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New York Community Bank Merger Leads to Promising Commitments
New York Community Bank announced a New York City Community Reinvestment pledge as part of the bank’s $28 billion community pledge agreement with NCRC to support communities of color and small businesses nationwide.
The Community Reinvestment Act (CRA) works best when the communities most impacted by the bank’s actions, and by broader inequitable banking practices, are engaged, as was the case when NYCB partnered with the Association for Neighborhood & Housing Development (ANHD) and our Equitable Reinvestment Coalition (ERC) to create a NYC pledge with detailed commitments that will benefit New York City’s lower income communities and communities of color. This pledge is part of a broader $28 billion community pledge agreement with the National Community Reinvestment Coalition (NCRC), of which ANHD is an active member.
New York Community Bank created this pledge as part of its application to acquire Flagstar Bank, through which the bank will grow by 50% in assets, deposits, and branches, expand into five new states, and acquire a mortgage business operating in 28 states. NYCB CEO Thomas Cangemi and his team worked closely with ANHD and ERC to establish local goals for NYC as part of the broader pledge.
The NYC pledge builds upon a three-year pledge NYCB submitted in 2018 when they combined their commercial and savings banks. NYCB and Flagstar staff also held meetings with nearly 80 of NCRC’s member organizations to develop the larger plan. While the agreement is contingent upon the merger’s approval by federal bank regulators, ANHD and ERC believe it represents good CRA practices at any time, and are eager to work with the bank to put many of the commitments into action immediately, and ensure all commitments are met over the course of the pledge.
We also know that transparency is important for accountability. The following are key elements of the NYC Pledge and national commitments benefiting NYC:
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Renewed and strengthened commitment to Responsible Multifamily Lending principles to prevent harassment and displacement. NYCB will extend its commitment to anti-displacement multifamily lending best practices to its lending nationwide. The pledge also incorporates significant improvements, including three new full-time staff (at least one Spanish-speaking); new and detailed lead poisoning prevention measures; increased transparency and reporting; and stronger tenant engagement.
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Access to Banking Products and Services: NYCB will open at least two new branches in LMI / BIPOC communities in New York City. NYCB will not close any branches in similar communities throughout the pledge period and create a community driven process to respond to closures proposed after that. NYCB will offer a BankOn (no overdraft) product and join the AllPoint network to increase access to fee-free ATMs. NYCB will increase language access, maintain new identifications accepted, and offer a credit builder product to ITIN holders.
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Small Business Lending: NYCB will establish ambitious small business lending goals for loans to small and micro businesses, small dollar loans, and loans to BIPOC-owned businesses in New York City. They will support these goals by offering affordable products; establishing a second look / referral program for declined borrowers; and dedicating three staff to equitable lending. They will also establish a free checking account for small businesses.
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Residential Mortgage Lending: As NYCB re-enters the home lending market through this acquisition, the bank will set ambitious goals to equitably reach BIPOC and LMI borrowers. They will support these goals with new affordable lending products, including some available to ITIN holders; $1 million a year in down payment assistance; a new special purpose credit program to serve Black and Latinx borrowers; an appraisal gap program; and a new home repair product. They will dedicate three staff to equitable lending; provide training for all third-party originators and brokers; and work with ANHD to address concerns raised about third-party originators and brokers.
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Community Development Lending and Investments: NYCB commits at least $100M/year (increasing each year) in financing for nonprofit developers and lenders, including EQ2 commitments of $2 million a year for small business lending and $3-$5 million a year for housing and community development. NYCB will create a team of five community development staff in New York City, with three starting immediately. NYCB will support the development and creation and preservation of deep, permanent affordable housing, initiatives to further equitable economic development and small businesses, and more.
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Philanthropy: As part of the broader commitment of $16.5 million in philanthropic support over the five years, NYCB will increase grantmaking in NYC by 50%, increasing from $1.3 million a year to $2 million a year by the end of the pledge period. NYCB will also continue to fund the New York Community Cares program that includes support for tenant organizing and will join local community development funding collaboratives.
M&T also announced Community Benefits to NYC
The NYCB agreement comes just a few months after M&T announced a $43 billion community growth plan with NCRC in connection with its application to acquire People’s United Bank. In addition to their pledge to increase loans and investments in every market, including New York, there are several other components that will benefit New York City, including a public commitment to ANHD’s multifamily lending best practices to combat tenant harassment and displacement; a new bank branch in the Bronx; a new home repair loan product; and an increase in grantmaking for community organizing.
Raise The Bar for Bank Mergers
Both mergers are still pending, and not yet approved by federal bank regulators. However, the plans reflect the types of activities all banks should be doing to meet their CRA obligations; each bank can and should promptly implement any commitments related to their current business models. Too often mergers lead to less competition and fewer services for, and investments in, already underserved communities. We anticipate federal bank regulators to review the bank merger process this year, including how community benefits are evaluated in applications. Commitments like these-and more- should be required for all bank mergers. Our communities deserve no less.
Members of ANHD’s Equitable Reinvestment Coalition :
Asian Americans for Equality / Renaissance Economic Development Corporation
Association for Neighborhood & Housing Development
Banana Kelly Community Improvement Association
Greater Jamaica Development Corporation
Neighborhood Housing Services (NHS) of Jamaica
Neighborhood Housing Services (NHS) of Queens
Northern Manhattan Improvement Corporation (NMIC)
Northwest Bronx Community and Clergy Coalition