November 19, 2015

Leveraging Social Performance Metrics:An Interactive Workshop

Text “IMPACT”, along with your name, questions and other comments to 62953

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Panelists Joining

• Salvador Menjivar - Executive Director, Beneficial State Foundation

• Kimberly Jones - Director Government Relations, Urban Partnership Bank

• Tom Ogaard - President and CEO, Native American Bank, NA

• Melanie Stern - CRA Officer and Director of Consumer Lending, Spring Bank

• Michael Grant – President, National Bankers Association

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Turning Data into Action

NCIF’s Data Resources

Investors

NCIF offers investment opportunities that deliver social,

environmental, and financial returns through the power of

mission-oriented financial institutions and information to

inform decision making.

Banks

Institutions in the NCIF Network gain access to capital, visibility,

business opportunities, metrics, and innovative solutions. Data can

help benchmark and inform internal decisions.

Regulators/Researchers

NCIF’s innovative thought leadership positions us to advance and support the mission-oriented financial

industry.

BankImpact Database – Custom Analysis – Publications – Dashboards

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Initial analysis and building the case for

data tracking with publicly-available data

Expanded analysis with

privately-reported

information

Created of DLI, DDI, and

Quadrant Score Core

Metrics

Incorporated datapoints on clients served, jobs created, governance, diversity and

creation of Core Metric Mission

Intensity

Evolving towards

comprehen-sive impact

measurement

Advancing Social Performance Measurement

Features of the NCIF social performance measurement:

Undertaken since 1998 with ongoing evolution

Includes publicly-available data and information reported directly from bank and credit union partners

Includes four Core Metrics (DLI, DDI, Quadrant Score and Mission Intensity) and additional data points to highlight social performance

Aligned with IRIS metrics and complements CIIS reporting

1998 2015 and beyond

UNDERSTANDING THE OUTPUTS AS OUTCOMES

The Impact of Mission-Oriented Banks

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Extending credit to underserved communities & groups

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The Mission Intensity Metric measures the comprehensive impacts of a bank’s lending, including loans qualified by location and by support of a bank’s mission. Mission Intensity captures the subset of the population and groups served by banks.

• Banks reporting a multitude of mission-relevant lending to be captured in the metric• 81% of the median bank’s lending supported their mission • Many loans were doubly qualified by location and mission or by meeting more than one mission

category for the bank. This demonstrates a commitment to extending credit to the underserved.

When all reported lending is combined, 73% supports banks’ mission

Mission-relevant loan categories # of banks reporting

Loans in low- and moderate-income (LMI) areas 22

Loans for projects benefiting LMI individuals 17

Loans to support community development 18

Loans to minority-owned businesses 16

Loans to women-owned businesses 14

Loans to low-income borrowers 18

Environmental lending 4

Loans to nonprofit borrowers 15

Faith-based lending 11

Loans to minority borrowers 18

Other 3

Core Metric: Mission Intensity

Providing a range of credit offerings in LMI areas

Through the transaction level reporting provided by the banks, credit unions, we analyze lending activity and their relative focus in LMI areas across loan types:

NCIF calculates the % of lending in qualified census tracts as our Development Lending Intensity Metric (DLI). The median bank had a DLI score of 63.6%

There was a high percent of lending in qualified areas, across each loan category

Partner institutions have lent over $7 billion in Investment Areas since 1998, and have continued to lend in these communities in the midst of the Great Recession

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Loan category % in qualified areas (DLI)

All Loans 63.6%

Housing 56.1%

CRE 61.5%

Small business 59.3%

Agriculture 99.5%

Consumer 63.7%

Core Metric: Development Lending Intensity (DLI)

Serving as anchor institutions in LMI communities

NCIF considers branch location to be an important marker of a bank’s relationship with its community. Banks offer a range of products and services in their communities and proximity to a branch location helps to access them. Branches also allows banks to establish local connections, serving as economic contributors and community stakeholders.

85.7% of the median bank’s branches were located in LMI areas, showing a high concentration of location, having a presence in these communities. This is NCIF’s Development Deposit Intensity (DDI) Metric.

Partnerships with other location institutions, funding of economic and community development projects

Banks are also direct employers. In 2013, banks reporting employing 1,819 individuals with 150 new positions.

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2x the concentration

of branches in LMI areas

Core Metric: Development Deposit Intensity (DDI)

Outperforming Major Peer Groups in Social Performance

W W W . N C I F . O R G 8

We can combine DDI and DLI to get an overall representation of a bank’s concentration in LMI areas

21 of the reporting banks are quadrant 1 banks, representing 87.5% of the banks

Nationally, only approximately 11% of banks qualify as quadrant 1 banks, NCIF’s highest social performance categorization

The CDFI and MDI bank peer groups also outperform the all bank peer group

Core metric: Quadrants

Crafting products to meet client and community needs

To meet the needs of lower-income clients, we find that the reporting banks offer both depository and lending products at small dollar values:

44% of deposit accounts held less than $1,000

The average reported loan was $119,356 while the median size was only $10,522

The median small business loan was only $50,000 and the average consumer loan was $6,243

9 banks reported providing alternative check cashing services

15 offer products to help clients restore credit including deposit secured loans and secured credit cards

W W W . N C I F . O R G 9Additional datapoints: Products and services offered

Job opportunities in their communities

Banks can be important drivers of economic development by helping to create jobs in their communities through their lending activity to small businesses and other borrowers.

Through bank reported and NCIF calculations, we estimate that reporting banks have created nearly 70,000 jobs since we started collecting information in 1998.

10,609 of those jobs were created in 2013 alone.

1,819 jobs in the branches

W W W . N C I F . O R G 10Additional datapoints: Jobs created

Adopting environmentally-responsible behavior

W W W . N C I F . O R G 11

Environmentally-responsible activity % of banks implementing

Tracking emissions and electricity use 8.7

Environmentally-responsible purchasing 17.4

Locally sourced purchasing 17.4

Green building certification 13.0

Implementing policies and procedures 21.7

Additional datapoints: environmental outcomes

Banks increasingly incorporating environmentally-responsible and green consideration into their operations and lending activity.

6 banks originated 32 loans totaling $37.9M in green and/or environmentally-responsible lending

Example loans include housing with green elements, buildings achieving sustainability certification, sustainable agriculture, and more

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Panelists Joining

• Salvador Menjivar - Executive Director, Beneficial State Foundation

• Kimberly Jones - Director Government Relations, Urban Partnership Bank

• Tom Ogaard - President and CEO, Native American Bank, NA

• Melanie Stern - CRA Officer and Director of Consumer Lending, Spring Bank

Text “NCIF”, along with your name, questions and other comments to 62953

APPLYING THE DATA WITH STRATEGY

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Taxonomy of Data

There is a growing list of data requests and it can be challenging to sift through what is best to collect and how to efficiently track data

Using NCIF Dashboards to submit data and receive back impactful analytics, metrics – format the report comes back in is good, valuable information

Focus on collecting data that can be used along multiple reporting needs

Connect at the forefront on which impacts you want to capture and for which stakeholders

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Reusing the Data

In responding to data requests– how can we streamline and consolidate the data that banks need to collect and other stakeholders want to see?

BankImpact Dashboard helped consolidate into notable impacts for internal use and benchmarking

Found a growing interest in identifying banks doing small-dollar lending

Been able to use this data on the Hill

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Data Collection

How can banks better collect information, particularly since many MOFIs are smaller? How can banks work smarter to build momentum around making the data valuable?

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Using Data to Communicate with Stakeholders

Banks interface with a range of stakeholders including investors, deposits, the CDFI Fund, boards, clients and their community. How can they best share data with them and communicate impacts?

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Examples of Making it Work

What are your success stories and what are our mutual ways forward?

Talent acquisition and retention linked to communicating the mission-orientation of the bank

Software like SalesForce and FiServ to automate and streamline data collection by bringing it to the front end

18Text “NCIF”, along with your name, questions and other comments to 62953