The U.S. Department of Justice announced a $31 million settlement with City National Bank over allegations that the Los Angeles-based bank engaged in "redlining" – a pattern of lending discrimination – in Los Angeles County.
The settlement, which according to the DOJ is the largest redlining settlement in the department's history, will benefit individuals and communities impacted by the discriminatory practice, the DOJ announced on Thursday.
Redlining, a discriminatory and illegal practice, is when lenders withhold services from customers who live in low income neighborhoods, disproportionately impacting communities of color.
"We are committed to ensuring that all consumers have an equal opportunity to apply for and obtain credit," City National said in a statement posted to the bank's verified Twitter account on Thursday, along with a link to lending services resources. "We stand proudly on our legacy of integrity, corporate philanthropy and commitment to the communities we serve."
ABC News has reached out to City National for additional comment.
"The Justice Department will continue to build on our efforts to vigorously enforce federal fair lending laws and work to ensure that financial institutions provide equal opportunity for every American to obtain credit," Attorney General Merrick B. Garland said in a statement on Thursday. "In advance of what would have been Dr. Martin Luther King Jr.'s 94th birthday, it is a fitting time to reaffirm our commitment to that work, and to the pursuit of justice for all Americans."
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The complaint against City National Bank, which was filed by the DOJ in federal court on Thursday, alleges that from 2017 through at least 2020 the bank avoided marketing and underwriting mortgage lending services to majority Black and Latino neighborhoods and discouraging those Los Angeles County residents from obtaining mortgage loans.
City National Bank only opened one branch in a majority-Black and Hispanic neighborhood and did not assign an employee to generate loan applications for the branch like they did branches located in majority-white areas over the past 20 years, according to the complaint.
According to the DOJ, City National agreed to take a number of actions to address redlining, including investing at least $29.5 million in a loan subsidy fund for communities of color in LA County. They will also open a new branch in a predominantly Black and Hispanic neighborhood as well as conducting an assessment to identify needs for lending services in those communities.
"City National worked cooperatively with the Department to remedy the redlining allegations," the DOJ said in the statement on Thursday. "In conjunction with this settlement, City National has announced that it is proactively taking steps to expand its lending services in other markets around the country to provide greater access to credit in communities of color."
City National Bank announced a new lending initiative on Wednesday that will help entrepreneurs and potential homebuyers in underserved communities gain access to capital, according to a press release.
"At City National, supporting our communities is core to who we are as an organization," City National CEO Kelly Coffey said in a statement on Wednesday. "We take very seriously our obligation to ensure that all businesses and consumers have an equal opportunity to apply for and obtain credit."
The settlement comes more than one year after the DOJ announced an initiative to combat redlining – a practice that is illegal under the Fair Housing Act and the Equal Credit Opportunity Act.
Garland said on Thursday that the Combating Redlining Initiative, which was launched in October 2021, has secured over $75 million dollars in relief for communities impacted by lending discrimination.
City National is the latest bank that was found over the past few years to be engaging in redlining practices in the U.S.
In October 2021, federal officials and the DOJ announced that Trustmark National Bank agreed to pay a $5 million settlement over allegations it engaged in lending discrimination in communities of color in Memphis, Tennessee.
ABC News' Mark Nichols contributed to this report.
City National Bank to pay $31M in redlining settlement with DOJ originally appeared on abcnews.go.com