Merged Bank Will Improve Service to Community : Bankamerica: The new entity’s lending goal of $12 billion is the foundation.

The merger of BankAmerica and Security Pacific recently underwent the most extensive public hearings of any bank merger in U.S. history. The Federal Reserve held four hearings in three states at which more than 150 individuals and organizations testified about Bank of America’s service to lower-income customers and communities under the Community Reinvestment Act.

Bank of America was both praised and criticized at those hearings. But significantly, very few groups actively opposed the merger. The message we did hear, however, is that the new BankAmerica must enhance its lending goals for lower-income neighborhoods and then meet those goals, year in and year out.

We are absolutely committed to doing just that. BankAmerica has developed a comprehensive post-merger community lending program unmatched by any bank in the nation. The foundation of our program is a 10-year lending goal of $12 billion in lower-income communities in the 11 Western states to be served by the merged bank, including nearly $8 billion earmarked for California to fund home loans, small-business loans, multifamily housing construction and consumer credit.

As part of the merger, we have pledged to create no new underserved areas through branch closures or consolidations. If Bank of America or Security Pacific is the only provider of banking services in a low-income neighborhood, the branch will not be closed. And we will explore ways to expand access to banking services in these areas, through methods such as branches in grocery stores and other retail outlets, or free-standing ATMs.

One of our primary services to lower-income customers is Limited Checking, a checking account with a low monthly fee that provides customers with free, unlimited check-cashing services. We believe this is a very affordable alternative to high-priced check-cashing stores, and provides easy access for lower-income customers to a variety of basic banking services.

We have taken a number of affirmative steps to expand access to home loans in lower-income and minority neighborhoods, including the use of modified underwriting standards, increased incentives for bank officers to make these loans and more aggressive marketing. As a result, Bank of America’s home loans in lower-income areas of California totaled more than $500 million in 1991, an increase of at least 15% over 1990, with significant increases in loans to black and Latino customers.

We have also taken steps to expand access to credit in the small-business market. The merged bank will have an annual goal of $200 million in conventional small-business loans under $50,000, which will have a major impact among minority and women-owned small businesses.

We will continue to seek out innovative approaches to community-based economic development. In particular, we are interested in the potential of a Los Angeles multibank community development corporation in stimulating economic growth--in Los Angeles and the surrounding region.

There were concerns raised during the Federal Reserve hearings that the combination of Bank of America and Security Pacific would create a banking juggernaut dominating the local market. In fact, the combined banks will account for only 19% of all deposits among banks, thrifts and credit unions in Los Angeles. There are currently more than 200 financial institutions competing for business in Los Angeles, providing consumers with a broad choice of products, services and rates.

Bank of America has been communicating extensively regarding the community impact of the merger in Los Angeles. In addition to the Federal Reserve hearings, we have talked with Mayor Tom Bradley and his aides, members of the City Council, City Controller Rick Tuttle and community-based groups. We have been the subject of hearings before congressional and California legislative committees.

Gail Hillebrand, board chair of the California Reinvestment Committee, had this to say at the Fed hearing: “We are dealing with men and women of good faith (at Bank of America). In California, we have found bank people very receptive to meet and talk with us. They have been willing to say to us not just ‘yes’ or ‘no,’ but sometimes ‘maybe,’ which is very helpful, and a way of saying, ‘Here’s what needs to be done to make this work. Here is what you need to bring to the process.’ ”

We take that as a very high compliment. We may have different opinions about particular programs. But fundamentally, our goal is to work honestly and candidly with our communities so that, together, we can craft real solutions with real benefits.

We believe this merger will produce the kind of community-based, well-capitalized bank that can make our reinvestment programs even better. Bank of America’s record is one of integrity, creativity and accomplishment, built on principle and common sense. We expect nothing less of the new BankAmerica.