On December 2, 2009, the FDIC released its National Survey on Unbanked and Underbanked Households. The survey examined the number of households in the United States that do not have checking or savings accounts (unbanked) as well as the number of households that have a checking or savings account but use alternative financial services such as non-bank money orders and check cashing services, payday loans, refund anticipation loans, pawn shops and rent-to-own agreements (underbanked).

Nationally, the study found that 7.7 percent of the population is unbanked, and a further 17.9 percent are underbanked. The study found a high disparity between racial groups, finding 21.7 percent of black, 19.3 percent of Hispanic and 15.6 percent of American Indian / Alaska Native households to be unbanked compared to 3.5 percent of Asian and 3.3 percent of white households that are unbanked. The percentage of St. Louis households that are unbanked is slightly lower than the national average (7.5 percent); however, the racial disparities are more significant than in any other metropolitan area, with 31.0 percent of black households in the St. Louis region being unbanked, compared to 1.1 percent of white households. The percentage of African American households that is unbanked in St. Louis is higher than for any other metropolitan region in the country (see table 4.2, page 24).

Commenting on the report, Mira Tanna, Assistant Director of the Metropolitan St. Louis Equal Housing Opportunity Council said: “The report shows that banks in the St. Louis region have done a poor job reaching out to African Americans. We have identified banks that exclude predominately African American areas from their service area and that choose to locate their branches only in predominately white neighborhoods. At the same time, many African American neighborhoods are littered with alternative financial services such as payday lenders and auto title loan companies that charge excessive interest rates. It is time for banks to offer equitable access to credit to African Americans in the St. Louis region.”

The disparities between blacks and whites in banking in the St. Louis area are not new. A 2000 study by the Center for Community Change found St. Louis to have the highest disparities among upper income blacks and whites in the use of subprime loan products.

EHOC helped form the St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA) to help increase investment in low-income and minority communities in part by ensuring that banks are have facilities in and are lending to these communities, and that banks are offering products and services that meet the needs of low-income borrowers.

For Immediate Release
October 5, 2009

Media Contact:
Elisabeth Risch 314-534-5800 ext. 22

Community Organizations File Public Comment Letter against Midwest BankCentre

ST. LOUIS – A coalition of community organizations called the St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA) announced today that they had filed a public comment letter with the Federal Reserve Bank regarding Midwest BankCentre’s performance under the Community Reinvestment Act (CRA).

The public comment letter alleges that the bank does not provide equal access to services for African American communities; that the bank excludes areas of high minority concentration in its assessment area; that the bank has not approved mortgage loans to black borrowers in five years; and that the bank appears to treat borrowers differently according to race.

SLEHCRA gathered data through the Home Mortgage Disclosure Act (HMDA) showing that the bank has not approved a single mortgage loan to an African American borrower in five years (2004 – 2008), despite receiving applications from African Americans.

In the past 3 years (2006 – 2008), in contrast, 355 mortgage loan applications from white borrowers were approved. Also cited in the letter was the lack of services in African American communities. All full service branches are located in areas with less than 2.5% of African American households.

The bank also serves four retirement centers, one of which is located in a census tract that is 32% African American. However, these partial service locations are not open to the general public and do not issue credit.

SLEHCRA also noted that the bank’s assessment area appears to exclude areas of high concentration of minorities, leaving out large parts of St. Louis City and some parts of north St. Louis County in apparent violation of federal regulations for large banks that recommend the assessment area be designated as the entire metropolitan area or at least within entire political subdivisions.

Finally, the Metro St. Louis Equal Housing Opportunity Council (EHOC) conducted a “test” in which potential borrowers appeared to be treated differently because of race.

The potential black borrower received one customer service contact, while the potential white borrower received one customer service contact and 6 personally-generated contacts from the mortgage division, despite the black borrower having superior qualifications.

Founded in 1906 as Lemay Bank and Trust, the bank had assets of $958.5 million in 2007 and was examined as a large bank.

The bank is undergoing is performance evaluation this quarter by the Federal Reserve Bank. A negative rating can result in additional performance evaluations; delays or denials of mergers, acquisitions, or expansions of services; or enforcement activity by the U. S. Department of Justice.

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For more information or to set up interviews, contact Elisabeth Risch at 314-534-5800 ext. 22.

[PDF Copy of Press Release]