First National Bank of Pennsylvania settles redlining case for $13.5M

Accused of redlining by regulators, First National Bank of Pennsylvania (FNB) has agreed to settle the case for $13.5 million, the Department of Justice (DOJ) and the State of North Carolina announced Monday.  

FNB was involved in the case as a successor in interest of Yadkin Bank, which it acquired in 2017. The complaint alleges that, from 2017 through 2021, FNB failed to provide mortgage services to predominantly Black and Hispanic neighborhoods in Charlotte and Winston-Salem, North Carolina. In addition, the bank discouraged these customers from obtaining home loans, according to the complaint.

“Lending discrimination violates the law and harms communities and entire families for generations,” Attorney General Merrick Garland said in a statement. 

Headquartered in Pennsylvania, FNB has over $45 billion in assets, nearly 350 branches, and is among the country’s 100 largest banks. It has a presence in the District of Columbia, Maryland, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, and West Virginia.

In 2023, the bank originated about $2.3 billion in mortgages, primarily conventional and purchase loans, per tech platform Modex. 

However, according to the complaint, the bank’s mortgage lending was focused disproportionately on white areas, which is reflected, among other things, in the closing of its sole branch in a predominantly Black and Hispanic neighborhood in Winston-Salem in 2021. The complaint adds that the bank did not track how its mortgage loan officers developed loan referrals or how they distributed the marketing materials.

“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,” regulators said in a news release. 

The complaints were solved through two consent orders, which still need court approval. 

The settlement includes $11.75 million in a loan subsidy fund to increase access to home mortgages for majority-Black and Hispanic neighborhoods in Charlotte and Winston-Salem.  

In addition, $1 million will be spent on community partnerships and $750,000 in advertising. The bank committed to opening three new branches in these neighborhoods and hiring a director of community lending.

“With this settlement, the Justice Department’s Combating Redlining Initiative has now secured over $122 million in relief for communities across the country,” Garland said. 

The Justice Department’s Combating Redlining Initiative was launched in October 2021. It’s a coordinated enforcement effort to address the persistent discrimination against communities of color. The department has announced 12 redlining resolutions. 

In January, Tennessee-based community bank Patriot Bank agreed to pay $1.9 million to resolve redlining allegations. Last year, American Bank of Oklahoma, ESSA Bank & Trust and City National Bank settled their cases. In 2022, settlements were made with Trident Mortgage Co., Warren Buffet’s Berkshire Hathaway subsidiary, and Lakeland Bank.