Three months after buying CoreStates Financial Corp. of Philadelphia, First Union is planning to invest $1 million in a small black-owned bank there.
First Union, which has $229 billion of assets, would get 80,000 shares of nonvoting stock in United Bancshares, parent of $118 million-asset United Bank of Philadelphia. United Bank was founded six years ago to serve ethnic communities in and around Philadelphia.
First Union already has a $500,000 stake in United Bancshares, gained through the 1996 acquisition of First Fidelity Bancorp. The additional investment would push First Union past a 5% ownership stake, said spokesman Ken Darby.
The company filed this month for Federal Reserve approval of the investment, he said.
In acquiring $48 billion-asset CoreStates in late April, First Union ran into significant opposition as customers and city leaders protested the loss of the last big local banking company.
First Union has worked to overcome that reaction by forming a $100 million community foundation, helping displaced workers find employment, and promising to create jobs.
"We're going to do things to promote economic development and revitalization in Philadelphia neighborhoods. This is one part of an overall strategy," Mr. Darby said.
Emma Chappell, United Bancshares' president, said First Union's investment should help her company expand. "It's allowing us to do more in terms of serving the underserved areas," she said.
Ms. Chappell said United has about $7.5 million of capital and needs to raise that to $10 million to $12 million to meet the growth goals in its five-year strategic plan.
NationsBank Corp. is already an investor in United, which also receives assistance through an alliance with American Express Financial Advisory Services as well, Ms. Chappell said.
