The 2013 Interagency Minority Depository Institution and CDFI Bank Conference
Collaborating to “Tell Our Story”
|Joe Schmidt||Vice President, National Community Investment Fund (NCIF), Chicago, IL|
|Blondel Pinnock||Senior Vice President, Community Development Corp, Carver Federal Savings,
New York, NY
|Mark Ricca||President & CEO, First American International Bank, New York, NY|
|Norman Williams||President & CEO, Illinois Federal Savings, Chicago, IL|
|Greg Bischak||Program Manager, Financial Strategies & Research, CDFI Fund|
Roundtable participants reviewed examples and discussed actual and potential ways to “tell and sell” their story, building on the efforts of NCIF members. They explored how to use the “social and economic impact” performance metrics of MDI and CDFI banks to: attract investors, board members, staff and customers; and inform examiner evaluations and Federal regulations, policies and programs. Participants had the opportunity to offer advice, make a recommendation, and help develop a winning strategy they can use.
Traditional measures of bank performance including return on assets and return on equity do not tell the full story of mission-oriented banks such as MDIs and CDFIs. Measuring social performance enables these banks to tell the important story of how they contribute to job creation, affordable housing, home ownership, and business development in their communities.
The National Community Investment Fund, a non-profit investor in CDFI banks, developed Social Performance Metrics and a Development Impact Dashboard to show the impact that CDFI banks are having in their communities at a point in time, over a period of time, and relative to standardized and customized peer groups. Using the dashboard, the NCIF showed that CDFI banks have three times the percentage of Home Mortgage Disclosure Act (HMDA) reported lending in economically disadvantaged communities compared to the median percentage for all banks in the country, and CDFI banks have four times the percentage of branch locations in these communities compared to all banks. The NCIF began measuring the impact using publically available data on deposits, branch locations and HMDA lending, but as investors began to use the metrics, mission oriented banks saw the value in providing additional private quantitative and qualitative data to NCIF to provide an even more robust measurement of the impact of these banks. Banks that collect this additional information on lending have found it useful, and have overcome potential privacy and burden issues. Going forward, NCIF plans to refine its standards and create certifications to enable the CDFI industry and their investors to have a common framework for measuring performance of mission oriented banks.
The CDFI Fund collects data on the impact of their programs in low- and moderate-income communities. They collect statistics on a variety of types of lending and investment including longer-term lending for community facilities and housing, small business lending, and micro-lending. They also compile information on numbers of businesses and affordable housing units financed, and numbers of jobs created or maintained through their programs. The CDFI Fund indicated a need to further analyze the results of investments and lending by CDFI banks in order to better communicate program results to stakeholders such as the President, the Congress, CDFI banks and the public. The CDFI Fund has a number of research efforts underway to measure the impact of their programs.
Community banks, MDIs and CDFIs need to be involved in “telling their story” both individually and collectively, to a variety of stakeholders. Senior leaders from three MDIs which use NCIF’s social performance metrics and dashboard described how helpful the information has been in communicating the impact of their banks in their communities with their Board, with current and potential investors, and in interactions with regulators. It is particularly critical to “tell the story” locally, especially in markets where MDI and CDFI products and services can be a superior alternative to predatory services.