The Independent Community Bankers of Minnesota is supporting an innovative program by a health insurer that will deposit millions of dollars into local community banks.
Medica, a non-profit health insurer, announced the program designed to support local economies throughout Minnesota. Under this program, Medica will deposit $20 million of its reserves in local community banks.
“We recognize that there are Minnesotans throughout the state that have significant financial needs. Many of them turn to their local community bank for loans in these times of need,” said John Naylor, Medica’s president and CEO. “By banking locally, Medica is giving community banks more resources to support families and small businesses in our communities.”
Medica anticipates about 80 banks will participate in the initial roll-out of the program. The banks will be selected based on the local economic needs of each community, and the money deposited will be used for loans to businesses and individuals in those communities.
“As a non-profit health plan, Medica has an obligation to place its reserves in credible financial institutions to ensure that we can meet our health insurance obligations,” Naylor said.
According to a Federal Reserve survey, community banks are small business’ choice lenders. The “Small Business Credit Survey: Report on Employer Firms,” found that more than 60 percent of all small business loans and 80 percent of agricultural loans are provided by community banks.
At a time when gathering deposits is one of community banks’ top priorities, “Medica is choosing to bank locally,” said Jim Amundson, ICBM president and CEO.
“Community banks are conduits to promote the economic success of towns and cities across Minnesota,” Amundson said. “We are thrilled to partner with one of the state’s most respected companies to launch this novel program. We hope other Minnesota companies will choose to follow Medica’s lead.”
About 20 banks had applied to have Medica make deposits with them within the first day after its launch.