WASHINGTON -- First National Bank of Vicksburg grabbed the national spotlight in January when it settled Justice Department charges that it violated the Fair Housing Act.

Now the Mississippi bank will cease to exist as an independent entity.

The Federal Reserve Board on Monday approved a merger between the much larger Trustmark Corp. of Jackson, Miss., and Vicksburg's parent, First National Financial Corp.

Also, the Office of the Comptroller of the Currency approved on Aug. 26 the conversion of all Vicksburg's branches to Trustmark branches.

The $4.4 billion-asset Trustmark, the largest bank in the state, controls 15.6% of the deposits in Mississippi.

With the merger, the bank will boost its share of the state's deposits to 16.8%.

The Fed ruled that the merger would not affect competition in the Jackson market - where the two banks compete - because the $304 million-asset Vicksburg was so small and because the market remains attractive to other banks.

The Fed noted in the decision that the merger would increase Trustmark's share of the Jackson market by less than 1%, for a total of 44.2%.The central bank also ruled that Trustmark must honor all of Vicksburg's obligations under the consent decree it signed with the government.

The bank signed the decree rather than fight government allegations that it charged minority group members 4% to 11% more for home improvement loans than it charged white borrowers.

The decree requires the bank to review all of its rejected applications to ensure that no discrimination is occuring, train its loan officers in fair lending, and pay approximately $4.400 each to 170 black borrowers that the government said the bank had discriminated against.

The Fed said in its decision that it will approve the merger even though Vicksburg has a "needs to improve" Community Reinvestment Act rating from the OCC.

The reason: The Justice Department concluded that the bank is in full compliance with the decree.

Trustmark maintains a "satisfactory" rating. Community reinvestment groups were not worried by the decision.

"It's not clear to me that something awful has happened," said

Woody Widrow, vice president of . the' National Community Reinvestment Coalition. "I'd have to reserve judgment."

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