California Reinvestment Coalition Negotiates $4 Billion Community Investment Plan with Cathay Bank
BANK’S NEW COMMITMENT WILL BENEFIT 11 COUNTIES ACROSS CALIFORNIA
November 1, 2016—The California Reinvestment Coalition announced today they have negotiated a Community Reinvestment Plan with Cathay Bank (“Cathay Bank”), as part of Cathay General Bancorp, its bank holding company’s plans to acquire SinoPac Bancorp and its sole subsidiary, Far East National Bank (collectively, “Far East National Bank”) with the goal to merge the two banks leaving Cathay Bank as the surviving bank. The public plan sets out goals for over $4 billion in loans, investments, and financial services to low and moderate income communities and communities of color over ten years across the geographic footprint of the combined bank, including Los Angeles and Orange Counties, portions of Riverside and San Bernardino Counties, San Diego County, Alameda and Contra Costa Counties, San Francisco and San Mateo Counties, Santa Clara County, and Sacramento County.
Cathay Bank is committing to combine the two bank’s activities to increase access to credit and capital equaling9% of the banks’ statewide deposits starting in 2017 and reaching 15% by 2027.
Andrea Luquetta-Kern, Deputy Director of the California Reinvestment Coalition, whose members met anda dvocated with the bank to increase its commitment as part of the acquisition, explains: “Cathay’s new CRA plan is a testament to what can be accomplished when banks meet with their local communities, hear first-hand about the credit needs of the communities, and make a CRA commitment that reflects and robustly addresses those needs.”
Mark Masaoka, policy director at Asian Pacific Policy & Planning Council (A3PCON) comments: “Banks have tremendous power to support and strengthen the communities where they do business, and we’re excited to see Cathay answering that call with a new CRA plan. Communities will benefit from the bank’s increased commitment to invest in things like affordable housing, safe mortgages, and community development.”
Michael Banner, president and CEO of Los Angeles Local Development Corporation, adds: “Small businessescreate 2 out of every 3 new jobs in this country, and we applaud Cathay Bank’s focus on supporting these small business owners through their new CRA plan. This new plan means that more small business owners will have access to safe, responsible loan options, and as a result, will be able to sustain and grow their businesses,creating more jobs, more income, and more assets in the communities that need them most.”
Clarence Williams, president of California Capital, explains: “Cathay is demonstrating a commitment to ensure that its mortgage and small business loans will be accessible to all racial and ethnic communities and by doing so contributing in their capacity to helping to close the racial wealth gap in California.”
Highlights of the new plan include
Small Business Lending: The Bank plans to increase its small business lending in several ways, including developing a “Smart Micro Loans” program that will provide loans in the amount of $5,000 to $10,000 for small business owners. Also, starting in 2018, the Bank’s goal is that at least half of the Bank’s CRA qualified small business loans will go to small businesses with annual revenues of less than $1 million, or loans of less than$150,000, excluding credit card loans. The Bank will also develop a referral program with local Community Development Financial Institutions (CDFIs) and other technical assistance providers who can assist and potentially lend to small business owners who did not qualify for financing from Cathay. Cathay also intends to increase and diversify its SBA lending and to potentially join California’s Small Business Loan Guarantee Program.
Community Investments: Cathay’s goal is that at least .25% of its California deposits will go towards community development investments, which can include investments in affordable housing, small business support, and other community development initiatives. Cathay also commits to diversify its investments so that within seven years, no more than half of its investments will be in New Market Tax Credits and Low Income Housing Tax Credits.Supplier Diversity: Within 18 months of the merger, Cathay intends to develop a formalized corporate supplier diversity program, with a goal that by 2022, approximately 15% of its total non-banking system related spending will be with minority and women owned businesses.
Mortgages: Cathay Bank will research programs that assist low and moderate income homebuyers, including the Individual Development and Empowerment Account (IDEA) Program and the Workforce Initiative Subsidy for Homeownership (WISH) Program. Cathay will also work to increase and diversify its mortgage loan originations over time.
Consumer Accounts: Cathay will promote a low or no cost checking account with certain features to prevent overdrafts, and the Bank will also continue to waive ATM surcharges for users of California Electronic Benefit Transfer (EBT) cards.
Philanthropy: Cathay will increase its philanthropic contributions over a five-year period to meet or exceed.025% of the bank’s statewide deposits. By 2018, at least 50% of Cathay’s philanthropy will go towards CRA qualified programs that support organizations serving the needs of low and moderate income communities and includes programs such as affordable housing, economic development, and consumer asset building.
Annual Meetings: Cathay Bank will hold annual meetings with community groups to review, evaluate, and develop strategies around its CRA commitment.
See a complete copy of the plan on the California Reinvestment Coalition’s website.