New Haven residents will have another resource to ease their financial strain, New Haven community leaders said, when the first-ever community development bank — a for-profit bank designed to promote economic development and serve residents in low- to moderate-income areas — opens in the Elm City in early 2010.
The First Community Bank of New Haven, which has been in the works for five years, is now one regulatory step away from opening a branch at 299 Whalley Ave. It will be a for-profit bank that offers anyone who comes in with some form of identification, including the Elm City Resident Card, the chance to make deposits, utilize financial consulting services and apply for loans, said William Placke, the bank’s Chief Executive Officer.
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In June, the bank received a temporary charter from the State of Connecticut Department of Banking to open as a bank, and the Federal Deposit Insurance Corporation and the Federal Reserve are currently reviewing its business model for accreditation. The temporary charter put the bank back on schedule to open in the first quarter of 2010.
Sandra Treviño, the executive director of JUNTA, a local progressive action group said there had been a delay in the bank’s opening because the bank’s former Chief Executive Officer Chandler Howard had decided to step down in 2007. She added that she felt confident, with Placke in charge, the bank would open in 2010 as planned.
The community bank is the latest project of the First City Funding Corporation, a not-for-profit organization that was formed in 2004 to promote the development of New Haven’s low-income neighborhoods. It was formed because New Haven no longer had a bank committed to the city’s economic and social agenda after the city’s primary local bank, the New Haven Savings Bank, merged in 2004 with the publicly-traded NewAlliance Bank, Placke said.
Placke explained that one of the community bank’s main goals for both its Whalley Avenue branch, located on Whalley Avenue, and a possible Fair Haven branch is to offer New Haven’s lower-income residents a safe place to manage their money responsibly. He said many of the bank’s prospective customers to whom the bank will cater currently must pay a fee to cash their checks because they do not own bank accounts and must use check cashing services.
“We’re going to have to be very sensitive to the needs of our demographics,” he said.
For example, he said the Fair Haven branch’s marketing materials will emphasize the bank’s affordable money transfer services because more of its customers will be sending money overseas. But the New Haven branch’s marketing materials will focus extended operating hours on payday, he said.
Carla Weil, director of the Greater New Haven Community Loan Fund — a not-for-profit organization that operates a variety of loan programs that foster economic development in New Haven — said her organization plans to collaborate with the First Community Bank, though said she could not specify what that collaboration will entail because she does not have a realistic idea of what opportunities for collaboration there will be. Another mission of the Community Loan Fund is to foster investment in the New Haven community by securing lending for the development of affordable housing and working with people who are purchasing homes or facing foreclosure.
“There are certain things that the [community loan] bank can do that we can’t,” Weil said, explaining that her organization has seen an increased demand from its clients for foreclosure counselors and small financial support groups — an increase she said she hopes the opening of the new community bank will help alleviate.
“[The First Community Bank and the funding corporation] have an excellent model — it’s very exciting what they are planning to do,” she said.
Planke projected that within five years of opening the Whalley Avenue and Fair Haven branches, the bank will have assets of $150 million and that though the bank will be relatively small, it will likely have hundreds of regular customers at the Whalley branch alone. He added that he believes the Whalley branch’s location at the intersection of Whalley Avenue and Sherman Avenue, as well as its proximity to several low-income neighborhoods, puts it right in the center of its target market.
“I hope this site will be viewed a center of activity in New Haven,” he said.
The community loan bank has been in the planning stages since 2004.