EHOC Calls on Treasury to Deny Bailout to Enterprise, First Bank, Heartland banks, and examine Regions

(Saint Louis, MO, Dec. 18, 2008) The Metropolitan St. Louis Equal Housing Opportunity Council released a report today entitled "Bailing Out on Community Reinvestment: A St. Louis Fair Lending Study," which examined the records of 8 local banks that are participating or considering participating in the US Treasury's TARP Capital Purchase Program, known colloquially as the "$700 billion bailout." The report recommends that 3 local banks be denied participation until they demonstrate a commitment to lending to minority and low-income communities. The report also recommends that the House Financial Services Committee commence hearings to look at the fair lending and community reinvestment records of banks that are participating in the program, including Regions Bank, which has been approved for $3.5 billion.

The findings of the study demonstrate that four of the banks studied – Enterprise Bank & Trust, First Bank, Heartland Bank and Regions Bank – have poor records of lending to minority and low-income communities. For example, Enterprise Bank had very poor market penetration in minority communities: only 1% of Enterprise Bank's applications in 2007 came from African Americans, and Enterprise Bank received no applications in 2006 and 2007 from Hispanic borrowers. First Bank had a high disparity in lending between minority and white applicants: African American borrowers were denied a mortgage loan 57% of the time, compared to whites who were denied only approximately 18% of the time. Those African Americans who did originate a loan with First Bank were more than 5 times as likely as a white borrower to receive a high cost loan. Heartland Bank, which has 11 branches in the St. Louis metropolitan area has not a single branch in an African American neighborhood or in a low or moderate income neighborhood. Ten of its branches were in neighborhoods that were less than 3% African American. Regions Bank, a large national bank headquartered in Birmingham Alabama with approximately 69 branches in the St. Louis region lent only about 6% of their assets in predominately African American neighborhoods and invested less then 1% of their home loans in low-income census tracts. 

The report also praised practices of some local banks that had positive lending patterns among minority and LMI individuals and communities. Bank of America had good penetration in minority communities: 18% of their applicants were African American, a percentage proportionate to the African American population in St. Louis. Bank of America loaned more money to African Americans as a percentage of their total loans than any of the 8 banks surveyed. Southwest Bank had the most applications and originations from Asian and Hispanic borrowers as a percentage of their total mortgage applications. Southwest Bank lent almost 20% of their total assets to predominately African American neighborhoods and over 30% of its loans were in low and moderate income census tracts. Locally headquartered Pulaski Bank had very little disparity in its origination rates between racial groups. One third of its branches were located in African American neighborhoods.

"Had these banks been lending to low income and African American neighborhoods, these neighborhoods might not have been hit as hard by the subprime mortgage crisis. We are going to work to hold banks accountable for their adherence to fair housing and CRA requirements. Banks who take taxpayer money must show that they are serving all segments of our community," says Executive Director Will Jordan.

The full report is available by contacting Mira Tanna, ehocmt@birch.net or 314-534-5800 ext. 26.