Critic of Charlotte bank merger takes concerns to Federal Reserve

Capital Bank offices on Glenwood Avenue in Raleigh are shown in this 2009 photo.
Capital Bank offices on Glenwood Avenue in Raleigh are shown in this 2009 photo. Harry Lynch

A North Carolina nonprofit is voicing concerns over a proposed merger involving Charlotte-based Capital Bank Financial Corp., telling the Federal Reserve the deal will negatively impact low-income and minority communities.

In a letter this month, Durham-based Reinvestment Partners criticizes the lending practices of Capital Bank and First Tennessee Bank, whose parent company is set to acquire the Charlotte firm. Underserved communities, particularly in North Carolina, will be “worse off” in the deal, the nonprofit said.

“To date, First Tennessee Bank and Capital Bank, have not demonstrated that commitment to serving all of their communities,” Peter Skillern, executive director for Reinvestment Partners, wrote in the letter. The advocacy group, whose roots trace to the 1980s, opposes the merger, arguing it will not benefit “those underserved communities that most need access to capital and opportunity.”

Both banks declined to comment.

In announcing the $2.2 billion deal in May, the banks said it would create the fourth-largest regional bank in the Southeast by assets, as First Horizon’s $30 billion joins Capital Bank’s $10 billion. Expectations are for the deal to close in the fourth quarter. It’s among of flurry of consolidations announced this year involving banks headquartered in Charlotte.

In its 12-page letter, Reinvestment Partners said examinations of both banks’ lending histories to low- and moderate-income and minority borrowers indicate they “are failing to meet needs of the underserved.”

In one example, the letter noted African-Americans make up more than 22 percent of North Carolina’s population but accounted for just 4.5 percent of all Capital Bank mortgage applicants last year. Also, the bank denied nearly 40 percent of African-American applicants last year, compared with less than 20 percent of whites, the letter said.

The letter also cites a U.S. government settlement last year involving First Tennessee. The $1.9 million accord resolved allegations the bank discriminated against African-American and Hispanic applicants by denying them mortgage loans and failing to put branches in minority-concentrated areas.

Both banks received “satisfactory” ratings on their most recent Community Reinvestment Act exams, which measure lending in low- and moderate-income neighborhoods. Satisfactory is the second-highest of four possible grades.

It’s not unheard of for proposed bank consolidations to be challenged over concerns about affects on minorities and low-income populations.

Just last month, the California Reinvestment Coalition said it was among organizations opposed to a proposed acquisition involving PacWest and California United Bank. Among other issues, the coalition cited concerns about potential negative consequences to low- and moderate-income communities.

Deon Roberts: 704-358-5248, @DeonERoberts