Profiles in Inclusion

While the events of 2020 have highlighted persistent disparities among races in wealth, homeownership and access to credit, it has also shone a spotlight on what banks have long done, often with little recognition, to close gaps and promote economic inclusion. This year, the ABA Foundation recognized two co-winners with the George Bailey Distinguished Service Award, the association’s highest individual honor. In different geographies and different banking contexts, Midwest BankCentre EVP Alex Fennoy and M&T Bank AVP Detra Miller have led initiatives to expand access to financial services in historically underserved neighborhoods and clienteles.

Alex Fennoy
Midwest BankCentre

After a long career as a commercial banker in St. Louis, more than a decade ago Alex Fennoy joined Midwest BankCentre. He helped transform the community bank into one that has won awards—including a 2019 ABA Foundation Community Commitment Award—for its responsiveness to local needs. Fennoy pioneered partnerships with local nonprofits and faith-based organizations, including co-locating a Midwest BankCentre branch in a historically Black church, and he led the development of provident small-dollar financial products focused on the life needs of low-income families.

Q How did you get started in banking?

A How I first got into to banking was through a minority program called Inroads that put African Americans and Latinos into corporate America partnerships. I worked at another company in accounting, and one of my people that worked for me at the time, her husband was a recruiter in commercial lending over at Boatmen’s Bank, and they were looking in 1990 to bring more minorities into commercial lending.

The irony is I had never thought until that point about ever being in banking, and 28 years later, I can’t see my life being anywhere else.

Q Where did you grow up and what was your perspective on banking before you entered the industry?

A It’s an interesting kind of a duality for me. I’m an only child and the son of two retired educators so middle income. But I was born and raised in East St. Louis, Illinois, which is a greatly impoverished community. For me personally, that wasn’t my experience, but I absolutely saw it around me. So even though I got a background in honoring hard work, saving and having your finances in order, most of my family and friends around me did not have that. I got to see, even before being a banker, the disparity and the unfairness that was there. I didn’t know to put certain words to it that I know now from being in this space for the last 11 years—but I saw the core of it, and I noticed it.

As a kid, some of my friends and I umpired ballgames, and they used to pay us $5 a game to umpire and $6 if you call balls and strikes. So of course, I always wanted to be calling balls and strikes, because I wanted the $6 instead of the $5! In my mind, innately, I’m saving maybe $4 or $5, and I might spend $1 or $2. But I would hear my friends immediately go to what they’re going to buy and what they’re going to spend. That’s not to make them the villain in this story; that’s to make them more real.

My family always has a joke that before I was a banker, I’ve always been a banker, just from that kind of mindset.

Q Coming from that upbringing in East St. Louis, how did you move into the community and economic development work you’re doing now?

A It was a tale of two cities. For the first 17 years, before joining Midwest BankCentre, I was strictly either a commercial lender or managed commercial teams. At that time I had to look creatively to build my network because I didn’t go to high school with someone whose family was in the third generation of owning a business. What I had to do was try to find niches that a lot of commercial lenders wouldn’t try to do because the work was harder. It wasn’t that it was necessarily riskier; it was just innately harder. In the very beginning, I saw the not-for-profit space and faith-based communities as an opportunity for me to be successful. I also saw industries that weren’t as sexy. At one point I had several smaller railroads—not like Norfolk Southern—and then I had a couple bigger ones, and then I did some barge businesses. It taught me how to be a subject-matter expert in certain industries, and then people will come to you. What levels the playing field is hard work. In the beginning, I had to get all over the place to make myself known.

Q What did you learn about the role of churches and nonprofit organizations in meeting the economic needs of distressed communities?

A I didn’t know it at the time, but it was building. With all due respect to Cass Bank, they were taking it to a certain point, but because they’re really a commercial bank, there was nothing in there, at least at the time, really getting down to the actual leadership of the church and then the congregants.

I saw them doing great work with the actual [church]entity, but then falling short of what I believe is true community and economic development, which goes deeper. That’s where the transformation happens, you know—it doesn’t happen at the entity level. The next level is the leadership of whomever you’re working with. And then the third level is then their clients or congregants, whether it’s not-for-profit or faith-based.

Q With that in mind, tell us about Midwest BankCentre’s partnership with Friendly Temple Church.

A It’s just a perfect example. That’s a 10,000-12,000-member church. In their heart is true community and economic development, in addition, obviously, to the gospel of Jesus Christ. Not only can we work with the church on their different projects in north St. Louis and into north St. Louis County—we can do that and we have been doing that—but that next transformative level is started with the 10,000 to 12,000 congregants. We have about 2,000 households at the Friendly Temple branch today, and it’s just over three years old. That’s good headway, but that’s not where I would like to be. In five years, I would like to be 50 percent or better into the church alone. That means you should have another 1,000-1,500 households that are not at Friendly Temple today. That’s when you change your community.

It’s not complicated, but it is hard. That’s one of the sayings inside of Midwest BankCentre. Everything I’m talking about is relatively simple to pull off, but it’s also hard to do. Counseling is needed in any distressed community to get people to see above what their circumstances have been—and that’s not to minimize them, not to say they’re not smart, they’re not hard working, none of that. It’s that there’s no good example of it. The total opposite is really that what’s been there has been more predatory. They’ve been taken advantage of.

Trust has to happen, and it’s trust that is sped up when you work with a partner, like a Friendly Temple or like our prior project with the city of Pagedale and another one of our great nonprofit partners, Beyond Housing.

Q What is Midwest BankCentre doing to help consumers avoid predatory products from nonbank alternatives?

A We’ve been doing that for going on 11 years, and where we are today is the best we’ve been this whole time. We have a whole suite of products that we call Life Happens, with things like a payday loan alternative. In Missouri, the average payday loan is about 400 percent. Our payday loan alternative is 28 percent. We look at it as transitional. We want people into Life Happens, then we want them to grow—rise together—into something else the bank offers.

Another one is we have is Credit Booster. One, it does exactly what the name says if you don’t add a bunch of other debt and you pay your other things. Historically, it moves someone’s credit score up 45 to 50 points in six months’ time, and it’s an affordable way to do it. It’s a $150 loan. And it becomes a little bit of savings, because we don’t give the individual the money up front—we put it in a $150 CD. It doesn’t sound like a lot of money, but if you look at someone who’s low-to-moderate income, it’s the muscle of saving that were trying to help incorporate.

The last one I’ll highlight is an affordable home improvement loan when the home is in an LMI census tract. The exciting thing about that product is we’ve held that loan at 3.99 percent. A comparable market rate for that is probably 15-16 percent. It has super-relaxed underwriting; you can get into that loan with a credit score is low as 580. The success rate with that product—and it’s going on 10 years—is about 93 percent.

Q We’ve talked about the Friendly Temple branch and you’ve mentioned the Pagedale branch. How do you quantify the results of these investments in underserved communities?

A Based on a study in cooperation with Washington University in St. Louis, our economic impact from those two branches combined is nearly $20 million with the number of clients and customers that they looked at. Pagedale is approaching $40 million loans and deposits, going on eight years old, and it reached profitability in about two and a half years. A typical branch takes about five years. Friendly Temple is approaching $50 million today, and it reached profitability in slightly over two years. In two highly underserved, predominantly African-American communities, you’re at $90 million in loans and deposits.

We think it’s hugely successful and can be replicated with the right partners and in the right situation. Our majority shareholder, our board absolutely believe in it. Our chairman and CEO, Orvin Kimbrough, believes in it, and the rest of us who are honored to be his team one believe in it. We’re driving it into the bank—this is the heart of who we are as a financial institution.

We’ve developed products and services that match what we’re trying to accomplish. We’ve moved to credit policies that match what we’re trying to accomplish. Anyone who has predictable cash flow, who has the collateral, who has the capacity should be able to get a yes to a loan.

As a financial industry, that hasn’t always been the reality. We want that to be the reality for everyone who touches Midwest BankCentre.

• • •

Detra Miller
M&T Bank

For many small businesses, whose owners spend on consumer credit cards and put up personal assets as collateral, the distinction between retail and business banking is blurry. Detra Miller, a veteran of M&T Bank’s retail side, noticed this when working with female and non-white entrepreneurs. She pitched M&T Bank on creating a team focused on outreach to minority-owned and women-owned businesses in the Baltimore-Washington area, building bridges to these entrepreneurs and helping them understand banking and access credit. At a moment when the national focus is on financial inclusion, Miller’s work has resonated with its target audience.

Q How did you first get involved in the banking industry?

A I majored in finance and worked for Morgan Stanley right out of school as an analyst, and really enjoyed learning about the financial industry. But for me, I really wanted to have the opportunity to work on a more grassroots level, to help individuals manage money and have a better understanding of money. There was a management development and training program through Provident Bank, which was acquired by M&T in 2009, shortly after I joined the bank.

I had the opportunity to work in the retail bank for a few years after I graduated from that program, managing four branches in the Baltimore city area, and then had an opportunity in 2016 to manage regional branches in northeastern Maryland. In those roles I really had an opportunity to work with everyday people, helping them manage their financial goals and realize their financial dreams, and that really brought a lot of joy.

This happens at a lot of banks, but here at M&T we are really dedicated to ensuring that we not only had business bankers on the street, working with entrepreneurs and helping them with their dreams, but we also ensure that our branch managers are like many business bankers—managing the operations and the retail sales branches, but also developing those strong relationships with a lot of the smaller businesses. We have a great partnership between our business banking division and our retail banking division.

That’s just where I really developed a love and a passion for working with entrepreneurs, as a branch manager. I had an opportunity to work with a lot of small businesses. Talking to them, I realized my passion for helping people manage money and use money to fund their dreams and live great lives. By helping one small business, I can help anywhere from one family to potentially 100 or more families, just by working with that one small business. For me, it’s all about impact. And that’s where my passion really grew—just learning the great stories of how they took an idea, ran with it and were able to make a great living for not just a family, but also create jobs for other families in that community.

In 2018, after working in the retail bank for a little over 10 years there was an opportunity that came about to lead a team of business bankers. I really enjoyed working with my retail team, but this was a great opportunity for me to jump into business banking and be the lead a team that business bankers. That’s where the love came from for working specifically with small minority-women-owned businesses, helping people of color and women in business overcome the obstacles that many of them face when it comes to being successful.

Q Can you talk a little bit about the challenges that women-owned and minority-owned businesses face in the markets that you work in? How do the strategies that you implemented at M&T help deliver the right kinds of banking support to those businesses?

A When this all started, I was just trying to get my feet wet. I was never a business banking relationship manager. I really wanted to go out, develop my own network and lead by example. If I’m asking you to go out and build relationships and find opportunities to help small business owners, I needed to be doing the same thing. I would find myself going to different events and trying to build a network that way, and I don’t know if it’s something that just happened naturally, but I gravitated more toward events that catered to women or people of color. A lot of the same topics came up: they were having a hard time getting access to capital and were bootstrapping, scraping together money from personal credit cards.

I think eyes have been opened wide to the huge wealth gap that lies between people of color and white individuals. They would say, “I don’t know how to go about accessing capital. I’m using my own money, and then I don’t necessarily have the money. So I’m trying to figure out how to use credit cards or I’m just floating money until I receive payment from my customers.” But probably the biggest issue that we were hearing a lot about is just, “How do I even start?” Many times, people will rely on friends’ and family’s financial advice versus coming to a bank and just having a conversation with a banker and talk about how to gain access to capital traditionally without having to look at the really high-interest-rate loans that can eat away at your profits.

We also learned this: in almost every project that the government puts forth, there’s a minority component. And while that can be another revenue stream, diversifying the way that money comes into your business, it can be a very confusing process. The certification process is confusing; it may be awhile before you get paid. I was trying to learn more about how we can help people become certified. One can do it alone, but it can be very confusing.

Then we would also find in terms of mentorship, people wanted to know, “How, how do I find others like me who have been in my industry to help mentor me, to help me avoid the roadblocks that they that they had to go through?” When you look at the data, many people of color in business and many women are typically the first generation in a business. They may not have all the wherewithal in terms of the financial piece of running the business—they know the craft and they know the product that they want to sell, but in terms of how to manage the business, how to work on the operation, that was something that a lot of people needed help with. So that’s what we were focusing on.

As the plan was forming, we thought, “We should figure out a way to become some sort of ecosystem to help these small businesses with these different areas of opportunity. And if we can do that, it’ll have a greater impact not just on this small business but on others around them and ultimately a positive impact on our economy.”

Q What results have you seen from the program to date?

A We’ve been doing this a little bit over a year officially, and our portfolio has grown to almost 70 clients. Out of those 70 we have around 60 percent accessing credit. Many of these individuals weren’t able to go anywhere else to get credit. A lot of times it didn’t even come down to a poor credit score—it just came down to some details missing [on an application].

That’s where it was really important for us to build that trust due to the history of our country. Banks haven’t necessarily earned the right to have that trust when it comes to people of color and specifically African-American individuals in our country. We haven’t always been kind to individuals. With the focus on racial injustice and social injustice, we’re seeing now that there were some systems that were in place to deny some people access. So many times, it was all about building the trust, getting people to be vulnerable, open up and better be able to tell the story.

We’re not underwriters, but my team and I do have a great relationship with our underwriting teams that we can better understand credit and our processes, and by building those relationships, we can better advocate for our clients and prospective clients—and be able to run through opportunities to say, “Okay, this may have been a hurdle, but this is how we’re going to overcome this hurdle. This is what the business owners plan to put in place. These are the support systems they have around them.” We’ve had a really high acceptance rate; while only about 60 percent of our clients are accepting credit through us, that’s not because they’ve been denied. Some of them just didn’t want or weren’t ready to access capital. For the applications that we’ve put through, about 80 percent of those clients have gotten credit that have applied with us.

I never like to use the term “not bankable,” because everyone is bankable—you just may not be able to access credit from a traditional bank. Part of that ecosystem that we’ve developed is that we work with a lot of the local community development financial institutions in our community as well. For some people, we’ve gone and talked to our partners in the market, our peers or friends in the market and said “Hey, I have this opportunity. What do you think?” And many times, they’re able to figure out a solution for them. That’s a little bit more flexible than what traditional banking.

What’s also helped us is that we’re a preferred Small Business Administration lender, when we’re having issues with someone new to business, maybe buying a business from someone, maybe starting a new piece of the business. We’re able to rely on the SBA to really help us when we have a lot of collateral or cash flow isn’t proven.

There’s a lot of energy around the bank right now. And now that more people know about what my team is doing, everyone wants to be a part of it. You don’t have to be a part of the team—how can you influence from where you are, developing relationships with clients or centers of influence within your communities? Are you reflective of the marketplaces you’re in? People just want to feel like they’re part of something. They want to feel appreciated and that you truly care about them, their culture and who they are as a person or business. It’s important for all of us to be more inclusive and challenge ourselves to do a better job of being the best we can be for our community.

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About Author

Evan Sparks

Evan Sparks is editor-in-chief of the ABA Banking Journal and senior vice president for member communications at the American Bankers Association.