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Wachovia sweetens its pledge to Florida

The state gets a large chunk of the bank's billions in community investments if its SouthTrust merger happens.

By JEFF HARRINGTON
Published August 6, 2004

Wachovia Bank has pledged $75-billion in community banking investments over the next five years, including $20.2-billion in Florida alone, to help win support for its pending acquisition of SouthTrust Corp.

The commitment - which includes small-business loans and affordable mortgages in low-income neighborhoods - is more than twice as large as the one the megabank made in 2001 during the First Union/Wachovia merger.

The news was enough to appease a group of Florida community activists that had been actively protesting the $14.3-billion merger until now.

"We asked Wachovia/SouthTrust to be a "Leader.' We are so very pleased," Al Pina, chairman of Florida Minority Community Reinvestment Coalition, wrote in an e-mail to members Thursday.

The announcement comes less than two weeks before the end of the public comment period for opponents of the merger to voice concerns to the Federal Reserve, which must sign off on the deal.

It's also just 10 days after members of the Florida community coalition and a fellow activist group, the Greenlining Institute, met in Orlando with Wachovia and SouthTrust representatives. The group sought a higher commitment for Florida but was pleased with the amount.

Pina said Wachovia also agreed to meet with his coalition twice a year to review its goals.

To appease federal regulators and community activists, large banks routinely include a multibillion-dollar pledge of community investment funds to quell opposition to large mergers. But specifying a state commitment is rare for many banks.

Wachovia spokeswoman Allison Rice said a state-by-state breakdown has been standard for Wachovia and its predecessor, First Union.

Florida is getting far more than any other state, she said, in part because of the number of branches and employees here. The bank also considers market share and needs identified by community leaders, she said.

When First Union bought Wachovia and took that bank's name, the effect on Florida was minimal since there were few Wachovia branches here.

This time, as Wachovia and SouthTrust shutter up to 150 overlapping branches around the country, Florida and Georgia will bear the brunt of the closings. Wachovia has a network of 609 Florida branches, including 113 in the Tampa Bay area, while SouthTrust has 252 Florida branches, 56 of them in the bay area.

Once the deal closes, likely by November, Wachovia will push its Florida market share up from 15 to 19 percent, just shy of the 20 percent held by the state's biggest bank, Bank of America. The bank isn't expected to identify which overlapping branches are closing until next year.

Wachovia, based in Charlotte, N.C., will have a post-merger footprint that covers Alabama, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Virginia, as well as Florida.

After Florida, the next-highest statewide community pledges are to North Carolina and Georgia, receiving $14.45-billion and $10.5-billion, respectively.

The national pledge includes:

$45-billion in small-business loans.

$15-billion in affordable mortgages.

$7.5-billion in moderate-income consumer loans.

$7.5-billion in community development loans and investments.

$100-million supporting philanthropic activities.

$2-million in technical assistance to minority-owned small businesses.

and $1-million supporting small-business resource centers such as incubators.

Jeff Harrington can be reached at 813 226-3407 or harrington@sptimes.com

[Last modified August 6, 2004, 01:00:38]

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