A group of community organizations are mounting a challenge to First Union Corp.'s agreement to buy Signet Banking Corp.
The groups claim the merger would be "anti-competitive" and that the branch closings resulting from the deal would hurt several low- and moderate-income neighborhoods. They also allege that Charlotte, N.C.-based First Union, which has $143 billion of assets, has been deficient in complying with fair-lending laws and the Community Reinvestment Act.
"Their record is worse than other banks in the industry," said Matthew Lee, executive director of Inner City Press/Community on the Move of Bronx, N.Y. "The merger doesn't meet the needs of the community and shouldn't be approved."
The Delaware Community Reinvestment Action Council Inc., Wilmington; the Coalition for Nonprofit Housing, Washington; and the Roanoke Community Reinvestment Coalition of Virginia have filed letters of protest with the Office of the Comptroller of the Currency and the Federal Reserve Board. Inner City Press is coordinating the protests.
The groups want the OCC and the Fed to convene public meetings on the merger. They have also asked First Union to disclose its plans for branch closings and layoffs.
First Union officials dismissed the opposition, pointing out that it has more than $5 billion in consumer and mortgage loans outstanding to low- and moderate-income constituents. "We currently have billions of dollars extended in low- and moderate-income communities," said spokesman Jeep Bryant. "Our First Union community reinvestment program is increasingly viewed as a model for our industry, and we are very proud to stand on that strong record."
First Union spokesman Ken Darby said the company had not received an unsatisfactory CRA rating in the last five years.
Similar opposition was voiced when First Union announced it intended to acquire New Jersey-based First Fidelity Bancorp. in 1995. Opponents were unsuccessful in hindering that merger. Mr. Bryant said First Union does not anticipate any delay with the Signet merger either.
The opponents of the merger cite mortgage lending data indicating that First Union has a less-than-stellar record when it comes to making loans to African-Americans. Last year black applicants seeking First Union mortages were 2.43 times as likely as whites to be rejected, opponents claimed. The comparable figure for Signet was 1.9, the groups said.
First Union said in July that it had agreed to pay $3.25 billion in stock for Richmond, Va.-based Signet. The acquisition would make First Union No. 1 in Virginia market share, up from No. 4, and second in the Maryland and Washington areas. The deal is scheduled to close by yearend.