Patriot Bank to Invest $1.9 Million in Lending Discrimination Case

Patriot Bank will spend nearly $2 million to rectify allegations of lending discrimination towards communities of color in Memphis, according to U.S. Department of Justice (DOJ) officials.

Bank officials said they voluntarily agreed to collaborate with the DOJ. In the settlement, the bank will pay $1.9 million to “resolve allegations that the bank engaged in a pattern of or practice of lending discrimination by redlining majority-Black and Hispanic neighborhoods in Memphis, Tennessee.”

The DOJ’s original complaint was brought against Patriot Bank under the Fair Housing Act and the Equal Credit Opportunity Act. These acts prohibit discrimination for home loans on the basis of race and color. They also prohibit redlining.

“From 2015 through at least 2020, Patriot engaged in a pattern or practice of unlawful redlining,” the complaint reads. “Patriot avoided providing home loans and other mortgage services in majority-Black and Hispanic neighborhoods in and around Memphis, Tennessee.”

The DOJ alleges that from 2015 through 2020, Patriot’s redlining activities included having locations and a majority of their branches and loan production offices and all its mortgage loan officers in majority-white neighborhoods. The bank was also accused of avoiding marketing in these areas.

The Justice Department added that while the bank may have received loan applications from applicants in majority-Black and Hispanic areas, it found that they were “disproportionately white.” The agency also found during the six-year period, other banks “received nearly 3.5 times as many loan applications,” in communities of color.

“As a result of the above-described practices, Patriot generated disproportionately low numbers of loan applications and home loans during each year in the relevant time period from majority-Black and Hispanic neighborhoods in and around Memphis, as compared to similarly situated lenders,” the complaint says.

However, bank leaders said they do not understand why the DOJ “pursued this matter,” and said Patriot Bank “originated a greater number of mortgage loans in Black and Hispanic areas in the city of Memphis than hundreds of other lenders.”

“Patriot 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,” reads a statement from Patriot Bank. “In Tipton County, Patriot ranked first, second or third in making loans in minority areas in each year from 2015 to the present.”

About $1.3 million of the settlement funds will be used to increase access to home mortgage, home improvement, and home refinancing for residents of majority-Black and Hispanic neighborhoods. The bank will also spend $375,000 to increase advertising and other credit and outreach-based opportunities focused on those same neighborhoods. Also, $250,000 will be used on “community partnerships to provide services that increase residential mortgage credit access for residents of those neighborhoods.”

Under the proposed consent order, the bank must also ensure that at least two mortgage loan officers serve the majority-Black and Hispanic neighborhoods in the city while also employing a director of community lending for continued development of lending in these neighborhoods.

“The actions described in the consent order embrace the programs that Patriot has already had in place for years, and Patriot is pleased to continue with its existing initiatives that demonstrate the bank’s commitment to communities of color,” said Keith Barger, vice chairman of Patriot Bank and CEO of Patriot Bank Mortgage.

The bank, which opened in Millington in 2001, has eight full-service banks in Millington, Arlington, Collierville, Rosemark, and Raleigh Springs in Shelby County, and Covington, Covington South and South Tipton in Tipton County.

“For too long, practices like redlining and discriminatory lending have been used to undermine the promises of our economic system,” said U.S. Attorney Kevin G. Ritz for the Western District of Tennessee. “Our office is committed to enforcing fair lending laws and ensuring that banks and lenders are providing communities of color equal access to credit and lending opportunities. This agreement with Patriot Bank signifies an important step toward preserving economic justice and for communities of color in Memphis as they buy homes, start businesses, and take part in the American Dream.”