Orders issued under Bank Holding Company Act - Legal Developments - Allied Irish Banks P.L.C. to acquire share of M&T's subsidiary banks

Federal Reserve Bulletin,  May, 2003  by Robert DeV. Frierson

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Convenience and Needs Factor

In acting on proposals under the Bank Merger Act and section 3 of the BHC Act, the Board is required to consider the effect of the proposal on the convenience and needs of the communities to be served. (19) The Community Reinvestment Act (12 U.S.C. [section] 2901 et seq.) ("CRA") requires that each insured depository institution be assessed on its record of meeting the credit needs of its entire community, including low- and moderate-income ("LMI") neighborhoods, consistent with safe and sound operation of the institution. The CRA requires the Board, in evaluating proposals under the Bank Merger Act and section 3 of the BHC Act, to take into account the CRA performance records of the insured depository institutions involved. (20) The Board has carefully considered the convenience and needs factor and the CRA performance records of each subsidiary bank of M&T and Allfirst in light of all the facts of record, including public comments on the proposal.

A. Summary of Public Comments

Two commenters submitted letters about the proposal. One commenter contended, based on data submitted under the Home Mortgage Disclosure Act (12 U.S.C. [section] 2801 et seq.) ("HMDA"), that M&T engaged in disparate treatment of minority individuals in home mortgage lending, and that M&T denied loan applications from minorities more frequently than it denied applications from nonminorities. The other commenter asserted that M&T's branch distribution in the New York Consolidated Metropolitan Statistical Area ("CMSA") was inadequate, and that although 30 percent of the tracts in the assessment area were LMI tracts, only 14 percent of M&T's branches were in LMI tracts. That commenter also expressed concern about M&T's commitment to retaining branches in New York City's LMI neighborhoods.

B. CRA Performance Examinations

An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed evaluation of the institution's overall record of performance under the CRA by its appropriate federal supervisor. (21) Both of M&T's subsidiary banks received ratings of "satisfactory" or better in the most recent examinations of their CRA performance. Trust Company, which accounts for approximately 98 percent of the total consolidated assets of M&T, received an "outstanding" rating from the Federal Reserve Bank of New York, as of June 2002 ("2002 Evaluation"). Trust Company also received an "outstanding" rating from the New York State Banking Department, as of April 2000. M&T Bank, National Association, Oakfield, New York, received a "satisfactory" rating from the Office of the Comptroller of the Currency, as of January 2000.

Allfirst Bank received a "satisfactory" rating from the Federal Reserve Bank of Richmond, as of January 2001 ("2001 Evaluation"). (22) M&T has stated that it intends to retain Allfirst Bank's CRA program and structure after consummation of the proposal to assist M&T in ascertaining the needs of the communities served by Allfirst.