Union Bank is branching out.

The San Francisco-based bank's community development finance group, which began in 1995 with just two employees originating a handful of loans to local nonprofits, has expanded into the East Coast and the Pacific Northwest over the last few years.

It has grown to a staff of 24 and now originates between $400 million and $500 million in debt for the affordable housing industry annually, the lion's share of which goes to construction financing. Union Bank has also grown its bond expertise over the last four years.

“A majority of our growth on the lending side has come in the last four years as we've gotten into private placement of tax-exempt bonds and increased our coverage of developers on the West Coast,” says Jim Francis, a senior vice president who co-founded the group.

Union Bank's expansion into the Pacific Northwest facilitated the community development group's presence in Seattle, established in 2008 with an office that also serves Oregon. “We're trying to lay the groundwork for additional expansion of the company's branch network and overall banking platform in that marketplace,” says Francis.

In 2005, the company opened an office in the Washington, D.C., metro, which serves an area as far north as Boston and as far south as Atlanta. The company has originated about a dozen deals out of that office, with a strong pipeline for 2009. “It's helping to establish our presence outside of California and diversify our portfolio,” says Francis.

In 2008, the Seattle office originated roughly $40 million in debt, while the Washington, D.C., office produced about $50 million in debt for affordable housing deals.

Union Bank became a Federal Home Loan Bank (FHLBank) board member in 2007 and has begun helping its developer clients tap the FHLBank's Affordable Housing Program. Over the last year, it has helped to get five new deals approved for $1 million loans each. It is also an active tax credit investor, having invested about $200 million in 2007 and about $230 million in the first half of 2008.

The company is poised to acquire other capital sources. Since Union Bank has always taken a conservative approach to risk management, it has not been as affected as many of its peers by the subprime mortgage industry meltdown. Its strong balance sheet means significant acquisitions might be on the horizon.

“I would anticipate that would be forthcoming,” says Francis, who declined to provide details. “The company is defi- nitely looking at those kinds of opportunities over the next year.”

Union Bank also has carved itself a niche in lending to green multifamily projects. It originated a $13 million permanent loan for Solara in Poway, Calif., winner of AFFORDABLE HOUSING FINANCE's 2007 Readers' Choice Award for best overall project. Solara, a 56-unit project, uses photovoltaic panels on its roofs to power all residential and common areas.

And Union Bank recently provided $60 million in a tax-exempt bond purchase to Crescent Park, a 378-unit complex in Richmond, Calif., being renovated by EAH Housing. That project is also installing photovoltaic panels on its roofs to become the largest affordable housing complex in the nation to be powered by the sun.

Before expanding into Seattle and Washington, D.C., the bank's community development group had financed some deals in Nevada, but that was about as far from California as it would go. But for 2009 and beyond, the company is looking to become a player on the national stage, so much so that, in December, the bank officially changed its name from Union Bank of California to Union Bank.