The New York Attorney General has charged a regional bank with engaging in illegal discrimination by intentionally ignoring predominantly African-American neighborhoods in Buffalo.
Evans Bancorp, Inc., and Evans Bank, N.A., allegedly designated the bank’s “Trade Area” in the Buffalo area by taking a map and delineating the neighborhoods in which to market and sell the bank’s products and services. While the Trade Area encompassed the predominantly white areas of the city and suburbs, the neighborhoods composed of a majority of African-American residents were completely excluded.
“Our complaint alleges that Evans Bank has intentionally engaged in a systematic policy of illegal redlining that has had a disparate impact on the African-Americans it is supposed to serve,” AG Eric T. Schneiderman said at a press conference about the suit. “I honestly never thought I would have to bring a redlining case because this is a problem we thought we put behind us a couple of decades ago.”
Since at least 2009, federally chartered Evans engaged in intentional discrimination in violation of the Fair Housing Act as well as New York State human rights law and Buffalo City Code, according to the complaint filed in New York federal court. Evans refused to solicit customers, market loan products, and provide banking facilities in predominantly African-American neighborhoods, the AG alleged.
The bank is alleged to have adopted an explicit policy restricting eligibility for certain mortgage products to only certain geographic areas outside of the Trade Area, evaluating loan requests from outside the boundaries on “an individual case-by-case basis” while considering many factors including a policy of limiting the “concentration of loans outside of our trade area.” Borrowers with properties outside of the Trade Area were automatically disqualified from eligibility for certain mortgage products and services – regardless of their creditworthiness, the AG said.
Evans also located its branch offices and ATMs outside of African-American communities, limited its direct mail advertising campaigns to predominantly white communities, and placed the vast majority of its print media advertising in local newspapers with a circulation limited to the Trade Area, again excluding African Americans.
Further supporting the charges, the AG’s office noted a statistical analysis demonstrating that Evans drew mortgage applications from and originated mortgage loans to African-American borrowers at the lowest rate of all comparable banks (even banks lacking a presence in Buffalo). For example, according to Home Mortgage Disclosure Act data, Evans received 1,114 residential mortgage applications in the Buffalo area from 2009 to 2012. Only four of those applications came from applicants reporting as African American.
The suit seeks civil penalties, damages, punitives and injunctive relief halting future discrimination.
The bank responded with a statement: “We believe that the allegations being made by the New York State Attorney General are unfounded and without substance and we will vigorously defend this complaint through the legal system,” Evans CEO David J. Nasca said.
To read the complaint in New York v. Evans Bancorp, click here.
Why it matters: New York banks be warned. AG Schneiderman said the action was part of an ongoing, wider investigation by the Civil Rights Bureau into mortgage redlining by banks operating in New York, initiated after concerns were raised that in the wake of the financial crisis banks were lending at a decreased rate to minority communities.