Neighborhood Housing Services of Chicago (NHS) held its Annual Community Banks Partnership Meeting on Tuesday, April 30, 2013, at the Federal Reserve Bank of Chicago. The meeting brought together over 60 representatives from area community banks, regulators, and industry partners to discuss the evolving landscape of community banking. The NHS is Chicago’s largest nonprofit neighborhood revitalization organization and works in partnership with businesses, government, and neighborhood residents to revitalize low- and moderate-income neighborhoods throughout northeastern Illinois, specifically Chicago, south suburban Chicago, Elgin, and the Fox Valley.

Established in 2007, the Community Banks Partnership is an innovative collaborative that supports NHS’ community reinvestment programs and services through financial support, lending capital, service, and counsel. The partners meet at least once annually to discuss issues important to the housing and lending industries and also host NHS’ Annual Meeting each fall.

Michael Berry, director of Policy Studies for the Federal Reserve Bank of Chicago Community Development and Policy Studies Division (CDPS), welcomed the Community Banks Partnership to the Federal Reserve Bank and provided the opening address. He noted that NHS and the Fed have a long history of partnering on community based initiatives, and the Federal Reserve was instrumental in establishing what is now known as NeighborWorks® America, which delivers its programs through the national NeighborWorks® network – 235 independent, community-based organizations – one of which is NHS of Chicago. Berry noted that NeighborWorks® pioneered the secondary market for mortgage loans to borrowers with limited down payment or credit history. This early subprime lending was based on sound underwriting – a hallmark of NHS lending to the present day – though the term subprime has taken the opposite meaning in the recent past. He went further to say that the Seventh District has more community banks than any other district. Although CDPS is not focused on bank supervision, the group has long been interested in community banks, current regulatory developments, and the ways that smaller banks adapt to environmental changes, such as the sharp downturn in property values, a traditionally common source of collateral. Additionally, CDPS is especially focused on institutions that have received certification as Community Development Financial Institutions (CDFIs). Berry went on to say that regardless of an institution’s charter and whether or not it is a CDFI, “We know that community banks often serve as the economic engine of local communities.”