World Savings Bank took top honors in a recent ranking of mortgage loans made to low-income minorities by California banks and thrifts.
A Dec. 28 Greenlining Institute report found that the Oakland-based thrift made about 39 loans to low-income minority borrowers per billion dollars of assets. The community group's report, which ranked the 15 largest California banks and thrifts, was based on 1994 Home Mortgage Disclosure Act data.
Wells Fargo Bank ranked fifth overall, but the institution took first place among banks, with 18.3 loans to low-income minorities per billion dollars of assets.
"When the HMDA information was made public in 1990, we looked at our results and realized we needed to increase our outreach to minority and low-income borrowers," said Karen Wegmann, executive vice president of Wells Fargo.
More significant than the actual ranking is the way the scores were tallied, according to Robert Gnaizda, the Greenlining Institute's general counsel.
Currently, bank and thrift regulators focus on the number of loans denied minority borrowers compared with the total number of loans made by the institution, Mr. Gnaizda said.
"The paradox is that if a bank aggressively outreaches to a low-income community, it often will have a high declination rate," Mr. Gnaizda said. "However, by looking at bottom-line home lending data, we have found that banks that have marginal declination rates often make the most loans per dollar figure of assets."
However, a spokesman for Glendale Federal Bank, which was ranked lowest among the eight thrifts in the report, took issue with the Greenlining Institute's methods.
"That number is misleading," said Glendale Federal spokesman Maury Healy. "A much better measure would be based on low-income loans made as a percentage of loans originated."
Approximately 15% of Glendale Federal's loans, and 10% of its loan dollar volume, went to low-income borrowers, Mr. Healy said. "We feel confident that we are doing well in that measure," he added.
However, the study argued that focusing on a percentage of loans originated is not always an accurate barometer of an institution's achievements.
"Two banks may have comparable percents of loans given to each minority," the study said. "However, when comparing the actual number of loans, one institution may have made 20 times as many loans as another."
Among thrifts, American Savings took second place, making 36.6 loans per billion dollars of assets. Great Western Financial Corp. placed third, with 25.9.
Bank of America ranked second among banks, scoring 11.9 loans per billion dollars of assets. Third place went to Union Bank, which scored 11.1.
While thrifts beat the banking industry hands down under this method of ranking, major California banks came out on top in another category.
The study found that the largest California banks made almost 50% more of their total home loans to Blacks and Hispanics of all incomes than major thrifts in the state.
