Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
"Just one remarkably memorable event in Darrin Williams' lifetime, in this case flying into his hometown on Air Force One with the president of the United States, Williams' wife and 6-month-old child on board, for a national celebration to recognize the Little Rock Nine and the 40th anniversary of the desegregation of Central High in Little Rock, would probably be enough for most folks. Williams has a closet full of such memorable encounters not unlike that leading up to his current role as chief executive officer of Little Rock's Southern Bancorp, a $2.5 billion institution with plans to double that over the next five years."
"Though banks have recently been churning out their highest profits in more than a decade, there's trouble brewing beneath the rosy performance metrics, according to the consulting firm McKinsey.
The threat is largely tied to the ongoing shift of balance-sheet activities and transactions away from traditional banks to nonbank institutions, McKinsey warns in its 2023 annual review of global banking. That migration has gained such scale that banking is now at 'a tipping point' that could 'fundamentally alter the nature' of the industry, the McKinsey report states."
"Community development financial institutions (CDFIs) are vital investors in cities across America, but could they have a greater impact if they better pulled in dollars from public finance sources?
As long-standing lenders with a mission, CDFIs specialize in providing loans to individuals, organizations, and businesses in under-resourced or disadvantaged rural and urban communities often underserved by mainstream banks. They also provide other forms of fair, responsible financing that further economic potential. CDFIs can also function as trusted intermediaries that invest in a wide range of important sectors like housing, infrastructure, small businesses, and others."
"CFPB recently analyzed the non-sufficient fund (NSF) fee practices of a number of banks and credit unions. NSF fees are charges that some financial institutions impose when they decline to make a payment from a consumer's account, like a check or electronic authorization, after determining the account lacks sufficient funds. NSF fees are distinct from overdraft fees, which financial institutions charge when they pay, rather than decline, a payment when the account lacks sufficient funds."
"The changing economic environment is opening a window of opportunity for banks and credit unions to put their artificial intelligence models for loan underwriting through a credit cycle.
The digital banking evolution in the past decade has significantly enriched data around consumer profiles and behaviors. It has incubated a group of financial technology vendors to develop AI underwriting models for banks and credit unions. Since most of them were established in a benign environment, early adopters are now looking to validate their AI models in the current dynamics with the downside risks leading to credit deterioration being high."
"To increase the public's awareness of deposit insurance and how it can protect people's money in the event of a bank's failure, the FDIC developed a national consumer campaign, 'Know Your Risk. Protect Your Money.' The campaign reaches people who may have lower confidence in the U.S. banking system or who are unbanked, as well as those who use mobile payment systems, alternative banking services and financial products that may appear to be FDIC-insured but are not."
"Members attending the American Bankers Association's annual convention in Nashville, Tenn., have elected new ABA officers and directors to serve on ABA's board for the 2023-2024 association year. The new officers are:
- CHAIR: Julieann M. Thurlow, president and CEO, Reading Cooperative Bank, Reading, Mass.;
- CHAIR-ELECT: John C. Asbury, chief executive officer, Atlantic Union Bancshares Corp., Richmond, Va.;
- VICE CHAIR: Kenneth Kelly, chairman and CEO, First Independence Bank, Detroit; and
- TREASURER: Carissa Rodeheaver, chairman, president and CEO, First United Bank & Trust, Oakland, Md."
Congratulations, Kenneth!
"Today, the Consumer Financial Protection Bureau (CFPB) announced the appointment of new members to the Consumer Advisory Board, Community Bank Advisory Council, Credit Union Advisory Council, and Academic Research Council."
CDBA would like to recognize the achievement of the following member:
- Victor M. Ramirez, SVP, CRA and Fair & Responsible Banking, Beneficial State Bank (Oakland, CA) was appointed to the CFPB Community Bank Advisory Council
Congratulations, Victor!
Federal Reserve Governor Bowman:
"Today I will begin by discussing some of the research around community banks and the role they play in the U.S. banking system. I will then discuss how this research can inform policy, including by helping us be more sensitive to the unintended consequences of reform, and discuss how this perspective can be applied to the evaluation of bank mergers and acquisitions. Finally, I will mention a few additional areas where I think research could be valuable as an input to the rulemaking process."
A brief history of the early days of the New Markets Tax Credit:
"In early 2003, Bob Rapoza got a call from the Treasury Department.
The first round of new markets tax credit (NMTC) allocations–$2.5 billion worth–would soon be announced by the Community Development Financial Institutions (CDFI) Fund and Rapoza was head of the fledgling New Markets Tax Credit Coalition (NMTCC)."