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Adecade ago, in the last economic crisis, mainstream banks abandoned Dianna Bowser and the Southside Community Development and Housing Corporation, where she's executive director. Founded in 1988, the nonprofit builds homes and provides counseling for first-time homeowners in and around Richmond, Virginia. ut that’s when Bowser first encountered Virginia Community Capital, a relatively new bank at the time. The bank stepped in to finance a major construction project for her organization. It has an unusual nonprofit ownership structure, a mission to serve underserved or disinvested communities, and startup capital that came from the state instead of private investors like most banks. The relationship has grown ever since.
Promontory recently rebranded itself with a pithier name: IntraFi Network. The new name is meant to reflect the company's core mission of partnering with banks and to help it grow and move beyond the service for which it's best known: reciprocal deposits. The company built a system that enables depositors — such as municipal departments, public schools and high-net-worth individuals — to hold large sums with their primary institution without losing Federal Deposit Insurance Corp. coverage. IntraFi parcels out balances that exceed the $250,000 FDIC limit to other banks within the network. This service also helps community development financial institutions and minority depository institutions gather the capital they need to lend to underserved communities. Customers keep their relationship with their own bank and don't know that IntraFi is involved. Bill Dana, vice chairman of the $261.5 million-asset Central Bank of Kansas City in Missouri, notes that it’s difficult for CDFIs to attract high-balance depositors. “You’re serving a low- to moderate-income community, so by definition there are not a lot of deposit dollars available in your marketplace.”
The Solar Lending Professional Training - Virtual Series is designed for community-based lending practitioners who are interested in expanding their knowledge of the fundamentals of solar finance and increasing their organization's activity in individual consumer and/or community commercial-level financing. These trainings will cover the knowledge, skills and practices you need to engage in solar lending, including market assessment, product development, working with solar installers and developers, underwriting and deal structuring, and program and asset management. We will include additional content on providing solar finance to underserved borrowers to lend deeper into your community. All CDFIs, including banks, are welcome to join.
This year has certainly tested bank executives' ability to manage during a crisis. Apart from dealing with the myriad of business challenges thrown at them by the coronavirus pandemic, they are trying to maintain morale of employees, many of whom are working remotely and coping with stresses of their own. This year American Banker asked executives at the 85 institutions that make up our ranking of the Best Banks to Work For to reveal how they have kept employees engaged and motivated in this most difficult of years. Included on this list are FNBC Bank, BankPlus, and United Bank.
Last month, Bank of America announced that it had completed 10 new equity investments as part of its 4-year $1 billion commitment to advance racial equality in economic opportunity. Of BoA's 10 equity investments, 6 were to CDBA member banks: Carver State Bank, Carver Federal Savings Bank, First Independence Bank, M&F Bank, Southern Bancorp, and Optus Bank. These investments will facilitate benefits across multiple states and in the communities that these institutions serve through lending, housing, neighborhood revitalization, and other banking services.
A community development bank in Arkadelphia, Ark., that raised nearly $35 million could be a model for a growing number of similar banks scrounging for capital to meet the needs of consumers and small businesses in struggling neighborhoods. Central to the strategy of the $1.6 billion-asset Southern Bancorp is a heavy emphasis on returning capital to investors through regular dividends and a stock repurchase program. "There's patient capital, but patient shouldn't mean permanent," CEO Darrin Williams said in an interview after the bank recently published a paper about its successful capital raise late last year.
The proportion of U.S. households without access to a bank account fell in recent years but could be driven up again by the coronavirus pandemic, according to a survey released Monday by the Federal Deposit Insurance Corp. The so-called unbanked rate declined to 5.4% in 2019 from 6.5% in 2017, as some 1.5 million households saw at least one member open a checking or savings account, the FDIC said in the biennial report. That rate represents the lowest level since at least 2009, when the survey began. Most of the decline reflected improvement in the circumstances of households that didn’tpreviously have bank accounts, the FDIC said. Unemployment is strongly correlated withlack of access to banking services and had fallen to 50-year lows before the pandemic sent the U.S. economy reeling this year.
Pressure is mounting on banks to offer low-cost accounts that could help bring more unbanked households into the financial mainstream. On October 19, both the American Bankers Association and the Federal Deposit Insurance Corp. called on banks that do not already offer accounts designed for previously unbanked consumers to start doing so. The basic accounts cost $10 or less per month and they usually do not come with paper checks, and don't charge fees for either overdrafts or low balances. JPMorgan Chase, Citigroup, Bank of America and Wells Fargo are among more than 40 banks that offer such accounts, and on Monday ABA President and CEO Rob Nichols urged "the rest of the industry" to join them.
The FDIC recognizes that MDIs play a unique role in promoting economic viability in minority and low- and moderate-income communities. Preserving, promoting, and building capacity in these institutions are high priorities for the FDIC. Because of this, the FDIC created "Investing in the Future of Mission-Driven Banks" as a way for private companies, philanthropic organizations, and others to learn more about the vital role of these financial institutions, and to provide suggestions about supporting MDIs and CDFI banks across the country through investments or partnership opportunities.
Hundreds of thousands of small businesses are closing for good. Temporary layoffs at larger companies are becoming permanent. But the country's largest banks, which together serve a majority of Americans through loans, credit cards or deposit services, are not raising an alarm. In their third-quarter earnings reports this week, big banks have said they are generally prepared for a wave of loan defaults they expect in the second half of next year. And their own fortunes are just fine: A trading and investment banking bonanza on Wall Street is helping them stay profitable. A few common themes have emerged from the reports.