Coalition Criticizes Sumitomo Bank’s Community Plan

Sumitomo Bank of California this week announced a $1-billion community investment campaign, but a statewide coalition of minority and low-income groups immediately criticized the program on Friday as a “recycling of bad faith” that echoed promises the bank made in 1993.

San Francisco-based Sumitomo, which has been criticized by community groups for inadequate lending to blacks and Latinos, on Thursday announced plans to expand a 10-year commitment to Community Reinvestment Act goals.

The new program would double its lending to poor and minority communities from a previous commitment made in 1993 of $500 million. The Community Reinvestment Act is designed to prevent financial institutions from denying credit in poor and ethnic neighborhoods.

Sumitomo, the state’s fifth-largest bank, also vowed to:

* expand its Community Advisory Board to 10 members from five members;

* increase its annual charitable contributions to 2% of net income from 1%;

* double advertising in black- and Latino-owned media to $1.6 million this year;

* use black and Latino search firms and community groups to help fill management positions;

* increase the dollar volume of black and Latino vendor contracts by 50% in three years.

The bank also announced a joint venture with black-owned Founders National Bank of South-Central Los Angeles, which will include “sensitivity training” for Sumitomo tellers and managers. Founders employees will get executive training and perhaps help in other areas, such as participating loans with Sumitomo.

Sumitomo is considering making a large capital investment in Founders, said Carlton Jenkins, Founders president and chief executive.

“Our goals are extremely challenging, but we feel they are consistent with our business plans, and we will do our best to achieve them,” said Tsuneo Onda, president and chief executive of Sumitomo Bank of California.

Onda noted that the bank has made $349 million of CRA loans since 1993. “I believe that is an outstanding accomplishment, especially in light of the fact that our bank has actually declined in size over that period,” he said.

But the Greenlining Institute, a nonprofit public advocacy organization that provides administrative support for the Greenlining Coalition of community groups, immediately criticized the latest Sumitomo plan.

“They’re just doubling zero,” said Robert Gnaizda, general counsel for the institute. “We’ve talked to our members and they say it’s too little too late.”

The Greenlining Coalition has contended that the bulk of those loans went to Japanese Americans, with few home or business loans made to blacks or Latinos. The institute, which has negotiated CRA commitments with corporations including Bank of America and Wells Fargo, went so far as to call Sumitomo’s 1993 agreement the only such commitment to fail.

In December, the Greenlining Institute filed a grievance with the Federal Deposit Insurance Corp., charging that Sumitomo had the worst record of any major California bank in lending to and promoting non-Asian minorities. In 1995, for example, the bank made only 153 home loans to non-Asians, including just 15 to blacks and Latinos, the institute said.

Last year, the number more than doubled to 37, but the percentage actually declined as total home loans more than quadrupled to 559.

A Sumitomo spokesman said the bank has little data to prove the ethnicity of its borrowers and the Greenlining Institute is distorting what data does exist.

The Greenlining Institute also filed a complaint in December with the U.S. Labor Department alleging that the bank has the “worst record of promotions of women and minorities of any bank in the nation.”

“We are fully committed to making the changes and to continue to diversify, but it will take some time,” said Sumitomo spokesman Kyle Tatsumoto. “Four years is not really a whole lot of time to make the kinds of significant changes that we are talking about.”

Jenkins of Founders National Bank said that he found Sumitomo to be “genuinely interested in trying to be a little bit more creative in how they approach this second CRA commitment.”

“I don’t make apologies for them,” Jenkins said. “My job is to make sure they make a difference in this community and at the same time our little bitty bank is able to move forward. We’re going to hold their feet to the fire, at least as far as South-Central is concerned.”

Sumitomo was founded in San Francisco 45 years ago by its Tokyo-based parent company to provide financial services to Japanese Americans and other Asian groups. In California, the bank has nearly 1,600 employees and 47 branches.