Ameritrust's Branch Shutdowns Delayed by Charges of Redlining
Federal regulators are delaying action on an application by Ameritrust Corp. to relocate two branches while they investigate allegations of redlining at the Cleveland banking company.
Cleveland Mayor Michael R. White ignited a public dispute last week by saying Ameritrust had an "appalling community reinvestment performance" and asking the Office of the Comptroller of the Currency to withhold approval of the branch application.
The mayor was joined in the protest by community groups and several members of the City Council, all of whom are charging that Ameritrust extends too little credit in minority neighborhoods.
The bank issued a statement Friday denying the allegations and declined to comment further. But city officials said Ameritrust had requested a meeting to discuss the charges.
The protest could threaten more than Ameritrust's branch-consolidation plan, which includes the two relocations and would result in six fewer branches by yearend. The bank has said it will entertain merger offers, but any combination would require regulatory approval and could be stalled by community protests.
Cleveland Meeting Set
James D. Rode, president and chief operating officer of the $10.6 billion-asset banking company, is scheduled to meet today with Chris Warren, Cleveland's director of community development.
Mr. Warren said Ameritrust requested the meeting after the mayor accused the bank of red-lining, or denying credit to people living in poor and minority neighborhoods.
"Our review suggests serious shortcomings, notwithstanding the branch closings and relocations, in the extension of home mortgage credit evenly and fairly," the Mayor wrote in a letter to Mr. Rode dated Aug. 21.
Differences in Perception
The Mayor released a report Friday contending the branch relocations would also leave some area residents and minority communities without a bank branch.
Ameritrust is the latest of several banks to receive positive evaluations for community reinvestment activities only to come under fire from the community when seeking regulatory approval for business changes.
Earlier this month, the bank received a satisfactory rating, second highest on a four-tier scale under the Community Reinvestment Act, from the Comptroller's office. But in its evaluation, the Comptroller's Chicago office said Ameritrust did not comply with a technical provision of the Equal Credit Opportunity Act and did not adequately monitor compliance with anti-discrimination laws.
A spokesman for the Comptroller's office said it would review the protests, give Ameritrust a chance to respond, and conduct its own investigation before ruling on the bank's application.
"Banks today are being challenged on all kinds of filings even though they may have an excellent record under the Community Reinvestment Act," the spokesman said.
He declined to say when the regulator would take action on Ameritrust's application.
11 Groups and Individuals
A total of 11 groups and individuals filed protests with the Comptroller's office. They included several area development groups, the National Association for the Advancement of Colored People, and a local association of real estate brokers.
But some others defended the bank's community activities.
"I was quite surprised by the mayor's charges," said Marcia Nolan, executive director of Neighborhood Housing Services of Cleveland, a nonprofit organization. She said Ameritrust had contributed to NHS for several years and called the bank "an active player in our community."