Cathay General Bancorp in Los Angeles has agreed to a community reinvestment plan tied to its deal to buy SinoPac Bancorp from Bank SinoPac in Taiwan.
The $14 billion-asset Cathay negotiated the public plan with the California Reinvestment Coalition to commit more than $4 billion in loans, investments and financial services to low- and moderate-income and minority communities. The 10-year plan covers the 11 counties from San Diego to San Francisco, the CRC said in a press release Tuesday.
Cathay announced in July that it had agreed to pay $340 million for SinoPac Bancorp; the deal is expected to close in the first half of 2017. SinoPac Bancorp's Far East National Bank has loans of $956 million and deposits of $964 million, and five of its nine branches are in Los Angeles.
Within 18 months of the closing of the SinoPac deal, Cathay is to develop a corporate supplier diversity program, committing about 15% of its total nonbanking-system-related spending on minority- and women-owned business by 2022.
The company would also increase and diversify its mortgage loan originations, and more than half of its investments would be in New Market Tax Credits and Low Income Housing Tax Credits.
Cathay plans to increase access to credit and capital equaling 9% of the combined bank's statewide deposits starting in 2017 and 15% by 2027. It also plans to invest 0.25% of its California deposits in community development, including affordable housing and small-business support.
"Being part of banking today, this is Cathay's commitment to do more in the community lending and investment areas over the next decade," Heng Chen, Cathay's chief financial officer, said Tuesday in an interview.
Chen said Cathay reached out to the California Reinvestment Coalition about opportunities to help small businesses and strengthen its low-income-housing partnerships.
"We want to have their support as part of the regulatory application process," he said. "They have many points that other banks have agreed to and we also have formally gone on record to make these commitments as well."
The plan includes a Smart Micro Loans program that would provide loans of $5,000 to $10,000 for small-business owners. Cathy intends to increase and diversify its Small Business Administration lending and said it would consider joining California's Small Business Loan Guarantee Program.
"Cathay's new CRA plan is a testament to what can be accomplished when banks meet with their local communities, hear firsthand about the credit needs of the communities and make a CRA commitment that reflects and robustly addresses those needs," Andrea Luquetta-Kern, deputy director of the California Reinvestment Coalition, said in the press release.