The U.S. Department of Justice and North Carolina’s attorney general have announced a groundbreaking $13.5 million settlement with First National Bank (FNB), a regional lender headquartered in Pennsylvania. This monumental agreement resolves allegations of redlining tied to two of North Carolina’s largest cities, Charlotte and Winston-Salem.
NC $13.5M settlement with First National Bank : Redlining Allegations
In a North Carolina federal court complaint, authorities accused FNB of systematically avoiding providing mortgages and related services to Black and Hispanic neighborhoods within the Charlotte and Winston-Salem metro areas. The practices, spanning from 2017 to 2021, allegedly constituted redlining, a pernicious form of illegal lending discrimination.
NC $13.5M settlement with First National Bank : Discriminatory Practices
Among the cited practices was FNB’s alleged concentration of “nearly all” of its branches and loan officers outside the targeted neighborhoods. This strategy purportedly discouraged residents from these areas from applying for loans, perpetuating economic disparities.
Path to Resolution
To rectify the claims, FNB has committed to several substantial measures. These include the establishment of an $11.75 million loan subsidy fund aimed at bolstering mortgage access for communities of color in Charlotte and Winston-Salem. Additionally, the bank has pledged $1 million towards local community development partnerships and another $750,000 for outreach and advertising over the next five years.
Consent Orders
Proposed consent orders, filed Monday, outline these terms. However, final approval from a North Carolina federal judge is pending. Notably, the settlement does not require FNB to admit any wrongdoing. The bank, which acquired Yadkin Bank in March 2017, thus marking its entry into the Charlotte and Winston-Salem markets, maintains its position of compliance with fair lending laws.
FNB’s Response
Jennifer M. Reel, Chief Communications Officer at FNB, emphasized the bank’s commitment to equity and economic prosperity. “We firmly assert First National Bank’s compliance with fair lending laws and strongly disagree with the DOJ’s allegations,” Reel stated. She further highlighted the bank’s cooperation in reaching the settlement, aiming to avoid prolonged litigation and focus on its mission of promoting equitable access to financial services.
NC $13.5M settlement with First National Bank : Conclusion
The $13.5 million settlement marks a significant step towards addressing systemic inequalities in lending practices. It underscores the importance of regulatory vigilance in upholding fair treatment and access to financial resources for all communities.
