Stephanie McHenry, president of ShoreBank’s Cleveland Banking region, recently spoke at the Cleveland City Club on community banks and the instrumental role they can play in leading an inclusive economic recovery. You may not know that since beginning work in Cleveland in 1994, ShoreBank has invested more than $300 million in Greater Cleveland neighborhoods for developing sustainable, residential and commercial properties and growing small businesses. Now is your change to learn more about Stephanie and our work in Cleveland.
An active board member, Stephanie serves on local governing bodies, including those of the Cleveland State University, and ideastream® (public radio and television). And in 2007 she was named one of Crain’s “Women of Note” and received a YWCA “Woman of Achievement” award in 2008.
Enjoy listening to her City Club presentation “Banking to Change the World: Creating Jobs and Empowering Communities” here. What are your thoughts on her presentation?
Times are tough all over. This month’s Atlantic Monthly magazine carries a thought provoking and thoroughly dispiriting article by Don Peck called, “How a New Jobless Era Will Transform America.” Peck quotes Kathryn Edin, who teaches public policy at Harvard, describing her recent research in South Philadelphia. “These white working-class communities—once strong, vibrant, proud communities, often organized around big industries—they’re just in terrible straits. The social fabric is just shredding. There’s little engagement in religious life, and the old civic organizations that people used to belong to are fading. Drugs have ravaged these communities, along with divorce, alcoholism, violence.” That’s an ugly picture, but the worst is yet to come. “I hang around these neighborhoods in South Philadelphia, and I think, ‘This is beginning to look like the black inner-city neighborhoods we’ve been studying for the past 20 years.’”
Edin’s comments unintentionally point out that many people have long-ago written off mostly-minority neighborhoods. Except, of course, the people who live in those neighborhoods. Despite the tremendous stresses of lost jobs, tumbling home values, and growing neglect from the larger community, the residents of the minority neighborhoods ShoreBank serves continue to care deeply.
The reason is that people in our communities can put down roots. Unlike in wealthy suburban areas, several generations can afford to live in the same neighborhood. There are few “For Sale” signs because homes are often passed on to the next generation, other relatives, or friends. There is a vibrancy and cohesion that ShoreBank recognized from the beginning and continues to value, and indeed, to rely on.
But, all the economic data—national, state, and local—lead inexorably to the same conclusion: the downturn has hit minorities much harder than white Americans. For blacks as a whole, this is not a recession, but a full-scale depression. As a general rule of thumb, the numbers show that, however bad things are for whites, they are twice as bad for blacks. However good things are for whites, they are half as good for blacks. The ramifications of racism live on.
“Do you know what I think? That main street is making a comeback back,” said my small-town Kansas-raised Dad – and he wasn’t referring to the economy. Triplepundit.com’s recent article Buy Local. Grow a Sustainable Economyagrees with my dad (and apparently many others). It states that “Evidence is growing that ‘going green’ is a community-centric economic mega trend that is creating revenue growth for businesses and meaningful local economic development.” But, is there room to buy local in our lives?
“Local” technically means “existing in or belonging to the area where you live, or to the area that you are talking about.” That includes corporate chains, which can provide more convenient, lower-cost familiar brands than local small business equivalents can. But to me, buying “local” means that the point of purchase is within three miles of my home and, if given the option, one considers or selects a small business over a corporate one. For many, that might be easier said than done for the following reasons:
It’s more expensive to shop locally. It might not cost as much as you might think. It costs approximately $150 per person per month to purchase the groceries listed on the government’s Thrifty Food Plan. A Digital Journal studysuggested that that same person would spend an extra $10.32 to eat locally. And don’t forget the transportation costs you can forego by staying within a three mile radius. You might even be able to leave your car at home and self-power your way there.
But my local store doesn’t carry (insert brand name). According to Susan Witt, Executive Director of the E.F. Schumacher Society, if consumers turn online or to a chain store for a certain product, it can actually help local businesses better identify and innovatively fill gaps in the market place. Remember, many new companies begans as small local businesses.
Big corporations already contribute a lot to my community. Great! But there is room for more. A case study by Civic Economics on Austin, Texas found “local merchants generate substantially greater economic impact than chain retailers.” The study revealed that if someone was to spend $100 at a chain, only $13 would be funneled back into the economy. However, if one spent $100 at a local business, about $45 would go back to fuel the economy. That is not to say we should depend solely on local businesses but rather that if we make room for small businesses, they might be able to better fuel our communities’ growth than a large store might.
There are only corporate chains in my neighborhood. Keep an eye out for and try a new small business if it opens in your neighborhood. You might be pleasantly surprised by what you find.
There really is no good reason to not try to buy local. ShoreBank is committed to developing small businesses in our communities. What are you doing to make room for local businesses?
Although landlords are ultimately responsible for a building’s energy efficiency, there are a number of steps which environmentally-friendly renters, some of whom pay their own utility bills, can take to reduce energy costs and consumption. So I am going to share with you some of the easy and convenient steps that we share with our ShoreBank customers and encourage building owners to pass along to their tenants.
*P.S. Many of the tips also apply to anyone owning or inhabiting a home, apartment, or condo.
1. Turn off unused lights and computers and replace incandescent light bulbs with compact fluorescent bulbs (CFLs).
2. Caulk and weather-strip windows and outside doors. For older windows, place a sheet of plastic over them and use two-way tape to affix it. The greatest source of heat loss in a home comes from the windows.
3. Remember to use the storm windows which help insulate the home and keep heat inside it.
4. Keep your drapes open in the winter to let sunlight naturally warm the room and home. And in the summer, keep them closed to prevent the place from getting too warm.
5. For each degree lower or higher you set the thermostat, you will save potentially two to 10 percent on heating or cooling costs. In the winter, keep the temperature set at 68 degrees during the day and 55 in the evening. Wearing a sweater or layered clothing will make the temperature more tolerable, especially on days when the bill arrives in the mail.
6. Clean the coils on the back of the refrigerators which contribute to about 15 percent of the total monthly electrical bill. This can help persuade your landlord to finally get around to replacing the old one with an ENERGY STAR model.
7. Get an electric blanket. Besides the joy and comfort that comes from getting into a bed at night with warm sheets, it is less expensive than heating your bedroom.
8. Move your furniture away from the exterior walls to create space between you and the cold walls. This will make space for the air to move around, making the air warmer.
9. Keep your radiator and heating vents clean from dust. Dust and dirt prevents heat from flowing into the rooms where you need it. It’s “no fun” to clean, but being cold and paying more for it can be even more painful.
10. Select ENERGY STAR appliances and products, and check efficiency ratings prior to purchasing.
Whether you own or rent, energy efficiency is everyone’s concern. Please share this information with friends, family and / or your landlord. It might even help some renters get a faster response to a lingering maintenance issue when the building owner understands how it will reduce their monthly costs while adding comfort and value to the property.
In fact many of the improvements are eligible for tax deductions and may help lower income taxes. With the April tax deadline fast approaching, I will explore the tax benefits of buying a home and incorporating energy saving improvements in your 2009 tax return in my next blog entry.
Guest Contributor: Stephen Jacob, AVP, Credit Analysis
Haiti is not some far away place to me. Both my parents are from Haiti and I have family members that still live there. I try to go to Haiti every 2 to 3 years and last visited in 2007 to volunteer with a local organization called Concerned Haitian Americans of Illinois (CHAI). I have seen a mix of improving and deteriorating conditions in the country over the past 10 years, but this recent crisis is a wake up call.
Much of the devastation in Haiti was largely unavoidable. Even if the buildings had been constructed better, it is unlikely any well made structures could survive a 7.0 earthquake[1]. Nonetheless, lax building code enforcement and poor construction quality has exacerbated the problem. For example, in 2008 there was a school collapse in Port-au-Prince that had nothing to do with the earthquake. However, some of the lack of communications and access to roads to help disaster victims can be attributed to a very poor and deteriorating infrastructure. The rush to make sure that those in need get emergency medical attention, clean water, and food, should compel us to think about making sustainable improvements to not only prevent future crises but also to create new economic opportunities that improves the quality of life for Haitians.
Immediately after the disaster there will be an opportunity to rebuild – to begin anew—creating the infrastructure designed to sustain a modern country. In recent months, there have been initiatives to reduce the time it takes to incorporate a business. According to the World Bank, it requires 13 procedures, takes 195 days, and costs 227.93% GNI per capita to start a business in Haiti – this is almost unheard of. Across the border in the Dominican Republic, it requires only 8 procedures, takes 19 days, and costs 17.3% GNI per capita to start a business. Along each of the World Bank’s indices of access to business credit and protection of investors, Haiti is in the bottom of the rankings[2]. Haiti is one of the most difficult countries in the world to do business with—this needs to change if there’s ever to be any hope for catalyzing the development that can begin to transform the country and improve peoples’ lives.
In addition, the average Haitian, no different than most, needs to be gainfully employed in order to provide for his or her family and businesses need either debt or savings to get off the ground. But with the unemployment rate hovering around 50% for the last two decades, gainful employment will require greater foreign direct investment and a growing economy. A long-term solution requires investment in both the country’s physical infrastructure (e.g., roads, ports, and telecommunications) and its social infrastructure (e.g., improved school system, reform of a standing army or national police force, and protection of property rights). Without this investment and the ability to provide access to credit, Haiti will continue to be mired in poverty.
Many friends and colleagues have been asking me how to help. In the near term, money is the best thing to send because Haiti is a logistical nightmare, (especially today). And, if you donate, please do your homework to ensure your donation goes to a reputable organization who will put your fiscal aid to good use in Haiti. I am donating to the Concerned Haitian Americans of Illinois, but I am listing a few other very worthwhile organizations for you to consider making a contribution.
[1] To put things in perspective, the 1989 San Francisco earthquake measured 6.9 on the Richter Scale.
[2] The complete report is available at http://www.doingbusiness.org/Documents/CountryProfiles/HTI.pdf
Have you seen a version of Charles Dickens’ A Christmas Carol yet this year? Have you ever noticed how shockingly relevant the Victorian themes of materialism and the plight of the underprivileged are to today’s society? These are forces that impact ShoreBank’s communities every day. Yet, in the words of Dickens, “I have always thought of [the holiday season]. . . as a good time; a kind, forgiving, charitable time; the only time I know of, in the long calendar of the year, when men and women seem by one consent to open their shut-up hearts freely, and to think of people below them as if they really were fellow passengers to the grave, and not another race of creatures bound on other journeys.” Here are just a few ways our ShoreBank teams are giving back to our communities this holiday season:
ShoreBank Retail Branches
Our retail branches just completed a 2 week “Head to Toes for Kids” clothing drive. They collected gently used hats, scarves, gloves, and new underwear and socks, for children aged toddler through sixth grade who need them.
ShoreBank Customer Service
Our customer service team works with our ShoreBank customers and prospects every day and really understands that times are tough. Instead of engaging in their annual Secret Santa gift exchange, our customer service team pooled their Secret Santa funds to collect and to donate $300 to REST. REST provides shelter and social service programs to tens of thousands of homeless people in Chicago. That donation really is customer service!
ShoreBank Fellows
Our Princeton Fellows are applying their education to not only ShoreBank but also to mentor 4th graders every week as WITS Chicago volunteers. WITS (Working in the Schools) is an organization that provides individual tutoring to Chicago youth to promote literacy and a love of reading.
ShoreBank Nonprofits & Foundations Team
Our Nonprofits & Foundations Team is giving back while giving to various Nonprofits. This year they are giving customers coffee bags from Aspire CoffeeWorks. Aspire CoffeeWorks offers craft-roasted coffees while providing job opportunities to people with developmental disabilities. But there is always more giving to be done when nonprofits are concerned. This team also collected and is donating over 5 boxes of books to a nonprofit to help promote and inspire literacy among children and adults.
As we enter the end of 2009 may you too be inspired to give as you able, for it is our generosity that can often help counter the neglect of the underprivileged in communities everywhere.
Happy Giving and Happier Holidays from everyone at ShoreBank!
As unemployment, the leading cause of foreclosure, continues to soar above 10%, ShoreBank’s work helping homeowners to refinance and modify their mortgages continues to intensify. In addition to implementing the ShoreBank Rescue Loan program, which is helping homeowners to refinance their original loans from other institutions, we are among the few banks aggressively working with our own borrowers in President Obama’s Home Affordability Modification Program (HAMP) to provide new affordable mortgages.
Pundits say: “The bigger the story, the smaller the focus;” so let’s focus on how one of our mortgage lenders is tackling the challenge of saving a home.
Jabari Watson, an experienced loan officer who joined ShoreBank nearly two years ago, never imagined his responsibilities would be turned upside down. Far from his previous ShoreBank role assisting first-time homebuyers and residents with new home purchases, today he has become a mortgage modifier extraordinaire. While the duties have changed dramatically, one constant has remained—the amount of satisfaction he derives from helping an individual or a family have a home.
Each morning, Jabari receives a handful of troubled loan applications from our Asset Protection Department. He then identifies the appropriate, available rescue program that will best help the borrower catch up on his or her mortgage payment and save the home from foreclosure. But time is not on his side. The process usually takes up to 30 days and often the homeowner does not have that kind of time to get the issue resolved.
Once he identifies the appropriate program, Jabari hits the ground running, verifying the program’s criteria for application. To qualify for the HAMP program the borrower must:
Have originated his or her home loan before January 1, 2009
Be living in the home as his or her primary residence
Have an unpaid balance of not more than $729,750 (for a single-family home)
Have an income (this can include federal assistance or a part-time job)
Have a monthly mortgage payment that exceeds 31% of their monthly income
In addition, Jabari must obtain certain financial information from his borrowers, including a signed tax return transcript form, their most recent tax return on file, their two most recent pay stubs, and an “affidavit of financial hardship” that, with the exchange of voice and email messages, often takes an inordinate amount of time to collect.
“Despite sifting through the endless mountains of paperwork, my pressure is nothing compared to what our customers are going through,” said Jabari at a recent team meeting. “These people are staring at the possibility of losing their homes and having nowhere to go. Now that is real pressure, so I try and handle their situation with the utmost sensitivity which can be hard to do when I have to ‘beat the clock’ to get the application process in time to save the home.”
Despite this and other current challenges, ShoreBank loan officers like Jabari have successfully completed 53 modifications since the launch of the program with many more in the pipeline. While we look forward to the day in the (hopefully) very near future when we can get back to exclusively making loans for new home purchases, we are committed to helping our customers and our communities through the economic crisis and to helping as many people as we possibly can.
Most people think the Census Bureau only springs to life in years ending in zero to conduct its decennial head count. Not so. Among its numerous publications is an annual report on poverty in America. The 2008 report was published a few weeks ago.
Poverty, sadly, never seems to go away, even in the world’s richest country. Our poverty rate last year rose to 13.2%, encompassing 39.8 million people, among the highest numbers in about a dozen years. In addition, more than 17 million people had an income of less than one-half the poverty threshold, and 6.3 million children lived in such low-income households.
Stark as these figures are, they present a snapshot of a moment in time rather than an assessment of the dynamics of poverty. In contrast to many parts of the developing world, poverty in America tends not to be a long-term condition. Over the four-year period from 2003 through 2007, just 1.8% of the American population was chronically poor. On the other hand, almost a third of the population could be classified as living below the poverty level for at least two months. More than a quarter of households classified in the bottom 20% by income moved up between 2004 and 2007, while a similar percentage moved down from the top 20%.
What makes us different from other nations? Mobility. The Census Bureau notes that its statistics “yield insights into…the economic mobility of US residents.” Compared to the millions trapped in generations-long poverty in the urban shantytowns and isolated rural villages of the developing world, poverty in America is relatively dynamic. If there is hope for a better future among those living in despair, it is our nation’s track record of economic mobility.
Though poverty here may not always be a life sentence, having almost 40 million people in poverty at any time remains a national disgrace. It is more than the populations of Connecticut, Mississippi, Arkansas, Iowa, Kansas, Utah, Nevada, New Mexico, West Virginia, Nebraska, Idaho, Maine, New Hampshire, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont, North Dakota, Wyoming, and the District of Columbia combined. It is time to move more people to action.
Most banks offer their customers the option of banking online in addition to writing paper checks and conducting transactions at brick-and-mortar branches. However, at ShoreBank we see online banking as more than a way to provide convenient banking options (though it certainly does that). We also see it as an integral component of our commitment to the environment and our position as a triple bottom line institution.
The environmental impact of paperless, electronic banking should not be underestimated. We’re talking about more than the occasional four-by-two inch ATM receipt. For example, Greendig.net estimates that if every household in the U.S. switches to electronic banking, it would save 16.5 million trees each year. That’s paper for envelopes, paper for stamps, paper for checks…all being saved.
Many customers also seem specifically attracted to the green aspects of paperless banking. In 2008, Newsweek reported that 57% of U.S. consumers expressed an interest in green banking when polled about it.
ShoreBank has always seen its environmental commitment as integrally connected to its community development mission. For example, supporting businesses like Indie Energy—a company that designs and builds environmentally-friendly, renewable energy systems throughout the Chicago region— creates jobs for people in the community while making their homes more energy efficient and affordable. By encouraging energy-efficiency whether by financing a green business or providing homeowners with free energy-audits—ShoreBank is helping homeowners lower their utility bills and tackle global warning by working to reduce greenhouse gas emissions.
Want to learn more? One easy-to-use tool for gaining a better understanding of the link between environmental and economic community development can be found on our new website, https://www.sbk.com/. It’s a fully-functional bank website with state-of-the-art technologies to make it easier to manage your money. It also has stories that will engage you in ShoreBank’s mission. Now you can manage your finances and build wealth while seeing, through customer stories, how we are building stronger, healthier communities and reinvigorating the lives of our customers.
So I am encouraging you to browse https://www.sbk.com to help “put a face” onto the opportunities and people we work with —both through online and good old fashioned brick-and-mortar banking. I think you’ll enjoy learning more and hope from these stories you will either begin or continue supporting ShoreBank in its mission.
To help more hard working people buy their first home and speed up the end of the recession, the $8,000 tax credit for first-time home buyers, scheduled to expire December 1, 2009, ought to be extended into 2010.
Since its inception as a vital component of President Obama’s American Recovery and Reinvestment Act of 2009, the tax credit has assisted nearly 1.5 million Americans, providing $10 billion for the purchase of a new home. The first time home buyer is someone who has been without a principal residence for a three-year period. It is available for homes purchased on or after January 1, 2009 and before December 1, 2009, but does not have to be repaid. Vacation homes and rentals properties are ineligible.
Single tax-payers with incomes up to $75,000 and married couples with incomes up to $150,000 are eligible for the full tax credit. The credit reduces the new homeowner’s tax bill or increases their refund–dollar for dollar. Unlike most tax credits, the first-time home buyer credit is fully refundable. This difference means that the credit will be paid to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed. (For additional information about the home buyer tax credit, visit www.federalhousingtaxcredit.com.)
Helping homebuyers to realize homeownership and life in a strong, healthy community is not only ShoreBank’s mission, but also the dream of millions of Americans. Previously we could rely on consumer spending to lead us through the recession and onto the road of economic recovery, but not now. Those days, I am afraid, are gone. I believe an extension of the tax credit is necessary in order to help stabilize our communities by encouraging consumer spend on home purchases, generating the additional revenues local government agencies need and encouraging the home improvement projects which create the badly-needed new jobs. In fact, unemployment is the number one cause of housing foreclosures, so an extension of the tax credit is essential and best of all, it has proven it works.
The tax credit is in a great position to continue being successful. While some have blamed the mortgage meltdown due to the ease by which many buyers obtained unaffordable loans, most of the irresponsible lenders are no longer in business. And now there are fewer institutions serving the areas hardest hit by the recession, and yet there are plenty of hard working individuals and families out there who need quality loans, and who qualify for them too.
Some naysayers will point to the tax credit not coming cheaply to American taxpayers. It is estimated to be costing taxpayers about $1 billion a month, but much of the tax credit will inevitably pay for itself. So now is the time for our government to invest in our housing market, our communities, and our taxpayers. Besides its proven record for speeding up the economic recovery, it is also a “tried and tested” formula for creating new jobs that will prevent future foreclosures and help stabilize entire communities.
Times are tough all over. This month’s Atlantic Monthly magazine carries a thought provoking and thoroughly dispiriting article by Don Peck called, “How a New Jobless Era Will Transform America.” Peck quotes Kathryn Edin, who teaches public policy at Harvard, describing her recent research in South Philadelphia. “These white working-class communities—once strong, vibrant, proud communities, often organized around big industries—they’re just in terrible straits. The social fabric is just shredding. There’s little engagement in religious life, and the old civic organizations that people used to belong to are fading. Drugs have ravaged these communities, along with divorce, alcoholism, violence.” That’s an ugly picture, but the worst is yet to come. “I hang around these neighborhoods in South Philadelphia, and I think, ‘This is beginning to look like the black inner-city neighborhoods we’ve been studying for the past 20 years.’”
Edin’s comments unintentionally point out that many people have long-ago written off mostly-minority neighborhoods. Except, of course, the people who live in those neighborhoods. Despite the tremendous stresses of lost jobs, tumbling home values, and growing neglect from the larger community, the residents of the minority neighborhoods ShoreBank serves continue to care deeply.
“Do you know what I think? That main street is making a comeback back,” said my small-town Kansas-raised Dad – and he wasn’t referring to the economy. Triplepundit.com’s recent article 
But my local store doesn’t carry (insert brand name). According to Susan Witt, Executive Director of the E.F. Schumacher Society, if consumers turn online or to a chain store for a certain product, it can actually help local businesses better identify and innovatively fill gaps in the market place. Remember, many new companies begans as small local businesses.
Although landlords are ultimately responsible for a building’s energy efficiency, there are a number of steps which environmentally-friendly renters, some of whom pay their own utility bills, can take to reduce energy costs and consumption. So I am going to share with you some of the easy and convenient steps that we share with our ShoreBank customers and encourage building owners to pass along to their tenants.
5. For each degree lower or higher you set the thermostat, you will save potentially two to 10 percent on heating or cooling costs. In the winter, keep the temperature set at 68 degrees during the day and 55 in the evening. Wearing a sweater or layered clothing will make the temperature more tolerable, especially on days when the bill arrives in the mail.
Haiti is not some far away place to me. Both my parents are from Haiti and I have family members that still live there. I try to go to Haiti every 2 to 3 years and last visited in 2007 to volunteer with a local organization called Concerned Haitian Americans of Illinois (CHAI). I have seen a mix of improving and deteriorating conditions in the country over the past 10 years, but this recent crisis is a wake up call.
In addition, the average Haitian, no different than most, needs to be gainfully employed in order to provide for his or her family and businesses need either debt or savings to get off the ground. But with the unemployment rate hovering around 50% for the last two decades, gainful employment will require greater foreign direct investment and a growing economy. A long-term solution requires investment in both the country’s physical infrastructure (e.g., roads, ports, and telecommunications) and its social infrastructure (e.g., improved school system, reform of a standing army or national police force, and protection of property rights). Without this investment and the ability to provide access to credit, Haiti will continue to be mired in poverty.
ShoreBank Customer Service
Once he identifies the appropriate program, Jabari hits the ground running, verifying the program’s criteria for application. To qualify for the HAMP program the borrower must:
Stark as these figures are, they present a snapshot of a moment in time rather than an assessment of the dynamics of poverty. In contrast to many parts of the developing world, poverty in America tends not to be a long-term condition. Over the four-year period from 2003 through 2007, just 1.8% of the American population was chronically poor. On the other hand, almost a third of the population could be classified as living below the poverty level for at least two months. More than a quarter of households classified in the bottom 20% by income moved up between 2004 and 2007, while a similar percentage moved down from the top 20%. 
Want to learn more? One easy-to-use tool for gaining a better understanding of the link between environmental and economic community development can be found on our new website, 
Helping homebuyers to realize homeownership and life in a strong, healthy community is not only ShoreBank’s mission, but also the dream of millions of Americans. Previously we could rely on consumer spending to lead us through the recession and onto the road of economic recovery, but not now. Those days, I am afraid, are gone. I believe an extension of the tax credit is necessary in order to help stabilize our communities by encouraging consumer spend on home purchases, generating the additional revenues local government agencies need and encouraging the home improvement projects which create the badly-needed new jobs. In fact, unemployment is the number one cause of housing foreclosures, so an extension of the tax credit is essential and best of all, it has proven it works.