Clearinghouse CDFI in Lake Forest, Calif., has acquired Arizona MultiBank Community Development, a community development financial institution that operates in the Southwestern U.S. and on Native American reservations.
Clearinghouse acquired Arizona MultiBank's assets and loan portfolio for a combination of cash and Clearinghouse stock. Clearinghouse also agreed to retire Arizona MultiBank's $10 million in long-term debt certificates. Arizona MultiBank will donate its remaining assets to the Arizona Community Foundation, about $1 million in Clearinghouse stock and $1 million in a legacy fund for making community development donations.
The acquisition will increase Clearinghouse's assets by about $8 million. Clearinghouse will operate Arizona MultiBank as a division of the institution and retain all its employees.
"We're adding to what they do as opposed to taking it away or changing it completely," Clearinghouse CEO Douglas Bystry said in an interview. Clearinghouse will do "a lot more lending and larger, more impactful loans in Arizona."
The combination of the two institutions is an unusual occurrence in the CDFI field, Bystry said.
"Sometimes it just makes economic sense to have some groups with a shared mission align themselves," Bystry said. "We're not actively looking [to acquire another CDFI], but who knows if this will be something someone else might emulate."
Clearinghouse also plans to increase lending to Native American reservations and other tribal communities in Arizona and New Mexico, and will create a Native American advisory board for the CDFI.
JPMorgan, Wells Fargo and PacWest Bancorp in Los Angeles are Clearinghouse's largest shareholders. JPMorgan, Wells Fargo and Bank of America had been the largest holders of Arizona MultiBank's debt.
Clearinghouse is owned by numerous banks, including Banc of California in Irvine, which acquired an 8% stake in May 2014. Other owners include First Banks in St. Louis, Luther Burbank Savings Bank in Santa Rosa and Farmers & Merchants Bank of Long Beach.