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According to a new survey of 100 bank executives, U.S. banks are increasingly setting their sights on underbanked customers. About 23% of bankers said underbanked customers present the greatest growth opportunity for their bank, up from 12% a year ago. Banks are interested in those customers because they spend more money on fees for cashing checks or ATMs than other customer segments. The survey also found that despite the growth of mobile banking, roughly 41% of bankers polled intend to increase the number of physical branch locations over the next 12 to 19 months, which could broaden their reach to larger segment of underbanked customers.
Although big banks tend to be ahead of the curve with online and mobile offerings, small banks have some advantages — such as better postcrisis reputations — that could put them streets ahead with millenials. "Does technology play a role? It is the role," said Joe Sullivan, chief executive of consulting firm Market Insights. Glen Fossella, a tech industry executive, says that millennials tend to tie brands to their self-image. For example, they may buy an iPhone in order to seem cooler or smarter than those who purchase an Android. Chicago-based Liberty Bank for Savings conducted a series of focus groups aimed at understanding the banking needs of young people. To better connect with millenials, they now offer debit cards which can be customized to feature iconic local landmarks.
The White House Rural Council has announced the creation of a new fund through which private entities can invest in rural infrastructure projects across the country. Target investments will include hospitals, schools, sewage systems, energy projects, broadband expansion, food systems and other rural infrastructure. CoBank, a national cooperative bank serving rural America and a member of the Farm Credit System, is the fund's anchor investor with an initial commitment of $10 billion. Capitol Peak Asset Management will manage the fund and work to recruit more investors. The U.S. Department of Agriculture and other federal agencies will identify rural projects that could be beneficiaries of the financing.
The CDFI Fund has released data collected on New Markets Tax Credit investments across the nation through fiscal year 2012. The raw data can be downloaded as an Excel spreadsheet from the CDFI Fund website. The CDFI Fund's analysis found that 45% of Qualified Active Low-Income Community Businesses (QALICBs) specialized in real estate, while 53.3% were operating businesses. A substantial majority, 72.7 percent of projects, were at least partly located in a severely distressed census tract. Seventy-nine percent of investments were metropolitan.
A group of West Coast banks have banded together to save community development bank Pan American Bank in Los Angeles (not to be confused with Illinois-based CDBA member Pan American Bank). Pan American was facing a potential failure after the collapse of a capital raise in May. The $41 million-asset bank has now been recapitalized after raising $6.3 million from 16 banks. None of the banks will hold more than a 4.9% stake in Pan American, and the Hispanic-focused bank is expected to maintain its MDI status. Pan American also named Robb Evans as interim chairman and chief executive, filling the vacancy left by Jesse Torres, who left the bank earlier this year.
Sunrise Banks, Beneficial State Bank and Virginia Community Capital were recognized for creating the most positive community impact by the B Corp Best for Communities list. The list honors 86 businesses that earned community impact scores in the top 10% of all Certified B Corporations of their size on the B Impact Assessment, a comprehensive assessment of a company's impact on its workers, community, and the environment. Sunrise Banks and Beneficial State Bank were recognized in the midsize business category and Virginia Community Capital in the small business category.
An FDIC report profiling Minority Depository Institutions and CDFI banks highlights the small size of the two sectors and their high degree of overlap. MDI and CDFI banks account for a small amount of the broader banking industry. As of year-end 2013, 174 insured institutions, 2.6 percent of all banks, were MDIs. The number of insured institutions certified as CDFIs totals 78, or 1.1 percent of all insured institutions. Of the 78 CDFI banks, 41 were also MDIs. Most MDIs and CDFI banks are community banks -- 88 percent of MDIs and 97 percent of FDIC-insured CDFIs.
An increasing number of big lenders are devising low-fee banking products tailored to customers with troubled finances. The bare-bones bank accounts and prepaid debit cards are hardly big money makers; in some cases, they barely break even. But for the banks working to overhaul their public images, the products offer good will from regulators and a chance to woo customers who might become profitable in the long run — for example, if they start taking out auto loans, credit cards and other types of higher-margin credit. Bank of America, for instance, has introduced the SafeBalance account, which comes with a $4.95 monthly fee and allows for direct deposits and online bill pays while eliminating overdraft fees.
One PacificCoast Bank has rebranded, changing its name to Beneficial State Bank. The new title reflects the bank's commitment to "beneficial banking," which they define as environmentally-friendly banking that supports the local economy. The bank's new acorn logo both symbolizes the growth potential of beneficial banking and evokes the bank's hometown, Oakland, Calif. "Beneficial State Bank offers our customers a new kind of bank and the tools they need to build something beautiful. Beneficial Banking was made to serve those who are creating a better world," the bank said via press release.
The Senate has passed legislation requiring the Federal Reserve to include at least one community banker on its seven member board. Federal Reserve Chairwoman Janet Yellen had pushed back on the bill, questioning the wisdom of reserving spots at the central bank for specific industries. But senators pressed ahead, adding the amendment to a terrorism insurance bill. The Federal Reserve board was left without a community bank voice after Elizabeth Duke resigned from the Fed in 2013 and President Obama took Sarah Bloom Raskin away for a job as Deputy Secretary of the Treasury. The president has reportedly been mulling another community banker to fill one of the two open spots.