KeyBank and the National Community Reinvestment Coalition announced Wednesday a collaborative effort to improve the bank’s lending in nonwhite communities, a year after the fair-lending advocacy group raised concerns about KeyBank’s mortgage lending practices.
KeyBank has pledged $25 million to address issues previously highlighted by the NCRC's report, which criticized the bank's lending record to Black borrowers in late 2022, NCRC CEO Jesse Van Tol announced while speaking at the advocacy group’s Just Economy conference.
NCRC has entered “an agreement to resolve our concerns with KeyBank. And this is a big deal,” Van Tol said Wednesday.
The NCRC and the Cleveland-based lender will provide $17 million to fund grants, down payment assistance, fee waivers, product and branch expansion, and marketing — a move “designed to expand credit and assist loan applicants in minority and underserved communities,” Van Tol said.
The two organizations will independently allocate $8.5 million each “with meaningful input from the other,” he added.
KeyBank will provide $8 million to support NCRC’s mission, and both organizations will work together to continue the bank’s lending to nonwhite and underserved communities.
“Most important of all, we will return to the table to work in good faith to establish a new relationship with KeyBank, with the potential to channel billions of dollars of lending capital into community,” Van Tol said.
After Van Tol’s announcement, KeyBank confirmed moving forward with the agreement, saying it would help deliver greater levels of investment in nonwhite and underserved communities, according to a statement seen by Banking Dive.
NCRC’s reports have focused on some metropolitan regions, including Philadelphia, New York City and the Connecticut markets of Hartford, Bridgeport and New Haven, according to the statement.
“In recent years, the NCRC has raised concerns about KeyBank’s lending in minority and underserved communities and whether we have kept our promise to be a leader in inclusive home mortgage lending,” the Cleveland lender said. “KeyBank disputes NCRC’s reports, but we value our relationship with the NCRC and are committed to serving all communities within our footprint.”
Van Tol met with KeyBank CEO Chris Gorman “to discuss the renewed commitment, future partnerships, and the respective goals both organizations hope to achieve as they chart a new path forward together to continue and enhance investment in minority and underserved communities,” the NCRC statement noted.
KeyBank’s and the NCRC in March 2016 signed a $16.5 billion community benefits deal. The plan, which included mortgage, small business, community development lending and philanthropy in low- and moderate-income communities, was designed to last five years starting in 2017.
However, a November 2022 report alleged that KeyBank had the lowest percentage of mortgage originations to Black borrowers among the top 50 mortgage lenders in 2021. The share of home purchase loans going to LMI borrowers dropped by double-digit percentages between 2018 and 2021, the report noted.
The NCRC warned in January 2023 that it would notify KeyBank’s regulators of its concerns. After two months, fair-lending groups and 80 local community organizations sent a letter to the Federal Reserve and the Office of the Comptroller of the Currency, asking for an investigation into alleged redlining.
The NCRC also asked the Fed and the OCC to downgrade KeyBank’s Community Reinvestment Act rating and examine the lender’s compliance with public commitments concerning its acquisition of First Niagara Bank. The five-year plan became a keynote of discord in KeyBank’s bid to acquire First Niagara.
KeyBank in May agreed to engage in a third-party racial equity audit by Washington-based Covington & Burling, the law firm that performed racial equity audits for Wells Fargo and Citi, to assess the impact of its diversity and inclusion practices both inside the company and in the communities it serves.
“This critical work will make sure we continue to deliver better outcomes while investing in our teammates and the communities we proudly serve and call home,” Gorman said in May.
