OCC’s Strong Statement on CRA Plans

February 12, 2016

ANHD applauds Comptroller Thomas J. Curry for emphasizing the requirement of CRA future planning by banks when they submit an application for a merger or acquisition, and for making it clear that regulators must evaluate these plans in addition to looking at the banks' prior CRA ratings.

Comptroller of the Currency Makes Strong Statement on CRA Plans

ANHD applauds Comptroller Thomas J. Curry for emphasizing the requirement of CRA future planning by banks when they submit an application for a merger or acquisition, and for making it clear that regulators must evaluate these plans in addition to looking at the banks’ prior CRA ratings.

The Community Reinvestment Act (CRA) is a powerful tool to ensure that banks are meeting the credit needs of the community, and to bring them to the table with community and government to work towards important community development goals. But too often communities have found that bank reinvestment planning and impact fall short because it is not fully informed by the most critical local issues and needs. There is a growing acceptance among bank regulators that a bank “CRA Plan” can help the bank to better plan and understand their reinvestment obligations, create more community development benefits for the community, and make the CRA itself more effective. ANHD believes that Regulators should raise the bar by requiring a forward looking, multiyear plan for every merger and acquisition with a detailed commitment from the bank in the form of a CRA plan.

In remarks on Tuesday before the 2016 National Interagency Community Reinvestment Conference, Comptroller Curry stated:

In addition to reviewing past CRA performance, the OCC also considers the convenience and needs of affected communities when evaluating a bank’s application to acquire or merge with another insured depository institution, or to purchase branches from another insured depository institution. This forward-looking analysis evaluates how the bank will serve the community following the merger or combination. The OCC will also consider any comments from the public discussing the proposed corporate application.

Comptroller Curry’s language of assessing “convenience and needs” in the context of mergers and acquisitions appears in the regulations of all three federal bank regulators (the OCC, the FDIC and the Federal Reserve Board). Unfortunately, it is rarely enforced as regulators typically rely solely upon CRA exam ratings and, in some cases, statements of products or practices the banks intend to maintain. These are not the same as concrete CRA goals developed in partnership with local community organizations. We have been pleased to see a growing acceptance among regulators in recent years that a prospective, detailed commitment, often in the form of a CRA plan, should be required from banks at the time of mergers and acquisitions. For example, in 2013, the FDIC approved Apple Bank’s application to acquire 29 branches from Emigrant Bank conditional upon the bank developing an action plan for home and multifamily mortgage lending to borrowers of color and in communities of color. In 2014 and 2015, the OCC approved two mergers (Valley National-1st United and Sterling-Hudson Valley) conditional upon each bank writing a publically available CRA plan that had to be approved and monitored by the OCC. Later in 2015, the OCC and Federal Reserve Board also approved the CIT-One West merger with multiple conditions, including presenting a revised CRA plan, also publically available to be approved and monitored by the OCC. ANHD is currently following two bank mergers closely Goldman Sachs’ acquisition of GE Capital Bank’s online deposit-taking platform and New York Community Bank’s acquisition of Astoria Bank. As mergers and acquisitions pick up in the coming months and years, Comptroller Curry’s comments send a strong message that banks must pay attention to their CRA goals. No merger or acquisition should be approved without a CRA plan. Banks should be proactive in working with the communities they serve to draft forward-looking CRA plans before they apply to merge and not leave it as an afterthought.