Washington Mutual Inc. is expected to announce today a $120 billion, 10-year community reinvestment commitment as part of its planned acquisition of H.F. Ahmanson & Co, sources close to the deal confirmed.
The commitment incorporates a $75 billion pledge Wamu made as part of its acquisition last year of Great Western Financial, a $35 billion pledge Ahmanson had announced before its March 17 merger accord with Wamu, plus an additional $10 billion. The thrifts expect to complete their merger in the third quarter, pending regulatory approval.
The beefed-up Wamu would devote $81.6 billion for affordable housing loans, including $30 billion for mortgages to low- and moderate-income borrowers.
The package also would include $25 billion for small-business and consumer lending, $12.1 billion for multifamily housing, and $1.3 billion for tax-exempt housing bonds and community development projects. Also, the thrift would contribute 2% of its pretax earnings to charity, sources said.
The pledge represents 8% of the thrift's post-merger assets, making it proportionally one the largest Community Reinvestment Act commitments to date. The $350 billion CRA pledge made Wednesday by the new BankAmerica Corp. would represent about 6% of assets.
"This is a comprehensive program that is very achievable," a source close to the deal said. "It is good business."
Robert Gnaizda, general counsel to the Greenlining Institute, a San Francisco-based coalition of community groups, said the Wamu deal sets a new standard for banks and thrifts entering into major mergers. "This is going to be the leading (community) commitment," Mr. Gnaizda said.
Kenneth H. Thomas, a Miami-based consultant and author on fair-lending issues, said other banks involved in mergers, such as Banc One Corp. and First Chicago NBD Corp., may feel pressure to commit to large pledges.
-Brett Chase and Jaret Seiberg