California Reinvestment Coalition Negotiates $11 Billion Reinvestment Commitment as part of City National and RBC Merger


April 23, 2015-Los Angeles— Today, the California Reinvestment Coalition announced that its members successfully negotiated a new Community Reinvestment plan as part of City National’s merger with Royal Bank of Canada. The plan, developed after several months of negotiations, calls for the bank to achieve a minimum of$11 billion in cumulative qualified CRA activity during the next five years. The $11 billion amount corresponds to the bank’s goal of reaching a level of qualified Community Reinvestment Act (CRA) activity equal to 15% of the bank’s normalized California deposits by 2021.

Paulina Gonzalez, executive director of the California Reinvestment Coalition, whose members advocated with the bank to develop the plan and increase its commitment as part of its merger with RBC, comments: “We think it’s noteworthy that City National was willing to make a commitment to California’s communities that is more than double what OneWest Bank has proposed as part of its merger with CIT Group. As the Federal Reserve and OCC continue reviewing the troubled OneWest merger with CIT Group (opposed by over 100 organizations and over 21,000 individuals), they should compare these two plans to see what is possible when banks make a real commitment to their local communities. It’s hard to believe that OneWest and CIT Group, recipients of billions of dollars in TARP and FDIC subsidies, and who are responsible for over 35,000 foreclosures in California, are proposing a reinvestment plan that isn’t even half of City National’s commitment.”

A chart comparing City National’s plan to OneWest’s proposed plan is available here.

Gonzalez adds: “The investments called for in City National’s new plan will enable small businesses to grow,especially through support for community lenders, technical assistance providers, and overall commitment to focusing on the smallest of small businesses in California’s low income communities and communities of color.The investments are critical to ensuring equitable financial services and credit are provided to California’s historically underserved communities.”

Under the plan, during the next five years, the bank’s goals include, at a minimum:
• $4.2 billion in small business loans;
• $4.4 billion in qualified CRA community development loans;
• $1.6 billion in qualified CRA investments;
• $700 million in residential mortgage loans for minority borrowers;
• $30 million in charitable contributions.

Additional Context

Small Business Lending: The bank will continue to focus on smaller small businesses through providing smaller-dollar loans with 50% or more of CRA-reportable small business loans at $100,000 or less. The bank is also investing at least $14 million annually in Community Development Financial Institutions (CDFIs) and other community development lenders. These mission-driven nonprofits work with small businesses, engage in economic development projects, and provide financing for affordable housing. City National also commits to refer a minimum of 20% of denied small business loan applicants to community Technical Assistance providers who can work with these applicants to improve their business plans and increase their chances of being funded.In addition, the bank will fund an annual fund for technical assistance and loan loss reserve funding to support small businesses. In addition, the bank will increase its overall SBA lending to $140 million a year, 50% each year shall be to underserved communities and low-and-moderate-income census tracts.

Affordable Housing: City National will continue to originate $30 million per year in Community Development loans for affordable housing, with the goal of increasing this amount by considering the development of a one-stop, construction to permanent loan product for multi-family housing and a line of credit facility for nonprofit housing developers.

Consumers: The bank will develop and market a checking account, similar to CRC’s SafeMoney™ standards, to meet the needs of unbanked, underbanked, and low-to-moderate income communities in the bank’s assessment area. The bank also commits to reconfiguring its ATMs to waive out-of-network surcharges for California public assistance recipients that use Electronic Benefit Transfer (EBT) cards

Philanthropy: City National will increase its charitable contributions to a level representing 1.5% of the bank’s Net Income Before Taxes (NIBT). Of this .5% increase, 80% of contributions will be dedicated exclusively to CRA-qualified affordable housing and economic development, with the remaining 20% targeted to financial education and financial literacy initiatives.