Introduction
As you know, this is the 84th Annual Convention of the National Bankers Association. I think it is appropriate for us to pause a moment here at the beginning of the first full day of sessions to look back over those eight and a half decades, and to reflect on the founding of this great organization and the spirit and the vision that made it possible.
There is a wonderful story about one of NBA's founders, Richard Robert Wright, Sr., that I have always loved. Wright was born in 1855, in Georgia, and after the Civil War. When he was just a young man, he was approached by a retired Union general who happened to be visiting Wright's school. The general asked if Wright had a message for him to take back to the North about the situation of African-Americans in the South, and the young man reportedly replied, "Tell them, General, we are rising."
Now, if there was anyone in Georgia back then who was destined to rise, it was R. R. Wright. In time, he became a major in the United States Army and the first African-American to serve as a paymaster. From 1891 to 1921, he served as the first president of the Georgia State Industrial College for Colored Youth, now known as Savannah State University. And after entering the Wharton School of Business at the University of Pennsylvania - at age 66, mind you - he founded Philadelphia's Citizens and Southern Bank and Trust Company, the only African-American-owned bank in the North.
R.R. Wright - or Major Wright, as he came to be known - was determined to keep on rising throughout his entire life. And he wasn't just concerned about his own progress. He was just as concerned about the progress of his people.
In fact, that is what inspired him to become a banker. He recognized that building financial and economic strength was absolutely vital if African-Americans were going to find their rightful place in American society, and he believed that banking could be a tool for advancing the cause.
So Major Wright became a banker and launched his own bank. And 84 years ago, in 1927, at a time of widespread discrimination in America, he launched the Negro Bankers Association, an alliance of 14 African-American banks moved by hard times to find new ways to lift up their communities and their banks.
The organization that Major Wright founded back in 1927 in such challenging times has not only endured - it has expanded its membership, extended its reach, and even changed its name. Today, the National Bankers Association is a consortium of African-American-, Hispanic-American-, Asian-American-, and Native-American-owned banks. Its members operate branches in 29 cities across America, have more than $15 billion in assets, and serve more than three million depositors.
But no matter how much the Association has evolved, it has remained true to its roots. It is still guided by the generous spirit and uplifting vision of R.R. Wright. Eighty-four years later, the National Bankers Association is still dedicated to ensuring that the people and communities its members serve are rising.
New Challenges
I believe that those of us who serve low-income communities today would do well to keep Major Wright's spirit and vision in mind. The challenges we face now may be different from the challenges the original 14 members of the Negro Bankers Association had to contend with back in 1927, but they are just as real. And it is just as critical for us to stay focused on what we need to do to keep rising.
Yes, these are difficult times. Our nation has been battered by the worst recession since the Great Depression. As a result, community development banks and Minority Depository Institutions have faced their own challenges.
When I last spoke at the NBA Conference, in 2009, I commented on the rise of Milwaukee's Legacy Bank, an NBA member and the first bank in the United States founded by African-American women. I noted in my remarks then that "since opening its doors in 1999, Legacy has achieved remarkable growth and success that cement its reputation as a minority bank of national importance."
I also said this about Legacy: "What started as a dream of three women, Legacy Bank has now become a beacon of economic opportunity within the underserved communities of Milwaukee. In these trying economic times, communities are relying on these types of financial institutions to provide support."
Sadly, earlier this year, the bank regulators were forced to close Legacy Bank's doors. Legacy was declared "significantly undercapitalized" and was given 60 days to raise capital or to be acquired by another institution. On March 11, 2011, the bank was acquired by Seaway Bank and Trust, a Chicago institution with a long history of serving the underserved and underbanked. Seaway has pledged to continue Legacy's mission. Let us all wish them well.
But let us also be mindful of the important lessons that Legacy's example offers.
The economic downturn has made it clear that what was true of Legacy is true of you and every community development bank and MDI in the United States. Your communities need you and rely on you to provide support, because they have no one else to turn to. Your role is more critical than ever.
Believe me, I understand the external challenges you face today. I understand that minority communities have been devastated by the recession and are still reeling.
But I also believe that MDIs - more than ever before - must do a hard self evaluation and develop strategies that can be implemented as a group to strengthen areas of weakness.
What I want all of you to understand is that your communities simply cannot afford to lose you. You may not be too big to fail, but you are certainly too important.
It is this challenge that you must take up if your institutions are to keep rising, and if your communities are to keep rising.
New Opportunities for CDFIs
Now, there is something else I want all of you to understand, and that is that you are not alone.
The high interest and solid endorsement the CDFI Fund has received from the current Administration and from both aisles of Congress demonstrates the critical role that CDFIs play in underserved communities.
The unprecedented support for the CDFI Fund is also creating unprecedented opportunities for CDFIs - and for your organizations in particular, because the CDFI Fund offers a number of programs specifically designed to strengthen community development banks and credit unions.
They include:
- The CDFI Program, which provides Financial Assistance and Technical Assistance Awards to certified CDFIs each year;
- The New Markets Tax Credit Program, which is designed to attract new investment capital to low-income communities;
- The Bank Enterprise Award Program, which provides monetary awards to FDIC-insured banks for increasing their investment in low-income communities or in CDFIs;
- The Native American CDFI Assistance Program, which is designed to create and increase the number of Native CDFIs; and
- A new program - the CDFI Bond Guarantee Program. Created by the Small Business Jobs Act of 2010, this new program allows the Treasury to guarantee up to 10 bonds per year for CDFIs, each at a minimum of $100 million. The total of all bonds cannot exceed $1 billion per year. This is a new, potentially transformational tool to expand the capacity of CDFIs to serve low-income communities.
The CDFI Fund also has a training and technical assistance effort called the Capacity Building Initiative. Through the initiative, industry-wide training targets key issues currently affecting CDFIs and the communities they serve, including affordable housing and business lending, portfolio management, risk assessment, foreclosure prevention, training in CDFI business processes, and assistance with liquidity and capitalization challenges. The Capacity Building Initiative also offers direct on-site technical assistance and individualized capacity-building plans, and focuses on extending CDFI coverage to underserved communities, especially in rural areas.
We will be offering more training opportunities through the Capacity Building Initiative over the coming months, and I encourage all of you to take advantage them.
There are many opportunities for you to gain needed capital for the financing needed in your communities, as well as technical assistance and training to help you build your organizations.
As you continue to strategize and plan to ensure the sustain ability of MDIs, I would urge you to think about three important areas:
- Training and Technical Assistance - What type of training and technical assistance would benefit MDIs that are CDFIs? While obtaining capital is critical, you have shared other concerns about the state of MDIs. These include Board involvement, succession planning, attracting and retaining staff resources, compliance, and portfolio management. The CDFI Fund would like to hear from you, and in particular, we'd like to know if we can support you in the areas of training and technical assistance.
- Additional Sources of Funding - CDFI banks and MDIs have been successful with the Bank Enterprise Award Program. In fact, 36 percent of all of the 2010 Bank Enterprise Awards recipients were MDIs. I would also encourage you to also look at the CDFI Fund's other programs. But as the government works to lower silos and to communicate about programs that are cross cutting, I would also urge you to assess whether these other programs are also appropriate for your institutions.
One recent collaboration between the CDFI Fund and the Small Business Administration resulted in the new Community Advantage pilot program which will allow CDFIs to make SBA 7(a) loans of up to $250,000 with the regular 7(a) government guarantee. Community Advantage leverages the experience these institutions already have in lending in economically-challenged markets, along with their management and technical assistance expertise to help make their borrowers successful.
I also encourage all of you to seek opportunities to reach out to socially responsible investors, corporations, and philanthropic organizations - including foundations that you may not have reached out to before.
- Collaboration - We all understand the power that can ensue by joining forces with others. This annual conference and your communications year round afford you the opportunity to discuss issues and to share ideas. And that's important. In this economic crisis, there may be other ways to work even more closely that can be explored - by reviewing shared services such as back room operations, for example.
Above all, I want to urge all of you to work with us. Please remember that the CDFI Fund is not here to regulate you - that is not our function. As I said, we are here to support you and help you succeed. Let us know what your issues are, what you need, and how we can help you.
Rising Together
On this past July 18, the CDFI Fund announced its awards for the FY 2011 round of our CDFI Program. We awarded $142.3 million to 155 CDFIs headquartered in 40 states and the District of Columbia.
One of those CDFIs to receive an award was NBA member First Tuskegee Bank, also a recipient of a FY 2010 Bank Enterprise Award.
First Tuskegee has provided commercial banking services to small businesses in its market area for more than 100 years, and it plans to use its $600,000 Financial Assistance award from the CDFI Program to expand its small business lending efforts.
The bank has distinguished itself as a strong and effective small business lender. Earlier this year, for example, it provided financing to a minority women-owned commercial contractor in Tuskegee. The contractor had an opportunity to win a seven-figure contract with a DOD agency, but faced challenges with its bonding because the contract was larger than any it had won in the past. First Tuskegee communicated with the bonding company and structured the financing in a way that enabled the contractor to win the contract.
The bank has also launched an initiative focusing on Asian-owned businesses in South Central Alabama, especially those in the auto manufacturing sector. It has dedicated resources to the program and hired an Asian banker. One of the businesses it has financed is a Korean-owned Tier 2 automotive supplier that manufactures engine component racks and directly supplies Kia, Hyundai, and other Tier 1 suppliers.
First Tuskegee also continues to be a leader in church financing. Many of the churches it finances are located in isolated or rural areas which serve a large portion of low to moderate income borrowers. It recently provided financing to a church to fund the renovation and HVAC replacement of its community center in an LMI neighborhood.
What has driven First Tuskegee Bank's success is that they are committed to be more than bankers. They learn about their client's businesses and counsel them on their availability of different options. They often visit local schools to talk to young students about the importance of banking. And they also support small business incubator programs and are active in localized programs, such as SCORE, which operates in Montgomery, Alabama, and provides training assistance and other guidance to new and emerging businesses.
I would like to salute the management team of First Tuskegee Bank for exploring new ways to expand their impact in their community. You are clearly an organization that is determined to keep on rising, and the CDFI Fund is very proud to support you with a Financial Assistance award.
And I would like to salute all of you for being determined to keep on rising. Thank you for your wonderful work in your communities. You truly are beacons of hope.
So let us work together. Let us work together so that there are always beacons of hope shining in communities where hope and light are needed most. Let us keep rising together.