Justice Department and State of North Carolina Secure $13.5 Million Agreement with First National Bank of Pennsylvania to Resolve Redlining Claims in North Carolina

On February 5, 2024, the United States Department of Justice and the State of North Carolina announced that First National Bank of Pennsylvania has agreed to pay $13.5 million to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black and Hispanic neighborhoods in Charlotte and Winston-Salem. Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in communities because of the race, color, or national origin of residents in those communities.

The complaint alleged that First National Bank:

• Failed to provide mortgage lending services in predominantly Black and Hispanic neighborhoods in Charlotte and Winston-Salem from 2017 through 2021, and discouraged people seeking credit in those communities from obtaining home loans.
• Focused home mortgage lending disproportionately in white areas of Charlotte and Winston-Salem, with other lenders generating home mortgage applications in predominantly Black and Hispanic neighborhoods at 2.5 times and 4 times the rate of First National Bank in Charlotte and in Winston-Salem, respectively.
• Located First National Bank branches overwhelmingly in predominantly white neighborhoods and closed its only Winston-Salem branch in a predominantly Black and Hispanic neighborhood in Winston-Salem in 2021.

The United States Department of Justice and the State of North Carolina have resolved the claims in two proposed consent decrees, both of which must still be approved by the court.

The consent orders require First National Bank to invest $13.5 million to increase credit opportunities for communities of color in Charlotte and Winston-Salem. Specifically, First National Bank 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.

First National Bank 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.

Click here to read the original press release from the United States Department of Justice.

Click here to read the complaint.

Click here to read the proposed consent order.