New York Community Bancorp has reached an agreement with a key community advocacy group as it seeks to pave the way for approval of its merger with Flagstar Bancorp.
Under the agreement with the National Community Reinvestment Coalition, the New York community will provide $28 billion in loans and other support to neighborhoods and small businesses.
The deal, which comes at a time when the Biden administration is signaling its intention to apply greater scrutiny to bank mergers, could help the Long Island company, with assets of $57.9 billion, secure the approval of the Flagstar agreement. The community reinvestment plan covers the footprints of both banks.
“This multi-year agreement reflects our commitment to providing greater economic opportunity” to low- and moderate-income communities and communities of color, and to “closing the racial wealth gap that exists today,” said President- New York Community Chief Executive Thomas Cangemi. in a press release.
Jesse Van Tol, chief executive of the NCRC, said in the same statement that the agreement represents “an important commitment to increase investment, services and lending for low- and middle-income communities and neighborhoods of color where these banks operate”.
The New York community deal for Flagstar, which is based in Troy, Michigan, was announced in early 2021 and was originally expected to close by the end of last year. In October, community leaders in New York told analysts that the closure would be postponed to 2022.
Under the deal announced Monday, the combined bank, which is expected to have $85 billion in assets, will provide $21.7 billion in community development loans and investments. A portion of the funds will be used to help develop affordable housing strategies with local organizations, according to the press release.
The New York Community will also provide $5.7 billion in new mortgages, refinances and home improvements, $10 million in down payment assistance, $542 million in small business loans and $16.5 million in philanthropy.
The bank has also pledged to maintain customer access to select Flagstar products and hire existing branches in their communities. Flagstar currently operates branches in Michigan, Indiana, Wisconsin, Ohio and California.
The Biden administration has ordered federal regulators to look for ways to update their bank merger review procedures to apply a closer examination how these agreements affect communities.
The National Community Reinvestment Coalition is negotiating payouts to communities of color and low-income areas impacted by bank mergers. Since 2016, he has negotiated $417 billion in investments with 17 banking groups.