West Side banks applauded, criticized for lending practices

August 6, 2011
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A nonprofit organization specializing in economic development released “report cards” Thursday for several West Side banks, ranking their commitment to lending within Austin, keeping homeowners out of foreclosure, and supporting projects that promote employment and economic growth close to home.

Topping The Monroe Foundation’s list was PNC – a Pennsylvania-based bank with branches in North Lawndale, Cicero and Berwyn – that, according to the foundation, has given nearly $100,000 in investment grants and contributions to local nonprofits for financial education and home ownership and job development programs.

At the opposite end, earning a “failing” grade, was Oak Park’s Community Bank of Oak Park-River Forest, an institution reprimanded by federal regulators earlier this year for failing to invest in low-income communities.

But Community Bank leaders dispute its recent failing grade, claiming the report overlooks steps the bank has taken to increase its community-oriented lending.

Bank of America and J.P. Morgan Chase received “passing” grades, while Urban Partnership Bank – formerly Shore Bank – received an “incomplete.” The local Austin Bank of Chicago was not studied, because “there are only so many institutions we can look at in a given year,” said foundation CEO Otis Monroe.

The five banks were rated based on their compliance with the Community Reinvestment Act of 1977, which requires banks to meet credit needs of all segments of their communities, including low- and moderate-income areas.

Banks that passed were commended for offering counseling to prevent foreclosures and financial literacy workshops, and supporting nonprofits that offer similar training, Monroe said.

Lending and financial literacy are particularly important topics in Austin, where foreclosure rates remain among the highest in the city, according to data compiled by the Woodstock Institute.

In 2010, 887 Austin properties went into foreclosure – a drop of 6.4 percent from 2009 but still enough to place the community at No. 2 in Chicago, second only to the nearby Belmont Cragin neighborhood, which had 916.

Thursday’s report cards, presented at the monthly meeting of the Westside Ministers Coalition, was met with calls by state Rep. La Shawn Ford and Cook County Commissioner Bridget Gainer for new laws that would require banks that hold government investments to disclose how they will work with borrowers to help them stay out of foreclosure.

“Until banks fear the mass exodus of public funds and public investments taken from them … only then will they do the right thing,” Monroe said.

The Monroe Foundation’s report card was not the first time Community Bank has been targeted for its lending practices.

In April, the Federal Deposit Insurance Corp. gave the bank a “substantial non-compliance” rating for its CRA compliance – the lowest possible rating. Only 14 banks have received that score in the past decade, Crain’s Chicago Business reported.

Community Bank “has not demonstrated to us any real effort or commitment to changing their strategy” since then, Monroe claimed.

But Community Bank Chairman Martin Noll says the bank has taken numerous steps to improve its lending practices since 2008 – the year on which the “substantial non-compliance” rating was based.

“I’m not sure I understand, nor has Mr. Monroe explained to us satisfactorily, how his report card system works,” Noll said. “If he sat down with our bank and tried to understand what our bank is doing and has been doing for the past 2-1/2 years, since this God-awful and very disappointing rating from the FDIC, he would find out that … we have a 10-point plan in place that is working.”

Community Bank has hired a staff person to work with community organizations, started a first-time home-buyers program, and undertaken marketing and outreach programs in low-income communities, among other steps, Noll said.

“In terms of the Austin community, we’ve never forgotten them,” Noll said, adding that if an organization seeking a loan is responsible, “we’re willing to work with them.”

Noll said his bank has had little interaction with The Monroe Foundation, noting that Monroe applied for one of the bank’s “Challenge Grants” but withdrew its application.

At the other end of the report card, Monroe praised PNC, which purchased National City banks in 2008. PNC has contributed more than $45,000 in community development grants to the foundation’s community partners, according to a Monroe Foundation report.

In a statement issued Thursday, PNC Bank touted its affordable housing programs, financial education, workplace development programs and support of the Garfield Park Conservatory.

“We are proud of our ongoing work with non-profit and community organizations in the Austin area and pleased to be recognized for our efforts,” the statement said.

Park National Bank – an Oak Park bank popular for waiving fees for nonprofits and supporting groups in Austin – does not appear in the report either, as it was seized by federal regulators in fall 2009. It has since been turned over to U.S. Bank, another institution not included in The Monroe Foundation’s report.

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