U.S. Bancorp on Monday made a large financial commitment to lower-income neighborhoods and communities of color under a deal with activists who previously withheld their support for its pending acquisition of MUFG Union Bank.
The five-year, $100 billion community benefits plan is the largest of its kind, according to U.S. Bancorp and the community groups that endorsed it, eclipsing the
For the Minneapolis-based parent company of U.S. Bank, the plan represents an important step forward in its efforts to secure regulatory approval for the pending merger, though just last week U.S. Bancorp said the timeline for approval was “uncertain.”
U.S. Bancorp CEO and Chairman Andy Cecere said Monday that the spending plan “blends the best programs and thinking of U.S. Bank and MUFG Union Bank.”
“We want our actions today to create a ripple effect that will lift future generations,” Cecere said in a press release.
Activists
About 60% of the pledged spending for mortgages, business loans and other assistance will be targeted toward parts of California, which would feel the greatest impact from the takeover of San Francisco-based MUFG Union Bank.
The community benefits plan includes a pledge to increase mortgage lending nationally by 20% and a commitment in California to boost low- and moderate-income borrowers by 30%. It also promises a 15% boost in lending to small businesses and small farms nationally and a 25% increase in California.
U.S. Bancorp also agreed to create special purpose credit programs that would provide down-payment assistance for mortgages and expand Union Bank’s business diversity lending program, which activists had hoped would continue following the merger.
In addition, the plan includes unique requirements for opening new branches and closing old ones, according to its supporters. U.S. Bancorp would have to take input from community groups and conduct an analysis of neighborhood demographics before choosing to close any branch in a lower-income area, according to the plan.
U.S. Bancorp developed the agreement in partnership with the National Community Reinvestment Coalition and the California Reinvestment Coalition, and both groups expressed their support Monday.
“We know that when we organize, we win,” Paulina Gonzalez-Brito, executive director of the California Reinvestment Coalition, said in a joint press release. “While there is still much work ahead, and a continued need to hold banks accountable, we celebrate these communities today as well as our members who were critical in discussions with the bank.”
Still, it is not clear if the U.S. Bancorp-MUFG Union Bank tie-up could still face other snags.
U.S. Bancorp had previously projected that the deal would be finalized in the first half of this year. But in
U.S. Bancorp’s
Before U.S. Bancorp’s regulatory filing last week, investors believed that the company’s timeline for closing the deal was aggressive. They pointed to the backlog of M&A deals stacking up at federal banking agencies and the ongoing review of the merger application process ordered by the Biden administration last summer.
Acting Comptroller of the Currency Michael Hsu said in
During an event hosted by the Brookings Institution, Hsu said that the OCC was “considering options” to allow community activists to provide more input and could adopt “a presumption in favor of holding public meetings” on mergers, like the one held in March for the U.S. Bancorp-Union Bank deal.
The merger would create a $690 billion-asset banking powerhouse. U.S. Bancorp has argued that it will be better equipped to compete with bigger banks in the California market once the deal closes.