RICK ROTHACKER
Staff Writer

Wachovia Corp. received the top rating for community lending and investment in its latest review from federal regulators.

The Office of the Comptroller of the Currency gave the Charlotte bank an "outstanding" -- the highest of four main grades -- for the period from October 2000 to June 2003, the company said Wednesday.

The grading examined how the bank meets the credit needs of low- and moderate-income neighborhoods where it operates. The OCC evaluates national banks for compliance with the 1977 Community Reinvestment Act.

The ranking was the first for Wachovia since its merger with First Union Corp. in September 2001. Both banks received "outstanding" ratings in their previous reviews, which are performed every few years.

In the report, the OCC praised Wachovia for making $3.3 billion in community development loans during the review period and for its use of a tax-credit program that finances affordable housing projects.

Mike Rizer, Wachovia's director of community relations, said the company's partnerships with community groups contributed to its top rating.

As part of its ongoing SouthTrust Corp. merger, Wachovia has pledged more than $75 billion in lending and investment over five years to states affected by the acquisition. Some community groups, however, had urged the bank to make a bigger commitment.

Community reinvestment advocates say the OCC ratings can be subject to "grade inflation," noting few banks are given negative marks. In 2003, 13 percent received outstanding grades, while 86 percent earned "satisfactory" ratings, according to the Community Reinvestment Association of North Carolina, a nonprofit group that advocates investment in low- to moderate-income communities.

"At times I have challenged the merit of some outstanding rankings, but Wachovia probably deserves it," said Peter Skillern, the nonprofit organization's executive director, citing the company's lending to minorities and work with community groups.

He praised the company's recent admission that predecessor banks had ties to slavery, but said Wachovia could work harder to increase diversity on its local advisory boards. He also opposes the company's "bounce-protection" program, which can hit users of free checking accounts with high fees when they overspend.

Overall, Wachovia received outstanding grades in all three rating categories: lending, investment and service.

Regulators said the company had "adequate and good levels of lending," "readily accessible retail services in most locations" and "creative and innovative investments, services and loan products."

Bank Ratings

Here is how federal regulators rated Wachovia on its lending, investment and service to low- and moderate-income communities.

• Overall: Outstanding

• Charlotte metro: Outstanding

• North Carolina*: Outstanding

• South Carolina*: Satisfactory

*The Charlotte and Aiken, S.C.-Augusta, Ga. metro areas were not included in the state rankings.