The Association for Neighborhood and Housing Development (ANHD) is today releasing its annual report, State of Bank Reinvestment in NYC: 2015 analyzing how banks meet neighborhood credit needs and the local impact of the Community Reinvestment Act.
ANHD has a deep appreciation of both the need for and the benefits of effective bank reinvestment and policies that hold banks accountable to help meet the credit needs of our at-risk communities. Banks receive significant taxpayer-backed public benefits from the federal government. These benefits must come with the understanding that banks will provide their services equitably and meet the needs of the communities in which they operate. Our city differs county by county and even block by block, and reinvestment is most effective if the bank has a clear understanding of the local issues and needs of individual communities and how the bank’s reinvestment activity will address them.
The major findings of the Report (bulleted below) show that locally held deposits in the 25 largest banks in New York City increased 14% in 2014 and overall reinvestment dollars increased by 25%. This is a positive trend, but seven banks increased deposits and decreased reinvestment and, in all cases, quality matters just as much as quantity. Much of the reinvestment growth comes from core consumer and commercial lending dollars, which often reflects a bank’s core business model.
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Major Findings
Local deposits continue to increase – up 14% in 2014, reaching $991 billion. Much of the increase was due to large increases in Manhattan and national wholesale bank deposits. In the outer boroughs, deposits rose much more modestly, up just 3.6% from $96.51 billion in 2013 to $99.94 billion in 2014. Seven banks increased deposits but decreased reinvestment in NYC.
The multifamily market remains strong, but the number of loans decreased 20% among banks in this study and by 13% in lower-income neighborhoods. The number of multifamily loans qualifying for community development decreased in 2014, but the dollar amount increased. While signs of physical and financial distress remain low, rising rents and sales prices, especially in historically more affordable neighborhoods, increases the pressure on lower-income tenants, putting them at risk of displacement. Too many bank and non-bank lenders continue to lend to known bad actor landlords
With a few exceptions, the percentage of community development loans and investments under the economic development category is very small, highlighting the challenges with the category and the opportunity for activity to support quality jobs. ANHD believes that at least $1 billion more could be reinvested in NYC to support equitable economic development
The number of branches remained relatively stable across the City, but the distribution remains inequitable, with core Manhattan inundated, while lower-income neighborhoods still lack sufficient branches and ATMs. Three branches closed in the Bronx. Some new accounts appear more accessible to lower-income New Yorkers, but many remain out of reach. Only four banks currently accept the IDNYC as primary ID.
The number of Home Purchase loans went down 14% from 2013-14 and 6% from 2012-14. The decline to LMI borrowers was about the same in 2014, but down 11% from 2012. A large factor is the decline in lending by the Big 4 banks (Chase, Citibank, Bank of America and Wells Fargo) and HSBC. The share of lending by the Big 4 banks in NYC has been steadily declining citywide and nationwide, while the number of non-CRA-covered lenders is on the rise, particularly in FHA lending. Racial disparities persist; 22% of New Yorkers are Black and 29% Latino, yet on average the banks in this study made just 9.6% of home purchase loans to Blacks and 7.3% to Hispanics. Thousands of homeowners are still in, or at risk of,foreclosures, with the highest percentages in communities of color in Brooklyn, Queens, and the Bronx.