Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, May 28, 1993 TAG: 9305280093
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: MICHAEL STOWE STAFF WRITER
DATELINE: BLACKSBURG LENGTH: Medium
Wayne Strickland, executive director of the Fifth Planning District Commission in Roanoke, said the bank would expand credit available to companies.
The Blue Ridge Economic Development Commission, established by the General Assembly and chaired by Del. Joan Munford, D-Blacksburg, endorsed the concept at a meeting Wednesday at Virginia Tech. The Fifth Planning District Commission recently completed a feasibility study on a development bank for the Blue Ridge Regional Development Commission.
But such a bank is a long way from being established, and Strickland said one of the commission's first steps is to find a retired banker or executive who would be willing to head it up.
Then the commission must find "seed" money to start it.
One option would be state funding, but Strickland expressed reservations about that. "The committee wants this bank to be based in this region, and we have a fear that if we turn to the state it will be based in Richmond," he said.
"To be blunt, we think that some of the state agencies could really screw this up if they got control of it," added Franklin County Administrator Macon Sammons.
Strickland stressed, however, that he doesn't want to alienate state officials. "They definitely have a role in this," he said.
Development banks are private, nonprofit institutions that don't depend on federal funding for their survival.
There are none in Virginia, but North Carolina's Center for Community Self-Help established one in 1984 and it now has more than $40 million in assets.
Strickland said development banks do little or no consumer lending and don't try to compete with traditional banks. Development banks usually offer loans at 2 percentage points over the prime rate, a comparatively low level. The prime rate, a baseline for most lending, is the price that commerecial banks charge for loans for their most creditworthy commercial customers.
Development banks take more risks than other financial institutions and offer technical assistance to their customers, Strickland said. "It's a bank with a heart," Munford said.
by CNB