Sunrise Banks Empowers the Underserved to Achieve

This piece first appeared in Capital Institute's Field Guide to Investing in a Regenerative Economy.

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“Most people think of the social and environmental mission of a business as subtracting from its profit margin.  We see it a totally different way. We operate from an abundance mindset in the way we look at our mission as opposed to a scarcity mindset. The way we see it, our mission multiplies our margin and our margin allows our mission to multiply and grow.” — David Reiling, CEO, Sunrise Banks

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Guided by a mission “to be the most innovative bank empowering the underserved to achieve,” David Reiling has grown a a struggling bank in inner city St. Paul into a banking group with $900 million in assets, 6 branches operating in Minneapolis/St. Paul, and a national prepaid card business based in Sioux Falls, SD, representing 25 percent of revenues.

Although he grew up in a banking family, David initially connected with his own passion for the profession when he landed a summer teller job as a teenager at a community bank in St. Paul. In 1995, after brief stints at an inner city bank in Los Angeles and at an LA branch of Citibank, he returned to Minnesota to purchase Meridian National Bank, a failing state-chartered bank located in a low-income, predominantly Hmong community of St. Paul. “We just kept innovating and trying to figuring out ways to provide access to capital and financial services to the local immigrant population,” David reports,

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"We knew if the bank was going to succeed the community had to be successful too."

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Within two years the bank had returned to profitability.​

In 2007, David took over his family’s St. Paul bank holding company and its three nationally chartered banks. Six years later he consolidated all three banks under one charter. In 2009 Sunrise Banks became a Certified B Corp ™  and in 2015 a public benefit corporation.  Sunrise has been a member of the Global Alliance of Banking on Values since 2012. 

Four Strategic Pillars
Sunrise Banks’ operating strategy is grounded on four pillars, the foundational one being the organization’s values-based mission. “I grew up in a Catholic family so ethics and morals were always in the forefront,” David explains. “But for me what was personally fulfilling was translating my values into some real work in the world. Operating from a social mission is doing what it is my unique ability to do.”

Sunrise’s second strategic pillar is centered on governance—embedding mission into policies, procedures, and people. The third pillar is accountability with a focus on metrics. “We treasure mission and innovation and financial sustainability,” he reports. “So we take our metrics and measures around them very seriously and hold ourselves accountable to them.” 

Sunrise’s loans outstanding to LMI communities now stands at 74.6 percent, and the metric is monitored weekly to ensure it never slips under 60 percent. “That is where the rubber meets the road for me,” says David. “If that number is robust I know we are making loans in the right spot.”  Another set of nontraditional metrics tracked is the demographic makeup of staff—currently 31 percent are minority, 57 percent women, and 30 percent live in the communities that the bank serves. 

​Storytelling is Sunrise’s fourth pillar, with tales told informally via the bank’s social media platforms, its blogs, and the word-of-mouth of employees and partner organizations. David explains, 

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"The story might be about an enterprise we helped finance, a loan we gave to a first-time homebuyer, or a real estate project that transformed a neighborhood. But they are always about home, opporunity, and transformation."

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Translating Mission into Practice
Mission becomes practice via a tightly focused, two-pronged strategy. The first prong is place-based—providing banking services in the underserved communities where the bank has deliberately located. Typically the target businesses are job-creating small enterprises, affordable housing projects, and nonprofits that provide a social safety net.  Sunrise often shares risk when extending these loans in partnership with the Small Business Association, local, state and federal lending programs, and not for profits. 

The second prong is also people-based but national in scope. Out of an office in South Dakota, Sunrise offers a prepaid card business that enables, for example, New York City taxi-drivers to collect their tips from client credit card transactions at the end of the day.  Sunrise works with 24 program managers around the country to provide this service.

The bank is also in the early stages of a partnership with technology provider Employee Loan Solutions to implement TrueConnect, a small-dollar-lending program. TrueConnect is a safe loan alternative for those 26 million Americans who do not have a credit score.  Since TrueConnect is offered as an employer benefit, a credit report or a designated loan officer is not required to provide the service.  The loan amount is based on the individual’s salary with loans offered at $1,000, $1,500, $2,000 or $3000, capped based on employee wages to avoid excessive borrowing. The loan is retired through payroll deductions.

​Crafting products for the unbanked can be fraught with operational challenges. David reports that the bank suffered a lot of brain damage in order to achieve the core competencies it needed to manage the attendant risks.  Now, he says, “We really have a unique competitive advantage. We have a compliance department that rivals some of the major banks in terms of talent.  We are in communities where we need to be top notch.” ​

As the growing national programs of the banks demonstrate, what started out for Sunrise as a laser focus on serving a low-income market in St. Paul has evolved over time into a much broader service mission.  “When I talk about our mentality of abundance and that our mission multiplies our margin,” David explains, “it is because our mission and focus on people started in our local community. But that led us into these national products and to a broader impact and scale.”

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"When you focus on something, sometimes it limits options," he reflects, "but also sometimes you eliminate a lot of noise and you can look at the possibilities within a realm consistent with your values. Then the world seems to open up."

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On average Sunrise introduces at least two new products or services a year. The process of continuous innovation can be challenging, as obstacles reveal themselves along the way.  But, says David, opportunities also reveal themselves, enabling the bank to solve problems, sometimes in a systemic, large-scale way, at other times in a place-based, local way.  For example, when the bank decided to ramp up its mortgage lending business, it needed to hire more personnel with mortgage compliance experience.  As it turned out these staff members, who get paid for following the rules, were a surprising source of creativity and resourcefulness.  “When they saw that there were ways to help people,” David relates, “they figured out ways to get around what looked like roadblocks.” ​   Innovating on the Deposit Side 
​In 2003, in order to attract more depositors when Sunrise needed to grow its loan portfolio, the bank created a socially responsible deposit fund that has since grown to $125 million. Funds are earmarked for loans to small businesses for jobs, affordable housing for shelter, and to support nonprofits. ​

Supporting Clients on Their Regenerative Journey
​One of the best opportunities to intervene as a regenerative influencer and educator, Sunrise has found, is when it lends into the built environment. About fifty percent of Sunrise’s real estate loans involve environmental cleanup—on the housing side, lead and asbestos; on the commercial side, contaminated soil. These loan transactions turn out to be great conversation starters that often lead to related discussions about how to reduce long-term costs through energy efficiency investments.  “We explain the conservation case to them in a conservative manner,” says David. “Then we get around to the cost savings from recycling and managing waste. There are ways we weave it into the discussion without being preachy.” 

Empowering Employees
Environmental conservation is a common value held by Minnesotans, with its abundant natural resources (10,000 lakes/rivers/parks/camp grounds/National Parks) and year-round outdoor activities. That said, David reports, one of the greatest challenges he faced in the early years of the bank was getting employees to buy into the social side of the mission. “It took us a while to get the right people in place, but once we did we really started to pick up momentum in terms of relieving ourselves of our mission burden,” David relates. “It has made moving the ship a lot easier.”

​David is now able to step away from day-to-day operations, applying his skills and talents where they can best benefit the bank.  He spends the bulk of his time innovating new products, thinking strategically about the organization, cultivating key relationships, and communicating about the bank’s mission. 

What’s on the Sunrise Horizon?
Following years of consolidation, David reports that the next move for the bank will be another expansion into new marketplaces, using a holding company to house multiple entities. “We have talked about creating a nonprofit of our own, and perhaps spinning off prepaid or other national product business lines into separate entities,” he explains. “We are also looking into crowd funding, which would require a separate entity. That is very much what our model will look like in the future.”