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NCRC Announces Expanded Community Benefits Agreement With First Merchants Bank

The National Community Reinvestment Coalition and First Merchants Bank recently revised their Community Benefits Agreement, bringing the bank’s total commitments to low- and moderate-income (LMI) communities to $2 billion over the next five years. The updated CBA will benefit NCRC members and the communities where they work as First Merchants makes pledges that better expand and reflect the bank’s positive community impact goals as a corporation. 

This significant expansion of First Merchants’ commitments to its communities shows the good that can come about when a bank listens to the people it serves and takes their ideas and concerns to heart,NCRC President and CEO Jesse Van Tol said.First Merchants has been a strong, engaged partner throughout this process, just as they were in our initial conversations in 2020. This new expansion on that previous agreement will bring large amounts of thoughtfully targeted capital to bear on the redevelopment, homeownership expansion and local economic growth needs in communities served by First Merchants across the midwest.

Since 2016, NCRC has facilitated similar community benefits agreements with 19 bank groups worth more than $541 billion for mortgage, small business and community development lending, investments and philanthropy in LMI and under-resourced communities.

NCRC’s prior community benefits agreement with First Merchants was unveiled in June of 2020. This revision represents a significant advancement in the magnitude of the financial benefits across the communities the bank serves. The commitments – which include more than half a billion dollars in direct purchase and home improvement loans to marginalized communities and almost three-quarters of a billion dollars in new resources and staffing capacity on small business lending – are also extended to all regional markets in Indiana, Illinois, Ohio and Michigan. A more detailed summary of the updated provisions of the agreement can be found below.

“The updates will strengthen First Merchants’ role as an attentive and active partner in the communities that it serves, benefiting businesses and consumers,” said Mark Hardwick, CEO of First Merchants. “Because of our commitment to these initiatives, we are helping to enhance the financial wellness of the diverse communities we serve, especially among businesses and consumers who have been historically underserved by the financial sector.”

Numerous NCRC member organizations attended listening sessions with First Merchants executives during the process of creating the revised agreement. Feedback from groups like HomesteadCS in Indiana and the Detroit-based community groups U SNAP BAC and Fair Housing Center of Metropolitan Detroit helped shape the expansion of the earlier agreement. A full list of NCRC member organizations that signed onto the agreement can be found below.

“HomesteadCS is thrilled that First Merchants Bank is continuing to work with local organizations in their footprint to ensure that their products are accessible to persons from all walks of life.  We look forward to continuing this relationship,” said Marie Morse, Executive Director of HomesteadCS.

“The CBA is a stepping stone to closing the gap that exists in low to moderate-income households,” said Lakesha Hancock, Direct of Housing Counseling at U SNAP BAC. “First Merchants and other financial institutions must make equitable investments to ensure housing opportunities for all which is a human right.”

“We are in a crisis as to affordable housing. This community benefits agreement with First Merchants is a step in the right direction by increasing the availability of affordable loans,” said Fair Housing Center of Metropolitan Detroit Executive Director Steve Tomkowiak.

Leaders at First Merchants point to the bank’s brand promise and vision as their “north star” for being attentive to the needs of its communities by consistently and genuinely helping businesses and consumers in those communities prosper. 

“Our ‘listen first’ approach is different from other banks. We are fortunate to have strong relationships with the NCRC and its partners to guide us in identifying gaps and proactively engaging with our diverse communities and employees to learn what is important to them and how we can help. This collaborative process allows us to improve our services and meet the needs of our diverse communities where our impact matters most,” said Scott McKee, Senior Vice President and Director of Corporate Social Responsibility at First Merchants.

The update to First Merchants Bank’s community benefits agreement was initiated by the acquisition of Level One Bank on April 1, 2022. The acquisition increased First Merchants’ asset size by about $2.4 billion. In this updated community benefits agreement, First Merchants is expanding its commitments from $1.4 billion to $1.97 billion.

The goals include mortgage lending to low-to moderate-income (LMI) borrowers and communities, small business lending in LMI and rural communities, community development lending and investments, philanthropy and community engagement, and banking center distribution and access.

First Merchants’ latest initiatives attentively help community members prosper throughout their financial journey. They include an innovative home improvement loan product aimed at creating more opportunities for home improvement financing and the national Cities for Financial Empowerment Fund’s certification of First Merchants Simple Access checking as a safe, affordable account. In addition, First Merchants recently launched a financial wellness program to provide financial education and powerful planning tools to customers as well as access to one-on-one guidance from welcoming, dependable, and attentive bankers. For example, in April 2022, First Merchants opened a banking center in the Northland neighborhood of Columbus, Ohio, focused on helping revitalize that community by increasing financial wellness, supporting greater access to home ownership, and facilitating economic growth and vitality in the area.

First Merchants looks forward to using the amended community benefits agreement to better help its communities prosper in a very direct and attentively involved way.

The final agreement has been endorsed by the following NCRC member organizations:

Amandla CDC

Bridging Communities 

Chicago Community Loan Fund

Community Economic Development Association of Michigan (CEDAM)

Continuum of Care Network of NWI

Detroit Hispanic Development Corporation

Fair Housing Center of Central Indiana, Inc.

Fair Housing Center of Metropolitan Detroit

GenesisHOPE

Homes on the Hill Community Development Corporation

HomesteadCS

Matrix Human Services

MY Project USA

New Hope Community Development

Northwest Indiana Reinvestment Alliance 

Ophelia Steen Family and Health Center

Prosperity Indiana

Southwest Detroit Business Association

Southwest Economic Solutions

SunRaise Consulting, LLC

U SNAP BAC

Urban Neighborhood Initiatives 

Wayne Metro CAA

Summary Of The Updated Community Benefits Agreement Between The National Community Reinvestment Coalition and First Merchants Bank

First Merchants Bank will increase their commitments from the previous CBA established in 2020 to lend, invest, or donate more than $1.97 billion throughout their branch network, focusing on borrowers with low-and-moderate incomes (LMI), LMI communities, and people and communities of color over the same five-year period of 2021 through 2025.

Mortgage Lending to the Underserved

Community Benefits Commitment:    $537 million over 5 years

First Merchants has updated and increased their separate and specific home purchase and home improvement lending goals for African Americans, Hispanics, Asians, communities of color, borrowers with LMI, and communities with LMI. Unit based goals for each group of underserved borrower and neighborhood have been updated to reflect more recent lending performance of First Merchants and results in significant increases from the first agreement. For example, the new agreement commits First Merchants to providing an additional 800 home purchase and home improvement loans to Black borrowers over the same five year period as before. First Merchants has also agreed to increase their down payment assistance budget, to start tracking applications and originations of their Next Horizon loan product, and to increase support for and engagement with housing counseling organizations, including setting up referral relationships with housing counselors that can work with borrowers to get them mortgage ready.

Small Business Lending

Community Benefits Commitment:     $734 million over 5 years

First Merchants commits that each First Merchant’s branch will have a small business banking trained banker, and to increasing grants, loans, and investments in CDFIs throughout First Merchants’ footprint, as well as offering technical assistance for CDFIs and CDCs that want to offer small business loans.

Community Development Lending and Investment (CDLI)

Community Benefits Commitment:        $679 million over 5 years

First Merchants will work with the advisory board and interested NCRC members to gain insight and ideas related to developing Acquisition-Rehab Community Development products, such as the development of a revolving loan fund for acquisition and rehab.

Philanthropy

Community Benefits Commitment:        $4.7 million over 5 years

This increases the previous philanthropy goal by 38%, and the goal for CRA eligible philanthropy for organizations led by people of color has also increased to at least $683,500. First Merchants will also continue and increase support for local coalitions and Detroit community organizations, provide meaningful multi-year capacity building grants, especially for organizations serving immigrant communities, and support and work with organizations serving the Muslin community in First Merchants footprint in order to find solutions for increasing home ownership and small business capital in these communities in culturally appropriate ways

Appraisal Practices and Data

First Merchants will establish Appraiser Panels where questionable appraisals and appraisers will be reviewed. First Merchants will work with NCRC and other partners to provide data on the overall results of the Appraiser Panel Process. The goal of sharing data is to create a more informed picture of the extent of appraisers and appraisals practice issues. The timing and frequency of the reporting of data will be established. The reports will be reviewed with the Advisory Board, as well as with NCRC’s local coalitions and interested members. First Merchants also commits to not working with appraisers that are identified as consistently undervaluing homes, and to support increasing diversity within the appraisal industry.

Bank On

First Merchants will become a BankOn certified partner in its regional market areas, including Detroit.

Renewal of Agreement

First Merchants commits to working with NCRC and its members throughout the First

Merchants footprint when the Agreement nears its completion date of December 31, 2025. Aspects to consider for renewal will include agreement commitments, and member specific local initiatives.

Agreement Governance

First Merchants will continue to report on agreement progress to the Advisory Board created in coordination with NCRC and First Merchants.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

Complete the form to download the full report: