First National Bank of Pennsylvania will pay $13.5 million to settle redlining allegations raised by the U.S. Department of Justice and the state of North Carolina.
FNB was accused of discriminating against borrowers in predominantly Black and Hispanic neighborhoods in Charlotte and Winston-Salem, NC, from 2017 to 2021, via Carolina-based Yadkin Bank, which it acquired in 2017.
The bank “failed to provide mortgage lending services” to those neighborhoods and “discouraged people seeking credit in those communities from obtaining loans,” according to a press release.
Other lenders generated applications in these neighborhoods two-and-half times the rate of FNB in Charlotte and four times the rate in Winston-Salem.
It also only operated in white areas, shutting down its sole branch in a minority-dominated neighborhood in 2021, while providing no evidence about how its LOs developed loan referrals or distributed marketing materials.
The claims have been resolved through two consent orders requiring FNB to invest in credit opportunities for communities of color. The orders are awaiting court approval.
“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. “I want every person who calls North Carolina home to have a fair shot, and I’m pleased that this settlement will create better borrowing opportunities for all North Carolinians.”
The $13 million will be put towards furthering homeownership in minority communities through a spectrum of programs focused on loan subsidy and education. It must also open three new branches in Black and Hispanic communities in these cities.
FNB spokesperson Jennifer Reel said the company denied the claims but nevertheless cooperated fully and settled the matter “to avoid prolonged litigation and to maintain our focus on promoting equity and economic prosperity.”
During the investigation, the bank created a Special Purpose Credit Program providing up to $3 million per year in closing cost assistance to minority borrowers anywhere it operates.
Pittsburgh-based FNB is one of the 100 largest banks in the U.S., with 350 branches across seven states and assets of more than $45 billion.
The investigation was part of the Justice Department’s Combating Redlining Initiative, which kicked off in October 2021. It has resolved redlining claims at 12 institutions since its launch.
“With this settlement, the Justice Department’s Combating Redlining Initiative has now secured over $122 million in relief for communities across the country,” Attorney General Merrick B. Garland said.
“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.”
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