Community Development Banking News
CDFI Banking: Industry, Policy, and Beyond.
Forbes partnered with market research firm Statista to produce their second annual look at the Best Banks In Each State to gauge whose customers gave their banks the highest grades. Nearly 25,000 customers in the U.S. were surveyed for their opinions on their current and former banking relationships. Southern Bancorp and BankPlus were named among the best banks in their states.
An effort encouraging investors to buy stock in Black-run banks could create new challenges for the leaders of those companies. The Buying Black movement, which took root last week, led to sharp increases in the shares of companies such as Broadway Financial in Los Angeles, Carver Bancorp in New York and M&F Bancorp in Durham, N.C. An influx of new investors could increase pressure to improve shareholder returns, while any strategic effort designed to generate higher profits could also draw a backlash. At the same time, markets are fickle — most shares in Black-run banks have fallen significantly in recent days as some existing shareholders cashed out.
Three years after its successful initial investment, The Cameron Foundation has renewed a $1 million loan and deposit with Virginia Community Capital (VCC), a community development financial institution that makes impact investments throughout the Commonwealth. As the community begins to reopen from the COVID-19 closures, the funds will be deployed into the Tri-Cities and other areas in Cameron's footprint, supporting their economic rebuilding.
In partnership with the 17-member Community Development Financial Institutions (CDFI) network and lawmakers, Pennsylvania Gov. Tom Wolf recently announced the launching of a $225 million statewide grant program that will go to support small businesses throughout the state that have been impacted by the COVID-19 public health crisis and the subsequent business closure order. CDFI is a group of 17 Pennsylvania-based community development financial institutions that primarily provide financing options for small businesses. The fund will be distributed through the recently enacted state budget, which includes $2.6 billion in federal stimulus funds through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Podcast: Sells, American Banker's Digital Banker of the Year, explains how he encouraged his team to take risks on projects like a three-minute account opening process and a system that analyzes core data in real time to help set deposit prices. Read American Banker's profile on him here.
Foundations and other institutional investors are targeting capital to help hardest-hit communities recover from the coronavirus pandemic, reviving a structure that helped during the Great Recession: community development financial institutions. Unlike traditional banks, CDFIs deploy federal funds that they then leverage four to six times with private debt from banks, foundations, corporations and individuals to lend to disadvantaged business owners, affordable housing developers and community projects that would not otherwise qualify for traditional loans. There are now more than 1,100 CDFIs in the U.S. with more than $222 billion in assets certified by the Department of Treasury's Community Development Financial Institutions Fund program.
Lawmakers are sounding the alarm over complaints from minority-owned and other underserved companies that they are unable access to small-business loans mandated by recent pandemic relief laws. Some independent data backs up their concerns, pointing to minority-owned businesses getting rejected or still waiting for coronavirus rescue funds. And, with the nation intensely focused on racial divisions after the killing of George Floyd, members of Congress from both parties continue to demand better demographic data from the government on recipients of Paycheck Protection Program loans. Fears that minority-owned businesses lack access to loans and a focus on the lack of public data about PPP borrowers are emerging as additional trouble spots for the Small Business Administration program enacted in March in the Coronavirus Aid, Relief, and Economic Security Act.
From Rep. Mike Quigley, Chair of the Financial Services and General Government Subcommittee: Last month, the House passed legislation to provide critical funding to help state and local governments, support our front-line workers in the fight against coronavirus and assist small businesses and workers impacted by the pandemic. However, our work is far from over; we will be dealing with the economic fallout for months, if not years to come. That’s why the $1 billion in the HEROES Act for Community Development Financial Institutions (CDFIs) is key. This funding will not only provide much needed access to capital for struggling rural and urban communities at present, but it will help us lay the path toward economic revitalization in the uncertain times ahead. In addition, it will allow CDFIs to stay afloat while continuing to finance Paycheck Protection Program (PPP) loans.
The Community Development Bankers Association (CDBA) stands in solidarity with black communities in calling for an end to systemic racism and police violence. In response to the national events of the last two weeks, we say black lives absolutely do matter. There is no excuse for racism of any kind.
When the Small Business Administration rolled out its Paycheck Protection Program, it set off a fire drill of sorts among bank technology executives, who had to quickly figure out how to accept applications from borrowers and load them into the SBA's system before the money ran out. Like other banks, the $1.4 billion-asset Sunrise Banks in St. Paul, Minn., had two weeks to decide whether to buy or build a solution, set it up, test it and take it live. As of June 5, Sunrise had made $216 million in paycheck protection loans. What follows is a look at how and why the bank made the technology choices it made and how it plans to use this technology for other purposes when the program ends.