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BankPlus’ payday lending alternative notches top American Bankers Association award

By TED CARTER

Ridgeland-based BankPlus’ has won acclaim across Mississippi for  turning into customers people who thought a bank loan or even checking account was beyond their reach.

Now, the $2.5 billion privately held bank is getting recognized on a national stage for bringing financial services to more than 22,000 unbanked or under-banked Mississippians.

BankPlus will be honored in Los Angeles next week as winner of the American Bankers Association  Community Commitment Award in the Nontradtional Borrower and Underbanked category.

Underbanked is a classification for someone who has a bank account, but continues to rely on alternative financial services, such as check- cashing services, payday loans, rent-to-own agreements or pawn shops. Unbanked is someone with neither a checking nor savings account.

Mississippi leads the nation in unbanked, with 16.4 percent of its population having neither checking nor savings accounts, according to the non-profit Corporation for Enterprise Development, or CED. The CED put Mississippi’s underbanked at 25.2 percent of its population.

Corey Carlisle, the ABA’s senior vice president for bank community engagement, said BankPlus is showing that banks can develop effective strategies for helping the unbanked and underbanked. “What’s great about this is that they are showing results in what they are doing,” he said in an interview Monday.

What they are doing is steering Mississippians away from payday lending stores and into their 60 banking locations. The enticement is an opportunity to gain mainstream financial services and, after completing an approximately three-hour financial literacy class, eligibility for the CreditPlus program.

The program, which led to BankPlus’ Community Commitment Award, is a small-dollar, short-term loan product designed as an alternative to the high-interest loans offered at the more than 1,000 payday lending stores in Mississippi. CreditPlus is also designed to help participants develop a regular savings plan.

CreditPlus loans have a maximum length of one to two years. The bank provides loans of $500 to $1,000 at 5 percent to CreditPlus participants.

Since launching CreditPlus in 2008, BankPlus has signed up 22,223 unbanked or underbanked Mississippians who attended one of 642 money-management sessions.

The 22,000 CreditPlus loans BankPlus has made total  more than $16 million, the ABA said in announcing its award.

In seven of the towns it serves, BankPlus is the lone bank, “We are probably in 10 more towns where only two banks are in town,” said Max Yates, senior executive vice president & chief risk officer, in an interview Monday.

Unlike other banks in the years since the banking crisis of the last decade, BankPlus has not closed any branches, Yates said.

“We are committed to our rural small-town roots, but we look for growth as well to balance that out,” said Yates, whose bank has $2 billion in deposits, the sixth most among Mississippi banks, and earned $10.6 million in net income in the second quarter.

The ABA chose BankPlus and five other banks from among nearly 200 bank entries. Other categories and winners were Affordable Housing, HomeStreet Bank, Seattle; Community and Economic Development, Banco Popular, San Juan, Puerto Rico; Financial Education, Old National Bank, Evansville, Ind.; and Protecting Older Americans, Inland Bank & Trust, Oak Brook, Ill.

“Banks like to learn from each other,” the ABA’s Carlisle said.

BankPlus and the other winners “are really fine examples of showing something that can work,” he said.

An ABA panel of judges winnowed candidates to four or five in each category and sent the finalists to outside judges to select the top one.

Ellen Lazar, former senior adviser to the FDIC’s chairman for consumer policy, made the final selection in the Nontradtional Borrower and Underbanked category. She handed honorable mentions to United Bank of Atmore, Ala., for its Credit Advantage Small Dollar Loan program and to HarborOne Bank of Brockton, Mass., for its HarborOne U program.

For BankPlus, the short term, small-dollar program “is a building block to add customers,” said Yates, the senior executive vice president, said.

BankPlus has branches in two of the counties that the Corporation for Enterprise Development says are among the 10 most unbanked in America – Holmes and Humphreys. Leflore County is also among the 10 most unbanked.

The first step is the financial education which BankPlus provides throughout its market. Bankers from each branch teach the money management classes, which run about three hours.

“Once you go the seminar you qualify for CreditPlus,” Yates said.

A percentage of the participants take out small loans and fail to pay them back, but a “much larger percentage come through the program and we end up at the end of the day with a savings-and-checking- account customer,” Yates said.

Beyond its CreditPlus program, BankPlus is Mississippi’s leading Community Development Financial Institution, a U.S. Treasury Department designation for banks certified to receive low-cost federal funds to be used to provide credit, capital and financial services in economically distressed communities.

Mississippi is one of the nation’s top recipients of CDFI funds and BankPlus the top bank recipient. The Ridgeland bank acquired more than $50 million in CDFI capital in late 2010 from more than $200 million awarded to Mississippi CDFI banks.

To be a CDFI bank, low-and-moderate income residents must make up at least 60 percent of a bank’s market. “We exceed that by a comfortable margin,” Yates said.

The success BankPlus had using the CDFI capital in its CreditPlus program garnered BankPlus an Empowerment Award in late 2014 from the Promontory Financial Group, a global financial services consulting firm. The award came in the Community Development Banking category, a classification made up of CDFI banks.

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