First National Bank of Pennsylvania (FNB) has agreed to pay $13.5m to resolve allegations of lending discrimination, as announced by the US Department of Justice (Justice Department) and the State of North Carolina.
The settlement comes after accusations that FNB engaged in redlining practices, specifically targeting predominantly Black and Hispanic neighbourhoods in Charlotte and Winston-Salem, North Carolina.
Redlining, deemed illegal, involves lenders avoiding providing credit services to individuals based on their race, colour, or national origin.
Attorney General Merrick Garland said: “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 recognise 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.”
According to the complaint, filed jointly by the Justice Department and the State of North Carolina, FNB failed to provide mortgage lending services to these communities and actively discouraged individuals from seeking home loans. Instead, the bank directed its focus disproportionately on predominantly white areas of Charlotte and Winston-Salem.
The complaint further alleges that FNB relied on mortgage loan officers from predominantly white areas to generate loan applications, without proper tracking of referral development or distribution of mortgage marketing materials.
Notably, FNB’s branches in both cities were predominantly located in white neighbourhoods, with the bank closing its only branch in a predominantly Black and Hispanic neighbourhood in Winston-Salem in 2021.
The proposed consent orders, subject to court approval, mandate FNB to invest $13.5m to increase credit opportunities in Charlotte and Winston-Salem’s communities of colour. These investments include funding for loan subsidy programs, community partnerships, advertising and outreach initiatives, and the opening of new branches in predominantly Black and Hispanic neighborhoods.
Additionally, FNB will hire a director of community lending to oversee these efforts.
To enhance its fair lending programme, FNB will retain independent consultants to conduct a community credit needs assessment, evaluate fair lending compliance systems, and conduct staff trainings.
Notably, FNB established a Special Purpose Credit Program during the investigation to provide greater access to home loans in communities of colour across the states where it operates.
Justice Department Civil Rights Division Assistant Attorney General Kristen Clarke said: “This agreement will have a transformative impact for Black and Hispanic communities, providing them with new opportunities to become homeowners, bank in their neighborhoods and create generational wealth.
“As we take time across the nation to commemorate Black History Month, we must also create space to acknowledge the ongoing harms caused by structural racism and long-term discrimination. Modern-day redlining is a stain on our economy and underscores the need to keep pushing for equal economic opportunity and racial justice in our country.
“The Justice Department stands ready to hold banks and financial institutions accountable to ensure that communities of colour are not shut out of access to mortgage credit due to modern-day redlining.”
FNB cooperated with the Justice Department and the State of North Carolina to address the redlining concerns and opted to settle the matter without contested litigation. This settlement aligns with the Justice Department’s Combating Redlining Initiative, launched in October 2021, aimed at addressing lending discrimination against communities of colour.
Since its inception, the initiative has resulted in 12 redlining resolutions and over $122m in relief for affected communities nationwide.
With assets exceeding $45bn, FNB, headquartered in Pennsylvania, operates approximately 350 branches across the District of Columbia, Maryland, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, and West Virginia, ranking among the 100 largest banks in the US.