Brandon Holveck|The News Journal
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Clayton Joyce says he learned banking the hard way.
Without a bank near his New Castle home, the 42-year-oldgrew up cashing his checks at aliquor store. Every time he paid expensive fees— costs that he says were always changing.
Joyceeventually opened an account at the PNC Bank on Delaware Avenue in Wilmington. There, without knowing basic banking practices,he incurred overdraft fees, failed to maintain minimum balances and had checks bounce.
And today Joyce still faces the challenge of getting there, havingto beat rush hour traffic to arrive before the bankcloses at 5 p.m. The bank is roughly a 20-minute drive from his home near the New Castle library.
That's why Joyce, a union carpenter who haslived in New Castle since 1996,started attending meetings for the New Banking DelawareInitiative. It's a project that aims to bring abank to Joyce's neighborhood and the rest of the Route 9 corridor, which spans from Southbridge to Old New Castle. The area has not hada bankfor years.
"I have children. I wouldn't want them to have those hidden fees or those unnecessary deductions," Joyce said. "I think it would be smart to have children be financially literate. Learn to bank early and not the hard way."
The initiative's co-chairs, Larry Lambert and Ron Handy, callthe Route 9 corridor abanking desert. The termrefers to an area without traditional bank branches, much like a food desert describes an area without access to fresh food.
The Route 9 corridor is densely populated —16,500 people live in more than a dozen communities along the corridor — yet the closest banks are in downtown Wilmington.
It's one of many emerging deserts as online banking tools and online nonbank lenders have become increasinglyprevalent, leaving expensive to operate brick-and-mortar locations by the wayside.
A report from the National Community Reinvestment Coalitionfound that 86 new banking deserts emerged between 2008 and 2017, as almost 10,000 branches nationwide closed overthat time.In Delaware, 27 branches closed between 2008 and 2017, a loss of around 10 percent, according to the NCRC report.
A study from the St. Louis division of the Federal Reserve identified 1,132 deserts at the end of 2014.
Joyce sees the issue manifest almost daily in his community. Without a traditional brick-and-mortar bank residents pay high fees to cash checks or withdraw money from ATMs, and can fall victim to predatory payday loans, he says.
The lack of available loans and banking services stuntsmall business growth, which in turn limits employment opportunities.
Median household income varies significantly throughout the Route 9 corridor. Communities in the northern portion of the corridor, which are majority African American, have median incomes as low as $33,500as of 2017. Communities in the southern portion of the corridor are closer to New Castle County's average median income of $66,647.
Jakim Mohammed, a Dunleith resident of 16 years, also makes the trek to Wilmington when he needs to visit a branch. He sees bringing a bank to the Route 9 corridor as an opportunity to teach young people in his community about safe banking and saving practices.
"I have to come all the way to Wilmington. It's not convenient at all," Mohammed said.
Joyce agrees, seeing how he would have appreciated the lessons growing up years ago.
"I think the community needs this right now," Joyce said. "A lot of people spend it when they get it. Just practicing saving money, being stable. That needs to be introduced."
Why not bank online?
The Route 9 corridor's last bank branch,a SunTrust in New Castle's Crossroads Shopping Plaza, closed about five years ago according to Handy. The corridor was without a bank for years before the SunTrust opened.
Lambert and Handy, the initiative's founders, believethat in the time since it closed online banking alternatives haven't been able to match thevalue of atraditional brick-and-mortar branch.
"People want to be able to look somebody in the eye, shake their hand and know my money is going to be safe here," Lambert said. "And that’s what we’re looking for."
Lenny Brokenborough, who lives in the Boothhurst development north of Old New Castle, does his banking online. Yet he started attending the initiative's meetings after being introduced to Lambert at an event at his cousin's house.
"We do need a bank," Brokenborough said. "A lot of people don't trust banking online. A lot of people don't trust the internet. Online, that's more of a preference to me."
National trends reinforce that assessment. Even as itbecomes more convenient for many people to deposit checks and perform other basic banking tasks online, face-to-face interaction is still preferred by most when considering larger financial decisions such as loans and mortgages, studies show.
According to a 2018 JD Power study, more than three-quarters of bank customers said that they want guidance from their bank. And 58% of customers who received guidance face-to-face felt it fully met their needs, while 45%of customers who received advice online felt it fully met their needs.
The desire for face-to-face interaction is reflected in the direction taken by somenational brands. For example, Capital One is creating cafesdesigned to promote more casual one-on-one advising. After experimenting with mostly digital branches stocked with self-service kiosks, Citi retreatedto an employee-based set-up with its workers roaming the building with iPads to create a relaxed and informal atmosphere.
The focus is less on basic banking tasks such as deposits and withdrawals, which can be performed almost anywhere, and more on building relationships with customers.
But it's rare to see a bank expand its retail footprint. Bank branches are expensive to set-up and operate. Experts estimatethat traditional bank branches cost anywhere between $2 million and $4 million to set up. According to the bank services company ARCA, the cost of operating a branch is at least $200,000 a year.
Dialogue to action
Handy has lived in the Route 9 corridor his entire life.
He has spent the last 25 years working with the Boys and Girls Club of Delaware and in addition to serving as co-chair of the New Banking DelawareInitiative, is the co-chair of the New Castle Prevention Coalition.
Before getting involved with youth, Handy served in the U.S. Navy.
Lambert has worked in corporate banking for nine years. He does not live in the Route 9 corridor but has multiple family members that do. Last year Lambert ran unsuccessfully for state representative in the 7th district.
Together they formed the initiative after participating in aYWCA program called Dialogue to Action. At the end of the six-week program, Lambert and Handy decided to form the New Banking DelawareInitiative to continue the conversation.
They holdmonthly meetings at the Route 9library to teach members of the community about the issue. Meetings are held on the last Tuesday of every month at 6 p.m. About a dozen people attend on average.
Currently, Lambert and Handy arecompilinga roster of community supporters, including private businesses, non-profits and labor unions. They are also carrying out risk assessment and transportation studies toshow banksthe need exists and that abank can be profitable along the corridor.
They said they've had preliminary meetings with a few banks but hope to have more traction with the community's backing and once their studies are complete.
Handy and Lambert's effort is not the first. Five or six years ago Handy reached out to banks on his own and before that credit unions popped up "here and there," Handy said,but none lasted long.
Why would a bank come this time?
Handy and Lambert think a bank would thrive in the Route 9 corridor and point to the Port of Wilmington as one of the main reasons why.
Emirati port operator Gulftainer took over the port last year and said at the timeit would invest some $600 million in upgrades and a new container-handling terminal. State officials estimated that the takeover could double the 5,700 port and maritime-related jobs in Delaware.
"Past generations of this, they were asking for a bank, advocating for a bank," Lambert said. "We’re not moving from a position of asking, we’re moving from the position of strength. Which is, this area will be getting a bank, does your community engagement philosophy match what our community needs?"
Community Reinvestment
There is legislation in place that attempts to thwart the rise of banking deserts, but many, including Lambert and Handy, argue it's not enough.
In 1977, Congress passed the Community Reinvestment Act which requires banks to lend consistently in every community where they collect deposits.
The Federal Reserve's website describes the legislation's purpose as "to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods."
But what if the banks don't do business there?
Every time a bank closes a branch, the area they must serveunderthe Community Reinvestment Act shrinks. In many cases, as banks look to maximize profit, they've closed branches in lower-income areas and opened them in wealthy ones (if they've opened new branches at all).
More than 90 percent of banks receive at least a satisfactory rating in regard to the Community Reinvestment Act, according to the NCRC.
It's left communities, like those in the Route 9 corridor, feeling left out.
"I know for a fact that a bank would be a big boost," Brokenborough said. "We just need people to see more things like this, to make themselves feel good about who they are and where they're at."
Contact Brandon Holveck at bholveck@delawareonline.com or at (302) 324-2267. Follow on Twitter @holveck_brandon.