Patriot Bank in Millington, Tennessee, agreed to pay $1.9 million to resolve allegations that it engaged in lending discrimination by redlining majority-Black and Hispanic neighborhoods in Memphis, the Justice Department said in a
The DOJ alleged that, from 2015 through at least 2020, the $460 million-asset Patriot avoided providing mortgage services to majority-Black and Hispanic neighborhoods in Memphis and discouraged people seeking credit in those communities from obtaining home loans. Over the same six-year period, other banks received nearly 3.5 times as many loan applications compared to Patriot in the same neighborhoods, the DOJ said.
The DOJ said Patriot cooperated with its investigation. John Smith, president and CEO of Patriot Bank, said in a statement provided to American Banker that the bank has a long history of serving all areas of Memphis and denied the DOJ's allegations.
"Patriot Bank has always acted to serve the home mortgage credit needs in minority neighborhoods, and the bank's strong record speaks for itself and flatly contradicts any allegation of wrongdoing," Smith said. "We are proud of our record and strongly deny that Patriot Bank ever avoided originating home mortgage loans in Black and Hispanic areas of the Memphis market."
The bank said in the statement that it entered into the consent order with the DOJ "because the terms of the agreement affirm and adopt the programs and actions that the bank has already been implementing on its own for many years to help meet mortgage credit needs in the communities it serves, including its investment of $1.9 million in reaching and serving communities of color, as the consent order itself states."
Patriot said it ranked 14th out of 482 lenders in making mortgage loans in minority areas of Memphis in 2021 and 15th out of 534 lenders in 2022.
Among other efforts, the bank said it most recently partnered with a leading community development organization and the City of Memphis to finance a residential subdivision in a low-income and Black neighborhood in South Memphis.
The proposed consent order, which is subject to court approval, requires Patriot to invest the $1.9 million to increase credit opportunities for communities of color in Memphis.
Specifically, the bank must invest at least $1.3 million in a loan subsidy fund to increase access to home loans for residents of majority-Black and Hispanic neighborhoods and spend another $375,000 for advertising, outreach, consumer financial education and credit counseling. It also is required to invest $225,000 on community partnerships to provide services that increase mortgage access for residents of those neighborhoods.
The order also requires the bank to have at least two mortgage officers dedicated to serving majority-Black and Hispanic neighborhoods in Patriot's service area, and employ a director of community lending to oversee the continued development of lending in communities of color.
The DOJ said it opened its investigation into Patriot's lending practices after receiving a referral from the Federal Reserve, the federal bank's regulator.
A handful of lenders have faced redlining allegations from the DOJ over the last few years. In October,
The DOJ said in the press release on Wednesday that the agency has negotiated $109 million in relief in 11 redlining cases since 2021.
