It is not uncommon for customers to lose out in bank mergers because the acquirer casts a critical eye on old loans. But few customers have fared as badly as North Carolina home builder Bob McLemore, even though the merger was never consummated.

Mr. McLemore, from Mint Hill, N.C., was the largest borrower at Charlotte's Home Federal Savings and Loan for more than two decades.

Then, during the early 1990s, Home Federal cut off his line of credit and asked for repayment of previous loans. This, he said, resulted in his filing for bankruptcy.

"They wanted me to end the commitment and forced me to reduce those loans," said Mr. McLemore in a telephone interview.

The reason? According to Mr. McLemore, Home Federal's excessive exposure to one borrower - the thrift had extended $20 million of loans to Mr. McLemore from a $60 million capital base - imperiled a planned merger with BB&T Financial Corp.

Wilson, N.C.-based BBT had much stricter loan controls. But Mr. McLemore had borrowed from BB&T as well.

Last February, Mr. McLemore filed a lawsuit in U.S. district court in Raleigh seeking $50 million in damages from BB&T and Home Federal. More recently, he launched a campaign to air his grievances in the press.

"The publicity side of it is strictly to try to start again," Mr. McLemore said. "I built houses for 30 years, and throughout this three-year struggle my reputation has been ruined. I just want the public to know what I know and what I can prove."

A BB&T spokesman declined to discuss the case, except to say, "BB&T had done nothing improper in connection with its handling of the McLemore loans."

A federal bankruptcy judge recently dropped BB&T from Mr. McLemore's lawsuit on a technicality.

Home Federal chairman Joe King termed Mr. McLemore's allegations "ridiculous" and said Home Federal and BB&T never discussed the loans at all during their merger talks.

"The simple truth of the matter is that he had a lot of loans and did not repay them as agreed," Mr. King said.

Mr. King also said the McLemore loans could easily have been absorbed by BB&T had the acquisition been consummated.

However, the deal fell apart during the regulatory controversy over merger-conversions, an acquisition technique used by banks to acquire thrifts at rock-bottom prices. It involves purchasing an S&L at the moment it converts from a depositor-owned institution to a publicly owned one.

Regulators clamped down on the process last year because bank insiders were viewed as enriching themselves at the expense of depositors.

With assets of $582 million, Home Federal reported 3.5% of its loans in default at Sept. 30, much of that related to the McLemore bankruptcy.

BB&T, meanwhile, has moved on to bigger things. The bank anticipates closing its merger with Southern National Corp., Winston-Salem, on Feb. 28, creating a $20 billion-asset company.

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