Five-year reinvestment plan directs resources to underserved communities
First Merchants Bank (Nasdaq: FRME) and the National Community Reinvestment Coalition (NCRC) today announced the creation of a five-year, $1.4 billion community investment plan for the regions served by First Merchants Bank.
The commitment, based upon discussions between the bank, NCRC and its community-based members starting with a community meeting in September 2019 and finalized earlier this month, includes mortgage, small business and community development lending and investments. Philanthropic funding is a primary focus as well and will be funneled to organizations led by people of color and low- and moderate-income communities across First Merchants’ regional market areas in Indiana, Ohio, Illinois and Michigan.
“The $1.4 billion Community Benefits Agreement accelerates First Merchants’ leadership in helping our communities and customers thrive,” said Mike Rechin, First Merchants CEO. “At a time when low- and moderate-income neighborhoods are most vulnerable, we will provide hundreds of millions of dollars to help communities throughout Indiana, Ohio, Illinois and Michigan. The impact of these resources will last well into the future.”
The collaboration with NCRC involves 19 locally-based community organizations that provided critical input to develop the plan.
“This agreement is a product of all of our efforts. This commitment provides First Merchants Bank an opportunity to increase its Community Reinvestment Act activity, and to direct it where it is needed most,” said Jesse Van Tol, NCRC CEO. “This is how the Community Reinvestment Act should work for banks and communities alike.”
“The Community Benefits Agreement is an opportunity for the employees of First Merchants to take great pride and engage in as we continue along with our partners to stand in the gap assisting those who most need an opportunity to build financial stability,” said Karen Evens, First Merchants Marketing Director.
The commitment by First Merchants will focus on underserved, low- to moderate-income and rural communities and provide:
- $398 million in mortgage lending
- $423 million in small business lending
- $580 million in community development lending and investment commitments
- $3.4 million in sponsorships, grant, loan and investment opportunities
- $10 million to open five new branches and/or loan production offices in low- to moderate-income communities, including Marion County, Ind. Lake County, Ind., Franklin County, Ohio and Wayne County, Mich.
“This agreement with First Merchants Bank is a significant step forward and reflects practices that all banks can adopt in order to address the racial wealth divide,” said Dedrick Asante-Muhammad, NCRC Chief of Race, Wealth and Community.
These new investments add to First Merchants’ existing support of clients and community organizations during the coronavirus pandemic. Those resources include loan modifications, mortgage assistance, economic injury disaster loans, emergency personal loans and more.
NCRC Member Quotes:
“The Northwest Indiana Reinvestment Alliance is pleased to be a part of this partnership agreement with First Merchants Bank. Our organizations have been a long standing customer and they serve on our Lake County Housing Taskforce as well as our Northwest Indiana Bankers Community Council.” Jean Ishmon, Executive Director – Northwest Indiana Reinvestment Alliance
“We are proud to be part of the committee that worked with NCRC and First Merchants to craft a Community Benefits Agreement. As a HUD Certified Housing Counseling Agency that helps families understand their housing options, and a CDFI that offers an affordable alternative to payday lending, we welcome this partnership to ensure fair and equitable housing stability for our families.” Marie Morse – Executive Director, HomesteadCS
“First Merchants’ community benefits agreement communicates a significant step regarding the bank’s new commitment to transforming the communities where they serve. We look forward to seeing these strategies implemented, knowing the lending, investment, philanthropy, and inclusion spending will be more important than ever in the aftermath of COVID-19.” Jessica Love – Executive Director, Prosperity Indiana.
Organizations Supporting The Community Benefits Agreement:
Chicago Community Loan Fund
Chicago Lawyers’ Committee for Civil Rights
Continuum of Care Network NWI, Inc.
First Tabernacle M. B. Church
Homes on the Hill CDC
Mapleton Fall Creek Development Corporation
National Center for Economics
NeighborWorks Collaborative of Ohio
Northwest Indiana Community Action
Northwest Indiana Reinvestment Alliance
Northwest Side Housing Center
Ohio CDC Association
Ophelia Steen Family and Health Service Center
The Resurrection Project
Universal Housing Solutions CDC
About the National Community Reinvestment Coalition
NCRC and its grassroots member organizations create opportunities for people to build wealth. We work with community leaders, policymakers and financial institutions to champion fairness in banking, housing and business. NCRC was formed in 1990 by national, regional and local organizations to increase the flow of private capital into traditionally underserved communities. NCRC has grown into an association of more than 600 community-based organizations in 42 states that promote access to basic banking services, affordable housing, entrepreneurship, job creation and vibrant communities for America’s working families. Learn more at: www.ncrc.org
About First Merchants Corporation
First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as First Merchants Private Wealth Advisors (as a division of First Merchants Bank). First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s website (www.firstmerchants.com). FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.
Summary of the Community Benefits Plan between the National Community Reinvestment Coalition and First Merchants Bank
First Merchants will lend or invest $1.4 billion to people of color, communities of color, and to borrowers and communities with low- and moderate-incomes (LMI) over a five-year period through 2025. This commitment comes out to approximately 11% of First Merchant’s assets or 15% of its deposits.
Mortgage Lending to the Underserved
Community Benefits Commitment: $398 million over 5 years
First Merchants commits to separate and specific home purchase and home improvement lending goals for communities of color, borrowers with LMI, and communities with LMI. On average, communities of color will see an increase in lending of 33%.
Small Business Lending
Community Benefits Commitment: $423 million over 5 years
In order to meet the heightened demand for small business lending during the COVID-19 pandemic, First Merchants commits that for every year of this agreement, half of their small business loans will have an average amount of $35,000. This will ensure that actual small businesses are getting the capital they need.
Community Development Lending and Investment (CDLI)
Community Benefits Commitment: $580 million over 5 years
First Merchants will increase their amount of community development loans and investments by 53%. First Merchants will also dedicate resources to alternatives to payday lending, another pressing need for COVID-19 recovery.
Community Benefits Commitment: $3.4 million over 5 years
First Merchants will increase their amount of CRA eligible philanthropy by 58%. First Merchants will also start to track how much of their CRA eligible philanthropic support goes to organizations led by people of color, and will increase that amount by $250,000 during the course of the agreement.
First Merchants will open 5 new branches or loan production offices in LMI neighborhoods. New branches will be in Marion County IN, Lake County IN, Franklin County OH, and Wayne County MI.
First Merchants will share their annual workforce diversity information with NCRC and will increase diversity at multiple levels of the organization during the course of the agreement.
First Merchants will increase their procurement from businesses owned by African Americans by over five times over the course of the agreement.
First Merchants will create an Advisory Board to provide accountability to the commitments of the agreement. Half of the Advisory Board members will be named by NCRC.