A well-connected bank with a green bent plans to open its first branch in downtown Austin in June, hoping to capitalize on the local appetite for environmentally friendly projects.
Named One Earth Bank, it has among its backers U.S. Rep. Lloyd Doggett; former Dallas Mayor Ron Kirk; former Texas Comptroller John Sharp; filmmaker Richard Linklater; Jim Marston, chief of Environmental Defense's Texas operations; Austin developer Perry Lorenz; state Rep. Mark Strama; and organic gardener and radio host John Dromgoole.
The bank will feature a green deposits program that will channel customers' money to green building projects, clean energy businesses and organic food companies, among other sustainable enterprises.
The bank's principals say its lending practices will weigh environmental and social considerations alongside standard underwriting criteria.
"When you put money in this bank, it's not going for a coal-fired plant in Waco," co-founder and Vice Chairman Bill McLellan said.
If the traditional economy has elements of a dirty engine, with banks lending to polluting companies, then One Earth's loans will stimulate a green economy, "like feeding a healthy ecosystem," said Edward Mannix, 33, a founder and chairman of the bank.
The bank's founders acknowledge that they might face sticky situations in lending.
"There are some projects that we may have to have some board meetings about," Mannix said, adding that the bank has already had some internal simulations to determine which projects it would back.
Stephen Skaggs, a bank consultant in Austin, said that One Earth shouldn't have a problem attracting deposits but that that's just one side of the equation.
"Then the question is, what do they do with the funds; how do they deploy the money in a green fashion?" said Skaggs, president of the Bank Advisory Group.
Skaggs said small-business loans, a strength of most community banks, present a challenge for One Earth. "Most small-business loans are secured with real estate, so you have a double whammy, assuring the business is green and assuring the real estate is green," he said.
Brandi Clark, the sustainability officer of One Earth Bank and a widely known environmental figure in Austin, said the bank is "leaning toward a policy of engagement rather than hard and fast no's."
"If someone has land in the aquifer and wants to develop and we say no to them, they can go and get money from someone else, and we won't have saved that land," she said. "We could help them structure a conservation development (in which land is set aside as open space) or find a land trust to buy their development rights, and find value for their land without doing something destructive."
She added that the bank would not loan any money to a development not in compliance with the Save Our Springs ordinance, which sets out development standards over the Barton Springs portion of the Edwards Aquifer.
"If it's not meeting current best standards for water quality protections, we wouldn't go there," Clark said.
Most of the bank's 50 or so founders have invested $25,000 to $150,000, and each is expected to encourage more people to invest.
This "super-community bank" model took root in California in the 1990s. Rather than starting with capital from a small group of investors, the newer model involves getting larger numbers of shareholders to invest and become a web of unofficial salespeople for the bank.
Mannix said the bankers plan to capitalize the venture with $23 million to $29 million.
One Earth's principals say they're banking on high customer loyalty and positive media attention while keeping their products priced competitively with other banks in Austin.
Small businesses with an environmental bent often find banks unwilling to bankroll their projects, said Dromgoole, who owns the Austin business the Natural Gardener.
"If you go into a lot of banks and say, 'I'm going to do this solar project,' they say, 'Solar? I don't know,' " he said.
One Earth Bank will be a rarity, but it is not the first of its kind.
Banks in New Mexico and Boston, for instance, favor loan applications for green uses, said Cliff Feigenbaum, the founder and managing editor of GreenMoney Journal, a Santa Fe, N.M.-based publication. Some give lower interest rates to people who buy hybrid cars or energy-efficient homes.
Feigenbaum predicted that the bank could easily draw customers in Austin, with its environmentally progressive population.
"A Whole Foods customer is a green banking customer," he said. "Why would they buy organics and then bank somewhere irresponsible?"
The activities of these small banks have been imitated by national conglomerates, which have found themselves under public pressure from environmental groups.
Earlier this year, Bank of America announced that companies that create "sustainable products, services and technologies" would earn a higher score on their loan applications than those that don't. The bank also said it would develop a credit card in which a percentage of each purchase would be donated to an environmental organization. It said it also would dedicate $18 billion in lending, advice and market creation to environmentally friendly projects such as green building developments.
One Earth faces state and federal regulatory hurdles to establish itself as a state bank — it plans to file its application for a state charter next month — and it needs to continue to attract investors.
"There's definitely a sufficient degree of consciousness to make a move in this direction," said Skaggs, the bank consultant. "From a business standpoint, I'm still anxious to see how you make it work."
Edward Mannix
Chairman; his careers have included baby food (he co-founded Fresh Start Organics, now Happy Baby), venture capital and a telecommunications company in Mongolia.
Bill McLellan
Vice chairman; a gregarious business networker and community leader in Austin whose long career at 3M Corp. ended with his retirement as staff vice president of the 3M Austin Center. He was a founder of Treaty Oak Bank in West Lake Hills in 2002.
source:http://www.statesman.com/business/content/business/stories/other/12/23/1223greenbank.html
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