“First Financial has once again demonstrated what it looks like to be a true community partner,” said Jesse Van Tol, president and CEO of NCRC. “These addendums reflect a serious commitment to ensuring that as First Financial grows in Ohio and into the Chicagoland area, the communities in those new markets — particularly those that have been historically underserved — will benefit from that growth in concrete, meaningful ways.”

“At First Financial we truly believe that we are improving lives through our commitment to helping our clients and communities thrive,” said Archie Brown, president and CEO of First Financial. “We are enthusiastic in extending the reach and positive impact of our CBA so that we can become a trusted financial partner for the new neighbors and communities we now serve.”

A detailed summary of the plan can be found below. Highlights of the plan for Chicago include:

• $10 million in mortgage lending through the use of products providing greater access to LMI communities and borrowers, providing access to community development mortgage loan officers and making available small-dollar mortgages and home improvement loans,
• $9 million in small business lending in LMI communities through support of small business development corporations and business incubators and through the issuance of microloans,
• $45 million in community development lending and investments in affordable housing, community services, revitalization and stabilization, and projects that create permanent jobs, which benefit LMI areas,
• $1 million in philanthropy, targeting donations to organizations that create and preserve affordable housing and workforce development, plus those that provide housing counseling and promote financial and economic inclusion,
• $75,000 in marketing and communications to benefit clients and communities in LMI and majority-minority census tracts.

Highlights for Northeast Ohio under the amended CBA include:

• $9 million in mortgage lending through the use of products providing greater access to LMI communities and borrowers, an intentional effort in rural communities, providing access to community development mortgage loan officers and making available small-dollar mortgages and home improvement loans,
• $50 million in small business lending in LMI communities through support of small business development corporations and business incubators and through the issuance of microloans,
• $45 million in community development lending and investments in affordable housing, community services, revitalization and stabilization, and projects that create permanent jobs, which benefit LMI areas,
• $750,000 in philanthropy, targeting donations to organizations that create and preserve affordable housing and workforce development, plus those that provide housing counseling and promote financial and economic inclusion,
• $60,000 in marketing and communications to benefit clients and communities in LMI and majority-minority census tracts.
• First Financial has also committed to open a new branch located in an LMI area to better serve the community.

“We are bringing the same community-first approach to Chicago and Northeast Ohio that has been the hallmark of First Financial Bank for years,” said Roddell McCullough, chief corporate responsibility officer for First Financial. “This is an ambitious plan, and we’re excited to be collaborating with our community partners to bring these ideas to life.” 

Since 2016, NCRC has facilitated more than 30 community benefits plans with bank groups that committed more than $600 billion for mortgage, small business and community development lending, investments and philanthropy in LMI and under-resourced communities.

The following NCRC member organizations signed on to the plan:

Benjamin Rose
Chicago Community Loan Fund
Community Shelter Board
Freedom Equity Inc.
Homes on the Hill CDC
Housing Action Illinois
Housing Opportunities Made Equal (HOME)
Indianapolis Neighborhood Housing Partnership
Legal Aid of Southeast and Central Ohio
Miles Heights Development Corporation
Ohio CDC Association
Our Home Family Resource Center
The Cedric Group/Norwood Together
The Housing Partnership, Inc.
Woodstock Insitute

“As a First Financial Bank Advisory Board member, I have witnessed the bank’s commitment and transparency in meeting its CBA goals to better the communities it serves,” said Kevin Draiss, director of Our Home, Inc.

“This agreement reflects what community-informed investment should look like—targeted, accountable and built for impact,” said Meredith Whitehead, CEO and executive director of The Cedric Group/Norwood Together.

“We are pleased to see First Financial collaborate with NCRC to develop a comprehensive plan for community development,” said Stephan Torsell, executive director of Homes on the Hill CDC. “The process of developing the agreement provided an additional opportunity for additional considerations from First Financial through their conversations and negotiations with NCRC and member organizations. We look forward to working with First Financial to improve our communities.”

Summary of the Community Benefits Plan Addenda Between The National Community Reinvestment Coalition and First Financial Bank

Through two acquisition-linked addendums extending its Community Benefits Plan to 2028, First Financial Bank has committed $169,885,000 to underserved borrowers and communities — $104,810,000 reflecting its new Ohio footprint (Westfield acquisition) and $65,075,000 reflecting its new Chicagoland presence (BankFinancial acquisition). 

Westfield Addendum — $104,810,000

The Westfield addendum reflects First Financial Bank’s new footprint in Ohio following the Westfield acquisition, adding to the final three years of the existing CBP term through 2028.

Mortgage Lending to LMI Communities and Borrowers

Commitment: $9,000,000

FFB commits to retaining at least one Community Development Mortgage Loan Originator (CD MLO) in the Westfield footprint.

Small Business Lending

Commitment: $50,000,000

This commitment represents a 29% increase over Westfield historic production. 

Community Development Lending and Investment (CDLI)

Commitment: $45,000,000

FFB commits to at least one Low Income Housing Tax Credit (LIHTC) deal between $4–8 million.

CRA Focused Philanthropy

Commitment: $750,000

FFB will continue the commitment of Westfield Bank to support the Summit/Medina County United Way with the establishment of a First Financial Bank Family Support Center and ongoing support of their Financial Empowerment Center.

Marketing

Commitment: $60,000

Other Market Commitments

• FFB will open a new branch in an LMI census tract within Westfield’s legacy footprint to better serve the community. FFB will solicit community input as part of the site selection process for the new LMI branch.
• FFB will implement First Financial Bank’s formal volunteer and employee giving programs with the Westfield associates to positively impact LMI individuals and communities.

BankFinancial Addendum — $65,075,000

The BankFinancial addendum reflects First Financial Bank’s new footprint in the Chicagoland area following the BankFinancial acquisition, adding to the final three years of the existing CBP term through 2028.

Mortgage Lending to the Underserved

Commitment: $10,000,000

This merger will increase mortgage lending access in the Chicagoland area after BankFinancial exited retail mortgage lending in 2017. This proposal is based on loan production beginning in 2027, with two Community Development MLOs each producing $2 million in loan production, improving to $3 million each in 2028.

FFB has hired a recruiting firm to identify and attract candidates for the two open Community Development MLO roles and commits to maintaining two CD MLOs in the BankFinancial footprint throughout the agreement.

Small Business Lending

Commitment: $9,000,000

This commitment represents a 38% increase over the BankFinancial historic production.

Community Development Lending and Investment (CDLI)

Commitment: $45,000,000

This commitment is based on BankFinancial asset size in comparison to FFB.

CRA Focused Philanthropy

Commitment: $1,000,000

Marketing

Commitment: $75,000

Other Market Commitments

• FFB will implement First Financial Bank’s formal volunteer and employee giving programs with the BankFinancial associates to positively impact LMI individuals and communities.

One pillar of that work is Community Benefits Agreements (CBAs) – often also known as Community Benefits Plans (CBPs) – which lay out specific commitments. Such plans typically include the creation of Community Advisory Councils (CACs), which meet regularly to support and enhance banks’ work toward CBA goals.

In recent years, CBAs and CACs have become essential advocacy tools for engaging financial institutions in efforts to create more equitable communities. CBAs lay the groundwork for the community and economic development programs and initiatives that will be delivered via a financial institution’s collaborative partnerships with directly impacted communities. 

These types of projects can cover such areas as small business lending, affordable single and multi-unit housing financing, preserving and expanding retail branch networks, investing in Community Development Financial Institutions (CDFIs), and safe and affordable retail products like small-dollar loans, check-cashing options, mortgage loans and BankOn-certified checking accounts. 

CBAs are public commitments developed in collaboration with community organizations that ensure banks meet their obligations under the Community Reinvestment Act (CRA), which was passed in 1977 as a way to address discriminatory banking practices such as redlining prevalent in minority and low- and moderate-income (LMI) neighborhoods.

Without these tools, the opportunities and benefits tied to new development may not reach LMI communities. Large economic development projects have often fueled gentrification, displacing longtime residents and replacing local businesses with ones serving higher-income populations. CBAs help ensure banking institutions are meaningfully reinvesting in all communities. 

The Community Advisory Council (CAC) model builds on this foundation by providing a formal structure for expert and community input on banking institutions’ proposed projects. Committees are composed of local leaders and representatives from nonprofit organizations who understand the needs and priorities of underserved communities. 

In this advisory role, CACs foster open dialogue to identify strategies to engage LMI borrowers and track progress on community commitments. They also guide banks in improving products and services to better meet community needs. At the core of CBAs, CACs and the CRA is a simple principle: the community – in partnership with the bank – defines its credit needs.

Since 2016, NCRC has facilitated agreements with 24 bank groups totaling $593.8 billion, driving impact across a wide range of initiatives – from small business development programs to homeownership training to climate resiliency initiatives. 

The following case studies highlight both emerging and established CAC models, offering insight into the impact and longevity of these tools for change. 

First Citizens Bank in Raleigh, North Carolina

Founded in 1898 and currently operating in 19 states, First Citizens Bank is a leader in the CBP space. Its five-year, $16 billion community reinvestment plan developed alongside NCRC is evidence of the bank’s strong commitment to communities through housing, small business lending and community development programming.

Charged with ensuring community voices and interests are meaningfully reflected in the CBP, First Citizens’ CAC includes 13 members from across the bank’s broad market.

The plan has maintained steady momentum and performed well over the past four years, with only a small number of components remaining as it nears completion this year.

“Our guiding principle since day one is leadership’s commitment to doing the plan and to doing it right,” said Mike Atkinson, senior vice president and senior director of community development at First Citizens. “The message was clear to commit wholeheartedly to fulfilling it and so that’s what we’ve done.”

A key driver of the plan’s success is transparency with First Citizen’s CAC and the community. First Citizens compiled a 100-plus page document for its CAC to review before each meeting with details from all of the bank’s business units that play a role in the CBP’s work.

“It’s about pulling the curtain back and telling you exactly what we’re doing. What’s good, not so good, or hasn’t started yet,” Atkinson said. “Transparency, thoroughness and comprehensiveness of information is critical.”

First Citizens prioritizes strengthening community relationships by holding regular CAC meetings promoting collaborative discussions within committee members’ local markets.  

“It has been a really productive relationship for us,” said CAC member and Senior Director of Operations at Atlanta Neighborhood Development Partnership Susan Adams. “I would encourage community organizations to take advantage of the opportunity to provide candid feedback and establish new partnerships in their work.”

Though new to First Citizens’ CAC, Symone Crawford, Executive Director of the Massachusetts Affordable Homeownership Alliance, has extensive experience serving on other CACs and said the model helps ease the challenges community development organizations face in building relationships with lenders.

“As a community serving low- to moderate-income individuals, we recognize that most times the solutions we seek and the proposals put forth happen without people at the table who will actually be impacted,” Crawford explained. “It’s gratifying to bring that to meetings and have lenders actually listen… Our voices and experiences are important for meaningful impact in the community [and] the [CAC model] provides an opportunity for that.”

SouthState Bank in Winter Haven, Florida

In March 2025, SouthState Bank announced a five-year, $8.3 billion plan to support underserved communities in their service area.

“We’re continuing a 90-plus-year legacy of fair banking practices and service to our communities and are proud to build on our core values as a community-centric bank,” said SouthState’s Senior Vice President and Director of Community Engagement Mellissa Slover-Athey. 

Slover-Athey said SouthState sees NCRC as a leader in community engagement, which is why the bank proactively approached them during the course of the CBP creation process. SouthState and NCRC conducted community listening sessions with leaders from SouthState’s eight-state footprint to inform the specific goals and outcomes of the CBP. 

“Our team [met] with organizations to understand the community, meet the players and learn the geography, while simultaneously [holding] strategic planning [sessions] looking at product and service development,” Slover-Athey said. 

SouthState will hold the inaugural meeting of its 15-member CAC this fall. Slover-Athey is confident in the group’s potential and sees it as a reflection of the bank’s commitment to transparency, trust building and advancing equity in the community.

“[The CAC model] helps us build meaningful and lasting connections,” Slover-Athey said. “It helps us ease burdens, create a sense of well-being and do what’s right for our customers and the community at all times.”

Nicole Rothstein is a Contributing Writer with NCRC’s Communications team.

Photo caption: Announcement of SouthState Bank CBA during this year’s NCRC Just Economy Conference.

“First Financial exceeded the goals we set together in our previous CBA and agreed to continue this strategic collaboration by negotiating new commitments to low- and moderate-income communities,” said NCRC President and CEO Jesse Van Tol. “These new commitments will directly improve the material conditions of under-resourced neighborhoods within the bank’s footprint. Every bank should take notice and embrace the same collaborative approach that First Financial continues to take on these issues.” 

Since 2016, NCRC has facilitated 30 community benefits agreements with bank groups that committed more than $580 billion for mortgage, small business and community development lending, investments and philanthropy in LMI and under-resourced communities. 

“Our new Community Benefits Agreement is a bold statement about how First Financial intends to continue its mission to improve lives and help communities thrive,” said Archie Brown, president and CEO of First Financial. “These are neighborhoods where we live and work, and we are taking a leading role in helping our neighbors achieve goals and improve their financial wellbeing.” 

First Financial’s goals under the CBA for 2024-2028 include: 

• $700 million in mortgage lending, through the use of products providing greater access to LMI communities and borrowers, an intentional effort in rural communities, a commitment to community development mortgage loan officers and providing small-dollar mortgages and home improvement loans, 
• $600 million in small business lending through support of small business development corporations and business incubators, and microloans, 
• $1.075 billion in community development lending and investments in affordable housing, community services, revitalization and stabilization, and projects that create permanent jobs, which benefit LMI areas, 
• $18 million in philanthropy, targeting donations to organizations that create and preserve affordable housing and workforce development, plus those that provide housing counseling and promote financial and economic inclusion, 
• $9 million in branch distribution and access, with three new financial centers located in LMI communities, 
• Commitment to a minimum source-able vendor spend of 25% with minority-owned business enterprises (MBE), women-owned business enterprises (WBE), disability-owned business enterprises (DBE) and veteran-owned businesses by 2028, 
• $1.2 million in marketing and communications to benefit clients and communities in LMI and majority minority census tracts (MMCT). 

“We have much to accomplish under this new agreement and already have a head start working in many of these areas,” said Roddell McCullough, chief corporate responsibility officer for First Financial. “Our previous CBA was an incredible success, touching thousands of lives for the better. I am excited at the prospect of helping many more individuals, families and businesses in the next five years.” 

The following NCRC member organizations also signed on to the new agreement: 

• REBOUND, Inc.
• Northwest Indiana Community Action
• Prosperity Indiana
• Legal Aid of Southeastern and Central Ohio
• The Housing Partnership, Inc.
• Housing Opportunities Made Equal of Greater Cincinnati
• Community Shelter Board
• Fair Housing Center of Central Indiana
• River City Housing, Inc.
• Working In Neighborhoods
• County Corp.

First Financial’s commitment to the community over recent years was also validated when it achieved a rating of Outstanding from the Federal Reserve Board in 2021 for its performance under the Community Reinvestment Act (CRA). This rating, the highest available, came after a broad evaluation of First Financial’s lending, investment and service levels from 2017-2020. The review specifically looked at First Financial’s work that benefited customers who met income guidelines or resided in LMI census tracts. 

Summary of the Community Benefits Plan Renewal Between the National Community Reinvestment Coalition and First Financial Bank 

Building on the success of its 2018 Community Benefits Plan (the “2018 Plan”), First Financial Bank will renew its commitments and under a new Community Benefits Plan and will lend or invest $2.4 billion to low- and moderate-income borrowers and communities over a five-year period from January 1, 2024 to December 31, 2028.  

Mortgage Lending to Low- and Moderate-Income Borrowers and Communities 

Plan Commitment: $700 million over 5 years 

First Financial Bank will lend $700 million to LMI borrowers and borrowers in majority minority census tracts, representing a 37% increase over First Financial Bank’s 2018 Plan commitment. First Financial Bank also commits to the following mortgage lending sub-goals:  

• $76 million in loans under $100,000 for LMI and majority minority census tracts, minority borrowers or borrowers with LMI; 
• $208 million will target rural lending to support non-MSA census tracts; and 
• $296 million in lending to BIPOC or LMI borrowers and communities. 

First Financial Bank will provide reports detailing mortgage lending in both dollar volume and loan units to Black, Latinx, Asian and LMI borrowers to its Community Advisory Board. First Financial Bank also commits to developing and implementing affordable products that assist with interest rates, continued homeownership, and home repairs/maintenance to keep families in their homes. 

Small Business Lending 

Plan Commitment: $600 million over 5 years 

First Financial Bank will lend $600 million to LMI borrowers and borrowers in majority minority census tracts, representing a 6.76% increase over First Financial Bank’s actual small business lending volume for the prior five-year period (excluding PPP loans). In addition, First Financial Bank will modify its microlending program to provide access to flexible small business credit to all counties within its footprint. 

Community Development Lending and Investments 

Plan Commitment: $1.075 billion over 5 years 

First Financial Bank commits to $1.075 billion for qualified community development loan and investment opportunities within the bank’s assessment areas, more than doubling its 2018 Plan commitment. 

Philanthropy 

Plan Commitment: $18 million over 5 years 

First Financial Bank will make $18 million in donations over the five-year plan period and will specifically target donations to organizations that create and preserve affordable housing and workforce development. 

Branch Distribution and Financial Services Access 

First Financial Bank’s committed to eight new branches in LMI neighborhoods in the 2018 Plan. Going forward, First Financial Bank commits to maintaining a minimum of 25% of its branches in LMI communities. In addition, First Financial Bank commits to developing and maintaining a small dollar loan product with flexible lending standards, with access to LMI individuals and to combat pay-day lenders. 

Marketing and Communications 

Plan Commitment: $1.2 million over 5 years 

Reflecting a key component of First Financial Bank’s 2018 Plan success, First Financial Bank commits to targeting $1.2 million over the five-year plan period for marketing and promotions that aim to reach minority and LMI communities across the bank’s footprint, a 20% increase over the prior plan commitment.  

Supplier Diversity 

In addition to the commitments above, First Financial Bank will maintain our Supplier Diversity commitment with a minimum source-able spend of 25% with diverse businesses (minority-owned, women-owned, veteran- owned and disability-owned) compared to the prior commitment of 10%. 

Plan Governance 

First Financial Bank will continue to work with the Community Advisory Board created under the 2018 Plan. NCRC will appoint 50% of the CAB members with meetings held twice annually, rotating locations throughout the bank’s footprint. First Financial Bank will continue to provide quantitative and qualitative reporting in line with the reporting provided under the 2018 Plan.

That appears to be changing, thankfully, as a new crop of advocates and regulators push to revitalize anti-monopoly work across the whole of government. As President Biden has elevated watchdogs who are critical of the status quo approach to antitrust enforcement, the subject of merger review has received new attention – with many such voices agitating for significant changes to the system.

The Biden team is beginning to overhaul merger review rules writ large – and the banking sector is a major focus in that work. It is crucial that overhauled merger rules restore the proper role of public interest. The people leading this effort appear eager to meet that challenge. But it would be easy for their well-intentioned efforts to miss a key trick: Unless policymakers clearly affirm that public interest analyses will be predicated on what actual community groups say they need, the reform effort will fall short of fulfilling Congress’s long-neglected statutory intent. 

As applied to banking, merger reform should center on one important question: How can we determine whether communities, and not just bank shareholders, are benefitting from bank mergers?

Regulators should address this question by conditioning any merger approval on the successful creation of a community benefits agreement (CBA). 

CBAs are a set of commitments made to local communities by a bank. They come from a dialogue between bank leaders and local community development organizations. The deals contain explicit goals for bank activity such as mortgage lending to the underserved, loans for small businesses, community development financing, locating branches in low- and moderate-income census tracts, philanthropy and supplier diversity. 

Since 2016, the National Community Reinvestment Coalition (NCRC) has facilitated 27 CBAs with 21 banks. Those agreements brought more than $574 billion in cash, loans and services back into disinvested communities. Those commitments have delivered concrete and meaningful benefits for everyday people in those places, including significant increases in lending to Black borrowers and increases in the goods and services purchased by banks from BIPOC-and-woman-owned businesses. 

In 2021, due to financing from First Financial Bank, a new grocery store opened in a former food desert in Cincinnati. In 2020, First Merchants Bank increased its philanthropic support for nonprofits with BIPOC leadership by 154%. First Merchants Bank is one of eight banks that have created a new metric for tracking and increasing support for nonprofits led by people of color as a result of CBAs. In the first year of our 2018 CBA with First Horizon Bank, then known as First Tennessee Bank, they invested $9 million more in Equity Equivalent (EQ2) investments with Community Development Financial Institutions (CDFIs) than they did the year before. 

These kinds of bottom-up actions differentiate community-driven CBAs from decisions made unilaterally on the 50th floor of a bank’s headquarters. 

The construction of the grocery store in a food desert underscores the unique power of a CBA. A CBA is more than a press release with a list of dreams – it’s a blueprint for community improvement driven by the local knowledge of community members. CBAs lead to understanding between banks and community groups. They include both clear goals and specific plans to measure how a post-merger bank ultimately fulfills its promises to serve a community’s needs.

This is only possible through consensus-driven convenings between communities and banks. NCRC-led CBAs are an intensive and high-participation affair. PNC’s 2021 CBA was shaped by 84 different community groups who attended listening sessions. In 2022, 76 groups signed NCRC’s CBA with M&T Bank and People’s Bank. Such efforts help banks understand individual markets – information that is especially valuable when an acquiring bank will move into new markets. 

We bring organizations into the bank merger process that otherwise would be unlikely to get involved, even though they have invaluable insight into their local economies. Housing counseling agencies, CDFIs and nonprofit developers partner with banks to achieve positive community outcomes. 

But unless there’s a CBA conversation happening, many of these local organizations do not currently engage in the bank merger review process, and they are unlikely to file a comment to a regulator. It takes time out of their day-to-day work in their communities, among other scarce resources. Sometimes they are hesitant to provide critical comments on bank performance for fear of harming a funding relationship. 

The regulators currently reviewing merger policies have a chance to fix that. They can mandate the same types of collaborative processes and direct communication that we facilitate when circumstances allow – which is to say, when the banks proposing to merge have leaders who are interested in talking to our members in the first place. Regulators could take that voluntary largesse element out of the picture entirely if they require that the review process seek out and honor the input of groups like our members.

Merger Reviews Must Consider Public Benefits

Mergers can present risks to the sustainability of local economies. Banks control capital flows, so when the connection between a bank and the surrounding community weakens, so does local capacity for self-guided growth. 

Such risk is especially pronounced in mergers where a local bank is set to be acquired by another one headquartered elsewhere. For example, when an acquiring bank sets its budget for Community Reinvestment Act (CRA) compliance staffing, some members of the acquired bank’s CRA staff may be deemed redundant. 

Academics say that cost efficiencies from scale automatically and always bring benefits, but in our members’ experience the opposite is true. Local expertise trumps the remote big bank every time. Bank leaders would be more likely to understand the value of the knowledge they’d lose by downsizing CRA staffs if they were required to participate in CBA discussions. And their institutions would benefit in many other ways from the information they gather at those meetings. Bankers receive valuable feedback on their community performance through our CBA listening sessions, enhancing their understanding of how products should be structured and marketed and of where opportunities exist to gain market share. A CBA creates efficiencies because of the scale of feedback – and it comes without paying for a marketing survey. 

These healthy-for-all dynamics are in harmony with what lawmakers have ordered regulators to do. Merger review law requires that the benefits of mergers not fall to banks alone. When Congress passed the Bank Merger Act, it created four criteria for evaluating merger applications. The second of those four was that all mergers should lead to a public benefit. 

Congress did not specify, however, the manner by which regulators would determine whether or not public needs and conveniences would be met. A CBA isn’t the only way to fulfill that need – it’s just the only one that can capture the whole truth of the matter, at more granular and better-informed levels than statistical analysis can deliver. It is a way to determine the particulars of making a merger help regular folks: Where, when, how and by whom.

Congress included the public-benefits pillar of merger law to balance the need for community interest with the gains banks experience from cost efficiencies. Some antitrust academics have held that consumer welfare is maximized when markets are competitive. That’s not what real-world evidence suggests. If those academics were right, how could it be that thousands of profit-boosting bank mergers have been consummated since the mid-1990s but most American households struggle with keeping ahead of their bills, in part because their bank uses junk fees to rake in money? How do these pro-merger voices reconcile their classroom theory with the persistent reality of a vast and widening racial wealth divide?  

Even if one sets this philosophical difference aside for a moment, the means by which the academics’ theory is currently incorporated into merger reviews is failing to do its intended job. The current framework for assessing competitiveness relies on a formula that is too simple in its analysis and too narrow in scope. 

Reviewers use a formula called the Herfindahl-Hirschman Index (HHI) to gauge market concentration. In banking, HHI looks at local market deposit concentrations to assess competitiveness. This is an abstract, ultrasimplified way of understanding a market – when markets are in reality quite specific and hypercomplex networks of human interactions. 

Bankers love the simplicity of HHI. Abstraction and a false sense of clarity tend to make their profit-motivated ideas look pretty good, resulting in hardly any “regulatory friction” in the deals that will make them rich. Where HHI math finds little reason for competition concern, regulators have shown less inclination to condition merger approval on demonstrations of public benefit. 

But this simplicity appeal is also HHI’s downfall. Banking is about much more than just taking deposits. It’s about loans, services and many other things that go beyond the sums of the squares of deposits. HHI should be replaced by something more nuanced, which more closely aligns with the views of consumers. 

The right analysis will consider all aspects of banking. In a farming community, for example, it would be important to understand how a merger would affect agricultural lending. But because HHI only looks at deposit holdings across an entire metropolitan area, a review process reliant on that abstract simple math would never reveal such a concern.

Critics have argued that regulators have allowed the bank merger review process to atrophy by prioritizing the competition prong of the Bank Merger Act above the public benefits criterion. Across all industry sectors, regulators have demonstrated the inclination to rubber-stamp merger applications. In his Executive Order Promoting Competition in the American Economy, President Biden noted that prudential regulators had not denied a publicly-announced merger application in more than 15 years.

Essential Elements of a Strong CBA Include Clear Goals, Public Input, and Post-Merger Accountability

Much of what’s been rotten in the merger landscape could be fixed by combining the two channels of regulatory action we’ve discussed thus far. If the feds both replace HHI with a new, more accurate competition gauge and require binding CBA-style programmatic commitments, there might be fewer mergers – but those mergers would be much more clearly defined to serve real people’s best interests alongside those of shareholders.

But if all they do is replace HHI with something that actually works, reformers will have let their own side down. All mergers and acquisitions should lead to a public benefit – not just those that threaten competition. 

That’s why regulator-required and -enforced CBA processes are vital to reform. But not all CBA-style deals are created equal. As we urge Washington to fold in formalized CBA constraints on mergers, we also want to share some of what we’ve learned about how to make such a deal stick, and how to maximize its efficiency. 

Effective CBAs establish specific baselines and set clear goals for increasing lending to underserved borrowers. This guarantees that banks, regulators, and the public all have a clear sense of how a bank is being evaluated on serving community needs after the merger. 

These lending goals are best achieved with strategies endorsed by community organizations that work every day to expand local economic opportunities. CBAs should also take a holistic approach to community impact and consider how banks can contribute to expanding opportunity. For example, many of our CBAs also include goals for supplier diversity and grants for nonprofits led by people of color or women, addressing heightened burdens facing underserved businesses and nonprofits. 

Effective CBAs also ensure the conversation doesn’t stop when the signatures are dry. Our written agreements call for the creation of Community Advisory Councils (CACs), where the same sorts of local grassroots and grasstops actors convene regularly and formally to hold banks accountable to the terms of their CBA. These councils have been very helpful in providing input on new product features and providing a forum for issues that come up after a CBA is finalized. 

But accountability isn’t assured under the present system. NCRC members have no hard-power accountability tools – only the soft-power accountability of blowing the whistle when a company like KeyBank betrays its CBA partners. Some banks will tout the CBA process when they need merger approval, only to neglect it afterward. This is another lesson regulators can crib from NCRC’s leadership experience in this space: They’ll need some sticks to go with their carrots. One such tool is a conditional rather than final approval of a proposed merger. The regulators could keep industry leaders honest by using conditional approvals – with formal consequences for noncompliance such as clawing back executive pay or restricting access to the government-sponsored entities that buy mortgages from private lenders, among a host of other possible tools. Such conditional approvals would also commit the government to regularly monitor real-world performance towards CBA goals. 

That’s some of what our CBAs can teach regulators who want to fix what’s broken in bank merger oversight. They should launch an interagency process to improve bank merger reviews – and as soon as possible. Reforms should start by conditioning all new approvals on establishing a new, binding and federally-enforced CBA, then move on to replacing the false simplicity of HHI with something better. 

These steps combined can give banks the clarity they want in a review framework while ensuring communities have their voices heard. 

That’s the only way to break the damaging cycle of the past decades, where working-class families increasingly struggle to make ends meet while banks merge and shutter, merge and shutter, pay a huge dividend to insiders then merge and shutter some more.

Adam Rust and Kevin Hill are Senior Policy Advisors at NCRC.

Photo of Treasury Department headquarters via Flickr.

Banks have the capital to be a catalyst for change in your neighborhood and can be critical community partners. This presentation will cover how NCRC uses the Community Reinvestment Act (CRA) to secure community benefits agreements with banks and explore how CRA can be used to increase reinvestment in your communities.

This is crucial information for anyone working towards a Just Economy.

Slide Download

Transcript:
NCRC video transcripts are produced by a third-party transcription service and may contain errors. They are lightly edited for style and clarity.

All right, so the chat function is live now you were able to use it. It’s gonna give everybody a few couple more minutes to join. But welcome to our theory basics webinar. Thank you for joining us. And then for those of you who are new to NCRC in the next slide, we are a coalition of more than 700 member organizations across the nation working to make adjust economy a national priority in a local reality. So if you’re interested in joining us and learning more, you can go to ncrp.org/membership, which I will also drop in the chat. In today’s presentation, we are going to go over the history of CRA the implementation issues when enforcement how to get involved in what NCRC is doing to help. We are holding this webinar in preparation for our annual just economy Conference, which is March 29 through the 30th this year. And then a few housekeeping things before we get started is please use the q&a function for any questions that you may have and they will be addressed after the presentation. And please remember to follow our code of conduct which I will also drop in the chat. And then feel free to introduce yourself in the chat and we will begin shortly.

01:07

Hi everyone. Welcome and good afternoon. My name is Katherine Petrus. I’m a senior CRA analyst with NCRC and very excited to have you in this webinar today. So I’ll go ahead and get started with a brief history of the Community Reinvestment Act. Before thinking about CRA, it’s always a helpful reminder to remember why banks exist. Banks are chartered by state and federal governments to serve a public purpose. You may have also heard the phrase safety and soundness and what that means is the safety and soundness or financial stability of our banking system is critical to the country’s stability and economic development. So while banks are private entities, and most of them are owned by holding companies who are owned by shareholders, it’s important to remember that they also serve a public purpose and your involvement in CRA is, is important to ensuring a proper balance between the bank’s needs and the needs of the community. My hope is that after today’s webinar, you’ll feel excited and empowered and also curious to learn more about CRA and engage with banks and regulators to strengthen CRA enforcement. Again, back to the public purpose of banks of good bank can be an anchor in the community. And an underlying principle behind CRA is that you can’t have a just economy without economic justice. You can’t have economic justice without access to affordable and safe capital. Homeownership is a key way that people build wealth, and capital can also empower people to start businesses. Banks have a really critical purpose and obligation to meet those credit needs not just for middle and upper income residents but for everybody in the communities where the banks are located. Like other laws, the CRA tells a story about history. And what the CRA tells us about history is that when Sarah was enacted in the 70s, the 1970s, banks were not fulfilling their obligations to all communities. CRA was a response to the practice of redlining, which was a decade’s long practice of refusing to make loans in certain communities based on class, race, or immigrant status of the residents who lived there. Redlining started during the Great Depression, with the formation of the homeowners Loan Corporation, that was an agency that did a lot of things to enhance the mortgage market. But they also created the practice of redlining. They would literally send employees to cities around the country to draw maps like this one of Los Angeles and they would color code different census tracts. If you lived in an area that was coded red, it was deemed hazardous and you could not get alone in that area. The Federal Housing Administration FHA, they largely use the same logic in their systems for appraisals. And of course, the result has been a decade’s long disinvestment in certain communities. Unfortunately, redlining is not a thing of the past. The impact of redlining continues in the practice itself continues today. In 2021, the Justice Department announced an initiative to combat redlining. And you can look online and find several recent redlining settlements. This map is a map of Los Angeles from January 2023 settlement. It shows the location of a certain bank’s branches in Los Angeles. And you can see the branches are all in yellow and orange areas on this map. It might be hard to see but the red areas are census tracts that are 60%, or more black or Hispanic. This is a pretty blatant example of what some banks continue to do, which is to choose bank branch locations based on race and income of the residents. Another link I wanted to share with you all today if you want to explore the current legacy of redlining. NCRC has a report on our website that shows the link between past redlining and current health outcomes in 140 cities. So clearly, we need to do better. Congress enacted the CRA in 1977. It was one of several laws aiming to end redlining and housing discrimination. The first of those laws was the Fair Housing Act, enacted in 1968. And Fair Housing Act prohibits discrimination. The Equal Credit Opportunity Act also prohibits discrimination in lending. In 1975, the home mortgage disclosure Act which people refer to as Honda required banks to collect and disclose data about the ethnicity and race of their mortgage applicants. And in 1977, the CRA was passed and CRA is the only one of these laws that carries with it an affirmative obligation. It requires banks again to serve the entire communities in the markets where they’re located. The CRA requires banks to serve the convenience and needs of communities where they’re located. I put the actual language from the statute here because you’ll hear the phrase convenience and needs over and over again. And this is where it comes from. It’s in the congressional findings in the CRA itself. And also, it’s part of the CRA Statement of Purpose The institutions are required to meet credit needs of local communities where they’re chartered, consistent with again, safety and soundness. So basically, when a bank takes deposits, it should be reinvesting those deposits by making loans into the community and to all the community, including low income through upper income residents. That reinvestment obligation is part of a bank’s public purpose. And again, a charter is a privilege that comes with special subsidies and benefits, one of them being deposit insurance and access to discounted loans from the Fed. Those privileges come with obligations.

09:05

CRA regulations largely dictate what I’ll be going through today in terms of how banks are evaluated and how CRA is enforced. There was a 1989 update to CRA regulations that required banks to bank supervisors to disclose CRA rating. So you might be a little surprised I was to learn that for the first 12 years of CRA. Bank supervisors didn’t even have to publicly disclose CRA ratings. In 1995, most most of what we see in CRA exams, as we know them today, was created in a regulatory reform. And this year we expect the regulator’s to update CRA regulations. We don’t know when the update It will occur, but expect it to happen this year. And that’s the first CRA reform and over 25 years, we’re hopeful that it addresses a lot of the shortcomings of CRA that I’ll touch on today. Although the final rule will likely be published this year, we don’t know when it will be effective. So when regulators published final rules, they also give an implementation deadline, it could be six months from publication up to two years from publication, and they might take a phased in approach. So today’s presentation will cover the current CRA regulations. I just wanted to highlight that these will be changing, but we don’t know when. So we are still operating under the existing regulations. And a couple of things I wanted to note that are not in the current CRA regulations, what or statute, one is that CRA is colorblind. Its focus is on data about income in census tracts, so the focus is on ensuring banks are meeting the needs of low and moderate income census tracts. This is a little problematic, of course, because Congress chose to address the problem of redlining with a colorblind law. And we hope that that gap in CRA will change with the updated regulation. And one more thing is that CRA does not apply to credit unions, it only applies to banks, and banks are evaluated relative to each other. Since 1977, there have been numerous studies of the benefits of CRA these numbers are through 2018 and shows that CRA has resulted in $883 billion in loans for affordable housing and economic development in low and moderate income communities. Also over 970 billion in small business lending. An economists have found over and over again that CRA covered lending is actually safer and sounder than non CRA covered lending. So that means less risky and less prone to default, or to creating loss for banks. On to implementation and enforcement. CRA again, is enforced through evaluating banks relative to each other. The performance evaluation is the basic tool for enforcement and it’s also referred to as CRA exams. Exams happen at each bank every three years. They’re conducted three to four years sorry. They’re conducted by the bank’s primary federal regulator and exams provide an opportunity for public comment. So one of the ideas behind CRA is public participation. And so each CRA exam is an opportunity for the public to weigh in on banks performance, and regulators have to consider those comments when doing their examination. These exams evaluate how well banks are doing in lending to LMI borrowers and neighborhoods and the level of support for community development investments, as well as whether banks are maintaining branches in low and moderate income communities.

14:02

The three regulators charged with CRA enforcement are the FDIC, they regulate state chartered banks that do not belong to the Federal Reserve System. The Federal Reserve regulates bank holding companies and membership in the Federal Reserve System is required for national banks but optional for state banks. So state chartered banks that are part of the Federal Reserve System get examined by the Fed for CRA compliance, and finally OCC regulates national banks. I saw a question in the chat about credit unions there is not currently a CRA equivalent for credit unions, although there are some state C RAS that that do apply to credit unions or have been there’s been a lot of advocacy to Play states here is two credit unions. And I’ll touch on that at the end of the presentation.

15:11

These three regulators are responsible for issuing, not just doing CRA exams, but they they issue the regulations to implement CRA. And again, they’re in the process of finalizing a joint rule to update CRA regulations. The there are four CRA ratings and this is part of the statute. CRA tests or exams are basically pass fail. And when a bank fails a CRA exam, there are consequences, it’s more difficult for the bank to merge, it’s more difficult for them to acquire branches, and the bank is going to be subject to more frequent CRA exams than the usual three to four year exam schedule. Another thing that NCRC has called for in the CRA reform that we’re waiting for is that there should be a little more nuance to these ratings. There should be you know, maybe some subcategories and and we do expect to see a little bit more than four ratings for CRA exams that are in the final rule that comes out later this year. Ratings are based again on the CRA exam or performance evaluation. And the evaluation is a sort of three part component test which I’ll discuss in more detail a little bit later. But the three tests are lending investment and services. The lending test is the most heavily weighted part of the exam that accounts for 50% of the final CRA rating. And examiner’s look at Bank data, bank records and also public comments during the evaluation to come up with the final CRA review and final score. Another concept in CRA that’s important to understand is that exams measure bank performance within assessment areas. assessment areas are geographic areas where the bank has branches. It’s a pretty complex, the way banks determine assessment areas and actually under the regulations bank, banks define their own assessment areas. It’s based on locations of their branches and deposit taking ATMs. And basically, if there’s a bank branch in your community, then that bank has a serious obligation to the community. The assessment areas generally considered consist of metropolitan statistical areas, or they could be contiguous political subdivisions like County cities and towns. And under CRA regulations, assessment areas cannot arbitrarily exclude low and moderate income neighborhoods, I think of this as sort of gerrymandering rules. So probably a lot of you are familiar with gerrymandering of election districts. This the CRA regulations are designed to prevent that So banks can’t carve out areas that they want to want to serve or don’t want to serve. If if they have a branch in an area, then they have to serve the entire community.

19:10

On to the three component tests, I’ll start with the lending test, the most heavily weighted test on a cre exam. This test evaluates the amount of home mortgage loans, small business loans and small farm loans that the bank has made in their community.

19:34

The exam also looks at Community Development lending with an added emphasis on flexible complex or innovative lending. An example of that is low income housing tax credit loans, loans to CDFIs that demonstrate job creation. Generally the those types of loans can be more labor intensive for lenders. And so, examiner’s will give higher weight to innovative and complex loans that further or support economic development and reinvestment. And finally, the CRA lending test looks at income levels of both the assessment area that the geography and the borrowers receiving those loans. The investment test evaluates the amount of investments that a bank has in with a community development purpose the complexity of the investments and innovation of those investments. Grants are also not required but by CRA but most banks do. Do make grants and refer to as often you’ll hear CRA eligible philanthropy that also gets CRA credit. And then the examiners are supposed to look at the responsiveness of investments to the community development needs of each assessment area or community that they’re serving. And finally, the services test is feels a little more nebulous to me. The way I like to think about this, as is thinking about banking deserts, and you’ve all probably seen communities that are in banking deserts. And what you’ll see in those areas are a lot of check cashers. Payday lenders. markets with high cost ATMs that are operated by private parties that aren’t depository institutions. So the CRA exam will look at retail banking services. They’ll focus on the distribution of the bank’s branch network in particular, whether whether the bank is putting branches in low and moderate income census tracts within the banks assessment areas. Which if you’ll think back to the DOJ consent order map of Los Angeles earlier that was a bank that was not putting branches into LMI census tracts. The exam will also look at Community Development Services. Some examples are offering low cost checking accounts that make deposit services accessible to in individuals with low incomes. Also financial literacy programs for school children. And a lot of banks encourage their employees to volunteer and that also gets them CRA credit on the services test.

23:28

With that background on CRA enforcement, the rest of the webinar will cover advocacy, or public participation. Advocacy begins with research. Identifying a bank figuring out who their regulator is so that you can look up their CRA rating and CRA exam. Understanding what the bank’s assessment areas are, those are the areas that the examiners will focus on, and then exploring their lending data to see if their performance is subpar relative to peers in their market. And finally, that information all feeds into CRA advocacy, which could mean many different things. But today I’ll focus on the main tools we use which are comment letters and community benefits agreements. So beginning research into CRA starts with often particular bank and the first questions to ask are, who the bank’s regulator is and what’s their CRA rating.

24:46

The tools that you have are online. The FDIC maintains a website called bank find sweet and again these slides will be shared so you’ll have all of these links This site is a great resource for looking up basic details about a bank and also the branch locations. You can download a list of branches from this site into an Excel spreadsheet. The F fic, which is the Federal Financial Institutions Examination Council, they maintain a site that where you can look up CRA ratings for all banks. And you can also go to each individual regulators website to look up banks and pull their CRA performance evaluations, which should all be available for download. I’ll warn you that the exams are often posted. Well, after CRA exams are concluded, sometimes they don’t get around to it for a year, maybe even longer. And but if if you contact the agency, they will send it to you or posted if there’s an exam that you can’t find. I wanted to share a quick few slides about what this looks like what those searches look like. This is the and I’ll use US Bank as an example. This is the institution details page for US bank from the FDIC bank find site. This is the page I always start with when I’m looking into a bank. I’ve circled where the primary federal regulator is noted. And for US Bank, you can see it’s Comptroller of the Currency, which is OCC. And then there’s this somewhat hidden button at the top right, which is the button where you can download bank location data and financial data on the bank and the banks locations, branches are all listed on the site as well. Once you have figured out what the reg who the regulator is, you can go to their performance evaluation site and pull up the CRA ratings. And then the evaluation dates are actually for the OCC hyperlinks to the exam itself, and you can click on it and download. There. They’re often very large PDFs, but they’re all organized. pretty intuitively. There’s at the beginning of the exam, a report card and and then the exam discusses each different test for each assessment area. And at the end of the exam, there will be a list of assessment areas and a matrix showing how the bank scored in each of those tests in each particular assessment areas. So these appendix rating summaries are a really good way to look at your particular community to see if a bank has either a low satisfactory or needs to improve score in any of these areas. And that can tip you off into a really good way to get involved in care advocacy in your community.

28:26

I’ll pause now to just clarify what we mean when we say LMI or low to moderate income. The CRA regulations specifically define low and moderate income according to census bureau criteria. The moderate income criteria is 80% or below area median income. And so any anyone with 80% or below of census tract median income is considered a low or moderate income borrower.

29:12

And again, CRA is colorblind and the focus in CRA data and evaluations is on is on income, which hopefully we will see updated in the new regulations. The statute can’t be changed, but there could be various ways that the regulator’s increase focus on race in CRA exams. One One is fair lending should be an discrimination is supposed to be part of the CRA evaluation, although it hasn’t been a very robust part until now. And hopefully the new regulations will make that a bigger focus of CRA exams

30:07

How are the regulator’s doing I think we all know that CRA has not put an end to redlining and discrimination, but it has helped. There are countless studies and data to show that it has helped. But there’s also data to show that we need to do a lot more CRA grades are inflated. This is kind of an old slide, but the data is still the same 98% of banks pass their CRA exam. So I don’t know about you. But if I was taking a class in school, and I knew that 98% of the class would pass no matter what, I really wouldn’t try that hard. This is another area that really needs to be improved in updated CRA regulations.

31:15

Pause to take a few questions now. I have a few questions in the chat. The final rule, we don’t know when the final rule will be completed, we expect it to be or hope that it’ll be finalized in the first half of 2023. But we really won’t know until until it’s published.

31:48

I think I answered the question about credit unions, there is no CRA equivalent for credit unions. And someone asked about credit union who monitors credit unions credit unions are regulated by the National Credit Union Administration NCUA. And I think the logic but behind not requiring them to comply with CRA is that credit unions are member owned cooperatives. So there’s a field of membership and they’re they’re designed to serve a narrower group of people. Although some people would argue that some credit unions have gotten so big that they should be regulated by CRA just like banks.

32:45

I’m looking at the questions. Someone asked what are our thoughts are my thoughts on special purpose credit programs? I think they’re very beneficial. Special Purpose credit programs are programs that banks can create to to make loans to a specific demographics. So a bank could have a special purpose credit program that is designed for black business owners or black and Hispanic mortgage borrowers. And if it’s created in compliance with Equal Credit Opportunity Act criteria, then it a special purpose credit program is not considered a violation of the general rule that you can’t discriminate in lending based on on race or ethnicity. We think we’re seeing more and more banks doing special purpose credit programs, even though it’s been in the last since the 70s. It really it’s only in the past five or six years that we’re seeing banks start launching these programs. A few banks I know that are doing them are several of our our banks that we have CBAS with US Bank, BMO Harris bank, TD Bank, so a lot of our larger national banks are starting to implement Special Purpose credit programs. And that’s really good news. Hopefully we’ll see that number snowball. That’s my hope that once the bigger banks adopt those programs, more and more national and regional and smaller banks will as well and that could actually have a bigger impact in in the racial wealth divide that CRA is really designed to, to change.

34:46

So one person asked how do you know who the bank’s primary federal regulator is? And what’s the difference? I think the question is going to what’s the difference between primary and secondary And I’ll share the slides after this presentation. But the primary federal regulator, you can look up on the FDIC bank sweet site, there’s a couple of links to that site in the slides. And there’s sometimes sometimes a bank will be regulated both by the OCC and the Federal Reserve. And that’s because the Federal Reserve regulates bank holding companies. And for purposes of CRA though, it just the primary regulator is the one that matters and the one that you would engage with if if you want to get into CRA advocacy. I see a few other questions but I’m going to move on to the next part of the presentation and hopefully have time at the end to address some more of those questions.

35:58

The rest second half of the webinar will be about CRA advocacy and how you can get involved.

36:10

Gilson Kado was an activist who’s been called the mother of CRA. She led the fight for Honda and CRA in the 1970s. And in that fight, she understood and really emphasized that CRA enforcement requires robust public participation. Some reasons to get involved are that when banks are engaged with the community and the community is really monitoring and engaging with the bank and regulators, bank performance does improve, especially if there are issues with the bank, they they tend to really make big increases when the community starts to engage. Increased CRA activity increases reinvestment in community development. It directs more resources into underserved neighborhoods, and it builds partnerships with financial institutions.

37:17

CRA advocacy begins with research again. So part of that research is once you’ve identified a bank and its regulator and you’ve looked at their CRA exam, the next step is to look at their data. And before I go into this chart, I will say that NCRC does help members evaluate bank data, the data is all available online, and I’ll share a link to it later. It’s pretty complex to download and analyze that data. And one thing NCRC does for our members and other groups is help with pulling and analyzing data for specific banks in your community. When you’re looking at data, again, the banks are evaluated against each other. So a bank is looked at in terms of how it’s performing relative to bank peers in the same markets. So we always pull when looking at home to data in an assessment area. We’d like to look at the banks data but also the aggregate data of all mortgage lending in that area. In this case, you can see the percentage point difference between the bank that this chart looks at versus aggregate data in the market. So you can see there 17% behind the average of all lenders for lending to minorities in in the community. And one thing I’ll note again, CRA is a colorblind statute. But we do always look at lending to racial and ethnic groups in our analysis because again, the goal of CRA is to combat redlining even though it’s it’s in imperfectly designed to technically focus on low and moderate income communities. It is important in the advocacy community to really also look at race and ethnicity.

39:42

Small Business Lending analysis uses a similar methodology banks are evaluated relative to peers. And the data available for small business lending is much narrower than hummed a data. Because there’s no federal law yet that requires less ders to disclose well to collect first of all and disclose the any demographic information on borrowers other than what you see here, which is lending to businesses with under a million dollars in revenue and loans to businesses located in census tracts. And again, oh, sorry, there’s a percentage point difference here that shows this bank is performing very, very badly relative to peers, in terms of its loans to businesses with under a million dollars and in revenue. And we definitely want to encourage banks to make loans to small businesses that have lower revenues, because those are the businesses that are just starting out that that really need that need capital to just stay afloat and to grow. And a side note about small business data is that this will be changing soon, we will be getting additional data under Section 1071 of the Dodd Frank Act. That section of the Dodd Frank Act requires the CFPB to issue regulations for the collection and reporting of demographic data for small business lending. So eventually, we’ll have we should have a data set similar to the hum to mortgage data which going back to the slide, you’ll see we have in addition to data on income tracks and borrower income hummed a data provides banks are required to collect and provide demographic information on borrowers and and demographics on census tracts. So we’ll have that same, hopefully, level of detail in small business lending and CFPB is actually working to issue a final rule in that should be finalized by March of 2023.

42:15

So this, these are links to the 100 data and the current small business data that’s available to the public. And again, if you’re an NCRC member, you can take advantage of that by contacting us to help you download and analyze data about banks in your community. So we again, encourage membership, unless you’re you’re someone who’s really really interested in pulling huge, huge amounts of data and doing the analysis yourself. I see one more question about online lenders like Rocket Mortgage. Is there any indication that the rule revisions to CRA will include online lenders like Rocket Mortgage? I think the answer is well, I don’t know I don’t think I don’t think non bank lenders will be covered by the updated CRA although several states CRA statutes do address online lending and state. Honestly state CRA laws might be a another really good place for advocacy to increase the effectiveness of CRA.

43:47

So turning to advocacy, now that you have all this information about a bank, you’ve looked at their lending data and maybe identified some issues. The two main tools that I’ll discuss today for advocacy are comment letters and community benefits agreements. comment letters are my backup comment letters are or public comment letters or letters to federal agencies that provide feedback on sometimes it’s a proposed rule or regulation. But in the CRA context, its feedback to the FDIC, OCC or Federal Reserve regarding the CRA performance of a bank, there are three opportunities for comment letters in the CRA context. One is and this is probably the main opportunity when banks merge or acquire new branches and mergers being actually the key opportunity here. I’ll discuss that in greater detail soon. Another opportunity for comment letters are in CRA performance of valuations and then the public can comment on branch closures. Although that’s not not been the most effective advocacy tool just because regulators actually can’t stop a branch closure. I’ll discuss each of these a little bit more. So, public comment letters generally include a request or state a position that’s either support or opposition to a filing, so they they might oppose a merger. Comments can also request an extension to the comment period. I’ll talk a little bit more about the comment period, but they’re very short typically. comment letters also could request that the regulator’s convene a public hearing or meeting to hear from the public about a bank merger. And they can include I have OCC here, but it should be any regulator. comment letters can include a recommendation that the regulator, only grant approval of a merger under certain conditions. So often, when we engage with regulators on mergers, we asked them not to, not to approve a merger. If there there are issues with either the acquiring or target bank, without a meaningful community benefits plan in place. The content of the letter also usually includes information and data that backs up your position and requests that could be lending analysis, like the tables that we looked at other information relevant to the bank’s performance and your community. It’s important, I think, to tell stories about your community and paint a picture of what’s going on there. If there’s been disinvestment, or if there’s a bank with a branch there, that sort of invisible to the community and not really engaged in community development lending, that might be something to include. And it’s also helpful to describe your organization or coalition and how you can help improve for performance in collaboration with with the bank.

47:35

Mergers, we think of as election season in CRA banks are really required to show that their merger is going to have a public benefit and meet the convenience and needs of the community.

48:01

Regulators are required to look at the bank’s record, as well as how the expanded bank will serve the community going forward. And it’s again, it’s often an opportunity to negotiate community benefits plans and so, that is often something that we mentioned in comment letters. The comment period to keep in mind is usually 30 days from the receipt of a merger application and that that is very quick. So, this is the comment period for the US Bank Union Bank merger. You can see the comment period started on October 7 of 2021. It closed on November 6. So this is why often comment letters do request and extended comment period, which sometimes banks will will grant especially if they decide to do a public hearing or public meeting on the merger. And on that note, merger public meetings are have generally been very uncommon. But they are another opportunity to participate. And in the last year and a half, the OCC has held public meetings on three mergers. And this is a statement from Michael Chu, who’s the head of the OCC and also who will be keynote speaker at our conference at the end of March. So he’s saying that the OCC is considering adopting a presumption in favor of holding public hearings that might happen we don’t know. We don’t know what that would look like either. It could be just for large national banks. But it’s something to keep in mind if you’re interested in advocacy. I am pretty low on time. So I’m going to try to speed up a little bit here. These are links to CRA exam schedules. And this can tell you when you can comment on a CRA exam. Branch closures again are an opportunity to comment. But it’s it’s rare that you can see a big benefit from that. Although a public protest or comment could result in some benefits to the community like donation of building an equipment, which is eligible for CRA purposes if the branch is in a low or moderate income area. So the last section I have very little time for so I’ll try to go quickly. community benefits agreements are another major tool for advocacy in the CRA. These are agreements between a bank and CRC and our members in which the bank commits to increases in CRA activity. Usually these are negotiated in connection with a merger. The agreements contain goals to increase CRA eligible lending. They include other commitments to activities that that address pressing needs identified by our members. And we believe CPAs are really an ideal model for bank community engagement in the CRA context. In an ideal situation, banks and community groups collaborate together to create metrics, evaluate performance, and also to develop strategies for meeting care for meeting the CBA goals. So the way we start a CBA process is with listening sessions. Our organizing team works with members throughout the bank’s footprint. And we put together listening sessions that are designed to identify local needs. We prepare our members for meetings with the bank. We usually have 100 to 200 groups, each making a three to five minute presentation in three two to five virtual meetings that lasts about two hours and usually the bank CEO attends some or all of those meetings. The the listening sessions are designed very carefully to show the bank that that the groups involved are an impressive network of nonprofits that can not only help the bank achieve their goals by collaborating with the bank, but if necessary, the network can be called upon to submit comments or take other actions to increase pressure if needed. Once we finish the listening sessions, and CRC sends a proposal to the bank. It’s got quantitative metrics and lending goals as well as a comprehensive list of the strategies identified by our members. And then we get a draft back from the bank and NCRC will share that draft with members for feedback and work with the bank to finalize the CPA. Typically, we get CPAs during bank merger reviews, because bank merger law requires that banks show public benefit through a merger. And sometimes we’ll have a CBA that expired and a bank will reach out to us to renew the CBA. And we treat those like new agreements, starting over with a new round of listening sessions. After announcement, the bank will typically form advisory councils and often we will work with the bank to to identify community leaders to sit on the Advisory Council and those those councils are really a way to ensure that the bank is responsive to local community credit needs. And then throughout the term of the CBA we we NCRC and in particular our organizing team work to deploy resources in a collaborative way that that keeps the bank engaged with key community groups and stay cool Realtors some results of our CBA work. And CRC has had CPAs with 22 banks since 2016, resulting in over $600 billion in lending and investment to underserved borrowers and communities, as well as 130 new bank branches in LMI communities. There’s a link here to our CBA explainer, which has a list of our CPAs with a hyperlink to each announcement. And each of those announcements at the bottom of the press release contains a detailed summary of the CBA commitments. I will go very quickly through these slides since we only have three minutes. Here are some results of our CBA work for First Tennessee bank, they increased financing for CDFIs very dramatically in the first year of their agreement. Huntington Bank and in the Midwest is also a bank that had very significant increases in mortgage lending to black borrowers during the first two years of the CBA term. And there has been an increased focus on CRA activity in merger review in the merger review process and also in bank merger applications they’re providing banks are providing much more detail in merger applications on how mergers will benefit the public. And we’re always advocating for more data and transparency. And some of the results of our CBA work we think have been increased transparency, we’ve had four banks since 2020. Commit to track how much of their CRA support is going to organizations led by people of color. And several banks have published their EEO one report on their website. That’s a report of bank staff demographics, it’s required to file with the EEOC, but banks don’t have to publish it unless they do so voluntarily. It’s something we always advocate for more transparency about in our CBA process. So we have one minute left. Again, some of the benefits of NCRC membership are are that we help with advocacy, we help with data analysis, sample comment letters and construction of community benefits agreements with our national coalition. These are some links for anyone interested in a deeper dive.

57:56

These are a list of states that have local CRA s or responsible banking ordinances. We have a video of a conversation about the upcoming CRA proposed rule. A link to the actual statute and then again, this is a link to the FDIC bank find suite which has location data and basic information on banks. I think we’re out of time for questions. But you all have my email from the chat, I believe and please do feel free to follow up with me if you have any questions and I’ll get back to you. And I will now turn it over to Kaylee.

58:43

Thank you so much, Catherine. And thank you everybody for joining. Again, I just wanted to note that we are holding this webinar in preparation for our annual just economy Conference, which is March 29 and 30th this year. If you register now we’re still offering a limited time this kind of ticket price. We do have some great content and speakers coming including sessions on CRA to deepen your knowledge about CRA. We’d love to see you there. And if you’re interested in joining membership, we will also drop that link in the chat and I will drop the conference registration. But we look forward to seeing you all there and have a great day

“TD Bank brought dedication and open minds to the meetings with NCRC members that brought us to this strong and promising agreement,” said Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition President. “The deal we just signed will ensure that communities of need see tangible increases in resources and economic opportunity in their neighborhoods — as every bank merger is legally required and morally bound to do. This agreement reflects the hard work of our members and the bank’s staff in numerous ways, including TD’s commitment to opening 25 new physical bank branches in marginalized communities — the largest such pledge to date by any of the 20-plus banks that have signed onto a community benefits agreement with NCRC members. I applaud everyone involved for bringing the candid, constructive energy these deals require to our meetings and producing such a robust final package.”

To identify areas of greatest need in communities across 22 states and Washington, D.C., the bank solicited feedback from NCRC leadership and non-profit groups from both TD and First Horizon markets from the time it announced its definitive agreement to acquire First Horizon Corporation in February 2022. TD will meet annually with NCRC to discuss and measure progress on the elements of the plan. 

“Banks have an important role in providing economic opportunity and supporting changes that help low- and moderate-income (LMI), diverse and underserved communities achieve their financial goals,” said Leo Salom, President and CEO of TD Bank. “This is rooted in the belief that our business only does well when the people we serve are flourishing. Our Community Benefits Plan builds on TD Bank’s and First Horizon’s longstanding focus on our communities. We are excited to continue this focus in First Horizon markets as we move forward with combining our two organizations. Thank you to NCRC and its member organizations for their collaboration and critical insight as we developed an effective plan that addresses the priorities and needs of the communities we serve.”

Since 2016, NCRC has facilitated 27 community benefits agreements with bank groups that committed more than $620 billion for mortgage, small business and community development lending, investments and philanthropy in LMI and under-resourced communities.

In addition to TD Bank and NCRC, the following 59 NCRC member organizations that operate in the markets affected by TD’s acquisition of First Horizon endorsed the deal:

Affordable Homeownership Foundation, Inc.

Affordable Housing Centers of Pennsylvania

African American Chamber of Commerce of Montgomery County

Best of the Bess, Inc.

BLDG Memphis

Building Alabama Reinvestment 

Business Outreach Center Network, Inc.

BOC Capital Corp.

Can I Live, Inc.

Ceiba

Central Baptist Community Development Corporation

Clarifi

Coalition for Non Profit Housing and Economic Development

Coalition of African Communities – Philadelphia

Coastal Enterprises, Inc.

Community Development Alliance Capital District, NY

Community Development Network of Maryland

Community Legal Services of Mid-Florida, Inc.

Community Legal Services of Philadelphia

Community Link NC

Community Reinvestment Alliance of South Florida

Connecticut Fair Housing Center

Corporation to Develop Communities of Tampa, Inc.

Economic Action Maryland 

Georgia Advancing Communities Together, Inc.

Greater Philadelphia Hispanic Chamber of Commerce

green|spaces Chattanooga

Housing For All

HousingWorks RI

Jane Place Neighborhood Sustainability Initiative

Kingdom Community Development Corporation

Local Enterprise Assistance Fund (LEAF)

Long Island Housing Services, Inc.

Massachusetts Affordable Housing Alliance

National Association of American Veterans, Inc.

National Association of IOLTA Programs on behalf of the Arkansas Access to Justice Foundation, Legal Services Corporation of Virginia, Tennessee Bar Foundation, and The South Carolina Bar Foundation 

National Housing Resource Center

Neighborhood Housing Services of Waterbury

New Jersey Citizen Action

New Kensington CDC

Norris Square Community Alliance

Olive Hill Community Economic Development Corporation, Inc.

People for Change Coalition 

PFC Black Chamber of Commerce Inc.

PT Partners

Real Estate Education and Community Housing, Inc.

Rebuild Communities NC

Sandhills Community Action Program

Solita’s House, Inc.

Springfield Neighborhood Housing Services, Inc.

Taller Puertorriqueño

The South Carolina Association for Community Economic Development (SCACED)

Titusville Development Corporation, a CDC

Urban Impact

Urban League of Essex County

Urban League of Greater Hartford

Washington Area Community Investment Fund (Wacif)

West Boulevard Neighborhood Coalition

Westside Network

“Ceiba looks forward to working with TD Bank to meet our mutual objectives of building wealth and expanding access to financial services for low-to-moderate income families and communities of color in Philadelphia,” said Will Gonzalez, NCRC Board Member and Executive Director of Ceiba. “This CBA helps TD Bank, an institution with a big footprint in Philadelphia, enhance its capacity to make comprehensive, sustainable, and positive community development impacts in our city.”

“New Jersey Citizen Action applauds TD Bank for recognizing the importance of partnering with stakeholders in the communities where they do business and committing to CRA goals for their investment in affordable home-ownership, community development and small business finance for underserved, low- and moderate-income and BIPOC communities,” said Leila Amirhamzeh, CRA Director of New Jersey Citizen Action. “We look forward to working with TD Bank and all of the partners in this community benefits plan to make it a success.”

“Collaboration is critical to delivering impactful financial products and services that reach diverse communities,” said Nancy Carin, Executive Director of the Business Outreach Center Network / BOC Capital Corp. “TD Bank’s commitment to partnership with community stakeholders and CDFIs to address community needs promises to have positive impacts. BOC Network and BOC Capital look forward to the bank’s active community engagement.” 

“This Community Benefits Agreement that NCRC has worked out with TD Bank represents a valuable investment in affordable housing, homeownership opportunity, small business development, and support for Black and Brown communities,” said Bruce Dorpalen, Executive Director of the National Housing Resource Center. “Housing counseling organizations across the TD Bank footprint are ready to help implement this commitment.”

“We applaud TD Bank’s Community Benefits Plan and are encouraged to see a $1 billion commitment to CDFIs and MDIs over the next 5 years,” Gerardo Espinoza, Executive Director of Local Enterprise Assistance Fund (LEAF). “The recent COVID epidemic has evidenced a plethora of social inequities that are present in our society. In order to navigate this economic uncertainty, we need all stakeholders in our communities to participate and lend support.”

“PT Partners welcomes TD Banks’ efforts to create greater equity in banking and lending but especially in philanthropy,” said Vanessa Liles, Co-Project Director at PT Partners, “where ‘Black, Latinx, Asian, Women, 2SLGBTQ, Veteran, PWD or Native American-led organizations’ are experiencing great disparity.”

“The South Carolina Association for Community Economic Development (SCACED) recognizes the contributions of TD Bank and First Horizons to communities throughout the state of South Carolina,” said Katherine Pratt, VP of Operations for the South Carolina Association for Community Economic Development (SCACED). “We look forward to working with them through and after the merger to see even greater impact in underserved communities to increase access to capital for small businesses, increase access to affordable housing and increased support for the nonprofits working on the ground in these communities.”

Advancing TD’s and First Horizon’s Strong Track Records of Community Engagement 

The community benefits plan extends TD and First Horizon’s shared commitment to positively impact social and economic outcomes in local markets and address financial inclusion across diverse communities, including Black, Indigenous, minority, women, veteran and LGBTQ2+ individuals and their businesses, and enhancing access to safe and affordable products and services.

Mortgage Lending and Consumer Products

TD Bank will enable affordable homeownership by increasing residential mortgage loans, including first-time homebuyer, and home improvement loans to $21 billion for LMI and minority borrowers, and in LMI and majority-minority census tracts, which represents a 65% increase. In support of this goal, TD will hire additional, diverse Mortgage Loan Officers and Community Mortgage Loan Officers who reflect the communities they serve. 

The bank will also provide affordable retail products and services that are designed to meet the needs of economically vulnerable consumers across the footprint.

Accessible Banking

Consistent with TD’s goal to make banking accessible to its customers, it will open at least 25 new stores and 25 ATMs in LMI and/or majority-minority markets over the next five years. The bank also commits that all banking locations will be open at least five days a week. In addition, there will not be any merger related First Horizon store closures. 

Small Business 

The plan builds on the bank’s ongoing commitment to support the critical role small businesses play in local economies by offering an estimated $7.75 billion in lending to small businesses with under $1 million in annual revenue, with a focus on minority- and women-owned businesses and those in LMI and/or rural areas.

Community Development Loans and Investment

TD Bank will provide $17.5 billion in community development loans and other investments to support economic development activities and affordable housing projects (including rental housing) within TD and First Horizon’s markets. This represents a 21% increase over the combined TD and First Horizon previous five-year average. 

Additional Highlights

• Giving $200 million in Community Reinvestment Act-related philanthropy through the TD Office of Charitable and Community Giving, which includes creating a $40 million TD New Horizon Foundation, with a focus on giving in Memphis, Tennessee, and other First Horizon markets over five years. 
• Creating a Community Development Financial Institutions (CDFIs) / Minority Depository Institutions (MDIs) Impact Strategy with a total estimated impact of $1 billion.
• Increased spending with certified diverse suppliers in the US by 50%. 
• Engagement and support of Historically Black Colleges and Universities (HBCUs) through institutional support, recruitment of students and alumni, and financial access.

Summary of the Community Benefits Plan Between the National Community Reinvestment Coalition and TD Bank

TD Bank will lend, invest or donate more than $50 billion nationally, focusing on low- to moderate-income (LMI) borrowers, LMI communities, and communities of color over a five-year period from 2023 through 2027. TD Bank plans to grow its presence in low-income communities, with the largest commitment to new branches in LMI communities in any NCRC CBA to date.

Mortgage Lending to the Underserved

Community Benefits Plan Commitment: $21 billion over 5 years

If lending to a specific group (Black, Asian, Latinx, Native American, Hawaiian/Pacific Islander), or in any assessment area reported within the bank’s combined footprint currently lagging peer banks, is not progressing in pace with target after two years, TD Bank will meet with community representatives to discuss ways to increase lending to the particular group. In order to achieve its targets, TD Bank will continue to offer a Special Purpose Credit Program (SPCP) mortgage product in Black and Hispanic census tracts in markets in both the TD Bank and First Horizon Bank footprint. In addition, TD Bank will increase its number of loan officers in LMI and majority-minority communities.

Small Business Lending

Community Benefits Plan Commitment: $7.75 billion over 5 years

TD Bank will seek to develop a small business SPCP for small businesses that are 51% or more and registered as WBE, MBE and Veteran businesses, with a goal to include availability in targeted regions throughout the TD Bank footprint, including Philadelphia, New York, Charlotte, North Carolina, and Memphis, Tennessee, and to include expanded credit policies to ensure that minority-owned businesses and women-owned businesses are given equitable access to credit.

Community Development Lending and Investment

Community Benefits Plan Commitment: $17.5 billion over 5 years

TD’s community development lending and investment commitment will include approximately $11.6 billion in commercial lending and credit enhancements to support community development activities, and approximately $5.9 billion in tax credit investment to develop, facilitate, or preserve affordable housing and make other impactful community investments. TD will create a coordinated Community Development Financial Institutions / Minority Depository Institutions Impact Strategy with a total estimated impact of approximately $1 billion over the plan term.

Philanthropy & Community Service

Community Benefits Plan Commitment: $200 million over 5 years

TD Bank will invest approximately $200 million in CRA-related philanthropy through the TD Office of Charitable and Community Giving. Part of this commitment will be a $40 million commitment for the TD New Horizon Foundation, with a focus on Memphis, Tennessee, and other legacy First Horizon markets.

TD’s Charitable Distribution policies prioritize diverse-led and diverse-serving organizations and programs, as well as those benefiting LMI communities, and TD aims to direct at least 75% of its philanthropic support provided over the next 5 years to Black, Latinx, Asian, Women, 2SLGBTQ, Veteran, PWD or Native American-led organizations.

Branch Distribution

TD Bank plans to open the greater of 25 new branches or 25% of all new branches in LMI and/or majority-minority markets over the next 5 years across the combined TD/First Horizon footprint.

Additional Areas of Focus

TD Bank will develop an outreach plan for both Philadelphia and Memphis, to include local Community Advisory Councils that will meet quarterly for the first two plan years.

In addition, TD Bank will seek to develop a US Native American strategy through collaboration with Canadian counterparts that have successfully implemented a strategy for engagement with and support of Indigenous Peoples in Canada. This strategy will include an annual consultation with representatives from the Native CDFI Network and Native American focused community groups to learn more about the unique and specific community development needs of Native American communities within the combined TD/FHN footprint and assess how TD may be a resource.

Staff & Supplier Diversity

TD Bank commits to increasing spending with certified diverse suppliers in the US by 50% over the plan term. After the acquisition is closed, TD will work with First Horizon to establish the baseline of the combined certified diverse spend and supplier count and will seek out new certified diverse suppliers across the newly expanded footprint and will seek to add 75 new certified diverse suppliers in the US over the term of the plan.

Statewide Increases

The intended outcome of this plan is to increase lending across the TD Bank – First Horizon combined footprint. If mortgage lending to a specific group (Black, Asian, Latinx, Native American, Hawaiian/Pacific Islander), or in any market reported within the bank’s combined footprint currently lagging its peer banks is not progressing in pace with target after two years, the TD Bank will meet with community representatives to discuss ways to bridge that gap.

Plan Implementation & Accountability

TD Bank will create a Community Advisory Board (CAB) comprised of members representing a diverse cross-section of community groups in the combined TD Bank-First Horizon Bank footprint. The CAB will meet on a semi-annual basis, and at least one meeting annually will be attended by the TD Bank, NA CEO. Annual assessment of progress on CBP targets will be reported to NCRC. For the five-year term of the CBP, TD will report annually to the NCRC on progress against the elements of the plan, unless specified otherwise.

Part One of this series focused on race and small business. Part Two covered health care and climate resiliency. Part Three provided an overview of comments from the banking and lending industries. 

In this fourth and final part of our series reviewing these trends, we highlight matters of interest in the comments submitted by local, state and federal policymakers. 

Local Policymakers

Local elected officials echoed calls from community-based organizations regarding the consideration of race in CRA exams. Montgomery County Maryland Council Member Will Jawando offered a comment that aligned closest to NCRC’s regarding race. He noted the homeownership gap between Black and White families remains near a 120-year high point. He also supported the agencies’ proposal to use Section 1071 data on small business lending by the race and gender of the business owner. Jawando noted a resolution the Montgomery County Council submitted in 2020 in support of strengthening the CRA and expressing concern regarding the NPR issued by the OCC and FDIC when those agencies were led by Trump Administration appointees.

The African American Mayors Association (AAMA) similarly supported the inclusion of race into the CRA in their comment letter. AAMA’s letter also opposed the proposal from the regulators to eliminate certain subtests for about 1,000 medium-sized and smaller banks, and thereby eliminate their accountability for providing community development finance and branches in underserved communities. AAMA noted that this proposal lacked justification since the banks have been successfully performing these activities for several years. 

The Comptroller of the City of New York, New York City’s chief financial and accountability officer, stated in his comment that federal CRA regulations need to better explain the processes for community engagement and accountability. He encouraged the CRA regulators to conduct a comprehensive needs assessment based on local data and community input, which would create a practical process to solicit local input on both community needs and bank performance from a wide range of stakeholders. This process would have an emphasis on BIPOC-led and serving organizations, and in racial and ethnic minority communities, representing the wide range of community development areas. 

He also suggested that the CRA regulators utilize community advisory boards within local communities to facilitate this engagement process. The agencies should provide clarity on how public comments factor into ratings. The agencies should also encourage Community Benefits Agreements (CBAs) and community-informed CRA plans. These should be monitored and enforced through conditional approvals on mergers and review for CRA exams. 

Chicago Mayor Lori Lightfoot offered a concern not mentioned by other municipalities that commented. The mayor was concerned that too much CRA exam weight for geographical areas with branches may neglect areas with relatively few branches and high percentages of unbanked and underbanked populations. She suggested that community or neighborhood level data for large metropolitan assessment areas may be needed to address and ameliorate disinvestment in urban Black and Brown communities.

The City of Cleveland, in their letter, like NCRC and others, opposed the CRA regulators’ proposal to exempt more banks, such as intermediate small banks (ISBs), from examination of their community development lending and investments. They also supported applying this to non-bank institutions including mortgage companies, fintech companies and credit unions. In addition, the city opposed any efforts by regulators to water down the penalties under CRA for discrimination. 

State Policymakers

State policymakers submitted comments that were broader in scope than those written by local officials. However, many of the same themes persisted – especially the argument that race should be included in CRA, which continues to be the most common theme throughout the comments. In addition, the Attorney General for Colorado noted that CRA regulators should consider adopting the Bank On national account standards as a ready-made metric for determining whether a deposit product is responsive to the needs of LMI communities. The Attorney General stated that LMI consumers in Colorado and around the country would be well-served by encouraging more institutions to offer these products.

The New York State Department of Financial Services (NYDFS) supervises and regulates the activities of nearly 3,000 financial institutions in New York with assets totaling more than $8.8 trillion. Their comment held similar views as the New York Comptroller, but also covered some interesting additional ground. NYDFS voiced concern over the regulators’ proposal to not treat a bank’s loan production offices as automatically constituting a facility-based assessment area. Loan Production Offices (LPOs) are banking facilities that conduct loan approvals, closings, originations and other key pieces of the lending process. The NYDFS comment acknowledged that LPOs do not meet the traditional definition of bank branches, but are nonetheless physical locations that can factor into banks’ overall lending performance in LMI communities – and therefore ought to be brought into the facility-based assessment area component of CRA oversight. Like other commenters, the NYDFS expressed support for maintaining a list of activities qualifying for CRA credit. NYDFS also remarked that regulators should ensure that activities that only loosely or tangentially assisted local communities should not be included. They also advised close coordination between federal and state regulating agencies administering CRA evaluations regarding the federal preclearance process for qualifying activities for CRA credit. 

A topic not mentioned in many comments, but discussed in the NYDFS’s comment was the express inclusion of unfair, deceptive or abusive acts or practices (UDAAP). The NYDFS conveyed support for the regulators’ decision to include UDAAPs as conduct that could negatively affect a bank’s CRA rating. They noted the harm these practices regularly inflict upon LMI individuals and communities.

The Pennsylvania Housing Finance Agency’s (PFHA) mission is to provide affordable homeownership and rental apartment options for older adults, LMI families and people with special housing needs in the state of Pennsylvania. The PFHA urged full consideration of Low Income Housing Tax Credits (LIHTC) activities, which is all the more important in the context of a declining stock of affordable housing.

Regarding what standard should be used to determine whether a government program qualifies as an affordable housing activity, PFHA suggested that regulators find a balance between administrative simplicity and thorough verification. As examples, PFHA cited programs with a federal component, such as mortgage revenue bonds (MRB), LIHTC and project-based vouchers that require LMI verification. These programs, the PFHA argued, should be categorically eligible for full CRA consideration. 

Federal Policymakers

We were pleased to see policymakers from both the US House of Representatives and the US Senate comment on the joint CRA NPR. Both letters enumerated similar sentiments to comments mentioned in this series of blogs. Below are the themes both letters discussed in detail

Race in the CRA 

The House letter expressed concern that race was not included in the NPR. It was suggested that regulators look to advocates’ recommendations – including NCRC’s legal analysis on how to consider race and ethnicity on CRA exams while still meeting the requirements of the Equal Protection Clause of the United States Constitution. The Senate’s letter, which was not as explicit in its request, urged the regulators in the final rule to strengthen data collection and disclosure of banks’ service to communities of color. This would include the requirement of public disclosure of data; strengthen review of banks’ compliance with fair lending and housing obligations; and consider any disparities by race or ethnicity in CRA evaluations and mergers, acquisitions or other bank requests.

Bank CRA credit should be granted for projects that meaningfully improve communities

The House’s letter noted the need to better utilize data from bank records and publicly available sources to measure the impact of both bank loans and investments. Impact needs to be measured rigorously in order to promote effective reinvestment that results in thriving communities.

The Senate’s comment stressed the need for CRA regulators to preserve their proposal for CRA activity to have the primary purpose of community development. This would be demonstrated by having the majority of the funding or benefits produced going to low- and moderate-income communities in order to receive community development credit. In addition, the Senate supported the regulators’ proposal to develop a list of broad types of activities eligible for CRA credit. However, they made sure to stress the list should be as broad as possible to leave room for creativity as banks work to meet local needs and challenges. 

CRA exams

The Senate did not touch this topic but the House stated the desire for regulators to strengthen CRA exam standards so they are more rigorous, which is a position that NCRC has advocated for years. Over the years, it has become relatively easy for banks to pass their CRA exams. NCRC highlighted this in a 2020 report where we found that roughly 98% of banks consistently pass their CRA exams on an annual basis, receiving either the highest possible rating, “Outstanding,” or the next highest rating, “Satisfactory.” The House letter emphasized that banks’ CRA exam standards should reflect the goal of ending redlining in the 21st-century. Lastly, the House letter emphasized that discriminatory and abusive practices must result in CRA ratings downgrades for both traditional banks and the newer “fintech” banks. 

Services

The Senate letter supported the regulators emphasis on branch placement, responsiveness of banks’ product offerings and hours of branch operations. Their letter went on to urge the CRA regulators to evaluate the extent and availability of low cost, small-dollar lending products offered by banks since these are the products most easily utilized by LMI consumers. In addition, the Senate urged regulators to expand the service test to consider banks’ efforts to serve borrowers with limited English proficiency (LEP). NCRC and other groups like AFR advocated for the same LEP inclusivity in their NPR comments as well.

Joseph Reed is the Senior Policy Advocate at NCRC.

“Regulators have taken a light touch in reviewing bank mergers for decades, which has encouraged the industry to consolidate dramatically over the past quarter-century – with some harmful consequences for working-class families,” National Community Reinvestment Coalition (NCRC) President and CEO Jesse Van Tol said. “The law says no bank merger can be allowed unless it benefits the public, yet regulators have largely failed to properly enforce that requirement. Banks should bear the burden of proof when they ask the government to let them reduce the choices available to consumers – and regulators should use merger applications as leverage to push banks to serve communities.”

The NCRC-led letter details numerous specific ideas for improving the merger review process to prioritize community benefits, including the creation of “a rebuttable presumption that a merger will not [help the public]” which banks must formally disprove, an expanded competition analysis that “consider[s] all aspects of banking and not just deposit concentration,” and more robust accountability measures to ensure that merging banks fulfill commitments to the public. More than 100 other organizations signed onto the letter.

Merger review processes have received new attention from the Biden administration, which in a 2021 executive order promised to take a ‘whole-of-government approach’ to reviving economic competition across a wide range of sectors and industries. The banking industry is a prime example of the decline in competition that the White House is scrutinizing: There are now fewer than 5,000 banking institutions in the US, down from roughly 18,000 in the 1980s. Though the overall effects of this market concentration are complex, one clear negative consequence for consumers is the evaporation of physical bank branch locations – a long-term decline which dramatically accelerated starting in 2020.

The letter places special weight on community benefits agreements (CBAs), where bank executives meet with local leaders to craft specific bank commitments to serve community needs. No merger should be approved without an ambitious and enforceable CBA, the letter states.

The full letter can be read here. The following organizations joined NCRC in signing the letter:

National Groups
Consumer Action
National NeighborWorks Association
National Association of American Veterans, Inc.

Alaska
Alaska PIRG

Alabama
City of Birmingham
HICA
Montgomery Community Action Committee & CDC, Inc.
Roosevelt Southwest Community Development Corporation
St. Peter African Methodist Episcopal Church
Titusville Development Corporation, a CDC

Arizona
Local First Arizona
Pima County Community Land Trust
UPI Loan Fund

California
California Coalition for Rural Housing
California Community Economic Development Association
California Reinvestment Coalition
CAMEO
CDC Small Business Finance
EAH Housing
Latino Leadership Council
People’s Opportunity Fund
Stanislaus Equity Partners
The Greenlining Institute

Colorado
African American Trade Association
NeighborWorks Southern Colorado
Urban Land Conservancy

Delaware
Delaware Community Reinvestment Action Council, Inc.

District of Columbia
Coalition for Non-Profit Housing and Economic Development

Florida
Affordable Homeownership Foundation, Inc
African American Alliance of CDFI CEOs
Community Reinvestment Alliance of South Florida
Florida Housing Coalition
St. Petersburg Neighborhood Housing Services, Inc. dba Neighborhood Home Solutions

Georgia
Alliance 85
Georgia Advancing Communities Together, Inc.
Neighborhood Improvement Association
Southwest Georgia United Empowerment Zone, Inc.

Hawaii
Hawai‘i Alliance for Community-Based Economic Development

Illinois
Chicago Community Loan Fund
Housing Action Illinois
IFF
Universal Housing Solutions CDC
Woodstock Institute

Indiana
Continuum of Care Network Nwi, Inc.
Fair Housing Center of Central Indiana, Inc.
Gary Housing Authority
Homestead CS
Northwest Indiana Reinvestment Alliance
Prosperity Indiana
South Bend Heritage Foundation

Kentucky
Fahe

Louisiana
Family Resources of New Orleans
Jane Place Neighborhood Sustainability Initiative
Sun CHDO

Massachusetts
Massachusetts Affordable Housing Alliance
Springfield Neighborhood Housing Services

Maryland
Economic Action Maryland (formerly Maryland Consumer Rights Coalition)
Housing Options & Planning Enterprises, Inc.

Michigan
dba Development Incentives & Consulting
Fair Housing Center of Metropolitan Detroit
GenesisHOPE Community Development Corporation
Southwest Economic Solutions

Minnesota
Jewish Community Action
Black Women’s Wealth Alliance

Missouri
SLEHCRA

Mississippi
HEED
Increase One, Inc.

Nebraska
Family Housing Advisory Services

New Jersey
New Jersey Citizen Action
Seniors Success Center Corporation

New Mexico
Tierra Del Sol Housing Corporation
United South Broadway Corporation

New York
Association for Neighborhood and Housing Development (ANHD)
Devotion USA, Inc.
Empire Justice Center
Fair Finance Watch
Leviticus 25 23 Alternative Fund, Inc.
New York State Rural Housing Coalition, Inc.
PathStone Enterprise Center, Inc.

North Carolina
Henderson and Company
Piedmont Business Capital Inc.
Reinvestment Partners
Welfare Reform Liaison Project, Inc.

Ohio
County Corp.
The Pride Through Empowerment Foundation, Inc
Western Reserve Community Fund
Working In Neighborhoods

Oregon
CASA of Oregon
Housing Oregon
Oregon Human Development Corporation

Pennsylvania
Ceiba
Community First Fund
Pittsburgh Community Reinvestment Group
Urban Erie Community Development Corporation

Rhode Island
HousingWorks RI

Texas
City of DeSoto
Freedman’s Town
Johnson Consulting Group
Our Casas Resident Council, Inc.
South Dallas Fair Park Innercity Community Development Corporation
Southern Dallas Progress Community Development Corporation

Washington
African Community Housing and Development (ACHD)
LIHI

Wisconsin
Metropolitan Milwaukee Fair Housing Council
Newcap, Inc.