Pennsylvania lender FNB settles US redlining case in North Carolina

By Jonathan Stempel

(Reuters) -First National Bank of Pennsylvania on Monday reached a $13.5 million settlement with the U.S. Department of Justice and the North Carolina to resolve charges it engaged in lending discrimination known as redlining in the Charlotte and Winston-Salem, North Carolina markets.

Redlining occurs when lenders deny or discourage mortgage applications and loans in neighborhoods based on the race, color, or national origin of people who live there.

FNB’s five-year settlement resolves claims that the bank violated the federal Fair Housing Act and Equal Credit Opportunity Act by avoiding home loans and other mortgage services between 2017 and 2021 in majority-Black and Hispanic neighborhoods.

“The settlement should send a strong message,” Kristen Clarke, assistant attorney general of the U.S. Department of Justice’s civil rights division, told reporters on a conference call. “Redlining will not be tolerated.”

In afternoon trading, FNB shares were down 14 cents at $12.94.

FNB will invest $11.75 million in a loan subsidy fund, devote $1 million to community partnerships, and spend $750,000 on advertising, credit counseling, education and outreach.

The Pittsburgh-based lender will also open at least two branches in majority-Black and Hispanic neighborhoods in Charlotte, and one such branch in Winston-Salem.

According to court papers, those regions had a respective 32% and 22% of census tracts in majority-Black and Hispanic areas, but FNB devoted just one of 18 branches in each region to those tracts — and closed the Winston-Salem branch in 2021.

“The playing field isn’t level, and that is not what we want for the people of North Carolina,” state Attorney General Josh Stein told reporters.FNB’s alleged wrongdoing continued after its 2017 acquisition of Yadkin Bank, whose lending in majority-minority neighborhoods historically lagged its peers.

The Justice Department said the settlement is the 12th in the Biden administration’s Combating Redlining Initiative, which was announced in Oct. 2021. An official had earlier said the case was the 13th.

FNB ended 2023 with about $46.2 billion of assets and 350 branches in seven U.S. states plus Washington, D.C. It did not immediately respond to requests for comment.