After enjoying a successful commercial banking relationship with VisionBank for more than a decade, Central Iowa entrepreneur Christina Moffatt has joined the bank’s staff to promote PurposeBank – VisionBank’s new subsidiary aimed at providing lending services. minority and women-owned small businesses.
Women- and minority-owned businesses have been among the hardest hit by the economic turmoil caused by the pandemic, said Moffatt, who became PurposeBank’s first employee earlier this year as head of business development. . Moffatt is the founder of Creme Cupcake + Dessert in Des Moines, which she sold to Sammy Mila earlier this year, and most recently served as Director of Small Business Resources with the Greater Des Moines Partnership before joining PurposeBank.
PurposeBank’s niche in lending to disadvantaged small businesses is bolstered by a commitment to donate 10% of its profits to nonprofits focused on financial literacy and entrepreneurship. According to Moffatt and VisionBank executives, the prepayment approach will resonate with many small business owners as borrowers and depositors.
“I don’t have a background in banking, but I have an entrepreneurial background and have worked with small businesses year after year to prepare them for the lending process and then keep them strong,” said Moffatt. “I feel like my whole career has taken me here to make an impact.”
To lead the lending team, VisionBank CEO Heather Miller has recruited Jenny Leonard, a seasoned banker who has spent much of her career in commercial lending. Leonard has worked at all levels of the banking industry including an international bank, a large state bank, a regional bank and a small community bank. While each had their philanthropic efforts, none had the 10% provision that PurposeBank established.
“Like Heather, I can do loans anywhere,” Leonard said. “I can develop business books with all the amazing, well-established companies here in town. But being able to do this with all the people I’ve dealt with for over a decade here in Des Moines and knowing that 10% is going to help others “know what they don’t know” makes me super excited, ” she says.
“It’s a focused bank, and it provides an intentional banking partner to all of these well-established businesses as well as a resource to those that are often underserved. [small businesses]. And what’s more exciting than anything, these big established companies, a lot of them started out as these little guys. It was someone working in his garage, it was someone working in his basement. It was someone doing a side hustle, or they were just full of guts and no one taught them anything and they had to learn things the hard way without some resources to figure it out.
How does this donation differ from the federal Community Reinvestment Act requirements that all banks must follow?
Moffat: This [10% contributions] is on top of that – so it’s actually a whole other level that we’re removing, and we’re still going to meet our community reinvestment funds [requirements].
[The Community Reinvestment Act, enacted in 1977, requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods. Banks are evaluated using one of five evaluation methods tailored to a bank’s size or business strategy. The Federal Reserve makes banks’ performance evaluations public through an online database that can be searched using institution or exam criteria or by bank branch location.]
What will be the process for deciding on the use of the 10% of net profits?
Leonardo: These funds will be appointed by an independent advisory committee that we are establishing. It is therefore not only [the CEO] or any bank employee who picks it up. They are individuals representing a large and diverse group of businesses and nonprofits who know where those needs lie.
What is the relationship between PurposeBank and VisionBank?
Leonardo: PurposeBank is a division of VisionBank. For any bank, you can view our financial statements on the FDIC page. To hold ourselves accountable, we obviously have our own ledger within VisionBank just like any other branch or marketplace. … So it will be very transparent what that number is. We know among ourselves what our strategic goals are to get there – we can’t just break even or there’s nothing [from which] give 10%. So we know internally what numbers we need to reach, and we hope to do so within a year.
Why this device rather than a new banking charter?
Leonardo: To start a bank, you would obviously need a lot of capital and you would need to set up all your compliance and back-office operations. It is therefore more efficient and a better use of funds and resources to make it a division of an existing bank. And that’s how regulators might be comfortable with that as well, because a new bank will be given different review guidelines, as it should be, than an existing bank. We have a proven credit culture. We can use [VisionBank’s] credit team; we can use our loan operations team. We can also use our retail [lending] team, which is great for small business owners. So there are branches in the metro that can use PurposeBank.
Besides the 10% profit contributions, what else will set PurposeBank apart?
Leonardo: Other banks, in my opinion, don’t have the kind of sales advisor that Christina is.
Moffat: For me, I coach them, and I prepare them. That’s what I’ve done in the past – get their whole business plan [elements] ready. So I can actually look through their business plan for missing pieces before connecting them with Jenny. … Our goal is not just to make this loan – our goal is to grow these businesses.
Would you say you bring quite a few contractors with you?
Moffat: Without even having started, some long-time customers have intentionally moved their banking needs here because they started out as a little guy and want to be able to pay later. … From my own past experience, I remember what it was like to go through the loan process. I’ve been turned down several times for a loan, so I know what this room looks like too. But I never knew why [I was turned down]. So even if we have to deny someone, it’s making sure they understand why. They may need more collateral, they may need more capital, they may need more time, or they may need more coaching, or the plan of business is not quite correct.
How will having PurposeBank as a division affect VisionBank’s commercial lending operations?
Moffat: We still have commercial lenders on the VisionBank side, and they continue to lend. We have actually started to attract a few of them to our side to manage what we receive. … We’re going through it with some of our commercial lenders. They still have their business book [at VisionBank]. But if their client said, “I want to send [the loan application] through PurposeBank,” our VisionBank lenders still maintain that relationship. They can just do [the loan] under PurposeBank so that their customers get that 10% refund.