Opposition Emerges To U.S. Bank Buyout Deal Rural Communities Concerned About Service

A coalition of a dozen rural community groups in four states has asked the Federal Reserve Bank to deny First Bank System’s acquisition of U.S. Bancorp, complaining of poor rural service.

First Bank, based in Minneapolis, announced in March it would buy U.S. Bancorp, based in Portland, for $9 billion. The combined regional banks will have 995 branches in 17 states after the deal is approved by federal regulators.

Rick Rohde, a spokesman for the Medford office of Oregon Action, said his group and the Southern Oregon Economic Development Coalition oppose the deal along with groups from Idaho, Montana and South Dakota.

“We’re opposing the merger primarily because of our concern about the performance of First Bank in providing money for community lending in rural communities it serves,” Rohde said. “We think U.S. Bank has had a better record of working with our communities in Oregon.”

Jim Fleischmann, executive director of Montana People’s Action, said the coalition had decided to oppose the merger because it couldn’t get a commitment from First Bank to support affordable housing and other community programs.

A First Bank spokesman couldn’t be reached for comment on Thursday.

The groups’ opposition to the merger by the rural groups came just a day before the Federal Reserve Bank ends a monthlong period for collecting letters from the public about the pending merger. The Federal Reserve will decide based on the letters whether to hold a public hearing to examine the merger more closely.

First Bank and U.S. Bancorp headed off potential opposition to the merger in Portland by agreeing earlier this week to commit $1.4 billion to community reinvestment in Oregon in 1997. The pledge included $1.1 billion in loans to small businesses and programs to build affordable housing and to provide home loans to low- and moderate-income home buyers.

John D. Eskildsen, president of U.S. Bank of Oregon, said the deal demonstrated the commitment of U.S. Bancorp and First Bank to respond to community needs.

“We’re pleased we got it wrapped up so quickly. And we’re proud of what we’ve done,” Eskildsen said. “We put down a commitment to do things that we were sincere about doing anyway.”

First Bank was involved in last-minute negotiations on Wednesday and Thursday with groups in California and Washington seeking a community reinvestment agreement similar to the one reached in Oregon.

Jon Gould, coordinator of the Washington Reinvestment Alliance, said his group rejected an initial deal offered by First Bank and was looking at a second offer from the company on Thursday.

“The Oregon deal was a net gain for Oregon,” Gould said. “But it wasn’t a multiyear commitment. We feel that’s essential in a merger such as this.”