William Reiling and his son David took over two troubled Twin Cities banks, including one accused of discriminating against customers in poor areas three decades ago.
To turn the tide and rebuild, the Reilings turned to those clients who had been wronged – working class people and immigrants from urban neighborhoods. They also sought out nonprofits and small businesses as clients.
Today, St. Paul-based Sunrise Banks is a financial mainstay of the Twin Cities nonprofit community, helping with mortgage loans for affordable housing and working with organizations that help poor families. to find stability.
It is also growing by partnering with tech companies to offer nationwide financial products that help people repair their credit and avoid predatory payday lenders.
“My father grew up as a poor farm boy. He said, ‘Don’t fuck the little guy,’ ”Sunrise Banks CEO David Reiling said of the bank’s philosophy.
Sunrise, with $ 1 billion in assets, is one of some 100 banks nationally certified by the U.S. Treasury as a community development finance institution providing credit, investment capital and financial services in urban communities in difficulty.
He underwrites all of the mortgages for Greater Twin Cities Habitat for Humanity – nearly 100 last year alone.
“They are motivated to do the right thing,” said Robyn Bipes-Timm, vice president of loan funds and mortgages at Habitat. “It’s so refreshing.”
Sunrise also became Minnesota’s first utility company in 2015, when lawmakers created the designation for companies to signal that they can sometimes put social principles ahead of profits.
“They really and truly are community bankers who want to make the community a better place,” said Kate Barr, former banker and CEO of Propel Nonprofits, another community development financial institution. “It is an intentional part of their business strategy to serve nonprofit organizations. That says a lot. “
“They need access”
Leaders of nonprofits have said many of their low-income and bad-credit customers need better access to banking services.
One in four U.S. households is either unbanked or underbanked, often relying on check cashing, money orders and payday loans, which charge fees, according to a 2017 Federal Deposit Insurance Corporation survey. higher.
“It’s expensive to be poor,” Reiling said.
New Hope’s Eumeka Kufuor, who struggled financially in the past and doesn’t have a bank account, has used expensive money orders and prepaid credit cards to pay bills and shop for groceries for years. Then, she received help with the tax return and financial support from the non-profit Prepare + Thrive, and was able to open checking and savings accounts at Sunrise Bank in July.
“They do everything in their power to ensure that you don’t have an overdraft fee,” she said. “They allow you to regain your financial independence. “
Reiling said he saw the potential of banks to serve low-income people and urban areas earlier in his career at a Los Angeles bank in an area struggling with poverty and crime. At another bank there, he noticed that they were not serving immigrants and foreign businessmen living in the United States.
His success with these clients landed him a job in New York. But his dad called and dragged him to Minnesota instead.
While they were working on the construction of what is now known as the Sunrise Banks, they turned to immigrants. At one point, almost 40% of their customers were Hmong.
“They needed access,” Reiling said. “We have created products and services to unlock the potential of customers. “
He has also studied the alternative financial sector, including what he calls the “dastardly model” of payday lending. He saw how check cashing services and prepaid credit cards filled people’s financial gaps. He even bought a check cashing business and set it up in the bank lobby to find out more.
“It is this information and customer feedback that has been the raw material for innovation,” said Reiling.
Growth through innovation
Sunrise Banks now has six branches in Minnesota. His approach was praised by a much larger competitor, Wells Fargo, which in 2015 awarded Sunrise a national award for developing innovative products and services to help people not connected to banks.
“They’ve been really nimble,” said Anne Leland Clark, director of finance and learning at Prepare + Prosper, “and when you hear ‘bank’ you don’t think nimble.”
New Sunrise offers include a loan program called TrueConnect, which is offered by employers and allows employees to borrow and make payments on the loan through payroll deductions over time. More than 1,000 employers participate nationwide.
Joyce Norals, vice president of human resources at Lutheran Social Service, which offers TrueConnect to employees, said she was initially skeptical because of the interest rate on loans – 24.99%. But she said the employees who use it love her.
“People who make payday loans pay up to 300 to 500% interest. It’s amazing, ”said Norals. “So that seems reasonable in this context. “
In April, Sunrise added a credit building program with tech company SelfLender.com that works like a reverse loan. It is available nationwide. People make monthly payments and receive the money at the end of the 12 month period. These payments help to increase the credit scores of borrowers.
Bipes-Timm, of Habitat, said his organization directs people to the program when they need to increase their credit to buy a home.
“In a year they qualify,” she said.
Yet Reiling acknowledges that some may still be skeptical of a for-profit bank.
“I’m going to use whatever legal structure I can to do good and do good at the same time,” he said.