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Financial Services Industry

Orders Issued Under Bank Merger Act - Allfirst Financial Inc

Federal Reserve Bulletin, April, 2001 by Robert Dev. Frierson

Allfirst Bank Baltimore, Maryland

Order Approving Establishment of Branches

Allfirst Bank, Baltimore, Maryland ("Allfirst"), a state member bank, has given notice under section 9 of the Federal Reserve Act ("Act") (12 U.S.C. [sections] 321 et seq.), of its intention to establish branches at Central Avenue & Campus Way South, Largo, Maryland; and Broadcast Square Center, Broadcast Road & Papermill Road, Reading, Pennsylvania.

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published in accordance with the Board's Rules of Procedure (12 C.F.R. 262.3(b)). The time for filing comments has expired, and the Board has considered the notices and all comments received in light of the factors specified in the Act.

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Allfirst is the largest commercial banking organization in Maryland, controlling deposits of approximately $11.6 billion, representing 34.6 percent of commercial banking deposits in the state.(1) Allfirst is a wholly owned subsidiary of Allfirst Financial Inc., Baltimore, Maryland, and Allied Irish Banks, P.L.C., Dublin, Ireland.

Community Reinvestment Act Considerations

In acting on an application to establish a branch, the Board is required to take into account the bank's record under the Community Reinvestment Act ("CRA").(2) The CRA requires the federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and sound operation, and requires the appropriate federal supervisory authority to assess the institution's record of meeting the credit needs of its entire community, including low- and moderate-income ("LMI") neighborhoods, in evaluating branch applications.

The Board has received a comment from the Maryland Center for Community Development ("MCCD"), a state-wide nonprofit organization, that criticizes Allfirst's record of opening branches in Baltimore. MCCD alleges that Allfirst has failed to serve the LMI areas of the city, and that residents in these areas must obtain transportation to reach a bank branch or use check cashing outlets when seeking financial services. MCCD also encourages Allfirst to establish alternative delivery systems to provide banking services in low-income areas. Allfirst has responded that most of its branches serve LMI neighborhoods and that it has loaned more than $30 million to finance the construction of multifamily residences and approximately $10 million in equity investments to support affordable housing in Baltimore. Allfirst also has represented that it has worked successfully with community groups and nonprofit organizations to provide credit products and services in disadvantaged areas and to revitalize underserved communities in its assessment area.

A. CRA Performance Examination

As provided in the CRA, the Board evaluates the performance of an institution in light of examinations by the appropriate federal supervisors of the CRA performance record of the institution. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed, on-site evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor.(3) Allfirst received a "satisfactory" rating at its most recent CRA examination by its then primary federal supervisory agency, the Office of the Comptroller of the Currency, as of October 1998.(4)

B. CRA Performance Record

Examiners found that Allfirst was responsive to the credit needs of its assessment area, including the Baltimore Metropolitan Statistical Area ("Baltimore MSA").(5) Examiners commended Allfirst for its responsiveness to the credit needs of borrowers of all income levels, including LMI borrowers. For example, while LMI families accounted for 36 percent of all families in its assessment area, and lenders in the aggregate made 25 percent of all their housing-related loans to LMI families in 1997, Allfirst made 40 percent of its housing-related loans to LMI families during this period.(6) Allfirst also had a good record of lending in LMI census tracts. Allfirst made 16 percent by number and 13 percent by dollar volume of its housing-related loans in LMI census tracts in its assessment area in 1997, compared with 14 percent and 9 percent, respectively, by lenders in the aggregate.(7) In addition, Allfirst's lending to small businesses in LMI census tracts exceeded the distribution of small business loans in these census tracts by lenders in the aggregate.(8)

Allfirst was found by examiners to be an active community development lender. During the CRA examination period, Allfirst extended 25 community development loans and lines of credit, totaling $52.5 million, throughout its assessment area. Seventeen of these loans, totaling $41.6 million, were made in the Baltimore MSA. Allfirst also made $8.6 million of qualified community development investments in its assessment area, and made commitments to invest an additional $30 million. These projects included a commitment made in 1998 to invest $2.7 million, of which $1.5 million was funded during the CRA examination period, to create an affordable elderly housing facility in a moderate-income census tract in Baltimore County, Maryland, and a commitment of $250,000 to a nonprofit organization to help to purchase and renovate a shopping center in a low-income area of the City of Baltimore.(9) Qualified investments in the Baltimore MSA totaled $2.6 million, which was a reasonable amount according to examiners.

Financial Services Industry

Orders Issued Under Bank Merger Act - Allfirst Financial Inc

Federal Reserve Bulletin, April, 2001 by Robert Dev. Frierson

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