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First PacTrust in Los Angeles plans to become to Banc of California, effective July 16.
July 15 -
Regulators are clearly interested in crafting further reforms to Community Reinvestment Act policy following relatively minor changes last year. Here's a guide to what they may target.
April 11 -
The company is suing Basswood Capital, claiming the activist hedge fund unlawfully accumulated a large stake by violating a confidentiality agreement. It also claims that Basswood's meddling resulted in a subpar capital raise last month.
June 19 -
Banc of California suffered from growing pains -- and a big third-quarter loss -- due to rapid expansion. CEO Steven Sugarman must prove to investors in 2014 that his efforts are leading to a stronger company.
December 26 -
Popular (BPOP) in San Juan, Puerto Rico, has found buyers for its regional operations in Illinois, California and central Florida.
April 23
A dispute with a community group could imperil Banc of California's expansion plans, while reminding other banks of the dangers of going to battle with advocacy groups.
The California Reinvestment Coalition, or CRC, has asked the Office of the Comptroller of the Currency to deny the Irvine, Calif., company's plan to
The CRC, which advocates for equal banking services in poor and minority communities, says Banc of California isn't being open about its plans to serve low-income customers and lacks a strong history of serving those clients. The group also claims Banc of California has financial and management weaknesses.
"We believe there are unanswered questions with this proposed acquisition," Paulina Gonzalez, the CRC's executive director, wrote a letter to the OCC.
"These questions raise doubts that this merger will create a sufficient and clear public benefit," she added. "We call for the OCC to extend the comment period, hold hearings on Banc's application, and deny its application until a strong CRA plan, which has been subject to meaningful public review, is in place and financial managerial concerns are addressed."
Banc of California is hopeful that buying the Orange County and Los Angeles branches, along with $1.1 billion in deposits, will give it the scale to be a major player in California and provide an inroad into the Latino market, Chief Executive Steven Sugarman said in April.
As other acquirers have seen, however, challenges tied to fair-lending laws and the Community Reinvestment Act can disrupt or derail a bank's M&A plans.
Cullen/Frost Bankers (CFR) received regulatory approval to buy WNB Bancshares in May, but only after the Federal Reserve Board
The Association for Neighborhood and Housing Development said Thursday that it is opposing Valley National Bancorp's (VLY) plan to buy 1st United Bancorp (FUBC) in Boca Raton, Fla., based on claims that the Wayne, N.J., company has not met its CRA obligations.
The OCC has not made a decision about holding a public hearing or extending the comment period for Banc of California's acquisition, an agency spokesman said.
Banc of California's community development officer, Gary Dunn, says he expects the deal to go through, adding that the current controversy will only delay it. The company received a "satisfactory" on its latest CRA exam, and last week it issued a press release listing 35 community groups that support the deal.
"The CRC, being a political access group, does this with banks all the time," Dunn says. "They throw everything at the wall to see what sticks. The bank has support from many members of the CRC, and, with the support of those nonprofits, I really don't see CRC being able to stop this merger or get public hearings."
Dunn and the CRC say that relations between Banc of California and the advocacy group have been strained since last year. The bank says the dispute stems from a misunderstanding; the CRC calls it a deliberate attempt by Banc of California to mislead the public.
Banc of California sought approval last year to consolidate banks and take a national charter. The CRC issued an objection, then rescinded it after meeting with Sugarman. The CRC says Sugarman promised to make its reinvestment plan public, but later reneged.
Banc of California says Sugarman promised to listen to the CRC's concerns, but he did not agree to show a plan. Banks are not required to make such plans public, and Banc of California says doing so would jeopardize its proprietary information.
"The CRA plan is proprietary and we're not under an obligation to share it," Dunn says. "We welcome the input, but we're not going to hand over proprietary information."
Dunn notes that a member of the CRC's board, Roberto Barragan, is a director of California United Bank.
The bank's explanation is "disingenuous," Gonzalez says. "Sugarman could have clarified any misunderstandings. The bank seems to have benefitted from that quote-unquote misunderstanding."
Banks routinely show their CRA plans to the CRC, Gonzalez says, adding that her group wants to ensure Banc of California has the products and know how to serve groups that are not yet its core customers.
"Banc of California has decided to do things behind closed doors and not be transparent with a community they have no history with," Gonzalez says. "Trust needs to be built. If you're committed to serving the community over the long term, then why not show us your plan and be proud of it?"
Dunn is adamant Banc of California is doing the right thing by refusing to show its CRA plan. The company welcomes discussion, but draws the line at sharing such information, he says.
"I would advise other banks to discuss community reinvestment with CRC and their members, to ask for input for their members, to listen to their ideas and try to include in their business plan," Dunn says. "I would also advise them not to make the CRA plan public or to give them the plan."
