Star Banc Vows $5 Billion of CRA Lending in 3 States

Star Banc Corp. has joined the big banking companies that have committed huge sums to community reinvestment lending.

The Cincinnati company pledged more than $5 billion of such lending in the next five years in Ohio, Indiana, and Kentucky.

Though small compared with other multibillion-dollar pledges by bigger banking companies, the commitment is sizable relative to Star's $14 billion-asset size.

It did not please everyone. Morris Williams, associate director of the Coalition of Neighborhoods in Cincinnati, said he was irritated that his group was not consulted before Star made the pledge.

"The hardest thing to do is to talk to somebody who has already made up his mind," Mr. Williams said. He said most Cincinnati banks' track record in minority and low-income lending is "clearly the worst" compared with banks elsewhere.

Star officials claimed that their commitment, as a percentage of total assets, is among the largest. But in terms of total dollars, it is well behind the $140 billion over 10 years announced last October by $260 billion-asset BankAmerica Corp., which is probably the record.

Like BankAmerica, Star said it had made its commitment without the onus of a community group's challenging a merger application. Such challenges have become commonplace since 1977, when Congress passed the Community Reinvestment Act to encourage banks to lend in poor neighborhoods.

Star recently completed the acquisition of Louisville, Ky.-based Great Financial Corp. Last week it announced it had agreed to buy 53 Ohio branches from Banc One Corp.

Star officials said the lending pledge was not made out of fear of CRA- related challenges to its latest deal.

Mr. Williams said his group had not taken any such action but would consider it.

"This was not at all a response to a community group's protest or because we want to do an acquisition or a big business initiative," said Cynthia O. Booth, Star's senior vice president and director of community affairs.

A New York-based activist who has mounted challenges on community reinvestment grounds said banks could preempt fights with community groups by announcing pledges before attempting large deals.

"Banks are smarter to announce pledges while they're not in a fight," said Matthew Lee, executive director of Inner City Press/Community on the Move.

Although few banks have had mergers called off because of poor lending records, challenges can slow down regulatory approvals.

Mr. Lee said reinvestment announcements are not as meaningful as a true "good-faith effort" by banks. Too many companies make pledges that are hard to monitor, he said.

Ms. Booth said Star would work with community groups in the five geographic areas where the company does business. The commitment, which includes loans to low- and moderate-income consumers, small businesses, and affordable-housing developments, would be apportioned according to Star's market size.

Star said it plans to lend $2 billion in greater Cincinnati; $1 billion in Cleveland and northeast Ohio; $800 million in Kentucky; $750 million in Columbus and south-central Ohio; and $600 million in Dayton, Ohio, and eastern Indiana.

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