Sen. Farley And The Banking Department Announce New Banking Development Districts Approved In First Quarter 2006

Hugh T. Farley

April 26, 2006

State Senator Hugh T. Farley (R, C - Schenectady), Chair of New York State Senate Committee on Banks, announced the New York State Banking Department designated four new Banking Development Districts (BDDs) in the first quarter of 2006 and approved a fifth BDD on April 11th, effectively bringing banking services to five more underbanked neighborhoods in New York State.

The five new districts and corresponding applicant banks are:

* Manhattan’s Lower East Side (Banco Popular North America);

* Manhattan’s Central Harlem (Citibank);

* Orange County’s Town of Mount Hope and Village of Otisville (Walden Federal Savings and Loan);

* The Bronx’s Williamsbridge (Ridgewood Savings Bank); and

* Oneida County’s Village of Holland Patent (Adirondack Bank).

Governor George E. Pataki said, "Through these five newly created Banking Development Districts, we are able to give businesses and hard-working families access to financial services they otherwise may not have had. This program is a great way to further invest in our communities and encourage economic development. I’m proud to work with Superintendent Taylor in continuing to bring these great services to people all over New York State."

New York State Banking Superintendent Diana L. Taylor said, "In the past year the Department has increased its efforts to promote the Banking Development District program throughout the State. Rather than wait for municipalities and banks to come to us, we’ve begun identifying underbanked neighborhoods and marketing the program to banks. This Enriched BDD program has been piloted — very successfully — in the five boroughs of New York City, and we’re now working on implementing it statewide. As a direct result of the Enriched BDD program and the efforts of these five municipalities and banks, in the first three months of 2006, we’ve approved as many new Banking Development Districts as we did in all of 2005."

The BDD legislation became effective January 1, 1998. The program provides financial institutions with incentives to locate in traditionally underserved communities. While an institution may see the long-term potential of branching into an unbanked or underbanked area, it may take a number of years before the branch can attract enough deposits to become viable. The BDD program is designed to ameliorate those concerns, providing incentives that can include municipal deposits at below-market rates, property tax exemptions and Community Reinvestment Act (CRA) credit. Under the Enriched Program, when applying for BDD designation, the bank must detail the programs and amenities it will bring to the community, including services such as extended hours of operation, multilingual staff, special products and services tailored to the community, workforce development programs and financial education programs and outreach.

In June 2005, the Banking Department completed a survey (Annual Report) of 12 BDD branches. The reports showed that in the last twelve months, each BDD branch made an average of more than $6 million in loans and opened an average of 920 accounts. The vast majority are actively involved in providing financial literacy training at the BDD branch and 11 of the 12 branches introduced new services and products in the last year, including new ATMs, free application assistance for Earned Income Tax Credits, and extended hours. The Banking Department will complete a survey of fifteen BDD branches in June 2006.

"This announcement is good news for communities that have been denied sufficient banking services. I compliment Diana Taylor for her leadership on this issue, and I’m glad that the Comptroller’s Office can be helpful by placing deposits in these needy communities," New York State Comptroller Alan G. Hevesi said.

New York City Comptroller William C. Thompson, Jr., said, "By participating in the Banking Development District program, New York City has been able to invest in its most underserved communities. The City’s deposits spur economic development and provide the New Yorkers in those communities much-needed banking services such as savings and checking accounts, mortgages and small business loans."

Senator Hugh Farley said, "As the Senate sponsor of the Banking Development Districts law, I am gratified to know of the Districts’ continuing success in all parts of our State. Governor Pataki and Superintendent Taylor are effectively using this law to improve New Yorkers' access to banking services."

Assemblyman Darryl C. Towns, Chair of New York State Assembly Committee on Banks, said, "These new Banking Development Districts will continue the mission of decreasing the number of unbanked and underbanked New Yorkers."

Designated BDDs Will Provide Many Resources Across New York State

BDDs bring opportunity to neighborhoods: allowing unbanked New Yorkers to enter the financial mainstream; providing area businesses with capital; fostering job creation; and promoting community stability, revitalization, and long-term economic development. There are now 24 BDDs in New York State, and New York is the only State in the nation to have this type of program. These are the latest additions:

On January 5, 2006, the Banking Department approved Banco Popular North America’s application for an Enriched BDD in Manhattan’s Lower East Side and created the 20th BDD in New York State. This neighborhood was targeted by the Enriched BDD Working Group in early 2005. Seventy-three percent of the population of this BDD resides in low- or moderate-income census tracts, 45 percent of households are low-income, and 35 percent of residents are Hispanic. Banco Popular has a long tradition of serving low- to moderate-income and immigrant communities — with its first branch opening in the South Bronx more than 43 years ago. The bank is currently constructing the new full-service BDD branch, which will provide bilingual staff, deposit/transaction accounts, and small business and microenterprise lending to area residents. The bank also plans to provide financial education and to support efforts to increase availability of affordable housing in the area.

"We are a strong community bank and we are excited to be in this area," said Michele Imbasciani, Regional Executive, New York Metro for Banco Popular. "Our dedicated employees, our bilingual staff and wide array of products, plus our commitment to the communities we serve, will provide the residents of Manhattan’s Lower East Side with trusted advisors in banking matters. We are grateful to the New York State Banking Department for its partnership and support in bringing this branch to life."

Citibank’s Central Harlem branch, an existing but poorly performing facility, became the State’s 21st BDD branch when it was approved by the Banking Department on February 8, 2006. This neighborhood was also targeted by the Enriched BDD working group in early 2005. After great success with a BDD in the Bronx, Citibank applied for the BDD designation for a previously established but struggling branch in Central Harlem, in order for the branch to better serve the underbanked community. There is one bank branch per 14,532 residents in this neighborhood, compared with one branch per 2,631 residents for all of Manhattan. Thirty-eight percent of the BDD’s population lives below the poverty level, only five percent of the housing units are owner-occupied, and small business growth is well below levels currently being experienced by much of the rest of Harlem. With the BDD designation, the branch plans to expand financial education efforts; increase consumer accounts by 3,000 over three years, specifically targeting individuals who utilize money orders; organize biannual small business conferences; and promote and increase small business lending.

"Citibank is proud to be a part of this great community," said John F. Stewart, Managing Director, Citibank North America. "We are committed to offering all of our innovative products and services to meet the needs our customers as well as promoting important initiatives such as financial education and small business development."

The Otisville branch of Walden Federal Savings and Loan, in Orange County, was approved as the 22nd BDD branch on February 23, 2006. When another bank closed its local branch in October of 2005, Otisville and Mount Hope were without a bank branch for the first time since 1966, despite the fact that the town’s population grew by 11 percent from 1990 to 2000. Using the BDD program, Otisville Mayor Lou Maurizzo and the municipality solicited banks to locate in the area and the new branch opened in November 2005. Walden Federal hopes to combine its "small town philosophy" with the BDD designation to serve the small yet growing community, particularly with loan products that would not otherwise be available locally. Walden’s specific goals for the BDD include: increasing homeownership levels with State of New York Mortgage Agency and Rural Housing Service loans; meeting the credit needs of local small businesses and the municipal government; and strengthening local community organizations, including the Voluntary Fire Station, the Lions Club, the Historical Society, and senior citizens groups.

Stephen W. Dederick, Vice President and CEO, Walden Federal Savings and Loan, said, "It was a pleasure working with the Town of Mount Hope and Village of Otisville to form the Banking Development District to serve the communities’ need for ‘hometown banking’. The Bank is looking forward to providing quality banking services to the people and businesses of Otisville and the surrounding communities. The Banking Development District program is a prime example of how government and local businesses can work together to continue to help communities grow."

Ridgewood Savings Bank’s first branch in the Bronx was approved as the 23rd BDD on March 10, 2006. The new branch will be located in the Williamsbridge neighborhood in the northern end of the borough, which was targeted by the Enriched BDD working group in early 2005. This area’s population has grown 15 percent between 1990 and 2000, and it now has the second-highest population of the twelve Community Districts in the Bronx. But there is not a single bank branch in the BDD—only five check-cashers and a former branch storefront that has been vacant for five years. Ridgewood’s new branch will be located in the center of the BDD and plans to help the area’s 40 percent immigrant population enter the U.S. financial mainstream. The branch will also work to increase homeownership (67 percent of units are rentals) through expanded mortgage lending and to introduce financial literacy programs to the area, particularly through local schools and student savings accounts.

William C. McGarry, Chairman, President and CEO of Ridgewood Savings Bank, said, "We look forward to a presence in the Bronx and the ability to bring the essence of community-focused banking to neighborhoods that we believe would benefit from personalized, one-on-one banking relationships. Since 1921, our bank's focus has been simply to serve our customers and their communities."

The Village of Holland Patent in Oneida County was designated as the State’s 24th BDD when Adirondack Bank’s application was approved on April 11, 2006. The village has been served by a single bank branch since 1944, which closed in December 2005, as did two other banks operating branches in the surrounding area. Adirondack is now currently attempting to purchase the vacated facility in the village center and open its new BDD branch there. The BDD area is a five mile radius from the village square but the branch can potentially serve more than fifteen small local villages within a ten mile radius. The branch is situated on a main road into Adirondack State Park, and will likely be used by tourists or local second-home residents in the area. The area’s tourism and farming economy has created a middle-income population but area employment and growth is stagnant. The branch hopes to provide the community the spectrum of banking and borrowing services, including investment opportunities through its affiliate Adirondack Financial Services. It also hopes to expand small business and mortgage lending, to provide financial resources to local municipalities and non-profits, and to give educational resources and financial support to community initiatives.

Adirondack Bank CEO Gary W. Kavney said, "The BDD program that sparked our partnership with the Village of Holland Patent is one of the finest examples that I have seen of the government promoting public/private cooperation. This program exists to make banking services available in an underserved market — and it works. The Banking Development District designation will allow us to realize our plan to provide a wider variety of financial services to the residents of Holland Patent."

To receive a BDD designation, the locality, acting jointly with interested financial institutions, must demonstrate to the Banking Department a need for banking services in a given area. A local government must first vote to approve the submission of a BDD application, which is then forwarded to the Department for approval. The local government must apply in conjunction with a commercial bank, trust company or savings bank, or a state or federally chartered savings bank or savings and loan association.

The highlights of a BDD designation include:

* Banks will receive highly favorable CRA consideration for branches in BDDs;

* The State of New York or local governments may agree to earn interest on monies deposited in district branches at a rate which is at or below the bank's posted two-year Certificate of Deposit (CD) rate;

* District branches of savings banks can receive municipal deposits from the sponsoring municipality;

* Banks may receive a partial property tax exemption phased in over a 10-year period, beginning with a 50 percent exemption in the branch's first full year of operation, decreasing by five percent in the subsequent years; and

* NYS Banking Department will link a BDD branch with organizations providing financial education and facilitate contacts with community groups.

The New York State Banking Department is the regulator for all state-chartered banking institutions, virtually all of the United States offices of international banking institutions, all of the State’s mortgage brokers, mortgage bankers, check cashers and budget planners. The aggregate assets of the companies and institutions supervised by the Banking Department are over $1.3 trillion.

In addition to regulating banking institutions, the Banking Department is active in informing and educating all New Yorkers on banking matters. To contact the Banking Department, please call 1-877-BANK-NYS or visit our Website at