Residents of low- and moderate-income communities often must travel some distance to get to their bank’s branch office. Neighborhood National Bank plans to change the local banking trends by servicing these communities.
“Our bank reaches out in providing banking services to many underserved areas and people of San Diego,” said Robert McGill, president and CEO of Neighborhood National Bank.
Neighborhood National Bank was the first nationally chartered community development bank in the nation when it was formed in 1997.
The formation of chartered community development banks started nearly eight years ago when Bill Clinton was a presidential candidate, McGill said.
– President’s Model For
Clinton used Chicago-based South Shore Bank as a model for banks aimed at helping underserved neighborhoods.
In 1996, the Community Development Institution Fund was created as a division of the U.S. Treasury to encourage banks to make loans to nonprofit groups and enterprises serving low- to moderate-income neighborhoods. CDIF has provided $182 million for community development to banks, thrifts and community development institutions since its establishment.
Neighborhood National Bank established branches in the Paradise Hills and the Logan Heights areas. McGill plans to expand into San Ysidro, Linda Vista, North Park and City Heights in the future.
Shareholders of Neighborhood range from other banks like Wells Fargo and Union Bank of California to nonprofit organizations like Religious of the Sacred Heart and the Walton Family Foundation.
Neighborhood National Bank functions as a traditional bank with checking, savings, CDs, small business loans and loans for revitalization projects.
One of the financial and educational programs presented by Neighborhood National Bank is the Refugee Individual Development Account (RIDA) program in conjunction with the San Diego chapter of Catholic Charities.
– Program Offers Matching
Savings Account Funds
RIDA is a federally funded program administered by the Office of Refugee Resettlement in Washington, D.C. The program functions as a savings account with matching funds provided by the agency. For every dollar invested, the refugee will receive an additional $2 in matching funds.
After a period of 10 months, the refugee may use the invested RIDA fund for the purchase of an automobile, a computer, a house, vocational training, or to fund a small business. The refugee must be part of a low-income family with assets over $10,000 and be employed.
“RIDA helps refugees head towards self-sufficiency,” said Candace Troung, a case manager with Catholic Charities. “Neighborhood National Bank understands the low-income communities and refugees in helping with RIDA.”
Troung said refugees must participate in a 10-hour financial literacy program called Dollar Wise with Neighborhood National Bank. In Dollar Wise, the participant learns about checking accounts, savings, credit and investments.
She said 166 participants enrolled into the RIDA program since March.
– Joint Home Loan
According to McGill, Neighborhood National Bank also plans to expand similar services in conjunction with the San Diego Housing Commission to obtain federal matching funds though the Federal Home Loan Bank in San Francisco for a program called the Individual Development Empowerment Account (IDEA) program.
“You’re dealing with a lot of people who aren’t used to managing their finances,” McGill said. “There’s a real purpose to teach people about their finances and to trust banks.”
McGill said many of Neighborhood National’s customers are high-maintenance, low-balance account holders. An average balance size for an account holder is around $100, he estimated.
– Customers Informed
Of Banking Options
He also defined a high-maintenance account holder as a customer who needs a helping hand with financial information at the cash-checking windows. Employees assist customers by informing them of certain functions of investments and banking.
“Every transaction is a new transaction,” McGill said. “We’re here to walk them through the process and educate them.”
Roger Cazares, president and CEO of the Metropolitan Area Advisory Committee (MAAC) Project, said banking services are needed in communities with low- to moderate-income families.
MAAC Project is a community service organization assisting in child development, affordable housing projects, Head Start programs, and revitalizing neighborhoods.
One of the problems these neighborhoods faced was the closure of many branches following all of the bank mergers in recent years, he said.
Neighborhood National Bank provides mortgages, loans and small business development to communities lacking in banking services, Cazares said.
“(Neighborhood) is a cost-effective banking option for all-income families,” Cazares said. “It provides options to these underserved people.”