2014 Annual Beneficial Banking Report
Benefit to All, Harm to None
Each year, we celebrate you -- our citizen bank customers -- as the original and most important "crowdfunders." You haven't often been recognized as such but that's what you are! Banks are allowed to recruit deposits promising FDIC protection along with the prevailing interest rate. We then take those deposits and lend them out to borrowers. Of course, we must always have enough liquidity to return deposits when they are needed by you, but your "idle cash" is working hard when you don't need it. And those borrowers, at least in our case, fulfill a reciprocal role in crowd funding by creating the new economy -- one that is fully-inclusive, racially just and environmentally sound. Bank crowd funding is especially powerful in the economy due to the leverage it enjoys -- we are allowed to collect about $9 of deposits for every $1 of equity we bring to this social enterprise.
We believe therefore that banks should compete for your deposits on the basis of their impact, not just on the interest they pay. So what are we offering you, as evidenced in this Annual Beneficial Banking Report? First, we make sure that your deposit funding is going toward loans that provide benefit to all, harm to none. We keep at least 75% of loan dollars outstanding in the hands of transformative sectors of the new economy. We also warrant that the remaining dollars are not lent to contra-mission activities. While all banks produce some benefit, this "harm to none" distinguishes a small segment of banks from all others, those of us not willing to fund ecological disaster or human misery.
Second, we recruit both seasoned values-driven banking talent as well as promising young people to learn the crafts of underwriting, engagement, and data driven analysis. All of those skill sets are essential to running a bank that is accountable to its "crowd" and borrowers, positively impactful through prudent lending, and protective of the FDIC insurance fund that enables those depositors to entrust their savings to us in the first place. Increasingly, we need also to adopt technological advances that allow our banks to better fulfill mission.
Lastly, we mandate our banks to reveal the full measure of their activities. Through chronic assessments like those we do for BCorp, GABV, JUST, and our annual internal GHG/landfill/water footprint analysis, we strive for corporate practices that are assuredly sustainable and just. Of course, we can always improve but we target better results each round and "better is good." Data collection also allows us to internalize the objectives of our communities and stakeholders and drive toward fulfillment of them. This year, to our output metrics, we will add eight new outcome measurements that will evidence how many units of affordable housing, kilowatts of renewable energy, and living wage jobs your crowdfunding has maintained or created, plus more.
So beneficial depositors and borrowers, arise to take your rightful place in the making of the new economy! We are not even kidding. We all now have a bank model that is reliably profitable, producing to the benefit of all and harm to none, and changing the banking system. At this stage of our evolution, we may be still small and incapable, yet, of replacing the dominant actors among banks. But by awakening depositors to realize that their choices matter, we can first migrate deposit capital to the beneficial banking model. Then, by trying to "pay for performance," we can attract the highest performing borrowers in the new economy. And throughout, we can recruit the brightest human capital to a new banking system that realizes our collective vision.
That's what we call beneficial banking and you deserve nothing less.
Kat Taylor & Tom Steyer
Co-Chairs, Beneficial State Bancorp
Our mission mandates that we produce social justice and environmental well-being at the same time that we are economically sustainable.
A banking industry that is fair to the person with the least bargaining power; Provides access to financial services for all our communities, particularly the traditionally underserved; Results in the long-term prosperity of responsible consumers; Promotes financial system stability; and Contributes to the sustainability of the environmental commons. We call this vision beneficial banking.
Theory of Change
Beneficial State Bank is a triple bottom-line financial institution that believes money should serve people, not the other way around. We institutionalized our values of trust, justice and empowerment by giving 100% of the economic rights of our bank to our foundation which is governed in the public interest and can only reinvest bank profits, when distributed, back into robust community living and the environment that sustains us all. We believe that a far better world isn’t only possible, it’s being built right now by inspired people everywhere. So we’re building a better future with our customers by building a better banking system: Beneficial Banking.
We offer our customers a new kind of bank and the tools they need to build something beautiful. Our commercial loans, transactional services and financial assistance are made to serve those who are creating a better world. The future we’re creating together will strengthen our local communities, improve quality of life for each of us, and be reflected in widespread gains in social equity and environmental renewal. Our ultimate goal is nothing short of changing the banking system by migrating deposit, equity and human capital to a better, beneficial bank model.
The Beneficial State Family
The Beneficial Bank Family includes Beneficial State Bank, covered by this Annual Report, and our aligned bank sibling, Albina Community Bank (ACB). ACB's 2014 results and bank leadership can be found here and our consolidated bancorp call report here. Our leadership, serving on the Beneficial State Bank, Beneficial Bancorp, and Beneficial State Foundation boards having our undying gratitude, are profiled here.
Our New Brand
In 2014 we rebranded in order to find a name and logo that reflected our vision, mission and commitment to our triple-bottom line. We have selected "Beneficial State Bank" because of the multiple meanings it has in support of those aims.
- We are striving to be an institution that is truly beneficial to the clients we serve and the environment upon which we all depend.
- By providing "beneficial capital," we're change agents in the transformative sectors we've decided to focus on.
- Beneficial State means being beneficial to whichever of the three states we're operating in but it also refers to us and our clients being in a beneficial state of mind, wherever we are.
We decided upon "build something beautiful" for a simple but emotional and effective tagline to call to action our lending clients and depositors alike, to build they communities we all desire to see.
We’re happy to be proving the model that a Beneficial Bank can grow and be reliably profitable (and not at the expense of our stakeholders)!
- Profits of approximately $1.9 million or 6% return on equity
- Loans grew by 18%
- Asset size is $366 million
- Over 4,000 depositors
- Over 500 borrowers
- High Credit Quality on all indicators
Our Financial Statements
How We Stack Up
Business and Nonprofit Lending
Our customers are our heroes! Our 4000+ deposit clients are the crowd-funders that help us make loans to businesses and nonprofit lending clients in the areas below.
Together, we build affordable homes for low income families, create clean, renewable energy from the wind, sun, water and waste, help nonprofit organizations serve those in need, provide spaces for art, educate our youth, support social entrepreneurs, grow and distribute healthy food, build businesses owned by workers, and so much more!
Here’s a snapshot of where the money went in 2014:
Learn more about our sectors:
- Affordable Housing, Multi-family and Neighborhood Stabilization
- Sustainable Food, Fisheries and Agriculture
- Low-Income Community Economic Development
- Clean Tech, Green Energy and Green Chemistry
- Women and Minority Owned Businesses
- Other Mission Lending
- Other Commercial and Industrial
2012-2014 Renewable / Clean Energy
We’ve done a deep dive into our renewable energy lending from 2012-2014 and are excited to share the results. The following numbers show the energy production and environmental impact of our borrowers during the 2012-2014.
Spectrum of Fair & Transparent Credit Products for Citizens
Personal Builder Loan offers a responsible, new way to borrow quickly, easily, and safely.
In January we launched the Personal Builder Loan, a consumer loan offered in partnership with LendUp Technologies. Lendup is an innovative consumer lender who shares completely our mission of making responsible financial services available to all our communities, particularly the traditionally underserved.
We’re all in this together, and in order to change an industry, everyone needs to be inspired and involved. We have a wonderful staff including a dedicated team of community engagement professionals who connect with and spread the word about the power and importance of banking that benefits all people and the planet.
Our community engagement team develops programs and events to connect, educate, inspire and support the social enterprises and nonprofits in our communities who are working to build a better world.
In order to migrate the banking system to all benefit, no harm, we need to tend a new garden. Inside and out of the bank, we support a new ecosystem for beneficial banking.
Some of the essential plantings include speaking at events and conferences, large and small, as well as hosting and co-hosting events such as:
- Money on a Mission (Portland, Seattle)
- Oakland Indie Awards
- B Corp events such as BLD: B Corp Leadership Development day and the Champions Retreat
- Locally Inspired
In addition to hosting events, we also connect and engage with our mission-driven community by:
- Sponsoring nonprofit organizations
- Offering our branch locations for nonprofit and social enterprise events
Beneficial Banking Internship Program
To help build the pipeline for the next generation of leaders, Beneficial State is proud to offer an intensive summer internship program that provides valuable work and learning experience to high-caliber students interested in beneficial banking, community economic development and responsible financial services.Interns work on challenging Bank and Foundation projects, complete deliverables designed to contribute to their educational and career development, and present to Beneficial State’s staff and senior leadership team at the end of the program.
Interns also participate in the Beneficial Banking Curriculum & Speaker Series, which includes workshops led by experts in the fields of community banking, investing, and responsible finance and site visits for interns to see the work in action. Past interns have joined the Beneficial State team after graduation and leveraged their rich internship experience into careers in financial services and a variety of industries. Learn more here.
Beneficial Banking Scorecards and Metrics Development
At Beneficial State we are serious about measuring our impact and using this measurement to continually increase our positive impact on the community. Our work includes evaluating each borrower and the purpose of each loan to determine the likely social and environmental impact of the loans, as well as potential concerns for any counter mission activities. In order to better track this data and to gather the richest data possible, we are building more robust MIS systems, editing our loan applications, and developing interview protocols.
These efforts are helping to develop outcome metrics that show the on-the-ground impact our loans are having. Two of these metrics – kilowatt hours of renewable energy financed, and C02 emissions reductions – are being revealed in this report for the first time. Others, such as number of units of affordable housing, are in the works and will be publicized soon.
In addition to this internal metrics work, we participate in voluntary industry assessments and scorecards, such as the Global Alliance for Banking on Values (GABV) scorecard, in which we evaluate what percentage of our loans are Triple Bottom Line and what percent are Real Economy, meaning that they directly support businesses doing real, tangible work in the community, rather than a purely financial transactions such as purchasing and reselling other loans in whole or in part. In 2014, our scorecard revealed that 70% of our assets were in the Real Economy and 76% of our assets were Triple Bottom Line, according to GABV definitions.
We also participate in the National Community Investment Fund (NCIF) BankImpact dashboard report. In the 2014 report, Beneficial State Bank had a Development Deposit Intensity (DDI) of 50%, compared to the national average of 40%, indicating that a higher proportion of our bank’s branches are in low- and moderate-income census tracts. Our Development Lending Intensity was higher at 58%. Finally our Mission Intensity score -- the extent to which our loans meet our social and environmental mission was 96.1%.
We find these external scorecards and the work it takes to complete them very informative and valuable in helping us not only benchmark against others, but to deepen and broaden our own thinking about how to measure our impact.
In 2014, we were honored as a Best for the World and Best for Communities by B Corporation. The ‘B Corp Best for Communities’ list honors 86 businesses that earned a community impact score in the top 10% of all Certified B Corporations of their size on the B Impact Assessment, a rigorous and comprehensive assessment of a company's impact on its workers, community, and the environment.
From day one, Beneficial State has been committed to supporting our community above and beyond its lending by providing sponsorships to 501(c)(3) nonprofit organizations each year. Historically we have provided the equivalent of 10% or more of Beneficial State Bank’s profits. That’s ten times the U.S. average corporate giving of less than 1% (.76%). In 2014, we provided $156,900 in sponsorships to community organizations. Learn more about our sponsorships here.
We are proud to be members of and/or certified by the following ecosystem partners:
We are proud to be one of a few financial institution certified as a B Corporation. B Corps are sustainably minded companies that care about doing good, as much as earning a profit. We are also thrilled to offer the first-ever, B Corporation Affinity Credit Card that will be available this Fall.
Global Alliance for Banking on Values
The GABV is an independent network of banks using finance to deliver sustainable development for underserved people, communities and the environment.
Community Development Bankers Association
Community Development Bankers Association (CDBA) is the national trade association of the community development bank sector. They are the voice and champion of banks and thrifts with a mission of serving low and moderate income communities. CDBA educates policymakers, regulators, legislators and the general public on the importance of Community Development Banks. They spread understanding of the unique circumstances our banks operate under and the special needs of our institutions. CDBA leads the growth and development of our sector, building healthy institutions with the capacity to promote access to capital and financial services in distressed and underserved communities.
Community Development Financial Institution
Fewer than 2% of U.S. banks are certified as Community Development Financial Institutions (CDFIs) and we’re proud to be one of them! CDFIs are specialized financial institutions that work in economically distressed target markets and have community development as a primary mission. CDFIs are certified by the US Department of the Treasury. Learn more about how CDFIs benefit our communities here.
Social Venture Network
SVN works to create a just, humane and sustainable world by:
- Supporting and promoting innovative entrepreneurs and business leaders who contribute to the well-being of their employees, customers, investors, communities and the environment
- Fostering strong connections and collaborations among business leaders and entrepreneurs that lead to groundbreaking solutions to social, economic and environmental problems
- Contributing to an ecosystem that enhances and supports these solutions and promotes a just sustainable economy
The International Living Future Institute’s™ JUST™ program is a voluntary disclosure program and tool for all types and sizes of organizations. JUST is, quite simply, a call to social justice action.
Inner City Advisors
ICA works tirelessly with entrepreneurs, advisors, employees and sponsors to create a more equitable and impactful economic ecosystem in the Bay Area. Their unique approach has developed many amazing companies who have created good jobs for local residents.
National Community Investment Fund
NCIF is the largest investor in the mission-oriented banking industry, with investments in 15% of all certified CDFI Banks. NCIF has $228 million of assets under management, including $206 million in New Markets Tax Credit allocations. They invest capital and facilitate the flow of funds from investors to banks. As an impact investor, NCIF pursues a triple bottom line strategy that maximizes social, environmental, and financial returns.
Green on the Inside
Beneficial State has a Green Team that drives our sustainability efforts. The mission of the green team is to: 1) reduce our consumption of energy, natural resources, and materials; and 2) reduce contributions to greenhouse gas emissions, air and water pollution, and landfills. Some of our key green programs and elements are:
Beneficial State employees engage in education and action campaigns to reduce waste and energy usage reduction at work and home. In 2014 staff participated in the Eco-Challenge by Northwest Earth Institute, helping us implement new behaviors to reduce waste, energy and water usage.
Green Business Certifications
We seek to green certify all of our bank locations and we’re making great progress! We are green certified in Oakland and Greenest certified in Seattle. In Sacramento, we’re in a LEED Gold certified building, and we are in the process of getting certification for both Portland and our newest location, Santa Rosa, CA.
Reducing our Greenhouse Gas Emissions
At Beneficial State Bank we hire a 3rd party to audit and report on our sustainability. This report tracks our greenhouse gas (GHG) emissions and sources, and we use this information to target ways to reduce our emissions.
We are reporting our data through 2013, as our sustainability report results are completed near the end of the following year. We are in the process of calculating our 2014 results.
Total emissions increased just over 17% from 2012 to 2013, due mostly to an increase in the size of the workforce by 17%. However, GHG emissions per FTE continued to decrease, from 5.2 metric tons/FTE (2012) to 5.0 metric tons/FTE (2013). This is represents a 4% decrease from 2012, and a 27% decrease from 2011.
Being Carbon Balanced (Balancing Out the Rest)
In addition to tracking, reporting, and targeting reduction of our GHG emissions, we purchase carbon offsets for these emissions. We are proud investors of 728 mT CO2 equivalent emissions reductions from the California Improved Forest Management Project in Arcata, CA to balance out 2 years of emissions.
Supporting Employees in their Community Work
We believe community volunteering is an investment in a community and its peoples. Volunteering provides valuable community services and strengthens a community in many ways such as supporting families, improving schools, supporting youth, and beautifying the community. Community volunteering is an important measure of the civic health of a community, a state, and a nation. Bank employees are given thirty-two (32) hours of paid volunteer time per calendar year for a volunteer opportunity of their own choosing.
All employees have the opportunity to receive up to $250 annually to match money he/she donates to a qualifying 501(c)3 charitable/nonprofit organization of his/her choice.
Living Wage Policy
Our salary administration philosophy is to attract and retain a workforce committed to achieving both corporate and personal goals by implementing a compensation program which is inclusive of the Living wage standard.
Gender & Ethnicity
We are committed to ensure gender and ethnic diversity inclusiveness within our workforce. The overall goal is to treat men and women equally in all aspects of life and work. More specifically, the goal is to have a workforce that is gender balanced in all job classifications and at all levels, with women being given the same opportunities for recruitment, hiring, training, promotion and leadership positions as are presented to men. Gender diversity (and gender equality) refers not only to having relatively equal numbers of employees of both genders in the organization but, most importantly, to having women, as well as men, in senior leadership, executive and board positions. We strive to have a workforce that is as ethnically and racially diverse as the community, region or state in which we serve.