ANHD CRA / Bank Advocacy Work

OrganizeOhio! Fair Lending Conference

Jaime Weisberg, Senior Campaign AnalystANHD

November 13, 2015

The Association for Neighborhood and Housing Development

• ANHD represents over 100 local Community Development Corporations (CDCs) and other neighborhood based organizations focused on affordable housing, equitable economic development

• ANHD was founded in 1974 with the mission to help low-income communities thrive and to ensure that all New Yorkers can live in decent, affordable housing and neighborhoods. ANHD members came together at a time of major disinvestment and redlining in NYC and urban communities nationwide. – ANHD was part of the movement to pass the CRA. The focus then was to “Fill

in the holes” – build housing, get banks to open and lend, and bring banks to the table as partners. Over the past 30 years, ANHD has been a leading voice for affordable housing in NYC and ANHD members have built over 100,000 units of housing.

• ANHD Current Focus: Building and Preserving Affordable Housing, Expanding equitable economic development, and increasing the quantity and quality of Bank Reinvestment in NYC

• Original Policy Research to engage ANHD members and influence policy makers and regulators

• Training and Capacity Building to support developers and community / tenant organizers. – Training and technical support for CDC developers– Capacity building training, policy research, and technical support

for organizers– Training for the next generation of organizers and planners through

apprenticeship programs, advanced organizer trainings, and graduate fellowships

• Grassroots Campaigns to achieve policy change – legislative, regulatory, and other

The Association for Neighborhood and Housing Development

• Preserving private multifamily affordable housing: * 2/3 of New Yorkers are renters; nearly half are rent-regulated

* 56% renters are rent-burdened; 30% severely rent-burdenedo Preserving rent-regulated buildings & units; credit for loans to

purchase, refinance, and maintain multifamily housing. o Finance responsible landlords that will maintain the buildings and

respect tenant rights. Banks to help transfer properties to responsible owners when the landlord does not meet that criteria.

Why NYC Cares About CRA

• Access to Credit: affordable home loans, small business loans, education and small dollar loans; secured credit cards and loans to build/repair credit

• Access to Banking: branches, affordable accounts, transparent fees, language access and flexible ID requirements, hours, access

• Elimination of predatory products, such as payday lending and high cost credit cards, personal, and prepaid cards

o Community Development Loans, Investments and Grants:o Build and preserve real affordable housingo Create and preserve quality Jobs for underserved

communitieso Support small businesseso Build and maintain community facilities: community centers,

healthcare, schools, access to quality foodo Support community-based nonprofits: general operating

support, community organizing, housing counseling, small business supports, workforce development, and more

Why NYC Cares About CRA

ANHD’s CRA & Bank Work• Research reports, including – Annual State of Bank Reinvestment in NYC report – Detailed research on bank reinvestment and

economic development• Participation at time of CRA exams• Bank Merger / Acquisition advocacy• Regulatory advocacy– HMDA modernization, CRA Q&A’s, and other

regulatory changes• Member support to engage with banks on an

ongoing basis: Tenant & community organizers and developers

Annual report of CRA Activity and bank reinvestment in NYC, with detailed analysis of 25 commercial, savings, and wholesale banks operating in NYC

State of Bank Reinvestment in NYC

Includes Industry Trends, Analysis, and Recommendations on major areas of Bank Reinvestment:• Deposits • Branching Patterns & Bank Accounts• Core Lending: Multifamily, 1-4 Family, and Small Business lending• Community Development Activity: Staff, Community

Development Lending, CRA-Qualified Investments, and Philanthropy / CRA-Eligible Grants

Bank Reinvest-ment

% Chg $'s 2012-13

Overall Reinv. Index

% Chg Index 2012-13

Largest Banks (Greater than $50 B assets)M&T Bank $293 7% 11.00% -2%Wells Fargo $1,181 86% 8.90% 70%Capital One $696 -32% 3.00% -34%Citibank $1,319 32% 2.30% 20%Bank of America $378 38% 0.80% 38%HSBC $389 -25% 0.70% -28%TD Bank $78.82 -60% 0.60% -63%Santander $37.69 20% 0.50% 13%Chase $1,270 22% 0.30% 13% Smaller Banks (Fewer than $50 B Assets)NY Community $2,945 56% 50.80% 41%Carver $46.14 34% 9.40% 42%Signature $1,030 13% 9.00% -4%Dime $126 -36% 6.38% -41%Astoria $204 -49% 5.56% -48%Ridgewood $109 231% 4.00% 214%Valley National $61.64 202% 3.85% 202%Flushing* $32.46 -8% 2.70% -3%Popular Community $64.16 -38% 2.60% -35%Apple $114 77% 1.70% 14%Emigrant $10.92 9% 1.30% 310% WholesaleMorgan Stanley $123 -18% 0.90% -37%Deutsche Bank $17 16% 0.60% -11%Goldman Sachs $257 -17% 0.40% -31%BNY Mellon $261 -59% 0.20% -60%

2013 Overall Reinvestment Volume Index: Measures volume of reinvestment loans and investments to locally held deposits

2013 Overall Reinvestment Quality Score: Measures how loans, investments, and services reach lower-income residents and neighborhoods

Largest Banks Smaller BanksCapital One 3.64 Popular Comm. 4.33

Chase 3.37 Carver 3.89M&T 3.33 NY Community 3.23Bank of America 3.32 Apple 3.08HSBC 2.94 Ridgewood 2.89Citibank 2.72 Signature 2.5TD Bank 2.58 Dime 2.3Wells Fargo 2.34 Astoria 2.26Santander 2.27 Valley National 2.08Wholesale Emigrant 1.5Deutsche Bank 3.59 Flushing 1.37Morgan Stanley 3.19Goldman Sachs 3.14BNY Mellon 1.5

• CRA Exams– Submit comments on CRA exams– Speak to regulators about community needs– Educate bank leadership on community needs

• Comments and advocacy at the time of mergers– Recent past mergers: BankUnited-Herald, Valley

National-1st United– Current: Goldman Sachs, NY Community Bank

ANHD Believes that no merger or acquisition should be approved without a CRA Plan

Participation in the CRA process

• New Jersey Based bank with 31 branches in NYC• In 2014, Valley National Applied to acquire Florida-based 1st United

Bank• ANHD, NJ Citizens Action and NCRC contested the merger:

– 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 NYC, not one home purchase loan in 2012 went to an African American or Latino borrower and few of their loans overall went to LMI borrowers and neighborhoods.

– Just one of their 102 NYC multifamily loans in 2011 and 2012 was in a low- or moderate-income tract.

– Additionally, the bank had not made one CRA-qualified investment, including grants, in NYC in the prior 3 years.

– In the bank’s 2013 CRA exam by the OCC, examiners used the word "poor" or "very poor" 47 times to describe the bank's lending performance.

• We submitted comment letters, spoke with regulators, and met with the bank’s CEO and senior staff

Valley National Example

• In late 2014, the OCC granted a “conditional approval” that required a CRA Plan that is to be public and enforced by the OCC

• Highlights of the plan:– Institutional Support by the CEO, board, and senior staff– First time home buyer program, with $30 million allocated in support– Small business lending unit to concentrate on smaller loans– Ambitious, measurable goals to finance multifamily apartments in

LMI tracts and to reach LMI borrowers and borrowers of color with home and small business loans.

– Increase in grant budget and increases in Community development lending and investments, particularly for affordable housing and economic development

Valley National Example

History• Based in NY. Through multiple acquisitions, it now operates

in 5 states: New York, Florida, Arizona, Ohio, New Jersey• Long been one of the largest multifamily lenders in NYC• In the early-mid 2000’s, ANHD members raised concerns

about NYCB’s lending practices: – Overleveraging: putting too much debt on the buildings – more

than the buildings could sustain given the rents and expenses– Lending to unscrupulous landlords who harassed tenants and

didn’t maintain the buildings in good condition– When the economy collapsed, loans defaulted, buildings fell

into foreclosure, and conditions worsened– When ANHD commented to the FDIC in 2011, over 19,000

units, nearly 14% of NYCB’s portfolio, were in distress• We used all tactics: protests, rallies, meetings with the

bank, comments for CRA exam, meetings with regulators

New York Community Bank (NYCB) Example

• Organizing got results from the bank:– Came to the table and committed to improving its

practices– Participates in the First Look program – a program

designed by ANHD, City Council, and allies to transfer distressed buildings to preservation-minded developers • NYCB was the first bank to work through the program to

transfer a very distressed building in the Bronx to a community-minded developer –

New York Community Bank (NYCB) Example

Current• NYCB Merger #1: Internal merger of NY

Community Bank and NY Commercial Bank• NYCB Merger #2: NYCB to purchase Astoria Bank

New York Community Bank (NYCB) Example

Current• ANHD submitted comments on the internal merger and

will do so for the Astoria merger• NYCB remains the largest lender in the city – conditions in

their buildings appear much better than they were in 2008-10 and we very much appreciate the responsiveness of NYCB staff since that time.– 3,991 buildings in portfolio (over 180,000 units) – only 10 “at

risk” of physical and financial distressHowever, signs of overleveraging do not necessarily appear in these indicators, especially when a bad-actor landlord successfully moves out lower-rent paying tenants through harassment and eviction tactics. We are concerned by some of the landlords NYCB has loaned to in recent years.

New York Community Bank (NYCB) Example

Current• NYCB has about $49 billion in assets – the Astoria

merger will push it over the $50 billion mark, making it one of the larger banks in the city.

• All banks, especially those of this size, must demonstrate a proactive commitment to CRA.

• A thoughtful comprehensive CRA plan – developed in partnership with the local communities it serves – is the best way to demonstrate this commitment:– concrete, measurable goals to benefit lower-income

communities and communities of color with banking products, core lending, and CRA dollars

– Dedicated, empowered staff with adequate resources– Strong partnerships with the nonprofit community and a

commitment to support nonprofit developers

New York Community Bank (NYCB) Example