Low- and Moderate-Income Home
Financing: What Are the Trends in Kansas City?
By James Harvey and Kenneth Spong
Over the last decade, many significant developments
have influenced home lending. Among these developments are the longest
expansion period in U.S. history, pathbreaking technological and financial
innovations, new regulatory and legislative incentives for low- and
moderate-income lending, and continued growth of community organizations and
special home lending programs.
This article takes a look at these trends and their
possible effect on home purchase lending in the Kansas City metropolitan
area between 1992 and 2001. The article examines changes in home financing
across the entire metropolitan area, as well as among low- and
moderate-income borrowers and within low- and moderate-income neighborhoods.
Also analyzed are the contributions of different types of lenders—banks and
thrifts with local banking offices, banks and thrifts with no Kansas City
banking offices, and independent mortgage companies.
Among the more noteworthy findings in this analysis is
the substantial growth that has occurred in home purchase lending for the
entire Kansas City metropolitan area, with an increasing share of this
lending going to low- and moderate-income borrowers and neighborhoods. Of
further interest is the growing importance of home lending by banking
organizations without deposit-taking offices in Kansas City. In particular,
the rapid emergence of such organizations in low- and moderate-income
lending provides a strong signal that this lending is meeting many of the
same market tests as other forms of lending, thus foreshadowing a more
continuous flow of financing to lower income neighborhoods.
Community Bank Performance in
Slower Growing Markets: Finding Sound Strategies for Success
By Forest Myers and Kenneth Spong
A substantial number of community banks in the Tenth
Federal Reserve District are located in rural areas that are experiencing
slower economic growth, a less vibrant business environment, and little or
no population increase. As a result, these banks face a variety of
challenges, including how to maintain prosperous banking operations, find
sound lending opportunities, and attract an adequate supply of deposits.
Other possible challenges involve finding capable staff, growing and
achieving an efficient scale of operations, and contributing to the health
of their communities.
This article looks at how banks that operate in slower
growing markets are responding to these challenges. As a group, Tenth
District banks in slower growing counties appear to be performing at a
satisfactory level, but they fail to match the returns achieved by banks in
faster growing markets, and they also fall short on several other
performance measures.
A portion of the banks in slower growing markets,
though, are doing remarkably well. Telephone interviews with senior officers
at these “high performing” banks revealed a number of strategies and keys to
their success—all of which could provide an excellent focal point for other
banks in low-growth markets. These successful strategies include: getting
the basic business of banking down right as the first step; being open to
new business opportunities that are consistent with the bank’s resources and
expertise and then taking a slow and careful approach in entering these
activities; and actively assisting the local community and the bank’s next
generation of customers.