WASHINGTON -- Shawmut National Corp. announced Friday that it has not abandoned plans to buy a New Hampshire bank, despite the Federal Reserve's denial of its application.
The company said it will quickly "address and resolve" problems that Fed governors had with Shawmut's fair-lending record, which led them to deny the expansion application.
"It is our intention to move forward on our plans to acquire New Dartmouth," the bank said in a statement.
Shawmut's decision to persevere could change the tenor of an ongoing Justice Department investigation of the bank's minority lending record. While that probe was not expected to be resolved for many months, sources say, Shawmut may now be willing to reach a speedy settlement to clear its record.
A resolution of the investigation could lead some Fed governors to reconsider their "no" votes.
In a split vote last week, the Fed denied Shawmut's bid to acquire New Dartmouth Bank of Manchester, N. H. It was the first such Fed denial on fair-lending grounds alone.
The Fed released statements Friday explaining the governors' votes on the application.
Chairman Alan Greenspan, Vice Chairman David W. Mullins, and Governor Lawrence B. Lindsey wrote that they opposed it because Shawmut was under investigation by the Justice Department for alleged lending discrimination. "We believe that this matter is of the most serious concern," the three governors wrote.
In addition, the governors said widespread inaccuracies in the companies Home Mortgage Disclosure Act data showed that senior managers were not responding seriously to government concerns about discrimination.
Examiners found that Shawmut's HMDA data from 1990 to the first half of 1993 was extremely inaccurate, the governors said.
Appeal Due by Nov. 30
Mr. Greenspan, Mr. Mullins, and Mr. Lindsey also noted that Shawmut has recently taken steps to improve its record. But the changes "have not been in place for a sufficient period of time to allow an adequate evaluation either of the effectiveness or sufficiency of these initiatives," they said.
Shawmut has until Nov. 30 to request that the Fed reconsider the New Dartmouth application, a Fed spokesman said. Otherwise, it will be forced to submit a new application to the Fed -- a process that could take months if it wants to complete the New Dartmouth deal.
Shawmut need only convince a single governor that it has resolved all questions of lending discrimination in order for the issue to gain majority support on the board.
A speedy resolution of the Justice Department probe -- such as a settlement agreement to provide restitution to past mortgage applicants and a commitment for future initiatives -- could appease the Fed, some said.
2 Other Bids
Shawmut recently announced two other acquisition bids -- for Peoples Bank Corp of Worcester, Mass., and Gateway Financial Corp. of Norwalk, Conn. Those deals will also require Fed approval.
On Friday, three governors who had voted to approve Shawmut's application -- Wayne D. Angell, Susan M. Phillips, and Edward W. Kelley -- also released a statement saying they were satisfied that Shawmut had already taken adequate steps to remedy disparities in treatment of minorities and whites.
They said that Shawmut's lending record already has improved. For example, they said in the first half of 1993, the denial rate for mortgage loan applications was 16% for blacks and 11% for whites. In 1990, they said, the denial rates for blacks was 40%, compared with 15% for whites.