Community reinvestment plans comes a decade after BancorpSouth’s DOJ settlement over “redlining” and discrimination allegations in Arkansas and Memphis area
BCN Staff – March 5, 2022 – Cadence Bank, the regional $6 billion banking colossus formed in October from the merger of Tupelo-based BancorpSouth and Cadence Bancorp in Houston, recently announced that it will invest $20.7 billion to support traditionally underserved communities across the bank’s nine-state footprint.
According to Cadence, the multibillion-dollar investment is part of its 2022-2026 Community Benefits Plan—developed in collaboration with the National Community Reinvestment Coalition (NCRC) – would bring billions of dollars in new capital to low- and moderate-income neighborhoods, people of color, and small businesses.
The $20.7 billion, five-year plan includes provision for mortgage lending, small business lending, community development lending and investments, philanthropy and improve banking service hours in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Missouri, Tennessee and Texas, all markets now served by Cadence.
“Cadence is dedicated to understanding the financial needs of its communities and providing solutions to help make them stronger,” Dan Rollins, chairman and CEO of Cadence Bank, announced in late February. “Founded on the principle that neighbors should help neighbors, our company believes it is only as strong as the communities it serves. This $20.7 billion plan will strengthen our efforts to improve the places we live and work. We’re proud to partner with NCRC to provide economic opportunities to LMI communities, neighborhoods of color and small businesses.”
The plan follows the Oct. 29 completion of the merger of BancorpSouth Bank and legacy Cadence Bancorporation merger, which created a leading regional banking franchise with approximately $50 billion in assets and more than 400 branch locations in its nine-state footprint as of year-end 2021.
“We appreciate the leadership and commitment of Cadence Bank to listen and work with NCRC and our members to create this community benefits plan,” said Jesse Van Tol, President and CEO of NCRC. “The investments, services, philanthropy and other goals spelled out in this plan are an important step to meet the needs of low- and moderate-income communities and neighborhoods of color where the bank operates.”
The $20.7 billion five-year plan features the following:
- $11.8 billion in residential purchase-money mortgage loans to LMI borrowers, LMI geographies, people of color (including African American and Latinx), and majority-minority census tracts;
- $6.5 billion in small business lending to businesses located in LMI census tracts and/or businesses with less than $1 million in gross annual revenues; and
- $2.4 billion in community development lending and investments, supporting activities intended to increase the availability of affordable housing, services, social impact and economic opportunity for low- and moderate-income persons or help to stabilize and improve conditions in distressed communities.
The plan also includes additional initiatives Cadence will undertake to enhance its impact on the underserved in its communities, including its commitment to volunteer services, grants and donations, and the possibility of new branches and product offerings, where feasible.
The bank’s Corporate Community Advisory Council is an established key community engagement initiative. Under the plan, this group comprised of local executives, community leaders, representatives of nonprofit organizations and other community stakeholders will collaborate with the bank to continue to offer and develop innovative loan products, investments and services for the successful implementation of the plan.
BancorpSouth is only six years removed from a settlement agreement with the U.S. Department of Justice and Consumer Financial Protection Bureau (CFPB) to resolve allegations that it violated the Fair Housing Act and Equal Credit Opportunity Act (ECOA) by using policies and practices that unlawfully discriminated against African Americans and other residents of predominantly minority communities in the Memphis, Tennessee, area, as well as parts of neighboring Mississippi and Arkansas.
In 2014, the Mississippi regional bank with a big presence across Arkansas had to table its merger pacts with Ouachita Bancshares Corp. in Monroe, La. and Central Community Corp., headquartered in Temple, Texas, after the Federal Deposit Insurance Corp. lowered the bank’s Community Reinvestment Act rating from “satisfactory” to “needs to improve.”
The FDIC downgrade occurred after the DOJ and the CFPB alleged that BancorpSouth was illegally “redlining” predominantly minority neighborhoods in the Memphis metropolitan area. Redlining is a discriminatory practice by banks or other financial institutions to deny or avoid providing credit services to a consumer because of the racial demographics of the neighborhood in which the consumer lives. BancorpSouth also allegedly discriminated against African American applicants in the underwriting and pricing of certain mortgage loans and implemented a policy or practice that required its employees to treat applications differently based on race or other prohibited characteristics.
The complaint also alleged that BancorpSouth’s mortgage department implemented a discriminatory loan policy or practice of requiring its employees to deny applications from minorities more quickly than similarly situated white applicants and to not provide credit assistance to “borderline” applicants that other applicants may have received. In an audio recording of a BancorpSouth meeting held in 2012, a manager told loan officers and processors that applications from minorities and others whom the bank viewed as “protected class members” must be “turned down” within 21 days, while white applicants were not subject to this shorter time frame. During this meeting, BancorpSouth employees made several racially insensitive comments followed by laughter, the DOJ alleged.
In early 2018, BancorpSouth was able to get two those earlier stalled acquisition deals back online following a deal with federal regulators, including the FDIC and CFPB. BancorpSouth announced plans in April 2018 to expand deeper into Texas with the purchase of Houston-based Icon Bank in a stock-and-cash deal valued at nearly $145 million.
The merger deal with the much larger Cadence in late 2021 creates one of the nation’s largest regional banks with dual headquarters in Tupelo and Houston. Cadence also now has additional operations centers in Tupelo and Birmingham, Ala., and specialty banking sites in Macon, Ga., Starkville, Miss., and Houston.
Also, the bank’s board of directors is now comprised of 20 directors – nine from Cadence and eleven from BancorpSouth, including former NFL player Keith Jackson, founder and president of Little Rock’s Positive Atmosphere Reaches Kids (P.A.R.K.), and Gus Blass III, general partner of Capital Properties LLC. BancorpSouth officials also broke ground in August 2021 on a new four-story, 40,000 square-foot corporate office in west Little Rock to house the bank’s BXS Insurance affiliate and a full-service branch with commercial lending, wealth management and mortgage operations.
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