Verdict Still Out on Urban Lending Vows : Banking: Chemical Banking, BankAmerica and NationsBank made the promises while seeking approval of mergers.

NEW YORK â€”  Last year, three of the nation’s largest banks made spectacular promises to invest in economically deprived neighborhoods if regulators approved their mergers with other banks.

The bankers got what they wanted--the muscle and geographic reach that such combinations provide. But community activists say it’s too early to tell whether the banks’ multibillion-dollar promises will be kept.

“The banks can really do a good job at snowing you,� said Mike Shea, the Chicago-based housing director for the Assn. of Community Organizations for Reform Now, or Acorn. The group has led a nationwide effort to make the banking industry more responsive to low-income areas.

The mergers undertaken by BankAmerica Corp., NationsBank Corp. and Chemical Banking Corp. in 1991 realigned the superpowers of banking.

They also raised basic issues about whether the banks would neglect economically underserved areas, violating the spirit of federal anti-discrimination guidelines designed to make loans available to the poor.

Armed with these guidelines, Acorn and others had threatened to block the mergers. Partly as a result, BankAmerica pledged $12 billion in community lending over 10 years, NationsBank $10 billion in 10 years, and Chemical $750 million, with no time period specified.

All three report that they’re well on their way toward implementing these goals. Chemical and NationsBank, in fact, say they’re ahead of schedule.

Still, it’s difficult to measure the banks’ success or failure at this point, since federally mandated statistics on community lending activities won’t be available until late September or early October. And even then, sifting through the reports to determine how much of the money reaches disadvantaged communities is difficult.

“In general, the experience across the country is the actual dollar amount that reaches the street for low-income and minority people is significantly less than the amount that crosses their lips when they make the commitments,� said John Taylor, executive director of the National Community Reinvestment Coalition in Washington.

Deborah Warren, a member of the Community Reinvestment Alliance of North Carolina, said NationsBank has trained its staff and devoted dozens of people to work on community reinvestment activities.

“We have not seen any changes in our communities yet,� she said of the effort. “Let’s watch and see if this activity now bears fruit.�

NationsBank, the combination of NCNB Corp. of Charlotte, N.C., and C&S-Sovran; Corp. of Atlanta, has given $1.1 million to the National Assn. for the Advancement of Colored People each year for three years to have the civil rights group find businesses and individuals who are likely customers.

The bank advocates borrower education programs, fosters partnerships between businesses and public agencies, and looks for model community development and loan programs to copy elsewhere in its 10-state service area, said Cathy Bessant, its Dallas-based community reinvestment officer.

“We can only be successful in community development lending if our communities believe we are sincere,� Bessant said.

As for the progress on its $10-billion goal, Bessant said, “We are well on our way in exceeding $1 billion in lending this year.�

Earl Shinhoster, regional director for the NAACP in Atlanta, praises NationsBank for letting his group offer information about alternative sources of credit and other details that can help a loan win approval.

New York-based Chemical Banking Corp., the combination of Chemical and Manufacturers Hanover Trust Corp., provided the most detailed information about its commitment so far.

The bank has committed to granting $11 million under its Neighborhood Homebuyer Mortgages, a home loan program with more flexible down payment and income criteria for lower-income people, said Carol Parry, head of Chemical’s community development group.

The rejection rate for minority and white loan applicants in this program is about equal, she said.

Chemical so far has committed to loans for 1,200 units of rental and ownership multifamily housing, $25 million in loans to small businesses in low-income communities and $3 million in grants to New York community groups, she said.

At BankAmerica, a small business loan program is still under development and should be in place by year’s end, said Donald Mullane, executive vice president in charge of community reinvestment programs. Goals for public and private partnerships and new home loans are on track, he said.

“It appears because of the strong mortgage market we are achieving the numbers that we forecast,� said Mullane.

In California, the bank said it granted $280 million in the first quarter for a range of housing and business loans for low-income customers. Of that, $6.3 million was for small business and farm loans.

San Francisco-based BankAmerica, the nation’s second largest bank, combined with Security Pacific Corp. of Los Angeles earlier this year.

BofA said it has committed $200 million in interim construction loans to multifamily housing development. Following the Los Angeles riots, BofA pledged $25 million to help small businesses recover. So far, it has committed $17 million, said Mullane.