Trust Company Bank is an Atlanta institution.
The bank is proud of its historic role in promoting the city's economic health. Known as the "Coca-Cola Bank," Trust Company was led by the late Robert W. Woodruff, the Coke magnate remembered as the city's greatest philanthropist.
And the bank is proud of its historic role in promoting racial harmony. The late John A. Sibley, then retired chairman of Trust Company, was credited with holding Georgia's black and white leadership together in 1960-61 as public schools began desegregation, and he provided seed money for single-family housing for blacks in southwest Atlanta during tense times in 1962.
"Trust Company Bank has contributed to the shaping of Atlanta like few other institutions," the bank's literature says.
That's all true, say the leaders of an Atlanta neighborhood coalition. The Atlanta Community Reinvestment Alliance also says Trust Company doesn't lend much money to black people.
"I'm not going to try to tell you the bank's motives," said Dennis Goldstein, the Atlanta Legal Aid Society lawyer representing members of the coalition. "But the bank's policies have a racially discriminatory effect in the extreme."
The coalition filed a complaint with federal regulators last year against Trust Company's parent, SunTrust Banks. After negotiating unsuccessfully with the bank for a year, the group asked the Federal Reserve Board to stop a SunTrust merger. The group claimed Trust Company was redlining -- not lending in working-class and minority neighborhoods -- in violation of the federal Community Reinvestment Act.
SunTrust won, as has every other bank challenged through complaints to the Federal Reserve Board.
Trust Company says the coalition picked the wrong target. "I think we get a bad rap," said Jim Mynatt, first vice president of Trust Company. "We don't have a map up there with a redlined district."
However, Trust Company ranks 15th out of 17 banks and savings and loans in the city in The Atlanta Journal-Constitution study of lending to minority and lower-income neighborhoods. It ranked seventh when loans to similar black and white neighborhoods were compared.
Coalition leaders say they chose Trust Company partly because of its lending records, partly because its merger plans provided a convenient target, and partly to make a point.
"Trust Company was not the worst bank," said Lynn Brazen, co-chairwoman of the coalition. "We studied five banks and two savings and loans. They were all bad. Some were worse than others. More speakers at our neighborhood meeting complained about Trust Company than any other bank.
"We also wanted to start with a community leader, a bank with an image as a good citizen," Mrs. Brazen said. "We weren't trying to tear down that image, but to let the bank be the leader in this, too. Let the bank take the initiative to improve its record."
Trust Company is the city's most profitable bank. It's also the one with the second-highest share of non-white customers, according to the 1986 Scarborough Atlanta Market Study for the Journal-Constitution. Trust Company drew 28 percent of the metro area's non-white customers, second only to First Atlanta's 31 percent.
Although Trust Company officials say they are fair and obey the law, they also agree that the common man is not their target audience.
The "vision statement" of parent SunTrust Banks includes this: "Our primary target markets are successful, growing businesses and institutions and individuals with above-average financial service needs."
Another bank publication adds: "Even though it is a large bank, Trust Company Bank still has limited resources. Management has decided that the way to have the most profound impact on the community is to deal largely with the corporate and wholesale markets.
"To say that the bank's emphasis is on corporate and wholesale banking does not imply that the bank's leadership does not have a strong sense of community responsibility."
That's exactly what the community coalition implied.
The challengers focused on Trust Company's lending pattern, its closing of branches serving minority and lower-income neighborhoods, its refusal to offer fixed-rate mortgages and its lack of advertising in minority publications.
The coalition also said Trust Company was the only major bank in town without a low-cost checking account, sometimes known as a lifeline. For customers without a balance of $500, a Trust Company checking account costs $3 a month plus 30 cents a check.
The coalition waited a year to file its challenge, perhaps passing up its best opportunity. The coalition almost challenged a larger merger in 1986 that brought Tennessee's Third National Bank Corp. into SunTrust, but it backed off as negotiations improved.
"We took them at their word last year on the basis of their promise to listen to our concerns in good faith," Goldstein said. "That might have been a mistake."
Members of the coalition include the Capitol View Manor Community Group and the Capitol View Neighborhood Association, as well as four groups that encourage housing for low-income neighborhoods: the Georgia Housing Coalition, Interfaith, South Atlanta Land Trust and Southeastern Reinvestment Ventures.
The challenge was joined by the city's Neighborhood Planning Unit M, which includes the Bedford-Pine, Sweet Auburn and Techwood neighborhoods; the Historic District Development Corp., which is developing housing in the Martin Luther King Jr. Historic District; the Sweet Auburn Merchants Association; and several area residents.
The negotiations, from September 1986 until the complaint was filed in October 1987, were often contentious.
The bank said its lending patterns were caused mostly because it offers no fixed-rate mortgages, which it said are preferred by residents of slower-growing, less transient areas. It offers only adjustable-rate mortgages, which appeal more to residents who will sell in only a few years.
"Thus, the fact that fewer mortgage loans were made by Trust Company Bank in black neighborhoods than in white neighborhoods is the result of the differing mobility and growth patterns between the white and black neighborhoods, rather than to racial discrimination," Georgett Dickinson, assistant corporate counsel for SunTrust, wrote to the Federal Reserve.
As for a lifeline checking account, the bank said few people wanted such an account, it would lose $25 a year on each account with a $2.50 monthly fee, and it would not consider offering a lifeline account that lost money.
After negotiations started, Trust Company did advertise in the city's largest black newspaper, The Atlanta Daily World, in October 1986. It did not advertise again until October 1987, when it filed the merger application, but since then has been the newspaper's largest bank advertiser, according to advertising director W.A. Scott III.
At the same time, Trust Company began to make loans to a leading coalition member, the South Atlanta Land Trust.
"Trust Company has funneled half a million dollars my way since the negotiations began," said the land trust's founder, the Rev. Craig Taylor. "They've co-opted me to absolve themselves of their larger responsibility."
"I just can't believe Craig said that," said Trust Company's Mynatt. "Trust Company Bank has entertained any loan request that's come to us. The bank is very receptive to any of these housing projects."
At one point Trust Company questioned methods of the coalition's legal counsel, the Atlanta Legal Aid Society, of which the late John Sibley of Trust Company was a founder.
Last April, Trust Company's corporate counsel, J. David Webb, wrote to the executive director of Atlanta Legal Aid, Steve Gottlieb, asking if Legal Aid was soliciting clients to challenge SunTrust. If the lawyers were soliciting clients, Webb said, Trust Company would be unable to give its annual $100-per-attorney donation to Legal Aid. After Legal Aid gave assurances that the clients had come forward on their own, Trust Company made its usual donation.
Trust Company's arguments and information persuaded the federal regulators.
After one negotiating session, the chief regulator on the case, William Estes III, examining officer for the Federal Reserve Bank of Atlanta, wondered aloud why the group bothered to file a challenge.
"He said he was impressed by the communication between the bank and the community group," said lawyer Goldstein. "This was shocking to us, because the focus of the meeting was our complaint about the bank's lack of communication."
The coalition asked the Atlanta Fed to hold a public hearing. The request was denied.
In the end, the Federal Reserve Board in Washington refused to hear the challenge.
The coalition was not surprised, but it was angered that the regulator made a point of praising Trust Company.
"The record in this case," the Federal Reserve secretary wrote, "reflects that Trust Company has made efforts to serve the low- and moderate-income and minority communities in Atlanta through its House Money program and through its participation in a loan consortium that will provide below-market rate financing of single-family homes."
House Money, through which Trust Company offers home-purchase loans at half a percentage point below market interest rates in targeted neighborhoods, made nine loans from 1985 to 1987.
And the loan consortium hasn't made any loans yet.Go to the next article or back to the Color of Money index or Power Reporting
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