Beneficial State Bank Responds to Rise Economy Letter Calling For End to Harmful Lobbying

Rise Economy - a member-led alliance creating systemic change and economic justice for BIPOC and low-income communities – sent a letter to 44 bank CEOs in 2023 asking to reaffirm their public comments in support of social and racial equity made in the aftermath of the George Floyd murder. Along with Amalgamated Bank, Beneficial State Bank fully responded to the letter.

On June 24, 2024, Rise Economy followed up with a second letter to over 40 bank CEOs, urging them to end harmful lobbying and litigation practices. The following is Beneficial State Bank’s response.

August 1, 2024

Dear Ms. Paulina Gonzalez-Brito and Mr. Kevin Stein,

Thank you for your letter and for your efforts to build a more equitable and inclusive financial system. At Beneficial State Bank, we share your concerns about the banking industry’s lobbying and litigation actions and remain steadfast in our commitment to fighting discrimination of all kinds.

Beneficial State Bank is dedicated to the triple bottom line of people, planet, and prosperity for all. Our advocacy efforts, lending portfolio, and corporate operations demonstrate this commitment, and we actively support policies that protect small businesses, consumers, and marginalized communities. We believe that equitable participation in the financial system is a pillar of economic and racial justice.

Our support for women entrepreneurs and entrepreneurs of color and our dedication to closing the racial wealth gap are best demonstrated through our lending practices. By the end of 2022, we had $90 million in loans outstanding to women-owned businesses, nearly $82 million to businesses owned by people of color, and approximately $21 million to businesses owned by women of color. Additionally, the Beneficial State Foundation, a nonprofit advancing financial justice and the bank's majority shareholder, leads the groundbreaking “Underwriting for Racial Justice” national working group. This pilot initiative, in which Beneficial State Bank is one of 60 participants, aims to reimagine credit underwriting standards and increase financing for underserved business owners and consumers.

Beneficial State Bank is dedicated to supporting affordable housing initiatives that address acute housing challenges faced by low-to-moderate-income individuals and families. We believe housing is a human right and a fundamental aspect of building strong and inclusive communities. Accordingly, we provide loans to individuals and organizations that purchase and manage affordable multifamily rental housing—investing in the preservation and maintenance of affordable housing stock for years to come. As of December 2022, Beneficial State Bank had $337 million in loans outstanding to mission-aligned affordable housing projects, which has financed over 14,664 affordable housing units.

We also recognize that climate change disproportionately impacts communities of color. Understanding that climate justice is social justice, we conduct zero fossil fuel financing; instead, we are committed to using our financial resources to support the transition to clean and renewable energy. As of December 2022, we had $100 million in loans outstanding in the environmental sustainability sector and $144 million in cumulative loans in the renewable energy sector. Our lending has generated 1.09 billion kilowatt hours of renewable energy since 2007.

Beneficial State Bank also takes significant steps to reduce its own carbon footprint. In 2022, we opened loan production offices in notable green locations, including PAE's building in Portland, celebrated as the world’s first developer-driven Living Building, and at key sites like the Los Angeles Cleantech Incubator and AltaSea at the Port of Los Angeles, the nation’s largest Blue Economy tech hub. These actions demonstrate our ongoing dedication to environmental stewardship in our banking practices and corporate operations.

Our third-party certifications also highlight our dedication to the triple bottom line. We are proud to be one of 196 CDFI banks in the United States and one of nine CDFI banks on the West Coast. CDFI certification, issued by the United States Treasury Department, requires that at least 60% of our lending occurs in low-to-moderate income (LMI) neighborhoods. We go beyond that requirement by committing at least 75% of our lending portfolio to sectors that positively impact communities and the planet. Additionally, in 2021, the Federal Deposit Insurance Corporation (FDIC) awarded us our second consecutive “Outstanding” Community Reinvestment Act (CRA) rating, recognizing our efforts to meet the credit needs of communities across our service areas, including low- and moderate-income neighborhoods. Beneficial State Bank was also named a Best for the World Certified B Corporation by B Lab, the global nonprofit network that certifies B Corps. Beneficial State was recognized for being among the top 5% of B Corps in its size group worldwide for its triple bottom line business model and community impact.

Finally, I would like to address the industry’s lawsuit to overturn recent updates to CRA, which you mentioned in your letter. We advocated for modernizing CRA and are critical of the American Banking Association (ABA) and other business groups’ lawsuit challenging the new rule. In fact, Beneficial State Bank has filed an amicus brief with the U.S. Court of Appeals for the Fifth Circuit urging it to allow important new financial regulations under the CRA to go into effect. While last year's updates to CRA are a step in the right direction, we have publicly stated that they fall short in addressing racial inequities. We continue to call for comprehensive CRA reform by Congress, which would strengthen the CRA against further litigation by banking industry groups, especially in the wake of the U.S. Supreme Court’s recent ruling overturning the longstanding Chevron doctrine.

B Lab is a third party central to Beneficial State Bank’s identity. B Lab’s new standard for B-corp certification requires us to disclose all of our trade group affiliations, document changes, and then put forth a timeline and action plan for change. Due to these requirements, Beneficial State Bank is already working to meet the requests outlined in your letter. While we understand the intention behind the call to action to leave industry groups like ABA, we also recognize the opportunity to assert positive influence from the inside and the responsibility that comes with it. Beneficial State Bank will continue to advocate for a better banking system. If we –and other mission-driven banks– give up our seat at the table where key decisions are made, we will leave a powerful industry organizing group void of voices to dissuade or move the industry into the future financial system we strive to build. We will continue raising our–and mission-driven partner banks'–voices to ensure we advocate both within and outside the system.

Thank you once again for your letter and for your dedication to economic and racial justice. We look forward to continuing this important work together.

Sincerely,

Randell Leach
CEO, Beneficial State Bank