CASE SI-134(A) DATE 013116 Jacly

CASE: SI-134(A)
DATE: 01/31/16
Jaclyn Foroughi, CFA, and Professor Maureen McNichols
prepared this case as the basis for class discussion rather
than to illustrate either effective or ineffective handling of an
administrative situation.
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BENEFICIAL STATE BANK (A):
ORGANIZATION AND MEASUREMENT OF SOCIAL
IMPACT
We’re not just trying to develop a new bank model at the firm
level and hope that has better and
salutatory effects. We’re really trying to change the banking
system for good.
1
—Kat Taylor (JD/MBA ’86), co-founder and co-CEO,
Beneficial State Bank
In November 2004, as presidential hopeful John Kerry conceded
the presidential race to George

W. Bush, husband and wife team and Democratic supporters
Tom Steyer (MBA ’83) and Kat
Taylor found themselves at an impasse in their political
endeavors. Having served as a delegate
to the Democratic National Convention and as a significant
backer of Kerry, Steyer was
considered a certainty for a position in Kerry’s administration.
Taylor, meanwhile, had recently
emerged from a 20-year career hiatus, during which she raised
four children and supported her
husband’s esteemed career as founder and senior managing
member of Farallon Capital
Management. The lost presidential bid was not only
disappointing but left the couple seeking
out new avenues to benefit from their time, passion, and energy.
For Taylor, the idea of a beneficial bank was not new; in fact,
the notion of starting a bank to
help underserved communities had been suggested to her almost
20 years earlier when Taylor
sought career advice from then-economic advisor to Governor
Jerry Brown of California,
Michael Kieschnick. At the time, the idea seemed implausible
but now, with their newly

unleashed resources, the idea of community banking as a
leverage point in both communities and
the overall financial system seemed almost compulsory.
Specifically, they wanted to create a
triple bottom-line
2
bank that produced social justice and environmental well-being
while also
being economically sustainable not just in the community but
across the financial system. Still,
1
Interviews with Kat Taylor, August 14, 2015 and September
29, 2015. Subsequent quotations are from the
author’s interviews unless otherwise noted.
2
Triple bottom line refers to the measure of financial, social,
and environmental performance of an entity over a
period of time.
For the exclusive use of M. Chen, 2022.
This document is authorized for use only by Meng Chen in
Sustainable Value Creation 2022 taught by ROB RYAN, DePaul
University from Jan 2022 to Jul 2022.

Beneficial State Bank (A): Organization and Measurement of
Social Impact SI-134(A)
p. 2
determining how best to structure the organization in order to
ensure the fulfillment of its
intended benefits presented a significant challenge to the
couple.
FOUNDING VISION
Originally established in June 2007 as OneCalifornia Bank and
OneCalifornia Foundation,
3
Beneficial State Bank first opened its doors in Oakland, one of
the most ethnically diverse major
cities in Northern California. With a vision for providing
access to financial services for all
communities, particularly the traditionally underserved, the
founding in Oakland was no
coincidence. In 2007, approximately 17.6 percent of Oakland’s
general population was below
the poverty line and nearly 40 percent of Oakland residents
earned less than twice the federal

poverty rate.
4
In addition, despite a decline in the African American
population at the turn of the
millennium, African Americans remained Oakland’s single
largest ethnic group and had a
poverty rate twice that of the overall population in Oakland.
5
For Taylor, the inequalities present
in Oakland exemplified “communities of high potential”; in
other words, those most deserving of
and ripe to embrace change.
Beyond the community, the founders envisioned a more stable
financial system that was fair to
the person with the least bargaining power, typically the
depositor, and resulted in the long-term
prosperity of responsible consumers and their ecological
commons. As Taylor explained:
Over the last 50 years, we let the deposit fund providers—the
depositors—believe
that all they're entitled to is a meager amount of interest for the
deposits and no
influence over where they go… most depositors are on the 99
percent side, not on

the one percent side. And I think at present there are $12
trillion of deposits in the
American banking system. So those are large numbers. That's
the power base we
need to resurrect and make aware of the power they hold
collectively. And so we
plan to change the enormously powerful banking model that is
abusing its major
stakeholders—depositors.
In order to implement change in the prevailing banking system,
Taylor championed two fresh
views of depositors: first, in a nod to her political advocacy
work, depositors were viewed as
neither customers nor beneficiaries but citizens who were
entitled to the protection and respect of
the bank in exchange for their patronage; second, citizen bank
customers were regarded as
crowdfunders due to the monetary contributions (deposits) of a
large number of people used to
support a common project or goal—in this case, beneficial
banking. Taylor described:
Banking is actually the original and most important and

powerful form of
crowdfunding, not that specific deposits fund specific loans but
rather that
deposits always fund a lending practice. We hear that
crowdfunding happening all
3
In December 2010, upon acquisition of ShoreBank Pacific,
OneCalifornia Bank and OneCalifornia Foundation
changed their names to One PacificCoast Bank and One
PacificCoast Foundation, respectively. In July 2014, One
PacificCoast Bank and One PacificCoast Foundation rebranded
as Beneficial State Bank and Beneficial State
Foundation, respectively.
4
East Bay Alliance for a Sustainable Economy (EBASE), “2008
Labor Day Census Data Summary—Flatlined:
Economic Pain in the East Bay,” September 2008, p. 1.
5
Ibid.

p. 3
the time—a reflection of a desire to create a future you want to
see by coming
together. There's certainly nothing more powerful than coming
together to create
the FDIC insurance fund, which is backed by the American
taxpayer and provides
the ability for banks to attract up to $250,000 risk-free from
depositors. And in
fact, because banking is a leveraged model, those deposits are
levered nine times
to one of every equity dollar—there were some banks levered 33
times right
before the crisis. So, the lion's share of the funding is the
depositors; the cheapest
source of funding other than securitization, and they ought to
get to influence the
enabled lending practice.

Finally, in addition to empowering depositors at the individual,
community, and system-wide
level, the team was committed to creating an entity that
contributed to the long-term
sustainability of the environment.
To accomplish these commitments, the founders aspired to one
basic rule: benefit to all, harm to
none. While it was not uncommon for all banks to produce
some benefit, the tenet of “harm to
none,” or an unwillingness to fund ecological or human
exploitation, distinguished the bank from
the majority of its counterparts (see Exhibit 1 for a summary of
Beneficial State Bank’s hopes
and dreams). Taylor summarized the bank’s founding vision:
We are a bank formed in the image of the great socially
responsible institutions
like ShoreBank in Chicago, Grameen Bank in Bangladesh, and
Self-Help Credit
Union in North Carolina…we were inspired by those efforts to
make more broad
social equity and environmental well-being through a business
model. We chose

a bank because of the many ways a bank intersects with
everyone’s lives from
being the place you get a mortgage, transact business, save
money…We wanted
banking to be based on relationships and produce social justice
and environmental
well-being at the same time that it’s financially sustainable so
that it can persist,
grow bigger, serve more people, and achieve this mission.
6
ORGANIZATIONAL STRUCTURE
Initial Organizational Structure
With the initial vision in place, founders Steyer and Taylor next
had to determine how best to
structure the organization. Despite banking’s notorious scrutiny
and heavy regulation, the team
navigated the organization process in just under three years. In
an effort to institutionalize the
beneficial banking vision, the team created a for-profit bank
funded with $22.5 million in capital
provided by Steyer and Taylor. They also created two classes
of stock in the bank—one

representing all of the voting rights and another granting all of
the economic rights (see Exhibit
2 for a graphic of the group’s organizational structure).
6
Devin Thorpe, “Kat Taylor Does It Her Way: Banking the
Underserved,” Forbes, March 6, 2014,
http://www.forbes.com/sites/devinthorpe/2014/03/06/kat-taylor-
does-it-her-way-banking-the-underserved/ (October
20, 2015).
p. 4
In order to properly align the triple bottom-line incentives of
the founders with the values of its

citizen bank customers, Steyer and Taylor instantaneously
donated all of the economic rights to a
foundation of the same name while creating two bank holding
companies—“Bancorp” and the
foundation—to hold the voting stock and the economic rights,
respectively. As Taylor admitted,
“It's quite unusual for economic and voting rights to be
separated. For us, we did it because we
didn't want the voting rights to insist on profit maximization,
which tends to come at the expense
of the other bank bottom lines, even though, of course, we and
our [bank] regulators want the
bank to be profitable.” At the same time, the foundation was
disallowed from selling its stock
without the prior approval of the founders and only then to
another nonprofit. With this setup,
any profits earned by the bank could only be distributed to the
foundation, which was mandated
to reinvest those proceeds back into the communities and the
environment.
The foundation, meanwhile, was organized as a public charity,
which was prohibited from being
governed to the interest of or controlled by a private individual.
Instead, it retained its public

charity status by supporting the broad missions of three program
services: Bridge Housing
Corporation, East Bay College Fund, and The Tides Foundation.
Collectively, these programs
sought to:
combat economic distress and encourage community
development, encourage
financial literacy, promote affordable housing, and eliminate
discrimination by
promoting the provision of loans and investments, including
consumer loans and
micro and small business loans, and depository services for
disadvantaged
communities and community service organizations.
7
As a result, the investment of bank profits back into the
communities it serves and the ecological
commons upon which we all depend represented a virtuous
cycle of investment paralleling the
bank’s practice of making loans back into the communities from
which the deposits were

recruited to the economy and society the depositors wanted to
see.
While bank profits could flow only to the foundation, the
foundation was permitted to provide
significant resources and support to the bank. Since inception,
the foundation assumed research
and development expenses and “heavily support[ed] the bank in
start up mode, covering client
sponsorships, and building the field of Beneficial Banking and
Impact Measurement with
resources provided mainly by the TomKat Charitable Trust but
also…grants from the Marin
Community Foundation and the Schwab Foundation.”
8
In other words, the foundation acted as a
conduit for recruited charitable capital, a significant
competitive advantage for both the bank and
borrowers, reflecting measurable positive externalities.
Governance
As the original founding team, Steyer and Taylor retained seats
on the bank’s Board of Directors
with a permanent right to appoint a majority of the Board,

assuring that the Board would act in
7
U.S. Department of the Treasury, Internal Revenue Service,
Form 990, November 2014,
http://990s.foundationcenter.org/990_pdf_archive/205/20525366
3/205253663_201312_990.pdf.
8
Beneficial State Bank, “2013 Beneficial Banking Annual
Report,” 2013, http://beneficialstatebank.com/2013-
beneficial-banking-report.aspx (October 20, 2015).
p. 5
alignment with the founders and their principles. The
foundation, meanwhile, consisted of
directors appointed by the three supported organizations in

addition to Steyer and Taylor, the two
directors appointed by the TomKat Foundatio n, with the
provision that no private person ever
controls the Board.
Regulatory Considerations
Originally founded as a thrift to source deposits and originate
home and commercial loans,
Beneficial State Bank converted to a California state-chartered
bank in July 2014. Because the
founders launched the bank just as the housing bubble burst, the
bank could not become a scaled
mortgage lender and found it increasingly difficult to meet some
of the ratios required of a thrift.
In addition, regulators approached the team in August 2010 and
encouraged the bank to purchase
ShoreBank Pacific, a subsidiary of Chicago-based community
bank ShoreBank with operations
in Oregon and Washington, which was on the verge of
insolvency. Thus, while the mortgage
crisis contributed to a change in the bank’s original charter, it
also created a beneficial
relationship with the bank’s regulators. As Taylor described:

We have a non-traditional relationship with our regulators
because we actually
embrace regulation—which protects important values like fair
lending and access
to capital—but also because we have a mutually beneficial
relationship as a result
of the accident of our timing. We were born in 2007. Before
we were three years
old, we were asked to buy another community bank because we
had a source of
capital and the regulators could not allow all of these
community banks, imperiled
by the risky business of the big banks, going down at once. So
as a mission-
driven bank, we feel much more positively toward our
regulators, and we believe
they towards us.
By converting to a state-chartered bank regulated by the
California Department of Business
Oversight (DBO), the bank was able to achieve better alignment
with the regulatory agency’s
dual mission of supporting the state economy as well as the

stability of the overall banking
system. In addition, because of strong relationships between
the California DBO and Oregon
and Washington state regulators, the bank enjoyed reciprocal
arrangements in those additional
states where, at the time of the conversion and as a result of the
ShoreBank Pacific acquisition
completed in late 2010, operations were already in progress.
Meanwhile, the Federal Deposit
Insurance Corporation (FDIC) took a secondary regulatory
position behind the California DBO
while the Federal Reserve continued to regulate the two holding
companies—Beneficial State
Bancorp and Beneficial State Foundation.
In 2013, the Federal Reserve approached the bank insisting on
its compliance with some new
rules under Dodd-Frank (see Dodd-Frank below for further
details regarding this law). Dubbed
the “skin in the game rule,” banks over $500 million in assets
(later increased to $1 billion in
assets) must have a preponderance of common stock in their
capital structure. Given the bank’s
unique model in which the foundation owns all of the economic

rights and the founders retain the
voting rights, Taylor felt the same protections as the skin in the
game rule were already in force.
As a result of the bank’s constructive relationship with
regulators and progressive approach to
p. 6
financial reform, the team managed to obtain an alternate
commitment that approximated the
rule’s protections.
9
Dodd-Frank
Following the financial crisis of 2007-2010, the Dodd-Frank

Wall Street Reform and Consumer
Protection Act was signed into law by President Barack Obama
to prevent excessive risk-taking,
protect American consumers, and create the Consumer Financial
Protection Bureau (CFPB) to
prevent mortgage and pay-day lenders from exploiting
customers. At over 2,300 pages, Dodd-
Frank was the longest and most complicated bill ever passed by
the U.S. legislature. Despite its
complex rules and stringent capital requirements, particularly
for smaller banks, the team at
Beneficial State Bank welcomed the reform while continuing to
favor simplicity. As Taylor
reflected:
Dodd-Frank was long overdue in coming. We had, in my view, a
massive
unregulated sector putting at risk a really important role in the
economy, so we
embraced that aspect of it. We just would have preferred if it
were simpler:
1. Every bank has a Tier 1 capital ratio of 10 percent.
2. Nobody trades securities or some variety of the Volcker Rule.
3. Everyone has a cap on assets of, say, $100 billion with a

living will in place.
4. Nobody gets saved. Every bank that fails fails. No bail outs.
Those four simple rules we think would have constrained the
system in favor of
the democratic citizenry that funds it, allowed innovation to
flourish, and cut
down on compliance regime expense enormously.
Likewise, the team at Beneficial State Bank viewed the creation
of the CFPB as a positive
development in the “democratic citizenry” supporting the
banking industry. In Taylor’s view:
We really think that CFPB is a very good development. We
shouldn’t be fining
banks for bad behavior because it’s just seen as a cost of doing
business and
[banking] is a very lucrative business that easily absorbs those
costs, especially
when you abuse consumers.
We should be revoking their license and that’s what the CFPB
actually has the
authority to do. So if you are a bad credit card lender, then get

out of the market
for five years. You should clean up your act. We know about
inefficiencies in
regulation. We know them firsthand, but the most important
thing to do right now
is to fight the natural inclinations of the most powerful financial
system
incumbents to dismantle regulation.
Because of the values embedded in Beneficial State Bank’s
founding vision, the bank
distinguished itself from traditional banks and, as a result,
traditional banking business
models, including aversion to regulation.
9
For further information regarding the firm’s capitalization
structure, see “Beneficial State Bank (B): Evaluating
Social and Financial Returns for Investors,” GSB No. SI-
134(B).

p. 7
BUSINESS MODEL
Unlike traditional banks, Beneficial State Bank was guided by
one basic ideal: benefit to all,
harm to none. While what Taylor called “bigger, better, faster,
stronger” banks regularly
engaged in a number of unsavory acts including predatory
lending, persistent overcharging,
excessive consumer penalties, unethical employment practices,
and financing the unsustainable
exploitation of natural resources, Beneficial State Bank sought
to create a new economy that was
“fully inclusive, racially and gender just, and environmentally
sound.”
In describing the bank’s business model as it related to the
triple bottom line, Taylor said:

Banking is supposed to help low-income economies grow too,
and it’s supposed
to be there for the depositors to get their money back when they
need to use it
themselves but also to borrow. They pool their money together,
so they can
borrow, because life expenses come out in lumpy, non-
correlated needs to your
stream of resources.
So, I think in the beginning, we just thought we needed to be a
really good bank,
helping the poor communities and our environment. But, in
fact, depositors and
communities have chronically gotten left out of the main
functions of banking by
design and we have to create a model that gets them back in,
permanently. We
have to change the banking system for good.
Competitive Strategy
In a world of functionally identical technology and
commoditized banking, creating a

competitive advantage was difficult to attain but even more
difficult to sustain. Beneficial State
Bank made the decision to pilot a form of “pay-for-
performance” in this spirit. With a focus on
commercial lending and because of the bank’s unique structure
in which “the bank is owned by a
nonprofit public charity foundation, it can both provide capital
to buy down interest rates and
recruit capital from other charitable capital to buy down interest
rates.” In this pay-for-
performance model, borrowers would be offered rewards or
rebates on interest rates for
producing positive externalities such as affordable housing
units, renewable kilowatts, and
sustainable food. In turn, borrowers would obtain a lower cost
of debt (at no expense to the
bank), making both the borrower’s business and the bank more
competitive in the market.
Traditional banks, however, would be unable to partake in these
advantages because, as Taylor
revealed, “then you would be taking charitable capital and it
would benefit the bank on its way to
the borrower…and you can’t do that when you have private
shareholders.”

As one of 111 banks nationwide granted Community
Development Financial Institution (CDFI)
status by the Treasury Department, Beneficial State Bank was
entitled to a number of
competitive advantages. First, the bank was qualified to apply
for technical and financial
assistance awards to enhance the ability of CDFI organizations
to support the low-income
communities served. In September 2013, the bank was awarded
a $1.3 million financial
assistance grant to use for financing capital, loan loss reserves,
capital reserves, or operations. In
September 2015, the bank received a $2 million financial
assistance grant in addition to awards
under the Bank Enterprise Award (BEA) program, which
provided awards to banks correlated

p. 8
with the percentage increase in dollars associated with the
bank’s investment in distressed
communities. Second, the bank could access the CDFI Fund’s
Capacity Building Initiative,
which offered a variety of training and technical assistance to
CDFI’s interested in strengthening
their organizations. Finally, by combining CDFI certification
with the Certificate of Deposit
Account Registry Service (CDARS), Beneficial State Bank was
able to provide multimillion-
dollar FDIC insurance coverage earning CD-level interest.
Because this service was only
available to community and regional banks in the CDARS
network, smaller banks like Beneficial
State Bank could compete more effectively with larger
traditional banks. While not
insignificant, these advantages were necessary for CDFIs to
fulfill the missions underserved or
not served at all by non-CDFI institutions.

Human Capital
In order to carry out the bank’s mission, the team made it a
priority to ensure that its human
resources accurately reflected its stated goals. In the summer of
2012, the bank launched the first
of its well-regarded summer internship programs aimed at
giving participants exposure to the
challenges faced by a bank tailored to serving the community.
One important feature of the
program was the Beneficial Banking Curriculum and Speaker
Series, “a weekly series of
educational workshops led by experts in the fields of banking,
community development finance,
impact investing, and supplying credit to underserved
populations.”
10
Through the program,
interns were given more insight and a swifter learning
experience while training to be the next
generation of stewards for change. In addition, Beneficial State
Bank’s mission and model
allowed all employees to work in concert with their values and
purpose.

With a Living Wage policy
11
stipulating that the bank will pay 150 percent of living wage in
all
markets in place, Beneficial State Bank was committed to
attracting and retaining a workforce
that would, like its citizen bank customers, be financially secure
and economically empowered.
In addition, the bank’s roughly five dozen employees were
supported in their own community
work through paid volunteer time as well as matching
donations. Finally, echoing the bank’s
own commitment to social justice, the bank strived to ensure
gender and ethnic equality and
equity by not only have relatively equal proportions of both
genders within the organization but
also employing women in senior positions. In fact, the
International Living Future Institute’s™
JUST™ Program, which provided transparency for
organizations to voluntarily disclose aspects
of their operations, assigned Beneficial State Bank low marks
for gender diversity because it
employed too many women—a knock that Taylor accepted
proudly.

MEASURES OF SOCIAL IMPACT
For both accountability and superior performance quality,
Beneficial State Bank devised a
number of metrics to measure the impact of their efforts and the
success of their mission. First,
the team developed an internal point structure that would award
a point for every loan that fell
within its targeted lending sectors and made certain that at least
75 percent of outstanding loan
dollars were put to work in these, as Taylor referred to them,
“transformative sectors of the new
10
Beneficial State Bank, “Internship Program Expands in
Summer 2013,” Internship Program,
http://beneficialstatebank.com/internship-program.aspx
(October 21, 2015).
11
As calculated by the MIT Living Wage calculator in all
markets.

p. 9
economy.” These included any one of the seven categories of
mission lending: affordable
housing, multi-family, and neighborhood stabilization;
sustainable food, fisheries, and
agriculture; low-income community economic development;
clean tech, green energy, and green
chemistry; women and minority-owned businesses; and other
mission lending all working within
a new economy that was fully inclusive, racially and gender
just, and environmentally sound.
In keeping with the bank’s “benefit to all, harm to none”
mantra, the bank also required that the
remaining 25 percent (or less) of active loan dollars not be lent
to “contra-mission activities,” or
those working against the new economy. As Taylor explained:

The reason we do that is we know the old economy is disserving
depositors and
society, underperforming in nonfinancial and financial ways all
over the map.
We’ve got to get away from it. If we keep lending the
preponderance of the
depositor’s funding to the old economy, we’re just reinstalling
it. So our
commitment is that 75 percent or more has to be going towards
the shift to a new
economy. If we switched these percentages, our lending practice
would be
working against itself.
As a result of its commitment, Beneficial State Bank distributed
loans totaling over $350 million
in 2014—81 percent of which went to mission-driven sectors
(see Exhibit 3 for a summary of
2014 lending).
In addition to measuring the placement of loan dollars within
the new economy, Beneficial State
Bank also participated in chronic assessments of the
sustainability and justice of its corporate

practices such as JUST, BCorp, Global Alliance for Banking on
Values (GABV), National
Community Investment Fund (NCIF), as well as an internal
greenhouse gas (GHG)/landfill/water
footprint analysis.
As mentioned previously, the JUST label provided transparency
into a corporation’s operations
in the name of social justice. The BCorp certification, provided
by the nonprofit B Lab,
analyzed corporations based on standards of “social and
environmental performance,
accountability, and transparency.”
12
The GABV, of which Beneficial State Bank had been a
member for four years, was an independent network of banks
committed to sustainable banking
principles and the promotion of a positive, viable alternative to
the current financial system. As
the largest investor in impact-focused banking, NCIF invested
capital and facilitated the flow of
funds from investors to banks. Its 2014 NCIF BankImpact
report revealed that Beneficial State

Bank had a higher proportion of branches in low- and moderate-
income census tracts, along with
a higher proportion of development lending compared to the
national average of banks. Finally,
the bank remained dedicated to the reduction of energy, natural
resources, and materials
consumption as well as emissions, pollution, and landfill
contributions. By educating and
engaging employees in waste and energy reduction programs at
home and work, hiring a third
party to audit and report on GHG emissions and sources,
purchasing carbon offsets for GHG
emissions, and obtaining Green Business Certifications for bank
locations, Beneficial State Bank
was able to serve as an example of the sustainability that it
strived for its bank customers to
achieve (see Exhibit 4 for a review of Beneficial State Bank’s
greenhouse gas inventory).
12
B Corp, “What are B Corps?”
https://www.bcorporation.net/what-are-b-corps (October 21,
2015).

p. 10
With continual technology improvements and the team’s ability
to gather even richer data,
Beneficial State Bank remained focused on the continued
development of impact metrics.
CONCLUSION
With its innovative organizational structure, desire for radical
change across the financial system,
and commitment to triple bottom-line results, Beneficial State
Bank was born to uplift
depositors, the community, and society at large. As Taylor
remarked, “Our ultimate goal is
nothing short of changing the banking system by migrating
deposit, equity, and human capital to

a better, beneficial bank model.”
13
After having reported its third consecutive year of
profitability in 2015 at a return on equity in line with the team’s
goal, the bank appeared to be
proving that a triple bottom-line bank could not only fulfill its
social and environmental
aspirations but also produce financial returns that allowed it to
stay afloat, attract capital, and
secure the endorsement of its various regulatory agencies and
third-party auditors (see Exhibit 5
for Beneficial State Bank’s abstracted financial data from 2010-
2015). Of course, achieving its
stated goals was a fundamental first step. Maintaining reliable
and sustainable funding and
growth while preserving the integrity of the capitalization
structure, however, might prove to be
more difficult (see SI-134(B) Beneficial State Bank (B):
Evaluating Financial and Social
Returns for Investors for an in-depth review of the bank’s
capitalization and growth strategy).
Assignment Questions

1. What is Beneficial State Bank’s theory of change? How do
its product offerings and loan
portfolio relate to its theory of change? What is missing? What
doesn’t belong?
2. Identify key principles of the founding vision. Is it practical
and attainable? What are the key
risks? Would you do anything differently? What will you need
to bring the vision to reality
(team, capital, time, etc.)? Map out the key opportunities and
threats.
3. Evaluate Beneficial State Bank’s impact assessment
reporting. How could their reporting be
improved?
13
Beneficial State Bank, “2014 Beneficial Banking Annual
Report,” 2014, http://beneficialstatebank.com/2014-
Beneficial-Banking-Report.aspx (October 20, 2015).

p. 11
Exhibit 1
Beneficial State Bank’s Hopes and Dreams
Source: Beneficial State Bank, 2015.

p. 12
Exhibit 2
Beneficial State Bancorp’s Organizational Structure
p. 13
Exhibit 3
Beneficial State Bank 2014 Lending

p. 14
Exhibit 4
Beneficial State Bank 2014 Greenhouse Gas Inventory
Total Greenhouse Gas Emissions (metric tonnes of CO2
equivalent) and by Full-time
Employee (mtCO2/FTE), 2011-2014
Source: Beneficial State Bank, Climate Action and
Sustainability Report, 2014.

Total Greenhouse Gases by Category (mtCO2e), 2011-2014
326
311
364
279 6.8
5.2 5.0
4.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0

8.0
0
50
100
150
200
250
300
350
400
2011 2012 2013 2014
Total emissions (mtCO2e) GHG emissions (mtCO2e/FTE)
0
50
100
150
200
250

Natural Gas Electricity Work-related Board Travel Commute
Travel
Purchased
Paper
Solid Waste
2011 2012 2013 2014
p. 15
Exhibit 4 (cont.)
Beneficial State Bank 2014 Greenhouse Gas Inventor y
Total Greenhouse Gases by Category per FTE (mtCO2/FTE),
2011-2014

0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Natural Gas Electricity Work-related Commute
Travel
Purchased
Paper
2011 2012 2013 2014

p. 16
Exhibit 5
Beneficial State Bank Abstracted Financial Data (2010-2015)
Source: Compiled from Office of Thrift Supervision Thrift
Financial Reports and company data.
Income Statement
Figures are in $US thousands 2010 2011 2012 2013 2014 2015
Interest Income
Interest and fee income on loans 1,033 2,773 10,118 11,750
12,726 14,537
Interest from lease financing receivables - - - - - -

Interest income on balances due from depository institutions
40 23 150 105 129 118
Interest and dividend income on securities 98 383 896 496 742
628
Interest income from trading assets - - - - - -
Interest income from fed funds sold - - 5 5 4 8
Other interest income - - 12 54 96 196
Total interest income 1,171 3,179 11,181 12,410 13,697
15,487
Interest Expense
Interest on deposits 182 356 1,158 864 642 670
Interest on trading liabilities and other borrowed money 2 163
645 605 648 702
Total interest expense 184 519 1,803 1,469 1,290 1,372
Net interest income 987 2,660 9,378 10,941 12,407
14,115
Loan loss provision 346 200 1,402 1,165 830 1050
Net interest income after loan loss provision 641 2,460
7,976 9,776 11,577 13,065
Non-interest Income
Other fees and charges 30 2,781 - - - -

Service charges on deposit accounts - - 220 287 349 216
Net servicing fee - - (37) (40) (40) (27)
Net gains (losses) on sales of loans and leases (65) - - 136 - -
Net gains (losses) on sales of other real estate owned - - (22)
(211) 288 14
Net gains (losses) on sales of other assets - (33) - - 13 -
Other noninterest income 622 9 1,952 2,097 1,171 1,843
Total non-interest income 587 2,757 2,113 2,269 1,781
2,046
Non-interest Expense
Salaries and employee benefits 1,012 1,615 7,147 6,705 6,330
7,242
Expenses of premises and fixed assets 126 266 1,062 1,251
1,260 1,339
Goodwill and other intangibles expense - 34 137 138 137 137
Other noninterest expense 242 2,596 3,651 4,057 3,735 3,850
Total non-interest expense 1,380 4,511 11,997 12,151
11,462 12,568
Realized gains (losses) on available-for-sale securities 1 56
(18) 120 - 11
N et income (151) 762 (1,926) 14 1,896 2,554

Years ended December 31,
p. 17
Exhibit 5 (cont.)
Beneficial State Bank Abstracted Financial Data (2010-2015)
Source: Compiled from Office of Thrift Supervision Thrift
Financial Reports and company data.
Balance Sheet
Figures are in $US thousands 2010 2011 2012 2013 2014 2015
Assets

Cash and balances due from depository institutions 20,475
60,527 44,987 41,910 33,257 81,615
Federal funds sold 33,530 4,285 2,355 2,501 2,267 5,145
Total cash and cash equivalents 54,005 64,812 47,342
44,411 35,524 86,760
Securities available for sale 70,122 58,295 43,422 32,387
53,423 32,355
Loans and leases, net of allowance for loan losses 153,914
149,363 178,091 224,057 266,798 326,577
Premises and fixed assets 3,366 3,676 3,985 3,832 3,354 4,136
Other real estate owned 2,291 2,003 1,927 633 - 318
Goodwill and other intangible assets 3,328 3,192 3,055 2,919
2,782 2,646
Other assets 7,919 5,392 4,247 4,774 4,156 11,140
Total assets 294,945 286,733 282,069 313,013 366,037
463,932
Liabilities
Deposits and escrows 233,726 224,948 - - - -
Non-interest bearing deposits - - 70,013 81,844 86,281
101,840
Interest-bearing deposits - - 159,344 166,619 207,494
263,399

Other borrowed money 25,530 25,054 17,573 27,220 26,841
40,704
Other liabilities 2,850 3,319 3,401 3,837 3,856 5,696
Total liabilities 262,106 253,321 250,331 279,520
324,472 411,639
Stockholder's equity
Common stock 2,240 2,240 2,240 2,240 2,240 2,240
Additional paid in capital 42,160 42,160 42,660 45,610 51,210
52,710
Retained earnings (11,729) (11,644) (13,571) (13,556)
(11,660) (2,330)
Accumulated other comprehensive income 168 656 409 (801)
(224) (327)
Total stockholder's equity 32,839 33,412 31,738 33,493
41,566 52,293
Total liabilities and stockholder's equity 294,945 286,733
282,069 313,013 366,038 463,932
Years ended December 31,

CASE SI-134(A) DATE 013116 Jacly

CASE SI-134(A) DATE 013116 Jacly

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