month, First Chicago Corp. and NBD Bancorp made public the details of a six-year $2 billion commitment for community reinvestment loans in Chicago's inner city. The agreement satisfied demands from about a dozen community groups that wanted to know how the new First Chicago-NBD Corp. would allocate money in eight impoverished neighborhoods. Warren Traiger, a New York attorney and regulatory expert, said the agreement hits on some of the points included in the revised Community Reinvestment Act. The announcement comes two weeks after a similar one by Chase Manhattan Corp. and Chemical Banking Corp., which pledged to make $18 billion in CRA loans over five years. Mr. Traiger said the two commitments set a tone for future mergers. "One thing it does is it begins to establish a precedent of what banks will do as a result of a merger," Mr. Traiger said. "No longer can you do nothing." First Chicago announced the plan in March, its third CRA agreement in 12 years. But in July, when the bank said it would merge with Detroit-based NBD, community groups in Chicago began to apply pressure about where the money should go. Specifically, the program: *Commits the merged bank to four new full-service branches on Chicago's South and West sides. Three of the branches would be located in supermarkets. *Guarantees $2.5 million a year for loans of less than $100,000 each for small businesses in low- and moderate-income neighborhoods. The businesses must report annual sales of $1.5 million or less to be eligible. *Pledges a 25% increase in the number of home loans to low-income borrowers, or those with annual family incomes of $33,000 or less. First Chicago made 800 such loans last year. *Pumps $6 million into the bank's Community Development Corp., which makes equity investments of up to 10% in real estate projects that create jobs. *Promises more than $1 million for community and neighborhood development programs for 1996. *Reduces equity requirements for owner-occupied multifamily buildings of five to eight apartments, loans that normally require 20% down payments. Malcolm Bush, president of the Chicago-based Woodstock Institute, which helped negotiate the deal, said the program is the most detailed he's seen from a large bank. It's just good business, said Mary Decker, First Chicago's vice president for community affairs. She said the small-business provisions were added before federal guidelines came out. "We felt pretty sure something was going to come out related to small-business lending," she added. Five years ago, First Chicago committed only $250 million to a similar program. The bank has had problems keeping up with the CRA. Its outstanding rating was reduced to satisfactory just two years ago. Kathryn Tholin, Woodstock's vice president, said First Chicago has generally worked well with community groups. However, after the merger announcement, activists were uncertain whether NBD would demonstrate the same kind of commitment. "Part of the impetus was, a lot of people did not know how the merger of the two institutions would play out," Ms. Tholin said. Ms. Decker said the program has more ramifications than just the threat of a challenge from activists. "The issue of a challenge was there, and it wasn't," Ms. Decker said. "We do try to be proactive."
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