Settlement with Bank of $16.6 Million Expected to Benefit Minority Consumers

St. Louis Post-Dispatch, October 2, 2014

Midland States Banks said it will open a branch and loan production office in the St. Louis region as part of a settlement of a fair housing complaint that sought to block its acquisition of Heartland Bank.

Effingham, Ill.-based Midland States Bank announced Thursday it will open a new local branch in a predominantly minority community in the city of St. Louis, a loan office in the St. Louis region and a branch in Joliet, Ill. The bank also committed $16.6 million to increase access to home mortgage products including refinancing and multi-family lending in predominantly minority communities in St. Louis and Joliet.

The locations of the St. Louis area branch and loan production office have not yet been identified, said Douglas Tucker, senior vice president and general counsel of the bank’s holding company, Midland States Bancorp. The bank’s local branches are in Chesterfield, Columbia, Ill., and Waterloo, Ill.

Several national and local organizations, including the St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA), filed a complaint a year ago with the U.S. Department of Housing and Urban Development, alleging Midland States Bank did not provide equal services to black borrowers in violation of federal law. The complaint alleged black mortgage applicants made up just 0.39 percent of all applicants at the bank, based on an analysis of federal racial lending reports. The low numbers constituted redlining, a practice of refusing to lend in minority areas, which is prohibited by federal rules, according to the complaint. The National Community Reinvestment Coalition and the Woodstock Institute joined with SLEHCRA to file the complaint.

“I can already visualize the changes in St. Louis due to agreements like the agreement we now have with Midland States Bank to reinvigorate our communities, to put in investment where needed to provide low income individuals the access to credit,” said Ed Wartts, director of the U.S. Department of Housing and Urban Development’s fair housing and urban equal opportunity office in St. Louis. “Banking is a fundamental foundation of any community and without it, communities fail to thrive, they fail to grow.”

The settlement announced Thursday paves the way for Midland States Bank’s acquisition of Clayton-based Heartland Bank, announced last September, to move forward. Heartland has 13 branches and is among the largest locally chartered banks with $870 million assets at mid-year, according to the Federal Reserve Bank of St. Louis.

“We were concerned with Midland States Banks’ record of lending to minority communities in St. Louis as well as other areas in Illinois,” said Elisabeth Risch, director of research and education at the Metropolitan St. Louis Equal Housing Opportunity Council, a nonprofit housing organization that is a member of the alliance that lodged the complaint.

The alliance made the announcement on an undeveloped lot in the 5900 block of Dr. Martin Luther King Drive. The site was chosen because the zip code where the lot is located, 63113, has only one bank branch, and an adjoining zip code, 63113, has no bank branches. Combined, the two bank branches have a population of 33,000, of which 80 percent is black, Risch said.

“The agreement announced today with Midland States Bank represents the ongoing efforts by SLEHCRA and our partners to increase investment in low income communities and minority communities,” Risch said.

Midland States Bank’s Tucker said the acquisition of Heartland Bank is expected to close soon. “We’re hoping we will be able to close in the next month or two,” Tucker said.

Regarding the settlement, Tucker said Midland States Bank looks forward to working with the local nonprofit groups to identify sites for the new branch and loan production office. “We try to be a leader in every community that we’re in and we fully expect to be a leader in the economic development here in St. Louis.”

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