Gulf Coast Redevelopment: Pathways to Recovery

Southern Mutual Help Association Aids Neglected Rural Communities

Out of the public eye, rural Louisiana suffered tremendous hurricane-related damage to homes and businesses. Aiding in the state's recovery is the financial assistance provided by the Southern Mutual Help Association and its lending arm and wholly owned subsidiary, Southern Mutual Financial Services (SMFS). Through its Rural Recovery Program, the association worked to restore more than 800 homes and businesses across the 11 rural parishes most affected by the hurricanes. Established in 1969, the association collaborates with Louisiana banks through SMFS, a community development financial institution (CDFI), to encourage investment opportunities and strengthen poor families and communities throughout the southwest portion of the state known as Acadiana. SMFS concentrates on affordable mortgage financing. Banks can help their communities by investing in CDFIs like SMFS; at the same time, they earn consideration with regulators under the Community Reinvestment Act investment and lending tests. MidSouth Bank, headquartered in Lafayette, Louisiana, did just this with a $75,000 investment in SMFS through an equity equivalent product (EQ2), a long-term deeply subordinated loan with features that make it function like equity. It was the first time this financial tool had been employed in Louisiana. The EQ2 was invested with no interest obligation, increasing SMFS's ability to provide affordable mortgage financing to low- and moderate-income families and individuals. Making this commitment won MidSouth Bank the coveted Spotlight Award from the Federal Home Loan Bank of Dallas. Recently, the Southern Mutual Help Association returned to its founding objective -- providing affordable rural housing. Teche Ridge, its latest venture, will be a mixed-use, mixed-income development providing 184 housing units in phase one and 370 housing units in phase two, of which 138 units will be earmarked for low- and moderate-income families. The $150 million Teche Ridge project will help to counter developing patterns in rural Acadiana that segregate housing by income, geography, and design. The association is seeking partnerships with banks and other financial institutions to secure funds for the new initiative's infrastructure development. For more information, visit our Web site. Return to Top

OCC's Community Affairs Department (202) 874-5556 E-mail CommunityAffairs@occ.treas.gov to receive a hard copy of Community Developments. Articles by non-OCC authors represent their own views and are not necessarily the views of the OCC.