Huntington Bank on Friday pledged more than $16 billion in a five-year community development plan that it would implement after its proposed merger with Akron-based FirstMerit Corp.
The money would be used for mortgages and small-business loans in low- to moderate-income communities, community development and lending programs, additional funds for philanthropy and opening 10 new branch locations in low- to moderate-income areas or areas with a predominantly minority population.
Columbus-based Huntington is acquiring FirstMerit in a $3.4 billion stock and cash deal that is expected to be completed in the third quarter of this year.
Huntington worked on the agreement with the National Community Reinvestment Coalition (NCRC) and its community-based members and allies across the Midwest, including more than 100 locally based organizations within the combined eight-state footprint of the proposed merged company.
The plan, which would begin in 2017, includes funding:
• $5.7 billion in single-family mortgage lending in low- to moderate-income areas throughout the eight-state footprint.
• $6.6 billion in small business lending including within low- to moderate-income areas.
• $3.7 billion in community development lending and investment targeting affordable housing access and community-based loan funds.
• $25 million of additional grants and philanthropy primarily targeting housing and small-business credit service access.
The plan also calls for 10 new branch locations within low- to moderate-income areas and/or predominantly minority areas, adding community mortgage loan officers and forming a dedicated mortgage processing team to handle unique underwriting opportunities.
Huntington spokesman Brent Wilder said one new branch location is still to be determined, but the others will include three in Cleveland, three in Detroit, two in Chicago and one in Toledo.
While regulators in a proposed merger look at bank activities to make sure they are taking steps to ensure there is fair lending and equal access for all people, that doesn’t mean all banks are willing to negotiate with community groups to pledge money, said John Taylor, CEO of the Washington, D.C.-based NCRC.
Taylor lauded Huntington and its CEO Stephen D. Steinour, who attended the initial meetings with some of the community groups. Taylor said the $16 billion pledge was “a very very significant commitment” with substance.
Large banks will often announce a large pledge amount, with no details or measurements, he said.
“This is no joke. It’s not smoke and mirrors,” Taylor said. “This is the real deal. The key is to make sure they follow through on the commitment. We’ll be keeping a close eye on that.”
Concern about deal
However, at least one local community advocate is concerned about the agreement and protecting Akron.
“I think the national agreement is fine in terms of laying out a broad agenda,” said Lynn Clark, the former executive director of the Fair Housing Contact Service. Clark was present at several of the community group meetings at the invitation of other community leaders but was not representing any particular organization.
She said the agreement “is very vague about what it means for the local community and what are they doing to actually improve the numbers here?”
Clark worries that the overall money could be sucked away by larger communities.
Huntington spokesman Wilder said it’s too early to make any specific commitments, but there will be an advisory board of consumer groups to help allocate the money.
“We will definitely dedicate support to Akron within this plan,” he said.
Jesse Van Tol, NCRC chief of membership and policy, who served as lead negotiator for the agreement, said Clark’s concern is often a fear of advocates. However, she may not have seen the final agreement, which outlines that the pledged increase in residential and small-business lending is about an 18 percent overall monetary increase and that each bank market will see a similar increase, he said.
Additional pledges
Van Tol said there are additional pledges the bank made, including agreeing within three years to beat its peers in lending to people of color, women and other populations in at least 75 percent of its markets. Akron was specifically cited in that pledge, he said.
Malcolm J. Costa, president and CEO of Akron Summit Community Action Inc., said: “The importance of building on the historical FirstMerit role in Akron is beyond description. We are grateful for the support and assistance of the National Community Reinvestment Coalition in helping the community shape a most meaningful community benefits agreement.”
Costa’s organization was among nine Akron-area groups that worked on the plan. Others included Antioch Baptist Church, Catholic Commission of Summit County, Community Legal Aid Services, Inc., Fair Housing Contact Service, L.I.N.K.S. Community and Family Services, Mustard Seed Development Center, Nazareth Housing Development Corporation, Rebuilding Together Northeast Ohio.
The new commitments are in addition to ones Huntington made specifically to Akron in the merger proposal. Those included a pledge by Steinour to employ 1,200 in Akron within two years of the merger — the same number of workers currently employed by FirstMerit at its downtown headquarters, an operations center and branches in Akron.
The bank also pledged a separate $20 million for charitable contributions specifically for Akron and $5 million for Canton and Flint, Mich, and committed to opening an operations/call center in the city of Akron within two years.
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/betty