NCNB and C&S Make $10 Billion CRA Pledge

Attempting to stymie any protests of their planned merger, NCNB Corp. and C&S/Sovran Corp. pledged Tuesday to make $10 billion in community development loans over 10 years.

The commitment is the largest ever under the Community Reinvestment Act, which requires banks to serve their local markets. The previous record, $5 billion, was set by BankAmerica Corp. this spring when it bid for the Bank of New England franchise.

By filing CRA protests with regulators, community activists can threaten to stall or block merger applications. The pledge from NCNB and C&S/Sovran is intended to pave the way for a smooth combination into a new entity known as NationsBank by yearend.

Pledge Is Hard to Gauge

Activists in NCNB's hometown of Charlotte, N.C., and C&S/Sovran's base in Atlanta had said previously they planned to file CRA challenges to the $4.3 billion merger, which would create the nation's third-largest banking company.

Though the pledge is significant, community leaders said Tuesday they could not yet gauge whether it would meet community needs and forestall challenges to the NCNB and C&S/Sovran marriage.

"In general, these banks have been much better at promising rather than delivering on these types of programs," said Thomas Schlesinger, director of the Southern Finance Project, Charlotte. "There is more sizzle than steak."

Combined, the two banks already extend $600 million to $800 million annually under CRA programs.

Seeks to Satisfy Communities

In announcing the $1 billion-a-year pledge, NCNB chairman Hugh McColl said he expects the effort to satisfy community groups and to assist individuals and communities that have been left out of the region's growth.

"We think $10 billion will take care of almost everybody," said Mr. McColl. "We're saying we understand the needs of our communities. We don't think they've been met in the past."

Dennis Goldstein, housing specialist attorney with Atlanta Legal Aid Society Inc., said, "My first response is to be optimistic." But, he added, "I'm not sure what the $10 billion amount is for and what will be used in our area."

Community groups got some added firepower last summer when regulators adopted tougher CRA guidelines. Banks now must undergo extensive CRA exams and make their resulting ratings public.

Both NCNB and C&S/Sovran have received satisfactory ratings - the second highest of four possible scores - from federal regulators for their CRA activities.

But even banks that score well are not immune to challenges. Manufacturers Hanover Trust Corp. of New York found that out earlier this year when it filed to acquire several branches from Goldome after receiving the highest possible rating - outstanding. The application was delayed but eventually approved.

NationsBank will earmark the $10 billion for lending in the Southeast, in markets stretching from Maryland to Texas. The money will be used for home construction and mortgages for low-and moderate-income families, low-cost consumer lending, small-business development, economic development, and public and private housing partnerships.

NationsBank will be alloting about 0.84% of its $119 billion in assets to CRA lending each year.

West Coast Leads in CRA

By comparison, the California operation of BankAmerica committed 0.75% of its $65 billion in assets to community development in 1990.

California banks have generally led the way in CRA commitments. Security Pacific Corp. last year pledged $2.5 billion in community lending over 10 years, and Wells Fargo & Co. promised $1 billion over 7 years.

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