Deposits and the Reinvestment Quantity & Quality Indexes: Local deposits continue to increase, but reinvestment declined sharply, down nearly 30%. Deposits overall are up less than 1% from the prior year, and up 25% from 2014 to 2017, reaching $1.23 trillion. From 2016 to 2017, deposits increased 4.6% among retail banks and 5.9% outside of Manhattan. Half of all banks increased deposits but decreased reinvestment in New York City. And only five banks reinvested over 5% of their local deposits, down from 11 in 2016. Ten of 24 banks had a quality score over “3”.
Branches and Bank Products: The overall number of branches among banks in this study is down by just three, and down 7% in lower-income tracts. Some banks closed branches, while others opened; the distribution of branches remains inequitable. Core Manhattan is inundated, while lower-income neighborhoods still lack sufficient branches and ATMs. The Bronx is still the most unbanked area in the City, though 2017 saw a net increase of three branches. Five branches closed in lower-income tracts overall and 11 opened. Some new accounts appear more accessible to lower-income New Yorkers, but many remain out of reach. Overdraft fees declined slightly but were still well over $6 billion. At six banks, including two of the largest banks, overdraft fees accounted for over 40% of the banks’ service fees and at two banks, they make up over 10% of consumer transactional deposits. While many banks accept New York City’s municipal identification card, IDNYC, as secondary identification, no bank in this study accepts it as primary identification.
Multifamily Lending: This category of lending declined sharply again among the banks in this study, both overall and this year in lower-income neighborhoods (down 26% overall and 29%, in LMI tracts). This is distressing but in-line with general commercial mortgage lending trends. The number of multifamily loans qualifying for community development declined 29% and the dollars were down 36%. While percentages of buildings documented as being in physical distress remain low, we know from experience that many buildings where harassment and displacement occur do not appear on distressed lists; if a landlord successfully displaces tenants, the building may never fall into distress. Rising rents and sales prices – especially in historically more affordable neighborhoods – increase the pressure on lower-income tenants, putting them at risk of displacement. But banks and non-bank lenders continue to lend to known bad actor landlords. Responsible lending by banks should not fuel displacement; banks can work with tenants and tenant organizers so they can proactively ensure that tenants in their buildings are protected and respected. New tools exist to identify bad-acting landlords and hold banks accountable for supporting them, but they must be enforced.
1-4 Family Lending: The number of home purchase loans among banks in this study was relatively stable from 2016-17, hovering over 14,150 loans but still below the 16,300 in 2013 levels. Lending to lower-income borrowers decreased by 8%, barely staying over 1,000 loans, well below the 1,400 loans in 2013. As CRA-regulated banks are pulling out of 1-4 family lending, the rise of non-bank lenders continues, particularly in refinance loans Federal Housing Administration (FHA) lending. This trend threatens to undermine CRA goals because nonbank lenders are not covered by the same regulatory oversight, including the CRA. Nearly 30% of home purchase loans and over 55% of refinance loans were made by non-bank lenders, as well as over 90% of FHA home purchase loans and refinance loans. Meanwhile, racial disparities persist. 22% of New Yorkers are Black and 29% Hispanic, yet fewer than 8% of home purchase loans in NYC went to Black or Hispanic borrowers. The vast majority of banks in our study performed worse than that; at each of the “Big Four” banks (Wells Fargo, Chase, Bank of America, and Citibank), fewer than 5% of their home purchase loans were to Black borrowers, and at or below 7% were to Latino borrowers of any race in 2017.
Community Development Lending & CRA-Qualified Investments: The amount of money dedicated to community development loans and investments decreased by nearly 30%. The most notable decline was in Low Income Housing Tax Credits (LIHTC), one of the most important sources of financing for affordable housing in New York City. Among banks for which we have data from 2013 to 2017, LIHTC investments are at their lowest level in five years. Additionally, LIHTC dollars are down 25% from 2016. The uncertainty leading up to the eventual tax cuts at the end of 2017 likely drove much of this decline. In 2017, lending to nonprofits decreased in volume and dollar amount. However, in the midst of this decline, we are pleased to note that the number of community development loans to neighborhood-based community development corporations (CDCs) increased.
Economic Development & Small Business Loans: The dollar amount of community development loans, investments, and grants for economic development all decreased in 2017. As in prior years, the investments are concentrated in just a few banks: the majority made no investments for economic development, 13 made community development loans for economic development, and 14 made grants. But quality matters as much as quantity, and there is some positive news on that front. We are pleased to see banks continue to engage with nonprofit developers and the City to use and support the City’s new Industrial Developer Fund to support affordable manufacturing space. Among banks in this study, small business lending increased close to or over 50% overall and in low- to moderate-income tracts. However, much of that was driven by Chase’s credit card loans which now capture revenue size; excluding Chase’s credit cards, the number of loans decreased, and the dollars increased much less.
CRA-Eligible Philanthropic Grants: Grants were up 2.7% by volume, but down 8% by dollar in 2017. The trend of consolidation, with larger grants going to fewer organizations, continues, but not at the same scale as in prior years. Most banks continue to dedicate less than one tenth of one percent of their local deposits to grants. Grant-making to neighborhood-based organizations decreased 14% by volume but increased 43% by dollar in 2017; much of that increase was driven by a large grant at one bank. At four of the largest banks and almost all of the smaller banks, at or over a third of grants were to neighborhood-based organizations.
