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Immigrant Populations, Rural Poor and The FDIC Unbanked Initiative 11:15 a.m. to 12:15 p.m.

NCIF Annual Development Banking Conference. November 13 – 14, 2006 Chicago, Illinois. Immigrant Populations, Rural Poor and The FDIC Unbanked Initiative 11:15 a.m. to 12:15 p.m. Panelists: Michael Frias, National Coordinator, FDIC Matthew Brophy, Regional Manager, Second Federal

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Immigrant Populations, Rural Poor and The FDIC Unbanked Initiative 11:15 a.m. to 12:15 p.m.

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  1. NCIF Annual Development Banking Conference November 13 – 14, 2006 Chicago, Illinois Immigrant Populations, Rural Poor and The FDIC Unbanked Initiative 11:15 a.m. to 12:15 p.m. Panelists:Michael Frias, National Coordinator, FDIC Matthew Brophy, Regional Manager, Second Federal Al Lau, CEO, First American International Bank Phil Baldwin, CEO, Southern Bancorp Alice Greenwald, Director of Capitalization, NFCDCU National Community Investment Fund

  2. Serving the Mexican Immigrants Community Banking Matthew Brophy Regional Manger November 14, 2006

  3. Second Federal’s History 1882 First organized under the name of Columbia S & L. Serving the European Immigrants

  4. Locations in Illinois Chicago Aurora Cicero Fox Lake Little Village, Chicago

  5. Mission & Values To provide innovative banking products and services to our communities while supporting their community development, housing, and human needs.

  6. Core Market Retail Deposit and Mortgage Programs Mexican Immigrants. Customer: Good, Loyal, Hard working Pay on time Appreciate services Profitable Opportunity to give back to community

  7. Neighborhood Community Centered Define Needs of Immigrants Develop Products and strategies to meet their needs.

  8. Matricula Mexican ID Card Mexico and United States Matricula-Nothing to Fear Opportunity to Open Wide the Doors Security Features

  9. ITINs Accept or Not To Accept Not the Question. Treasury made the decision. ITIN- an answer to a growing problem

  10. Little Village: Prototype Market The population living in Little Village is young, vibrant, and active. Slightly more than three-quarters of the people living in Little Village speak Spanish primarily at home. The average household size is 4.1 people, much larger than the 2.6 City average. Half of all Chicago residents lived in the same home 5 years previously, compared to nearly 55% of Little Village residents.

  11. Mexican Immigrants Unbanked Threat – Totally Different Solution-Opportunities for growth.

  12. 1890’s First Mexicans 1960’s Mexican Immigrants Changing Neighborhood All Financial Institutions Move Out except Second Federal Threat or Opportunity ?

  13. Voices of the Community Problem: Cost of Wire Transfers to Mexico Solution: Issued Dual ATM cards 2000 Problem; Unbanked Immigrants Solution: National ID, ITIN Problem: Housing and Accumulating Capital Solution: ITIN Mortgages with/out PMI

  14. Chicago Market • 2.9 million people • 26% Latino – 750,000 • 18% Mexican Ancestry – 530,000

  15. But the Chicago banking industry appears to be more aggressively pursuing the Mexican-American market • Chicago also appears to have a more active and wider-spread community banking presence

  16. How Does Chicago Compare to Other “Top 10” Cities • 2nd highest count of total banks • The highest count of banks that accept Matricula cards • Greatest ratio of accepting banks per 10,000 Mexican ancestry population

  17. ITIN Mortgages ITIN Making housing accessible Building stronger communities Investing Capital

  18. Home ownership Build Assets Develop Nest Egg Improve quality of life Provides future capital for Investment College Education Revitalization Neighborhoods Contributes to local and national economies

  19. Mexican Immigrants Banked or Unbanked Home Ownership Path to secure future Hard working Good Family Values

  20. Mexican families in Second Federal’s market rely on extended family members, friends, and networks to carry out shared domestic, social, and economic functions of the household. The family unit is often comprised of mixed status residents, some with legal residence status and some with an undocumented status.

  21. Top 47 areas in Chicago land (including individual Chicago communities) comprise a $3.9 billion dollar ITIN mortgage market. This is a not the entire metro market – only the top targets.

  22. Mexican Immigrant Market • Fastest growing market • Young market • Clusters geographically, but pushing out into the mainstream • Census figures don’t tell the whole story • Multiple wage earners in household • Increasing buying power

  23. Tend to operate in a cash economy • Value image, reputation and tradition • Tend to choose financial institutions and products by recommendation / word-of-mouth • Willing to pay for high touch services / branding • Loyal customers

  24. Matthew Brophy Regional Manager 4811 W. Cermak Rd. Cicero, IL 60804 708.222.6349 mbrophy@secondfederal.com

  25. First American International Bank NCIF Conference November 13th – 14th, 2006

  26. Our story as a de novo community bank • Founded on November 15, 1999 • Headquartered in Brooklyn, New York • Serves the large and growing Chinese - American population in Metropolitan New York • Has 9 branches located in Brooklyn, Chinatown Manhattan and Queens • Total Assets of $395 million (3Q06) • Profitable since the full second year of business • CDFI, Minority Bank Designation, SBA, FNMA • Board of Directors consisting of 13 local, national and international professionals with 45% ownership • Professional senior management with extensive banking experience – principally large money center banks • Not under a C&D or regulatory agreement

  27. Opportunities for growth are good • Target customers are growing at 7% – 10% per annum : • Total Asians are estimated at 1.0 million in NY • Chinese-Americans generally represent 50 – 60% • Total market deposits are estimated at $15 Billion and growing at 7% per annum • Small and retail businesses are growing rapidly fueled by the population growth • Chinese-Americans tend to be savers, buyers of real estate and focus on owning a business

  28. Immigrant population can be viewed as a simple target market New immigrants Established immigrants Second generation

  29. The reality is more complex New immigrants Workers Skilled workers Students College graduates Professionals Business people Families Mainland China Fuzhen Quandong Wenzhou Shanghai Other parts Hong Kong Taiwan Malaysia Vietnam Established immigrants Quandong Taiwan Workers Professionals Business people Split families Second generation Sons and daughters ABC’s While the written language is the same, we must deal with several dialects.

  30. Luckily, financial needs and profiles are more homogenous • They all tend to be savers • Operate in a more cash basis • Consumer credit needs are limited but they tend to not have a credit history • They all continue to have immediate family members and relatives “back home” • “Three income” households • Starting and owning a business is their way to financial stability • Owning real estate is their way to save for retirement • Sacrificing for the second generation with a focus on their education • Comfortable in dealing with banks

  31. Products, people and service need to be tailored • Products • Passbook savings is our “best seller” with several flavors • Secured credit cards • High LTV, NIV loan products • International wire transfers • People • Drawn from the local community • Speak several dialects • High proportion of part timers – generally college students • Service • Extended hours and open 7 days a week • Brochures, forms, advertising, ATM screens are all in Chinese • Not focus on sales goals

  32. We face more complex challenges in order to maintain our growth • Second generation • Competition from mainstream banks • Technology • Business owners • Trade financing • Insurance • Wealth management • Real estate lending issues • Real estate cycle • New CRE guidelines

  33. Southern Bancorp in 2006 Four Nonprofits Three FDIC Insured Community Banks - Asset Development - Affordable Housing - Community Development - Real Estate Development

  34. Southern Bancorp in 2006 • Total Assets: $550 Million • Total Shareholders Equity: $61 Million • Development Loans Funded: $1.5 billion

  35. Introduction to the Delta

  36. Phillips County, Arkansas 33% poverty rate – highest in Arkansas

  37. Coahoma County, Mississippi 38% less than high school education

  38. Sunflower County, Mississippi Unemployment rate 13%

  39. Sunflower County, Mississippi

  40. Phillips County, ArkansasHighest poverty rate and child poverty rate in Arkansas

  41. Affordable Housing 120 high quality units throughout the Delta

  42. Value Added Agriculture • $2M Sweet potato storage facility • $25M Biodiesel facility

  43. Knowledge is Power Preparatory School Delta College Preparatory Charter School

  44. Knowledge is Power Preparatory School Delta College Preparatory Charter School - Expansion

  45. Individual Asset Development • Education • Jobs • Homes • Small businesses

  46. Downtown Revitalization Downtown Drew - Before

  47. Downtown Revitalization Downtown Drew - After

  48. National Federation of Community Development Credit Unions Presentation to NCIF Annual Development Banking Conference November 14, 2006

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