Group seeks hearings on Mercantile deal

BUSINESS DIGEST

May 23, 2006|By LAURA SMITHERMAN | LAURA SMITHERMAN,SUN REPORTER

Mercantile Bankshares Corp.'s planned acquisition of a Virginia-based bank has been challenged by a consumer group, which asked the Federal Reserve to hold public hearings on what it says are discriminatory lending patterns and a failure to safeguard consumer data.

The New York City-based Inner City Press/Fair Finance Watch, a group that frequently weighs in on bank mergers, lodged its complaint with the Fed over the weekend. Baltimore-based Mercantile agreed in March to buy James Monroe Bancorp Inc. of Arlington, Va., for $143 million in cash and stock. The deal needs regulatory approval to close.

Janice Davis, a Mercantile spokeswoman, said regulators haven't found any problems with the bank's lending practices. She also said the bank has been open with regulators and customers about an incident in May in which a laptop computer containing Social Security and account numbers for nearly 50,000 customers was stolen from a worker's car taken off company property in violation of bank policy.

The theft was an "isolated" incident, Davis said, and the bank has offered to pay for one year of credit-monitoring service for affected clients to alert them to any fraudulent activity.

Using mortgage data provided annually by all banks, Inner City Press said it found that Mercantile denied black applicants 2.3 times more frequently than white applicants. The group said Mercantile made about 1,200 mortgage loans to whites last year, compared with 76 to African-Americans and 10 to Latinos.

The American Bankers Association and other banking officials say the information is being misconstrued to show bias. The data don't include information such as credit score, which they say could explain why one applicant was denied a loan over another. At Mercantile, Davis said the bank has sponsored or contributed to programs designed to help low-income borrowers.

Inner City Press made similar allegations against Fulton Financial Corp. and objected to its acquisition of Columbia Bancorp, a bank based in Howard County, but the Federal Reserve approved that deal this year.

laura.smitherman@baltsun.com

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