First National Bank of Pennsylvania on Discriminatory Lending Practices Pays $13.5M Fine in Lending Discrimination Case

 Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color, or national origin of residents in those communities.

The complaint alleges, from 2017 through 2021, FNB, including as successor in interest to Yadkin Bank, which it acquired in 2017, failed to provide mortgage lending services to predominantly Black and Hispanic neighborhoods in Charlotte and Winston-Salem, and discouraged people seeking credit in those communities from obtaining home loans. FNB’s home mortgage lending was focused disproportionately on white areas of Charlotte and Winston-Salem.

For example, 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. FNB’s branches in both cities were also overwhelmingly located in predominantly white neighborhoods, with the bank closing its sole branch in a predominantly Black and Hispanic neighborhood in Winston-Salem in 2021.

The complaint further alleges that FNB relied on mortgage loan officers working out of predominantly white areas to generate loan applications and that the bank did not track how its mortgage loan officers developed loan referrals or how they distributed the bank’s mortgage marketing materials.

The Justice Department and the State of North Carolina have resolved their claims via two proposed consent orders, which are both subject to court approval. The consent orders require FNB to invest $13.5 million to increase credit opportunities for communities of color in Charlotte and Winston-Salem. Specifically, FNB will:

• Invest at least $11.75 million in a loan subsidy fund to increase access to home mortgage, home improvement and home refinance loans for residents of majority-Black and Hispanic neighborhoods in FNB’s Charlotte and Winston-Salem service areas;
• Spend $1 million on community partnerships to provide services related to credit, consumer financial education, homeownership and foreclosure prevention for residents of predominantly Black and Hispanic neighborhoods in those service areas;
• Spend $750,000 for advertising, outreach, consumer financial education and credit counseling focused on predominantly Black and Hispanic neighborhoods in those service areas;
• Open three new branches in predominantly Black and Hispanic neighborhoods in Charlotte and Winston-Salem (two in Charlotte and one in Winston-Salem), with at least one mortgage banker assigned to each branch; and
• Hire a director of community lending who will oversee the continued development of lending in communities of color.

FNB also agreed to retain independent consultants to enhance its fair lending program and better meet the communities’ needs for mortgage credit. The bank will conduct a community credit needs assessment, evaluate its fair lending compliance management systems, and conduct staff trainings.

FNB worked cooperatively with the Justice Department and the State of North Carolina to resolve and remedy the redlining concerns that were identified and agreed to settle this matter without contested litigation. During the course of the investigation, FNB established a Special Purpose Credit Program to provide greater access to home loans in communities of color across the seven states where it does business and the District of Columbia.

With assets of over $45 billion, FNB is headquartered in Pennsylvania and operates approximately 350 branches throughout the District of Columbia, Maryland, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, and West Virginia. It is among the 100 largest banks in the United States.

In October 2021, Attorney General Garland and Assistant Attorney General Clarke launched the Justice Department’s Combating Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color. Since 2021, the department has announced 12 redlining resolutions and secured over $122 million in relief for communities of color that have been the victims of lending discrimination across the country.

A copy of the joint complaint and information about Justice Department’s fair lending enforcement can be found at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the U.S. Justice Department’s housing discrimination tip line at 1-833-591-0291 or submitting a report online.