PACIFIC WESTERN BANK S CRA COMMUNITY BENEFIT 3-YEAR PLAN

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Tamsin Higgins
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1 PACIFIC WESTERN BANK S CRA COMMUNITY BENEFIT 3-YEAR PLAN Motivating Sustainable Communities

2 I. Introduction and Overview Pacific Western Bank's (the "Bank") Community Reinvestment Act ("CRA") Community Benefit Plan (the "Plan") is intended to be a living document, updated as necessary but at least annually and after considering current community needs and evaluating opportunities identified through discussions with community-based organizations. Feedback about the Plan from community organizations is an important process in its development. The Plan outlines the Bank s CRA strategies and goals to achieve an Outstanding rating and will be updated on a rolling three-year forward-looking basis. The Plan represents more than $3.2 billion in California-specific CRA activities. This Plan expresses the Bank's goals and aspirations during the next three years with respect to the communities it serves. It anticipates the legal close of a planned merger between Pacific Western Bank and California United Bank ( CUB ), scheduled to close in the fourth quarter of This Plan does not include the CUB assets and community development activities that will further strengthen the Plan if the merger is consummated. The Bank s goals herein reflect qualifying CRA-related statewide activities in California and North Carolina based on assumptions related to capital and operational capacities post-merger, and are subject to further modification at legal close. The goals express the aspirations with respect to each community the Bank currently serves, or proposes to serve as indicated in any bank merger application submitted. The Plan aligns with the Bank s business strategy, its operational focus, capacity and constraints. The Bank's Plan to achieve these goals during the next three years includes the following: Small Business Lending A minimum of 50% of the total number of small business loans originated annually will go to businesses with gross annual revenues of $1 million or less. At least 10% of the total number of small business loans originated annually will be referred by community-based organizations that provide services to women-, minority-, or veteran-owned small and micro-businesses, including businesses located in high minority census tracts. The Bank will strive to achieve this target by A minimum of 25% of the total number of small business loans originated annually will go to businesses located in low- and moderate-income census tracts. As a commercial bank focused on establishing long-lasting relationships with its customer base, the Bank will pursue formalization of its referral program with local CDFIs, small business technical assistance providers and other community development lenders, subject as always to the willingness of denied clients to be referred. 2

3 The Bank will continue to deliver to the market a flexible line of credit product designed specifically for businesses with gross annual revenues of $1 million or less. The Bank will also revisit participation in the California Small Business Loan Guarantee Program. Affordable Housing Goals While the Bank does not originate permanent single-family mortgages, the Bank will make loans, investments, and grants to preserve, develop and retain the availability of affordable housing as follows: The Bank will finance or invest in an amount equal to at least 1% of California deposits to support the development of affordable multi-family rental housing, and whenever possible, access the Federal Home Loan Bank s ( FHLB ) Affordable Housing Program. Consider direct investments in loan funds designed to address down payment assistance needs of local markets within the Bank s assessment area. Support for first-time homebuyers using the FHLB Workforce Initiative Subsidy for Homeownership program. Community Development Investments o Annual Investments The Bank will invest annually at the rate of 0.25% of California deposits for community development initiatives. Investments in North Carolina will support the credit needs of the community. o Charitable Contributions The Bank will contribute at least $5,850,000 for charitable contributions through Included in this total, $250,000 will be set aside annually for small business lending loan loss reserves and technical assistance for CDFIs and other nonprofit small and micro-loan intermediaries. o More than 50% of Charitable Dollars for Key Target Areas The Bank s charitable contributions will have as its primary focus community development. Each year, at least 50% of the dollar amount of contributions will support affordable housing, economic development, and financial education. These funds will also support community development services, which include non-profit capacity building. o Annual Meeting with Community Groups The Bank will host at least one annual meeting with CDFIs and other community groups in both California and North Carolina. A primary purpose of the meetings will be to review, evaluate and discuss strategies to 3

4 address the credit needs of local communities. A Bank executive will be designated to attend, and the minutes of the meeting will be reported to the Bank s board of directors. Access to Banking Services The Bank will offer surcharge-free ATM services as a participant in the MoneyPass network that does not assess surcharges to recipients of California public assistance. The Bank will explore the need to enhance existing consumer deposit products to determine alignment with SafeMoney Standards. Supplier Diversity The Bank s Supplier Diversity Program includes vendors that are locally based or owned by members of communities that have historically been under-represented for non-bank infrastructure products and services. The Bank will strive to increase its patronage with minority- and women-owned businesses. The Bank will seek bids from certified Diverse Suppliers whose business models are aligned with the Bank s business strategies. For contracts over $250,000, at least one bid will be from a Diverse Supplier. In the event a competitive bid cannot be obtained from a Diverse Supplier, efforts will be documented. II. Goals Small Business Loan Originations (Loan Amount $1Million) # $ # $ # $ California 2, ,000,000 2, ,000,000 2, ,000,000 North Carolina 50 6,000, ,000, ,000,000 TOTAL 2, ,000,000 2, ,000,000 3, ,000,000 33% growth in the number of loans. Business Credit Line and Small Business Credit Line products (loans $100,000 or less) make up majority of lending. Implementation of small business referral partnerships. Achieve at least 50% of the total number of small business loans to businesses with GAR $1mm. Achieve at least 25% of the total number of small business loans to businesses using proceeds in LMI census tracts. Community Development Loans $ $ $ California 440,000, ,000, ,000,000 North Carolina 9,000,000 10,000,000 11,000,000 TOTAL 449,000, ,000, ,000,000 Dollar volume supports exceeding prior examination results and parity with peer institutions. Reflects increased volume anticipated from CUB merger, loan purchase activity, increases from our Multi-family Lending and Tax Exempt Bond Financing Units. Anticipates an aggressive pursuit of CD loans in all assessment areas. 4

5 Community Development Investments Donations Other Types Donations Other Types Donations Other Types California $1,750,000 $50,000,000 $2,050,000 $70,500,000* $2,050,000 $65,000,000 North Carolina $550,000 $12,000,000 $600,000 $13,000,000 $650,000 $14,000,000 TOTAL $2,300,000 $62,000,000 $2,650,000 $83,500,000 $2,700,000 $79,000,000 Supports a balanced investment record over time to achieve and maintain an Outstanding Rating. Donations based on management s discretion. * Invest more in 2018 to ameliorate reductions in face value of investments. Community Development Services 2017 Volunteer Hours 2018 Volunteer Hours 2019 Volunteer Hours California 3,100 3,400 3,600 North Carolina TOTAL 3,200 3,525 3,750 Includes anticipated increased activity resulting from merger. Exceeds earlier Outstanding performance rated by the FDIC. Focus more hours on increased financial education activity and measurement of community impact. III. Conclusion This Plan expresses Pacific Western Bank s community development goals with respect to the communities it serves. It is an internal document subject to change at the discretion of the Bank. The Plan acknowledges the value of monitoring the Bank s performance against the needs of the community with goals that are measureable and provide tangible benefits to the community. These benefits increase financial education for low- and moderate-income consumers and technical assistance to smaller businesses; expand the number of investments not routinely provided by private investors that strengthen low-income and underserved communities; make capital available to a larger number of small businesses, and; continue the delivery of meaningful community development services by Bank employees. Finally, the Plan was developed to foster transparency, demonstrate growth and a commitment to achieving the goals over the next three years. This Plan will be available to the public. 5

CRA COMMUNITY BENEFIT 3-YEAR PLAN

CRA COMMUNITY BENEFIT 3-YEAR PLAN 2018-2020 Motivating Sustainable Communities March 2018 I. Introduction and Executive Summary Annually, Pacific Western Bank ( PWB or the Bank ) establishes a Community