AFTER the finalization of CIT Group Inc.’s $3.4-billion purchase of Pasadena-based OneWest Bank on Monday, Aug. 3, leaders from both financial institutions celebrated the merger at Filipino supermarket Island Pacific in Panorama City, California.
“Today’s a great day,” said John Thain, chairman and chief executive of CIT Group at the event on Tuesday, Aug. 4. “It’s a great day for us, it’s a great day for Island Pacific, it’s a great day for the Filipino community. They’ve been very supportive of us and we’ve been very supportive of them.”
Federal regulators approved the deal in July, following a public hearing in February where supporters said the merger would be beneficial to minority groups and poor neighborhoods, while critics said it would result in a new “too big to fail” financial institution.
Filipinos were among strong proponents of the acquisition and demonstrated their support by attending the February hearing at the Federal Reserve Bank of San Francisco in Los Angeles. Faith Bautista, president and CEO of the National Asian American Coalition (NAAC), said in February that her organization, Island Pacific Supermarket and 130 Filipino organizations were in favor of the “marriage” between the companies.
“[OneWest] is the bank that will take Filipinos to the next level. They’re very committed in microlending, they’re very committed [to] small business, they’re very committed [on] increasing home ownership,” Bautista said during a brief press conference on the day of the hearing.
She added on Tuesday that the new institution will also offer home origination loans to individuals who are self-employed, which will allow them to present the money in their bank accounts as income if they are unable to show income on their tax returns.
Jeff Lim, president of Island Pacific Supermarket, noted that in Panorama City, there are more than five times the number of payday lenders than there are banks that serve the community.
“What we are advocating for here are not handouts. And we certainly do not want any bank to make high-risk loans that may bring losses to the institution. In contrast, what we are advocating for is for banks to invest in our communities, but to do so in a safe and sound manner,” he said.
At Island Pacific in Panorama City, OneWest and the NAAC have partnered to provide financial education services to Filipinos through kiosks.
“The Filipino community has been a big supporter of the bank. We want to give back to the community by showing up the second day after the merger, to be able to demonstrate our support,” said Joseph Otting, CEO and president of OneWest. “This is been a wonderful trip and we really appreciate the opportunity to become more engrained and open up the financial services practice for the Filipino community.”
The bank also recently installed an ATM at the location and is planning to do the same at a future Island Pacific location.
At the hearing in February, Lim shared that OneWest helped Filipinos in the Philippines, as it is among the banks that helped finance the supermarket’s importation of products, such as dried fish.
“The opportunity for us to provide credit, to provide financing, to provide support, to allow companies like Island Pacific, to grow, to prosper, to hire new people, to provide jobs, that is what we’re all about,” Thain said during Tuesday’s celebration.
While Filipinos have been labeled the ‘invisible minority’ because of their lack of participation in public discussions, Lim said their “overwhelming” attendance at the February hearing resulted in Thain’s presence in the community at Island Pacific on Tuesday.
“That’s something that we should all be proud of,” he said.
“[As Filipinos,] the largest Asian minority group in California, we should not be labeled as the invisible minority,” he added.
With the approval of the new bank, which will have approximately $65 billion in assets and $30 billion in deposits, Lim said a goal is to ensure that the many Filipino organizations that supported the move will benefit from it.
The California Reinvestment Coalition (CRC), a group that advocates for low-income communities, those of color and for fair and equal access to financial services, was among those opposed CIT Group’s acquisition of OneWest.
One of its concerns, based on an earlier analysis, is that OneWest demonstrated a low level of reinvesting in the community, said Kevin Stein, associate director of the CRC. He added that the group’s analysis further demonstrated low home lending to Asian-American and African-American borrowers. Research conducted by the group also found that of foreclosures processed since OneWest Bank came into existence from the remains of mortgage lender IndyMac Bank in April 2009, 68 percent occurred in areas where the non-white population is 50 percent or more.
“In our view, looking back, it was a highly problematic merger,” Stein said. “Now we’re looking forward and hope the bank is, too. What we’d love is to see them develop a plan that addresses community needs and concerns.”
The new bank has 90 days to come up with a Community Reinvestment Act plan, and Stein said the CRC was happy to see that the approval order reflected concerns raised about the merger and included strong conditions from the Office of the Comptroller of the Currency.
“We’re glad to see that because it creates an opportunity for the bank to … ultimately to develop a stronger plan to serve communities of color and low-income communities in the state,” Stein said.
Because OneWest/CIT Group has yet to release a revised CRA plan, CRC remains opposed to the merger, calling what is currently on the table “willfully inadequate,” Stein said. However, the group is encouraged by the approval order and hopeful that the new institution will listen to the concerns brought to the table during the hearing.
“We’re hopeful to that, but right now their plan is in the exact same place,” Stein said.
He added that CRC hopes the bank will develop an inclusive process for receiving community input from all parties for its CRA plan.
Among goals for community investment and development activities in Southern California include $5 billion of community-related activities throughout the next four years, Thain said at the hearing in February.
Stein said the CRC thinks it is important that OneWest has reached out to Filipinos and other communities, and that it has gone on establish ATMs and kiosks in Island Pacific locations.
However, he said more could be done.
“Filipinos, Asian Americans, all communities deserve full-service branches,” he said.
“An ATM is certainly better than there not being an ATM, but we think they should be putting in full-service branches in part because their CRA activity will be enhanced,” he added.
The CIT Group/OneWest merger is the first since the financial crisis to create a bank with assets worth more than $50 billion.
Thain said the acquisition will result in “minimal” job cuts among OneWest Bank’s 1,700 employees, and plans on no branch closures, according to the Los Angeles Times.
The newly formed company will be based in New York, where Thain will serve as chairman. CIT Group’s Utah-based Internet banking arm will merge with OneWest. It will be renamed CIT Bank, where Otting will serve as chief executive, and be based in Pasadena, the Times reported.
