Small banks serving America’s impoverished communities were recognized by the U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund with $22.8 million in Bank Enterprise Awards (BEA Awards).
The Awards had been at risk as a result of the Trump Administration’s proposed $15 billion rescission package, which failed to pass by its 45-day deadline of June 22, 2018. The failure of this package resulted in the Awards’ long-awaited release to a record-breaking 113 banks and thrifts headquartered in 23 states and the District of Columbia. Louisiana received the second highest of these awards after Mississippi, with 14 recipient banks headquartered within the state.
In total, 119 community development banks across the country requested a total of $131.7 million from the program, which exceeded available funding by nearly 580 percent. Ninety seven percent of the money was awarded to 103 mission-focused banks that are certified as Community Development Financial Institutions (CDFIs), 63 of whom are members of the Community Development Bankers Association (CDBA).
The awards come at a critical time for Louisiana. According to the most recent benchmark report from the US Census Bureau, income inequality continues to rise. This problem is acute in Louisiana, with a poverty rate of 20.1 percent – the second-highest in the nation. 31 of Louisiana’s 64 parishes are plagued by persistent poverty.
“BOM is honored to be one of the 113 community banks that were awarded the 2017 BEA Awards through our partnership with CDFI and CDBA,” said Ken Hale, President and CEO of BOM Bank in Natchitoches, Louisiana. “We strive to promote and revitalize our communities and help bridge the economic gap by financing small business and providing financial literacy. Our newest endeavor within our partnership has been our Credit Builder Loan Program, which has been a huge success. We are looking forward to strengthening our partnerships with economically distressed communities.”
The BEA Program is a performance-based incentive that banks compete to receive based on documented increases in lending and services in economically distressed communities such as Louisiana’s persistent poverty counties. Awards received are used to support new activity in these areas. Over a year-long assessment period, the 113 recipients to the 2017 BEA Awards reported:
a $470.4 million increase in their loans and investments in distressed communities;
a $18.6 million increase in their loans, deposits, and technical assistance to CDFIs;
a $7.3 million increase in the provision of financial services in distressed communities; and
a $2.5 million increase in their equity and equity-like loans and grants to CDFIs.
These loans and financial services help encourage entrepreneurial activity, job creation, homeownership, and safe small dollar lending options for low-income communities.
“But for the banks committed to serving the nation’s most impoverished urban and rural markets, these are communities that otherwise would be left behind. The BEA Program is highly effective in getting capital to the places that need it most.” said Jeannine Jacokes, CEO of the Community Development Bankers Association, the national trade association of community development banks.
Despite the enormous success of the BEA program in revitalizing disenfranchised communities since 1996, the Trump Administration sought to rescind the 2017 awards, as well as eliminate funding for the program in the fiscal year (FY) 2018 and FY 2019 budgets. Congress voted to maintain robust funding for the CDFI Fund and the BEA Program in FY 2018 and FY 2019.