Old Kent Financial Corp. of Grand Rapids, Mich., has agreed with community activists on a complicated market-share formula for lending in low-income Chicago neighborhoods.

The three-year pact followed Old Kent's announcement in March that it would acquire $1.1 billion-asset Pinnacle Banc Group, which is headquartered in suburban Oak Brook, Ill.

Under the deal with the Chicago CRA Coalition, Old Kent would make the same percentage or more of total single-family mortgage and home equity loans in low-income areas as it does in wealthier neighborhoods.

Nineteen ninety-seven lending data-the latest available-suggest that Old Kent would have to boost market share for home mortgages in poor neighborhoods by 13%, increase refinancings by 67%, and expand home improvement loans by 85%, the CRA Coalition said.

Old Kent, which has $15.9 billion of assets, also vowed to keep its branches in low- and moderate-income neighborhoods for three years.

The pact is only the most recent example of activists using a pending merger to prompt a banking company to increase its community reinvestment lending.

Old Kent struck a similar deal last year with the same group when preparing for the Oct. 1 purchase of $1.9 billion-asset First Evergreen Corp. of Evergreen Park, Ill.

Richard Arasmith, who heads Old Kent's retail bank in Illinois, said it is important for his company to stay on good terms with local activist groups.

"We are growing in Chicago very rapidly, and a relationship with these organizations can be pivotal," he said.

According to Malcolm Bush, president of Woodstock Institute, one of the CRA Coalition's member organizations, the market-share formula may become a standard test for activists interested in gauging a company's CRA commitment.

The formula was first developed to test Bank One Corp.'s lending in Chicago after its 1998 merger with First Chicago NBD Corp.

Banks should make a commitment to community reinvestment lending before mergers are final, Mr. Bush said. Once the deal closes "there's a need to show increased profit immediately and sometimes community reinvestment suffers."

In an interview Friday, Mr. Arasmith would not discuss how the agreement would affect Old Kent's strategy in Chicago. But he did say the market- share formula is a more favorable benchmark for banks than committing to a specific dollar amount of loans.

"The groups tend to want a number because that makes ink," he said, but the current test "is a much clearer indicator of the market."

Mr. Arasmith said the final agreement involved compromise from both sides. "They're good and they're tough, but we're tough too," he said. "There's been some give and take."

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