State reaches $13.5 million settlement with First National Bank over claims of racial redlining

RALEIGH, N.C. (WITN) – One bank in North Carolina has settled with the state over claims that they engaged in racially discriminatory redlining.

North Carolina Attorney General Josh Stein announced the $13.5 million settlement with First National Bank of Pennsylvania after allegations were made that the bank was racially redlining people who were trying to get home mortgages in the Charlotte and Winston-Salem areas.

“When banks discriminate, it means hardworking people can’t buy a house, start a business, or invest in their futures,” said Attorney General Josh Stein. “I want every person who calls North Carolina home to have a fair shot, and I’m pleased that this settlement will create better borrowing opportunities for all North Carolinians.”

First National Bank has 16 branches in and around Charlotte and 15 in the Winston-Salem area. The state had claimed that the bank avoided approving mortgage loans in areas that had majority Black and Hispanic residents in both cities. The state also claimed that the bank worked hard to provide mortgage loans to the parts of those areas that had a majority of white residents, thus discouraging black and Hispanic customers from applying for loans.

“The devastating effects of discriminatory lending that become entrenched in neighborhoods can reverberate through generations,” said U.S. Attorney Sandra J. Hairston for the Middle District of North Carolina. “The settlement announced today demonstrates our commitment to combating redlining and ensuring the equal access to credit required by law. We will continue our efforts to hold accountable financial institutions that avoid communities of color in their markets or erect barriers that make it harder for minority residents to access credit. Banks and mortgage companies should evaluate their lending practices and take immediate corrective action to reach underserved communities in their market areas.”

According to Stein’s office, the settlement requires First National Bank to create a $11.75 million loan subsidy fund that will help increase credit for home mortgage loans for communities of color in the Charlotte and Winston-Salem areas.

Stein said these funds will be used to originate loans, assist in down payment and closing costs, and help pay people’s mortgage insurance premiums. The bank will also open two new branches in Charlotte and one new branch in Winston-Salem to provide financial services to residents of color as well as employ staff focused on lending to communities of color in Charlotte and Winston-Salem, spend $750,000 on advertising its services to communities of color in the two areas, provide consumer financial education, and review its fair lending and community credit needs to ensure it is helping the communities.

Stein’s office said The North Carolina Department of Justice reached the settlement in coordination with the U.S. Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Middle District of North Carolina.