FRIDAY APRIL 30, 2021 VOL. 186 No. 82 AMERICANBANKER.COM Follow us on Twitter @AmerBanker Early CRE payoffs drive 5 Bank OZK into new specialties Spreading the wealth The Arkansas bank is turning to asset-based lending and loans to venture capital and Since 2016, banks involved in mergers have pledged to invest nearly other investment groups to help fill a void $300 billion in community and small-business development. Here created by a shortage of new, big-ticket com- are the five largest commitments. mercial real estate deals. Page 6 See story on page 5 Petal offers alt-data 6 underwriting tech to banks. Do they want it? Bank Amount Date The fintech credit card provider is pitching to banks the same software it uses to determine PNC $88 billion April 2021 borrowers’ creditworthiness. But whether banks are ready for technology that em- Truist $60 billion July 2019 phasizes cash-flow analysis over traditional credit scoring is open to debate. Page 7 Fih Third $30 billion November 2016 No bubble in housing 7 market, Fed’s Powell says Hunǎngton $20 billion September 2020 Federal Reserve Chair Jerome Powell is dismissing claims that loose monetary policy KeyBank $16.5 billion March 2016 has led to rising home values and shrink- ing inventory and insists that the market is buoyed by creditworthy borrowers and Source: National Community Reinvestment Coalition investors. Page 8 FHFA adds refi option 8 for low-income borrowers dailybriefing Banks play key role It would be available to homeowners making 3 in push to eliminate 80% or less of their area’s median income food deserts who weren’t eligible to tap into low rates last LendingClub says 2021 Loans and tax-subsidized investments by year. Page 9 1 losses will be lower financial institutions have helped fund food than expected markets and pantries in low-income com- CFPB gives lenders extra 15 The company, which recently acquired Radi- munities. But there is still more work to do to 9 months to meet QM standard us Bancorp, still expects to lose at least $142 close the grocery gap. Page 2 The Consumer Financial Protection million this year and CEO Scott Sanborn Bureau has moved ahead with an earlier did not provide a timeline for profitability. Behind PNC’s $88 billion proposal to postpone the full adoption of “We’re building this business for the long 4 commitment to invest the qualified-mortgage ability-to-repay term,” he said. Page 2 in communities rule, citing a need to maximize borrowers’ The investment, tied to PNC’s deal to acquire credit access. Page 9 First Horizon discloses BBVA USA, was always going to be large but 2 data security breach seemed to grow as CEO Bill Demchak got OCC ‘true lender’ rule is The Tennessee company said an unau- intimately involved in the discussions and 10 wrong path to small-dollar thorized party gained access to dozens of the needs of communities and businesses hit lending by banks accounts and obtained less than $1 million hard by the coronavirus pandemic became Banks could be a better option than payday from some of those accounts. Page 2 more apparent. (See chart above.) Page 5 lenders to meet consumers’ short-term cred- it needs. But all the OCC’s regulation does is enable partnerships that circumvent state usury laws, Alex Horowitz writes. Page 10 FRIDAY APRIL 30, 2021 AMERICANBANKER.COM PAGE 2 Loan originations of $1.5 billion exceeded passwords and is working with customers EARNINGS the guidance that the company gave three to close existing accounts and open new months earlier of $1.2 billion to $1.3 billion. ones. The company said it reimbursed Originations were down 41% from the first the customers for the stolen funds and LendingClub quarter of 2020, which largely preceded the notified the appropriate regulators and law pandemic, but were up 63% from the fourth enforcement authorities. says 2021 quarter of last year. First Horizon said that, based on its ongoing assessment of the incident, it does not believe the event will have a material losses will be CYBERSECURITY adverse effect on its business or financial lower than First Horizon results. expected discloses TAX CREDITS By Kevin Wack Banks play April 28, 2021 data security LendingClub is projecting that its full- key role year losses will be smaller than previously breach expected after loan growth rebounded in the first quarter. By Paul Davis in push to The San Francisco company said April 28, 2021 Wednesday that it now expects a net loss in First Horizon in Memphis, Tenn., disclosed eliminate food 2021 of $142 million to $167 million, down that a number of online customer bank from its earlier guidance of $175 million to accounts were targeted by a data security $200 million. breach. deserts CEO Scott Sanborn did not provide a The $87.5 billion-asset company said in timeline for profitability, saying that the a regulatory filing Wednesday that it first By Joe Adler company is prioritizing higher long-term learned of the breach this month. April 28, 2021 profits over quick returns. “We’re building An unauthorized party obtained login A small Chicago grocery chain rehabilitates this business for the long term,” he said credentials from an unknown source and a vacant strip mall in an area lacking food during a call with analysts. exploited a vulnerability in third-party stores. In western Massachusetts, a popular LendingClub, which has long operated security software to gain access to less than food cooperative plans a second location in an online platform where consumers who 200 accounts, obtaining “less than $1 million” a rural town to reduce customer travel time. want to consolidate their credit card debt get from some of the accounts, the filing said. A twice-expanded Houston food bank gives matched with lenders, now bills itself as the First Horizon said it has addressed the groceries away to needy families hit hard by nation’s first digital marketplace bank. The software vulnerability, reset the accounts’ this year’s devastating winter storms. company’s $185 million acquisition of Radius Bancorp closed earlier this year. In the past, LendingClub relied heavily Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 on upfront revenue by collecting origination Phone 212-803-8200 AmericanBanker.com fees on the consumer loans that it facilitated. It is now putting 15% to 25% of those loans on Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 its balance sheet, a move it says will lead to Managing Editor Dean Anason 770.621.9935 longer-term profits. Reporters/Producers The company plans to sell the remaining Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 75% to 85% of its new loans in its online Washington Bureau Chief Joe Adler 571.403.3832 marketplace. Executive Editor, Technology Miriam Cross 571.403.3834 “For us there is obviously a trade-off Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 between the timing of the profits, versus the BankThink Editor Rachel Witkowski 571.403.3857 size of the eventual profits,” Sanborn said. John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 “And we’re going for the latter.” Hannah Lang 571.403.3855 LendingClub reported a first-quarter Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 net loss of $47.1 million, largely because of Digital Managing Editor accounting costs and expenses related to the Christopher Wood 212.803.8437 Kevin Wack 626.486.2341 Radius acquisition. For up to date and complete coverage go to AmericanBanker.com FRIDAY APRIL 30, 2021 AMERICANBANKER.COM PAGE 3 What these stores and pantries have in community that has a river. The grocery store therefore prioritized for program assistance. common is that they give their communities is within a mile as the crow flies, but it’s five Under the NMTC framework, small- a source of fresh, healthy food. to seven miles away by roadway. The only way bank loans combine with tax credit-based The other thing they have in common is to get there if you don’t have a car is public investments from larger banks to create a that they exist because of a multipronged, transportation, and public transportation capital pool to fund important projects that decadelong effort by the federal government, closes at 5 p.m. How do you get to the grocery might not otherwise be built in areas in community development financialstore?” the greatest need. And that framework has institutions, banks and others to expand funded projects across the country aimed healthy food access and reduce the footprint Creating food oases at expanding food access and strengthening of “food deserts” — areas all over the country In 2006, Mari Gallagher, a Chicago-based regional food systems. where the building blocks of a nutritionally researcher and consultant, partnered with For NMTC projects approved by the adequate diet are not easily accessible. LaSalle Bank (later acquired by Bank of CDFI Fund, a large bank is given a tax credit There is evidence that these efforts are America) to study the public health effects of for making an initial investment in a store making a durable impact on the dual issues food deserts in the Windy City. It measured project. That capital typically accompanies a of food insecurity — defined as inability the distance between every city block and direct loan from a smaller bank to help cover to afford the food one needs — and the both the nearest grocery store and nearest additional project costs.