U.S. Bank lays out $100B community benefits plan tied to merger

Dive Brief:

U.S. Bank announced a $100 billion community benefits plan Monday, aimed at winning community activists' support for the lender’s proposed acquisition of MUFG Union Bank.
U.S. Bank CEO Andy Cecere first teased the five-year, $100 billion plan two months ago at a public hearing on the merger.
As part of the plan, U.S. Bank would commit to increase mortgage lending by 20% nationally and 30% to nonwhite and low- to moderate-income (LMI) borrowers in California. Notably, the plan would also require U.S. Bank to analyze demographics and consider community input before closing any branches in an LMI area.

Dive Insight:

The Minneapolis-based bank developed its plan in concert with the National Community Reinvestment Coalition (NCRC) and California Reinvestment Coalition (CRC), two community groups that had withheld their support for the merger.

The CRC and 66 partner organizations expressed concern, in a November letter to the Federal Reserve and the Office of the Comptroller of the Currency (OCC), that the proposed merger would harm low-income, rural and minority borrowers, and asked U.S. Bank for a plan to support local investments and avoid branch closures.

The bank finalized the community benefits plan after the hearing and listening sessions with more than 200 community groups, it said.

“Banks are the economic engines of our communities. As such, we can make meaningful and significant impacts in supporting the ability of low- and moderate-income (LMI) communities and communities of color to access capital and build wealth,” Cecere said in a press release Monday. "Our CBP is outcome-focused and blends the best programs and thinking of U.S. Bank and MUFG Union Bank. We want our actions today to create a ripple effect that will lift future generations.”

Among other efforts in the plan, U.S. Bank pledged to increase lending to small businesses and farms by 15% nationally and 25% in California. The bank also would develop special-purpose credit programs aimed at boosting small-business lending, mortgage lending and the development of affordable housing. About 60% of the plan's commitments would support efforts in California.

Jesse Van Tol, president and CEO of NCRC, called the plan "a milestone not only because of its overall size but also because of the scale of increases committed for mortgage and small business lending, affordable housing, environmental and social impact lending, and for the plan’s clear focus on racial equity and access to credit directed specifically to communities of color.”

In terms of scope, U.S. Bank's community benefits plan surpasses a similar $88 billion agreement PNC announced when it acquired BBVA’s U.S. footprint last year.

“We appreciate the commitment from U.S. Bank and the personal leadership of Andy Cecere to collaborate with us, CRC and our members to develop the largest ever community benefits plan,” Van Tol said.

Even with the backing of community groups, though, the deal needs sign-off from regulators. When the acquisition was announced in September, U.S. Bank and MUFG Union Bank estimated the deal would close in the first half of 2022. However, U.S. Bank said in a regulatory filing last week that time frame is "uncertain," according to American Banker.

The Biden administration ordered the Justice Department, Fed, OCC and Federal Deposit Insurance Corp. (FDIC) in July to update guidelines to “provide more robust scrutiny” in bank mergers.