After merger fails, TD inks smaller community plan in New Jersey

Cole Burston/Bloomberg

TD Bank is committing over $2 billion to community reinvestment initiatives in New Jersey — three months after the unraveling of a larger, multistate agreement that was tied to its ill-fated acquisition of First Horizon.

Under a three-year plan unveiled Monday, the Canadian-owned bank committed to ensuring that financing opportunities reach low- to middle-income customers throughout the Garden State, including both individuals and small businesses.

TD agreed to provide $700 million of loans to small businesses, $600 million of community development lending that qualifies for Community Reinvestment Act credit, $210 million to invest in low-income housing and economic development tax credits and $505 million for affordable housing loans. The deal runs through 2025.

"We have a responsibility to give back to the communities we serve, and to make sure that when we give back, our efforts create a real impact for all communities," Robert Curley, the bank's regional president for New Jersey and Pennsylvania, said during a press conference Monday. "We envision to be the better bank."

He added: "Central to that is our aim to help customers establish a more secure and sustainable future for themselves, their families and our neighborhoods."

Curley spoke alongside leaders from the nonprofit groups New Jersey Citizen Action and the Housing and Community Development Network of New Jersey, which negotiated the deal with TD.

The agreement is significant because of TD's focus on reinvesting specifically in New Jersey communities, said Leila Amirhamzeh, director of community reinvestment at New Jersey Citizen Action.

"State-specific agreements are becoming harder and harder to come by, which is really why today's signing is such a huge achievement," Amirhamzeh said.

TD Bank, a unit of Toronto-based TD Bank Group, scrapped a $50 billion community benefits agreement in May after failing to secure regulatory approval to acquire Memphis, Tennessee-based First Horizon. The deal reportedly fell apart because of regulators' concerns about TD's handling of suspicious transactions.

At the time, Amirhamzeh expressed disappointment that TD was terminating the related community reinvestment plan but said that New Jersey-based groups planned to continue working with the bank to secure a state-specific agreement.

Banks have become increasingly proactive about signing community reinvestment initiatives in recent years as federal regulators have more closely scrutinized their compliance with fair-lending laws and the CRA.

Since 2021, when Attorney General Merrick Garland launched an interagency initiative tasked with investigating potential cases of redlining, there has been an uptick in enforcement actions and settlements with banks over alleged lending discrimination.

Earlier this year, City National Bank, a unit of the Royal Bank of Canada, agreed to the largest redlining settlement in U.S. history — a $31 million agreement with the Department of Justice over accusations that the bank discouraged Black and Hispanic customers from applying for loans.

The current regulatory scrutiny of bank compliance with the CRA is the "most aggressive" in recent memory, said Ken Thomas, who advises banks on compliance as the president of Community Development Fund Advisors.

In the current environment, Thomas advises lenders to be careful that they are complying with the 1977 law, which requires banks to meet the needs of the communities they serve. "Especially if they're thinking about doing a deal," Thomas added.

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Certain bank mergers have been called off because of compliance problems involving the CRA, according to Thomas. 

He cited the recent termination of New Jersey-based OceanFirst Financial's deal to acquire Delaware-based Partners Bancorp. That merger underwent two years of regulatory scrutiny before being called off last year. Earlier this month, OceanFirst received a "needs to improve" rating on its most recent CRA examination by the Office of the Comptroller of the Currency.

"This is the environment we're in today," Thomas said. "Once you have a deal with a major community group, you cannot walk away."