A year ago, Mary Louise Carter had to drive outside the boundaries of the city she governs to cash a check at a bank.
So, too, did many residents of Pagedale, a city in north St. Louis County with 3,300 residents.
Payday loan stores are numerous in Pagedale, which has higher than average unemployment and lower median household income compared to the rest of the region. But it wasn’t until last November that the city got the first bank branch in its 63-year history.
“It’s right here where we need it,” Carter, Pagedale’s mayor, said about the Midwest BankCentre branch at 6810 Page Avenue. “Now we don’t have to send a police officer to go out and make a deposit for Pagedale outside the city.”
In the year since the Pagedale branch opened on Nov. 13, 2012, customers from Pagedale and surrounding communities have opened hundreds of savings and checking accounts and gotten loans for cars, home improvement projects and businesses.
Carter and the city each opened accounts at the branch. The city of Pagedale is the branch’s largest deposit customer.
Fewer people in her community are tapping into the payday loan services, which offer quick access and high fees, the mayor said.
“I talked to someone who once paid $100 to get an income check cashed,” Carter said. “That’s ridiculous. You’re paying a lot of money at the check-cashing places, when you can get a loan with an interest rate less than 2 percent at the bank,” she said.
The Pagedale branch represents the most recent effort to deal with the issue of the unbanked — those who don’t have a checking or savings account. A large number of unbanked individuals fosters deeper financial instability as the region’s poor relies instead on costly payday loans or cash-checking services.
St. Louis is among the cities with the highest numbers of unbanked black households in the country, according to the Federal Deposit Insurance Corp.
The problem is most acute in communities like Pagedale, where 97 percent of residents are black and the median household income is $35,777, according to U.S. Census figures, far below the $54,149 figure for the St. Louis region.
Midwest BankCentre says the branch has exceeded the goals it set out for the facility, which opened in leased space on the ground level of the Rosie Shields Manor senior apartments.
To date, the Pagedale branch has grown to $6 million in deposits and $2.5 million in loans.
“We had a pro forma, looking six years out, and as of April this year, we’re already on year four of our goals in deposits and lending,” said John Shivers III, Midwest BankCentre’s vice president of business banking. “You don’t get to that unless you have the buy-in from the community.
Before the branch’s opening, the lending practices of Midwest BankCentre and other small local banks were questioned for fairness. Beginning in 2009, the nonprofit fair housing advocacy group St. Louis Equal Housing Opportunity Council alleged Midwest BankCentre, a small community bank based in the Lemay area, discriminated in its lending based on race.
The following year, the U.S. Department of Justice sued the bank, alleging it engaged in a pattern of discrimination on the basis of race and color related to its mortgage lending.
The bank denied the allegations, but to settle the DOJ’s complaint, in 2011 Midwest BankCentre agreed to invest $1.45 million in areas of St. Louis with majority African-American populations and open a branch in Pagedale.
With those allegations behind them, Midwest BankCentre officials began introducing the bank and its staff to community groups, churches and schools to make the Pagedale branch succeed.
“We’ve tried to approach this as a business and not about checking boxes,” said Ron Barnes, Midwest BankCentre’s chairman. Founded as Lemay Bank & Trust Co. in 1906, Midwest BankCentre has $1.1 billion in assets and seven branches.
The bank’s decision to open a branch in Pagedale is servicing an unmet need, said Julie Stackhouse, senior vice president of the Federal Reserve Bank of St. Louis.
“The community wants this bank,” she said while attending an anniversary party at the branch in November. “These guys are pioneers, they really are bad credit pay day loans.”
The bank began eyeing opportunities to expand beyond its south St. Louis County base in 2000, ultimately opening branches in St. Charles County and Clayton over the past decade.
When the Pagedale branch was being planned, Barnes met with Chris Krehmeyer, president and CEO of Beyond Housing, a St. Louis-based nonprofit that provides affordable housing and home-ownership services to low income families.
“We felt that as opposed to us doing something by ourselves, having an informal partner was critical,” Barnes said.
Beyond Housing led the effort to bring a Save-A-Lot grocery to the same stretch of Page in 2010. Now the store shares a parking lot with the bank, which had to overcome unfamiliarity before it opened its doors.
“I’m willing to bet very few people in Pagedale had ever heard of Midwest BankCentre before it opened,” said Krehmeyer, who now holds a seat on the bank’s board. “The bank has done a good job building relationships, not only from a customer or business standpoint, but also to overcome the skepticism some have for banks and to slowly begin to have that sense of trust.”
To attract customers, the bank has tailored loans and services for the community.
“Part of the challenge has been trying to understand the needs here, both the physical location and customized services,” Barnes said.
One product that’s popular is the bank’s affordable home improvement loan, which comes with a low interest rate of 1.99 percent and closing costs covered by the bank.
The bank made 70 of these loans throughout its seven branch footprint so far this year, and 52 of those were made in Pagedale. The bank offers a credit booster loan at the Pagedale branch, which helps customers improve their lagging credit scores.
The bank is helping spur other development in the area, according to Krehmeyer and the bank’s CEO, Jim Watson.
“There’s a vision to extend development down Pagedale all the way to the (St. Louis) city limits,” Watson said.
Beyond Housing is planning to break ground next year on a new three-screen movie theater across the street from the bank and a health clinic across the street from Midwest BankCentre.
“These things all fit together,” Krehmeyer said. “Now that we have the financial services, senior housing and grocery store — the needs — we can go to the wants, like a movie theater.”
REACHING THE UNBANKED
The Pagedale bank’s success is being watched closely by business and community leaders who are working to turn St. Louis’ high unbanked statistics around.
The use of payday loan services is “just a cycle you never get out of,” Alex Fennoy, co-chair of the St. Louis Regional Unbanked Task Force and the bank’s senior vice president and community development director, said. “We think our presence in Pagedale interrupts that cycle.”
The task force was formed after a FDIC report found that in 2009, St. Louis ranked highest in the country for the number of black households that were unbanked, 31 percent. In 2012, when the report was updated, St. Louis ranked third in the country for unbanked black households, at 28.6 percent.
In February, Bank-On Save-Up St. Louis, a group of 20 financial institutions set a goal of helping people open 20,000 bank accounts in the region by 2015 to help reverse unbanked trends. So far, the effort has led to the creation of more than 1,300 accounts, with a 97 percent retention rate.
Many of the accounts at the Pagedale branch are low cost or free BankOn checking and savings accounts, which have smaller overdraft fees than most banks. Ultimately, the bank wants to extend other financial services to those customers, and Barnes said the high number of unbanked people in the region offers banks an opportunity.
“If you have 100,000 unbanked folks in St. Louis,” he said, “isn’t that more of an opportunity than going out on Manchester Road and competing with all those banks?”
No credit check payday loans offer quick financial support before the next payday in an easy and instant manner.