“ Community Development Banking” Presentation for Professor & Dean of the Faculty Ashish Vaidya’s MBA Class on Social Busi...
Traditional Bank vs. Community Bank  vs. Community Development Bank <ul><li>Mission </li></ul><ul><li>Focus & target marke...
Our Beliefs <ul><li>Best means to help communities to become sustainable is to provide access to robust commercial banking...
Banking Services & Products <ul><li>Depository: Consumer & Business </li></ul><ul><li>Loans: Consumer & Business </li></ul...
OneCalifornia Bank-THE IDEA…a hybrid model for more effective and efficient community development Social Entrepreneurism S...
OneCalifornia Bank-KEY INFULENCES Community Development Financial Institution (CDFI) Tom Steyer & Kat Taylor OneCalifornia...
THE MODEL: What We Have Today…an open sourced model <ul><li>Senior Holding Company </li></ul><ul><li>501 c 3 non profit  <...
How This Works &  How It Maintains Socially Responsible Focus <ul><li>Our Model...One of a few nationally chartered financ...
Dispelling Popular Myth:  No Break on Credit Standards <ul><li>5 C’s: The five key  elements  a  borrower  should have to ...
Bicycle <ul><li>Front Wheel: Mission...however defined </li></ul><ul><li>Back Wheel: Financial Sustainability: earnings tr...
OneCal Bank <ul><li>Opened September 2007 </li></ul><ul><li>Today:  </li></ul><ul><ul><li>$106MM Total Assets </li></ul></...
Outcome Measure <ul><li>Mission Ratio: Loans outstanding to: </li></ul><ul><ul><li>Women & Minority Owned Businesses </li>...
Outcome Measure Results <ul><li>2008 </li></ul><ul><ul><li>Mission ratio of 73% based upon $15MM in new loans </li></ul></...
Certifications <ul><li>Small Business Administration: 2009 Certified and Preferred Lender </li></ul><ul><li>2009 Green Bus...
What is the secret sauce? <ul><li>Mission implementation through out bank </li></ul><ul><li>Strategic Partnerships </li></...
Strategic Collaboration <ul><li>Example of collaboration with Community Based Organizations for Economic Development & Fin...
Inner City Advisors <ul><li>Inner City Advisors </li></ul><ul><ul><li>Focus on Inner City Businesses-Oakland </li></ul></u...
Imprint Capital Advisors <ul><li>Leveraging Capital for Social Impact & Social Return </li></ul><ul><li>Directing Mission ...
Hybrid Finance Model-Moving Grants, PRIs, Mission Related Deposits, Equity into the Communities <ul><li>Key Success Factor...
Why <ul><li>More Effective Vehicles than PRIs  </li></ul><ul><li>(Program Related Investments) </li></ul><ul><ul><li>Missi...
“ Connecting the Dots: Examples” <ul><li>Foundations “lending” & Bank leveraging the lending </li></ul><ul><li>Strategic C...
Implications <ul><li>Progressive Practices-But business discipline always </li></ul><ul><li>That may mean collaboration an...
You Run the Bank <ul><li>Possible solution to your problem single family mortgages </li></ul><ul><li>You have the first: $...
OneCal Solution <ul><li>Action on 2 nd </li></ul><ul><li>Action on 1 st </li></ul><ul><li>Financial Literacy </li></ul><ul...
Socially Responsible Banking… Banking Your Values.. Join The Movement <ul><li>Working collaboratively </li></ul><ul><li>Ho...
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Calstate MBA Lecture

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Lecture for Dr. Ashish Vaidya\'s MBA class on Social Business

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Calstate MBA Lecture

  1. 1. “ Community Development Banking” Presentation for Professor & Dean of the Faculty Ashish Vaidya’s MBA Class on Social Business & Social Entrepreneurship Cal State University Channel Island Jeffrey Cheung February 24, 2010
  2. 2. Traditional Bank vs. Community Bank vs. Community Development Bank <ul><li>Mission </li></ul><ul><li>Focus & target market…impact on access to fair banking services </li></ul><ul><li>Structure </li></ul><ul><li>Financial Metrics & Outcome Metrics </li></ul>
  3. 3. Our Beliefs <ul><li>Best means to help communities to become sustainable is to provide access to robust commercial banking services to business and non profits. </li></ul><ul><li>Provide open access to loans and depository services </li></ul><ul><li>Provide fair and transparent banking services to the employees of the businesses and organizations we bank </li></ul><ul><li>Promote financial education / literacy when and wherever we can </li></ul>
  4. 4. Banking Services & Products <ul><li>Depository: Consumer & Business </li></ul><ul><li>Loans: Consumer & Business </li></ul><ul><li>Cash Management </li></ul><ul><li>Bankers </li></ul><ul><li>How you operate </li></ul><ul><li>Strategic Partnerships </li></ul>
  5. 5. OneCalifornia Bank-THE IDEA…a hybrid model for more effective and efficient community development Social Entrepreneurism Social Philanthropy Active Social Business
  6. 6. OneCalifornia Bank-KEY INFULENCES Community Development Financial Institution (CDFI) Tom Steyer & Kat Taylor OneCalifornia Bank
  7. 7. THE MODEL: What We Have Today…an open sourced model <ul><li>Senior Holding Company </li></ul><ul><li>501 c 3 non profit </li></ul><ul><li>Federal Thrift Holding Company </li></ul><ul><li>Owns Economic Rights of Bank </li></ul><ul><li>Mid Tier Holding Company </li></ul><ul><li>Federal Savings Bank </li></ul><ul><li>CDFI Certified by US Treasury </li></ul><ul><li>Business & Non Profits </li></ul><ul><li>Triple Bottom Line </li></ul>OneCalifornia Foundation OneCalifornia Bancorp OneCalifornia Bank
  8. 8. How This Works & How It Maintains Socially Responsible Focus <ul><li>Our Model...One of a few nationally chartered financially institutions with a non profit senior holding company </li></ul><ul><li>Role of OneCalifornia Foundation </li></ul><ul><li>Role of OneCalifornia Bank </li></ul>
  9. 9. Dispelling Popular Myth: No Break on Credit Standards <ul><li>5 C’s: The five key elements a borrower should have to obtain credit : character ( integrity ), capacity (sufficient cash flow to service the obligation ), capital ( net worth ), collateral ( assets to secure the debt ), and conditions (of the borrower and the overall economy ). </li></ul><ul><li>Added 6 th element: Community </li></ul><ul><li>Added 7 th element: “Conditioning”…Dr. Phil </li></ul><ul><li>No Break from Banking Regulators </li></ul>
  10. 10. Bicycle <ul><li>Front Wheel: Mission...however defined </li></ul><ul><li>Back Wheel: Financial Sustainability: earnings trend & risk management </li></ul><ul><li>What type of bike do you want: old fashion two wheeler or a Lance Armstrong time trail bike </li></ul>
  11. 11. OneCal Bank <ul><li>Opened September 2007 </li></ul><ul><li>Today: </li></ul><ul><ul><li>$106MM Total Assets </li></ul></ul><ul><ul><li>$95MM Total Deposits </li></ul></ul><ul><ul><li>$50MM Loans Outstanding </li></ul></ul><ul><ul><li>Well Capitalized & Operating in Safe & Sound Manner </li></ul></ul><ul><ul><li>Highly Liquid </li></ul></ul>
  12. 12. Outcome Measure <ul><li>Mission Ratio: Loans outstanding to: </li></ul><ul><ul><li>Women & Minority Owned Businesses </li></ul></ul><ul><ul><li>Non Profits </li></ul></ul><ul><ul><li>Businesses located in low-moderate income census tracts </li></ul></ul><ul><ul><li>Modifying to track jobs sustained, jobs created, green-renewable-sustainable lending </li></ul></ul>
  13. 13. Outcome Measure Results <ul><li>2008 </li></ul><ul><ul><li>Mission ratio of 73% based upon $15MM in new loans </li></ul></ul><ul><li>2009 </li></ul><ul><ul><li>Increased dollar amount of new loans outstanding to $25MM </li></ul></ul><ul><ul><li>Increased mission ratio to 78% </li></ul></ul>
  14. 14. Certifications <ul><li>Small Business Administration: 2009 Certified and Preferred Lender </li></ul><ul><li>2009 Green Business Certification </li></ul><ul><li>CDFI Fund (Department of US Treasury): </li></ul><ul><ul><li>2009 CDFI Bank Certification </li></ul></ul><ul><ul><li>2009 Technical Assistance, Bank Enterprise Award and Financial Assistance Award </li></ul></ul>
  15. 15. What is the secret sauce? <ul><li>Mission implementation through out bank </li></ul><ul><li>Strategic Partnerships </li></ul><ul><li>Full Service Bank </li></ul><ul><li>Bankers: commercially focused / cash flow oriented / great at developing mitigants for risk </li></ul><ul><li>Innovation: use of “social capital” </li></ul>
  16. 16. Strategic Collaboration <ul><li>Example of collaboration with Community Based Organizations for Economic Development & Financial Literacy </li></ul><ul><li>OneCal Bank + Inner Cities Advisors + Imprint Capital + OneCal Foundation </li></ul>
  17. 17. Inner City Advisors <ul><li>Inner City Advisors </li></ul><ul><ul><li>Focus on Inner City Businesses-Oakland </li></ul></ul><ul><ul><li>Superior Business Advisory Services </li></ul></ul><ul><ul><li>Hybrid Financing: New Model </li></ul></ul><ul><ul><ul><li>Co-lending </li></ul></ul></ul><ul><ul><ul><li>Subordinated Debt </li></ul></ul></ul><ul><ul><ul><li>Guaranty </li></ul></ul></ul><ul><ul><ul><li>Equity </li></ul></ul></ul><ul><li>Example of Collaboration & Innovation </li></ul>
  18. 18. Imprint Capital Advisors <ul><li>Leveraging Capital for Social Impact & Social Return </li></ul><ul><li>Directing Mission Related Investments to key on the ground level organizations </li></ul><ul><li>Leading edge application of funds from programs, deposits to lending </li></ul><ul><li>Working with OneCal & other partners to “strategically connect the dots” </li></ul>
  19. 19. Hybrid Finance Model-Moving Grants, PRIs, Mission Related Deposits, Equity into the Communities <ul><li>Key Success Factor: Proper Feet on the Street to Execute </li></ul><ul><li>Needs: </li></ul><ul><ul><li>Advisory Partners </li></ul></ul><ul><ul><li>Financial Service Provider </li></ul></ul><ul><ul><li>Deal Flow </li></ul></ul><ul><ul><li>Crisp Execution </li></ul></ul><ul><ul><li>Reporting: Output, Outcomes and Financial Impact </li></ul></ul>
  20. 20. Why <ul><li>More Effective Vehicles than PRIs </li></ul><ul><li>(Program Related Investments) </li></ul><ul><ul><li>Mission-related Deposits </li></ul></ul><ul><ul><li>Subordinated-Debt </li></ul></ul><ul><ul><li>Lease Finance / Guaranties </li></ul></ul><ul><ul><li>Equity Stakes </li></ul></ul><ul><ul><li>Collaborative Consulting Services </li></ul></ul><ul><li>Need those on street who can source, underwrite and monitor these types of investments </li></ul>
  21. 21. “ Connecting the Dots: Examples” <ul><li>Foundations “lending” & Bank leveraging the lending </li></ul><ul><li>Strategic Collaboration: </li></ul><ul><ul><li>Inner City Advisors sources a deal & provides consulting services to business owners </li></ul></ul><ul><ul><li>OneCalBank underwrites lending needs & provides banking services </li></ul></ul><ul><ul><li>Imprint Capital brokers “capital / participating loans” </li></ul></ul><ul><ul><li>Team plans for Growth Trajectory </li></ul></ul><ul><ul><li>Not giving control for expensive VC capital </li></ul></ul><ul><ul><li>OneCal Foundation: Financial Education & Literacy </li></ul></ul>
  22. 22. Implications <ul><li>Progressive Practices-But business discipline always </li></ul><ul><li>That may mean collaboration and consolidation, especially for Non-Profits, who need to have business discipline too. </li></ul><ul><li>Investors need to insist on financial sustainability as well as social/environmental outcomes And they need to plan an exit </li></ul><ul><li>Also, what is scale? Is it different for different strategies? Organic growth, large capital infusion, networks of like-minded entities, etc. </li></ul>
  23. 23. You Run the Bank <ul><li>Possible solution to your problem single family mortgages </li></ul><ul><li>You have the first: $400,000 </li></ul><ul><li>A second mortgage exists: $100,000 </li></ul><ul><li>House is underwater </li></ul><ul><li>Homeowner struggling to make payments </li></ul><ul><li>What do you do…and you have a lot of these! </li></ul>
  24. 24. OneCal Solution <ul><li>Action on 2 nd </li></ul><ul><li>Action on 1 st </li></ul><ul><li>Financial Literacy </li></ul><ul><li>San Francisco Federal Home Loan Bank </li></ul><ul><li>Do you do the right thing for your shareholders? </li></ul><ul><li>Intended and Un-intended Consequences </li></ul>
  25. 25. Socially Responsible Banking… Banking Your Values.. Join The Movement <ul><li>Working collaboratively </li></ul><ul><li>How to Participate: </li></ul><ul><ul><li>“ Bank your values” </li></ul></ul><ul><ul><li>Both personally & organizationally </li></ul></ul><ul><li>What do you get out of it </li></ul><ul><li>Conscious Consumerism </li></ul><ul><li>Don’t “Green Wash” Yourself </li></ul><ul><li>Become part of the Change </li></ul>

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