Originally Posted on St. Louis Business Journal
Banks have paid at least $270,000 to coalition as part of benefits agreements
When St. Louis area banks meet with a coalition of community organizations about how to better serve the needs of lower income areas, they negotiate a detailed agenda of items.
The result — known as a community benefits agreement — spells out how banks will increase lending and other investments in underserved, lower-income minority neighborhoods. Since its creation in 2009, the coalition, called the St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA), has disclosed nine agreements with seven St. Louis-area banks. The deals typically come at a time when banks are seeking approval from federal regulators for mergers.
The checklist during negotiations includes maintaining branches and opening service locations, providing home and small business loans, and providing affordable mortgage products or programs. But there is also a section titled "collaboration with SLEHCRA" where banks commit to paying grants or charitable contributions to support the work of SLEHCRA and the members of its coalition.
The banks involved in deals with SLEHCRA have paid at least$270,000 since 2011. That excludes a deal in 2016 with an unnamed bank that included payment of an undisclosed amount. The deal was not announced publicly at the bank's request, SLEHCRA said.
The money from the banks flows to the Metropolitan St. Louis Equal Housing and Opportunity Council, a nonprofit group which is SLEHCRA’s fiscal agent. Elisabeth Risch, the co-chair of SLEHCRA, is the assistant director of EHOC.
The funding is a small fraction of the revenue for EHOC, which in2020 generated about $1 million. EHOC receives a big chunk of its funding from fair housing enforcement work it does for the U.S.Department of Housing and Urban Development, Risch said.
Risch said the bank funds help pay the salaries for herself and SLEHCRA’s community engagement specialist, who is an EHOCemployee. The money also is used for grants to community groups that are members of the coalition, for use in professional development, including attending conferences held by the National Community Reinvestment Coalition, a Washington, D.C.-based nonprofit that has developed a model document for community benefits agreements.
SLEHCRA's most recent annual report, from 2020, doesn't include details of grants distributed to members, but two prior reports, in2016 and 2017, identify 11 in undisclosed amounts, including one to Justine Petersen Housing and Reinvestment Corp. In its annual tax filings, EHOC is required to disclose grants over $5,000. Its most recent available filing, from 2017, identifies one grant to a SLEHCRAmember: $9,500 to the International Institute Community Development Corp.
Montgomery Bank paid $15,000 to the coalition through EHOC, as required by two of the three community benefits agreement it has signed since 2012. A section of the 2015 and 2019 pacts state: "This support will provide SLEHCRA the capacity to assist and partner with Montgomery Bank on specific items in this Letter of Intent, as well as other activities that meet the needs of (low- and moderate-income) individuals."
Kenneth Witbrodt, Jr., the bank's CEO, described SLEHCRA as an umbrella organization that makes it easier for the Sikeston-based bank to partner with multiple groups working in low- and moderate-income communities. The money it paid helps support that work.
"They have expenses in running their organization and their organization serves a beneficial purpose," said Witbrodt, when asked why the bank, which has about $350 million in assets in the St. Louis area, made the payments to help.
He praised the coalition's work, saying it initially approached Montgomery Bank because federal regulators had scheduled a regular examination on its compliance with the CommunityReinvestment Act. The 1977 federal law requires banking regulators to encourage financial institutions to help meet the credit needs of low- and moderate-income neighborhoods.
The largest amount that the banks have paid to SLEHCRA was from enterprise Bank, which provided $120,000 in grant funding over three years, Risch said.
Robyn Heidger, the bank's senior vice president for strategic alliances and inclusion, said in retrospect she probably should have included a provision requiring SLEHCRA to outline how it planned to use the money, along with its member organizations.
“It might have been good to have seen how they broke it out and what they’re doing. That said, I think my team and I know most of those organizations well enough that we trust what they’re doing with it. We know there’s a big need for the work that they’re doing,” she said.