Fla. bank that denied loans to Blacks, Hispanics to pay $9 million

Attorney General Merrick Garland announced a $9 million federal settlement on Thursday with a bank in Jacksonville, Fla., to resolve Justice Department findings that for years the bank had failed to provide loans and other financial services to Black and Hispanic residents.

Garland appeared at a news conference in Jacksonville to tout a Justice Department initiative that aims to combat discriminatory lending against minority communities, a practice also known as redlining.

The deal with Ameris Bank was the department’s latest redlining settlement since the Combating Redlining Initiative was launched in October 2021, officials said. All told, federal authorities have secured $107 million in restitution and penalties from financial institutions in Jacksonville, Los Angeles, Houston, Memphis, Philadelphia, Newark, Columbus, Ohio, and the state of Rhode Island.

The Justice Department filed both its complaint against and proposed settlement with Ameris Bank on Thursday morning in federal court in Florida. The complaint alleges that between 2016 and 2021, Ameris Bank avoided serving majority-Black and Hispanic neighborhoods in Jacksonville and dissuaded residents living in those communities from obtaining home loans. The bank has 18 branches in Jacksonville but none in the city’s majority-Black and Hispanic neighborhoods, which account for nearly 20 percent of the bank’s service area.

According to the Justice Department, Ameris Bank’s competitors received applications in these majority-Black and Hispanic neighborhoods at three times the rate as Ameris, which is based in Atlanta and operates in nine states. The Justice Department estimates it has assets of about $25 billion.

In a statement, Ameris Bank denied the Justice Department’s allegations of redlining, saying it was entering into the agreement to avoid litigation.

“We strongly disagree with any suggestion that we have engaged in discriminatory conduct and are confident in our efforts to provide equal access to affordable mortgage products in the Jacksonville community and all the markets we serve,” chief executive Palmer Proctor said. “We cooperated fully with the Department’s inquiry and have entered into this settlement to avoid the distraction of litigation and because we share the Department’s goal of expanding access to homeownership in underserved areas.”

As part of the settlement - which needs to be approved by a judge - the bank must open a new branch in a majority-Black and Hispanic neighborhood and dedicate three loan officers to serving people in these communities. It also must invest $7.5 million in a loan subsidy fund for residents in majority-Black and Hispanic neighborhoods and $900,000 in advertising targeting those neighborhoods.

“As today’s case makes clear, redlining is not just a relic of the past. Indeed, some of the neighborhoods that we allege Ameris redlined are some of the same neighborhoods that federal agencies originally redlined beginning in the 1930s,” Garland said in his announcement. “Moreover, the harm of redlining is felt not only by individuals and communities redlined today, but also by the next generation and the next.”

Senior Justice officials have cited growing racial inequality and a widening wealth gap in the United States as reasons they have focused on redlining cases. They say the federal investigations should send a clear signal to banks that the department will not tolerate lending discrimination.

Garland traveled to Jacksonville on Wednesday afternoon. His decision to personally make the announcement outside Washington, aides said, was aimed at bringing more attention to the redlining initiative and highlighting its progress. Assistant Attorney General Kristen Clarke, who oversees the civil rights division, and U.S. Attorney for the Middle District of Florida Roger Handberg, who is the top prosecutor in the Jacksonville-area, also spoke at the announcement.

“Our analysis also found that Ameris did not make sufficient efforts to reach neighborhoods of color - in fact, mortgage bankers failed to serve those communities, and marketing and outreach efforts were directed toward White communities,” Clarke said. “And finally, we allege that Ameris knew of its redlining risk in Black and Hispanic communities in Jacksonville for years, but it did not take any corrective action to address the risk and reach out to communities of color in Jacksonville.”

In 2021, Garland cited the history of banks denying loans to Black borrowers during the Great Depression and warned that such practices remain widespread more than 90 years later. He said then that the department would, in conjunction with other federal agencies, mount the U.S. government’s “most aggressive and coordinated effort” to root out and punish those who violate federal laws that prohibit such practices.

Experts have said redlining has contributed to generational inequities as Black families have had more obstacles than White ones to buying a home and being able to pass along that asset to their children.