New Jersey Citizen Action files protest against proposed bank merger
New Jersey Citizen Action files protest against proposed bank merger
Newark–New Jersey Citizen Action filed a formal protest on July 31st with the federal Office of the Comptroller of the Currency challenging the proposed merger of Columbia Bank and Atlantic Stewardship Bank. The letter of protest notes that neither bank has met its obligations in New Jersey under the Community Reinvestment Act, a federal law enacted in 1977 with the intent of ensuring that banks meet the credit needs of low and moderate-income neighborhoods.
“We believe that when banks get bigger they must get better,” said Phyllis Salowe-Kaye, Executive Director of New Jersey Citizen Action. “Based on the lending history of both banks this seems highly unlikely to happen.”
Public data shows that despite the fact that Columbia Bank and Atlantic Stewardship Bank serve parts of New Jersey that include significant minority populations, both have a deeply troubling history of not lending to African-Americans and Latinos. It also appears both banks failed to prioritize lending to low and moderate-income communities.
“Publicly available data for both banks strongly suggests that neither bank has met their CRA obligations in New Jersey,” said Beverly Brown Ruggia, NJCA Financial Justice Organizer. “According to their merger application, no plan exists for the newly created bank to correct their poor lending practices to minority and low and moderate-income communities in order to meet those obligations.
Data from the Home Mortgage Disclosure Act (HMDA) and others sources on Colombia Bank and Atlantic Stewardship Bank reveals that:
- Between 2015 and 2017 Atlantic Stewardship Bank failed to accept a single home purchase loan application (0 percent) from an African American. For other lenders in the same market, 7 percent of all accepted applications were from African American buyers.
- Atlantic Stewardship Bank did not make any home purchase loans in low and moderate- income neighborhoods.
- Between 2015 and 2017, denial rates for African American and Latino applicants by Columbia Bank far exceeded the market average. African American applicants were 3.5 times more likely to be denied and Latinos 3.8 times more likely that white applicants to be denied a loan by Columbia Bank. On the other hand, African American applicants were 1.9 times more likely to be denied and Latinos 1.5 times more likely than white applicants to be denied a loan by other banks in the same market.
- Columbia Bank avoids lending in low to moderate income communities and high minority areas. For example, the bank makes loans in the suburbs outside of Paterson and Camden but does not make loans to homebuyers inside those cities.
- Low and moderate-income and minority homebuyers are more likely to use FHA loans to purchase homes. But only 8% of the home purchase loans Columbia Bank made from 2015 to 2017 were FHA loans, compared to 22% of home purchase loans made by other banks in the area. Atlantic Stewardship made no FHA home purchase loans. This suggests that the banks are not making a good faith effort to serve the needs of all potential homebuyers in the markets where they operate.
The NJCA protest letter urges the OCC to deny the merger application and to require a comprehensive and concrete CRA plan for the banks that will end unfair lending and retail service practices.
“All bank mergers must provide demonstrable benefit to a community,” said Chris Estevez of Latino Action Network. “Given the history of these two banks we need to hold them accountable to a reasonable community standard. We should not sanction a profitable merger for banks with a this poor history of lending to the Latino community and other communities of color.”
“NJ banks have a history of discrimination against communities of color not only in their lending practices but also by not opening branches in our communities, creating banking deserts,” said Bruce Davis, Economic Chair of the New Jersey NAACP. “My organization is strongly opposed to the merger of Columbia Bank and Atlantic Stewardship Bank as not being in the interests of the communities we represent.”
“Given the history of these banks, this merger requires an appropriate level of scrutiny by the OCC to ensure the needs of all low and moderate-income communities are met,” said Salowe-Kaye.
NJCA_Letter_Opposing_Columbia_Bank_Atlantice_Steward_Bank_Merger_July_2019
New Jersey Citizen Action is a statewide progressive advocacy organization fighting for social and economic justice. We put progressive values into action.
