First National Bank of Pennsylvania Settles Discrimination Charges for $13.5 Million
In a recent announcement, the Justice Department revealed that First National Bank of Pennsylvania (FNB) has been found guilty of discriminating against Black and Latino homebuyers in North Carolina. This revelation adds FNB to the growing list of banks caught redlining, a discriminatory practice that denies loans or financial services to individuals based on their race or ethnicity.
The Justice Department stated that FNB will pay a settlement of $13.5 million, with a significant portion of the funds going towards a loan subsidy program for Black and Latino borrowers in Charlotte and Winston-Salem. These two housing markets were specifically identified as areas where discrimination took place.
According to the complaint filed by the DOJ, FNB engaged in several discriminatory practices. It closed branches located in majority-minority neighborhoods, neglected to provide mortgage services to Black and Latino potential borrowers, and ignored entire neighborhoods as potential lending opportunities. The DOJ’s investigation revealed that other lenders of similar size and scope to FNB were providing two to four times more lending to minority borrowers between 2017 and 2021.
The case stems from FNB’s acquisition of Yadkin Bank, a regional bank in the Carolinas, in 2017. While FNB claims that the discriminatory behavior occurred prior to the acquisition, the DOJ argues that any bank that purchases another bank should be held accountable for the acquired bank’s actions.
North Carolina’s Attorney General, Josh Stein, expressed his concern over the unequal treatment of residents in his state. He stated, “The playing field isn’t level, and that is not what we want for the people of North Carolina.” This settlement marks the 13th redlining case brought against banks by the Biden Administration since 2021.
Under the leadership of Attorney General Merrick Garland, the Justice Department has established a Redlining Taskforce dedicated to addressing racial discrimination in financial services. This task force has taken a more proactive approach than previous administrations in combating redlining. In fact, the DOJ filed the largest redlining lawsuit in history in 2023 against City National Bank, based in Los Angeles, which was also found guilty of discriminating against Black and Latino communities between 2017 and 2020.
Since its creation, the Redlining Taskforce has secured a total of $122 million in settlements, highlighting the significant impact it has made in holding banks accountable for their discriminatory practices. Assistant Attorney General Kristen Clarke, from the DOJ’s Civil Rights Division, emphasized the importance of addressing modern-day redlining. She stated, “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.”
In response to the settlement, FNB spokesperson Jennifer Reel expressed the bank’s disagreement with the DOJ’s findings. Reel maintained that FNB believed it was fully compliant with federal and state lending laws. However, the bank chose to settle the case in order to move forward and avoid prolonged litigation. Reel stated, “We cooperated fully to reach an agreement in this inherited matter as a good faith effort to avoid prolonged litigation.”
The settlement between FNB and the Justice Department serves as a reminder that discriminatory practices continue to persist within the financial industry. It highlights the importance of ongoing efforts to combat redlining and ensure equal access to financial services for all individuals, regardless of their race or ethnicity. The funds from this settlement will provide much-needed support to Black and Latino borrowers in North Carolina, helping to level the playing field and promote economic opportunity for all.