Public Bank East Bay
Viability Study Overviewpublicbankeastbay.org
Our Model for the Public Bank East Bay
● Owned and capitalized by Alameda County and the cities of Oakland, Berkeley and Richmond (and other jurisdictions that join in time) as founding members ● Takes only municipal deposits from cities, counties, nonprofits and special district governmental agencies like BART or EBMUD
Oversight
Lending
Funding
● Partners with local financial institutions like credit unions, Community Development Financial Institutions (CDFIs) and community banks to expand their loan programs ● Mission-driven loan policy based on the values of racial equity, environmental regeneration, and democracy
● Regulated by state and federal agencies with the same standards as any commercial bank (FDIC insurance, collateralization of municipal deposits) ● Governed by an independent board of directors with a mix of community representatives, city/county officials, and finance experts Viability Study
High-level summary
● Build mission-aligned lending portfolio of
~$250MM over first 10 years
● Support eligible borrowers with flexible
loans and lines of credit at 2-4%
● Leverage only 1-2% of available cash and
investments of participating governments
● Reach profitability in year 3 and return
competitive returns on investments of
1-1.5% while growing slowly and
sustainably
Viability Study - Proposed Funding
● $40MM by initial four agencies (<0.5% of total assets invested) ● Potential for growth by including other cities and counties in the future Capitalization
● Short-term (1-3 year) bonds purchased by local governments ● Grow investments from ~$100MM in year 1 to ~$200MM in year 10 (1-2% of total assets refinanced and/or diverted from Wall Street bond purchases) ● Potential for growth through deposits from special district governmental agencies (BART, EBMUD, etc.) and/or non-profits
Liabilities
Viability Study - Proposed Lending
Public Bank East Bay will provide loans and flexible lines of credit at 2-4% for:
● Short-term financing for pre-development, preservation, and property acquisition ● Help navigate government bureaucracy
● Lending to land-trusts & other non-standard structures Affordable Housing
~$500MM/year market
opportunity
● Partner with CDFIs through lines of credit, loan participation programs and other risk-sharing programs
● Build out secondary market for micro-loans
● Act as public face and referral agency for mission-oriented lenders Small Businesses
~$30MM/year market opportunity
● Finance building electrification programs (e.g. through partnership with public utilities)
Green Energy
~$10B market opportunity
● Invest in municipal bonds,
● Possibly underwrite small issue bonds.
Municipal Finance
~$350MM/year market opportunity
Tentative Timeline
● Regulatory review process and approval
Fall 2022
Fall-Winter 2023
Winter 2023
Winter-Spring 2023
Summer 2023
‘23 - ’24
● Complete draft business plan and governance plan and submit for regulatory comment
● Finalize board candidates and recruit executive leadership ● Receive comments from FDIC and CDFPI on draft business plan ● Hire CEO and finalize application based upon comments received ● Submit Public Bank charter application
● Public Bank East Bay begins operations.Spring 2025
This Resolution:
1. Approves the viability study as mandated by AB 857.
2. Notifies other founding agencies (Richmond & Berkeley) and Alameda County of the City of Oakland’s approval.