A little more than a year after the Community Development Bankers Association and National Bankers Association
The Advancing Communities Together deposit initiative collects cash from banks, corporations and other large depositors, then channels it to community development financial institutions and minority depository institutions, many of which face unique funding issues.
Ponce Financial Group CEO Carlos Naudon told American Banker that the program has helped his $3.2 billion-asset, New York-based bank plug gaps in its funding structure. “We’re heavy users,” Naudon said in an interview. “We need alternative sources. Our loan-to-deposit ratio is significantly north of 100%.”
The initiative is ramping up at a time when federal support for mission-focused banks is waning. In March, the Trump administration issued an executive order directing several agencies, including the Community Development Financial Institutions Fund, to scale back personnel and operations. The order has prompted
Naudon, who was named chairman of the Community Development Bankers Association in July, said helping to expand the Advancing Communities Together initiative will be a priority.
“Having a $1 billion fund like this is a goal that can be reached,” Naudon said. “You’ve got a multi-billion company that wants to make an impact in their community. They can’t make loans directly, but by putting $10 million to $15 million in ACT, they help not just us but a number of other communities as well.”
Ponce is active in affordable housing lending, where loan sizes can climb into the tens of millions of dollars. “We know when we’ve got loans to close and when we need to fund construction,” Naudon said. “We can look and say, ‘OK, a large deposit is coming. Now we can cover that.'”
Working with IntraFi, which provides deposit placement and wholesale funding services, the Community Development Bankers Association and the National Bankers Association unveiled ACT in June 2024 to bolster the deposit bases of member banks that struggle to raise funds inside their less-affluent footprints.
“Twelve of our 13 branches are in low- to moderate-income communities,” Naudon said. “[Customers] don’t have extra money.”
In a survey published in February, members of the National Bankers Association, which represents MDI banks, identified deposits as the sector’s single biggest pain point.
“This program is a powerful example of how corporate deposits can be both mission aligned and market smart,” Todd McDonald, president of the $1.1 billion-asset Liberty Bank & Trust in New Orleans and the NBA’s chairman, said Wednesday in a press release. It “allows us to expand access to capital for historically underserved individuals and small businesses, fueling economic growth where it’s needed most.”
Currently, 81 banks participate in ACT, along with 26 institutional depositors. Four financial firms — Blackstone, The Bank of New York Mellon, Warburg Pincus and IntraFi — seeded the initiative with $35 million at its launch.
IntraFi operates the program through its IntraFi Cash Service, which places depositor funds in Federal Deposit Insurance Corp.-insured banks. ACT depositors can select a community development financial institution or a minority depository institution as their relationship bank, but a portion of each deposit is distributed among the other ACT participants.
The deposits are understood to provide long-term funding for participating banks. They also don’t require the levels of securities collateral that are needed with other municipal and corporate deposits, Naudon said. High collateral requirements “diminish your ability to lend money,” he added.