After ICP's Protest of NYCB - Astoria Bank, Fed Asks 14 Questions
By Matthew R. Lee
NEW YORK, January 8 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks like Goldman Sachs - and those in the middle, seeking to become a Systemically Important Financial Institution like New York Community Bancorp is, applying to buy Astoria Bank.
Now, after Inner City Press / Fair Finance Watch filed a timely protest, the Federal Reserve has asked NYCB 14 questions. Inner City Press has put the Additional Information letter online here, including a request to know which branches NYCB would close, how it would try to sell of Astoria's loans, etc. There should now be more fair lending questions.
NYCB's home mortgage lending is extremely disparate; its multi-family lending, some to slumlords, is no defense. Inner City Press / Fair Finance Watch has filed this with the Fed:
“On behalf of Inner City Press / Fair Finance Watch, this is a timely first comment opposing and requesting a complete copy of an and an extension of the FRB's public comment period on the Application by New York Community Bancorp ('NYCB') to acquire 100% of the voting shares of Astoria Financial Corp and indirectly acquire Astoria Bank.
The applicant NYCB in the New York City MSA in 2014 made 109 home purchase loans to whites -- and only THREE to African Americans. For refinance loans, NYBC in the the NYC MSA in 2014 made 27 loans to whites and only ONE to an African American.
While NYCB may attempt to minimize these severe disparities by pointing to multi-family loans, there are significant complaints about that lending; note also this account of the CFPB which lists the ostensibly mostly multi-family NYCB with more complaints against it than banks that are both larger and more “retail."
In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites. For refinance loans, NYBC in the the Long Island MSA in 2014 made 52 loans to whites and only three to African Americans and only TWO to Latinos, while denying Latinos 2.32 times more frequently than whites.
In the Cleveland, Ohio MSA (where NYCB bought Ohio Savings), NYCB in 2014 made 17 refinance loans to whites in 2014 and only one to an African American, while denying African Americans, while denying African Americans three times more frequently than whites. Similar disparities exist for NYCB in New Jersey, Arizona and Florida -- ICP is requesting public hearings on this ill-conceived proposed merger.
As the Federal Reserve surely knows, this proposal was driving by activist investor pressure on Astoria (by Basswood Capital Management LLC); both institutions' securities fell significantly in price when it was announced. The price to consumers would include the closure of branches, disclosure of which should be demanded during the extended comment period and at the requested public hearing(s).
The comment period should be extended; evidentiary hearings should be held; and on the current record, the application should not be approved.”
Inner City Press / Fair Finance Watch, which also opposes NYCB's requests for approvals from the FDIC, New York and other regulators, has prepared this comparison of NYCB to other lenders:
“In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites.”
While NYCB made 107 home purchase loans to whites for one to an African Americans (ratio of 107-to-1), the aggregated in 2014 for home purchase loans on Long Island had a ratio of 13.41 loans to whites for every loan to an African American (15,081 loans to whites, 1125 loans to African Americans). NYCB is eight times more disparate than other lenders.
Original Title
NY Community Bancorp Is Asked 14 Qs by Fed On Its Protested Application to Acquire Astoria
After ICP's Protest of NYCB - Astoria Bank, Fed Asks 14 Questions
By Matthew R. Lee
NEW YORK, January 8 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks like Goldman Sachs - and those in the middle, seeking to become a Systemically Important Financial Institution like New York Community Bancorp is, applying to buy Astoria Bank.
Now, after Inner City Press / Fair Finance Watch filed a timely protest, the Federal Reserve has asked NYCB 14 questions. Inner City Press has put the Additional Information letter online here, including a request to know which branches NYCB would close, how it would try to sell of Astoria's loans, etc. There should now be more fair lending questions.
NYCB's home mortgage lending is extremely disparate; its multi-family lending, some to slumlords, is no defense. Inner City Press / Fair Finance Watch has filed this with the Fed:
“On behalf of Inner City Press / Fair Finance Watch, this is a timely first comment opposing and requesting a complete copy of an and an extension of the FRB's public comment period on the Application by New York Community Bancorp ('NYCB') to acquire 100% of the voting shares of Astoria Financial Corp and indirectly acquire Astoria Bank.
The applicant NYCB in the New York City MSA in 2014 made 109 home purchase loans to whites -- and only THREE to African Americans. For refinance loans, NYBC in the the NYC MSA in 2014 made 27 loans to whites and only ONE to an African American.
While NYCB may attempt to minimize these severe disparities by pointing to multi-family loans, there are significant complaints about that lending; note also this account of the CFPB which lists the ostensibly mostly multi-family NYCB with more complaints against it than banks that are both larger and more “retail."
In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites. For refinance loans, NYBC in the the Long Island MSA in 2014 made 52 loans to whites and only three to African Americans and only TWO to Latinos, while denying Latinos 2.32 times more frequently than whites.
In the Cleveland, Ohio MSA (where NYCB bought Ohio Savings), NYCB in 2014 made 17 refinance loans to whites in 2014 and only one to an African American, while denying African Americans, while denying African Americans three times more frequently than whites. Similar disparities exist for NYCB in New Jersey, Arizona and Florida -- ICP is requesting public hearings on this ill-conceived proposed merger.
As the Federal Reserve surely knows, this proposal was driving by activist investor pressure on Astoria (by Basswood Capital Management LLC); both institutions' securities fell significantly in price when it was announced. The price to consumers would include the closure of branches, disclosure of which should be demanded during the extended comment period and at the requested public hearing(s).
The comment period should be extended; evidentiary hearings should be held; and on the current record, the application should not be approved.”
Inner City Press / Fair Finance Watch, which also opposes NYCB's requests for approvals from the FDIC, New York and other regulators, has prepared this comparison of NYCB to other lenders:
“In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites.”
While NYCB made 107 home purchase loans to whites for one to an African Americans (ratio of 107-to-1), the aggregated in 2014 for home purchase loans on Long Island had a ratio of 13.41 loans to whites for every loan to an African American (15,081 loans to whites, 1125 loans to African Americans). NYCB is eight times more disparate than other lenders.
After ICP's Protest of NYCB - Astoria Bank, Fed Asks 14 Questions
By Matthew R. Lee
NEW YORK, January 8 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks like Goldman Sachs - and those in the middle, seeking to become a Systemically Important Financial Institution like New York Community Bancorp is, applying to buy Astoria Bank.
Now, after Inner City Press / Fair Finance Watch filed a timely protest, the Federal Reserve has asked NYCB 14 questions. Inner City Press has put the Additional Information letter online here, including a request to know which branches NYCB would close, how it would try to sell of Astoria's loans, etc. There should now be more fair lending questions.
NYCB's home mortgage lending is extremely disparate; its multi-family lending, some to slumlords, is no defense. Inner City Press / Fair Finance Watch has filed this with the Fed:
“On behalf of Inner City Press / Fair Finance Watch, this is a timely first comment opposing and requesting a complete copy of an and an extension of the FRB's public comment period on the Application by New York Community Bancorp ('NYCB') to acquire 100% of the voting shares of Astoria Financial Corp and indirectly acquire Astoria Bank.
The applicant NYCB in the New York City MSA in 2014 made 109 home purchase loans to whites -- and only THREE to African Americans. For refinance loans, NYBC in the the NYC MSA in 2014 made 27 loans to whites and only ONE to an African American.
While NYCB may attempt to minimize these severe disparities by pointing to multi-family loans, there are significant complaints about that lending; note also this account of the CFPB which lists the ostensibly mostly multi-family NYCB with more complaints against it than banks that are both larger and more “retail."
In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites. For refinance loans, NYBC in the the Long Island MSA in 2014 made 52 loans to whites and only three to African Americans and only TWO to Latinos, while denying Latinos 2.32 times more frequently than whites.
In the Cleveland, Ohio MSA (where NYCB bought Ohio Savings), NYCB in 2014 made 17 refinance loans to whites in 2014 and only one to an African American, while denying African Americans, while denying African Americans three times more frequently than whites. Similar disparities exist for NYCB in New Jersey, Arizona and Florida -- ICP is requesting public hearings on this ill-conceived proposed merger.
As the Federal Reserve surely knows, this proposal was driving by activist investor pressure on Astoria (by Basswood Capital Management LLC); both institutions' securities fell significantly in price when it was announced. The price to consumers would include the closure of branches, disclosure of which should be demanded during the extended comment period and at the requested public hearing(s).
The comment period should be extended; evidentiary hearings should be held; and on the current record, the application should not be approved.”
Inner City Press / Fair Finance Watch, which also opposes NYCB's requests for approvals from the FDIC, New York and other regulators, has prepared this comparison of NYCB to other lenders:
“In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites.”
While NYCB made 107 home purchase loans to whites for one to an African Americans (ratio of 107-to-1), the aggregated in 2014 for home purchase loans on Long Island had a ratio of 13.41 loans to whites for every loan to an African American (15,081 loans to whites, 1125 loans to African Americans). NYCB is eight times more disparate than other lenders.
FEDERAL RESERVE SYSTEM
January 8, 2016
‘Mrk F. Ment, Bo.
Sullivan & Cromwell LLP
125 Broad Stost
‘New York, New York 10004
Deer Mr. Mating:
‘This lotr rofrs to the notice filed by New York Community Bancorp, ln,
Westbury, Now Yark, (*NYCB"), to acquire 100 percent ofthe voting shares of Astoria
Financial Corporation, Lake Success, New York (“AFC"), and thereby indirectly woquite Astor,
Bonk, Long Islnd City, New York, (“Astoria”) pursuant to setion 4 ofthe Bark Holding
‘Company Act of 1956 (“BHC Act"). Based on out review ofthe notice, the following additional,
{nfoumation is requested. Supporting documentation, as appropriate, shouldbe provided.
1, Provide an updated balance sheet, iacome statement ad capital ratios for NYCB reflective
cof both yeer-end 2015 results and te recent balance sheet restructare announced on
December 29,2015, which resulted in, among other things, a $10.4 bilion prepayment of
‘wholesale borrowings.
2, Provide a copy of the most recent DFAST results for NYCB ard AFC. Discuss DFAST
planning for 2016, focusing on how the AFC organization would be incorporated into
DFAST requirements, Provide fll copies of al capita plans and intemal sess tests andlor
sensitivity analyses conducted in connection with this proposn. Inchide details of all,
soenatios used.
3. Discuss in detail how and when NYCB plans to incomporate CCAR testing requirements,
Tcl a discussion of koy milestones achieved, and significant items that remain
‘utstsaing
4. Confirm or clasity, as appropsits, whether the stes esting results included inthe iii
submission donot include the contemplated transaction.
5, Diseuss i detail the plan to sel of approximately $1 bilion of Astoria loan in connection
‘with the proposed tamsacion, Indicate what actions NYCB would tke if amarket fr these
Joans is not avsilable, not saficiently liquid, or otherwise not arate,6. On page 23 ofthe notice, NYCB states: Because of the complementary nlure ofthe
businesses of NYCB and Astoria [NYCB] anticipates thatthe products and services Astoria
currently offers will continue to be offered afer the closing either in their current frm, a in
the form in which NYCB provides such products and services” Indicate any products or
services curcenly offered by Astoria that NYCB contemplates would no longer be ofTxe
‘nits current form, Tn aditon, describe the features ofthe Astoria products or services to
be replaced, as well asthe NYCB replacement products and services.
7. Onppage 2 ofthe notice, NYCB indicated that it was conducting an snalyis ofthe ro-
forma combined branch network by the end of Jenuary. When available, provide alist of
‘ranches contemplated tobe closed in connection with this peopl, Ia addlton, provide
any branch analysis used to suppart any such closures
8, Provide the dots supporting the pro forma modified Liquidity Coverage Ratio LCR”)
calelation included in the submission, which indieates that NYCB would need to purchase
spproximately $2 billion io high quality liquid assets. Discuss potential sources to obtain
‘these asses, Inudton, discus in detail NYCB's plans to be compliant with the modified
‘LOR requirement in 2016, inluding milestones achieved and items that rem outstanding
9 Discuss in detail the Commercial Real Estate (“CRE”) and Multifamily concentrations of
the proposed combined organization, Describe in detail how these concentrations would be
managed according to SR 15-17 "Statement on Prudent Risk Management of Commercial
‘eal Estate Lending.”
10, Seotion 5.246 of the Agreement and Pan of Merger, dated
October 28, 2015 (Agreement), between NYCB and AFC, prohibits AFC from allowing
any of its usin including Astoria, fom making any extensions of credit in excess of
{$10,000,000 ina single ansaction, except pursuant to existing comasiznents, withost
[NYCB's prior writen consent. With respect to tis provision, indicate the fellowing:
‘The toil number and ital doll amount of al extensions of credit made by
Astoria over the ast calendar year;
'. ‘The total number and total dollar amount of al extensions of credit made by
Astoria in excess of $10,000,000 over the las ealemisr yea, and
‘The numb of times that NYCB has reviewed proposed extension of eredit by
‘Asovia pursuant tothe Agreement. State the sumbe of ines that NYC bas not
provided its consent, and desribe the reasons why NYCB refused to provide
consent in thse cases.
11. Seoton 6.2(@) ofthe Agreement requires AFC to cause its subsidiaries, including Astoria, to
make available to NYCB thir properties, books, contracts, commitments, and records, with
2certain exceptions. Describe the information provided by Astoria to NYCB to date in
secordance wit the terms of tis provision, In your response, confim or elf, as
appropriate, whether ether purty provides reports or other materials given ots board of
Aiectors or senior management to the other party before such meeting actually occurs,
12, Please canfirm whether NYCB must obtain ay approvals or eonsons from the Federal
Deposit Insurance Corporation pursuant to the loss-shareagroements forthe AmTrust Bank
and Desert Hills Bank acquisitions. If yes, indeate the status of obtaining such approvals or
‘consents
13. Inthe response to Item 13 stom Forma FR Y-3, discuss why NYCB responded “Jo the best.
‘of the Applicants knowledge, none ofthe existing or proposed principals ofthe Applicant
is also a principal of ay other depository institution or depository instition holding
“company.” Describe the process by which NYVCB tees potential management interlocks.
14, On page | ofthe Pretiminary Statement to the notice, NYC states that “[fhllowing the
Bank Merger allo the subsidiaries of [Astor] wil become direct suis of New
‘York Community Bank], the shares of which INYCB} ean bold pursuant to Seton 46XS)
‘ofthe BHC Act and Section 225.22(¢) of Regulation ¥." However, on pages 2 and3 of
Public Exit 1 to the notice, NYC requests hit the Hoard approve NYC's indirect
sequin of Astra Federal Mortgage Corp (“AF Mortgage") and Fiat Service Comp,
(CFidas”) parmant fo section 4(0(8) ofthe BIC Act. Pleas clarify the authority upon
Which NYCB would rely to hol the shares of AP Mortgage and Fiata upon consummation
ofthe proposed merger.
Please address your response tothe undorsgned, However, ofailitate
_moce tinnely distribution ofthe information within the Federal Reserve System, pease send
the original nd four copies of the response to Mr. Ivan Hurwitz, vive pesidentof the Federal
Reserve Bank of Now York, and provide a copy ofthe public portion ofthe response directly to
the commenter, Fat Finance Watch, C/O Matthew R. Lee, Fsq., PO Box 20047 New York, New
‘York, 10017.
Inoorder to fciitate timely processing of the notice, your response should be
received by Janvary 2, 2016. Any information for which you desire confidential treatment
should be so labeled and separately bound in accordance with 12 CFR 261.15Ifyou have aay questions regarding tis letter, please call Julia Sparks ofthe
‘Board's Division of Benking Supervision and Regulation at (202) 457-3805, or Seott Tkacz of
the Board's Legal Division at (202) 452-2744
Very truly yours,
Mill f bo
Michael J. Sexton
Associate Director
Matthow R. Lee, Bs
Fair Finance Watch