Nevada State Bank owner criticized for lack of diversity

Greenlining Institute, a San Francisco-based organization representing minority church, consumer, civil rights and small-business groups, sent a protest last week to Federal Deposit Insurance Corp. Chairwoman Donna Tanoue and Federal Reserve Chairman Alan Greenspan.

The group cited a lack of diversity in Zions' top management and an investigation into allegations of discriminatory hiring practices at Sumitomo.

"This merger will actually reward redlining by joining together two banks with the least diverse top management in the West," said John Gamboa, executive director of the Institute.

Redlining is the practice of denying loans and financial services in low-income areas or to minorities.

Zions President Harris Simmons disputed the characterizations.

"I don't think they've done their homework very well ... They have not been very careful or fair in looking at our record," Simmons told the Deseret News.

The most recent evaluation of Zions lending performance in Utah, from January 1995 through July 1997, by the Office of the Comptroller of the Currency gave the bank the highest possible rating for meeting community credit needs.

Simmons said the bank is the eighth largest Small Business Administration loan lender in the United States and has programs targeting American Indians, including work on the Navajo reservation.

"We bend over backwards to serve these groups," Simmons said.

Zions owns Nevada State Bank.

Gamboa's organization is asking the FDIC to hold at least three hearings in California on the Zions-Sumitomo merger require a plan for a larger community reinvestment commitment.

Simmons said Greenlining's objections come after negotiations between the organization and the bank broke down over such a plan.

Zions had proposed to double the amount of money available through federal Community Reinvestment Act programs over a 10-year period from $1 billion to $2 billion. Greenlining held out for $4 billion.

Zions announced in March that it would acquire Sumitomo for about $546 million. Sumitomo would be combined with Zions' Grossmont Bank and First Pacific National Bank, under the name Bank of California. It would be the fifth largest bank in the Golden State, with 70 offices.

Gamboa said Zions' "all white" record makes it unable to respond to a diverse California population.

Out of 700 officials at Zions Bancorp., only five have Spanish surnames and only two have Asian surnames, Greenlining said. Of the company's 260 Utah-based executives and board, none had a Latino or Asian surname.

Simmons, acknowledging the bank's board is composed entirely of white males, said that the Utah management is reflective of the state's demographics. A woman serves on the bank advisory board.

But Zions transfers control for most management decisions to its state systems, Simmons said, allowing local managers to meet the needs of their market.

He said that Greenlining also ignores the fact that two-thirds of the customers of Sumitomo Bank, which is being spun off by a Japanese corporation, are Asian Americans.

He acknowledged only two blacks received loans from Sumitomo during one reporting period.

Greenlining Institute also said the merger would constitute an obstruction to an ongoing investigation by the Department of Labor into racial discrimination in hiring practices at Sumitomo.

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