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By John Zasada, JD, CAMS – Shareholder, Financial Institutions Group

On Aug. 28, 2023, the U.S. Department of Justice announced a consent order with American Bank of Oklahoma for redlining discrimination in Tulsa, Okla. Redlining is when lenders avoid providing credit services to individuals living in certain communities because of the race, color or national origin of the residents in those communities. From 2017 through 2021, American Bank of Oklahoma failed to provide mortgage lending services to majority black and Hispanic neighborhoods in the Tulsa metropolitan area. All the bank’s branches and loan production offices were located in majority white neighborhoods. The institution did locate a single branch or loan production office in a majority black and Hispanic census tract. They designated a service area excluding all majority black and Hispanic census tracts in the metropolitan area.

The bank assigned all its loan officers to its branch locations or loan production offices, which were all located in majority white areas. It did not assign a single loan officer to conduct outreach in majority black and Hispanic areas, and did not market, advertise or take steps to generate loans from these neighborhoods. In addition, the bank paid for advertisements to increase brand recognition in the local majority white communities, where its branches and loan production offices were located, including weekly advertisements in local publications and billboards. They did not advertise in any publications intended for circulation within majority black and Hispanic areas. When advertisements and the website featured images of people, the images were of white-appearing loan officers and bank employees.

Despite operating in the Tulsa lending area, where 11% of the population is Hispanic, the bank did not circulate any marketing materials or advertisements in Spanish. Their website had no content in Spanish and did not identify the language abilities of any employees or direct potential customers to anyone who can speak Spanish.

The bank failed to appropriately monitor and address fair lending risk. Bank employees, including executives and loan officers, apparently sent and received emails on their work email accounts containing racial slurs and racist content.

Changes in Motion

American Bank of Oklahoma has agreed to invest the below in these areas:

  • Over $1.15 million to increase credit opportunities in neighborhoods of color in the Tulsa metropolitan area.
  • At least $950,000 in a loan subsidy fund for residents of majority black and Hispanic neighborhoods in the Tulsa area.
  • $100,000 for advertising, outreach and consumer education.
  • $100,000 for the development of community partnerships to provide services that increase access to residential mortgage credit.

Additionally, the bank will conduct the following initiatives:

  • Open a new community-oriented loan production office in the historically black area of Tulsa.
  • Ensure at least two mortgage loan officers are dedicated to serving majority black and Hispanic neighborhoods in and around Tulsa.
  • Host at least six consumer financial education seminars per year, with translation and interpretation services in Spanish.
  • Employ a full-time Director of Community Lending, who will oversee the continued development of lending in minority neighborhoods in the Tulsa area.

For more information on how to avoid violations related to redlining, contact our regulatory compliance specialists today.