A bank that targets customers others ignore is setting up shop in Harlem.
On Monday, CheckSpring Bank will open a branch at the corner of 111th St. and Frederick Douglass Blvd. with a mission: serving the city’s underbanked.
Five years ago, CheckSpring launched its first branch in the South Bronx with a unique concept. The startup would offer both check cashing and traditional banking under one roof.
The idea was to tap an underserved population of low-income New Yorkers and help them transition from expensive check cashing services to mainstream banking.
Now, after building a solid customer base, a newly renamed Spring Bank wants to do the same in Harlem.
“We are able to make money and serve the underbanked customers and small businesses that nobody wants,” CheckSpring Bank interim president Eric Pallas told the Daily News.
West Harlem was a natural fit. As much as 38% of the area’s population is considered unbanked vs. 13% for the city overall, according to a 2010 study by the Department of Consumer Affairs.
At the same time, CheckSpring sees a chance to capitalize on a commercial boom taking place on Frederick Douglass Blvd. between 110th and 124th. The lender wants to be the first stop for the many restaurants and upscale shops that have popped up on what was once a desolate street.
There are just two other bank branches on the strip.
“One of the biggest issues Frederick Douglass Blvd. faces is getting loans,” said Lia Sanfilippo, president of the Frederick Douglass Boulevard Alliance and the co-owner of 5 and Diamond restaurant between 112th and 113th.
“The neighborhood will benefit if the bank follows through.”
CheckSpring has been aggressive in going after low-income depositors and small-business borrowers.
While New York state allows check cashers to charge 1.91%, CheckSpring charges $1 on anything $1,000 or below and 1% on amounts above. Some savings accounts have no minimum balance requirements and no penalties to maintain them.
“While a bigger bank might decide their balances are too low, those balances appeal to us,” said CheckSpring vice president Brian Blake.
Small business loans range in size from $100,000 to $1.5 million, narrower than a typical bank loan. Lending to small businesses has surged 80% in the last year, helping the bank earn a recent award from the U.S. Department of Treasury.
To gain market share, CheckSpring has partnered with city agencies and nonprofits to create programs targeted to the working poor. One recent product: a bank account that helps low-income families use their tax refunds to pay their bills.
“They are offering innovative savings products,” said Haidee Cabusora, director of policy and advocacy at The Financial Clinic, one of CheckSpring’s nonprofit partners.
The bank, which has 270 business customers and 3,740 retail customers, broke into the black more than a year ago and plans to continue to expand cautiously.
CheckSpring’s majority investors, the Giannoulias family of Chicago, may have learned a lesson from a previous bank venture gone very bad. The prominent family owned Chicago’s Broadway Bank, which collapsed during the financial crisis hobbled by bad loans.
“We will continue to open branches as long as demand can be effectively and safely met,” Blake said.
pfurman@nydailynews.com
