Valley National's New CRA Plan

Valley National CRA Plan Finalized Just as Another Merger is Announced

Valley National Bank has announced plans to acquire another Florida institution, CNLBancshares. We are pleased that this merger comes at a time when community reinvestment is now an integral part of Valley National’s operations. Just last month in May 2015, Valley National Bank completed and published its final CRA plan, which was required by the OCC when they approved the bank’s application to acquire 1st United Bank in Florida. The OCC also required the bank to make the plan public and report regularly on its progress. This requirement of a bank CRA plan is an unusual and positive step by the regulators. ANHD was part of a coalition of community groups nationwide that organized to secure this requirement and worked with the bank to craft a plan that meets the needs of our local communities.

The Community Reinvestment Act (CRA) requires banks to lend and provide services 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 in certain circumstances, including when banks apply to merge with another bank.

ANHD believes that this CRA plan demonstrates a good-faith effort to ensure that the bank’s products and practices better meet the needs of the low- and moderate-income people and communities it serves throughout its footprint in NY, NJ, and now Florida. Some highlights include:

Core Lending goals, products, and practices.  By 2018, the bank plans to have its lending match 90% of the demographics of its assessment areas with regards to 1-4 family loans in LMI tracts and to LMI borrowers and small loans to businesses in LMI census tracts and with revenues under $1M; and 100% of the demographics for multifamily loans in LMI census tracts. They will achieve these goals by:

• 1-4 family lending: Creating partnerships with nonprofit housing counseling agencies, participation in government programs and offering first-time homebuyer products that include lower down payments, less restrictive credit requirements, and require pre-purchase counseling.
• Small business lending: New loans and lines of credit designed specifically for small business owners and nonprofits.  Restructuring to streamline the lending process and increase credit, including a new department focused on loans under $100,000.  We also encourage the bank to implement a formal “second look” program to refer declined borrowers to CDFI lenders.
• Multifamily Lending: Strong priority to lend on affordable multifamily buildings in LMI census tracts and build and expand relationships with nonprofit developers to support affordable housing.  With regards to community development loans, they commit to responsible underwriting based on current rents.  They also commit to ensuring the loan is not made speculatively and that the landlord has a good track record of developing and managing affordable housing.  Deferred maintenance and tenant complaints will reflect poorly on a prospective borrower.

Community Development Loans and Investments: The bank plans to dedicate 12% of average Tier One capital over three years (2016-2018) to Community Development Lending and 8% to CRA-qualified investments, including grants.

• Lending goals include creating and strengthening partnerships with nonprofit affordable housing developers, identifying larger commercial loans with a community development purpose; and strengthen lending to nonprofit organizations.  We applaud these goals and encourage them to also identify opportunities for their community development loans and investments to create and preserve quality jobs.
• Investments could include a range of CRA-qualified investments, including LIHTC, NMTC, investments in CDFI’s, and credit unions; Mutual Funds; SBA Investments; and MBS and bonds.
• The bank plans to significantly increase its grant budget between 2015 and 2018 and to implement an RFP process that lays out its priorities, criteria, and how to apply.  They will align their grants to the other community development goals in the plan.

Banking / Deposit Products: The plan doesn’t offer any changes to banking products, but they do offer a low-cost account and seem open to feedback from the field.  We encourage them, as we do all banks, to take the NYC ID as primary ID and eliminate overdrafts on debit and ATM cards.

Perhaps the most critical piece is the CEO- and Board-level commitment to the CRA Plan. The bank created new executive board committees and staff positions to ensure that CRA is a central part of the bank’s operation from the CEO down through the bank, including training staff at all levels of the bank to support the plan in their sales and outreach activities.  They created two new CRA advisory committees in NY/NJ and Florida comprised of community based organizations to provide regular feedback.  And finally, commit to affirmative marketing and outreach to advertise the new products and partner with the nonprofit sector to achieve these goals.

ANHD appreciates the bank’s time and effort in drafting this plan, as well as the explicit willingness to evaluate their effectiveness and explore new products or changes to existing products in loans, investments and services to better serve LMI people and neighborhoods.

Of course, actions speak louder than words and Valley National must now put this plan into action.  We look forward to engaging with Valley National’s leadership throughout the next few years as the plan is enacted.  This is increasingly important as the bank seeks to grow through further expansion and acquisitions.

Read the full CRA plan here: https://www.valleynationalbank.com/PDF/CRA_Plan_2015.pdf  

 
CLICK HERE  for recent press on ANHD’s stand on key community development issues.