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BANKING & COMMUNITY

FEDERAL
RESERVE BANK
OF DALLAS

Perspectives
FOURTH QUARTER 1999

Fannie Mae
and the CRA
by Franklin D. Raines
Chairman and Chief Executive Officer
Fannie Mae

Adapted from remarks delivered at the
Community Affairs conference “Defining
‘Qualified’ Community Development
Investments,” held September 28, 1999, in
Chicago. The conference was cosponsored by
the Federal Reserve Banks of Dallas, Chicago,
Richmond and San Francisco. Fannie Mae
is the nation’s largest source of
home mortgage financing.

INSIDE
Chili, Steaks and
Venture Capital

•
•
Rural Empowerment Zones
•
Small Business Resource Guide
•
CRA Ratings on Web
Tax Credit Opportunities

When it comes to fulfilling the
promise of the Community Reinvestment
Act, Fannie Mae wants to be the depository institution’s best friend. As you
know, Fannie Mae is not directly subject
to the CRA. However, we are chartered
to provide liquidity to the mortgage market to expand home ownership and meet
our own percentage-of-business housing
goals, which do the same kinds of things
that the CRA is meant to do.
Over the last two years, we’ve worked
with dozens of lenders to purchase loans
they hold in their CRA portfolios, replenishing their liquidity so they can make
more loans. We’ve purchased over $3 billion in CRA loans so far, and our objective is to purchase at least $10 billion of
such loans by 2002. More than that, we
have a range of CRA initiatives that can
help with both the lending test and the
investment test in ways that will make
business sense to lenders.

CRA loans are not just special loans.
Indeed, last year 25 percent of all the
loans Fannie Mae bought were for people
with incomes at or below 80 percent of
the median income. So our everyday
activities can become the foundation of a
very strong CRA program, which can then
be supplemented to meet local needs.
We’ve also done a number of things
with very creative bankers. For example:
• CRA-targeted mortgage-backed
securities trades. Through our desks, we
identify loans from a target area and put
them in a mortgage-backed security that
we guarantee to lenders. It becomes a
highly targeted investment for the bank.
We’ve done $1 billion of these so far.
• Real estate mortgage investment
conduit (REMIC) securities structured
around nonstandard loans with unusual
credit characteristics. We’ve done over
$1.3 billion of special REMICs with
lenders in connection with the CRA, plus
bulk purchases of seasoned CRA loans
from lenders.
Credit-Risk Management
Beyond our CRA commitment, we expand affordable home ownership through
our basic business of managing credit
risk on mortgages. Our credit-risk management involves trying to hold down the
likelihood of loan failures. We’ve gotten
this pretty much down to a science. Using
a lot of different tools and technologies,
we’ve managed to drive our credit losses
to the lowest levels in our history while
expanding access to financing to people
who have smaller down payments, weaker
credit and lower incomes.
Continued on page 6

PUBLIC & PRIVATE PARTNERSHIP

Chili, Steaks and
Venture Capital
Helping Businesses
Find Financial Resources
Dumas M. Siméus says that if
MESBIC Ventures Holding Co. (MVHC)
didn’t exist, some well-known restaurants
would go without his meats, soups,
mozzarella sticks, casseroles, vegetables,
chicken-fried steaks and fritters. In 1996,
MVHC furnished the financial meat and
potatoes for Siméus to acquire a Texas
business and turn it into Siméus Foods
International, the country’s 11th largest
black-owned corporation. (The M in
MVHC—MESBIC—stands for “minority
enterprise small business investment corporation.”)
From a 140,000-square-foot headquarters in Mansfield, near Dallas, Siméus
Foods International’s 350 employees
make key menu items for national restaurant chains, including Denny’s, Taco
Cabana, TGI Friday’s and Churchs
Chicken. For some restaurants, Siméus,
whose annual revenues top $160 million,
is the sole provider of major menu items.
Dallas-based MVHC provides longterm venture capital to well-managed and
growing businesses owned and managed
by Hispanics, African-Americans, IndianAmericans, Native Americans and AsianAmericans, says Don Lawhorne, the
company’s president and CEO. “Life is a
series of magnificent opportunities brilliantly disguised as problems,” and hardto-find capital is one of them, he adds.
The Haitian-born Siméus was president and CEO of Beatrice International
Foods, then the country’s largest African
American-owned corporation, when he
2

hooked up with MVHC. In pursuit of an
opportunity to operate his own business,
Siméus left Beatrice and moved to Dallas
in 1992 so he and Lawhorne could search
for a company to buy. After looking at
more than 100 businesses, Siméus
acquired Portion-Trol Foods in Mansfield
and renamed it.
As lead investor, MVHC worked closely with Siméus in 1996 to put together
the agreement and raise the capital for
Siméus’ $57.7 million acquisition of
Portion-Trol. Siméus and MVHC brought
together five other venture capital firms to
provide an equity investment of $13.7
million, including $2.8 million from MVHC.
Two years later, MVHC’s investment
climbed to $3.1 million.
In partnership with Siméus, MVHC

provides oversight for the company’s
finances, and the two organizations work
together to develop strategy. Three
Siméus representatives and two investors,
including one from MVHC, make up the
Siméus Foods board of directors.
Lawhorne says Siméus’ goal is to deliver competitive returns on private equity
investment, which Lawhorne adds would
typically exceed 30 percent.
MVHC plans to exit Siméus Foods to
look for other opportunities once Siméus
is recapitalized through merger or acquisition in about two or three years. MVHC
usually stays with a company for five
to seven years to get a healthy return on
its investment.
MVHC meanwhile has continued
building a pool of funds, thanks to its
investors. The additional funds give
MVHC the chance to invest in and
expand larger, more competitive firms,
such as Siméus Foods.
Looking for High-Growth Companies
MVHC’s assets exceed $80 million,
making it the country’s largest minorityfocused venture capital firm. Started in
1970, the company is also the country’s
oldest minority enterprise small business
investment corporation.
MVHC looks for high-growth enterprises
that can produce significant cash flow

Richard Vinegar (left) and Don Lawhorne (right) talk strategic planning with Dumas M. Siméus,
whose Siméus Foods International is the country’s 11th largest black-owned firm. Vinegar is senior
vice president and Lawhorne president and CEO of MESBIC Ventures Holding Co.

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • FOURTH QUARTER 1999

Fast Facts
MESBIC Ventures Holding Co. (MVHC) is the country’s oldest minority-enterprise small business
investment corporation. MVHC provides long-term venture capital to well-managed, growing businesses
owned and operated by minorities. MVHC was the lead investor in Dumas M. Siméus’ 1996 acquisition
of Portion-Trol Foods, which had a 140,000-square-foot food processing plant in Mansfield, Texas. Siméus
Foods International has annual sales of more than $160 million. In 1998, Siméus acquired Fast Food
Merchandisers in Forest City, N.C.
Purchase: Portion-Trol Foods

$57.7 million

Sources:
Senior term debt
Senior revolving debt
Seller paper
Equity
Total

$36 million
$3 million
$5 million
$13.7 million
$57.7 million

(Senior debt is provided by a syndicate that includes three MVHC shareholders: Chase Bank, Wells
Fargo Bank and Frost National Bank. The equity investors include Dumas M. Siméus, who invested
$700,000; a consortium of specialized SBICs led by MVHC; and the Texas Growth Fund.)
Uses:
Purchase price
Transaction costs
Total

Venture capitalists like MVHC
provide a highly disciplined
structure to start or expand
businesses. MVHC is
successful because its
investment strategy
emphasizes growing firms,
capital gains, top-flight
management talent and
large-scale, minority-owned
businesses.

$55 million
$2.7 million
$57.7 million

For more information:
MESBIC Ventures Holding Co.
(972) 991-1597, www.mvhc.com

and profits. The venture capitalists focus
on companies with:
• a proven management team;
• products and services not subject to
obsolescence;
• at least 12 straight months of profitability;
• primary operations in Texas, Oklahoma, California, New Mexico,
Colorado, Arizona, Arkansas or
Louisiana;
• a written business plan; and
• an ability to provide investors
financial returns of more than 30
percent annually.
MVHC invests in electronics companies; suppliers for the communications,
telecommunications, aerospace and auto
industries; broadcast properties; and food
processors. MVHC participates in the
Small Business Investment Company

Program, created by Congress in 1958 to
fill the gap between available venture
capital and the needs of small firms.
The program’s Small Business Investment Companies (SBICs) are profitmotivated organizations that provide
equity capital, long-term loans and management assistance to qualifying small
businesses. To support their growth, these
emerging companies require equity or
equity-type capital that often exceeds
what traditional, asset-based credit would
provide. The SBIC program addresses this
need, particularly for businesses requiring
financing from $300,000 to $5 million.
Venture capitalists can supplement
their own private investment capital with
funds borrowed through the Small
Business Administration, which licenses
and regulates the SBICs. The program
includes regular and specialized SBICs;

the latter invest in minority businesses.
MVHC owns two specialized SBICs:
MESBIC Ventures and Alliance Enterprise
Corp.
MVHC’s 80 corporate shareholders
include Bank of America, Sears, Sunoco,
Wells Fargo Bank, Bank One Texas,
Brinker International, Texas Instruments,
Frito-Lay and Bank United.
The minimum investment is $100,000,
Lawhorne says.
Bank of America in Dallas and its predecessors have worked with MVHC for
more than 20 years. Senior Vice President
George Carter says his bank will continue
with MVHC because the company
spreads risks and wealth, and allows
Bank of America to reach markets that
have been underserved and difficult for
Continued on page 7

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • FOURTH QUARTER 1999

3

Tax-Credit Opportunities
Tax-credit programs allow investors to
realize return, residents to afford housing

The Texas Housing Finance Corp.
(THFC), a low-income housing tax-credit
syndicator, brings together investors who
can benefit from the receipt of tax credits
and developers who can use the investors’
money to build affordable housing.
Edwina Carrington, THFC’s chief executive officer, says tax credits are crucial to
making low-income housing developments affordable and sustainable. From
1993 to 1998, THFC raised $58 million to
help develop 21 housing projects, including more than 1,800 new and refurbished
units. “The process grinds to a halt for
developers without the equity from
investors,” Carrington says. “The deals
simply would not work. The infusion of
equity also allows for lower rents, which
makes the housing affordable.”
To provide capital for such developments, THFC seeks investors for its
funds. These funds then acquire an ownership interest in multifamily housing
developments that are entitled to federal
tax credits based on a state allocation.
The developers get an equity investment
from the fund to start and complete construction, and the investors, through the

fund, benefit from the tax credits as well
as other incidents of ownership, such as
depreciation and losses.
Investors in THFC’s funds include
Banc One Community Development
Corp., Bank of America, Fannie Mae,
Freddie Mac, Comerica Bank, Chase
Manhattan Corp. and Wells Fargo Bank.
Carrington, bankers and developers
alike point to the Tax Reform Act of 1986
as a major force in attracting investors
and developers to back low-income
housing programs. The Tax Reform Act
created the low-income housing tax credit, allowing owners of certain affordable
housing projects to earn tax credits for
constructing or refurbishing housing that
is rent-restricted and serves tenants of
certain income levels. The tax credits are
awarded over the first 10 years of a qualifying project, although the rent and tenant
income restrictions must be maintained
for at least 15 years. Most tax-credit units
are rented to tenants who earn 60 percent or less of the area median income.
Tenants are charged rents that do not
exceed 30 percent of their household
income, adjusted for family size.

Using tax credits, developers can provide affordable rental housing like these attractive homes
in Dayton Park, Dayton, Texas.
4

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • FOURTH QUARTER 1999

“Tax credits put equity into the deal
and allow the units to be rented below
market rate,” says Barry Kahn, president
of Houston developer Hettig & Co.,
which uses tax credits to make affordable housing developments work. An
example is Dayton Park, located in the
community of Dayton, about 32 miles
northeast of Houston.
Seeing Tax Credits Pay Off
One low-income housing tax-credit
portion of Dayton Park—the first of a
three-phase development—consists of 50
two-, three- and four-bedroom units that
range from 800 to 1,200 square feet. All
the units are handicapped adaptable.
The community of single-story fourplexes
sports plenty of green space, a pool,
clubhouse and on-site management.
From the street, Dayton Park resembles
the typical single-family subdivision.
To start construction in Dayton Park,
Hettig & Co. received about $1.3 million
from the Texas Housing Opportunity
Fund II, one of THFC’s funds. Washington Mutual financed both the construction
and permanent loans.
In addition to the 50 units for lowincome residents, Hettig & Co. has completed 72 market-rate units at Dayton
Park and is using additional tax credits
this year to build 52 more affordable
housing units. The latter phase will
include a 2,200-square-foot community
building for the development.
The federal government allots tax
credits based on $1.25 per capita for
each state. In Texas, that translates into
$21 million for this year.
Dave Wood, vice president for community development at Bank One, says
banks not only realize benefits from
investing in the affordable housing taxcredit fund but gain opportunities to
make the construction and permanent
financing loans. These benefits may include Community Reinvestment Act credit
for both the investment and the loan.
Continued on back page

Rural
Empowerment
Zones
Providing sustainable
community development

A

rmed with $280 million, banks and
their community partners in the Rio
Grande Valley Rural Empowerment Zone
are making loans, setting up public/
private partnerships and establishing
job-training programs for South Texas
residents living with double-digit unemployment and high poverty rates.
Since 1994, the Rio Grande Valley
Empowerment Zone Corp. (RGVEZC),
which administers funds in the zone, has
helped start 312 new businesses and create 1,577 jobs within the area, exceeding
initial expectations. Those businesses include a furniture builder, a cotton gin, a
pool-table maker that received a large contract from Wal-Mart—and Julio’s Bakery.
In addition, RGVEZC Chief Financial
Officer Melly Moroles says the corporation
has allocated more than $6 million to area
nonprofit organizations. The nonprofits
have leveraged an additional $13 million
from local banks to construct or renovate
at least 150 affordable housing units.
The Rio Grande Valley Empowerment
Zone is one of eight such zones created
in 1994 as part of the multibillion dollar
national Community Empowerment
Program. The seven other zones are in
California, Georgia, Illinois, North Dakota,
South Dakota, Mississippi and Kentucky.
Combating Double-Digit Unemployment
Empowerment zone corporations and
their local partners are trying to improve
the economies of some of the country’s

Melly Moroles (left) of the Rio Grande Valley Empowerment Zone Corp. and Marcy Castillo (right)
of Texas State Bank display a plate of baked goods made by Julio Torres (center), who opened his
own bakery in Edcouch thanks to rural empowerment zone funding.

most impoverished areas by keying on
economic opportunity, sustainable community development, community-based
partnerships and strategic vision for
change.
The Rio Grande Valley Empowerment
Zone encompasses 227 square miles in
Cameron, Hidalgo, Starr and Willacy
counties along the Texas–Mexico border.
Unemployment hovers at more than 15
percent—nearly four times the national
average—and half of the people live
below the poverty line.
The RGVEZC combines its $40 million
budget with $80 million in community
development block grants, $160 million in
loan guarantees and various tax incentives
to operate the following housing and
business development initiatives, all designed to create sustainable development:
First-Time Homebuyer Program.
Amigos del Valle of Mission, Texas, received a $583,600 grant to develop a revolving loan fund to leverage long-term
mortgages from local conventional lending sources. To date, 12 home loans have
been made, and six more are in progress.
Brownsville Housing Development.
The Community Development Corp. of
Brownsville (CDCB) used a $1.3 million
grant for land acquisition and down payment assistance for 100 single-family

affordable houses. The CDCB also borrowed $3 million for home construction
from local banks.
Small Business Incubator. The
RGVEZC put up $750,000 to build a
23,000-square-foot building for business
start-ups and expansions in Port Isabel,
Texas. The incubator has been at or near
full occupancy for the last year.
Community Investment Fund.
The RGVEZC provided $3 million for
small business development loans, including 22 microloans and six commercial
loans.
One-Stop Capital Shop. In partnership with the University of Texas–Pan
American’s Center for Entrepreneurship
and Economic Development, the RGVEZC
created the one-stop shop to provide
technical assistance and counseling.
To date, more than 1,400 people have
been counseled or trained.
Job Training Program. The Valley
Initiative for Development and Advancement received $679,000 to help local
businesses develop a job-training program on a demand basis. More than 165
people have received money for college,
42 have received customized job training
and 81 have received basic-skills educaContinued on back page

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • FOURTH QUARTER 1999 5

COMMENTARY
Fannie Mae
Continued from page 1

Along the way we’ve discovered
that many of the “givens” about people’s
creditworthiness are simply wrong, outdated or unfair. For years we—the system
—assumed people were unworthy for a
prime rate mortgage if they didn’t have
cash for a 20 percent down payment,
didn’t have the same job and residence
for a long time or didn’t have an unblemished credit report. We thought multiple
borrowers made for a weaker loan application. But we found a lot of this was
based on anecdote. Years of experience
and more refined analytical tools have
proved these assumptions wrong.
As we’ve moved forward in affordable housing, we’ve also assumed our
delinquencies would go up. But at
Fannie Mae, our credit losses, in fact,
have gone down. How is this possible?
Because we intervene earlier.
People don’t lose their homes
because they decide not to pay. It’s
because they’ve had some life crisis—a
divorce, a death in the family, a job loss.
So we intervene earlier, and we work
with our lenders to do that, too. We now
have Fannie Mae representatives in our
major servicers’ offices every day, helping
banks get people caught up on their
loans so they can continue to own their
homes. Managing credit risk more smartly
has allowed us to serve more and more
people and offer mortgages with down
payments as low as 3 percent.
Through credit-risk management
we also found we didn’t need additional
mortgage insurance. One of my first acts
as Fannie Mae chairman in January was
to roll back the mortgage insurance
requirement, which has saved buyers
millions of dollars and will pull even
more consumers into the market.
Affordable Housing Mandate
The U.S. Department of Housing
and Urban Development has established

housing goals for us that require more
than half our business to serve lowerincome borrowers, underserved areas and
special affordable housing. Our housing
mandate differs from any others in the
business; it sets forth percentage-ofbusiness goals, and at year-end we have
to demonstrate we have reached them.
That’s a little hard when we don’t originate
the mortgages and we can only buy what
our lenders are selling us. We think of our
housing mandate as CRA on steroids. But
we embrace these goals. Indeed, we’ve
set even tougher goals for Fannie Mae.
We lead the marketplace in doing
business with low- and moderate-income
families largely because of our Trillion
Dollar Commitment—our pledge five
years ago to invest a trillion dollars by
2001 to help 10 million targeted underserved families achieve home ownership
and decent rental housing. This commitment has transformed our company.
We’ve set up a new Housing and Community Development Division and developed new products to serve families in
unique situations. And we’ve set up Partnership Offices all over the country. By
next January we’ll have 44 offices open,
each with a specific investment plan for

that community. We’ll have $300 billion
of these investment plans around the
country by January, advancing our $1 trillion goal by pulling targeted families into
the market, creating more affordable
housing for them and financing their loans.
These plans include significant investment in affordable multifamily rental
housing. But many families who are renting want to be homeowners and could
be building equity wealth and stronger
neighborhoods. They need affordable
homes to buy and flexible mortgages to
help them surmount financial and credit
hurdles. Home ownership is a particular
challenge for minorities. Minority home
ownership rates lag far behind those of
whites—47 percent for minorities compared with 73 percent for whites. To help
close this gap, we’ve chosen a number of
cities to roll out our minority home ownership initiative. [In the Eleventh District,
Houston has been selected for this program.] And we’re also helping immigrant
families qualify for mortgages while waiting for their green cards.
The Next Frontier
We know there are millions of
hard-working, wage-earning families out

Timely Payment Rewards
for Borrowers with Past Credit Problems
Fannie Mae’s new Timely Payment Rewards mortgage offers lower-cost financing options
for borrowers with past credit difficulties. Qualifying homebuyers will have an interest rate
2 percent below subprime, and, after 24 months of paying the mortgage on time, the borrower
is guaranteed a 1 percent interest rate reduction.
This adds up to significant savings over subprime mortgages. For example, with Timely
Payment Rewards, a borrower with slightly impaired credit may be eligible for a 30-year, fixedrate $100,000 mortgage at an initial interest rate of 9.5 percent and a monthly payment of $841.
After two years without delinquency, the borrower’s interest rate would drop to 8.5 percent and
the monthly payment to $769.
In comparison, a loan originating in the subprime market would carry an average interest
rate of 11.5 percent with a $900 monthly payment. (Note: Interest rates may vary depending on
market conditions.) Thus, a Timely Payment Rewards mortgage can save homebuyers as much
as $200 a month. ◗

6 FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • FOURTH QUARTER 1999

there who would love to be homeowners
and probably would qualify. As an industry we’ve been pretty successful in reaching out to people who are ready for
home ownership. The next frontier is to
prepare more people for home ownership. And the biggest single barrier many
families face is credit. By attacking the
credit barrier, we can find ways to avoid
sending them to the higher-cost subprime
markets if they can qualify for conventional financing.
We estimate that about 50 percent
of families who are rejected for a mortgage or referred to the subprime market
are just a notch below qualifying for the
lower-cost prime-rate mortgages. Many
are new Americans who have short credit
histories; minority families that mainstream lenders don’t know about; people
with nontraditional job histories; and
people who need a chance to repair
their credit.
One Fannie Mae survey found that
50 percent of Americans do not know
that if they chronically pay their bills late,
they will hurt their ability to get a mortgage. One of our new initiatives is an
educational program to help the public
understand the importance of good credit
to home ownership. Another is to serve
some people with impaired credit
through the Timely Payment Rewards
mortgage program (see box).
To sum up, we think Congress
made a wise decision 30 years ago when
it turned the job of expanding home
ownership over to an active secondary
market by establishing Fannie Mae as a
private, shareholder-owned company.
As our mission statement says, “At Fannie
Mae we are in the American dream
business. Our mission is to tear down
barriers, lower costs and increase opportunities for home ownership and affordable rental housing for all Americans,
because having a safe place to call home
strengthens families, communities and
our nation as a whole.” ◗

An employee of Siméus Foods International tests the temperature of meats the company
will sell to restaurants nationwide.

Venture Capital
Continued from page 3

financial institutions to penetrate. He
notes that Lawhorne and his associates
have more than 70 years of venture
capital experience.
“Bank of America is extremely pleased
with the results of its investment in
MVHC, recognizing a great relationship
with people who really know the business and reaching an underserved market,” Carter says. “The relationship is a
great marriage.”
Carter notes that MVHC is one of the
few venture capital firms whose mission
is built on community development. He
adds that MVHC stands out because its
investments range from $300,000 to
$3 million, compared with other venture
capitalists who won’t touch anything
under $4 million.
Experts agree that venture capitalists
like MVHC provide a highly disciplined
structure to start or expand businesses.
Timothy Bates, a labor and urban affairs
professor at Wayne State University in

Detroit, notes in Economic Development
Quarterly (February 1997) that MVHC is
successful because its investment strategy
emphasizes growing firms, capital gains,
top-flight management talent and largescale, minority-owned businesses. Bates
adds that MVHC is a model for helping
highly educated and skilled minority
managers start or join entrepreneurial
companies, attract equity-capital investment to those organizations and redirect
corporate involvement from philanthropy
to business development.
Meanwhile, Siméus is looking to the
future. In 1998, Siméus acquired Fast
Food Merchandisers, a 170,000-squarefoot facility with 350 employees in Forest
City, N.C., an acquisition that Siméus says
will lead to bigger and better things.
Siméus predicts that his company’s revenues will reach $1 billion through acquisitions within five years. He can dream
such big dreams, he says, because of
MVHC’s venture capitalists. ◗

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • FOURTH QUARTER 1999 7

Tax-Credit Opportunities

Rural Empowerment

Continued from page 4

Continued from page 5

“Just as in all real-estate investments,
you need to know with whom you are
investing and whether the deal makes
sense,” Wood says. “All the things you
look for in a commercial loan, you look
for in this.”
Wood says Bank One invested in lowincome housing developments long
before the Community Reinvestment Act
began emphasizing investments in its performance criteria for financial institutions.
He adds that Bank One will likely continue investing in such programs because
they are good for the bank and the community.
For more information, contact the Texas
Housing Finance Corp., (512) 469-9059. ◗

tion, such as English-as-a-second-language
or GED instruction.
Business Incentives. In addition to
capital resources, businesses locating in
the empowerment zone may win tax
credits, property tax reductions and
employer wage credits.

Did You Know. . .?
Technical Assistance
Resource Guide for
Small Business Owners
The Community Affairs Office of the
Federal Reserve Bank of Dallas has updated its Technical Assistance Resource
Guide for Small Business Owners. The
guide lists resources that offer technical
assistance and loan packaging for small
businesses. The information is organized
by state and by category.
If you did not receive a copy with
this issue of Banking and Community
Perspectives or if you require additional
copies, please call the Dallas Fed’s
Community Affairs Office, 214-922-5377.

Federal Reserve Posts CRA
Performance Ratings on Web
Ratings information dating back to
1990 for banks examined by the Federal
Reserve is available on the web at
www.bog.frb.fed.us/DCCA/CRA/crarate.cfm.
Ratings can be reviewed for a single
bank or for a particular group of banks.

FEDERAL
RESERVE BANK
OF DALLAS

Perspectives
Fourth Quarter 1999

Seeing Promise in the Dreams
RGVEZC leaders point to Julio’s Bakery
as an example of their dedication to developing sustainable communities. With
more than 25 years’ experience making
breads and pastries, Julio Torres dreamed
of owning his own bakery. But a lack of
capital had flattened his ambitions.
Today the sweet smells of Mexican
bread waft through the air from Julio’s
Bakery in the town of Edcouch. Loans
from Texas State Bank, in partnership
with the RGVEZC and the Small Business
Administration, enabled Torres, 38, to
turn his dream into a reality.
Torres’ original bakery opened in
October 1996. In early 1998, Torres received an interim loan of $150,000 from
Texas State Bank to cover operating costs
and to build a new bakery on land he
was leasing with an option to buy. A year
later, the RGVEZC partnered with Texas
State Bank to lend Torres another
$160,000 to buy the land and equipment.
The RGVEZC provided $64,000 of the
second loan, taking a second lien. The
Small Business Administration guaranteed
80 percent of Texas State Bank’s loans to
Torres, who is in good standing with the
bank and his creditors.
The new building opened last February.
Torres now employs six people.
“We saw a great deal of potential in
Julio but were unable to make the loan
by ourselves,” says Marcy Castillo, the
bank’s loan officer. “It would not have
been possible without the empowerment
zone and the SBA.”
For more information, contact the Rio
Grande Valley Empowerment Zone
Corporation, (956) 514-4000. ◗

Federal Reserve Bank of Dallas
Community Affairs Office
P.O. Box 655906, Dallas, TX 75265-5906
(214) 922-5377

Gloria Vasquez Brown
Vice President
gloria.v.brown@dal.frb.org

Nancy C. Vickrey
Assistant Vice President and
Community Affairs Officer
nancy.vickrey@dal.frb.org

Ariel D. Cisneros
Senior Community Affairs Advisor
ariel.cisneros@dal.frb.org

Shelia M. Watson
Community Affairs Advisor
shelia.watson@dal.frb.org

Toby Cook
Community Affairs Specialist
toby.cook@dal.frb.org

Jackie Hoyer
Houston Branch
Community Affairs Advisor
jackie.hoyer@dal.frb.org
Publications Director: Kay Champagne
Writer: Steve Smith
Editors: Jennifer Afflerbach, Monica Reeves
Design: Gene Autry, Laura J. Bell
The views expressed are those of the authors
and should not be attributed to the Federal Reserve
Bank of Dallas or the Federal Reserve System.
Articles may be reprinted on the condition
that the source is credited and a copy is provided
to the Community Affairs Office.
Internet web site: www.dallasfed.org