Community Developments
May 2018 Investments
Profitable Partnerships Collaborating With Minority Depository Institutions Profitable Partnerships: Collaborating With Minority Depository Institutions
A Look Inside … This edition of Community Developments Investments reviews how minority depository institution (MDI) collaborations with large and midsize banks can be profitable for the parties involved and help MDIs fulfill their missions and serve customers in a rapidly evolving industry.
Community Reinvestment Act Consideration for Collaborations That Promote Community Development Banks may receive Community Reinvestment Act (CRA) consideration from partnerships with other financial institutions, including those with minority- and women-owned financial institutions and low-income credit unions.
Catalyzing Impact: NCIF Fosters Bank Partnerships With MDIs The National Community Investment Fund (NCIF) has invested in mission-oriented banks, including MDIs. To encourage high- impact projects, the NCIF provides metrics and information that banks can use to analyze potential partnerships, projects, and investments. • Detroit: Liberty Bank and Trust Partners on Gateway Marketplace • East Baltimore: The Harbor Bank of Maryland and City First Bank Partnership
Citibank: Partnering With Community Banks to Expand Financial Access The Citi Community Automated Teller Machine (ATM) Network allows customers of Continental Bank and several other community banks to use—without paying out-of-network fees—any of Citibank’s 2,400 branch ATMs, including those in Chicago, Los Angeles, Miami, New York, San Francisco, and Washington, D.C.
Texas Capital and Texas National Banks: Collaborating for Mutual Benefit Texas Capital Bank is collaborating with and providing correspondent banking services to Texas National Bank and other MDIs and community development financial institutions.
Resources A variety of resources is available to help banks interested in developing mutually beneficial partnerships with MDIs.
On the cover
A Diverse and Entrepreneurial History Minority depository institutions today are descendants of an entrepreneurial group of community banks founded by minority bankers dedicated to serving their diverse communities. This newsletter’s cover honors this rich heritage with images of (clockwise from top right):
Façade of a bank in San Francisco (Alamy); Elouise Cobell, a Native American woman who spearheaded the capital campaign to fund Blackfeet National Bank, predecessor to today’s Native American Bank, N.A. (AP Images); St. Luke Penny Savings Bank employees (National Park Service); Romana Acosta Bañuelos, Latina co-founder of Pan American Bank in East Los Angeles, Calif. and U.S. Treasurer (1971-1974), pictured with James A. Conlon, Director, Bureau of Engraving and Printing (1967-1977) (Bureau of the Public Debt); Freedman’s Savings and Trust Co. passbook (U.S. Department of the Treasury); Maggie L. Walker, the first African American woman to charter a U.S. bank and founder of St. Luke Penny Savings Bank (National Park Service); Frederick Douglas, the first president of Freedman’s Bank, the first black-owned bank (Shutterstock). A Look Inside … Barry Wides, Deputy Comptroller for Community Affairs, OCC
he Office of the Comptroller national banks and federal savings addition, MDIs help to ensure that of the Currency (OCC) associations (collectively, banks). the nation’s vibrant and diverse Trecognizes the vital role that MDIs represent a small2 but banking system benefits the financial minority depository institutions important part of the federal banking needs of all customers, businesses, (MDI) can play in improving system because they often serve and communities they serve. financial outcomes for their customers in minority, customers and promoting the This issue of Community low- and moderate-income (LMI), economic viability of minority Developments Investments highlights and underserved communities. In and lower-income communities. the OCC’s continuing efforts to Consistent with its mission of ensuring a safe and sound federal banking system, the OCC is committed to promoting the preservation of robust and healthy MDIs and, in so doing, fulfilling its congressional and regulatory responsibilities.1 Preserving MDIs is an important and timely goal for the nation and the OCC, which supervises
Community Developments Citibank An ATM partnership between Citibank and Continental National Bank, in Miami, uses Investments Spanish materials to reach Continental’s Hispanic customers.
Deputy Comptroller Barry Wides
Editorial Staff David Black Janet Fix Emily Gold
Design Staff Vincent Harris Richard Shacklette Questions or comments, please phone (202) 649-6420 or email [email protected]. This and previous editions are available on the OCC’s website at www.occ.gov.
Disclaimer Articles by non-OCC authors represent the authors’ own views and not necessarily the views of the OCC. OCC Bank executives from women- and minority-owned banks gather at a recent meeting at OCC Headquarters.
1 Section 367 of the Dodd–Frank Wall Street Reform and Consumer Protection Act; OCC, “Policy Statement on Minority National Banks and Federal Savings Associations,” June 7, 2013. 2 Less than 3 percent of the depository institutions in the United States are MDIs. Only 30 percent of MDIs operated continuously throughout 2001 to 2013, compared with 57 percent of community banks, according to “Minority Depository Institutions: Structure, Performance, and Social Impact,” FDIC Quarterly, Volume 8, No. 3, 2014.
May 2018 1 support and encourage new and LMI communities. The OCC’s critical resources into low-income existing MDIs through collaboration roundtable discussions, which began communities and strengthen MDIs. roundtables. These roundtable in 2016, are continuing, and some of The NCIF explains its work in discussions bring together the senior the collaborations that came out of “Catalyzing Impact: NCIF Fosters executives of MDIs and those those initial meetings are highlighted Bank Partnerships With MDIs.” of midsize and large banks. By in the articles “Citibank: Partnering By highlighting MDI collaborations collaborating with MDIs, the OCC With Community Banks to Expand and resources in this publication, believes, large and midsize banks Financial Access” and “Texas the OCC hopes to encourage can help MDIs better serve the Capital and Texas National Banks: similar collaborations. The OCC’s credit needs of their communities, Collaborating for Mutual Benefit.” District Community Affairs Officers while expanding their own business Nonprofit organizations have been are available to answer technical opportunities, fulfilling strategic critical in facilitating collaborations. questions, and the OCC’s website goals, and potentially receiving The National Community Investment (www.occ.gov) has helpful resources. Community Reinvestment Act (CRA) Fund (NCIF), a nonprofit private In addition, MDI executives are consideration. These partnerships can equity trust and impact investor, is encouraged to attend the OCC’s be profitable for the parties involved dedicated to supporting mission- bank director workshops on risk and help MDIs fulfill their missions oriented MDIs and other banks governance, credit risk, compliance and serve customers in a rapidly operating in and serving LMI risk, and other important banking evolving industry. communities. The NCIF’s goal is issues. In 2015, the OCC issued a to channel financial products and MDIs and midsize and large banks, paper titled “An Opportunity for services to LMI areas, minority as well as their customers, benefit Community Banks: Working communities, and other underserved from a healthy, diverse federal Together Collaboratively.” The areas. To encourage high-impact banking system. After reading paper highlighted the benefits projects, the NCIF provides metrics this publication, you will better of bank partnerships pooling or and information that banks can use understand the important role that sharing resources to reduce costs, to analyze potential partnerships, MDIs play in their communities. We achieve economies of scale, and projects, and CRA-qualified hope you also will share the OCC’s leverage specialized expertise to investments. NCIF has also been commitment to ensuring the future serve customers and communities, using the New Markets Tax viability and preservation of the particularly those in minority and Credit Program as a way to bring nation’s MDIs.
2 Community Developments Investments Community Reinvestment Act Consideration for Collaborations That Promote Community Development David Black, Community Development Expert, OCC
he Community Reinvestment Act (CRA), passed in 1977, Tencourages national banks and federal savings associations (collectively, banks) to help meet the credit needs of all segments of their communities, including low- and moderate-income (LMI) neighborhoods. Today, federal financial supervisory agencies, including the OCC, evaluate financial institutions on their performance regarding activities that qualify for consideration under the CRA. This article reviews ways in which banks may receive CRA consideration from partnerships with OCC other financial institutions, including The East Baltimore Development Initiative used new markets tax credits, which is an eligible minority depository institutions community development activity under the Community Reinvestment Act. (MDI), women-owned financial institutions, and low-income credit unions (MWLI financial institutions). of “community development,” which a broader statewide or regional area is defined in the CRA regulations.3 that includes the bank’s assessment Community Development The definition of “community area(s). Activities development” includes affordable Examples of partnerships between housing for LMI individuals, banks and other entities to promote All federally regulated financial community services targeted to LMI community development include4 institutions, regardless of minority individuals, activities that promote ownership designation, may receive economic development by financing • loans made to a financial institution CRA consideration for certain eligible small businesses and farms, that primarily lends to promote community development. community development activities and activities that revitalize or • purchasing or selling a participation conducted in partnership with other stabilize LMI geographies or other in a larger community development entities, including other Federal geographies designated in the CRA loan made by another financial Deposit Insurance Corporation- regulations. institution. Loan participations insured financial institutions. A bank may receive CRA can allow smaller institutions Community development activities consideration for community to originate larger loans when include loans, investments, and development activities provided other banks agree to purchase services that have a primary purpose the activities benefit the bank’s participations. assessment area(s) or, in most cases,
3 12 CFR 25.12(g) and 195.12(g). 4 “Community Reinvestment Act; Interagency Questions and Answers Regarding Community Reinvestment; Guidance,” 81 Fed. Reg. 48506 (July 25, 2016).
May 2018 3 • investments or holding shares women-owned depository institution, ventures undertaken by a majority- in, or making grants or deposits as these terms are defined in the owned institution in cooperation available to, a financial institution CRA statute, may receive CRA with MWLI financial institutions, that primarily lends or facilitates consideration. The bank branch provided that the activities help lending in LMI areas or to LMI must be located in a predominantly meet the credit needs of local individuals. minority neighborhood.5 The amount communities in which the MWLI • grants that allow a financial of the contribution or the amount financial institutions are chartered. institution to undertake community of the loss incurred in connection The majority-owned institution development activities, such with such activity may be a factor in may receive consideration for such as financial counseling to LMI determining whether the depository activities even if the MWLI financial individuals. institution is meeting the credit needs institution is not located in, or the • technical assistance, in-kind of the institution’s community.6 activities do not benefit, the majority- contributions, or other community owned institution’s assessment development services to a financial Partnerships Between area(s) or broader statewide or institution whose primary purpose Majority-Owned regional area that includes the is community development. Institutions and MWLIs institution’s assessment area(s).7 CRA consideration is permitted For more information, contact David Sales or Donations of Bank for majority-owned institutions Black at [email protected]. Branches in Predominantly that partner with MWLI financial Minority Neighborhoods institutions. The federal financial Under some circumstances, a sale of agencies may provide CRA a bank branch on favorable terms or consideration for capital investments, a branch donation to a minority- or loan participations, and other
5 12 USC 2907(a). 6 Ibid. 7 OCC, Community Developments Fact Sheet, “Partnerships With Minority- and Women-Owned Financial Institutions, Low-Income Credit Unions,” August 2016.
4 Community Developments Investments Catalyzing Impact: NCIF Fosters Bank Partnerships With MDIs Saurabh Narain, President and Chief Executive Officer, National Community Investment Fund
inority depository mission-oriented institutions; and to analyze potential partnerships, institutions (MDI) using research to showcase impact. projects, and investments that may qualify them for Community play a vital role in the The NCIF has invested tier 1 and tier M Reinvestment Act (CRA) communities they serve by providing 2 capital directly into MDIs to support consideration. The NCIF considers access to investment capital, the financial services they provide to impact as the foundation for all its financial products, and services that LMI and minority communities. In all, investing and lending activities. The may not otherwise be available. the NCIF has invested in 58 mission- NCIF measures and demonstrates As community-focused banks, oriented financial institutions of which MDIs have a unique understanding the social impact of its investments 23 were MDIs (current investments in communities with its unique and of their local markets and needs. are in 14 MDIs). Together with other MDIs leverage this knowledge to proprietary Social Performance NCIF investments, these mission- Metrics. The NCIF developed its support small businesses, faith-based oriented institutions have generated Social Performance Metrics to organizations, community facilities, over $7 billion in loans in LMI identify high-impact MDIs and other real estate developments, and communities. mission-oriented financial institutions community members. as potential partners for banks with Historically, the first MDIs grew out Social Performance Metrics similar missions and goals. The of the pre-civil rights era providing To encourage high-impact projects, metrics provide a suite of quantitative banking services in underserved the NCIF provides metrics and and qualitative data, including areas; later ones were founded to information that banks can use “mission intensity” data (see figure 1). serve immigrant communities. Today, MDIs continue to play significant Figure 1: Mission Intensity of NCIF’s Portfolio of CDFI Banks and Minority Depository roles in minority communities in Institutions (2015) urban and rural areas throughout the Affordable housing (5.2%) Clean energy (1.3%) United States. Minority-owned businesses (3.4%) Neighborhood stabilization (2.9%) Founded in 1996, the National Community Investment Fund (NCIF) is a nonprofit private equity trust Nonprofit organizations (20.5%) and impact investor dedicated to increasing the flow of responsibly Sustainable food & agriculture (4.1%) priced financial products and services Woman-owned businesses (7.1%) in low- and moderate income (LMI) communities. The NCIF achieves its mission through three complementary lines of business: investing in mission- Development lending intensity total loans (40.4%) oriented financial institutions, most of which are MDIs or certified community development financial institutions (CDFI); using new markets tax credits (NMTC) to invest Note: The Mission Intensity Index shows how much of a bank’s lending is mission-related. It is the percentage of in high-impact development projects a bank’s total annual lending that supports the bank’s mission by 1) being located in a qualified census tract or 2) supporting a specific mission-relevant category. The figure shows the median percentage of 2015 lending by the that benefit these communities, in NCIF’s portfolio of CDFI banks and MDIs. The percentages do not add up to 100 because banks do other, non- mission intensity lending. For additional information, please see the NCIF report “Telling the Story: The Impact of partnership with the the Reporting Banks and the Mission-Oriented Banking Industry.”
May 2018 5 Some of these metrics are available Figure 2: NCIF’s Social Performance Metrics Illustrated by Quadrants from the NCIF’s search engines, www. BankImpact.org and BankImpact Maps (www.bankimpactmaps.org). The NCIF develops these metrics using the self-reported data received from banks and from publicly available sources, such as federal Home Mortgage Disclosure Act (HMDA) data. The NCIF analyzes this data to quantify and compare the social impacts of banks by the percentage of HMDA-reported lending and the number of branches in LMI areas and highly distressed U.S. Census tracts. The NCIF then assigns the banks to quadrants to help investors and consumers make informed banking choices (see figure 2). Banks exceeding the NCIF’s “impact thresholds” are assigned to the upper-right quadrant and highlighted for Note: The Development Deposit Intensity (x-axis) shows the percentage of a bank’s branches located in low-and potential partnerships. (For detailed moderate-income census tracts. The Development Lending Intensity (y-axis) shows the percentage of a bank’s information on the NCIF’s quadrant mortgage lending volume in low- and moderate-income census tracts. rankings, visit www.ncif.org.) The social performance metrics of mission-oriented MDIs and larger customer or build new customer MDI banks clearly show the banks’ banks interested in impactful projects relationships. The bank is able to importance in their communities. in LMI communities. The 3-Way book assets and income through As a peer group, MDI banks have Partnership comprises the following the loans. Second, some banks a substantial presence in LMI parties (see figure 3 for more detail joining in the partnership often communities, regarding both branch on the structure): provide depository services to locations and lending. The median 1. The NCIF, as the tax credit the borrower. Third, all banks MDI bank has 57 percent of its allocatee, selects projects that participating in the partnership branches in LMI areas, compared will benefit communities and gain experience and familiarity with 40 percent for the median bank involve mission-oriented banks as with the NMTC structure. Some in the United States. In addition, strong partners. Entities that are banks that have gained experience based on HMDA reporting, MDI customers of NCIF partner banks through participating in the 3-Way banks are much more likely to lend in often sponsor these projects. Partnership have gone on to LMI areas, with 48 percent of MDI 2. MDIs and other mission-oriented receive their own allocation. These lending going to these communities, banks have participated in the banks can then participate in compared with just 26 percent for the 3-Way Partnership in one or projects as co-allocatees. Finally, median bank overall. more ways. First, an MDI can and perhaps most importantly, participate as a leveraged lender through participation in the 3-Way New Markets Tax Credits (lending within the NMTC Partnership, mission-oriented banks can gain a relationship with In deploying NMTCs, the NCIF uses structure) or as a direct lender larger banks. its own 3-Way Partnership Model (directly financing or sponsoring to create relationships between the project) to support its
6 Community Developments Investments 3. large bank typically purchases Figure 3: NCIF’s New Markets Tax Credits 3-Way Partnership the tax credits, turning them into equity for the project as part of the NMTC structure. In addition to the benefit of the tax credits, the large bank can develop a partnership with the mission- oriented bank and fulfill its CRA responsibilities. To date, the NCIF has completed 27 NMTC projects with 3-Way Partnerships, 11 of which were partnerships with CDFIs including MDI banks.
The following two examples show how NMTC projects were used to leverage community bank and large bank relationships as well as positively affect communities. Detroit: Liberty Bank and Trust Partners on Gateway Marketplace Liberty Bank and Trust, a New Note: For additional information on NCIF’s New Markets Tax Credits 3-Way Partnership, please visit the NCIF’s Orleans-based MDI, along with the website. NCIF and U.S. Bank contributed to the NMTC financing for the Gateway Marketplace in Detroit. This new 350,000-square-foot retail center is the first major retail project in Detroit in over 40 years. The project remediates a 36-acre blighted and contaminated brownfield site and brings a fresh grocer to a federally designated food desert. Hundreds of new construction jobs and permanent jobs were created as a result of the development. Liberty Bank and Trust entered the Detroit market in 2009 and has been very active in community revitalization efforts. By building relationships with public and private partners, Liberty Bank and Trust REDICO has made a substantial contribution Liberty Bank and Trust, a New Orleans MDI, partnered with the National Community Investment Fund and U.S. Bank to finance the Gateway Marketplace, Detroit’s first major to several high-impact housing and retail project in decades. commercial revitalization efforts in Detroit.
May 2018 7 East Baltimore: The Harbor Bank of Maryland and City First Bank Partnership The Harbor Bank of Maryland, City First Bank of DC, the NCIF, and U.S. Bank contributed to the $33 million in NMTC financing for the development of the 1812 Ashland project. The project, developed by the Forest City–New East Baltimore Partnership, includes lab and office space for local and national tenants that have research relationships with Johns Hopkins University (JHU), as well as additional companies OCC attracted to Baltimore’s emerging Joseph Haskins Jr. Chairman and CEO of the the Harbor Bank of Maryland, shows an award technology sector. The project he received for the bank’s community development work in East Baltimore. created hundreds of construction and permanent jobs and generates re-energize, and rebuild East For more information on the significant economic activity in the Baltimore, oversees the initiative. NCIF and how to use its Social local community. The Harbor Bank of Maryland has a Performance Metrics, please visit www.ncif.org. Detailed information This project is a key component long-term presence in the community on the NCIF’s impact analysis is of a larger, $1.8 billion initiative and often acts as a catalyst for economic development in Baltimore. available at www.bankimpact.org. to revitalize the highly distressed Maps that can help investors and Joseph Haskins Jr., Chairman community of East Baltimore, an banks connect with geographically and CEO of the Harbor Bank of area that has suffered from persistent convenient partners are available at poverty and high unemployment. Maryland, who was instrumental in www.bankimpactmaps.org. East Baltimore Development Inc. the formation of EBDI, believes that (EBDI), a nonprofit organization such partnerships have allowed local and national entities to leverage their Articles by non-OCC authors represent established by community, the authors’ own views and not government, institutional, and strengths and maximize the impact of necessarily the views of the OCC or the organization they represent. philanthropic partners to revitalize, their investments in the community.
8 Community Developments Investments Citibank: Partnering With Community Banks to Expand Financial Access Janet Fix, Analyst to the Deputy Comptroller for Community Affairs, OCC
hen the Office of the Comptroller of Wthe Currency (OCC) encouraged minority depository institutions (MDI) in 2016 to form collaborations with larger banks, Guillermo Diaz-Rousselot was initially as skeptical as anyone would be if asked to team up with a competitor. “Yeah, right,” thought Mr. Diaz- Rousselot, President and Chief OCC OCC Executive Officer of Continental Natalie Abatemarco, Managing Director Spanish language marketing in Continental National Bank, an MDI in Miami. of Citi Community Development, and Bank’s lobby in Miami is presented by, Guillermo Diaz-Rousselot, President of from left, Sonia Canessa-Gonzalez, CFO As a trustee for Miami’s Olympia Continental National Bank, discuss their of Continental National Bank; Natalie Theater at the Gusman Center for the banks’ ATM partnership. Abatemarco of Citibank; and Natalia Arana, Performing Arts, he said, “I thought Marketing Director of Continental National collaboration was something only unions across the nation that are Bank.” musicians did.” initial partners in Citibank’s Citi ATM Community Network, a pilot organizations on these efforts to aid A phone call from Citibank, however, program created in July 2016. financially underserved individuals, soon gave Mr. Diaz-Rousselot reason families, and communities. to be more optimistic. Continental’s “At Citi, we share the same goal as minority-owned banks and credit Together, the MDIs and other customers were invited to use— unions, which is to provide wide institutions in the Citi ATM without paying out-of-network access to safe and affordable financial Community Network serve more than fees—any of Citibank’s 2,400 branch products and services, especially 400,000 customers, many of whom automated teller machines (ATM), in low-income communities and live in low- to moderate-income and including those in Chicago, Los communities of color,” said Bob majority-minority neighborhoods Angeles, Miami, New York, San Annibale, Global Director of Citi considered to be underserved by large Francisco, and Washington, D.C., Community Development and financial institutions. The typical cities where Citibank has 600 retail Inclusive Finance. “The Citi ATM MDI customer has a relationship with branches. Community Network enables us to collaborate in a new way by his or her community bank, which What did Citibank request in return? expanding access and convenience may have only a handful of ATMs “They did not request anything,” for the customers of these partner locally. said Mr. Diaz-Rousselot. “At first, institutions, while at the same time In 2016, Citibank executives learned I did not take them seriously, but strengthening local trusted credit the OCC was encouraging Citibank it was true and it turned out to unions and minority-owned banks.” and other OCC-supervised banks be the beginning of a beautiful Expanding financial access and to collaborate with MDIs. At the relationship.” inclusion for community bank same time, Citibank was building For Citibank, it was a serious customers is a key part of Citi’s off the creation of both the Access strategic move that led to positive corporate strategy, said Mr. Annibale, Account, in 2014, and its pioneering relationships with seven other MDIs, who leads Citi’s partnerships collaborations to develop savings four community banks, and 11 credit with global, national, and local accounts for schoolchildren in the
May 2018 9 city and county of San Francisco and • Mission National Bank, California said. “We could continue, almost the low-income immigrant clients • National Bank of Malvern, exponentially, to expand financial of Grameen America. In addition, Pennsylvania access.” Citibank was looking to further • Pacific Global Bank, Illinois Meanwhile, Continental Bank and its expand its financial inclusion efforts customers are enjoying the benefits by exploring ways to expand ATM In addition, four community banks of Continental’s relationship with access to small community financial are participating in the Citi ATM Citibank, including greater brand institutions. Soon after, Citibank Community Network: City First awareness and free access to their began its ATM pilot program and Bank of DC, Spring Bank in New cash at any Citibank ATM. contacted Mr. Diaz-Rousselot to York City, Neighborhood National invite Continental to join the Citi Bank in San Diego, Calif., and Mr. Diaz-Rousselot said the Citi ATM Community Network. Quontic Bank in New York City. ATM Community Network has The Citi ATM Community Network By participating in the network, helped Continental to stand out in recognizes the way bank customers a crowded South Florida banking banks enable their customers to work and live. “These partnerships avoid paying out-of-network ATM market where 60 community banks expand ATM access to people who compete for the same customers and fees that otherwise could total nearly have relationships with the local $5 per transaction. Typically, bank market share. “Our partnership is banks that, perhaps, they feel best a big plus, at the board level, with customers pay both an ATM fee about,” Mr. Annibale said. “They our officers, our customers … and charged by the out-of-network bank also leverage Citi’s branch network in terms of branding and public that owns the ATM and a second fee and expand our footprint in the local relations,” Mr. Diaz-Rousselot said. that their own bank charges for using communities of our partners.” an ATM owned by another bank. In Results, he said, have “been quite 2017, out-of-network ATM fees in In 2018, the Citi ATM Community positive.” Network continues as a pilot, and the United States hit a record high of His customers increased their ATM Citibank will, at its discretion, add $4.69 per transaction, up 2.6 percent usage by 10 percent, with 30 percent from the previous year, Mr. Annibale new partners while maintaining control over the impact of the added using ATMs to check balances before said. “People who are juggling making withdrawals. He said 67 limited cash flows and withdrawing volume on its retail branch network, percent of customers are using the just $40 at a time are paying a according to Mr. Annibale. network to withdraw funds. significant potential cost to get access “We know that people who use our to their money,” he said. 399 Park Avenue ATM don’t live In addition, Mr. Diaz-Rousselot has overcome his initial concerns The Citi ATM Community Network a few blocks away from 399 Park that Citibank might try to entice his does not boost Citi’s bottom line Avenue,” Mr. Annibale said. “They customers away or cross-sell Citibank or allow Citi to sell its products to come from all over New York, from its bank partners’ customers, Mr. all over the country, and around products to them. Citibank has not Annibale said. Proof of this, he the world. They live elsewhere but done this, Mr. Diaz-Rousselot said. said, is in the data Citi has collected may work in Manhattan, or they Most importantly, Mr. Diaz-Rousselot since the pilot began. “Most of pass by as taxi drivers, delivery is pleased because his customers are these customers are just using our men, cleaners, office workers, civil happy and saving money. ATMs, not the rest of the bank,” Mr. servants, and pedestrians.” “We know 91.3 percent of our Annibale said. While Citi may not quickly expand customers are aware of our alliance The Citi ATM Community Network its ATM network, it does hope that with Citibank and 64 percent have benefits the customers of Continental other OCC-supervised banks will see used a Citibank ATM at no cost,” National Bank of Miami and seven what it has done and follow its lead Mr. Diaz-Rousselot said. “It’s been other MDIs: by providing access to their ATMs at fantastic for us.” no charge to other community banks. • American Plus Bank, California For more information, contact • Broadway Federal Bank, California “There are many other [large banks] Patricia Tuma, Vice President for • City National Bank, New Jersey which could do the same, and that Corporate Communications at • Executive National Bank, Florida would be amazing,” Mr. Annibale Citibank, at [email protected].
10 Community Developments Investments Texas Capital and Texas National Banks: Collaborating for Mutual Benefit Janet Fix, Analyst to the Deputy Comptroller for Community Affairs, OCC
hen the Office of the headquarters for chief executives Comptroller of the of selected MDIs and CDFIs. WCurrency (OCC) invited That meeting focused on how Texas Capital Bank to join the first Texas Capital Bank could support Minority Depository Institutions MDIs and CDFIs through loan (MDI) Collaboration Roundtable, participations, reciprocal deposit Chief Executive Officer Keith relationships, sharing intellectual Cargill and Director of Community capital and specialized expertise Development Effie Dennison did about talent management, recruiting, not know what might result from compliance risk, marketing, and the meeting. They returned home to cybersecurity. Dallas with a new—and potentially Next, Texas Capital Bank ensured profitable—opportunity for the the collaborations it formed were bank’s business strategy. successful for all involved by
Two years later, Texas Capital Bank OCC • staying in touch with partners is collaborating with and providing Jesse Jackson, a Senior Vice President regularly through on-site visits and correspondent banking services of Texas Capital Bank, and Jose “Joe” meetings. to about 21 MDIs and community Quiroga, President of Texas National • building relationships with each development financial institutions Bank, consider their partnership mutually beneficial. MDI’s executive management (CDFI). The partnerships are giving team. Texas Capital Bank, a $25 billion agreements and other correspondent • offering deposit rates that commercial and private client bank services designed to meet the successfully compete with the bank, access to new business and balance sheet needs and earning asset federal funds rate and rates offered consumer relationships in culturally goals of its partners. These MDI and by other banks. diverse and low-to moderate-income CDFI partners are coast to coast and • reducing the size of loan communities across the nation. range in size from $80 million to $4 participations to $1 million to $5 In return, Texas Capital Bank is billion in assets. million (a fraction of the bank’s receiving Community Reinvestment typical $10 million to $15 million The partnerships further Texas Act consideration for its MDI minimum) to meet the lower Capital Bank’s strategic plan, which collaborations. lending limits of partners. has led the bank to partner with more “What we heard from these than 340 banks in 40 states. “We’ve “At the end of the day, our job banks was their long, rich history quietly built what some would say is to create opportunities for [our of meeting the needs of their is the largest correspondent banking partner] banks to buy into deals,” Mr. communities, and that they were division in the country, based on Jackson said. “Our internal credit not looking for a handout,” said Ms. deposits,” said Jesse Jackson, a culture and the folks that manage Dennison. “Rather, they were looking Senior Vice President of Texas MDI–CDFI relationships in our bank for an opportunity to be strategic by Capital Bank. have become familiar with the size helping each other’s businesses grow Texas Capital Bank formed its MDI– of transactions these banks require. for mutual benefit.” CDFI partnerships after the OCC’s We are comfortable with the segment Texas Capital Bank’s MDI–CDFI first roundtable in 2016 and held a of banks that are participating in our program provides reciprocal deposit subsequent meeting at its program.”
May 2018 11 Relationship banking is a key a deposit in our institution that “Texas Capital Bank is not in my ingredient. “When we do business diversifies our funding sources was backyard, and I don’t have a presence with you, we enjoy getting to know very helpful for us.” in its market in Dallas or Houston,” you,” Mr. Jackson said. “That is the The asset diversification has helped Mr. Quiroga said. “If anything, I wish way we cultivate our relationships.” Texas National better compete in I could do more from the standpoint The results have proven to be a growth market that is 90 percent of dreaming up new ideas of how we mutually beneficial to Texas Capital Hispanic and to provide loans to could collaborate together.” Bank and its partners. customers, Mr. Quiroga said. The That is at the core of these efforts. “The social impact is very important, partnership also has resulted in “We are free to ask, ‘How can I but we also set out to build a phone-based trainings for Texas make you better and how can you profitable business with our MDI and National’s staff members by Texas make me better?’” Mr. Quiroga said. CDFI partners,” Mr. Jackson said. Capital Bank’s experts in a number Texas Capital Bank is open to “The overall impact is far-reaching of key areas. collaborating with other MDIs and and rewarding. We’ll touch more Additional collaborations are CDFIs in 2018. banks, more communities, and more possible, Mr. Quiroga said, because “We’ve worked closely with each people through MDI collaborations Mr. Jackson and his Texas Capital of [our partner] banks to understand than you can on your own.” Bank team are “just phenomenal. their needs, to identify where the The rewards have been positive and They keep an open mind about where opportunities are, and to determine unexpected, said Jose “Joe” Quiroga, our partnership can go from here. … what fits with what we’re trying president of Texas National Bank, There’s a variety of different things to do to meet both organizations’ which is based in Mercedes, Texas, we are working on together, going profitability objectives,” Jackson and has locations in four other small forward.” said. “We want to make sure we are communities. Unlike other bankers who may balk adding value and doing things to “The partnership with Texas Capital at suggestions they collaborate with move these partnerships forward.” Bank has helped us to leverage our bigger banks that could be viewed For more information, visit Texas minority status in a growing market,” as competitors, Mr. Quiroga had no Capital Bank’s website or contact Mr. Quiroga said. “To have Texas qualms about partnering with Texas Jesse Jackson at jesse.jackson@ Capital Bank come in and make Capital Bank. texascapitalbank.com.
12 Community Developments Investments Minority Depository Institutions Resources A variety of resources is available to help banks interested in developing mutually beneficial partnerships with MDIs. The electronic version of this publication on the OCC’s website (www.occ.gov) contains links to these resources at www.occ.gov/mdicollaborations. OCC Resources • “An Opportunity for Community Banks: Working Together Collaboratively” • “Policy Statement on Minority National Banks and Federal Savings Associations” • Listing of OCC-supervised minority depository institutions • Minority Depository Institutions Advisory Committee • Minority Depository Institutions Resource Directory • “Minority-Owned Banks: Making a Difference in Their Communities” • “Partnerships With Minority- and Women-Owned Financial Institutions, Low-Income Credit Unions” • “Annual Report: Preservation and Promotion of Minority-Owned National Banks and Federal Savings Associations.”
Other Federal Resources • FDIC Minority Depository Institutions Program • Board of Governors of the Federal Reserve System Partnership for Progress • CDFI Fund Minority Depository Institutions Resource Bank
Banking Industry Resources • Community Development Bankers Association • Independent Community Bankers of America • National Bankers Association • National Community Investment Fund
May 2018 13 ommunity Affairs supports the OCC’s mission to ensure a vibrant banking system by helping national C banks and federal savings associations to be leaders in providing safe and sound community development financing and making financial services accessible to underserved communities and consumers, while treating their customers fairly.
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-mail and telephone information for the OCC’s District Community Affairs Officers is available at www.occ.gov cacontacts.
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