Leona Gleason

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• Leona Gleason
• FBOP CORPORATION

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for the Underserved and Working Poor
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COMMUNITY SAVINGS CENTER
Creation of Community Savings Center Doors
Opened January 9, 2006
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OVERVIEW OF COMMUNITY SERVICE CENTER CONCEPT
Integrated offer combining 3 essential elements
serving people in the community
Job training/ placement
Credit
Checking
Financial Products
Computer skills
Referral Services
Savings
Benefits eligibility
Basic transactions
Tax/EITC
Coun-selling
Additional modules (e.g., home ownership)
Intro to financial education credit repair
enabling progression up the credit path
with dignity and sustainability
Financial Education
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PARK NATIONAL BANK

• FBOP Corporation is a well-capitalized 15.5
  billion multi-bank holding company based in Oak
  Park, Illinois. Park National Bank (PNB) has 4.0
  billion in assets and is a well-performing,
  financially strong community bank with 30
  branches in Chicago. While the bank has a
  growing presence in the Chicagoland market and
  all the expertise of the largest area banks, it
  retains the atmosphere and exceptional service of
  a community bank. Because of our commitment to
  the communities in which we serve, we have been a
  partner with Bethel New Life for over 20 years in
  a number of community endeavors including Smart
  Savers 1.

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BETHEL NEW LIFE

• Bethel New Life is a 26 year old faith based
  community development corporation focused on the
  west side Chicago community. Bethel brought in
  over 110 million into a credit starved community
  with housing, economic development, and social
  services initiatives empowering individuals,
  strengthening and supporting families and
  building the community. Currently they operate
  a 13.5 million budget with 348 employees serving
  12,000 families.
  
  
• 
  
  
  In 1998 Bethel recognized a need to
  offer financial education and began an Individual
  Savings Account (IDA) Program, partnering with
  Good City and used Faith and Finances curriculum.
  Park National Bank participated in matching
  funds from a small government grant for this
  initial program which has come to be known as
  Smart Savers I. The Bank pledged 6,000 in
  support of this program. Additionally the bank
  opened free accounts for participants. Over 200
  individuals completed a 12 week course and opened
  new accounts from the beginning of the program
  until the Spring 2005.
  
• 
  
  
  Because of this initial program Bethel
  learned much about the community and the need to
  continue their efforts.

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Bethel New Life Smart Savers Graduation
42 graduated (Cycle III) 38 new savings accounts
established (Note, three cycles a
year) Bethel New Life, Inc. 4950 W. Thomas,
Chicago, IL 60651 [phone]
www.bethelnewlife.org
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SMART SAVERS APRIL, 2005 34 graduates Bethel New
Life
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THRIVENT FINANCIAL FOR LUTHERANS

• Thrivent exists to help its members achieve
  financial security and give back to their
  congregations, institutions and the broader
  community. The organization and its affiliates
  offer a broad range of financial products and
  services including life insurance, annuities,
  mutual funds, disability income insurance, and
  more.
• As a not-for-profit membership organization,
  Thrivent Financial also sponsors national
  outreach programs and activities that enable its
  members to demonstrate their care for others
  through support of congregations, schools,
  charitable organizations and needy individuals.
• For more than 100 years, Thrivent Financial has
  been guided by its members shared Lutheran
  traditions and Christian values. Today, these
  same traditions and values form the foundation of
  an organization dedicated to improving the
  quality of life of those it serves.

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MODEL FOR COLLABORATION What would each Partner
bring to the table?

• PARK NATIONAL
• Provide suite of financial products/services for
  low moderate income segment
• Provide funds, expertise and staff resources to
  start up and build the Center
• Deliver banking on-site at storefront space at
  Bethels new community center
• Facilitate referrals from banks traditional
  branches
• Ensure legal compliance and manages risk
• Provide bank staff to assist in financial
  training as needed
• Experience in tracking financial product metrics

• THRIVENT
• Offer best practices for venture based on field
  research from McKinsey Partners
• Culminate in a sustainable and replicable
  servicing model
• Assist in development of operating funds,
  including 1,000,000 in matching funds for the
  IDA program
• Thrivent branded financial literacy courses and
  training expertise to develop financial training
  programs
• Select and monitor performance metrics with
  partners

• BETHEL
• Well Known and effective social service agency in
  West Garfield
• Experience with getting grants (1,000,000 grant
  for the IDA accounts)
• Would offer financial education to customers
• Referral source for determination of social
  service benefits, job training and placement,
  candidacy for Habitat for Humanity and computer
  skills
• Would manage Community Advisory Board

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OVERVIEW OF COMMUNITY SERVICE CENTER GOVERNANCE
STRUCTURE
Core Elements
Governance and Oversight
Thrivent (Program manager and other
relevant staff)
Collaboration Committee

• 2 representatives from Thrivent, Bethel and Park
  National Bank
• (6 members total)
• Largely advisory, but does have decision-making
  authority on a few key items (e.g., build out,
  director, annual plan and budget)
• Additional roles include
• Reviewing performance against metrics
• Advising in innovative offerings and codifying
  learnings
• Supporting dispute resolution, although formal
  operational decision making rests in CSCs hands

Community Advisory Board
Bethel (Including CSC director and staff)

• Local leaders, influencers
• Act as community voice
• Assist with outreach, awareness and contact
  building

Park National Bank (Bank
Mgmt and staff)
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LEVEL SETTING ON CSC GOALS
Banking the Unbanked
To help individuals and families move to the
economic mainstream through sustainable asset
building, by

1. Enhancing knowledgeable financial behavior
   through financial literacy
2. Providing access to affordable financial products
   that enable asset accumulation
3. Ensuring CSC participants have access to social
   services that support financial well-being
4. Delivering these services in the most efficient
   and effective manner possible

Thrivent
Bethel
Park National Bank

• Societal impact Helping users move to the
  economic and financial mainstream
• Cost Services provided while maintaining
  effective cost/stewardship
• Learning Learning from the experience (to
  successfully replicate later)
• Risk management Accomplish CSC goals while
  managing potential risk/liability

• Enable West Garfield/Austin residents to build
  assets through savings and home ownership and
  rise out of poverty
• Improve economic viability and vitality of the
  community
• Enhance the holistic effectiveness of Bethel New
  Life in strengthening families and building
  community
• Create new ways to engage the community by
  focusing on residents financial health

• Transition customers over time into PNBs
  financial mainstream reducing usage of currency
  exchanges or pay day lenders
• Learn how to create a sustainable product set for
  the LMI segment, including low cost, basic
  alternatives such as
• Check cashing
• Payday loan alternatives
• Strengthen focus on community banking
• Learn to serve this segment in a safe and secure
  banking environment
• Aim to break even

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TIMELINE FOR CHICAGO CSC PILOT
April
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Q1 2006
Finalize governance / legal
Governance functioning, programs designed
Programs ready for release
Social services financial literacy
Partner identified, preliminary agreement
Finalize governance/ legal
Products identified, designed and developed
Financial services
D O O R S O P E N
IDA grant application, other sources contacted
Secure third party funding
IDA grant application approved
Funding
Replicable playbook for use in other CSCs
Develop cohesive CSC offer, delivery model,
playbook and performance metrics - for Chicago
pilot
Operating model/ offer/metrics
Develop CSC look and feel/blueprint. Engage
contractor
Remodel and finalize CSC space
Site selected and contracted
Remodeling
Develop staffing model and hire CSC Director
Staff CSC
Staffing
Marketing/ communications/ market research
Initial market research/naming/ branding
Complete research. Develop marketing
strategy/creative
Produce marketing and communications material
Release
Launch local awareness momentum building efforts
with community leaders, politicians, large
congregations. Target and recruit participants
Local awareness building
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OVERALL INSIGHTS MARKET RESEARCH SESSIONS
Overall Insights
1
Community residents lack trusted and reliable
sources of financial advice the CSC should
position itself to fill this gap
2
Financial products are important but arent
enough advice and education will ultimately
drive behavioral changes
3
Mainstream language, products, and delivery wont
work. We must tailor our language and image to
the community, and keep everything simple

• We must reach the young and old not just the
  middle-aged
• Touch youth before bad habits are formed
• Seniors are financially vulnerable in the current
  climate

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Asset ownership is a recognized goal, but is
getting harder to realize. Credit repair will
often be the first step to reaching longer-term
asset goals
Products Services
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Check cashing and bill pay, offered at a discount
to the market, will be a strong draw, as suspected
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People are open to one-on-one counseling, but
will likely have a show me first attitude to
courses
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Small business offering could eventually help
workforce development issues
Marketing Outreach
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We will need a mix of marketing and outreach
methods with special consideration for the youth
segment
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APPROACH TO MARKET RESEARCH EFFORT PERFORMED BY
MCKINSEY CONSULTING
Objectives

• Additional sessions, e.g.,
• Community beat meetings
• Person on the street interviews

• Community leader interviews
• 12 local leaders and influencers

• Small group sessions
• 25-30 potential users

• Strengthen teams insights on overall community
  needs
• Understand community usage and attitudes towards
  financial services institutions and specific
  products and services
• Spark creative ideas for building the ideal
  center
• Test current thinking on concept, offering,
  look/feel and name
• Understand how to best reach the community

• Gather early insights on community and high-level
  reactions to concept
• Gauge reactions to potential product and service
  offering
• Identify participants who are willing to stay in
  touch (e.g., as advisors) during the development
  of the Community Service Center (CSC)

• Test offering with specific segments
• Seniors
• Youth
• Small business owners
• Gather additional reactions to specific portions
  of offerings
• Generate early awareness among potential users

• Test refined concept, and specific product and
  service offering
• Understand what will truly make residents use and
  trust the CSC
• Generate early awareness among potential users

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GROUP FEEDBACK ON SPECIFIC PRODUCTS AND SERVICES
Participant feedback
Product
Comments
Very important

• Check cashing

• Will need to be cheaper than currency exchanges
  to act as draw fee structure should also be kept
  simple

• Bill pay specifically utilities, phone, cable,
  and cell phone

• Will need to have little or no service fee to act
  as a draw may phase in cell phone bill payment
  over time

• ATM with deposit feature

• Should be fee-free and as physically accessible
  as possible (i.e., 24 hours or beyond CSC hours
  of operation)

• Small business offerings

• Will need to assess whether any financial
  products beyond Small Business Administration-back
  ed micro loans are required
• May want to offer business-specific counseling,
  particularly at startup potentially in
  conjunction with Chamber of Commerce or local
  micro-enterprise organizations

Important

• Payday loan alternatives

• May need incentives beyond pricing to transition
  people away from predatory lenders need to stay
  far away from payday language to avoid negative
  connotations

• Mortgages

• Need to tie to education to ensure readiness to
  take on prospect of home ownership

• Checking/savings accounts

• Need to be accessible to people with poor credit
  histories

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GROUP FEEDBACK ON SPECIFIC PROJECTS AND
SERVICES (Continued)
Participant feedback
Product
Comments
Other potential innovations

• Special accounts for youth (e.g., lower minimum
  balance)

• Could be linked to in-school programs or for
  children who attend education workshops with
  their parents

• Interviewees repeatedly stressed the importance
  of credit repair and debt consolidation products
  and support this will be crucial to our offering

• Credit repair loans to help payoff credit card
  debt, etc.

• Lack of employment opportunities frequently cited
  as a concern can we do anything creative to
  support local business?

• Small business products with incentives linked to
  investing in the community

Less important

• Money orders (inexpensive elsewhere already)
• Auto loans (too confusing, prices would need to
  be highly competitive)
• Wire transfers/Western Union (not used often)

• Products are nice to have but shouldnt be
  priority offerings

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FINANCIAL PRODUCTS WITH SUPPORTING EDUCATION MOVE
INDIVIDUALS ALONG THE CREDIT PATH
Behavioural Segment
Likely product/service offering
Needs
Transactors

• Access to liquidity
• Understanding of personal finances
• Need to cash checks, obtain money orders, and
  wire money to others

• Check cashing
• Money orders
• Bill pay
• Financial counselling
• Access to Checking class offering
• EITC tax preparation
• Flex Loan

Savers

• Build initial asset accumulation
• Enter the financial mainstream

• Basic checking and savings accounts
• IDA program
• EITC tax preparation

Responsible borrowers

• Learn to use credit responsibly
• Improve/build credit score

• Basic checking and savings accounts
• More advanced financial literacy classes
• Micro-loans and short term credit (e.g.,
  overdraft)

Owners

• Accelerated asset accumulation promoting
  financial stability/security
• Need mortgage loans or small business loans

• Basic checking and savings accounts
• Consumer credit
• SBA micro-loans
• Mortgage
• Auto loan
• Transition to mainstream banking

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CSC PRODUCT OFFERING
Financial Products
Referral Services
Financial Education

• Check Cashing
• Money Orders (reduced fee)
• Bill payment through
• Western Union
• New Start Checking
• Statement Savings Account
• IDA Accounts
• Credit Products
• - Mortgage
• - Auto Finance
• - Small Business Loans
• Flex Loan (Emergency
• Loan)
• ATM Availability
• All Other Traditional Banking
• Products

• Smart Savers 1
• Smart Savers 2
• Financial Counselling
• Credit Repair Workshop
• Asset-Specific Modules
• - Investment
• - Retirement
• - College Savings
• - Small Business
• Access to Checking
• Home Ownership

• Job Training and Placement
• Computer Training
• Tax Preparation (EITC)
• Benefits Availability
• Home Buyers Programs
• Other Bethel Counseling
• Services

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PARK NATIONAL BANK CURRENT PRODUCT OFFERING AT CSC

• Check Cashing Services We have brought
  affordable check cashing services to the
• community! Customers can cash their payroll
  and/or government check, conveniently and
  more affordably.
• Money Orders Sold to Community Savings
  Center customers at
• a reduced rate. Goal is to keep customers
  away from
• currency exchanges and have them move into
  checking
• accounts.
• Bill Payment Processing gas, electric,
  cable, and several phone carriers.
• New Start Checking Available to
  individuals that have completed the Financial
• Education Course offered by Bethel. The
  account has no
• monthly charges and the owner is entitled to
  free on-line
• banking including bill pay, an ATM card,
  free checks and
• encouraged to sign up for direct deposit.
  Individuals whose
• accounts were closed out at other banks and
  are on check
• systems can now open a checking account upon
  completion
• of the financial education classes.

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PARK NATIONAL BANK PRODUCT OFFERING AT CSC
(continued)

• Individual Development Account Traditional
  IDA programs are implemented by community-
• (IDA) based organizations in partnership
  with a financial institution that holds the
  deposits, and funded by public and private
  sources. The Community Savings Center
  follows this ideal with Bethel facilitating
  the program, Park National Bank maintaining
  the accounts and Thrivent offering an
  additional match to enhance the program.
  IDAs make it easier for low income
• families to build the financial assets they
  need to achieve the
• American Dream.
• Individuals participate in
  IDA programs to save for 3 specific needs
• - First time Home Purchase
• - Start of up a Small Business
• - Educational Purposes
• Individuals in the program open a Park
  National Bank IDA Account saving up to 2,000
  over 3 years with a match of 2,000 from the
  Bethel Grant and 2,000 from Thrivent totaling
  6,000 to be used towards one of the above
  listed needs.

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IDAs DO WORK

• Low-income families can save.
• Financial Literacy creates savers and savvy
  consumers.
• Assets change lives.
• Communities benefit from homeownership,
  entrepreneurship, and educational attainment.
• Economy of scale make IDAs cost effective.

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PARK NATIONAL BANK PRODUCT OFFERING AT CSC
(continued)

• Flex Loan Park Nationals FLEX Loan was
  developed to offer an alternatives to
  traditional Pay Day Loans and reduce credit
  card debt. It offers several benefits to
  applicants
• - Great Way to Build and Repair Credit
• - Competitive Fixed Interest Rate at 9.0
• - Loans Available Up To 1,000
• - Flexible Repayment Schedule Over 6 Months
• - Funds Immediately Deposited Into Checking
  Accounts
• - Completion of a Financial Course May Be
  Required
• - Quick Decision-Making
• - Emergency Loans are Available for Car
  Repair, etc.
• ATM Availability Availability of ATM
  services to the community and CSC customers
  without fees attached.

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GRASS-ROOTS MARKETING AT THE COMMUNITY LEVEL IS
THE MOST IMPORTANT MARKETING TOOL

• Word-of-mouth from users
• Churches
• Schools, such as report-card day when parents are
  all there
• Sponsoring neighborhood events or sports teams
• Distributing information outside of grocery
  stores, in malls, outside currently exchanges, or
  even at other branches of FBOP
• Background on Thrivent Financial and its
  Fraternal strategy
• Other, more traditional media sources were also
  mentioned, e.g.
• - Local papers
• - Radio (e.g., GCI 1390)
• - Flyers
• Incentives for referrals (e.g., discounts) or
  first-time visits are also emphasized as keys to
  trial and loyalty

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CURRENT CSC SCORECARD METRICS
Activity metrics
Outcomes
Affordable financial products
Improved financial literacy

• Total number of customers helped
• Financial literacy (course graduates)
• Financial products (continuous holders of
  positive balance checking, savings, and IDA
  accounts, e.g., for over 1 year)
• Impact of social services with a direct link to
  financial well-being (TBD)
• Total dollars saved within CSC
• Total transaction fees saved (volume x our
  discount to competitors)
• Migration along the credit path
• Number of responsible checking account users
• Growth in asset-building financial products
  (metric is an amalgamation of savings accounts,
  IDA accounts, education loans etc.)
• Number of life-affirming investments made, e.g.,
• Home purchase
• Higher education
• Small business capitalization
• Credit repair
• Home repair
• Car purchase
• Improvement in credit scores

• Number of transactions by product, (e.g., check
  cashing, bill pay)
• Number of asset-building financial products,
  (e.g., savings accounts, education loans)
• Average balance
• Savings accounts
• Checking accounts
• IDA accounts
• Delinquency (e.g., overdrafts)
• Average number of financial products per household

• Number of classes held (by class)
• Number of participants (by class)
• Financial counseling usage
• Number of users
• Number of hours
• Average number of visits per client

Social services
Operational effectiveness

• Financial performance
• Deposit size
• Administrative cost ratio
• Cost/client served in key service areas
• IDA
• Financial counseling
• Marketing and community outreach
• Number of referrals from key sources (e.g., other
  SSAs)
• Number of positive media mentions
• Number of outreach events
• Intake effectiveness ratios
• Active outreaches Active clients
• Inquiries Active clients

• Number of organizations in referral network
• Number of successful social service referrals
  made by CSC by type (e.g., job training, computer
  skills, EITC prep) both internal and external
• High-level demographic profile of CSC users (Are
  we reaching/serving the people we are
  targeting?)
• e.g., employment status, assets

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Where are We Today?
Deposit Summary Deposit Summary
May-08


Deposits of Accts YTD of Change Balances YTD of Change Losses - Program to Date
Personal and Business Accounts 470 62.00 2,493,889 72.00 10,617


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Where are We Today?
FlexLoans Summary FlexLoans Summary
May-08


Branch PAST DUE RANGE Notes Orig'l Bal Bank Ledger Bal Past Due/CO Amt Recovered Amount (C/O)
WEST GARFIELD CURRENT 554 349,034 286,509    
WEST GARFIELD 1-29 Days Past Due 188 113,937 96,894 5,625.44  
WEST GARFIELD 30-59 Days Past Due 80 46,055 39,537 7,628.91  
WEST GARFIELD 60-89 Days Past Due 64 34,256 30,278 8,077.82  
WEST GARFIELD 90-119 Days Past Due 11 8,000 7,508 3,600.46  
Total Open FlexLoans   897 551,282 460,727    
Total Past Due FlexLoans   343 202,248 174,217 24,933  
Total Charged-Off FlexLoans   137     60,715 7,420


Past Due of Total Open FlexLoans () 38.24
Past Due of Total Open FlexLoans () 5.41
Charged Off of Total Open FlexLoans () 15.27
Charged Off of Total Open FlexLoans () 13.18
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Where are We Today?

• What Worked
• Partnership with Bethel and Thrivent
• Initial market research provided solid product
  offering guidelines
• Strategic planning and ongoing evaluation of
  program Collaboration Community
• Minimal Over The Counter losses (primarily Flex
  Loan Losses)
• Positive community reaction and participation
• Customized education and training for CSC bank
  staff
• Ongoing community outreach through grass roots,
  word of mouth, etc

• What Didnt Work
• Wrong location housed in same bldg as Bethel
• Non-profit management took over 2 years to push
  towards replacement
• Bank staff turned over to find best fit for
  growth within CSC
• Be prepared to take loan losses
• Non-profit metrics difficult to obtain
• Monitoring financial education classes to actual
  new account growth
• Advisory Board took too long to establish
• Ran out of Grant Money
• Branch Profitability 5 years

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Where are We going?

• Continue to Bank Unbanked
• More IDA Grant Funds
• New Location
• Change FLEX Loan Product Less Losses
• Create Branch Profitability

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Sample Marketing Materials
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QUESTIONS AND ANSWERS