The Department of Justice and the Consumer Financial Protection Bureau fined Mississippi-based BancorpSouth $10.6 million, alleging the bank deliberately discriminated against minorities in its lending practices.
BancorpSouth, a medium-sized regional bank with $10.6 billion in assets, deliberately avoided building branches in minority neighborhoods in Memphis from at least 2011 to 2013. The bank also denied loans to African-Americans and other minorities when compared to neighborhoods with smaller minority populations, the Justice Department and CFPB said, and those minorities who were given loans were given higher interest rates when compared to non-minorities.
While BancorpSouth is based in Tupelo, the case deals with BancorpSouth’s presence in Memphis. The bank had 22 branches in the Memphis area between 2011 and 2013, all of which were located outside neighborhoods with large minority populations. Maps provided by the regulators also showed nearly all BancorpSouth’s loans originated outside minority neighborhoods of Memphis as well.
“BancorpSouth’s discrimination throughout the mortgage lending process harmed the people who were overcharged or denied their dream of homeownership based on their race, and it harmed the Memphis minority neighborhoods that were redlined and denied equal access to affordable credit,” said CFPB Director Richard Cordray in prepared remarks.
If approved by the court, BancorpSouth Inc. will provide $4 million in direct loan subsidies in minority neighborhoods in Memphis, spend at least $800,000 on community programs and minority outreach, $2.78 million to African American customers who were overcharged or denied loans as well as a $3 million penalty.
The bank said in a prepared statement that while it “disagrees with these allegations, the decision to settle was made to avoid prolonged and distracting litigation and to put the matter behind us. In agreeing with the consent order, the bank has not admitted any of the allegations or to any liability.”
It said that it has “a steadfast commitment to fair lending and equal credit opportunity for all borrowers.”