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Valley National Bank under Fire from Advocates
The Community Reinvestment Act (CRA) matters. Under this law, banks have an obligation to ensure that their products are offered equitably to low- and moderate-income people and neighborhoods, and to invest in community development efforts to strengthen these communities.
Weak CRA record + no public benefits plan should not equal permission to expand.
The Community Reinvestment Act (CRA) matters. Under this law, banks have an obligation to ensure that their products are offered equitably to low- and moderate-income people and neighborhoods, and to invest in community development efforts to strengthen these communities. Regulators have a responsibility to accurately assess this record through regular CRA exams and to take it into account when banks apply to merge with another bank or open/close branches.
Today, a coalition of community groups nationwide is opposing the proposed merger between New Jersey-based Valley National Bank and Florida-based 1st United Bank. Valley National Bank has not met its obligations and its regulators are not sufficiently holding them accountable.
The bank has a very poor record of serving low- and moderate-income people and neighborhoods and should not be granted the privilege of expanding into new areas.
The OCC itself recognized this record in its most recent 2013 CRA exam, rating the bank “poor” on the majority of tests related to its record of lending to low- and moderate-income borrowers. Yet, in spite of this decidedly poor record, the OCC gave the bank a “high satisfactory” on the lending test. This score seems to result from the new Q&A revisions wherein a high volume of community development lending can make up for a poor distribution of home mortgage, multifamily, and small business lending.
Now, as Valley National applies to acquire First United Bank in Florida, it is attempting to use this “Satisfactory” rating to win an expedited process that waives the requirement to outline how the proposed merger will benefit its current or expanded assessment areas. The OCC has the opportunity to hold Valley National accountable by denying the bank’s application to acquire 1st United Bank in Florida until Valley National comes up with a clear public benefits plan that addresses the needs of its current and future assessment areas.
For example, according to publicly available Home Mortgage Disclosure Act (HMDA) data, in 2012 only 1.5% of all Valley National home loans in NYC and Northern New Jersey went to African-American borrowers even though African-Americans make up 20.5% of the population in those areas. In NYC, not one home purchase loan in that year went to an African American or Latino borrower and few of their loans overall – home loans, multifamily loans, and small business loans – went to low- or moderate-income borrowers and neighborhoods. Likewise, just one of their 102 NYC multifamily loans in 2011 and 2012 was in a low- or moderate-income tract.Additionally, the bank has not made one CRA-qualified investment, including grants, in NYC in the past three years. Its record throughout its full assessment area in New York and New Jersey reflects similar trends.
Valley National’s letter to ANHD dated June 19th only confirmed ANHD’s concerns and further demonstrated a lack of commitment to equitably serving everyone in the areas where they do business in NYC and beyond. For example, Valley National still failed to outline a real community benefits plan that will result from the merger.
Its letter to ANHD made repeated references to the 2013 CRA exam in which examiners used the word “poor” or “very poor” to describe the bank’s lending performance 47 times. The CRA exam also documents that the bank made just 8 loans in a three-year period through three affordable housing programs and five emergency cash loans to Sandy-affected families. Finally, in the letter to ANHD, Valley National attributed its poor record of lending to African American and Latino borrowers to its “responsible lending” practices.
In light of this evidence, the OCC should reject this application until the bank clearly outlines how it will address these problems and the public benefits that this merger will produce – first in its current assessment areas and then in the newly expanded assessment areas in Florida.