Why Truist is working on a new community investment pledge

Truist Financial, which is nearing the end of a $60 billion community investment plan struck as part of the BB&T-SunTrust Banks merger, has begun work on a new deal.

The company’s 2019 plan, which included pledges for mortgages, small business loans and other investments in low-income areas, had a three-year timeline. At the time it was announced, it was one of the biggest deals ever signed between a bank and the National Community Reinvestment Coalition.

A Truist executive recently indicated that the company doesn’t view these community investment pledges as one-time deals designed just to grease the way for a big merger approval.

Truist pledged in 2019 to provide mortgages, small business loans and other investments in low-income areas as part of a three-year, $60 billion plan tied to the BB&T-SunTrust merger.

Luke Sharrett/Bloomberg

“It’s something that Truist is not going to do because we have regulatory issues or necessarily a merger acquisition,” Anthony Weekly, community reinvestment law officer and community development manager, said this month. de Truist, at a conference organized by the Consumer Bankers Association. “It should be guided by who we are and how we serve the community.”

A new community investment plan from Truist would offer community groups a way to benefit years after the BB&T-SunTrust merger ends. It could also signal to other big banks that have drawn up similar plans in large mergers that they may be required to provide new commitments.

“I’ve had conversations with the NCRC, and many others, about what this next approach looks like,” Weekly said.

Negotiations on a new agreement would give community groups a chance to provide feedback after questions were asked whether the overall $60 million figure for the 2019 plan was inflated. About 95% of the pledged amount was based on the combined total of community reinvestments by BB&T and SunTrust over the previous three years.

Weekly said the new plan will come with “a few teeth,” but he didn’t provide details on the mechanics of the deal or a potential dollar figure.

The NCRC encourages banks to renew their community benefit agreements “whether they merge or not,” group CEO Jesse Van Tol said in an email.

“Several of our banking partners – including Truist – have proactively approached us to update their commitments,” Van Tol said. “They see it as a valuable framework for measuring their progress in community service, including their efforts toward racial equity.”

Charlotte, North Carolina-based Truist, which has $541 billion in assets, is not the first bank to negotiate a new deal with advocacy groups after a previous round of investment pledges.

The $174 billion asset of Huntington Bancshares in Columbus, Ohio, pledged $16 billion in 2016 as part of its acquisition of FirstMerit in Akron, Ohio. In 2020, just over a year after completing the previous investment plan, Huntington agreed to a new $20 billion commitment.

Huntington’s community development program director Staci Glenn Short, who spoke on the same panel at the industry conference, said her team worked in advance to develop the 2020 plan with various community groups.

Other banks that have entered into community investment deals in recent years include: PNC Financial Services Group, which rolled out an $88 billion four-year plan after announcing plans to acquire the giant’s US operations Spanish bank BBVA; and M&T Bank, which last year announcement a five-year, $43 billion plan as part of its purchase of People’s United Financial.

Truist is on track to meet its full $60 billion commitment in the 2019 deal, a bank spokesperson said Wednesday.

“In 2022, we are in serious dialogue with community leaders and advocates on our Community Advisory Board about new ways to serve and support the communities in which we live and work,” the spokesperson said in a statement. “We are carefully considering the next chapter and look forward to sharing more in the future.”

Jill E. Washington