ANHD 2016 Building the Community Development Movement
M&T Bank to acquire Hudson City Savings Bank and complete one of the biggest mergers of 2012
Consolidations, mergers, and fewer banks are dominant themes of the banking industry over the past 15 years and especially so following the financial collapse of 2008. As mentioned in an earlier post, we are concerned that these trends threaten the local community savings banks we once knew to reliably provide the “bread and butter” bank activities that everyday New Yorkers need, thus leading to less competition and fewer options for consumers.
The fact that one of the largest mergers of 2012 does not involve the big national banks might be a sign of things to come as the bigger banks slow down their acquisitions and regional banks pick up the slack. The merger in question is happening right in our backyard and will eliminate one more savings bank. While we are not opposed to the deal, any merger with an out of state institution threatens the local focus on New York City and we must be vigilant.
M&T Bank is seeking to acquire the New Jersey-based Hudson City Savings Bank. Hudson City was once well-regarded as a local dependable bank serving its local New Jersey communities, but is now considered one of the worst actors in the region. The bank barely received a satisfactory rating in their last CRA exam, exhibiting potentially discriminatory lending and services and subpar community development lending and investments. In 2011, Hudson City actually originated more home purchase loans than M&T in NYC, yet only one went to an African American borrower and 11 to Latino borrowers; not one went to a low-income borrower.
M&T Bank, on the other hand, has a large footprint along the east coast, with a relatively small but significant presence in New York City. M&T has demonstrated a commitment to the communities in which it operates, as evidenced by a strong CRA division in our city with dedicated, knowledgeable staff. Among other things, they are particularly recognized for their contribution to philanthropy citywide through their grants program and leadership role in strategic donor collaboratives that support community organizing, community development, and affordable housing. Of course, M&T has areas to improve upon as well, particularly in their low volume of multifamily loans.
The Community Reinvestment Act is a powerful tool to hold banks accountable to help meet the credit needs of local communities, and is particularly relevant when banks merge because their CRA rating impacts their ability to acquire another institution. Federal regulators are required to solicit public feedback as part of the merger application process. However, it only works when the public participates. Coincidentally, M&T’s CRA exam is occurring simultaneously and also requires regulators to solicit public comments. These are key opportunities for community groups and individuals to voice their concerns. While we have nosignificant objections to the merger based on M&T’s performance, we are concerned by Hudson City’s performance. ANHD is submitting comments urging regulators to insist that M&T make an explicit commitment to maintain and increase its strong New York City CRA division. We also want the regulators to ensure that M&T works to reverse the subpar practices of Hudson City and in no way replicate them in New York City or elsewhere.
As the banking industry consolidates, there are fewer opportunities to weigh in on such deals, which often fly under the radar. We must take every chance to do so to push each bank to do better, and to raise the bar across the industry.