CIT pledges $7.75B reinvestment as part of Mutual of Omaha deal
CIT Group has agreed to lend and invest $7.75 billion in community reinvestment projects in California and eight other states as part of its acquisition of Mutual of Omaha Bank.
The agreement comes about three months after the U.S. Department of Housing and Urban Development approved a $100 million settlement between the California Reinvestment Coalition and CIT for alleged redlining.
Under the new pledge, the $51.4 billion-asset CIT, based in New York, will make the loans and investments over a four-year period starting next year. The financing will be provided in low- and moderate-income communities of color for small businesses, affordable housing and other community development initiatives.
CIT announced the agreement jointly with the CRC and the National Community Reinvestment Coalition. About 84% of the lending and investments will take place in California.
“After five years of working with our members and partners to ensure that the bank meets the housing and community development needs of California communities, CRC and our members are pleased to reach this historic agreement with CIT,” Paulina Gonzalez-Brito, executive director of the CRC, said in a news release Friday.
Consumer advocacy groups in 2016 had accused CIT’s OneWest unit of failing to provide mortgages and financial services in minority neighborhoods and had filed a complaint with HUD. The complaint was filed a year after CIT acquired OneWest.
CIT operates 64 retail branches in California under the OneWest name and holds a total of $15 billion in deposits in the state. As part of the new agreement, CIT will add a retail branch in California to serve in low- and moderate-income communities and neighborhoods of color; its planned location was not disclosed.
“This plan reflects the ongoing dialogue we have had with NCRC, CRC and approximately 90 individual community organizations throughout the combined banks' footprint to ensure that our efforts make a meaningful difference and help to build thriving neighborhoods,” Ellen Alemany, chairwoman and CEO of CIT, said in the release.
In another recent deal involving California banks, the $17 billion-asset Mechanics Bank in Walnut Creek, Calif., agreed to lend and invest a total of $9.5 billion in CRA activities over a five-year period as part of its acquisition of Rabobank in Roseville, Calif. The deal closed in August.
CIT’s reinvestment plan will also take place in states where the $8.5 billion-asset Mutual of Omaha Bank has retail branches: Arizona, Colorado, Florida, Hawaii, Kansas, Nebraska, Nevada and Texas. The plan will be submitted to regulators, a company spokeswoman said. CIT expects the deal to close in the first quarter, pending regulatory approval.
CIT in August agreed to buy all of the banking assets of Mutual of Omaha Bank, except its Synergy One Lending mortgage unit, for $1 billion.