ABA Banking Journal - February 2008 - (Page 36)

COVER STORY know the nonprofit community in this way is much more effective than simply knocking on doors. While this approach gets Franklin bankers closer to their customer base and their potential mission partners, it comes with some baggage. Some deals don’t pencil out. So saying “no” sometimes is part of the territory, admits Albert Alexander, vice-president-commercial loans, but that doesn’t mean things have to be unfriendly. He points out that Franklin bankers know of advisors who can help organizations build themselves up in weak areas, with an eye to trying again. Michael Anderson, senior vicepresident and senior lending officer, puts it plainly: “We like your business, but we are still a bank, and still have to live by various rules and regulations.” Dorothy Bridges and her husband, Thomas “Rudy” Grant, live in the Hawthorne neighborhood, near Franklin Bank. While daughter Amanda, 20, lives at home while attending the University of Minnesota—she’s also a Viking cheerleader—daughter Cybill, 31, and sons Thomas, Jr., 37, and Myron, 33, are on their own. The couple has two grandchildren. development lenders. The asset-backed notes and investment funds structured of purchased credits are sold by CRF to institutional investors, including some banks, through private placements. In Franklin Bank’s case, most deals have been structured as 50%-50% participations, though CRF more recently has been “table funding” some loans. The relationship enables the bank to find some borrowers lower-cost funds than it otherwise could provide. “Some of our deals wouldn’t have gotten done if Frank and CRF hadn’t been involved,” says Bridges. Deposits on a mission Another part of the bank’s base is “socially responsible” individuals. These customers aren’t borrowers, but depositors who like doing business with a bank whose mission in corporate life is working for community betterment. And one of the key points where these customers and Franklin Bank’s affairs come together is the “Socially Responsible Deposit Fund.” The vehicle, originally called the Urban Partnership Fund, is a concept launched and marketed by all three Sunrise banks. David Reiling, Sunrise Community Banks’ CEO, and son of founder Bill Reiling, says the program was one of the first joint efforts launched by the threebank organization, in part as an effort at branding their unusual social responsibility business model. Reiling says the program has appeal for those individual and business customers who are also attracted to socially responsible mutual funds, shareholder advocacy efforts, and other attempts to blend capitalism and altruism. All depositors—including individuals, organizations, or businesses—can open any type of deposit account and designate it to be part of the balances of each Sunrise bank’s Socially Responsible Deposit Fund. (Governmental units can also use the program; the city of Minneapolis, for instance, is a depositor in the fund.) The bank, in turn, pledges to use those insured deposits to finance loans that help small businesses; create affordable housing; and develop community service facilities. Franklin Bank’s Socially Responsible Deposit Fund stands at approximately $8.9 million. Such accounts can be “sticky.” David Reiling acknowledges that many depositors are rate-sensitive, today, but that their Socially Responsible Deposit Fund CDs, or other accounts, tend to be the last accounts that they will move, because of their community commitment. Securitized development Another source of funding for community development efforts is the secondary market. Prior to joining the bank, Bridges worked for Community Reinvestment Fund, USA, which purchases community development and affordable housing loans and securitizes them for secondary market investment. Her old boss, Frank Altman, president and CEO, sits on the bank’s board, and the bank makes use of the private nonprofit’s programs to generate greater activity from the funding it obtains through ordinary channels. One of the strengths of the CRF approach, notes Altman, is that it underwrites loans it is considering purchasing in tandem with community development lenders like Franklin Bank. The organization buys various business-purpose and residential single-family and multi-family affordable housing loans, and also provides various services to community ABA council priorities Competition in business is one thing; competition in Washington is another. In addition to her ABA post, Bridges holds a seat on the Federal Reserve’s Consumer Advisory Council through 2008. (In January, Bridges was named to the board of the Federal Reserve Bank of Minneapolis, as well.) That has given her perspectives on pending government relations matters that other community bankers don’t get, directly. Many of her fellow advisory council members are not bankers, but representatives of groups that often butt heads with the bank lobby. This, plus her onetime stint as a regulatory consultant, have given her a deeper appreciation of the compliance burden. She knows how bad things could get if banks didn’t resist the views of activists. Bridges believes industry unity is crucial, especially with the fallout from the subprime debacle raining new troubles on the industry. “Things are only going to get more onerous,” says Bridges. “Going in separate directions only weakens our purpose.” So unity is her top goal. Coming just behind that is one more. “It’s a tall order,” she says, “but I would like to plant some seeds.” Those seeds, she says, would blossom such that more women and minority bankers would find themselves in the CEO’s seat in more community banks. She sees this as a natural benefit to an industry that needs strong leadership and talent in the presidents’ chairs. “The more we can do this,” says Bridges, “the more successful we’ll be as an industry.”BJ 36 FEBRUARY 2008/ABA BANKING JOURNAL www.ababj.com/subscribe.html http://www.crfusa.com/index.asp http://www.crfusa.com/index.asp http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - February 2008

ABA Banking Journal - February 2008 Contents On ABABJ.COM: Have You Visited Our Brand-New Website? Editor's Column "That's Edutainment" Snapshot: Tier 1 Ratios Stable so Far 100th Anniversary: Then and Now ABA Resources ABA Chairman's Position Don't Despair Pass the Aspirin Cover Story: Socially Responsible Banking Profitably - Incoming America's Community Bankers Council Chairwoman, Dorothy Bridges Demonstrates the Way A True "Rags-to-Banker" Story Retail Banking: On the Money Hunt Community Bank Management: The Ugly Truth About Board Relations Does Core Really Matter? Security 2.0: Not Just a New Kettle of Phish A Personal Case of Mal-Serendipity DOD Credit Regs Demand Attention Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - February 2008

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