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Philadelphia Fed Hosts Bank Program Pilot

For immediate release
Contact: Marilyn Wimp, media advisor, (215) 574-4197

Summary: Representatives from the Philadelphia region's minority-owned and de novo banks who attended a pilot for a series of training sessions responded positively. The Board of Governors' Partnership for Progress External Link is intended to assist these banks with technical and practical issues as they move through the stages of growth. It is also intended to encourage communication between bank management and regulators. Feedback from this pilot held at the Federal Reserve Bank of Philadelphia and others planned at the Atlanta, External Link Chicago, External Link and San Francisco External Link Federal Reserve Banks will be incorporated into the nationwide program, which will debut in 2008. For more information, see recent congressional testimony External Link by Sandra F. Braunstein, director of the division of Consumer and Community Affairs for the Board of Governors.

Philadelphia, Pa. - Starting a bank requires researching markets, raising capital, attracting talent, and complying with bank regulations. Herb Ames, founder of First Choice Bank, understands the commitment it took to open the multi-cultural de novo bank in Lawrenceville, New Jersey, in March 2007. Ames was among the bankers who recently participated in the Board of Governors “Partnership for Progress” program hosted at the Federal Reserve Bank of Philadelphia.

“I believe organizers, directors, and staff should participate in this program at different  [developmental] stages of a de novo bank. There should be continuing education for de novo banks and minority banks because it’s crucial to their growth,” Ames said.

The half-day pilot, “Growing Shareholder Value,” drew participants from African American, Asian, Middle Eastern, and Korean banks in the Philadelphia Fed’s Third District, which includes eastern Pennsylvania, southern New Jersey, and Delaware.  

“We focused on the challenges unique to these banks. Many of the banks choose to operate in underserved areas and our goal is to help them uphold their mission to serve the community’s needs while thinking about growing their future,” said Robert Tillman, who is a special advisor for the Federal Reserve Bank of Philadelphia and the program manager for the Partnership for Progress program. The Philadelphia Fed is spearheading the pilot for the Federal Reserve System, which has responsibility for supervising nearly 20 of 200 minority-owned banks nationwide. A nationwide program will debut in 2008.

Representatives from around the Federal Reserve System met with minority-owned and de novo banks across the country and talked to trade groups, bank consultants, and state and federal banking agencies to customize the outreach initiative. Lessons from the program will also be incorporated into training for the Fed’s bank examiners to foster a better understanding of key issues related to minority-owned banks. 

Philadelphia’s pilot covered practical and technical issues such as how management can achieve growth in a safe and sound manner, methods to measure the performance of the board of directors and management team, and the importance of expanding market presence. “It covered important topics that board directors are aware of but need to have reinforced,” said Kevin Lenihan, president and CEO of Indus American Bank in Iselin, New Jersey, who attended the pilot. The program was also designed to encourage communication between bank management and regulators. “It was an opportunity for representatives from minority-owned banks to have excellent dialogue with regulatory authorities and with their peers,” said Mark Winkler, president and CEO of Asian Bank in Philadelphia, who attended the pilot. J.W. Park, chief lending officer of Philadelphia’s 18-month-old MoreBank, agreed. “It was a good forum to exchange ideas and share trends. I am hoping to have another chance to attend,” he added. 

“We believe our program will evolve into a valuable resource for banks just entering the marketplace as well as for more established institutions. We also want bank regulators and minority banks to continue talking about their challenges,” Tillman said.

Feedback from pilot sessions at the Philadelphia Fed along with those held by the Atlanta, Chicago, and San Francisco Federal Reserve Banks will be incorporated into the training program. Participants will have access to classroom-style workshops, computer-based courses, and a web-based resource center. 

The Partnership for Progress Program includes two other areas of focus:  “Getting Started," which will address the steps involved in filing an application, raising capital, assembling a successful board of directors and management team, and conducting market analysis. "Managing Transition in Years 1-5" will focus on maintaining capital and liquidity, managing credit and interest rate risk, ensuring compliance with banking regulations, and developing products.

For more information about the Federal Reserve’s program or for an interview, contact Marilyn Wimp, media advisor, at 215-574-4197.

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