A 130-year-old community bank has a new look.
The Office of the Comptroller of the Currency has designated the $96.6 million-asset, depositor-owned Warsaw Federal Savings & Loan, which serves East Price Hill, a mixed-race Cincinnati neighborhood, as a minority depository institution.
Announced Tuesday, the OCC action came about five months after Warsaw Federal retooled its board, leaving African American directors as the majority of the 10-person group. The board's new majority-minority composition combined with the diverse footprint qualify Warsaw Federal as an MDI under guidelines the OCC first introduced in 2013, an agency spokesperson said.
Warsaw First will be added to the
Depositor-owned MDIs are not new. Over the years, however, the number dwindled as mutual institutions converted to stock ownership and the banking industry consolidated. By the start of the 2020s, only one mutual MDI, the $27.8 million-asset Columbia Savings and Loan Association, headquartered in Milwaukee's Amani neighborhood, remained. Columbia is supervised by the Federal Deposit Insurance Corp.
That decline has halted in recent years. Tioga-Franklin Savings Bank, a $73.4 million-asset mutual serving the Fishtown district in Philadelphia, transitioned to MDI status in 2022. Now, Warsaw Federal has done the same and more could follow, according to Tom Fraser, CEO at Warsaw Federal's corporate parent, the First Mutual Holding Company in Lakewood, Ohio.
"We think it's a model that's replicable in other communities," Fraser said in an interview. "I think it's natural that mutuals and MDIs marry up. … A mutual bank should be reflective of its local neighborhood."
Warsaw Federal's path to MDI status extends back about four years. Its board, under the leadership of former chairman Rick Flynn, began consulting with local community leaders to ascertain how the institution could better serve underbanked residents. "There must have been a dozen meetings where we concluded a mutual bank as an MDI would be the best form to bridge that gap," Fraser said.
With a plan in place, Flynn orchestrated a reorganization process that resulted in a board composed of seven African American and one Hispanic director. Prior to the makeover, fewer than half the board's members had been minorities. At roughly the same time, in April, Warsaw Federal hired a new CEO, Robie Suggs, who joined the bank from the Cincinnati Development Fund, where she served as chief lending officer.
The changes at Warsaw Federal aren't limited to the boardroom and senior management ranks, Suggs said. She plans to seek additional capital and revamp the product set.
"This time next year, we'll look a lot different," Suggs said.
Community groups, city officials and local businesses have responded positively to Warsaw Federal's MDI transition, all of which bodes well for the bank's prospects entering 2024, according to Fraser. "We expect it will have success in generating deposits, which can be redeployed directly into loans, but also, too, in raising capital next year," Fraser said.
Warsaw Federal becomes Ohio's second minority depository institution.
