EXCLUSIVE: Fifth Third Bank to announce massive investment in low-income communities

Bank to invest $30B over four years

CINCINNATI -- Fifth Third Bancorp is poised to announce a $2.5 billion increase in lending commitments to its low-income communities, WCPO has learned.

The announcement is expected Friday as the bank faces pressure from federal regulators to improve its performance under the Community Reinvestment Act.

That’s a law that requires banks to meet the credit needs of the communities in which they operate.

The Federal Reserve in July downgraded its rating on Fifth Third’s CRA compliance from “Satisfactory” to “Needs Improvement,” citing “substantive violations” of the Equal Credit Opportunity Act, the Consumer Financial Protection Act, and the Fair Housing Act between 2011 and 2013.

“Needs Improvement” is the second lowest of four possible ratings from the Federal Reserve -- and carries with it restrictions that could keep Fifth Third from making acquisitions or opening new branches.

Some local neighborhood groups have been speculating for weeks that Fifth Third would increase its CRA lending commitments.

WCPO has learned that Fifth Third is planning a 10 percent increase that would bring its total lending commitment to $30 billion over its 10-state footprint.

While it's unclear at this point how much of that money would help fund mortgages and community development in Greater Cincinnati, local developers here say the region's share could be transformational.

Cincinnati's 19 most active community development corporations have $458 million worth of plans for projects that could start quickly with the right funding, said Patricia Garry, executive director of the Community Development Association of Greater Cincinnati.

"If we put all that money up in pretty close to a couple of years, we would transform the city," she said. "The city would become more tourist-friendly. It would become more us-friendly. There would be more employment."

Superstars with 'actual plans'

The agreement between the bank and the National Community Reinvestment Coalition based in Washington, D.C., calls for Fifth Third to invest the money over a five-year time period, which began Jan. 1, 2016, WCPO has learned. So lending would have to happen relatively quickly to meet that goal.

Garry said Cincinnati community developers already are finding new ways to fund important projects, and an increase in lending from private banks would speed things up considerably.

She stressed that community developers in such neighborhoods as Walnut Hills, Avondale, Price Hill and Camp Washington all have big projects that could be ready to go quickly.

"These are actual plans," she said. "None of these are just pie-in-the-sky drawings on napkins. We've got some superstars out there."

A Fifth Third spokeswoman declined to respond to WCPO's questions about the agreement's details. But she noted that the bank has a "landmark community announcement" scheduled for 10:30 a.m. Friday.

Guests listed on the news release include: John Taylor, the president of the National Community Reinvestment Coalition; Greg Carmichael, president and CEO of Fifth Third Bancorp; and Brian Lamb, chief corporate responsibility and reputation officer for Fifth Third Bank.

“We’d love to see more investment here,” said Joe Gorman, an organizer for the Camp Washington Community Board. “Any support by the big private banks would be welcome news.”

Gorman has been working with an Indianapolis developer interested in renovating the former Crosley Manufacturing plant into more than 300 apartment units. The project has been unable to line up financing.

Fifth Third has the only remaining bank branch in Camp Washington, but PNC Bank and Victory Community Bank in Northern Kentucky are the neighborhood’s most active lenders.

“I’d love to see more investment and activity and input by Fifth Third,” Gorman said. “We have a serious amount of potential.”

South Cumminsville activist Sister Barbara Busch said there is an unmet need of “at least $1 billion” in mortgage lending and community redevelopment projects in Cincinnati that Fifth Third could help to finance.

“I believe there’s a real opportunity,” said Busch, executive director of Working In Neighborhoods, who worked with NCRC to encourage Fifth Third’s improvement in CRA lending.

“I think they’ve been sincere,” she said. “They have all new management. It looks to me like they’re very serious about it.”

Dan Monk covers business for WCPO. To read more stories by Dan, go to www.wcpo.com/monk. To reach him, email daniel.monk@wcpo.com.

Lucy May writes about the people, places and issues that define our region – to celebrate what makes the Tri-State great and also shine a spotlight on issues we need to address. Childhood poverty is an important focus for her and for WCPO. To read more stories about childhood poverty, go to www.wcpo.com/poverty.

To read more stories by Lucy, go to www.wcpo.com/may. To reach her, email lucy.may@wcpo.com. Follow her on Twitter @LucyMayCincy.

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