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By Joseph N. DiStefano
November 14, 2005

A report's focus is how well the ones used by the city do in serving low-income and minority areas.

Citizens Bank of Pennsylvania ranks near the top, and Commerce Bank at the bottom, in their focus on low-income and minority parts of Philadelphia, according to a new city-funded report.

The report, by the nonprofit National Community Reinvestment Coalition in Washington, reviews branch-location and small-business and home-loan data as of 2003 for eight banks that handle city deposits.

The report was produced under a law sponsored by Councilman W. Wilson Goode Jr. and approved last year.

Citizens got top marks for its small-business loans, which many lenders find costly to administer, and its network of 60 branches, most built decades ago by its predecessors, the Philadelphia Savings Fund Society and Girard Bank.

Those legacy branches extend into older and poorer city neighborhoods that newer arrivals such as Commerce have mostly bypassed.

"We are a neighborhood bank. As our neighborhoods are economically viable, so goes our business," said Pamela Crawley, a Citizens spokeswoman in Philadelphia.

Commerce Bancorp Inc. said in a statement that it "has been actively developing and promoting a variety of specially designed programs to meet the credit needs of first-time low-income home buyers."

The Cherry Hill company recently moved the official headquarters of its largest bank subsidiary into Center City, but it remains primarily a suburban institution whose 11 Philadelphia branches are in relatively well-off neighborhoods.

Goode wants to use the data to pressure banks that do business with the city to make more loans, especially in poor and minority neighborhoods, where residents are least likely to own property or businesses. "Banks are receiving city deposits" and other city business, Goode said. "I hope they will increase their lending to traditionally underserved communities."

On Wednesday, City Council's Finance Committee is scheduled to review another proposal, also written by Goode, that would press banks that do business with the city to file annual reports and "a long-term strategic plan to address disparities" in the loans and services they provide for different neighborhoods and racial and income groups.

A separate ordinance proposed by Goode would require banks to disclose whether their predecessors profited from slavery prior to 1865, and to detail what lending programs and charitable contributions they have developed as "reparations."

Goode said he hoped the data in the reports released last week would lead to more bank programs targeted to poor and minority borrowers.

Through 2004, Wachovia Bank had won at least 75 percent of new Philadelphia city deposits, debt payments and fees (excluding bond work and independent city authorities) during Mayor Street's tenure. In response to interest by Philadelphia and other cities, the bank issued a report this year acknowledging that some of its predecessors had owned slaves and others had been founded by slave owners.

Commerce ranked a distant second among banks given city business under Street, while PNC Bank and Mellon Bank did better under Street's predecessor, Ed Rendell, who is now Pennsylvania's governor.

Despite its high ranking for city banking services, Citizens has not won much business from city government. "We hope we will be favorably considered when we look for business with the city," Crawley, the Citizens spokeswoman, said.

But Citizens has stopped short of endorsing Goode's latest measures. "We don't need further regulation," Crawley said. "We know what our responsibilities are."

Only Fleet Bank, which was an aggressive home-mortgage and small-business lender despite its lack of urban branches, got higher marks than Citizens for its reach into poor and minority neighborhoods. But Fleet has since been purchased by Bank of America Corp., which, like most of the banks, got more mixed marks. The coalition is working on an updated report using more recent data, said Joshua Silver, the report's principal author.

PNC, the largest bank based in Pennsylvania, ranked just behind Bank of America in the middle of the pack. PNC, like rival Wachovia, got high marks for home loans in city neighborhoods, and for loans to African Americans. At both banks, three of every 10 home-loan borrowers were black, compared with just two in 10 for the city overall.

But PNC and Wachovia got below-average marks for small-business loans, compared with other big Philadelphia banks.

In a visit to Philadelphia this year, Wachovia Corp. chairman Kennedy Thompson said he wanted the bank to do more small-business and home-mortgage lending in Philadelphia neighborhoods, which the bank and its predecessors had de-emphasized in recent years. He stopped short of committing to particular programs.

More recently, Chris "C." Mack, a PNC retail executive, pledged to open branches in West Philadelphia and other older Philadelphia neighborhoods starting next year.

The coalition that wrote the report is a nonprofit group that promotes a 1977 federal law mandating that banks serve the poor along with the rich in communities where they do business.

United Bank of Philadelphia, a small, African-American-run lender that has sold or closed several branches since 2000, was excluded from most of the survey, even though it is a city depository, because it has made relatively few small-business loans.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.