First National Bank of Pennsylvania Must Pay $13.5 Million After Being Accused of Blocking Black People In North Carolina from Seeking Home Loans
After being accused of discriminatory lending practices, one of the largest banks in the United States has agreed to pay $13.5 million to resolve allegations that it redlined predominantly Black and Hispanic neighborhoods located in Charlotte and Winston-Salem, North Carolina, the state of North Carolina and the U.S. Justice Department announced.
Between 2017 and 2021, First National Bank of Pennsylvania, which acquired Yadkin Bank in 2017, allegedly did not provide mortgage lending services to predominantly Black and Hispanic neighborhoods in the two major North Carolina cities, the federal complaint states.
The complaint also alleges that the mortgage lender was disproportionately focused on the cities’ white-populated areas and discouraged Black and Hispanic people seeking credit in those areas from getting home loans, according to a news release Monday from the Justice Department.
White residents make up over 43 percent of Charlotte’s population of over 890,000, while Black people account for around 35 percent and Hispanic or Latino people account for over 15 percent, according to 2022 Census Bureau data.
In Winston-Salem, the city comprises 51 percent white residents, around 33.2 percent Black residents, and 16.6 percent Hispanic or Latino residents, Census data shows.
Compared with First National Bank of Pennsylvania, the complaint states that “other lenders generated applications in predominantly Black and Hispanic neighborhoods at two-and-a-half times the rate of FNB in Charlotte and four times the rate of FNB in Winston-Salem.”
“When banks discriminate, it means hardworking people can’t buy a house, start a business, or invest in their futures,” said North Carolina Attorney General Josh Stein in a statement.
The bank’s branches in both cities were primarily located in mainly white neighborhoods, and the bank closed its only branch in a predominantly Black and Hispanic neighborhood of Winston-Salem in 2021, according to the release.
“Lending discrimination violates the law and harms communities and entire families for generations,” said Attorney General Merrick B. Garland in a statement.
Garland said the settlement’s funds will help expand credit service access to Black and Hispanic neighborhoods in Charlotte and Winston-Salem.
Redlining, an illegal practice banned in 1968 through the Fair Housing Act, happens when lenders avoid providing credit services to individuals living in certain communities because of the race, color, or national origin of the people living in those communities.
The practice has been shown to have harmful impacts on affected communities, including increased health risks, air pollution struggles, and fewer urban amenities available, according to the University of California, Berkeley School of Public Health.
“With this settlement, the Justice Department’s Combating Redlining Initiative has now secured over $122 million in relief for communities across the country. But we recognize how much work we have left to do, and we are not letting up in our efforts to combat discrimination in lending wherever it occurs,” Garland said in a statement.
The agreement is expected to have a “transformative impact” for Black and Hispanic communities, boosting their opportunities to own homes, bank in their neighborhoods and build generational wealth, said Kristen Clarke, the assistant attorney general of the Justice Department’s Civil Rights Division.
In a statement from First National Bank provided to Atlanta Black Star, the bank said it is “deeply disappointed that the government commenced an investigation after the Bank’s brief presence in the Charlotte and Winston-Salem markets, particularly when the Bank had established its commitment to offering affordable credit in minority communities immediately following the Yadkin acquisition.”
The bank said in the statement that it has “developed and offered specialized loan products for more than a decade that expand access to credit for minority and low- to moderate-income borrowers” and plans to continue investing over $1 billion in loans and investments toward strengthening marginalized communities.
“We firmly assert First National Bank’s compliance with fair lending laws and strongly disagree with the DOJ’s allegations. We cooperated fully to reach an agreement in this inherited matter as a good faith effort to avoid prolonged litigation and to maintain our focus on promoting equity and economic prosperity,” said Jennifer M. Reel, chief communications officer and spokesperson for First National Bank, in a statement.
Through the $13.5 million agreement, First National Bank of Pennsylvania has agreed to invest at least $11.75 million in a loan subsidy fund that would make it easier for majority-Black and Hispanic neighborhoods to access home mortgage, home improvement and home refinance loans in Charlotte and Winston-Salem, according to the Department of Justice’s release.
It has also agreed to open three new branches in predominantly Black and Hispanic neighborhoods in Charlotte and Winston-Salem.