The Rio Grande Valley Multibank (RGVMB) is a local Community Development Financial Institution (CDFI) working in the Lower Rio Grande Valley of Texas, bordered by Mexico to the south and the Gulf of Mexico to the east. The RGVMB is a for-profit, stockholder-held organization owned by ten (10) banks and organizations: Wells Fargo, Bank of America, BBVA Compass, Frost Bank, International Bank of Commerce–Brownsville, IBC– McAllen, IBC– Zapata, National Cooperative Bank, Lone Star National Bank and the Community Development Corporation of Brownsville. The RGVMB's target market is the Lower Rio Grande Valley, Texas (RGV). The RGV is one of the poorest and fastest-growing regions in the United States. The RGVMB's target population is the growing, low-to-moderate income Latino population.
In 1996, the RGVMB received certification as a Community Development Financial Institution (CDFI) from the United States Department of Treasury. The Corporation’s most recent recertification was received in 2017.
In 2013, the RGVMB became the first CDFI to become a member of the Federal Home Loan Bank of Dallas in 2013.
Community impacts to date include:
· Over 735 Mortgage loans totaling over $30 million dollars all to families earning less than 80% AMFI.
· Interim construction financing totaling $4.5 million developing over 350 new single-family homes all for families earning less than 80% AMFI
· Acquisition financing of raw land and improved lots totaling $852,000 for the purchase by local affordable housing non-profits upon which 242 new affordable homes have been built and sold to families earning less than 80% AMFI.
· Over 16,000 Small Dollar Loans made to individuals in the Rio Grande Valley, over $16 million in total loans originated, with only a 4.5% loan loss in 2017.
· Franchised eleven (11) Community Loan Centers with local non-profits in three (3) states since 2014. Total lending by franchise partners since 2014 is 15,000 loans for $16 million.
Since its inception, the RGVMB has been managed on a day-to-day basis through an Administrative Agreement with the CDC of Brownsville which provides staffing, technical, administrative, accounting and expanded development services to the RGVMB. This arrangement has served to maximize efficiencies, reduce costs and provides for shared staffing.
RGVMB Board Members:
In 2009 the Rio Grande Valley Multibank had a hard decision to make, do we close our doors or do we expand into the market place with new and lofty goals to truly impact the Rio Grande Valley. We decided that the second option was the way to move. At that time the real estate market, national and local economies were at their lowest point, nevertheless, we saw opportunity where we could make a difference in people’s lives and make the RGVMB successful.
The RGVMB Board and Staff set two goals in 2009; 1) Using the new Dodd Frank Act, the RGVMB would join the Federal Home Loan Bank of Dallas to access long term funding for mortgage loans and 2) create a small dollar loan product to combat the predatory payday and car title lenders. Since 2011 the RGVMB has seen a significant impact in our market.
In 2012, our total assets were just $7.6 million, equity stood at $2 million and mortgage loan portfolio was at $5 million and shrinking. In order to increase our financial strength, we set out to do two things that no other CDFI had yet perfected: join the Federal Home Loan Bank of Dallas and create a small dollar loan program to compete against high cost payday lenders in the RGV. Using these two strategies we grew from $7.6 MM to $13.7 MM by December 2017.
In early winter 2017, RGVMB staff and board met to start its three-year strategic planning process with an idea session. At this session, staff and board reviewed the past three year’s history as well as looking at internal and external challenges and opportunities. In April 2017 RGVMB invited more than 30 people (board, staff, franchise network members and friends) to a two-day strategic planning event at the Federal Reserve Bank of Dallas moderated by Joe Gonzales of NeighborWorks America. The main question of the session to be answered was “How do we get to 50,000 loans a year?”
CASALoan (formerly known as Affordable Housing Loan Program)
The RGVMB's oldest affordable mortgage financing program is the Affordable Housing Loan (AHLP) program, now rebranded as the CASALoan Program. Since its founding in 1994, over 735 loans totaling over $30 million dollars in first lien loans have been made all to families earning less than 80% AMFI. This includes a six-year period, starting in 2006, when the loan product was dormant when it was overwhelmed by rampant no down, no doc, no income lending in the area and the subsequent housing crisis in 2009. The RGVMB discontinued the product due to lack of interest by clients.
The product remained dormant until 2013 when the AHLP was rebranded as the CASALoan and the RGVMB began utilizing its new line of credit with the Federal Home Loan Bank of Dallas. Since the relaunch of the CASALoan in 2013 the RGVMB has originated over 109 CASALoans totaling $6.7 million.
Small Dollar Loan Program- Community Loan Center (CLC)
The RGVMB newest program is its Community Loan Center’s small dollar loan program. This product was created to provide a marketplace alternative to high cost payday, pawnshop, signature loan, car title loan, and check cashing outlets. The RGVMB has been operating this program over the past six years and has to date originated over 16,000 transactions in the Rio Grande Valley totaling over $16 million.
The program is designed to assist working families who face emergency situations that are not of a regular nature, who would be currently utilizing the services of a high cost payday or salary advance lender to meet their needs. The amortization term and monthly payment amount is calculated to allow the family sufficient time to repay (versus having to do a rollover loan with a payday lender based on an 18-day turn), while at the same time making the monthly payment affordable based on the median income of the marketplace.
The CLC Loan is a maximum of $1,000, with an amortization period of 12 months, at an interest rate of 18%. A one-time $20.00 set up fee per borrower is required. Current market high cost lenders have an average 500% APR and 18-day amortization period.
The RGVMB is partnering with area employers to allow them to offer the program to their employees, coordinate and assist in taking loan applications and using payroll deductions to insure repayment through the employee's paycheck. The CLC is an on-line loan origination and servicing program. This allows for less “touch” per-loan and lower expenses overall. RGVMB is able to pass these savings on to the borrower. All transactions are done on-line including application and servicing.
Community Loan Center – Franchise Services
In 2014 the RGVMB began to franchise the Community Loan Center to other CDFI’s around the country. Currently there are eleven active franchises in Texas, Maryland and Indiana. Since 2014 the CLC Franchises outside the Rio Grande Valley have originated 15,000 loans totaling over $15 million.
Working as the Franchisor of the Community Loan Center business model. The RGVMB/CLC provides loan funding, servicing and franchise services. This bifurcated model allows local non-profit and CDFI lenders to offer an alternative to high cost loans in their market lending their own capital within a proven model. Each local lender is required to raise its own lending capital and recruit local employers and leave all the back-room administration and servicing duties to the RGVMB/CLC. This model has proven to be highly effective and has allowed the RGVMB/CLC to generate 40% of its revenue from administration and servicing fees as well as allowing the local lender to reach breakeven within two years of launch.