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Cleveland, Society Bank sign historic reinvestment plan: quarter billion dollar plan will aid community banking, mortgages, business.

Cleveland Mayor Michael R. White and Robert W, Gillespie, chairman and chief executive officer of Society National Bank, have signed a historic neighborhood reinvestent agreement for city neighborhoods that includes a combined mortgage, home improvement and small business lending goal of more than $260 million by Society over the next four years as well as important commitments to protect neighborhood branches for the next five years.

The historic agreement signals another victory stemming from the Community Reinvestment Act (CRA) changes enacted by Congress in 1988 after a major NLC effort as part of the $&L bailout legislation. Since enactment of the CRA changes, NLC has made it a priority to provide assistance and detailed guidance to cities regarding how to create CRA partnerships with local banks.

The development plan followed two months of extensive discussions between the mayor's staff and bank officials regarding the merger of Ameritrust into Society, which is scheduled to be completed this year. Ir includes a number of economic development programs that will directly benefit all Cleveland neighborhoods, White and Gillespie said.

"This landmark plan underscores the significant economic development role that Society Bank will have in our city after its merger with Ameritrust is completed," White said. "This plan will also help our efforts to encourage greater participation by other Cleveland financial institutions in the development and growth of our city. This agreement sets a standard by which other such institutions will be judged in the future."

"This development plan... reflects Society's continuing commitment to Cleveland, or heaquarters city. Society Bank takes its leadership position in the community very seriously and, as we look forwarded to our merger with Ameritrust, we will do everything in our power to ensure that our fellow citizens have access to the kinds of products and services that will improve their quality of life and contribute to the economic prosperity of our community," said Gillespie.

The mayor and bank officials will brief city council members on details of the plan this month. Council President Jay Westbrook, who attended the December 30 signing ceremony, endorsed the plan.

"This agreement demonstrateds Society's concern for the long-term well-being of Cleveland's neighborhoods," he said. "City Council is prepared to work with the administration and Society toward the fulfillment of all aspects of the plan."

Special briefing sessions with various community leaders will be held this month and a special oversight committee, selected by the mayor and council, will meet regularly with Society officials to ensure that implementation of the agreement is progressing satisfactorily.

Major elements of the plan include:

[section] A four-year goal by Society to offer $85 million in home mortgage and home improvement loans to city residents. Society has agreed to a number of specific lending goals in Cleveland from 1992 through 1995. These include increases in home mortgages and home improvement loans citywide, as well as increasing availability of those types of loans in 12 predominately African-American eighborhoods.

[section] Expanding the resources of Society's community development programs through a commitment of $175 million for specifice neighborhood development activities. Society's financial commitment includes creation lending pools for new and rehabilitated housing and a pledge to lend $100,000,000 to Cleveland small businesses at a preferred rate. Society and the city will work with a newly formed advisory committe composed of civic leaders who will work on citywide development issues. The bank, which has already been a leader in small business lending, will expand its staff and lending resources even further in this important area and develop a comprehensive business plan for implementing various lending and investment programs.

[section] A significant equity investment in a pilot micro-loan program in conjunction with the city and other area lenders. This program will provide even greater lending resources to assist new and growing small businesses.

[section] A commitment by Society to maintain branch banking services in 23 neighborhoods where Society and Ameritrust currently have branches.

[section] The bank has agreed to maintain and expand its Operations Center. The center, which serves all of Society Corporation, will take additional space in the building as part of a $30 million expansion program. The facility will ultimately have more than 2,000 employees.

[section] Work with a Community Oversight Committee to monitor achievement of plan goals.

The mayor has agreed to endorse the merger and to assist Society in its Operations Center expansion.

The plan also underscores steps already taken to ensure that empoyees affected by the merger are treated fairly and sesitively. It reiterates Society's position that it would occupy space in the proposed Ameritrust Center complex.

Society has been particularly successful in offering its Home Assist mortgage product in low-to-moderate income areas. This special product enables individuals or families to afford a home with a direct grant and counseling assistance from the bank. The HomeAssist mortgage was specifically cited last year when Society was awarded an "Outstanding" rating for its Community Reinvestment Act performance from the Office of the Comptroller of the Currency.

"I want to pay tribute to Mayor White and his staff for the spirit of cooperation in jointly fashioning this historic plan, which will help us fulfill our shared community vision for this great city," said Gillespie.
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Publication:Nation's Cities Weekly
Date:Jan 20, 1992
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