"Cash back fast!” their front windows promise. “Loans up to $255!” “C’mon in and get happy!"

Such pitches are an ordinary part of life in San Francisco’s Mission District, home to the city’s highest concentration of check-cashing outlets and pay day lenders. A single corner of Mission Street boasts two side-by-side outlets, nestled amid the laundromats and carnicerias that serve neighborhood residents, more than half of whom don’t hold traditional bank accounts.

Every year, these outlets siphon off millions of dollars from a community that can ill afford to lose it. They charge up to $40 just to cash a paycheck and up to 450 percent in interest rates on short term loans. For Mission District residents, many of them working two to three jobs just to get by, that can add up to hundreds or even thousands of dollars a year – for a service that most consumers get for free.

"In our city, the price you pay for using check cashers is so high, it really impacts the household. When you open a bank account, you benefit immediately, from day one," explains José Cisneros, San Francisco’s City Treasurer. Yet more than one in five San Francisco residents are "unbanked," including half of the city's African-American and Latino population.

That's why just over two years ago, Cisneros and colleagues both in and out of government created Bank on San Francisco, an innovative city-sponsored partnership that brings together banks, credit unions and community groups to create and market "starter" checking accounts to low-income households.

(Last year, the program’s five-person Steering Committee was recognized with a James Irvine Foundation Leadership Award. Recipients included Cisneros and his colleagues Leigh Phillips and David Augustine in the San Francisco Treasurer’s Office, along with Lena Robinson of the Federal Reserve Bank of San Francisco, and Ben Mangan, CEO of local nonprofit EARN.)

The Bank on San Francisco program has exceeded its goals, helping city residents open more than 31,000 first-time and second-chance accounts. Of those, more than 80 percent remain active accounts, with an average balance of $980. Bank on San Francisco has already become a model for more than a dozen programs across the country.

Over the long-term, Cisneros said, access to banking services helps participants become financially self-sufficient, which in turn strengthens their families, neighborhoods and ultimately, the city as a whole.

"If you don't have a bank account, there's no way you can save to buy a home or pay for your kid’s college education," he says. "It's getting people on that first step toward the possibility of asset-building, and the long road to financial success."

"It really is a form of financial equality – financial justice in a way," Cisneros adds. "Nobody deserves to be left out."

Bank on San Francisco is changing the lives of participants like Tenderloin resident Virginia Johnson, 74. A history of bounced checks left her unable to qualify for a traditional account, but she hated bringing her Social Security checks to the local check-cashing outlet.

"It was uncomfortable and it was unsafe," remembers Roy Miller, Johnson's in-home caregiver, who sometimes accompanied her. "They cashed the check and you were walking out of there with hundreds of dollars of cash onto Market and Jones – not exactly a safe area."

Worse yet, check-cashing and money order fees were consuming nearly $200 a month of his client's meager income. So when Miller saw an ad for Bank on San Francisco on the side of a bus, he didn’t hesitate to call the toll-free number. Johnson was able to open an account at Northeast Community Federal Credit Union, just a few blocks from her apartment.

"It's great,” Miller says. "She gets all her bills paid all at once with free money orders. She gets $50 cash and leaves the remainder in the account, so it works as a money management tool as well." Miller has since brought four other clients to open accounts at the credit union.

Bank on San Francisco grew out of the city's effort to expand a local tax credit program for low-income, working families. Cisneros and other city officials were dismayed to learn how many of the checks that went to local residents had been whittled down by check-cashing fees. In early research on the program, focus groups showed that unbanked residents generally disliked check-cashing fees, and were hungry for alternatives.

"People really wanted a bank account," said Anne Stuhldreher, a fellow with the New America Foundation who helped create Bank on San Francisco. "I remember one grown man almost in tears, saying 'I made some mistakes five years ago and I cleaned up my act and I deserve a second chance.'"

A checking account is a first step into the financial mainstream, allowing people to begin building a better life, Stuhldreher says. "All the research shows that if you have a bank account, you're more likely to have a higher credit score, which means you’re more likely to get a car loan or an affordable home loan."

Led by San Francisco Treasurer Cisneros, Bank on San Francisco is the result of an innovative public-private partnership that includes government agencies, for-profit banks and credit unions and a range of nonprofit and community groups.

In recruiting banks, city officials positioned Bank on San Francisco not as a philanthropic effort, but as a business opportunity – a way to reach new clients and reclaim business lost to check-cashers and other fringe outlets. Today, more than 75 percent of the banks and credit unions in the city are participating.

"One of the beauties of this program is there's something in it for every party involved, and the banks are no exception,” said Rebeca Rangel, vice president of community affairs for Bank of the West, one of 17 financial institutions that signed on. "From the banks' perspective, it's really multifaceted, it ultimately helps us build our customer base — and they’re good customers that come from these programs."

The program's success has attracted interest across the nation. More than a dozen cities plan to launch versions of the program with help from the National League of Cities. And earlier this month, Gov. Arnold Schwarzenegger announced Bank on California, which will officially expand the model into Fresno, Los Angeles, Oakland, San Jose and Sacramento.

Inquiries from other areas have grown so frequent, program managers for Bank on San Francisco are developing a how-to Web site, including an online toolkit, with help from the Irvine Foundation.

"Bank on San Francisco is a pragmatic solution to a widespread problem, and a great example of the power of public-private partnerships," said Amy Dominguez-Arms, director of the Foundation's California Perspectives program. “Already, they've become a catalyst for positive change in the banking industry. We’re glad to encourage the spread of this model to other cities in California and the nation."

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