An African-American-owned Detroit thrift is in hot water with regulators, who say it failed to meet its Community Reinvestment Act obligations.

The Office of Thrift Supervision published its latest CRA performance evaluations this month. Only $30 million-asset Home Federal Savings Bank got a "needs to improve." The exam of records from December 1998 through September 1999 found that Home Federal maintained a loan-to-deposit ratio of 44.6% at a time when the ratios of like-size midwestern thrifts averaged 84.2%. Its lending activity during the review period "was very low, even considering its asset size and resources," the OTS report said.

Home Federal president Helen Coleman, who has been with the thrift since 1958, would only say that she was "not fazed" by the evaluation. In an earlier interview, though, she voiced bitterness about the CRA.

Until recently, big banks "were not doing a thing" in Detroit's inner city, Ms. Coleman said last month. "Now all of a sudden they need some CRA credits, so they want to do something."

Other industry observers agreed that the 23-year-old law has created intense competition for quality CRA loans. They said big banks often snap up the best business, leaving small ones to scrounge for the leftovers.

"The big banks are willing to kill for the urban market because of CRA. They will make every loan worth making and a few that are not," said Diane Casey, president of America's Community Bankers, a trade group representing small banks and thrifts.

Dina Curtis, president of the American League of Financial Institutions, which represents minority-owned thrifts, said Home Federal hardly fits the profile of a CRA scofflaw. She said Ms. Coleman has been heroic in sticking by the disadvantaged communities on Detroit's West Side that Home Federal has served since 1947.

Ms. Curtis agreed that lending in the inner city is more competitive than many realize. She said some of her group's members have discussed seeking an exemption from the law.

"We are up against a wall," Ms. Curtis said. "The competition is tough. We have been concerned about the CRA for 10 years, but we cannot seem to resolve the issue."

Few African-American-owned thrifts seem to have as many problems as Home Federal, but the thrift has had no problems attracting deposits, despite its lending woes. Between December 1998 and September 1999 its deposits grew more than 11%, to about $28 million. In the same period its loan portfolio shrank 6%, to $11 million.

Not everyone is so quick to sympathize with Home Federal.

Richard Winslow, an activist with the Detroit chapter of the Association of Community Organizations for Reform Now, said, "We have invited them to our bank fairs, but we have never gotten them to participate."

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