You could chronicle the history of New Resource Bank through the story of just a single phrase. From the bank’s low point to its high points, from its business model to the internal culture that powered its model, to the ultimate mark it left on the worlds of banking and finance, social justice and environmental sustainability. One phrase encapsulates all of it.

Vince Siciliano says it came to him one day in his San Francisco office, back in 2009. New Resource at the time was on its last leg, in danger of regulators shutting it down. The bank was founded with a unique mission — to be the first depository institution in the U.S. that would specialize in environmental sustainability lending. But less than three years in, it hadn’t yet figured out how to do that successfully.

Siciliano had just been brought on as CEO for his reputation as a turnaround artist, having previously brought back three failing community banks from the brink of failure. So he knew he needed to start out building or rebuilding relationships with depositors who knew all too well the cold shoulders of a banking system that seemed at odds with their own personal values around people and planet.

“I was just dealing with this issue of how [to] communicate to people that when they choose a bank, they’re choosing more than a financial institution, they’re choosing to support its values and practices,” says Siciliano.

When speaking at environmental sustainability conferences or other activist or expert gatherings around the Bay Area, he wanted attendees to think about something that’s usually nothing more than an afterthought, even for those crowds — where they held their deposits.

The phrase Siciliano hit upon was, “Where does your money spend the night?” He posed that question in his speeches while waving around a dollar bill.

“I would say to people, your money doesn’t sleep at night, you sleep at night,” he says. “But your money is spending the night doing something somewhere. If you looked at a dollar bill as a magic carpet and you could get on that bill and ride around the world to see what your money is doing, would you be proud?”

Over the next decade, the phrase made its way around the world and back again, among students and activists pushing university endowments to divest from fossil fuels. It made its way into Occupy Wall Street discussions in the wake of the financial crisis. And it made its way among so-called “impact investors” — people and institutions looking to invest in ways that directly addressed social or environmental challenges in addition to making a financial return.

With a new administration and a new Congress in power in Washington D.C., the prospects for a “Green New Deal” have never been more promising, nor more urgent. Certainly, federal spending will need to lead the way in addressing the daunting breadth of things to prepare for or mitigate the effects of climate change. But the financial sector has also started to change over the past decade. Banks aren’t as opposed as they once were to the idea that climate change is a risk factor to their bottom lines. In recent congressional hearings, opponents of a Green New Deal agenda actually expressed fears that banking regulators could soon tip the scales for good against fossil fuel industries, which rely heavily upon financing from banks.

More banks know now there’s plenty of profithto be made from environmentally responsible lending — and they know younger generations of consumers want to see it. It’s a good moment to take a look back at how New Resource Bank, despite never being a very large bank, contributed to that global shift. And it starts with Siciliano’s catchphrase.

“We considered copyrighting it, but part of being in the socially conscious world or equity conscious world is [that] you don’t grab and hold, you give away,” says Siciliano. “It was the same with our business strategy. I shared our strategy all the time. I did not make a secret of it. The reason was, we wanted other people to do this. We wanted to be successful and tell other people how to do it.”

The Founding of a Very Unusual Bank

Peter Liu wasn’t thinking about starting a bank in 2004. But he was talking to a lot of banks about financing emerging industries such as solar panel installation or sustainable food production.

Phil Angelides, the California State Treasurer at the time, had just announced the “Green Wave” initiative, pledging to invest $1.5 billion from the state’s two main pension funds into “cutting-edge technologies” and environmentally responsible companies. Liu, a financial industry veteran and co-founder of the China-U.S. Energy Efficiency Alliance, was picked as an advisor to help craft the strategy for the pension funds to make those investments.

Liu says a lot of the initial Green Wave investments went into venture capital funds, which promise high returns. Pension funds are almost pathologically in search of higher returns to meet their obligations to pensioners. Not to mention that the state is home to Silicon Valley, a nexus of venture capital. Liu says the pension funds were looking to increase their allocations to venture capital anyway.

“But I thought we were missing the banking side,” says Liu, who had previously worked at several large global banks. “Venture capital was very ambitious, but not something that could translate to a broad economic base. The sustainability sector needed to grow from Wall Street and Silicon Valley to Main Street.”

Liu says he saw plenty of potential for growth, particularly in solar and wind energy, and organic foods. But many of the businesses that wanted to grow in those sectors weren’t interested in getting — or didn’t need — venture capital.

Some were in organic food production and distribution, and they weren’t interested in parading in front of venture capitalists, “Shark Tank” style. Some were established electrical contractors or developers or independent logistics companies who didn’t need a venture capital investment and to eventually get listed on the New York Stock Exchange as much as they needed a line of credit to secure raw materials, new tools and new hires with new training in order to open up a new line of business.

So Liu went to some of his friends and former colleagues working in big banks and told them what he saw.

“I said, ‘Hey this is an interesting phenomenon, you should jump on this.’ And basically the feedback was, ‘We’re not very good at starting new initiatives,’” says Liu. “They’re very good at buying things once it reaches scale and reaches something they can apply more efficiencies to.”

Liu was frustrated that even he — someone who knew banking and finance inside and out — couldn’t convince other bankers of the clear opportunity here to do some good while also making some money. So he started asking around about how to start a new bank — a “de novo” bank in banking lingo. He reached out to Triodos Bank, a Dutch bank that is one of the few founded with a specific social mission “to help create a society that protects and promotes the quality of life of all its members.” He also reached out to Shore Bank, known as the first community development bank, founded on the South Side of Chicago in 1973.

“All [of them] told me it was very hard, but maybe California was ready for this,” says Liu.

Regulators were skeptical about the business plan — though Liu recalls that the amount of skepticism was not unusual. The entire application process took about a year from when Liu and some of the other co-founders first walked into the FDIC’s regional office in San Francisco. It’s a typical amount of time for banking regulators to review an application.

“The FDIC applied very detailed scrutiny to our application to make sure there were actually bankable green businesses in the space,” says Liu.

Liu says their business plan included profiles of 200 potential customers as examples of their target market — organic food companies, nascent solar panel installation firms, and nonprofits with similar missions such as the Rainforest Action Network and former Vice President Al Gore’s Climate Reality Project.

After conditionally approving an application, regulators give de novo banks a standard two years to raise startup capital, sometimes granting an extension. It wasn’t that hard for New Resource to raise startup capital, either, given Liu’s industry ties and those of his fellow founding board members. To serve as the bank’s founding board chair, Liu recruited Mark Finser, who had recently founded a new not-for-profit financial services group called RSF Social Finance — which became an initial shareholder of New Resource Bank. Triodos Bank also became an initial investor. There was enough buzz at the time around sustainability and clean technology that Liu says they received more investor offers than they were prepared to accept.

Ultimately, the bank accepted offers from around 200 initial shareholders who invested a total of $24.8 million, and it officially opened its doors on Howard Street in San Francisco, on September 19, 2006. It was the fifteenth new bank to open in California that year.

“Remarkably, the clients we had targeted largely became the clients that were our initial customers,” says Liu. “The first customer of the bank was a woman-led organic vegetable distribution company called Veritable Vegetable. It’s one of these areas of growth that wasn’t about clean tech, but they wanted a bank that understood their business model.”

It would still be some years, however, before Veritable Vegetable really had a bank that understood their model.

Doubling Down on Mission

The final step before regulators shut down a bank is to issue a “cease and desist” order. It means the bank has to stop making loans until it satisfies the conditions laid out in the order. The order gives the bank a timeline to meet those conditions, which can include bringing in new leadership, setting new lending policies, raising new capital from investors, and drafting a strategic plan to bring the bank back to profitability within a certain timeframe.

New Resource Bank’s cease and desist order, dated April 21, 2009, starts off the same as most cease and desist orders. Based on recent regulator examinations, the FDIC and California’s state banking regulator “had reason to believe that the Bank had engaged in unsafe or unsound banking practices.”

Of course, regulators were issuing a lot of cease and desist orders at that time. It was the aftermath of the subprime mortgage implosion, which many banks ultimately didn’t survive.

How did New Resource get here? Bank leadership succumbed to the pressure to make as many loans as possible and get to profitability in the shortest period of time. In its early years, only a quarter of New Resource Bank’s portfolio was actually in environmentally sustainable businesses, with the rest allocated to plain vanilla real estate lending. That approach got the bank caught up in the financial crisis.

But more deeply, the time the bank devoted to real estate lending was time not spent on actually understanding the newer sectors it was specifically founded to serve.

“I would say that they had a generalized strategy and that the team was more focused on putting loans out,” says Siciliano. “But they weren’t going out with sufficient structure and policies.”

Siciliano identifies an additional shortcoming to New Resource’s approach around this time: the bank hadn’t yet cultivated an internal culture around its mission.

The needs were out in the world — companies like Veritable Vegetable that needed capital to grow — and depositors were coming to the bank in response to its mission-oriented promise. But if most of the loans it made were just like the loans any other small community bank made, New Resource really fell short of that initial promise.

“There are companies that have high service, or unique products, but in banking, things are mostly a commodity,” says Siciliano. “If you’re going to go out in the world and have a mission, then you really better understand how it informs your lending and blend it with your lending practices. So that people will understand the mission.”

For the community bank veteran Siciliano, it was a new challenge, and one that he found more fulfilling than any of his previous turnarounds. Rather than a community based on geography, New Resource Bank had to be a community bank whose community was based on shared values. And while the bank had some sense of those values internally, it needed to spend more time getting to know its potential customers and their values.

“We did a lot of deep dives on: Who are these people? What do they need? Where do they hang out? Why would they want a bank? How would they find us and where could we find them?” says Siciliano.

To restore credibility and have genuine conversations with those potential customers, the bank also made a big decision — coming out of the cease and desist order, every loan the bank made would have to be mission-aligned. It was the first decision made at the bank under Siciliano’s tenure.

“[As a group we realized] you can’t be half-green as an institution,” says Siciliano. “You can’t say to the world, well, we believe in certain things but then only do it half the time and continue doing traditional lending that comes out of a community bank. … And that was the first big decision that, you know, in the rearview mirror may not seem so important, but at the time, it was pivotal, because it said to everyone on our board, to our employees, to our shareholders, and to the regulators, we were 100 percent committed to this mission.”

In some ways, it was a huge risk, because it would mean saying no to some loans that might earn profits for the bank, but just weren’t aligned with its values around people and planet.

“We came up with our questionnaire, a simple questionnaire that would allow companies to answer the questions about practices, and we would score it,” says Siciliano. “And we said ‘no,’ often, in the early stages. We’d say well, really we’re looking for businesses that are compatible with this philosophy. How do you feel about that? So that was usually where the ‘no’ came in.”

But in other ways, the bank had little left to lose. If it wasn’t possible to remain financially viable under that constraint, the bank was already in danger of being shut down anyway. As Siciliano explains, committing 100 percent to mission-driven lending felt like the only way to build, or in some cases rebuild, credibility among the bank’s chosen community.

It didn’t necessarily mean that every business it made a loan to was purely in clean technology or organic foods or some other line of business clearly related to environmental sustainability. But if they were going to make that loan to a coffee shop or restaurant or book store, it would have to be made for the purpose of something related to environmental sustainability, such as installing solar panels on the roof of the business or financing some other piece of equipment or renovations to reduce the business’ carbon footprint. Or, Siciliano says, it might not be for something like that initially, but there would clearly be the potential for that to happen down the line with that borrower.

“We didn’t mean people had to be what we called ‘dark green,’” says Siciliano. “But they had to be on a journey. All of us are on a journey around sustainability, or for that matter equity and racism. We just wanted people to be on the journey, and then we could as part of our relationship with the client help move them along.”

Still, it didn’t mean those conversations were always easy. Siciliano, who had just moved from San Diego to San Francisco, didn’t know who Veritable Vegetable was when he came to the bank. He found out later that they were the first depositor, and the bank had made an offer to extend them a loan, but it was right before the cease and desist order, which nixed the loan. But even after the cease and desist order was terminated in 2010, the loan wasn’t picked back up.

“[Veritable Vegetable] felt that they were unknown to us, and that we didn’t care about them and the service on the loan side was non-existent,” says Siciliano. “And whenever I heard that kind of a thing I made it my personal mission to meet them and follow up and say, hey, you know, I’d like to come over and meet you, and they would say you can come over but it’s not going to be the happiest meeting. But there I went, and the entire management team was in the room, it’s an all woman-led company so there’s about eight women in the room, and they, you know, kind of lowered the boom on me.”

Understanding Your Community of Borrowers and Depositors Means Assessing Risk Realistically

Getting to know an industry such as organic foods — who the players are, what the bottlenecks are and just how things work — did more than just build or rebuild credibility for New Resource Bank. It also helped refine the bank’s ability to understand the risks of lending to that sector.

Here’s a secret about banks. If they say a sector or a community is too risky for them to lend to, most of the time it’s not because there actually is too much risk. Most of the time it’s because they haven’t yet spent the time or don’t want to spend the time understanding the real risks of lending to that community or sector.

You might expect banks to be wherever there’s profit to be made, and to some extent that’s true. But from their perspective, why go out and learn about a new sector or community when there’s plenty of the same old fossil fuels or guns or prisons to profit from?

A bank needs a reason to go out and understand a new industry or new neighborhood. It might take time to reach that understanding. But if that lending can be done profitably, that understanding can become a competitive edge, at least for a while. For New Resource Bank, its mission became the reason it went out to understand industries and business models that other banks shunned.

If a bank doesn’t understand how the organic food market works, who the brokers are, how much prices fluctuate on a daily, weekly or other basis and why those prices fluctuate, then there’s no way for the bank to size up how much it can loan to an organic food business. The bank might not care to look for a government program that can partially cover any potential losses on a loan of that kind to that specific kind of business, helping to mitigate some of the risk.

More importantly, if the bank doesn’t understand an industry or sector that deeply, it can’t defend itself when banking regulators come around on a periodic basis to monitor the bank’s lending practices for safety and soundness.

“When the regulators come through to do their exam they’re going to look through your portfolio and they’ll pick out 20 or 30 companies they want to talk about,” says Siciliano. “But they always were satisfied with our responses…and they understand the collateral valuations now. They learned along with us.”

Eventually, things started to click under the new 100-percent mission lending strategy and culture. From 2009 to 2018, the bank more than doubled in size, growing from $166 million in assets to $364 million. In terms of deposits, the bank grew from $140 million to $320 million.

In 2016, New Resource Bank and RSF Social Finance worked together to provide $4 million in capital for Veritable Vegetable to renovate a second warehouse across the street from its first warehouse, effectively doubling its capacity to purchase and store organic produce from farmers. The bank also helped finance the company’s fleet of electric-gas hybrid trucks.

Beyond that one example, New Resource Bank’s playbook for understanding how to make safe and sound loans to organic food companies remains a crucial piece of institutional learning available to other banks, including Amalgamated Bank — the century-old union-owned bank that merged with New Resource Bank in 2018.

Powering Up the Solar Power Market

New Resource Bank’s former loan officers are a crucial piece of the bank’s legacy. “When we hired people, we started asking, how much mission should they know? Are they embracing the idea of sustainability? Or is it totally new to them?” says Siciliano. “If you don’t embrace those things, [our target customers will] see through you in a minute. And so we had to start recruiting much more widely looking for people that had some of that interest in their background.”

It was difficult at first, Siciliano says, but as time went on, more and more people graduated from business schools with sustainability programs, went on to work at big financial institutions and got burned out — morally and ethically, if not mentally and physically.

“There’s that sentiment, you know, like ‘Oh, I’m tired of working in the evil empire,’” says Siciliano.

Nina Webster was one of those examples of a loan officer who embodied that balance. She went from a large mainstream bank to New Resource Bank in 2015. Siciliano had spent years rebuilding the bank’s lending team and its culture to attract recruits like her. She remembers going from working on deals in the tens of millions to hundreds of millions of dollars to deals in the range of five-hundred thousand to five million dollars.

“But it wasn’t any less interesting or complicated,” says Webster. “It was more so. That’s where my passion for sustainability grew into a greater understanding and knowledge and being brought into this community. We always had a national perspective, but the balance sheet and reach of a community bank. We had some clients on a national basis just because of the niche, finding circular economy clients or B-corp clients we could help throughout the country.”

B-corps, or certified B-corporations, are companies that go through a certification process by the nonprofit B-Lab. Companies get assessed on a number of areas, from environmental footprint, to minimum wage and wage inequality within the business, to the openness of hiring practices, paid leave policies, and even where the company itself does its banking. There are now more than 3,900 B-corps in 70 countries around the world, operating in at least 150 different industries. New Resource Bank was one of the first banks to become one.

Webster remembers one particularly large deal in 2015 involving a fund for residential solar panel installations — it was a deal involving all B-corps, from the real estate side to the installation company to the financiers. “We were one of the first banks to figure out how to do solar lending,” Webster says.

Solar panel installation loans are an asset class now, with hundreds and even thousands of loans being originated by specialized residential solar loan companies and sold to investors in the same way mortgage companies like Rocket Loans sell mortgages to investors in mortgage-backed securities. And those loans have helped the industry boom over the past few years — the Solar Energy Industries Association reported that in the first quarter of 2019, the U.S. solar market surpassed 2 million installations – just three years after the market surpassed the 1 million installation milestone. The industry is expected to hit 3 million installations in 2021 and 4 million installations in 2023.

Amalgamated Bank, where Webster now works since the 2018 merger, has even started purchasing many of those solar panel loans and other energy-efficiency loans. Although not everyone from New Resource stayed with Amalgamated Bank, key members of the lending team like Webster are still there. Bill Peterson was chief credit officer at New Resource; he’s now head of all commercial lending at Amalgamated. Finser also joined the board of Amalgamated Bank.

“There’s been the evolution of us at a bank, taking that expertise but now with a larger balance sheet doing that at a larger scale, but at the same time there’s been the evolution of the market,” says Webster. “Over time a lot more banks have become more comfortable with solar lending. There’s so much transaction history. Mainstream banks are doing it, the structure and terms and pricing is incredibly competitive. But there needs to be solar investment by banks on a large scale and I think we’re finally getting there.”

Getting Ahead of the Consumer Demand Curve

Megan Hryndza has been studying the behavior of banking consumers for at least five years now. She’s the co-founder of Mighty, a startup with an online platform that uses primarily public data sources to build profiles of all 5,000 banks and 5,000 or so credit unions across the country, showing how every single one of them leverages depositors’ dollars to make loans for housing, construction, small businesses, big businesses or make more exotic investments. After four years of piloting and beta testing, Mighty launched in early 2020.

Hryndza says there is a long tradition of moving deposits for the sake of reinvesting in historically marginalized communities — that’s how Shore Bank largely raised its deposits since it was founded in 1973. But moving deposits for the sake of the environment is a more recent idea. In the mid-1990s, Shore Bank created a west coast affiliate, called ShoreBank Pacific, which intended to focus on environmental sustainability. After Shore Bank failed, the west coast affiliate was absorbed into another B-corp bank.

But by the time Hryndza started building Mighty, New Resource Bank was really the only depository institution fully committed to environmental sustainability.

Over the course of 2020, Hryndza says the environment was the most searched theme among users of Mighty, along with searches for Black-owned banks. But she also says it’s the area where there is the least amount of public data. Unlike race and other demographics of home mortgage borrowers, or small business lending, there isn’t much public data yet to compare one bank’s environmental impact to another.

Despite the lack of public data for comparison, Hryndza says more banks or banking platforms are offering or promising some kind of “quote-unquote green banking experience” for their customers, certainly chasing the concerns of a new generation of banking consumers. She also sees a growing recognition among consumers that climate change threatens communities of color more than white communities, driving more to think about how their deposits may exacerbate racial and environmental injustice at the same time and to look for banks that help them express that kind of intersectional intentionality.

“I wouldn’t say any green banks today are necessarily spitting images of New Resource, but they are representative of the demand that New Resource proved existed,” Hryndza says.

A Merger Made in Mission-First Banking Heaven

Siciliano never thought New Resource would sell off to another bank. In fact, some of his other early battles were with some of the bank’s initial shareholders, who were very interested in selling the bank.

“We found out that we had two types of shareholders in the bank,” says Siciliano. One group was the Silicon Valley-type investors, who thought the bank was a really great idea, “a great niche,” and that they could build the bank and sell it to a bigger bank and make a handsome multiple on their original investment based partly if not mostly on mere hype around the bank. Siciliano had to push back on them regularly.

“We did not want that kind of pressure,” he says. “So I openly discussed with all our shareholders repeatedly, we’re not for sale. We are mission maximizers, not profit maximizers. But there’s always a financial component to [the] mission, because if you don’t, if you aren’t profitable, if you can’t get a high enough return on equity, you’re not going to be able to grow and be able to attract deposits.”

The second group of investors, such as RSF Social Finance and Triodos Bank, took a more long-term view. “New Resource Bank was able to stand on its own two feet and be a sustainable, mission-first business,” says Jasper van Brakel, who took the reins as CEO at RSF Social Finance in 2018. “I think that’s a huge lesson, that it is possible to do that. The extractive practices, consciously or unconsciously, that the financial industry and system or sector are built on, if you apply those same principles to funding climate solutions, or racial and social justice, that’s a huge disconnect.”

The example of New Resource shows that banks can still be profitable even when they put people and planet before profits — not the only example, but a powerful illustration that the rhetoric can match the business model. It bolsters the argument from some banking law experts that regulators should hold banks more strictly accountable for combatting issues such as climate change or persistent racial disparities in access to capital. The banking industry wouldn’t like its profits reduced for the sake of public policy goals, but New Resource stands as an example that banks could still be profitable even if they completely avoided industries like fossil fuels or private prisons or financing settlements for police brutality cases.

In 2017, Siciliano announced his plans to retire the following year. That second batch of investors were among those who showered him with gratitude and praise. One surprising call came in from across the country. It was from Amalgamated Bank, in New York City.

Amalgamated has its own unusual origin story, founded in 1923 by the leaders of the Amalgamated Clothing Workers of America, a garment workers union. Being much older than New Resource, Amalgamated was significantly larger, with around $4 billion in assets compared to $364 million for New Resource in 2017. It was also a very different kind of bank. Founded to serve union members, it had much more experience with individual depositors, and it has a huge portfolio of home mortgage loans, and loans for affordable apartment buildings and co-ops. In more recent years it has expanded its lending to nonprofits, foundations and even political campaigns.

Amalgamated did not do much of what New Resource specialized in — lending to the organic foods sector or to solar and wind energy businesses and projects. Nor did the New York bank have much of a West Coast presence — but it wanted one.

In other ways, Amalgamated and New Resource were similar. With a history and ownership embedded in the labor movement, Amalgamated famously had been the bank of choice to open an account for donations raised by the organizers of the original Occupy Wall Street encampment in New York’s Financial District. It was and still is a B-corp. Like New Resource, Amalgamated is a member of the Global Alliance for Banking on Values — a global network of financial institutions that believe in putting people and planet before profits. The alliance has its own assessment that prospective members must pass in order to join.

“We were very slow and skeptical at first in evaluating [Amalgamated] and seeing if we thought there was a fit,” says Siciliano. “And we did think there was a fit, we did think that we provided them something that they didn’t have, and they provided something for us that we didn’t have.”

In his December 2017 statement announcing the merger, Amalgamated Bank CEO Keith Mestrich mentioned New Resource Bank’s internal culture as a key motivation for the merger. Though culture doesn’t translate instantly across all offices — New Resource Bank had 51 full-time employees in 2018, almost all in San Francisco, compared with 37o for Amalgamated at the time, with its headquarters and branches in New York and one branch in Washington, D.C.

And building culture, Siciliano says, starts with the executive leadership. “The two big things that [any leadership] team does is, one, they build culture intentionally rather than accidentally,” he says. “And two, they build and execute strategy.”

A new face will soon take on the top role at Amalgamated. In January 2021, Keith Mestrich stepped down as CEO.

Siciliano says he wasn’t interested in the job.

“I’ll be 71 in July,” he says. “I am not in a position where I would want to [take on that job]. I mean, I did four turnaround banks, and that’s a lot of work.”

In May, the bank named financial industry veteran Priscilla Sims Brown as president and CEO.

This article is part of Financing Our Green Future, a mini-series examining the behind-the-scenes roles green banks play in making a more sustainable world. This series is generously supported by the Solutions Journalism Network.

EDITOR’S NOTE: This story has been updated to clarify Bill Peterson’s role at New Resource Bank, and the date when Nina Webster joined New Resource Bank.