Josh Silver
05-10-2007, 11:07 AM
*
For Immediate Release
May 10, 2007
Contact:* Karen Hinton, 703-798-3109
Karen@hintoncommunications.com
*
Study Finds Appalachian Banks Have $500 Billion in Assets To Fuel Economic Growth, But Rural Businesses Still Face Credit Gap Compared to Urban Counterparts
*
National Community Reinvestment Coalition Conducts Study For Appalachian Regional Commission -- Provides Data For 13 Appalachia States[1] (#_ftn1)
*
Washington, DC – Appalachia possesses over $500 billion in assets in 227 banks that finance $5.4 billion every two years for community and business development – a “cautiously optimistic” amount to combat poverty and unemployment, finds a study released today by the National Community Reinvestment Coalition (NCRC).
*
Drawing on a study commissioned by the Appalachian Regional Commission (ARC), NCRC said the region’s banks have made important strides in making loans available to small businesses.* For example, contrary to national trends, Appalachia banks have higher levels of small business lending in predominately minority counties.* At the same time, significant credit gaps remain.*
*
John Taylor, NCRC President and CEO, said: “When people think about poor areas, they usually talk about liabilities and deficits.* But we are cautiously optimistic about the region’s ability to face tough challenges because Appalachia has a significant asset – a banking sector that has been motivated by the Community Reinvestment Act to reinvest in the region.”*
*
Yet, significant credit gaps remained.** Small businesses in rural counties are less likely to receive loans than businesses in metropolitan areas.* Likewise, businesses in low- and moderate-income census tracts are less likely to receive loans (41% of all small businesses in Appalachia received loans as opposed to 35% of small businesses in low- and moderate-income tracts).** The smallest businesses with revenues under $1 million are least likely to receive loans – just 28% of these businesses received loans in 2003.***
*
An overlooked asset for addressing credit gaps are mid-size community based banks that have local branch presence. NCRC’s report revealed that bank branch presence has a significant impact on lending levels.* When the number of branches is 11 or higher in a county, the median number of loans is 1,287 in a county.** In contrast, when the number of branches is below 11, the median number of loans in a county is 235.* Mid-size, community based banks with local branches and with assets under $1 billion also are most likely to lend in rural counties and distressed counties.* Most of the banks headquartered in Appalachia are mid-size, community based banks.
*
Overall, banks made a higher amount of small business loans in counties where businesses had the best credit.* Surprisingly, small business creditworthiness did not vary greatly in metropolitan and rural counties and distressed and non-distressed counties.* This suggests that increasing branch presence is a relatively quick and efficient way for increasing small business lending since large differences in creditworthiness do not have to be overcome in rural and distressed counties.****
*
Another asset in Appalachia is the 100 Community Development Financial Institutions (CDFIs) and ARC sponsored revolving loan funds, making loans in hard to serve markets.* CDFIs in Appalachia place more of an emphasis on small business lending than their national counterparts.* In addition, ARC revolving loan funds have been financing higher levels of job creation per loan dollar over the years.
*
In order to close remaining credit gaps, NCRC recommends branch building and expansion in Appalachia.* State and local governments in Appalachia should consider New York State’s program which offers tax breaks and below market rate deposits in exchange for banks opening branches in economically disadvantaged areas.* In addition, Congress needs to strengthen CRA, a federal law that requires banks to meet credit needs of communities.* Congress should enhance CRA small business loan data reporting so that all banks must report the data and require that the data include the race and gender of the small business owner.* Moreover, the important role of community banks should be supported by expanding financing such as the Federal Home Loan Bank of Pittsburgh’s advances for bank small business lending.* The NCRC report includes a number of additional recommendations such as increased bank financing for the CDFIs and revolving loan funds in Appalachia.
*
Taylor said, “Our report shows the beginnings of a revitalization story in Appalachia.* Government support and encouragement of bank financing could go a long way towards economic rebuilding and job growth in the region.”
*
Entitled Access to Credit and Capital in Appalachia, the report is available via http://www.ncrc.org (http://www.ncrc.org/).*
NCRC is a national non-profit coalition of 600 member community organizations that promotes economic justice and equal access to credit, capital and financial services to traditionally underserved communities.* For more information on NCRC, visit us on line at www.ncrc.org (http://www.ncrc.org/) or call 202-628-8866.
*
*
*
Josh Silver
Vice President of Research and Policy
National Community Reinvestment Coalition
(202) 628-8866 or http://www.ncrc.org
*
*
*
[1] (#_ftnref1) See pages 23, 26, 28, 30, 33, 44, 94, and 97 of the report for regional and state breakdowns.* Also see pages 176, 178, 179, and 181 of the Appendices for additional breakdowns.
This post transferred from the cdb-l mailing list
For Immediate Release
May 10, 2007
Contact:* Karen Hinton, 703-798-3109
Karen@hintoncommunications.com
*
Study Finds Appalachian Banks Have $500 Billion in Assets To Fuel Economic Growth, But Rural Businesses Still Face Credit Gap Compared to Urban Counterparts
*
National Community Reinvestment Coalition Conducts Study For Appalachian Regional Commission -- Provides Data For 13 Appalachia States[1] (#_ftn1)
*
Washington, DC – Appalachia possesses over $500 billion in assets in 227 banks that finance $5.4 billion every two years for community and business development – a “cautiously optimistic” amount to combat poverty and unemployment, finds a study released today by the National Community Reinvestment Coalition (NCRC).
*
Drawing on a study commissioned by the Appalachian Regional Commission (ARC), NCRC said the region’s banks have made important strides in making loans available to small businesses.* For example, contrary to national trends, Appalachia banks have higher levels of small business lending in predominately minority counties.* At the same time, significant credit gaps remain.*
*
John Taylor, NCRC President and CEO, said: “When people think about poor areas, they usually talk about liabilities and deficits.* But we are cautiously optimistic about the region’s ability to face tough challenges because Appalachia has a significant asset – a banking sector that has been motivated by the Community Reinvestment Act to reinvest in the region.”*
*
Yet, significant credit gaps remained.** Small businesses in rural counties are less likely to receive loans than businesses in metropolitan areas.* Likewise, businesses in low- and moderate-income census tracts are less likely to receive loans (41% of all small businesses in Appalachia received loans as opposed to 35% of small businesses in low- and moderate-income tracts).** The smallest businesses with revenues under $1 million are least likely to receive loans – just 28% of these businesses received loans in 2003.***
*
An overlooked asset for addressing credit gaps are mid-size community based banks that have local branch presence. NCRC’s report revealed that bank branch presence has a significant impact on lending levels.* When the number of branches is 11 or higher in a county, the median number of loans is 1,287 in a county.** In contrast, when the number of branches is below 11, the median number of loans in a county is 235.* Mid-size, community based banks with local branches and with assets under $1 billion also are most likely to lend in rural counties and distressed counties.* Most of the banks headquartered in Appalachia are mid-size, community based banks.
*
Overall, banks made a higher amount of small business loans in counties where businesses had the best credit.* Surprisingly, small business creditworthiness did not vary greatly in metropolitan and rural counties and distressed and non-distressed counties.* This suggests that increasing branch presence is a relatively quick and efficient way for increasing small business lending since large differences in creditworthiness do not have to be overcome in rural and distressed counties.****
*
Another asset in Appalachia is the 100 Community Development Financial Institutions (CDFIs) and ARC sponsored revolving loan funds, making loans in hard to serve markets.* CDFIs in Appalachia place more of an emphasis on small business lending than their national counterparts.* In addition, ARC revolving loan funds have been financing higher levels of job creation per loan dollar over the years.
*
In order to close remaining credit gaps, NCRC recommends branch building and expansion in Appalachia.* State and local governments in Appalachia should consider New York State’s program which offers tax breaks and below market rate deposits in exchange for banks opening branches in economically disadvantaged areas.* In addition, Congress needs to strengthen CRA, a federal law that requires banks to meet credit needs of communities.* Congress should enhance CRA small business loan data reporting so that all banks must report the data and require that the data include the race and gender of the small business owner.* Moreover, the important role of community banks should be supported by expanding financing such as the Federal Home Loan Bank of Pittsburgh’s advances for bank small business lending.* The NCRC report includes a number of additional recommendations such as increased bank financing for the CDFIs and revolving loan funds in Appalachia.
*
Taylor said, “Our report shows the beginnings of a revitalization story in Appalachia.* Government support and encouragement of bank financing could go a long way towards economic rebuilding and job growth in the region.”
*
Entitled Access to Credit and Capital in Appalachia, the report is available via http://www.ncrc.org (http://www.ncrc.org/).*
NCRC is a national non-profit coalition of 600 member community organizations that promotes economic justice and equal access to credit, capital and financial services to traditionally underserved communities.* For more information on NCRC, visit us on line at www.ncrc.org (http://www.ncrc.org/) or call 202-628-8866.
*
*
*
Josh Silver
Vice President of Research and Policy
National Community Reinvestment Coalition
(202) 628-8866 or http://www.ncrc.org
*
*
*
[1] (#_ftnref1) See pages 23, 26, 28, 30, 33, 44, 94, and 97 of the report for regional and state breakdowns.* Also see pages 176, 178, 179, and 181 of the Appendices for additional breakdowns.
This post transferred from the cdb-l mailing list