New Report: Credit Gaps in Philadelphia

Posted by on May 19, 2006

[thanks to Don Kelly of GPUAC for forwarding.]

Banks Doing Better in Philadelphia, but Significant Credit Gaps Remain

Washington, DC?May 18?The National Community Reinvestment Coalition?s (NCRC) second comprehensive study on lending trends and branching patterns in the city of Philadelphia reveal that recent legislation and exposure to existing problems have significantly benefited city residents, but that credit gaps remain.

NCRC?s study reveals ?satisfactory?, but not ?outstanding? performance of banks receiving city deposits. The Community Reinvestment Act (CRA) performance of the depositories was improved in some aspects of lending but did not budge upwards in others.

?Councilmember Wilson Goode, Jr., through his recent legislation in the city, has been instrumental in heightening banks? lending and investing in traditionally underserved communities,? states John Taylor, President and CEO of NCRC. ?NCRC?s research shows that CRA makes a difference to minority and working class individuals and communities. Other cities should follow Philadelphia?s example by tying deposits to bank lending performance.?

Councilman Goode said, ?The City recently received new community reinvestment goals from our depository banks. We now look forward to their long term strategic plans to address all of their lending disparities identified in the NCRC reports, particularly related to their mediocre to poor performance in small business lending. If the lenders do this, the result will be a win-win of more wealth building opportunities in minority and working class neighborhoods and more business opportunities for banks.?

City depositories significantly improved their CRA and fair lending performance in making home purchase loans available to minorities, women, and low- and moderate-income borrowers. This is particularly important since buying a home is the only form of wealth building for many Americans. However, the City depositories continued to lag in small business lending, which represents another critical means for City residents to build assets. More than half of the City depositories exceeded the performance of other banks in the City on just 40 percent of the CRA indicators in small business lending. This represented no improvement from the performance recorded in NCRC?s first report issued last fall.

Significant small business lending disparities still afflict the City. During 2004 (the latest year for which industry-wide lending data is available), the portion of all small business loans made in low-income census tracts was 19.3 percent, but the portion of the City?s small businesses located in low-income tracts was 26.3 percent. Likewise, the portion of small business loans in minority tracts (greater than 50 percent of the population is minority) was 33.4 percent, but the portion of the City?s businesses that was in minority tracts was about 45.1 percent.

NCRC believes that residents of Philadelphia are better off thanks to advocates and community leaders such as Councilmember Goode, but that financial institutions still need to do more, both in the city and across the country to make equal access to capital and credit a reality for minority, women and working class neighborhoods/individuals.

For a full copy of the report, including graphs, visit us on line at or contact Rachel Maleh at 202-464-2717 or via email at

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