20 Hoosier Banker December 2015 Continued from page 19. payments toward lending initiatives in low- to moderate-income (LMI) and minority neighborhoods, plus a $5.5 million civil monetary penalty. As part of these payments, Hudson City is required to take several remedial measures and operational commitments to prevent future violations, and must encourage access to credit in these neighborhoods through several means, including opening at least two full-service branches, hiring additional staff, and developing and submitting compliance plans and policies for its employees and brokers. Hudson City’s fair lending issues became the focal point of Board review in consideration of the merger application, mirroring the growing importance of CRA issues in the overall regulatory approval process, due to a significant increase in public protests over violations. Fortunately for M&T, however, it has maintained a strong CRA record with an “Outstanding” CRA rating. The Board has thus determined that the combined M&T/Hudson City organization would better address fair lending issues by following M&T’s approach to serving LMI and minority neighborhoods, which focuses on community involvement, advertises affordable mortgage products in newspapers targeted to residents of LMI and minority neighborhoods, and offers government-backed mortgage products. M&T agreed to address the weaknesses identified at Hudson City. Finally, as the surviving entity, M&T will be required to fulfill the requirements of the consent order. Order by the Board approving the merger. In the order approving the merger, the Board noted the uniqueness of suspending the processing of the application. The Board noted that it “expects that a banking organization will resolve all material weaknesses identified by examiners before applying to engage in expansionary activity.”2 The Board specifically referenced SR Letters 14-2 and 13-7, which provide further insight into the application process. Additionally the Board noted that it “took the highly unusual step of permitting the case to pend while M&T addressed its weaknesses. The Board does not expect to take such action in future cases. Rather, in the future, if issues arise during processing of an application, the Board expects that a banking organization will withdraw its application pending resolution of any supervisory concerns.” Clearly the regulatory penalty box is strong and solid. Buyers remain on notice that they must have their regulatory houses in order before embarking on acquisition transactions. Banks that are interested in selling must continue to perform reverse due diligence of buyers with respect to their regulatory compliance, including CRA. Buyers, on the other hand, must continue to be sensitive to the regulatory and CRA issues facing sellers and must develop plans to address those issues. t Young & Associates, Inc. Consultants to the Financial Industry Capital Planning System Saves Time & E ort Field Tested Has Passed Regulatory Scrutiny Allows you to: • Develop a Base Case Scenario for minimum adequacy standards • Identify and Evaluate Risk for your bank • Stress Test Capital by loan classification (as recommended by the FDIC and OCC) • Perform Contingency Planning for stressed events • Generate Your Capital Plan in as little as 1 day! Pricing First Year License Fee — $1,095 Update/Annual License Renewal — $495 35 YEARS 1978 - 2015 + 2 FRB Order No. 2015-27, footnote 28
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