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The Color of Money

Follow-ups and reaction

ACORN fights merger plan by Bank South

By Bill Dedman, The Atlanta Journal-Constitution

Published June 28, 1988, Page A1

Copyright 1988, The Atlanta Journal-Constitution

A Georgia community group is trying to block Bank South's plan to merge with a Florida bank, claiming the bank has failed to serve minority and working-class neighborhoods in Atlanta.

Bank South called the accusation "inaccurate, misleading and without merit." A bank spokesman declined to respond to specifics of the complaint.

At the same time, Bank South announced Monday it will soon introduce improvements in its service to minority and working-class neighborhoods in Atlanta: new corporate statements of non-discrimination, new branches and branch renovations, increased marketing, new Saturday hours, increased small-business lending and educational programs.

The legal challenge against Bank South, the fourth largest bank in Georgia, was filed with the Federal Reserve Board by the Georgia Association of Communities Organized for Reform Now (ACORN). The group asks that federal bank regulators delay or deny Bank South's plan to buy C&P Bank Corp. of Pensacola, Fla. This is the Atlanta bank's first attempt at interstate expansion.

The legal challenge, filed last week, is the first since May, when The Atlanta Journal-Constitution disclosed discriminatory lending practices of Atlanta banks and savings and loan associations. The newspapers' study showed that Bank South and other deposit-gatherers made few home loans in black or working-class neighborhoods, had closed branches in minority areas, kept branches in black areas open fewer hours than branches in white areas, rarely called on minority real estate brokers, and enforced minimum loan amounts that rule out many minority and low-income homebuyers and businesses.

ACORN filed its challenge under the federal Community Reinvestment Act, which says that banks and savings and loans have "continuing and affirmative obligations to help meet the credit needs of their local communities, including low- and moderate-income neighborhoods, consistent with safe and sound operation."

Specifically ACORN claims Bank South:

-- "Has made no home loans in minority and low- and moderate-income neighborhoods," according to 1985 and 1986 reports under the federal Home Mortgage Disclosure Act. The bank refused to turn over records of its mortgage subsidiary, Bank South Mortgage, which makes most of its home loans.

-- "Is the only major Atlanta bank with no home loan program designed for low- and moderate-income people." Bank South is participating in the nine-member Atlanta Mortgage Consortium, contributing $2 million of the $20 million. But Bank South is the largest Atlanta bank not to set up its own special loan program. The three larger Atlanta banks have announced $45 million in low-interest loans.

-- "Has closed branches in Southside Atlanta." At least two former Bank South branches are now liquor stores.

-- "Makes no effort to solicit business loans" in minority and working-class neighborhoods.

-- "Does not participate in non-profit community development and housing development projects."

-- "Has no advertising in minority media."

"Bank South has one of the worst records on community reinvestment among all the Atlanta banks, and we just want to make sure they clean up their act before they acquire any more southeast banks," said ACORN President Annette Wilcoxson.

A Bank South spokesman, Bo Spalding, responded in a written statement: "The comments made by ACORN are inaccurate, misleading and without merit. We are disappointed that the ACORN representatives did not give us an opportunity to meet with them before they filed these complaints and issued the news release. We have scheduled a meeting with ACORN for Friday to discuss these issues."

Although the Pensacola bank is small, the acquisition would give Bank South an important foothold in the Florida Panhandle. C&P has assets of $250 million at nine offices. Bank South has assets of $4.1 billion.

Spalding said Bank South will soon release details of its plans for minority and working-class areas, focusing on the area south of downtown inside the Perimeter.

"We must admit that it is very difficult to continue working on these improvements when the representatives of the people we are trying to help are filing complaints and organizing boycotts," Spalding said. "However, we are trying to be responsible and do what we should to serve the entire community better, while also protecting the interests of our shareholders."

Spalding was apparently referring to a plan announced Sunday by black clergy to encourage minorities to put money in two black-owned institutions: Citizens Trust Bank and Mutual Federal Savings and Loan. That 90-day campaign for "minority economic empowerment" begins July 5, the same day Bank South's formal response to the ACORN challenge is due.

A similar challenge against Trust Company Bank was denied last fall. The challenge was filed by a different coalition of Atlanta neighborhood groups and housing advocates.


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