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Tuesday, August 24th, 2010
Urban Partnership Bank rises to continue the legacy of community development. We normally don’t blog about ourselves, but we wanted to share news about our new bank, Urban Partnership Bank, discuss its continued commitment to community development, and to introduce you to our management team!
Urban Partnership Bank, an FDIC-insured, Illinois chartered bank will focus on providing continued availability of financial services for low and moderate income communities in Chicago’s South and West Sides, Cleveland, OH, and Detroit, MI.
Branches of the acquired institution will reopen during normal business hours as branches of Urban Partnership Bank. Depositors of ShoreBank (other than certain brokered deposits) will automatically become depositors of Urban Partnership Bank, and their deposits will continue to be insured by the FDIC up to applicable limits. Additional information is available on the FDIC’s website at www.fdic.gov.
David Vitale will serve as Chairman of Urban Partnership Bank. Bill Farrow will serve as President and Chief Executive Officer. The new bank was capitalized by financial institutions, philanthropic organizations and socially responsible individuals from Chicago and nationally. Urban Partnership Bank enters the market as “well-capitalized” with a Tier 1 leverage ratio of at least 8%, and has sufficient capital to meet pre-opening expenses, projected growth, and overall capital needs.
“Urban Partnership Bank will provide access to financial services and support to distressed neighborhoods in order to help transform distressed neighborhoods into strong, stable communities,” said David Vitale. “The private investment in this new financial institution demonstrates commitment to restoring the economic vitality of our communities,” added Vitale.
Vitale announced that Urban Partnership Bank will apply to become a Community Development Financial Institution (CDFI), reflecting its mission to serve low and moderate income and minority communities. The new bank will also continue to support energy efficiency and environmentally-friendly development.
“We have complete confidence in the leadership and ability of David Vitale and his team to make Urban Partnership Bank an effective resource for growing small businesses, creating new jobs, strengthening nonprofits and renovating abandoned and neglected real estate that will help restore the economic vitality of our communities,” said Lester H.McKeever, Jr., CPA, Managing Principal, Washington, Pittman & McKeever, LLC, and community leader.
Tags: community development, David Vitale, FDIC, ShoreBank, urban partnership bank
Posted in Outreach | 6 Comments »
Tuesday, August 3rd, 2010
Feb.4 , 2010 (Bloomberg News) – Betting on declines in US Treasury bonds is a “no brainer,” said Nassim Nicholas Taleb, author of The Black Swan. “Every single human being should have that trade,” Taleb said at a conference in Moscow.
Mr Taleb’s runaway best-seller posited the idea that the unexpected is actually commonplace or, to put it plainly, 100-year storms come along about every 18 months. The recent housing crash is one such event, which Mr Taleb collectively labels “black swans.”
We should not feel too bad about our difficulty in anticipating the unexpected. Humans evolved 195,000 years ago on the grasslands of Africa. We learned to survive by recognizing patterns of cyclicality in Nature and behaviors in the animal kingdom. Those fundamental abilities are baked in our DNA. We are born assuming that everything will be more or less the same and that even change will follow a recognizable pattern. The sun will always rise in the east; the grass will be green in summer and brown in winter.
Change in the financial markets means that the price of assets like stocks or bonds can either rise or fall. Such price movements, when they are large, are always unexpected because of the fundamental way we understand change. So a big, sudden move in the price of, say, the 10-year US Treasury note, can be considered a black swan. The dilemma is that the price of the 10-year Treasury Note can move either up or down.
The black swan that Mr Taleb predicted so confidently six months ago was that long-term Treasury prices would fall sharply, resulting in much higher interest rates. Instead long-term Treasury prices have risen sharply and rates have fallen. Since February 4th, the 10-year Treasury note has lost 6.25% of it value, which means that if “every human being,” all 6.7 billion of us, had put on the trade Mr Taleb suggested to the tune of $10, the world would be about $4.2 billion poorer. (It’s unclear, of course, who would have taken the other side of the trade. God perhaps.)
My point is not to attack the black swan thesis, which is a valuable insight into our knowledge of the world. Rather, my point is that white swans, figuratively the events we call no-brainers, may not be what they seem either. Whatever their color, swans look elegant in the water, with their long necks and stately motion. But out of the water, they are ungainly creatures with nasty tempers to boot.
Tags: community development, economic predictors, financial crisis, green banking, ShoreBank, triple bottom line
Posted in Banking Industry | No Comments »
Tuesday, March 23rd, 2010
Water, water, everywhere; nor any drop to drink! Annie Leonard’s recent The Story of Bottled Water highlights the global impact that bottled water has on the global economy. She, like many, discusses the financial, health, and environmental impacts of bottled water; however, what many overlook is the impact that bottled water could have on our own public water supply? It might be one more reason why you might consider giving up bottled water.
A 2009 E.P.A. study estimated that we need $335 billion to maintain America’s tap water system in coming decades. Why? Although we starting using plastic water pipes approximately 30 years ago, over one million miles of 50-100 year-old iron pipes (often prone to rust and leaks) still transport our water. With a major leak occurring on average every two minutes somewhere in this country, these leaks add up to really negatively impact a cities’ budget, your health, and the global economy. Although the State of Illinois expects to distribute over $110 million in Public Water Supply Loans in 2010 to fix our public water infrastructure, maybe we can make more of an impact just by giving up bottled water.
Now, there are many reasons why you might choose to or not to drink bottled water in the United States. You might need something easily transportable; you want something with additives, like flavor or nutritional supplements; you suspect a health issue; or perhaps it is provided for you.
Regardless of the ‘why,’ and excluding the additional negative environmental impact created by water bottle products and the water bottle alternatives, consider this fact – bottled water costs $0.08/oz. (assuming $1.50/20 oz.); whereas tap water costs less than $0.01/oz. (which you already pay for). 2007 stats indicate that Americans annually spent $324 on those $1.50 20-oz. bottles. Can you imagine what would happen we all donated $324 to an organization focused on improving water supply infrastructure in the U.S.? The city of Chicago alone would free up $938 million in foregone bottled water costs (using 2000 Census population data)! That is 8.5 times the amount of Public Water Supply Loans the State of Illinois plans on creating. Think of the jobs and water supply improvements that would create while minimizing negative environmental impacts.
It is a win-win situation and all it takes is giving up bottled water. Consider it.
Sources:
Tags: energy conservation loans, environmental sustainability, ShoreBank, water conservation, world water day
Posted in Outreach | 1 Comment »
Tuesday, March 16th, 2010
If you are like me, you probably put off filing your 2009 taxes. But with the deductions and credits that apply to buying a home and making energy efficient improvements, if you are a homeowner, you will want to get started now, rather than later, to make sure you receive all the tax breaks you have coming in 2010.
It’s important to note that a tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces the tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. For instance, if you can itemize energy-related purchases on your tax form, it will reduce the amount of tax you owe.
Hopefully my top 10 tax deductions and credits will help.
1. Energy Credits: President Obama’s American Recovery and Reinvestment Act reinstated federal tax credits for homeowners who make certain energy-efficient improvements like new doors, new windows, furnaces, heat pumps, hot water heaters, air conditioners, and more. The credit is up to 30% of the cost of installing such energy savers, up to a maximum credit of $1,500.
A larger credit is available for more ambitious projects especially ones where you generate your own power. For more information on which products qualify for credits, visit here.
2. First-Time Home Buyer credit: A home bought in 2009 may qualify for either an $8,000 or $6,500 credit. To qualify for the $8,000 credit you must not have owned a home for three years prior to buying a new house. The credit is up to 10% of the purchase price or up to a maximum credit of $8,000. For purchases after Nov. 6, 2009, no credit is allowed for homes that cost more than $800,000.
To qualify for the $6,500 credit, you must have lived in the same primary residence for five consecutive years over an eight-year period leading up to the purchase of a new home. The credit is 10% of the purchase price, up to $6,500.
3. Home-office deduction: The costs related to operating your primary workplace from your home are tax deductible. These costs include depreciation, utilities, and insurance for the portion of the home used for meeting with customers or for the primary place of business.
4. Points: Points paid to obtain a mortgage for the home are generally fully deductible, but not if you paid them as part of refinancing: in that case, you must deduct the points over the life of the loan.
5. Moving Expenses: If you moved for a new job that is 50 miles or more away than your old job was from your old home, you can deduct the expenses related to the cost of moving your family and household goods.
6. Rehab Credit: If your home is a designated landmark, you can claim a 20% tax credit for the renovations made within a two year period.
7. Rental Income: If the home was rented for 14 or fewer days when there was a major event in taking place in your town, like the Olympics, the income, regardless of the amount collected, is tax free.
8. Mortgage Interest credit: If you received a mortgage credit certificate from a governmental agency, you can claim a tax credit of up to $2,000.
9. Real Estate Taxes: You can deduct state and local real estate taxes paid during the year on any number of homes.
10. Roth IRA Payouts: The rules allow IRA Roth contributions to be withdrawn at any time without penalty, so this is a great tool to help save for a first home if you are a would-be home buyer. You can withdraw all the money deposited each year tax- and penalty-free. And, if the account is five years or older, you can withdraw the earnings tax-, and penalty-free too if you use them to help buy a first home.
Please note, there are more credits and deductions than the ones listed. To make sure you have not overlooked anything, or for help answering specific questions or any concerns about filing your taxes, I highly recommend working with a Certified Public Accountant. The money invested on an accountant will pay you back, either in the form of money saved from taking the appropriate credit or deduction, or by avoiding a penalty for incorrectly filing your return.
Here’s hoping your tax season is less taxing.
Tags: American Recovery and Reinvestment Act, Energy Tax Credits, First-Time Home Buyers Credit, IRA, ShoreBank
Posted in Mortgage Lending | 1 Comment »
Tuesday, March 9th, 2010
One would assume that energy lending is suffering. Lenders are not only lending less, but actually reducing average balances on credit cards, home equity loans, and lines of credit. In fact, the contrary is true – energy lending seems to be growing by leaps and bounds. Many people ask me why I believe energy finance is poised for explosive growth.
Here are my five reasons for this growth:
- As credit is so difficult to obtain for any kind of project, the federal government is extremely focused on creating new loan programs, like energy finance, that expand credit in all sectors.
- The credit crunch is forcing many in the energy efficiency community to reach out to new types of partners to create these loan programs. In the past, the efficiency community concentrated on developing partnerships with very large commercial banks for easier replication and escalation. The problem is that pilots require experimentation, a willingness to develop new processes and procedures, and, often, an assumption of added risk – elements that do not easily mesh with these large banks’ established lending platforms, especially for lending products, such as residential mortgages, that highly value routinization, efficiency, and standardization. The credit crunch has meant that smaller, mission-driven institutions, which are eager to pioneer new types of loan structures and quite adept at pulling in philanthropic partners to leverage public dollars, such as our colleagues in Portland, are now courted more routinely as partners.
An increasing number of states are legislatively mandating that utilities create on-bill financing mechanisms. As a result, utilities are being thrust into the finance business. Consequently, they are now more eager to develop partnerships, explore leveraging models, use their expertise in measurement and verification of savings, and, with contractor oversight, to develop effective energy lending programs.- The severe economic downturn, budgetary shortfalls at all levels of government, and growing discontent with government (and elected officials), puts a premium on programs that promote job growth, are revenue neutral, and are open to a wide swath of the electorate. Energy financing programs are among the few policy options that offer all of these elements.
- The extreme run up in energy prices in 2007 and 2008 has altered perspectives on where future energy prices are headed. Most people now believe that energy prices will rise over time and that escalation will greatly outpace overall inflation. Indeed, rising costs for energy, like death and taxes, is now seen as one of the few certainties in life.
All of these reasons have thrust energy finance into the national spotlight and to much higher prominence in the financial services industry, especially if the Department of Energy is successful in its efforts to create a new secondary market for loans tied to residential energy efficiency improvements. Naysayers look out: energy finance is poised for growth.
Tags: energy efficiency, energy finance, financial crisis, on-bill financing, ShoreBank, triple bottom line
Posted in Green Collar | 1 Comment »
Wednesday, March 3rd, 2010
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?
Tags: city club cleveland, community development, ShoreBank, triple bottom line
Posted in Community | No Comments »
Tuesday, March 2nd, 2010
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.
Tags: community development, economic predictors, financial crisis, ShoreBank, triple bottom line, unemployment rate
Posted in Banking Industry | No Comments »
Tuesday, February 23rd, 2010
“Do you know what I think? That main street is making a comeback,” 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 Economy agrees 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 begin 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?
Tags: buy local, community development, ShoreBank, small business, triple bottom line
Posted in Community | 3 Comments »
Tuesday, February 16th, 2010
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.
For additional energy saving information, visit the U.S. Department of Energy’s website.
Tags: community development, energy efficiency, environmental sustainability, green banking, green building, ShoreBank, triple bottom line
Posted in Mortgage Lending | No Comments »
Tuesday, February 9th, 2010
Energy finance is clearly a hot topic if a panel on the subject at the Midwest Energy Efficiency Alliance annual conference has an overflow crowd. In years past, the topic might have garnered a couple of dozen of attendees and not the capacity crowd seen last month.
Panelists who were representing a wide array of energy efficiency financing models – from Property Assessed Clean Energy programs (PACE), to on-bill financing options, to governmentally supported private and public financing efforts – illuminated similarities among the programs. These similarities offer the following important lessons for financing programs targeting the residential sector:
1. No model fits all areas. Because no one financing option is perfectly suited for all geographies, incomes, and housing types, a variety models is needed. For instance, although the PACE model is likely to prove quite helpful for many localities, this model may not be feasible for a municipality with elevated levels of foreclosure or a very low tax base, or for one teetering on bankruptcy. Likewise, an on-bill financing program that relies solely upon a utility’s coffers to fund the loans may have too small a capital base to cover a meaningful portion of the units in the utility’s territory. This problem is particularly acute for dense urban areas, such as Chicago, where the capital need is conservatively estimated to be in the billions.
2. Tie the financing to the property or meter. If utility savings are the source of repayment of the loan, the financing should be tied to the property or meter. Otherwise, depending upon the timing of the sale or move, the savings could fall well short of what is needed for repayment, leaving the homeowner or renter to fund the difference. However, equally important, if the financing remains in place after the initial owner or tenant leaves, the improvements should be limited to ones that are not easily removed, such as air-sealing, insulation, HVAC systems, and windows, which will continue to generate savings well after the original owner departs.
3. New sources of liquidity are entering the field. Development Finance Organizations (DFOs), in particular, could represent an important new source of liquidity for energy finance programs. DFOs are public finance entities capable of issuing bonds to support public purpose projects. A development finance entity, for instance, could potentially issue bonds to provide the capital for an on-bill financing program, thereby lessening the need for the utility to find the funds internally or to have to borrow them directly.
As the number of energy finance pilots grows and diversity of program types multiplies, there is an acute need for dialogue among the practitioners about lessons learned, limitations for other locales, and opportunities for collaboration. I applaud the Midwest Energy Efficiency Alliance for beginning this critical conversation.
Tags: energy finance, green banking, Midwest Energy Efficiency Alliance, on-bill financing, ShoreBank, triple bottom line
Posted in Green Collar | No Comments »
