The first bank to take advantage of the Banking Development District designation in Corona opened its doors to much fanfare on Monday.
“We are a community bank,” said Joseph Ficalora, president of New York Community Bank, parent company of the new branch of Queens County Savings Bank that opened at 51-13 108th Street in Corona.
Ficalora, a Queens native and alumnus of Newtown High School, said, “We are very excited by the opportunity to enhance the level of banking services to those who live in Corona.”
The Banking Development District initiative was spearheaded by Governor George Pataki and State Senator Ivan Lafayette to encourage banks to open in neighborhoods lacking in financial services.
In order to entice banks to open in what are usually low- or moderate-income communities, the city and state will deposit money in the bank at a lower than market interest rate. This allows the bank branch to have enough in deposits to conduct business like opening accounts and offering loans.
The city and state will each deposit $10 million into the new branch. The state’s money will earn 1 percent below the market interest rate for a two-year Certificate of Deposit, which is from 3 to 5 percent. The city’s money will earn 0.5 percent below the market rate.
“Growing up in Brownsville, when that neighborhood had virtually no banks, I know what a terrible disadvantage it is when people don’t have access to checking and other financial services,” said New York City Finance Commissioner Martha Stark.
When communities do not have banks, often the only way for residents to cash their paychecks is through a check cashing business that charges a fee. And without a checking account, the only way to pay bills is by money orders, which also have a surcharge.
In addition to personal banking, Diana Taylor, deputy secretary to the governor for finance, housing and insurance, said neighborhood banks allow businesses to thrive, offering loans and investment options. “Banks signal confidence in the future and promote long-term economic development.”
The first bank to open under the Banking Development District program was a branch of Independence Bank in Red Hook, Brooklyn in 2000. While the state Department of Banking considers it a success, they are currently developing a more scientific system to judge whether more banks spur economic growth in the neighborhood.