2021 CSBS Community Bank Case Study Competition Journal

2021 COMMUNITY BANK CASE STUDY COMPETITION

impact on the spending within that industry, but that same lent capital spurs an indirect effect of spending in other industries, represented by a multiplier value. Aggregated loans sorted by RIMS industry codes are used as an input in the multiplier tables. Liberty’s Louisiana loan originations in 2019 represents 32.26% of their $345 million loan portfolio, before allowances, that spans eight states. The business loans represent approximately 56.4% of the Louisiana originations, or 18.2%, of their entire loan portfolio. Since mortgage and consumer-related borrowers’ spending does not fit into a RIMS code, we drop them from Liberty’s economic impact. These dropped loans have a clear and important influence, but they cannot be quantified in this model. To account for Liberty’s full loan portfolio that crosses eight states, it is assumed the other Liberty states’ multipliers are similar to Louisiana’s. Based on this assumption, the impact is scaled up by a factor of 5.42 to represent the full business loan portfolio across Liberty’s market areas. 3 Despite dropping a large portion of Liberty’s portfolio, their impact on economic development is vast. Table 2 illustrates Liberty’s impact on generated sales, taxable earnings, and jobs created. New Sales Generated: We learned that Liberty is responsible for creating a total indirect estimated impact of $685,626,888 of new sales throughout the states they operate in. In absolute dollar terms, Liberty’s efforts had the most impact on the construction industry,

The multiplier tables quantify how Liberty’s direct loan investments into a minority-owned business within a sector indirectly ripples throughout entire communities.

to execute an economic impact study which quantifies an estimate of how Liberty’s efforts have created sales, employment, and wage income throughout their market areas and beyond. Information obtained includes the borrowers’ North American Industry Classification (NAIC) codes, revenues, total assets, and loan origination amount. The loan’s NAICs code is converted into a Regional Input- Output Modeling System (RIMS) code allowing Team Southeastern to use multiplier tables for the State of Louisiana provided by the Bureau of Economic Analysis (BEA). The multiplier tables quantify how Liberty’s direct loan investments into a minority-owned business within a sector indirectly ripples throughout entire communities. Within the tables are multiplier values that show how lending to one industry can impact not only that industry, but also other industries indirectly. For example, capital lent to a business in the construction industry would have a direct

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