Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
Southern Bancorp has agreed to acquire the Bank of Bolivar County, which operates two branches in the Mississippi communities of Shelby and Mound Bayou. “Across the country, we’re seeing a trend of small, rural community banks closing their doors due to increased regulatory costs and declining profit margins,” said Southern Bancorp, Inc. CEO Darrin Williams. “And larger banks are usually unwilling to purchase them... Southern, however, is different. Our mission is to focus on rural, distressed markets, because we understand that without access to responsive and responsible financial capital... more businesses will close, more jobs will be lost, and ultimately, these communities will disappear.”
Amazon's launch of its new mobile card reader, Amazon Local Register, presents direct competition to mobile card processor Square as well as banks that offer their own mobile card readers, such as PNC, BBVA and Bank of America. The new Amazon reader has a low introductory swipe fee of 1.75% that will last through the end of 2015. After that period, the rate will bump up to 2.5% -- still below Square's 2.75%. Amazon is able to keep its pricing so low because many of its customers have pre-registered their bank account numbers for ACH transactions, which are less expensive than credit cards. For now, however, Square maintains an advantage in terms of the scope of its business support products, which include appointment-scheduling services, small-business lending and interactive receipts.
JPMorgan is joining a growing class of Detroit business leaders funding revitalization efforts in the city. The bank has pledged a total of $100 million: $25 million to renovate of abandoned homes, $12.5 million to train residents for better jobs and $12.5 million to grow small businesses and improve city infrastructure. The biggest piece, $50 million, will go to a pair of community lending groups, Capital Impact partners and Invest Detroit, to support the redevelopment of a ring of neighborhoods teetering between stagnant distress and burgeoning revitalization. The hope is that JPMorgan's big investment can convince others to make new investments by signaling that these neighborhoods are on the mend, and there will be money to be made.
Ongoing protests around the death of Michael Brown have called attention to rising poverty and shifting demographics in suburbs like Ferguson, Mo. Ferguson went from 85 percent white in 1980 to 67 percent black by 2012. The city’s poverty rate doubled between 2000 and 2012, resulting in one in four residents living below the federal poverty line. The changes in Ferguson are representative of the growth of suburban poverty nationwide. Within the nation’s 100 largest metro areas, the number of suburban neighborhoods where more than 20 percent of residents live in poverty more than doubled between 2000 and 2012. These demographic shifts have triggered a glut of problems in the suburbs, including entrenched unrepresentative leadership structures, social support funding shortages, and soaring crime rates.
Research by the New York Fed gives new details on the growth of subprime auto lending. Since the market hit bottom in Q4 2009, balances have risen for the auto loan industry as a whole. But the growth has been most pronounced among the riskier borrowers, who also experienced the most severe contraction during the crisis. The dollar value of originations to people with credit scores below 660 has roughly doubled since 2009, while originations for the other credit score groups increased by only about half, owing primarily to an increase in the average size of the loans. The bulk of the subprime auto lending growth has occurred among auto finance companies, while growth has been more modest at banks and credit unions.
The recovery in housing is fueling a niche market for newly minted bonds backed by mortgages on homes on the verge of foreclosure. The investors making money off the bonds include American mutual funds attracted by yields of about 4 percent and quick pay outs. The yields look enticing compared with the current 2.42 percent yield on a 10-year Treasury note. The catalyst for the emergence of the market was a decision by HUD to begin selling some of the most severely delinquent mortgages guaranteed by the Federal Housing Administration to avoid losses to taxpayers. Since 2010, HUD has sold 101,290 soured home loans with a combined unpaid balance of $17.6 billion. Recently, Freddie Mac also sold $659 million worth of troubled mortgages.
James Sills, Secretary of the Department of Technology for the state of Delaware, has been appointed the new CEO of historic Durham, N.C.-based Mechanics & Farmers Bank. “I think it’s important to embrace the history and tout the founders and tout what the banks mean to the community,” Sills said. But the bank is also looking ahead. This week, the bank started transitioning to a new tech platform, Fiserv. Sills also plans to initiate a complete overhaul of the M&F website and introduce a new mobile app. Kim Saunders, former CEO and current CEO of the bank’s holding company, M&F Bancorp, has taken a role in the financial services division. "After 32 years, I am truly looking forward to the new opportunities retirement from commercial banking will present," Saunders said.
Boston-based OneUnited Bank has announced the winners of its annual I Got Bank! Essay Contest. The three winners were Chase Abner, 12, of Los Angeles, Calif., Damoni Swain, 10, of Dorchester, Massachusetts, and Amaya Horace, 12, of Bowie, Maryland. Each won a $1,000 savings account for their essays on financial literacy. “We are very proud of all of the youth and their families who participated,” said Teri Williams, OneUnited Bank president and author of "I Got Bank!" a financial literacy guide targeted at urban youth.
Melrose Park, Ill.-based Pan American Bank has received approval from federal and state authorities to acquire the Palatine, Ill.-based Bank of Palatine. The deal is expected to close by early September and allow Pan American to increase its assets by about $50 million. Bank of Palatine President Winn C. Davidson will retire upon completion of the acquisition. "This merger provides us the opportunity to expand our high level of service to clients throughout the Northwest suburbs," said Pan American Co-CEO Nicholas Giuliano. "It also represents the next step in our strategy to continue to grow and expand our banking franchise and our brand."
An investigation by New York State Prosecutors has culminated with criminal charges against a dozen companies and their owner, Carey Vaughn Brown. Prosecutors accuse Brown and his companies of enabling payday loans that flouted the state’s limits on interest rates. They allege that Brown assembled “a payday syndicate” that controlled every facet of the loan process. The operation began when borrowers applied for loans on websites like MyCashNow.com. From there, borrowers’ information was passed to another company that originated the loans. The information then wound up with yet another company that collected payments from borrowers. The companies were all owned by Brown, who registered the businesses overseas or in states like Nevada, which have light regulations and modest record-keeping requirements.