Commitment to improve lending practices needed in U.S. Bank acquisition of Charter One branches

Written by Dan Fair on March 6, 2014 - 11:10am

U.S. Bank announced earlier this year it intended to purchase Chicago-area branches of RBS Citizens/Charter One Bank.

In a comment letter to the Office of the Comptroller of the Currency (OCC), Woodstock Institute encouraged the regulatory agency to approve the merger, with the condition that U.S. Bank make commitments to address public needs.

Prudential regulators such as the OCC, Federal Reserve, and Federal Deposit Insurance Corporation are required to consider the public’s interest when approving bank mergers and acquisitions. Assessing both of the institutions’ past records of serving underserved borrowers and communities indicates how well the merged institution will address public needs going forward.

Based on these criteria, Woodstock writes that while both banks are “making positive contributions to communities throughout Illinois,” there’s room for improvement. Specifically, Woodstock asks the OCC to approve the merger on the condition that U.S. Bank commits to increasing mortgage lending to African American and Latino borrowers, to borrowers in low- and moderate-income (LMI) census tracts, and to women. Woodstock also asked that U.S. Bank commit to maintaining or increasing the amount of grants and investments both institutions provide to the community and expanding its branch network in LMI neighborhoods and neighborhoods of color.

Woodstock asks the OCC to  approve the merger on the condition that U.S. Bank commits to increasing mortgage lending to African American and Latino borrowers, to borrowers in low- and moderate-income (LMI) census tracts, and to women.

The letter includes analysis of 2012 Home Mortgage Disclosure Act data, small business lending data, and branching data to provide more information on where U.S. bank is meeting or exceeding expectations and where it needs improvement, and found that:

  • U.S. Bank underperformed in mortgage lending to underserved populations, compared to its peers, while Charter One outperformed its peers.
  • Both banks have strong track records in small business lending.
  • Both banks underperform in branch presence in LMI and majority minority census tracts. The letter recommends the OCC prohibit U.S. Bank from closing any branches of either bank in these areas.

The OCC is expected to review comments on the proposed acquisition and make a decision later this year.

Read the full comment letter.

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