to secure less restrictive regulations. Among the likely flashpoints is a proposal to restructure the CFPB by allowing Congress to set its budget and setting agency policy with a bipartisan commission rather than a single director. Regulatory relief is also a likely target, including new requirements that agencies pursue more cost-benefit analysis when writing rules.
The Senate has adjourned for the year without acting on a bill that would require one of the seven members of the Fed’s board of governors to be a community banker. The Senate had initially approved the measure, inserted into a bill passed by the House that extended the federal terrorism insurance program. But the Senate was unable to pass the final bill before adjourning. Sen. David Vitter (R., La.) proposed the legislation, saying a person with small-bank experience would act as a balance to board members from academic backgrounds. He plans to resurrect the proposal as a standalone bill and will look for opportunities to amend it to other pieces of legislation.
Urban Partnership Bank has announced it is now a certified CDFI in Detroit and Wayne County, Michigan, affirming the bank's commitment to the Detroit area. The bank was also recertified in Chicago, Cook County and Illinois. In addition, the bank has announced that their board of directors is now a 12-member team with the addition of Michael Lewis. Lewis served as regional president and executive vice president of the Chicago Metro Region of BMO Harris Bank until his retirement in 2013. “The CDFI designations and the addition of Mike Lewis to our board further underscore our commitment to serve neglected communities and build a better future,” said Urban Partnership Bank CEO William Farrow.
OneUnited Bank will be providing a $10,000 gift to jump start the Employ Miami-Dade initiative. The goal of the initiative is to centralize resources for locals to get workplace readiness training and jobs. Employ Miami-Dade will first target the construction industry, helping local workers get hired by the construction firms which are tackling the county's current building boom. Trainees who qualify will receive a bi-weekly stipend of $250, initially funded by OneUnited's $10,000 gift. OneUnited's commitment to the initiative will extend long-term; the bank will provide workers financial education, helping them establish banking relationships and create budgets. “We want to share knowledge of how to save for a rainy or sunny day,” Williams said.
A new report examines the relationship between rapid growth of nonperforming loan servicing costs and tight mortgage credit standards. In 2013, the annual cost of servicing a nonperforming loan was 15 times that of servicing a performing loan—$2,357 versus $156. In addition, the cost of servicing nonperforming loans has risen almost twice as fast as performing loans -- from $482 in 2008 to $2,357 in 2013, a 489 percent increase. As a result, servicers charge riskier borrowers higher, sometimes unaffordable, rates. The report cites Fannie and Freddie's compensatory fees charged on tardy foreclosures, inconsistent Federal Housing Administration foreclosure timelines and vague property preservation and conveyance standards as causes of the growing costs.
Community Bank of the Bay is bucking the trend of fewer branches, moving its Danville, California office to a larger location and adding a loan office in San Mateo. The bank was initially advised by its financial backers that a branch wasn't needed as banks increasingly opt for online- and mobile-banking options. But along the way, they had a change of heart. "A branch is a bit of a security blanket. There are those 'emergency times' when you need to run into a bank," said CEO Bill Keller, citing the need to get a cashier's check or explore loan options to complete a deal. The bank hopes the move will foster its close connection to the Danville community. "To me that's the real value of the CDFI designation," Keller said. "It clearly articulates what we're all about."