Members of the St. Louis Equal Housing and Community Reinvestment Alliance didn’t mince words last week when they publicly opposed First Mid Bank & Trust’s plans to purchase Jefferson Bank & Trust.
Mortgage-lending data for First Mid Bank showed “significant and widespread redlining and fair lending concerns,” the group wrote, urging the Federal Reserve to deny the merger and open a fair-lending investigation into the bank’s practices.
“Their data was just so staggeringly bad that there was no way we could support this merger,” Elisabeth Risch, who is also the assistant director of the Metropolitan St. Louis Equal Housing and Opportunity Council, told St. Louis on the Air. “Our coalition had conversations with the bank, we brought this data up to them, and even still we were not in a position to support the merger with Jefferson Bank.”
The alliance joined with the National Community Reinvestment Coalition and the Woodstock Institute in submitting comment letters to the Federal Reserve on Oct. 18. The community groups cited “patterns of lending to minority borrowers and communities at less than half of their peers” as well as “extremely low” numbers of Black applicants for First Mid mortgages.
“The statistic that really stuck out to us is that over the last few years … in 2020 specifically, they had about 778 mortgage applications all across the region, and only 14 of those came from African American borrowers,” Risch said.
“And they then originated, or financed, only seven of those. So that’s like 1% of their mortgage lending, and in our region when African Americans make up about 20%, 25% of the population, that really stuck out to us as a point of concern and raised a lot of red flags.”
First Mid is based in Mattoon, Illinois. If First Mid is allowed to acquire St. Louis-based Jefferson Bank, the combined bank would be 11th largest in deposits in the St. Louis market, the advocates say. That’s one reason they’re pushing back on the merger.
“It’s not meant to be adversarial,” said Jacqueline Hutchinson, executive director of the Consumers Council of Missouri and co-chair of the alliance. “It’s not meant to block [First Mid’s] progress or any of that. It’s meant to make sure, as they move into our service area, that they are thinking about equity and inclusion and making sure that all of their customers have equal access to all of the tools that they have.”
Another factor driving the opposition to the merger is the civil rights history surrounding Jefferson Bank & Trust, which was the focus of lengthy protests of job discrimination in downtown St. Louis in 1963.
“To give up the Jefferson Bank name,” explained Hutchinson, “which is a historic legacy, to a bank that may not carry on the legacy of the history that people fought for — we’d like to have some commitment that shows that the bank is thoughtful about the history of Jefferson Bank, and would like to at least honor the legacy of the people who fought for equity and justice during that period.”
In a statement, a spokesperson for First Mid said the bank “has always taken compliance with regulations very seriously and have prided ourselves on making an impact in the communities we serve.”
“We feel the information presented by the consumer advocacy groups does not accurately reflect our lending practices or values and we trust the resulting review process by the Federal Reserve,” the spokesperson’s email read in part. “We have engaged in productive dialogue with these consumer advocacy groups and have shared with them our plans to introduce new low and assisted down payment mortgage products to better serve low-income and minority homebuyers inside the St. Louis region. With this merger, we also plan to increase community investments and partnerships in the area.”
Hutchinson and Risch said they have had several productive conversations with the bank. They acknowledged that First Mid has offered up some commitments going forward (including $5 million to loans in minority neighborhoods in Missouri, according to the St. Louis Post-Dispatch).
But they said they remained skeptical.
“To say that they will do any different than they’ve done in the past, for the region as a whole, is not reflected in the offer that they’ve made to us,” Hutchinson said.
Risch noted that First Mid is currently rated “satisfactory” by its regulator, the Office of the Comptroller of the Currency. Rather than mollifying the group’s concerns, she said that rating raises questions about the regulators.
To her, the bank’s performance is a matter of accountability.
“We really needed to raise this issue to the regulators, to the banking regulators like the Federal Reserve as well as the Office of Comptroller of the Currency and the Department of Justice,” she said. “Because they need to be held accountable to their past performance. At the same time, all of our coalition members are still invested in assisting and continuing to talk to the bank about how to make those changes and recommendations.”
“St. Louis on the Air” brings you the stories of St. Louis and the people who live, work and create in our region. The show is hosted by Sarah Fenske and produced by Alex Heuer, Emily Woodbury, Evie Hemphill and Lara Hamdan. Jane Mather-Glass is our production assistant. The audio engineer is Aaron Doerr.
