WEST VIRGINIA IS IN A POPULATION CRISIS

West Virginia is the only state to report a decrease in population. Dealths outpace births and the race is expected to continue. The once booming area used to house an abundance young couples and children, but with the decline of the steel mill the largest employer, these families are forced to relocate to survive.
The sense of community is dwindling if not gone in some areas. The aging population just does not have the energy, or in some cases, the ability to activily participate in community building activites. Gone are the days of festivals, fairs, and parades unless the younger generation steps up to the challenge.
Weirton, West Virgina is a perfect example of this story. With just 71 babies born on average for every 100 residents who die, Brooke County, in which Weirton is partly located, has the largest such gap in the nation among counties in metropolitan areas, save for a handful of places that are magnets for retirees. Hancock County, which contains the other part of Weirton, is in similar demographic straits.
The main reason Brooke County is so far off the national number - which is 171 births to 100 deaths - is that it has missed out on one of the dominant demographic trends to emerge from the recent census: the influx of young immigrants into communities across the United States. The median age for Hispanics, by far the largest immigrant group, is just 27, far lower than the median age for whites of 41.
Without immigrants or economic opportunities to keep its younger residents close to home, Brooke County and others like it are showing their age. At St. Paul Catholic Church in Weirton, the Rev. Larry Dorsch has buried 15 people this year and baptized one. The American Legion in Wellsburg has closed because of a lack of young supporters. Volunteer fire departments are so understaffed that people come from other towns to fight fires.
There are now 853 counties with similar population including parts of the Great Plains, the Midwest and New England. The problem is even more acute across the Atlantic. Countries in the European Union collectively will cross the threshold for having fewer births than deaths by 2015, and would experience population growth only through immigration.
West Virginia is the only state in the country with more deaths than births, but other states, like Maine, are not far behind. Estimates are that many white areas will tip into natural decrease in the next 10 to 15 years.
If Brooke County is a postcard from the future, it ended up there because it never adapted from its past. For decades, it was a steel manufacturing powerhouse, employing thousands of workers in mills along the Ohio River. Weirton Steel, a hulking plant that straddles Weirton’s main street was once the largest single private employer in the state. Now Wal-Mart holds that distinction, and Weirton Steel, now owned by Arcelor Mittal, a Luxembourg company run by an Indian billionaire, is a small fraction of its former size. Grass grows through cracks in the vast, empty parking lots.
Manufacturing jobs, long the lifeblood of the area, shrank by 38 percent statewide since 1990. Now health care is the state’s second-largest employer after government. The number of young people here sagged with the economy. The population under 35 is about half of what it was in 1980, while the number of residents 55 or older has jumped by 23 percent, according to 2010 census data released Thursday.
Now walkers and wheelchairs are more common than strollers. Sunday school classrooms at the United Methodist Church downtown are ghostly quiet, and Brooke High School has just half the number of students it did when it opened in 1969.
Fewer people means, inevitably, less of a sense of community. Father Dorsch spends his days looking for ways to revive it. In one town, he used public outrage about stray shopping carts to get people involved in improving their community. But Weirton has such bitterness over the mill that it has been hard to get its residents to trust anybody, and it seems stuck in place.
The demographics have created a death spiral, both literal and metaphorical. The lack of young people had reduced the tax base. With so few young people, volunteer fire departments are having trouble keeping staffing at safe levels. At the Bethany Fire Department, it is said that when the alarm goes off, the trucks leave with just two people on them when six are needed, so volunteers have to come from other towns to help.
But even one energetic young couple can do a lot to bring a town back to life, as the Sheperds have proved in Beech Bottom, the tiny town where they live. The town now has a new playground, thanks to the grant writing skills of Mr. Sheperd, who is from the county. They also have revived the town picnic, and have set up a Web site and a newsletter. They recently received a grant to start a recycling program.
With the population crisis, the communities will continue to struggle unless people, especially younger people, are willing to step up and take on the burden to turn things around. The Shepherds may have gotten the ball rolling but it will take more dedication from others to make it all work and progress. Areas like Brook County have a lot to learn to move themselves up from the trenches of a bad economy into a prosperous area that families will want to move back into.

A 'Systemic Shift' in Small Business Lending

Business Week

As banks cut back on lending directly to small businesses, CDFIs are expanding their role and tapping recently formed bank holding companies for capital

Lesia Bates Moss, president of community lender Seedco Financial, speaks at a forum on Opening the Small Business Capital Market in Washington, D.C., in March.

Lesia Bates Moss knows opportunity when she sees it. Shortly after she became president of Seedco Financial, a New York-based nonprofit lender with balance-sheet assets of $55 million, in March 2009, she sought new sources of capital to expand Seedco's lending to small businesses in low-income neighborhoods. Among Moss's top prospects were mammoth financial institutions like Goldman Sachs (GS) that had converted to bank holding companies in late 2008 to access federal aid. These bailout recipients would now face federal ratings under the Community Reinvestment Act on how well they serve disadvantaged neighborhoods—and Moss thought Seedco Financial could help.

Community Development Financial Institutions like Seedco are generally nonprofits that finance small businesses, housing, and other development in poor areas. They have long tapped a mix of federal funding, philanthropic grants, and investments from commercial banks to fund their work. Although CDFIs typically lend to clients that banks consider too risky, their loans have held up well in the recession, in part because they come with lots of hand-holding for borrowers. With banks still reducing their direct lending to small businesses, policymakers and bankers alike expect CDFIs to play a growing role in financing small businesses in the recovery.

"As we speak, several of the nation's largest banks are developing CDFI partnerships to provide small business credit," says Mark Pinsky, CEO of Opportunity Finance Network, a Philadelphia-based alliance of CDFIs. "I know of at least two significant deals that could launch in the coming weeks if all goes well." Commercial banks have long been among the biggest funders of CDFIs: JPMorgan Chase (JPM) has invested $1.2 billion in the last five years; Bank of America (BAC) has a $1 billion CDFI portfolio; and Wells Fargo (WFC) has $400 million in CDFI loans and investments. Now add Goldman Sachs to that list.

Goldman's Small Biz Program

At a conference early last summer, Seedco's Moss met Alicia Glen, a managing director at Goldman's Urban Investment Group, a decade-old $1 billion division that invests in inner-city businesses and real estate. That started a conversation that led to Goldman making a $20 million loan to Seedco to fund small businesses in New York City's low-income neighborhoods. It's part of a $500 million national program to aid small businesses Goldman announced in November. The initiative includes $250 million in loans and $50 million in grants to CDFIs over five years, as well as $200 million for education and mentoring for business owners. "We're not a retail bank," Glen says, noting that Goldman has no plans to underwrite small business loans directly. "But there's a whole set of intermediaries that do exactly that."

Investments in CDFIs, along with direct community development lending, help banks comply with the Community Reinvestment Act, the 1977 law designed to encourage depository institutions to serve disadvantaged areas. A new cohort of financial institutions that converted to bank holding companies to access government bailouts during the financial crisis is now subject to the law, including Goldman, Morgan Stanley (MS), American Express (AXP), CIT Group (CIT), and GMAC.

Goldman, for its part, says the program goes well beyond its plan to meet CRA requirements, which only apply to the firm in New York, New Jersey, and Utah, where its bank division has offices.

Goldman's announcement, which coincided with an apology from CEO Lloyd Blankfein for the firm's role in the financial crisis, was described as a PR move by critics to quell anger over bankers' billions in compensation. But the allocation is real money for CDFIs: Goldman's loans and grants equal 1% of the combined $30 billion in assets of the roughly 900 CDFIs certified by the Treasury Dept.

Federal Support

As CDFIs unlock new sources of private capital, the federal government has also increased its support. Congress allocated $247 million in 2010 for the Treasury fund that supports community lenders, by far the largest annual sum in the program's 15-year history. The CDFI Fund also benefited from $100 million in stimulus money last year, which the agency fully disbursed by Sept. 1.

New money can't come soon enough. CDFIs nearly doubled their demand for Treasury funds last year, seeking $467 million. "The demand continues to rise even as our funding increases," says Donna Gambrell, director of the Treasury's CDFI Fund. In a December survey of CDFIs by Opportunity Finance Network, 48% of respondents said they were capital-constrained during the third quarter. OFN's Pinsky says his members see more demand each quarter from borrowers that would previously go to banks for financing. "These are generally businesses that we would have in the past not looked at, only because we thought the banks or others could do the deals," he says.

While banks may no longer want to loan directly to these borrowers, many consider CDFIs a low-risk way to reach them. "As an industry it has a very low historic loss rate," says Megan Teare, vice-president for CDFI lending programs at Wells Fargo. "They have the ability to provide a lot of technical assistance to their borrowers, which typically a bank cannot do. That often makes a difference if small businesses are viable or not." And small businesses that start out with this kind of assistance may later become attractive customers for mainstream banks. "They are always looking to see how they can graduate their borrowers to become bank borrowers," says Dan Letendre, senior vice-president for CDFI lending and investing at Bank of America.

CDFI Industry Avoided Worst of Crisis

CDFIs have not been immune from the downturn. The OFN survey indicated 9.3% of loans were more than 30 days past due in the third quarter. But that compares favorably with some commercial banks. Bank of America, whose small business portfolio former CEO Kenneth Lewis famously called "a damn disaster," has a loss allowance equal to 15% of its small business portfolio, CFO Joe Price said on a call with analysts Oct.16.

The CDFI industry has avoided the worst fallout from the financial crisis. "We have not seen certainly the deterioration that we were fearful we would see," says Gambrell, the Treasury fund director. "[CDFIs] have been doing the work that they have done for many, many years. They know how to do it very, very well."

Mainstream banks that have watched their own balance sheets implode are taking notice. A group of senior officials in several banks' community development departments met in October at a conference of the Opportunity Finance Network to form a nascent CDFI Investors Roundtable to discuss the risks and opportunities in CDFI lending. At the table were Bank of America and Merrill Lynch, Citigroup (C), Deutsche Bank (DB), Goldman Sachs, JPMorgan Chase, Wells Fargo and Wachovia, Opportunity Finance Network, and several foundations, according to two people who attended the meeting.

Moss sees a growing role for lenders like Seedco to partner with such institutions to channel money to businesses that will create jobs in neighborhoods where they are needed most. "What is occurring now is really a systemic shift in the whole financial markets," she says, as banks reduce their risk and their capacity to lend directly to small businesses. "It really supports the case for CDFIs and other alternative lending sources to play a much more critical role to fill that gap."