Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
This month, South Carolina Community Bank officially changed its name to Optus Bank. The bank will also complete its conversion to a new core banking system and upgraded products and services on May 13th. The new brand is designed to highlight progress made by the bank, which was removed last March from the FDIC's troubled bank list. In 2018, the bank realized its first year of profitability and growth in 10 years, according to a news release from Optus. "We purposefully delayed the name change until the bank was healthy, profitable and able to deliver on our brand promise," said Optus president and CEO Dominik Mjartan. "The progress we made in 2018 positions us to fully live our new brand."
At first glance, a "video teller" installed in New Hebron may seem more impersonal than a traditional bank branch. However, for Peoples Bank this new bit of technology has allowed bankers to personally interact with a whole new set of customers. The machine, stationed in a location far from a physical branch, allows customers to live video chat with a real teller at another nearby Peoples Bank location. "We typically have two to three different employees who are serving that role as a live teller," said Ashley M. Jones, vice president of marketing. "The tellers on our end are enjoying the relationship that they have established...And for our customers, it is always nice to see a familiar face on the other end. It is comforting."
Many bank executives are excited about the benefits created by Opportunity Zones. However, other banks are still wondering if participation in them is even feasible. CDBA's Jeannine Jacokes offers her insights in this special report from American Banker. The article also features CDBA members Dominik Mjartan of Optus Bank, Tom Nida of City First Bank, Adam Northup of Virginia Community Capital, and Bill Dana of the Central Bank of Kansas City, all of whom support stronger regulations for Opportunity Zone projects.
Banks have made more than $1 trillion in community development lending from 1996 to 2017, benefiting low- and moderate-income communities, as a result of Community Reinvestment Act (CRA) requirements. While this level of financing is impressive, we do not know enough about where it is going in order to determine whether it is targeted effectively to the most underserved and distressed communities. In other words, we need better data. In a recent speech at the 2019 Just Economy Conference, Federal Reserve Governor Lael Brainard suggested that data on community development financing is crucial to assess whether banks are properly responding to neighborhood needs with their CRA financing.
As a senior vice president at Silicon Valley Community Foundation (SVCF), one of Bert Feuss' primary jobs is to decide where to invest the money that comes from donors. But when he went looking for a bank to deposit with, he specifically wanted one that would sign on to the Anti-Displacement Code of Conduct. This pledge would ensure that the financial institution would avoid making loans to developers who rely on the eviction of existing residents. While other banks hesitated, The Community Bank of the Bay was more than happy to agree. CDBA members Amalgamated Bank and Beneficial State Bank are also mentioned in this article.
This week's CDBA Storybank video highlights The Bank of Cherokee County in Tahlequah, Oklahoma, one of the first Native Community Development Financial Institutions in the country. Its featured clients are small business owners who have developed the Bright Start child care center and the Go Ye Village retirement home, both of which serve the community of Tahlequah. The Bank of Cherokee County "is not just a bank," says Go Ye Village's Steve Thomas. "They're more of a partner in the process."
Historically Black-owned banks have been a foundational pillar for the community by providing African Americans access to financial services and capital for businesses. Now, with movements such as #BankBlack, social media has brought awareness to the importance of banking Black and using our money to back these institutions. For those interested in making the shift over, Rolling Out recommends five high-performing black banks, including CDBA's Industrial Bank, OneUnited Bank, and The Harbor Bank of Maryland.
This week, The Clearinghouse CDFI announced a $195,000 investment in Native American Bank, the only Native American-owned, nationwide financial institution. With this investment, Clearinghouse CDFI becomes Native American Bank's first CDFI investor out of thirty-four different shareholders. "We are pleased to make this investment," said Clearinghouse CDFI President and CEO Douglas Bystry. "We are excited to partner with them in providing affordable and flexible financial services to Native American and Alaskan Native individuals, enterprises, and governments."
The number of community banks in our nation is at the lowest point in recent history. From a high of 18,033 in 1985, we've come to just 5,477 as of the third quarter of 2018. Additionally, many community banks have sold to larger institutions as heavy consolidation takes over the banking sector. Local banks are especially important because they support the nation's small businesses, which employ the majority of Americans. In fact, according to the Small Business Administration, small businesses make up 49.2 percent of private-sector employment.
The Omidyar Network, a venture capital fund started by Pierre Omidyar, the founder of eBay, recently spun off the portion of its portfolio devoted to financial-inclusion businesses. This new venture firm, called Flourish, will focus solely on backing fintech entrepreneurs whose innovations are helping people take advantage of economic opportunity and achieve financial health. Tilman Ehrbeck, managing partner of the new venture capital firm, shared the logic behind the spinoff and how he finds fintech startups that have a social mission, yet are also moneymakers. Read the full interview with Ehrbeck.