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Cascade: No. 54, Spring 2004

PNC Integrates Community Development Banking in Its Delaware Valley Branches

Building on the experience of its development bank, PNC has integrated community development banking throughout its branches in southeastern Pennsylvania and New Jersey.

In 2000, PNC established the first of 26 development bank branches as an initiative of its Retail Community Bank. Shirlyn Swann, PNC Bank vice president and community consultant, recalled: "It started with a basic philosophy. Low- to moderate-income consumers are not a burden. They are a viable customer segment, and we want to provide services that benefit them-and our bottom line."

The development bank had a two-tiered strategy. First, dedicated branches located in the heart of low- to moderate-income neighborhoods would offer specialized products and services such as affordable mortgages, low-rate Philadelphia home- improvement loans, and budget checking. Second, PNC community consultants would work with individuals, nonprofits, and small businesses to meet their needs in nontraditional ways, including hands-on financial literacy programs.

One of PNC's first development bank branches was at Broad and Fairmount Streets in Philadelphia. It was started in partnership with People for People Inc., the community outreach offshoot of Greater Exodus Baptist Church. Rev. Herbert H. Lusk II, the church's pastor and founder of People for People, had approached PNC about working together.

PNC donated one of its former bank branch buildings to People for People, funded its renovation, and helped the nonprofit start its own credit union. PNC also rented space from the nonprofit to open a development bank branch directly across the hall from the People for People Community Development Credit Union and placed a $100,000 deposit in the credit union. In the branch's first year, PNC developed more than 1,000 new banking accounts with customers who had never done business with a traditional bank.

From 2000 to 2002, the development bank branches increased their lending penetration 10.5 percent and increased the number of consumer and business accounts approximately 5 percent.

Beyond Bricks and Mortar

PNC community consultants played a critical role in conducting free seminars on budgeting, credit, and homeownership at nonprofits, schools, and churches. They also looked for opportunities to lead region-wide educational programs and took a leading role in the Philadelphia Saves campaign.

PNC's community consultants logged weekend hours during the tax season to offer free workshops at volunteer income tax assistance sites throughout the region. Swann added: "We believe that when we reach out to put people on the road to economic self-sufficiency, they'll contribute in more meaningful ways to society, and be potential customers, too."

The bank believes in building a customer base for the future even if results won't be seen for years. PNC recently partnered with Operation HOPE to introduce "Banking on Our Future," a financial literacy program for Pennsylvania school children led by instructors from the banking sector. PNC's commitment to the program includes offering office space to an Operation HOPE employee who will coordinate the program in the greater Philadelphia region.

The development bank also used PNC grants to assist nonprofits and businesses in low- to moderate-income areas. In many instances, the grants are part of a larger program of support. For example, Project H.O.M.E., a 2000 Partner Grant recipient, received PNC funding for its Rowan Homes development in North Philadelphia, and in October 2003, PNC provided $8 million in financing and public relations assistance for Project H.O.M.E.'s Kate's Place, one of the first affordable- housing initiatives in Center City Philadelphia.

Lesson Learned: Reach Low- to Moderate-Income Customers Wherever They Are

After two years of experience, PNC business managers decided to apply the development bank concept to all PNC branches. Carl Lisman, executive vice president for PNC Bank's greater Philadelphia region, explained: "We were missing an opportunity to reach low- to moderate-income residents living and working in the suburbs or in Center City Philadelphia, for example. At the same time, we realized that the development bank branches had become isolated from the rest of the retail system."

Last year, PNC instituted a comprehensive community development banking business segment. Today, all PNC territory managers are responsible for meeting community development goals and ensuring that retail employees are knowledgeable about the program.

"Getting the development bank's message out in our branches is probably our greatest opportunity," Lisman explained. "We know that delivering on that opportunity will require ongoing training on our community development products and services. We have a great opportunity to have a positive impact on low-income people and communities."

For information, contact Vicki Cervino-Henn at (732) 220-3106 or vicki.cervino-henn@pncbank.com, or Shirlyn Swann at (215) 276-7109 or shirlyn.swann@pncbank.com.