CRC successfully negotiated with Union Bank to increase the bank’s community commitments in light of their acquisition of Santa Barbara Bank and Trust.  Over the last decade, Union Bank has grown to become the fourth biggest bank in California by deposit market share, with over 400 branches statewide and more in neighboring states.  Santa Barbara Bank and Trust has 48 branches, making it the largest local bank serving the Central Coast counties and the 20th largest bank by deposits in California.

When Union Bank announced that it planned to purchase Pacific Capital Bancorp, owner of Santa Barbara Bank & Trust, CRC’s members quickly mobilized to raise community concerns and banking needs of low income communities and communities of color in California.  Smaller regional banks like Santa Barbara Bank and Trust are local community anchors for affordable housing developers and small and minority-owned businesses. CRC must be vigilant in preserving the community reinvestment commitments made by these smaller banks.

Union Bank’s responsiveness to community concerns led to a negotiated commitment that will bring positive investments and services to communities that Santa Barbara Bank & Trust and Union Bank serve and plan to serve. As a result, Union Bank has made strong commitments to increase small business lending and support for technical assistance, adopt a low-cost and transparent checking account, and increase grants that support community development efforts in California.

 As a result of CRC’s advocacy, Union Bank will, through 2014:

• Increase originations of small loans (under $150,000) to small businesses (those earning under $1 million in annual revenue), businesses located in low and moderate income census areas, and minority and women owned businesses. 

• Invest in Community Development Financial Institutions and Community Development Corporations that strengthen small business creation and growth.

• Increase support for technical assistance and credit assistance providers serving these businesses and referrals of denied small business loan applicants to organizations that can provide financing to enhance loan worthiness. The bank is also extending its diversity supplier program into the SBBT service area.

• Provide $2.5 million to help nonprofit agencies acquire and rehabilitate housing; increase support for homebuyer education; and provide $10 million to support predevelopment activities necessary to increase the affordable housing stock. 

• Create a low cost banking account product that will be transparent and affordable for low and moderate income communities, the unbanked, or customers simply seeking a lower cost product.

• Honor commitments made by SBBT to its local partners, such as through the Federal Home Loan Bank WISH program.

• Provide grants to support community development, at least at $10 million, increasing to $11 million in 2013 and $12 million in 2014. 

The new Union Bank Commitment is forward-looking, specific, and forged in collaboration with community groups as equal stakeholders. This negotiation provides an excellent model of the benefits of productive dialog between banks, regulators, and nonprofit community organizations at the time of a merger. Communities are better served when all of these stakeholders work together. The Federal Reserve and Office of the Comptroller of the Currency should encourage banks in their merger and acquisition applications to follow the model.