Regulators Say Sterling Bank's CRA Data Unreliable, Astoria Merger Document Shows, Here

By Matthew R. Lee, New Platform

NEW YORK, May 11 – Sterling Bank, which is applying for approvals to acquire Astoria Bank, is known by its regulators to have filed unreliable Community Reinvestment Act data from at least 2014 through 2016, a documentobtained by Inner City Press shows. Nevertheless, the US Federal Reserve denied Fair Finance Watch's request to extend the comment period on Sterling's application, in which even the Fed suspects there is incorrect CRA data. 

On May 11, the Federal Reserve Bank of New York along with questions about about branch closures and a CRA plan required after Fair Finance Watch's previous challenge to Sterling asked: "In a letter dated December 23, 2016, from the OCC to Sterling Bank regarding the OCC's data integrity review, the OCC stated that Sterling Bank's 2014-2016 CRA data is not reliable and that Sterling Bank lacks an effective process for collecting, verifying and reporting such data. To the extent that any of the CRA data in the notice is incorrect, submit the corrected data. In addition, describe Sterling Bank's efforts to address its CRA data compliance management deficiencies." 

So on April 26 in Sterling's analysts' call, did CEO Jack Kopnisky or Senior EVP Luis Massiani disclose the “unreliable” CRA data to, among others, Dave Bishop – FIG Partners, Casey Haire – Jefferies, Alex Twerdahl – Sandler O'Neill,, Collyn Gilbert – KBW, Matthew Breese – Piper Jaffray and Erik Zwick – Stephens Inc? Questions about this deal (here) and the Fed's commitment to public scrutiny are raised by its simultaneous denial of FFW's request for a hearing and to extend the comment period. There is no indication that the "corrected" CRA data would ever be made available to the public, or that this issue would not have been swept under the US bank regulators' carpet, like so many others. We'll have more on this.  

Regulators Say Sterling Bank's CRA Data Unreliable, Astoria Merger Document Shows, Here by Matthew Russell Lee on Scribd

Background: after Astoria Bank's protestedproposal to be acquired by New York Community Bank fell apart in late 2016, it found a new, equally controversial suitor: Sterling Bancorp. Now Fair Finance Watch has submitted a first Community Reinvestment Act challenge to the proposed merger, receipt of which the Federal Reserve has now confirmed, here. Inner City Press' summary of FFW's filing: "Dear Chair Yellen, Secretary Misback and others in the FRS: This is a timely first comment opposing and requesting an extension of the FRB's public comment period on the Application by Sterling Bancorp, Montebello, New York (“Sterling”) to merge with Astoria Financial Corporation, Lake Success, New York, and indirectly acquire Astoria Bank (“Astoria”).
This would be a combination of banks with disparate and in places highly irregular Home Mortgage Disclosure Act (“HMDA”) data. The proposal is the desperate result of the failure of Astoria's attempted merger with NYCB. That is no reason to approve this mis-conceived combination. The applicant's Sterling National Bank (“Sterling”) in the New York City MSA in 2015 for African Americans for home purchase loans denied the applications of African Americans 3.58 times more frequently than those of whites - much worse than other lenders. Sterling made only 22 such home purchase loans to African Americans, versus 495 to whites (and only 37 to Latinos) - again, much more disparate than other lenders. This bank should not buy Astoria. Remember: in the Nassau Suffolk MSA in 2013, Sterling made 149 home purchase loans to whites – and only one to an African American. For home improvement loans, Sterling made 30 to whites, none to African Americans. Taken together, this is unacceptable. The comment period should be extended to clarify – or refile – the HMDA data; evidentiary hearings should be held; and on the current record, the application should not be approved.
For the record, the CRA plan required after Fair Finance Watch's previous protest, we contend has not been complied with, and request evidentiary and public hearings on that basis.
Also for the record:  'The NYCB-Astoria Financial Merger is Kaput: Consumer advocates were among the groups that opposed NYCB’s acquisition of Astoria…'"

   In January, disparate lender Investor Bancorp, on which Fair Finance Watch previously got a condition imposed saw its proposal with Bank of Princeton fall apart.

  There's also Capital One - Cabela, on which Inner City Press commented: "In the New York City MSA in 2015, the most recent year for which HMDA data is available, for conventional home purchase loans Capital One denied the applications of whites 23% of the time, while denying African Africans fully 45% of the time, and Latinos even more, 46% of the time. This is unacceptable.

  Meanwhile, Capital One is “closing branches in Laurel, Gaithersburg, Frederick and Merrifield.”

   Capital One came back with snark, as has Simmons National -- but then announced including to NCRC that  it will withdrawn its application. Onward.