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EARMARKED DEPOSITS

Mutual sees success matching local deposits to local development loans By Bill Streeter, editor & publisher

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Four-part program Some years ago, Amorello helped create a similar program at another Worcester bank. After that bank was acquired, she says, the program lay dormant for many years. Amorello joined UniBank in 2009. With homeownership in Worcester on the decline again, she realized it was a good time to reintroduce such a program—this time at UniBank. Invest Worcester has four components: 1. A premium-rate statement savings account available to individuals, businesses, nonprofits, and Worcester municipalities. As described on the bank’s website: “Money deposited into these accounts will be leveraged by UniBank to provide loans in Worcester to advance homeownership, community 32

BANKING EXCHANGE

March 2018

development, and small business development.” (The rate is 1.00% for balances of $10 to $250,000, and 1.00% to 0.84% for balances over $250,000.) 2. A $750 credit toward mortgage closing costs. This is available to anyone purchasing or refinancing a 1-4 family residence in Worcester. 3. Low-rate, small business development loans or lines of credit. The APR is 1.722% for 12 months on loans of $1 million or less. Again, the rate is available only for businesses located in Worcester. 4. A $2,500 credit toward closing costs for Community Reinvestment Acteligible community development loans. Amorello and her team developed a multimedia marketing plan to launch the program, including radio, TV, print, billboards, and social media. As of year-end 2017, Invest Worcester had close to $9 million in outstanding loans and $1.7 million in deposits, notes Matthew Wally, vice-president of government and community affairs. He says deposits are a mix of small-dollar deposits from individuals and larger amounts from local businesses and nonprofits. As of early February, there were almost 80 deposit accounts, of which 50 are new to the bank. Wally notes “earmarked deposits” in

Invest Worcester accounts are not literally segregated, of course, but the aggregate amount is strictly used locally. “We tell people that this money is staying on Main Street—not going to Wall Street,” he says. “It’s being kept in Worcester.” The rate on the small business development loans is very popular, he adds.

CRA impact another plus The Invest Worcester prog ra m ha s brought CRA benefits as well, according to Wally. “It aligns with the CRA mission very nicely,” he points out. Worcester is a key component of the bank’s CR A assessment area. While small business and mortgage lending under the program both help with CRA, the community development loans “are the gold standard for CRA lending,” says Wally. These loans, with the sizeable closing credit, have attracted interest, he says, from organizations promoting affordable housing, rehabilitating abandoned properties, and otherwise serving a low-to-moderate income clientele. Amorello notes that the bank is considering setting up a similar program in Milford, Mass. “Any large, densely populated area would benefit from something like” Invest Worcester, she says.

Shutterstock/ Watchara Ritjan

ost community banks fund their loans locally as much as possible. It’s part of the fabric of the industry. But creating an account specifically to fund community and economic development loans and to boost homeownership in a given municipality is a bit different. Different, and quite successful, as Ma ssa chuset t s-ba sed UniBa n k ha s found over the last 18 months. The 148-year-old mutual rolled out its Invest Worcester account in late 2016. The bank refers to the account as “socially responsible banking.” UniBank has 14 branches in three counties in central Massachusetts. Worcester, population 180,000, is the largest market for the $1.6 billion-assets bank, formally known as UniBank for Savings. As the second-largest city in New England, Worcester faces problems common to many older industrial cities like declining homeownership and sluggish economic growth, says Janet Amorello, senior vicepresident of marketing for the bank. Although long active in the Worcester community—including as a source of grant money for local nonprofits—the bank has come up with a way to engage the customer base in helping to boost the Worcester economy and homeownership.

Banking Exchange March 2018  
Banking Exchange March 2018