On a list of Community Reinvestment Act performance evaluations released Tuesday by The Office of the Comptroller of the Currency, two banks received the second-lowest rating of “needs to improve” — including one whose proposed merger recently failed.
OceanFirst Financial Corp.’s rating fell from satisfactory to needs to improve “due to evidence of discriminatory or other illegal credit practices,” the OCC report states.
OceanFirst, of Red Bank, New Jersey, announced plans in November 2021 to merge with Partners Bancorp of Salisbury, Maryland. The deal, however, fell through a year later, when the banks agreed to terminate the $186 million transaction “after careful consideration ... and the progress made.”
Partners has since found a new marriage with Linkbancorp, announced in February. The closing of that merger, though, remains subject to regulatory approvals and other closing conditions.
OceanFirst’s CRA rating decline was disclosed Aug. 1, but the newly public documents are dated Nov. 1, 2021.
The possible ratings are outstanding, satisfactory, needs to improve, and substantial noncompliance; and of the 27 evaluations made public, 10 banks were rated outstanding, 15 were rated satisfactory, and two were rated needs to improve. No banks received the lowest rating.
The CRA evaluation and the initial merger announcement came within the same week, but it remains a question whether the results of OceanFirst’s evaluation were made available to Partners or were a consideration in the eventual dissolution of the deal.
Representatives for OceanFirst and Partners did not respond to a request for comment from Banking Dive.
In its report, the OCC said OceanFirst “engaged in a pattern or practice of unlawful discrimination in violation of the Fair Housing Act and its implementing regulations by failing to provide equal access to credit to borrowers seeking mortgages secured by properties in majority non-White or Hispanic census tracts.”
In Camden, a beleaguered New Jersey city not far from OceanFirst’s headquarters, qualified investments and community development services made by OceanFirst were “not effective and responsive in helping the bank address community needs,” the OCC found.
The bank made a limited number of investments, grants and donations under its programs; and conducted or supported very few community development services, the regulator’s report said.
The findings prompted the lower CRA rating, and the OCC said it “will consider any information that this institution engaged in discriminatory or other illegal credit practices, identified by or provided to the OCC before the end of the institution’s next performance evaluation in that subsequent evaluation, even if the information concerns activities that occurred during the evaluation period addressed in this performance evaluation.”
LinkBank, Partners’ soon-to-be, er, partner, received a satisfactory CRA rating in its most recent July 2021 report, according to the Federal Financial Institutions Examination Council.
