Arkansas Banks Find Currency in Diversity

Arkansas Banks Find Currency in Diversity
Adam Arroyos, a member of the board of Signature Bank: “It is not about launching an initiative or a branch; it is really about expanding our capability from beyond just serving one niche of our customers to being able to serve a diversity of customers.” (Marty Cook)

It’s more than just a bank branch for Adam Arroyos.

Arroyos, the CEO of the Fayetteville talent firm Serve2Perform, was an early and eager supporter of Gary Head’s project to open a Latino-focused bank in northwest Arkansas. Arroyos has a doctorate in philosophy and has been a longtime leader in the region’s Latino community.

Head, the CEO of Signature Bank of Arkansas, said his bank will open a branch in east Rogers, a city in which nearly 34% of the population identifies as Hispanic or Latino, according to the U.S. Census Bureau. Head said he would like to eventually open similar branches in other cities in northwest Arkansas.

One of Head’s first moves to support the initiative was to name Arroyos to the board of directors of both Signature Bank and its parent company, White River Bancshares Co. Head also named former longtime Walmart executive Francisco Herrero as Signature Bank’s president of multicultural banking.

“For me, it is significant for not just the Latino community, but also for the region and our economy and our banks in general,” Arroyos said. “It is not about launching an initiative or a branch; it is really about expanding our capability from beyond just serving one niche of our customers to being able to serve a diversity of customers.

“Now we are serving our entire community. That has to happen because, over the years, the diversity of our community has grown significantly.”

Signature Bank isn’t the only Arkansas bank attempting to make inroads in the minority communities of the state. U.S. Bank of Minneapolis has started two pilot programs to improve banking access for the Black community in Little Rock, and Encore Bank of Little Rock hired Miguel Lopez as a senior vice president in 2020 to help improve the bank’s services to underbanked communities.

By the Numbers

The need for better banking access is there, as shown by the numbers.

A 2020 report by the FDIC said that 13.8% of Blacks and 12.2% of Hispanics or Latinos were unbanked compared to the overall national rate of 5.4%. Among whites, the percentage of unbanked was 2.5%.

U.S. Bank is attempting to address the deficit in Black banking with its $116 million Access Commitment. It chose Little Rock for two pilots in the initiative, one addressing business investment and the other residential housing.

Access Home is a three-year, $3 million project overseen by Mike Richardson, U.S. Bank’s Arkansas regional president.

“It is about changing that wealth gap specific to home ownership,” Richardson said. “What the real issue is, disproportionately they pay more rent and their home ownership rates aren’t the same as what they are in other communities. We want to target that and change that wealth gap by moving more Black families into their own homes.”

Richardson said a key facet to the program is the bank’s desire to hire more Black loan officers. Just 1% of mortgage loan officers nationally are Black, he said.

U.S. Bank’s Access Business program is being run by Cassandra Kidd in Little Rock. It is one of nine programs nationally that U.S. Bank has undertaken.

A survey by the Federal Reserve in 2021 revealed that 13% of Black-owned businesses successfully obtained loans compared to 40% of white businesses. Kidd said that discrepancy is a major reason just 4% of new Black-owned businesses survive compared to the national rate of 10%.

Kidd said she wants to educate Black entrepreneurs about what banking services are available to them.

“If they do survive the startup stage, they are still going to struggle disproportionately with debt equity in addition to the challenges of lack of access to capital, connection and information,” Kidd said. “We find that these three are the prominent areas that are going to limit business growth and employment opportunities. My goal is to leverage and coordinate our resources internally and with external partners to address those.”

The Right Thing

Head said expanding banking to intentionally serve minority communities is a sound financial plan, but that is not the only or most important reason.

Head said the investment in Rogers will be more than $1 million. Signature Bank is also working with Serve2Perform to add Latinos to its community bank boards in other cities.

“Our local community is rapidly changing,” Head said. “To keep up with the needs of our changing community, it’s important to make sure we represent all of the community, not just part of it.”

Arroyos said that, similar to U.S. Bank’s focus on information, Signature Bank’s initiative will also focus on educating the Latino community about what a bank can offer. He said too many in the Latin and Hispanic communities either don’t know enough about the financial ins and outs to feel comfortable going to a bank or don’t trust institutions because of the language or cultural gap.

“For banks, if we are truly community banks, we should be able to serve the entire community,” Arroyos said. “It is critical for our Latino community because there is limited understanding of how to fully utilize the financial and the banking systems and what is available to us.

“For whatever reason, this community continues to be ignored and continues to be forgotten. When we read things about diversity and inclusion, not often is it really referring to Latinos.”

Herrero, a native of Puerto Rico, said personal relationships are important to the Hispanic community. You can’t just have a bilingual cashier or signs in Spanish to win over the community; they have to trust the people before they do business, he said.

“It is way beyond just having someone who can speak a second language,” Herrero said. “Hispanics want to establish a personal relationship first. If they like you and they trust you, then they will proceed to access the services you provide.

“We have received a lot of customers already by word of mouth — mothers and grandmothers and neighbors. In a very short time there is a lot of appetite for this to be served the right way.”

The banking inclusiveness expansion won’t be an overnight success, officials said. Kidd said the Access Commitment project is a marathon, not a sprint, and U.S. Bank is in it for the long haul.

“This is a generational change,” Richardson said. “We’re not going to see an immediate impact in two months or three months. It is a real investment, but really that is how we are going to change the wealth gap itself.”