ABA Banking Journal - May/June 2016 - (Page 52)
> CORPORATE SOCIAL RESPONSIBILITY
The Community Bank Incubator:
Armed with insight and tailored educational outreach,
these banks are catering to nontraditional customers
that, in turn, boost their bottom lines.
A CreditPlus seminar offered by BankPlus
BY COREY CARLISLE
FOR HARBORONE BANK in Brockton, Mass., building trust within
the community's immigrant population saw many positive results. In
2007, against the backdrop of a foreclosure crisis, the bank converted
11,000 square feet of its former headquarters into a multicultural
banking center called HarborOne U-Brockton, offering financial literacy
classes in multiple languages, as well as U.S. citizenship classes.
Thousands of volunteer hours have
been logged by HarborOne staff
teaching the approximately 7,000
attendees that have taken advantage
of the various class offerings. In turn,
those attendees have made $10 million
in deposits and borrowed $35 million
in business and personal loans.
Recently, the bank's small business
team also began teaching financial
management curriculum to
microbusiness owners. A second
HarborOne U location has opened in
nearby Mansfield, focusing on female
business owners and entrepreneurs.
Graduates of the classes are eligible for
a business loan of up to $5,000 that can
be expanded to a $10,000 line of credit.
BankPlus, a $2.5 billion community
bank in Mississippi that won a
2015 ABA Foundation Community
Commitment Award, provides smalldollar loans to consumers who use
payday lenders or other high-interest,
alternative lenders. The bank's
"CreditPlus" program gives borrowers
with a credit score of 550 or above
the opportunity to get loans of up to
ABA BANKING JOURNAL | MAY/JUNE 2016
$1,000, while those with a score of
549 or below can borrow up to $500.
The loans have a repayment term of
one or two years and a low 5 percent
APR. The bank requires six months
of continuous, verifiable income,
attendance at a bank-sponsored
financial literacy seminar and two forms
of identification. When the first loan is
repaid, customers have the option of
applying for a second loan. Since the
program's inception, the bank has made
nearly 23,000 loans totaling more than
$17 million. BankPlus has conducted
674 financial literacy seminars as part
of the CreditPlus program, with more
than 23,000 individuals in attendance.
The CreditPlus program also establishes
checking and savings accounts for
each customer. Half of the loan is
deposited into a savings account and
held as collateral. This encourages
these customers, many of whom are
struggling to break the payday lending
cycle, to use the checking account as
their primary account and add funds to
the newly created savings account on
a regular basis. Free online banking,
bill pay and ATM usage complement
these accounts. BankPlus heavily
marketed the program when it first
launched, but it now attracts most
CreditPlus customers through word
of mouth or via churches, nonprofits,
schools or businesses where the bank
has held financial literacy courses.
Given the program's success and
strong demand, BankPlus also created
CreditPlus Auto and BusinessPlus
for customers that have completed
CreditPlus and are looking to purchase
a car or realize a business plan.
"CreditPlus has steered many
people away from payday lenders,
while helping them pay off previous
payday lender debt, medical bills and
even establish savings plans for the
first time," says Bill Ray, BankPlus
president and CEO. "It's rewarding to
see the impact the program is having
on families right here in Mississippi."
These outstanding community
banks have found that serving the
unbanked benefits their business
strategies, not only by bringing in
new customers, but by spurring the
development of creative offerings
that appeal beyond their initial
target audience. A tremendous
innovation engine, indeed!
COREY CARLISLE is SVP for bank community
engagement at ABA and executive director of
the ABA Foundation.
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