On Monday, St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA), Woodstock Institute and the National Community Reinvestment Coalition (NCRC) submitted comment letters opposing the proposed merger between First Mid Bank & Trust and Jefferson Bank & Trust to the Federal Reserve. The letters cited similar Community Reinvestment Act (CRA) and fair lending concerns with First Mid Bank & Trust’s ongoing operations in multiple markets across Illinois.
First Mid Bank & Trust is a $5.6 billion bank based in Mattoon, Illinois, with a growing banking presence in the St. Louis region. The bank is applying to acquire Jefferson Bank & Trust, of St. Louis, Missouri. Combined, the bank would be 11th largest in deposits in the St. Louis market.
These consumer advocacy organizations have significant concerns about First Mid Bank & Trust’s recent lending activities:
- First Mid Bank & Trust shows patterns of lending to minority borrowers and communities at less than half of their peers in the multiple markets.
- The extremely low numbers of applications from Black applicants (compared to peers) indicate that the lender has not been properly attempting to market and serve the majority-minority neighborhoods within their assessment areas.
- The St. Louis, Champaign, Decatur, and Peoria markets showed the greatest signs of potential Fair Lending issues.
- Consumer advocates point out that the branch network is heavily concentrated in predominantly white and upper income neighborhoods.
- Local advocates also note the social and cultural significance of Jefferson Bank & Trust in the civil rights history of St. Louis. That such an important part of our local civil rights history could be merged with a lender who appears to have significant Fair Lending concerns is something the local community simply cannot support.
As a result of these concerns, advocates are asking that regulators deny the merger application and conduct a thorough fair lending investigation of First Mid Bank & Trust. The comment letters were also sent to the Office of the Comptroller of the Currency and the Department of Justice.
“Thankfully, it has become rare that we see lenders with the kinds of significant and widespread redlining and fair lending concerns that were found in First Mid Bank & Trust’s data,” said Elisabeth Risch, Co-Chair of SLEHCRA. “When coupled with the powerful history around Jefferson Banks & Trust, our coalition’s member organizations felt it was necessary to ask the Federal Reserve to block the proposed merger. We also have significant concerns that the banking regulators failed to identify these issues previously. Simply put, we cannot support First Mid’s acquisition of yet another lender in the St. Louis metropolitan area. Until the institution takes significant steps to correct its ongoing behavior, regulators should not allow their business to continue expanding.”
“This merger is not in the best interest of St. Louisans because the best indication of what we can expect from First Mid bank is reflected in their history of lending to African American borrowers in Illinois,” said Jackie Hutchinson, representing SLEHCRA member Consumers Council of Missouri.
“Analysis of First Mid’s mortgage lending shows a multi-year pattern and practice of blocking black borrowers from becoming homeowners,” said Horacio Mendez, president and CEO of Woodstock Institute. “In majority Black neighborhoods of 7 counties that the bank serves, they originated an appalling 2 mortgages over a 3-year period. And in the St. Louis region First Mid originated 940 mortgages over 3 years … 16 of which were to Black borrowers. At the same time, their regulator (Office of the Comptroller of the Currency) gave the bank an ‘Outstanding’ rating on their Community Reinvestment Act (CRA) Lending Test. What, exactly, does it take to fail? We’re hoping the Department of Justice can help us answer that question.”
“Bank mergers are a privilege, not a right, and they are supposed to benefit the public, not just the banks,” said Jesse Van Tol, President and CEO of NCRC. “In this case there is alarming data that shows First Mid failed to lend to Black borrowers and Black communities in multiple markets. That’s a pattern that regulators shouldn’t ignore or condone. Banks are supposed to meet the credit needs of the communities where they do business. The data suggests First Mid Bank & Trust does not meet those requirements, and therefore, this merger should be denied.”