How does a local bank earn an “outstanding” rating for compliance with the federal Community Reinvestment Act (CRA), and what does that mean to the public? About every three years, federal regulators review banks, looking at lending practices, products and services offered, in addition to the overall commitment to meeting the needs of the local community.
Northeast Bank, headquartered in Northeast Minneapolis, has received the highest rating of “Outstanding” over the past eight continuous exam periods (since 1997, the latest July 2020) from the Federal Deposit Insurance Corporation (FDIC), the only bank in Minnesota to have done so.
Keys to success:
For this primarily commercial bank, success ties to founder Walter Rasmussen and his family’s ongoing belief that the stronger a community is the stronger a business will be. Community members may think of a bank’s charitable contributions and involvement in organizations as CRA activities, and they are. But the core of the ratings is the record of helping to meet the credit needs of a bank’s area, including low-and-moderate-income neighborhoods, in a manner consistent with its resources and capabilities.
Northeast Bank made 694 Community Development (CD) loans during the exam period 2018-2020, totaling over $178 million. President and CEO Thomas M. Beck said the companies who bank at Northeast range in size from $100,000 in annual revenue to close to $10 million. There are concentrations in North and Northeast Minneapolis; and as electronic banking has become more the norm (especially driven lately by the pandemic) they are working with farther-away businesses.
Ben Rasmussen, who is on the bank’s board of directors, is a partner in Twin Ignition, a software technologies incubator at 1317 Marshall St. NE. “My passion is startups. We help them with some seed funding, we mentor the founder or founding team, help with everything from their tech platform to got-to-market strategy” to making contacts with potential large clients. This is just one example of how Northeast Bank helps, through referrals, to grow their own potential customers to where they are bankable.
Eva B. Rasmussen, Senior Vice President of Strategy and eBanking highlighted WomenVenture clients as another example of resourcing support that customers appreciate.
The company has been woman-owned since 1991 by Belva H. Rasmussen, Walter’s widow; she chairs the board of directors. “It was her drive to help women-owned businesses,” Eva said. The employees ESOP owns part of the company.
Other community activities
During the most recent exam period (2018 – 2020), Northeast Bank employees, officers, and directors volunteered approximately 6,100 hours within the community, with 3,400 of those hours qualified as community development activities. Some activities and donations come through the bank, others through the bank-funded foundation.
Ben traced the roots of the Rasmussen Foundation that his mother and he initiated. Walter, growing up in northern Minnesota during the Depression, was eager to give back after he had some success. “That was the impetus my mother had.” The first project was building a playground at Holland School, and education has remained a theme. They created opportunities to bring arts, such as the Minnesota Orchestra (for parking lot concerts) and the Walker Art Center to the neighborhood. The foundation funded the Rasmussen Clinic for Cardiovascular Disease Prevention, at M Health Fairview, with Dr. Jay Cohn MD and Bristol Myers Squibb.
All aspects of health, particularly for insurance-insecure populations, are priorities, said Sue Sjoselius, Director of Risk Management and Marketing. Sjoselius added that the bank fosters financial literacy with the EverFi program in schools.
Beck said the bank had once ventured into housing interests and now “work with organizations that are better at it than we,” which is true of other pursuits such as shrinking the achievement gap, addressing food insecurity and keeping kids safe and off the streets, the types of things Hospitality House, a favorite organization in North Minneapolis, does.
Volunteering, which has often meant serving on boards, or teams of Northeast Bank employees going to a site to complete a task or put on an event like the benefit gala for Neighborhood Health Source, has changed during the pandemic. “We’ve worked on different types of projects, like mailings,” Sjoselius said.
Beck commented that employees feel the sense of purpose and impact that come from volunteering, as well as professional development, and that has led to a pretty high staff-retention rate.
How has business changed in the last 20-plus years?
“It’s still about fundamental business needs,” said Beck, “Plant, equipment, etc. We have some 40- or 50-year customers.”
The bank now has (as do many banks) a full line of deposit and cash management tools; merchant card processing, electronic transfers, ACH and remote deposits. Eva Rasmussen, who heads up that department, said their Autobooks service lets clients send invoices electronically, “a great benefit to non-profits and churches, for example.”
Northeast Bank has offices in Minneapolis, New Brighton, and Coon Rapids and defines its local community as all of Hennepin, Anoka, and Ramsey County.
To see CRA ratings of all banks regulated by FDIC, see: https://www7.fdic.gov/CRAPES. Other regulators that oversee other depository institutions include the Board of Governors of the Federal Reserve System (FRB) and the Office of the Comptroller of the Currency (OCC).; comprehensive information can be found at https://www.ffiec.gov/cra/default.htm.