First Citizens Bank, Raleigh, N.C., will make $16 billion in loans and investments available for affordable housing, small business and community development financing between 2021 and 2025. The community benefits plan was developed in conjunction with the Washington, D.C.-based National Community Reinvestment Coalition (NCRC).
The plan is contingent upon the completion of a proposed merger between First Citizens Bank and CIT Group Inc. The merger is expected to be completed between March and June of this year, according to NCRC Community Reinvestment Bank Manager Kevin Hill. Following the merger, a form on firstcitizens.com will allow prospective recipients to submit funding requests.
First Citizens is hoping to demonstrate to bank regulators that proposed bank mergers create public benefits and serve the needs of people of color and people with low and moderate incomes, according to Hill. As part of the philanthropy program, First Citizens has pledged to support 30 organizations that neither it nor merger partner CIT have previously supported.
Fund allocation includes:
- $6.9 billion for community development lending and investments such as affordable housing and small business lending for nonprofits and small for-profit developers that support low-and middle-income communities;
- $5.9 billion in lending for companies with less than $1 million in annual revenue within the appropriate communities; and,
- $3.2 billion for home purchase mortgage loans.
The plan is designed to benefit a wide range of nonprofits, according to Hill.
“Basically, any nonprofit that is engaged in Community Reinvestment Act (CRA) eligible work, so anything to do with affordable housing or housing counseling, small business organizations like CDFIs [Community Development Financial Institutions] and technical assistance organizations or social service providers,” Hill wrote in an email to The NonProfit Times.
First Citizens will track the amount of its CRA eligible philanthropic support goes to organizations led by people of color, as well as their community development loan and investment partnerships.
Throughout the course of the program, First Citizens will increase its mortgage lending by 35% — seven percentage points annually.
“The agreement sets up specific and separate lending goals for Blacks/African-Americans, Latinas/Latinos, Asians/Hawaiians/Pacific Islanders, borrowers with low- or middle-incomes (LMI), borrowers in LMI census tracts, and borrowers in majority minority census tracts,” Hill wrote. “Each of these groups will have seven percentage point increases per year for the next five years for each category of mortgage lending — home purchase, refinance, and home improvement. For small business lending, First Citizens commits to increasing its lending by 20% over five years to businesses making less than a $1 million in annual revenue, as well as a separate goal with the same increase for businesses in LMI census tracts.”
The plan also includes an altruistic aspect. First Citizens will provide $50 million for philanthropic giving through 2025.
“Philanthropic priorities include: increased support for housing counseling and small business assistance orgs due to the heightened demand for these services caused by COVID; supporting mental health workers traveling and assisting law enforcement when responding to mental health emergency calls; supporting adult apprenticeship programs and other workforce development opportunities; and for organizations offering legal services regarding fair housing and fair lending,” Hill wrote.