William Reiling and his son Davidtook over two troubled Twin Cities banks, including one accused of discriminating against customers in poor areas, three decades ago.
To reverse course and rebuild, the Reilings looked to those clients who had been wronged — working-class people and immigrants in urban neighborhoods. They also sought nonprofits and small businesses as clients.
Today, the family's St. Paul-based Sunrise Banks is a financial linchpin for the Twin Cities' nonprofit community as it assists with mortgages for affordable housing and works with organizations that help poor families find stability.
It's also growing by partnering with technology companies to offer financial products nationwide that help people repair their credit and avoid predatory payday lenders.
"My dad grew up a poor farm kid. He said, 'Don't screw the little guy,' " Sunrise Banks CEO David Reiling said of the bank's philosophy.
Sunrise, with $1 billion in assets, is one of about 100 banks nationally certified by the U.S. Treasury as a Community Development Financial Institution providing credit, investment capital and financial services in distressed urban communities.
It underwrites all the mortgages for Greater Twin Cities Habitat for Humanity — nearly 100 last year alone.
"They are motivated by doing the right thing," said Robyn Bipes-Timm, Habitat's vice president of loan fund and mortgage lending. "It's so refreshing."
Sunrise also became Minnesota's first public-benefit corporation in 2015, when lawmakers created that designation for businesses to signal they may, at times, put social principles over profits.
"They are really and truly community bankers who want to make the community a better place," said Kate Barr, a former banker and CEO of Propel Nonprofits, a fellow Community Development Financial Institution. "It's an intentional part of their business strategy to serve nonprofits. That says a lot."
'They need access'
Nonprofit leaders said many of their clients with low-incomes or bad credit need better access to banking.
According to a 2017 survey by the Federal Deposit Insurance Corporation, one in four American households are either unbanked or underbanked, often relying on checking-cashing, money orders and payday loans, which charge higher fees.
"It's expensive being poor," Reiling said.
Eumeka Kufuor of New Hope, who had past financial troubles and no bank account, used expensive money orders and prepaid credit cards to pay bills and buy groceries for years. Then she received tax-filing help and financial coaching from the nonprofit Prepare + Prosper, and was able to open checking and savings accounts at Sunrise Bank in July.
"They do everything in their power so you don't have overdraft fees," she said. "They empower you to take back your financial independence."
Reiling said he saw potential for banks to serve low-income people and urban areas earlier in his career at a Los Angeles bank in an area struggling with poverty and crime. At another bank there, he noticed they weren't serving immigrants and foreign business people living in the United States.
His success working with those customers landed him a job in New York. But his dad called and lured him back to Minnesota instead.
As they worked on building what's now known as Sunrise Banks, they looked to the immigrants. At one point, nearly 40 percent of their customers were Hmong.
"They needed access," Reiling said. "We created products and services to unlock clients' potential."
He also studied the alternative financial sector, including what he calls the "dastardly model" of payday loans. He saw how check-cashing services and prepaid credit cards filled financial gaps for people, and even bought a check-cashing business and set it up in the bank lobby to learn more.
"It was that intel and customer feedback that was the raw material to innovate," Reiling said.
Growth through innovation
Sunrise Banks now has six branches in Minnesota. Its approach has earned praise from a much-larger competitor, Wells Fargo, which in 2015 gave Sunrise a national award for developing innovative products and services to help people not connected to banks.
"They have been really nimble," said Anne Leland Clark, financial capability and learning director at Prepare + Prosper, "and when you hear 'bank' you don't think nimble."
Sunrise's newer offerings include a lending program called TrueConnect, which is offered through employers and lets employees borrow and make payments on the loan through payroll deductions over time. More than 1,000 employers participate nationwide.
Joyce Norals, vice president of human resources at Lutheran Social Service, which offers TrueConnect to employees, said she was initially skeptical because of the interest rate on the loans — 24.99 percent. But she said employees who use it like it.
"People who do payday loans pay as much as 300 to 500 percent interest. It's unbelievable," Norals said. "So it seems reasonable in that context."
In April, Sunrise added a credit-building program with technology company SelfLender.com that works like a loan in reverse. It's available nationally. People make monthly payments and get the money at the end of the 12-month period. Those payments help raise the borrowers' credit scores.
Bipes-Timm, of Habitat, said her organization refers people to the program when they need to boost their credit to buy a home.
"In a year, they qualify," she said.
Yet Reiling acknowledges some may always be skeptical of a for-profit bank.
"I am going to use whatever legal structure I can to do well and do good at the same time," he said.
Shannon Prather • 612-673-4804