Access to banks and mortgage loans is an undeniable marker of community vitality. When banks fail to make loans in low- and moderate-income neighborhoods or in areas populated mostly by minorities, working people have a hard time building wealth, and neighborhoods lose the stability that widespread home ownership brings.
A recent study by the National Community Reinvestment Coalition on mortgage originations from 2012-2014 in three Midwestern cities – St. Louis, Milwaukee and Minneapolis – calculated the numbers for what we see with our eyes as we travel the streets of St. Louis. While African Americans make up 18 percent of the metro St. Louis population, only four percent of all home purchase loans here were made to African-Americans in that span.
In the same 2012-2014 period, Midwest BankCentre approved nearly 80 percent of all home purchase applications and nearly 70 percent of all home refinancing applications from majority-African-American census tracts in St. Louis city and county. Including home improvement loans, our total mortgage loan applications in that span totaled 677.
That was a dramatic change from 2009-11, when we took fewer than 65 applications in those same census tracts. We made a sober decision to embark on changing past patterns in ways that were sustainable and would jointly help our local community, our customers, our employees and our shareholders. We fully acknowledge that the impetus for this action was our discussion with regulators and ultimate agreement with the U.S. Department of Justice (DOJ) beginning in 2011.
Any business entering into a government agreement has two choices: 1) do the bare minimum and check the boxes that satisfy the letter of the agreement or 2) openly explore how to create lasting, viable and profitable changes. Realizing the power of rising together, we chose the latter. In so doing, our DOJ agreement became the beginning, not the end, of our story about the catalytic power of banking upon local communities.
What has happened since our decision? After exploring and building local partnerships, we opened a new full-service bank in 2012 in Pagedale, a community never before served by a bank, in collaboration with Beyond Housing. More than 200 mortgages and home improvement loans have been booked at our Pagedale bank, and we are not stopping there.
By listening to community members and sharing our expertise, we have developed new products that serve local needs and help build strong credit records. These tools work and have given many the chance to realize their dreams of home ownership. We have developed new loan products and accessed other assistance to further help local citizens build wealth through home ownership.
We haven’t done this alone. In Pagedale, members of our 24:1 Community Advisory Board help us develop unique financial solutions tailored to a traditionally underserved region. These local business leaders, public officials, educators, faith-based leaders and community advocates are invested with us in helping near North County to thrive. We are grateful for all they contribute.
Also backing our efforts are Midwest BankCentre Chairman & CEO Jim Watson, our diverse legal board of directors, our majority shareholder and our 300 bank team members, who invest thousands of volunteer hours each year, working hand-in-hand with nonprofits and community organizations on everything from completing tax returns and teaching financial classes to building new homes and making neighborhood improvements.
In addition, our active leadership in the St. Louis Regional Unbanked Task Force and its Bank On Save Up St. Louis initiative is generating positive, lasting change throughout the region.
In October 2016, we will open a new full-service branch in partnership with Friendly Temple Missionary Baptist Church in the 5500 block of Dr. Martin Luther King Drive. This partnership will serve a part of North St. Louis that is severely underbanked and ripe for expanded home ownership and greater business investment. When it opens, the bank will become our sixth location in the City of St. Louis.
Our recent purchase of Bremen Bank & Trust Co., completed July 15, gives us a new base in North St. Louis on which to build a business banking hub within St. Louis city. A new St. Louis City Advisory Board, modeled on our 24:1 board, will be invaluable to helping us spur economic success and business reinvestment in St. Louis.
It is this model of banking-community partnership that can change St. Louis for the better, one person and one neighborhood at a time. We look forward to more rising together.
By Alex Fennoy is executive vice president and Community & Economic Development director, Midwest BankCentre.
