Keeping the Faith
Connecting with church groups to spread the financial literacy word
by Kelly Lobdell
Inner city Baltimore is not the typical Main Street, U.S.A.
In a country where the national homeownership rate is a record-high 68 percent, only 50.3 percent of Baltimore’s families own their own homes and 22.9 percent of residents there live below the poverty line, according to the most recent U.S. Census statistics. Nearly 70 percent of the population is minority.
While several parts of the city, especially those along the city’s waterfront, are enjoying revitalization through redevelopment, others remain beyond the site of developers and most major financial institutions. It is these areas, places like Monroe Street where the New Shiloh Baptist Church is located, that are arguably in most need of attention. Described by one local pastor as “for all intents and purposes a ghetto,” not many banks are aching to serve the small and minority-owned businesses and faith-based organizations of these areas, but The Harbor Bank of Maryland is up to the challenge.
Founded in 1982, Harbor Bank of Maryland was formed to serve the markets of inner-city Baltimore that mainstream institutions overlooked, especially churches, says Joseph Haskins, chairman and CEO of the bank. Working with church leaders, some of which serve on the bank’s board, Harbor Bank has developed an understanding of the purchasing and financing needs of local churches ranging from pews, buses and building additions to more complex projects like recreation and rehabilitation facilities, and senior and affordable housing projects.
“At the beginning there was a very heavy time investment. It was awhile before we could cultivate that market because it took time to understand its dynamic aspect and financial needs and develop lending habits and lending models that we could easily tailor to meet a variety of needs,” says Haskins.
Today, Harbor Bank is making major inroads in the community and is starting to see the fruit of its labor. The $213 million-asset bank has helped Southern Baptist Church on North Chester Street finance the Cole-Grant-Higgs senior housing development. It also assisted New Shiloh Baptist Church with the financing for an $11 million building project and a community center, senior housing facility and medical care center called “New Shiloh Village.”
For Haskins, local churches have provided an entryway to reach out to potential first-time homebuyers, and Harbor Bank wants to do its part to help raise the city’s homeownership rate. Several bank-hosted seminars are held at churches throughout the year to explain benefits of homeownership such as lower crime rates and better schools in areas of high homeownership. The bank also provides brochures and pamphlets for churches to leave on their information tables.
Going the extra step, Harbor Bank also developed the Homeownership Made Easy (HOME) loan program that helps homebuyers explore loan incentive programs offered by state, county and national entities, sometimes even providing 100 percent of financing through the programs. Programs are often aimed at police officers, teachers, low- to moderate- income individuals and those looking to buy in distressed communities.
“What we attempted to do successfully is develop homeownership products and work along with different specialists in the homeownership market to put together financial packages that can aid us in reaching challenged borrowers who may not have the traditional amount of cash,” says Haskins.
Laying the Foundation
The ability to touch homebuyers through their churches was not an ability the bank gained overnight, says Haskins. Rather 20 years of demonstrated commitment to the community, including the development of a Visa Three- In-One Check Card that arranged for a portion of every purchase to go to a local church or charity, that has opened parishioners’ ears to Harbor Bank’s message.
“I’m not walking in cold saying ‘Hello, I’m ABC Bank, now listen to me,’” Haskins says. “We’ve built confidence and trust. We’ve said, ‘You’re valuable to us and we’re interested in your welfare.’ They know we’re genuine, that it’s not just the marketing strategy of the month.”
Members at Southern Baptist Church are among the many who have benefited from Harbor Bank’s initiative. Their senior pastor, Nathaniel Higgs, is on the bank’s board and encourages members to take advantage of Harbor Bank’s financing opportunities, often directing them to literature on display at the church, says Diane Lashley, Southern Baptist’s secretary and church clerk.
Pastor Harold Carter of New Shiloh says he also sees many opportunities for his flock through Harbor Bank. “Joe Haskins and the people at Harbor Bank are extremely sensitive to our needs, especially being a minority congregation,” he says. “There aren’t a lot of financiers who would be willing to invest that kind of money in an urban and, for all intents and purposes, a ghetto area here on Monroe Street.”
While New Shiloh has yet to take advantage of Harbor Bank’s homeownership initiative, it’s part of the church’s plans. “It all seems right on in targeting the needs of our community and at least getting us out of the position of being renters and holding leases and instead getting mortgages,” says Carter. “It’s something we’re definitely going to do.”
While reaching out to faith-based markets isn’t right for every community bank, the approach has been very successful for Harbor Bank, which holds $196 million in deposits and $130.8 million in loans, a 23.9 percent increase over last year.
Haskins suggests that any bank looking to reach out to potential homebuyers through faith-based communities first develop an understanding of that market. Then it should study the bank’s in-house strengths to either find or cultivate the needed talent. Building trust by working to help finance church projects is key, he says.
“You need to help churches from A to Z. You need someone who knows how to bring the whole team together including financial planners, accountants, attorneys and builders. You need to have a healthy relationship where they can be comfortable and trust you.”
And, like in any other church activity, it doesn’t hurt to have faith in your research and your commitment.
“We like to believe that when we engage our self with the church, we’re not just engaging the building and leadership-we’re connecting with the congregation,” says Haskins. “To that end, emphasizing homeownership to the community is one of the most important things we can do.”
In an area boasting a concentration of Koreans seconded only by Korea, Center Bank in Los Angeles, Calif., knows the value of Korean-language financial literacy tools. Few in its immigrant community speak English, and many do not understand the American banking system-a major obstacle for those looking to buy a home or use credit.
That’s why when officials from the FDIC approached the $842 million-asset Center Bank last year for help in translating, promoting and launching a Korean-language version of the Money Smart financial literacy curriculum, the bank jumped at the opportunity.
“There are a lot of new immigrants within the Korean community who don’t have training in banking, homeownership, credit cards and managing credit so a tool provided by the FDIC in the Korean language is great,” says Mindy Chun, an administration officer at the bank who helped with the program. “A lot of Koreans don’t know what FDIC stands for.”
Center Bank began its efforts by assigning a senior officer familiar with Korean banking terms and two other bankers in the compliance and quality control department to review and refine a translation of the 10-module program. Aside from the sheer volume of material, which filled two three-inch binders, the biggest challenge the translators faced was keeping the language simple, says Chun.
“The program is made for and is supposed to be understandable by even a child,” she says. “The officer editing here found some interpretations weren’t correct because Korean banking terms are different.”
In addition to translation work, Center Bank worked to build partnerships with other organizations in the Korean-American community and raise awareness through press conferences, newspaper advertisements and word of mouth. Korea Daily Central, a national paper, signed on as partner to promote the program, while Operation Hope, a local organization, is hoping to offer Individual Development Accounts with the bank.
Now, 100 years after the first Koreans arrived in the United States, nonprofit organizations, community banks, including other ICBA members like Hanmi Bank, Nara Bank and Pacific Union Bank, and other groups in Los Angeles are promoting the initiative to help new immigrants realize the American dream of owning a home or a small business. The first classes began at Center Bank in September.
So far more than 100,000 people have completed the Money Smart curriculum in English, Spanish, Chinese and Korean since it launched in July 2001. A Vietnamese translation is expected in 2004.
For more information on the free FDIC Money Smart program, visit ICBA’s web site, www.icba.org.
Kelly Lobdell is Independent Banker’s staff writer.