Bank watchdog group rates financial institutions’ CRA performance

By La Risa Lynch
Report cards were handed out for local banks serving Austin and neighboring western suburbs, and one bank in particular didn’t fare so well.

The Community Bank of Oak Park/River Forest (CBOPRF), 1001 Lake Street, Oak Park, IL, received a failing grade by the Monroe Foundation, a banking watchdog group that monitors financial institution’s community reinvestment act (CRA) obligations. CBOPRF officials disagree with the grade.

The 1977 act requires commercial banks to meet the lending needs of communities they serve. The act aims to prevent discriminatory lending policies against poor and minority communities.

Otis Monroe, the foundation’s founder, said CBOPRF received the grade because it had a substantial noncompliant ruling levied by the Federal Deposit Insurance Corp. FDIC released their ruling in April. Monroe said the bank has made little effort to correct the ruling, which is one of the lowest rankings a bank can receive.

“That institution received a substantial noncompliance because it does not lend or has focused any lending, have promoted any lending in the Austin community,” said Monroe, whose foundation released its bank evaluations during the West Side Ministers Coalition’s monthly meeting held August 4 at Columbus Park Refectory, 5701 W. Jackson Blvd.

CBOPRF acknowledged the FDIC’s substantial noncompliance rating, but contend that rating was given in 2008. CBOPRF’s Martin J. Noll said the bank has made great strides to the address issues raised in the FDIC’s rating. (Find your bank’s FDIC’s rating, click here.)

“We were criticized for not making an adequate number of loans in low-to-moderate income [areas],” said Noll, the bank’s CEO and chairman. But Noll explained that at the time of the FDIC’s rating, the bank’s “designated CRA assessment area” only included the affluent areas of Oak Park, River Forest and Park Forest, and not low-income areas. Since then, CBOPRF has expanded its assessment area to include Austin, Bellwood and Maywood.

To meet residents’ banking needs in those areas, the bank plans to hire a community lending specialist, create specialized lending programs for first-time homebuyers and provide financial literacy training. CBOPRF’s last two FDIC rating were satisfactory in 2004 and 1999.

“We are very confident that our continued targeted efforts will result in an improved rating in our next CRA exam,” Noll said in a statement.

This is the second year the Monroe Foundation graded area banks on their CRA performance. The grades are based on a bank’s capacity to build financial literacy, foreclosure intervention and meet communities’ lending needs.

The goal is to inform consumers on which banks are making real commitments to community reinvestments beyond what’s touted in banks’ glossy media kits and polished press releases, Monroe said.

Monroe said some banks pass off feel good grants as their CRA obligations. “They say that is CRA. That’s not,” Monroe said. “Those are good corporate citizen grants. That is not a commitment to help people open up bank accounts, learn how to budget a checkbook [or] … stay in their homes.”

He hoped the evaluations would hold banks accountable to communities, especially areas hit hard by foreclosures. The evaluations are part of the foundation’s community reinvestment organizing project.

The project pushes public policies that ensure banks that are depositors of city, state and county funds reinvests those monies responsibly. Banks, Monroe said are not going to change unless they fear a “mass exodus of public funds and public investments from their institutions.”

The foundation reviews certain banks based on recommendations from its coalition partners, including churches and community groups. This year, the foundation reviewed five banks with one receiving high honors even though that bank has no branches in Austin. PNC Bank, headquartered in Pittsburgh, received a pass with high honors grade for its work in financial literacy, homeownership counseling and workforce development.

“We can only succeed if our communities succeed,” said Fred Solomon, spokesperson for PNC Bank, which invested more than $60 million across the country in those initiatives.

Chase Bank and Bank of America also received a grade of pass because they supported similar efforts. Urban Partnership Bank, formerly Shorebank received a grade of “incomplete.”

Monroe said owners of the newly formed bank have yet to sit down with the community to address their financial needs.  Shorebank was seized in 2010 by federal regulators before being taking over by Urban Partnership Bank.

Austin Bank of Chicago and U.S. Bank were not reviewed this year because of time, Monroe said. U.S. Bank took over Park National Bank of Oak Park after it was seized by federal regulators in 2009.

However, Noll questioned the evaluations’ criterion. He said his bank has had little contact with Monroe or his foundation other than Monroe applying for a grant from the bank.

Monroe does acknowledge applying for a grant in May and then rescinded it before a decision was made. But he added that had no bearing on the evaluation. The grant was to provide housing counseling in Austin.

“We voluntarily withdrew the application, because we decided that a $2,000 grant was not a real commitment to community reinvestment,” Monroe said.