Newark Advocates Keep Pressure On Bank After ‘Redlining’ Settlement

NEWARK, NJ — Advocates in Newark and New Jersey continue to keep the pressure on Lakeland Bank after one of the largest “redlining” settlements in the history of the U.S. Department of Justice, demanding that the landmark agreement be considered as the bank tries to merge with Provident Financial Services.

Two months ago, federal authorities announced that they have reached an agreement with Lakeland Bank, which is accused of failed to provide mortgage lending services to Black and Hispanic neighborhoods from 2015 to 2021 in the Newark metropolitan area – including Essex, Somerset and Union counties.

The proposed consent order was subject to court approval. Lakeland Bank has agreed to several conditions, including investing at least $12 million in a loan subsidy fund for residents of Black and Hispanic neighborhoods in the Newark area, and opening new branches in “neighborhoods of color.” Read More: Bank 'Redlined' NJ Home Buyers In Newark Metro Area, Feds Allege

In September – a month prior to the settlement announcement – Lakeland Bancorp Inc. announced plans to merge with Provident Financial Services Inc., creating a “super-community bank” which will be headquartered in Iselin, New Jersey. The all-stock merger is valued at approximately $1.3 billion.

According to Lakeland Bank, the merger is expected to close in the second quarter of 2023, “subject to satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by the shareholders of each company.”

But according to some advocates – including Newark Mayor Ras Baraka – federal authorities need to take a closer look at the proposed merger in light of October’s redlining allegations.

On Dec. 15, advocacy group New Jersey Citizen Action (NJCA) delivered a letter to the Federal Reserve Bank of New York, requesting that the merger be approved only with a “forward-looking, New Jersey-specific” Community Reinvestment Act (CRA) agreement, and inclusion of the settlement requirements in the recent consent order with the U.S. Department of Justice.

Read the full letter here.

Baraka said he supports the group’s efforts and demands for a CRA agreement.

“I also ask that because Newark was most impacted by Lakeland’s redlining, that the CRA agreement also include all of NJCA’s recommendations that are Newark and New Jersey-specific,” Baraka said.

“Redlining is racist and illegal,” said Phyllis Salowe-Kaye, president of NJCA and a signatory of the letter to the Federal Reserve.

“In the last two years, there have been more than 10 mergers approved in New Jersey,” Salowe-Kaye said. “As banks get bigger, they must get better, and we cannot let them continue to refuse to make loans in our communities of color.”

“Provident has a long-term partnership with NJCA and a strong equitable lending record, so we are hopeful they will comply with the Department of Justice settlement and incorporate NJCA’s additional terms once the merger is finalized,” Salowe-Kaye added.

“Lack of access to fair financial products is a major driver of systemic inequity and intergenerational poverty,” said Christian Estevez, CWA District 1 Political Director, NJCA Board of Directors Co-Chair, and Founder of the Latino Action Network.

“Enforcing terms like those in the Consent Order and the CRA agreement is vital for holding banks accountable for unfair and illegal practices towards historically marginalized communities,” Estevez said. “We cannot let the consequences of Lakeland’s racist decisions and policies be lost in the shuffle of a merger.”

Here are some of the terms that the NJCA is suggesting be included in the proposed CRA agreement:

• Develop specific and measurable goals to provide below market mortgages, discounted home improvement loans, small business loans, construction and permanent financing and loans for community and economic development.
• Establish a statewide Community Advisory Board (CAB) composed of diverse community leaders who work with the LMI BIPOC population
• Work with the CAB and other community organizations to determine if additional branches or services are needed if the merger results in branch closures
• Develop a transparent process that includes community input when determining where to locate the second branch required in the DOJ Consent Order.
• Establish "Listening Sessions" with high level key bank staff to provide them with information on the needs of the LMI BIPOC community.
• Invest in the "NJ Forty Acres and a Mule Fund" (NJ FAM FUND) for real estate and small business development for Black and Latino partners

Additional commitments are needed in the City of Newark, which was most impacted by Lakeland’s redlining, the group said:

• Hold at least two Town Hall meetings in the City of Newark to assess community needs before deciding location of the new branch required in the Consent Order.
• Invest in the Acquisition Fund established in the Mayor's Equitable Growth Initiative to mitigate the effects of owner-occupied homes being purchased by large scale investors.
• Participate in the "Live Newark Program" to assist first time homebuyers in the City.
• Invest in the "Neighborhood Development Fund " that turns city-owned land into residential and affordable housing.

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