Alliance reports on bank diversity

Among the top 20 banks in St. Louis, there is a lack minorities in senior management positions and on banks’ board of directors, according to a new report released on Aug. 28 by the St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA).

The report examines how the top 20 banks in St. Louis are reinvesting in low- and moderate-income communities and communities of color.

Fifteen of the 20 banks provided data to SLEHCRA on the racial and ethnic composition of their employees, senior management and board of directors. Nine banks had zero performance in either diversity among senior management or diversity on members of board of directors. That means that 60 percent of the banks reporting do not have minorities in senior management positions or on their board of directors.

U.S. Bank has the highest performance among area banks in diversity of all employees and board members. UMB Bank has the highest employee and senior management diversity among mid-sized banks, with 15 percent.

While Bank of America fared well in diversity among total employees, the bank reported zero percentage of minorities in senior management positions in the St. Louis area. In addition, Collinsville Bank and Reliance Bank, both small banks, reported no minorities in senior management positions and no minorities on their board of directors.

The report also looks at home mortgage lending trends to minority borrowers and finds severe under-representation in mortgage originations and denial rate disparities.

Minority households represent about 28 percent of the population in the St. Louis area. However, in 2011, all banks originated only 8 percent of home mortgage loans to minority borrowers. Of the top 20 banks, 13 banks are lending below the aggregate and under-performing in lending to minority borrowers.

The highest-performing bank, Heartland Bank, originated 12 percent of loans to minority borrowers. Enterprise Bank & Trust was the lowest with 0.6 percent of loans going to minorities.

First Bank has the highest percentage of small business loans originated in low- and moderate-income census tracts at 34.1 percent.

“As the economy recovers from the financial meltdown, low- and moderate-income communities and communities of color need reinvestment more than ever,” stated Elisabeth Risch, director of research and education at SLEHCRA.

Under the Community Reinvestment Act (CRA), financial institutions have the affirmative obligation to meet the needs of all parts of the community.

“The 20 largest depository banks in St. Louis hold over $45 billion in deposits,” Risch said. “With those billions of dollars, banks have an obligation to provide our communities with services, products and investments.”

African-American borrowers are more than twice as likely to be denied a home loan as white borrowers, according to the report. In 2011, approximately 31 percent of African-American borrowers were denied, compared to 13 percent of white borrowers.

The disparity is highest among higher-income borrowers. Among middle- and upper-income borrowers, blacks are 2.4 times more likely to be denied than whites. 

The report, entitled The State of Bank Reinvestment in St. Louis: An analysis of how banks are meeting the needs of the community, was released as part of the 50^th commemoration of the Jefferson Bank demonstrations in St. Louis.

Beginning on August 30, 1963, black and white community members and leaders demonstrated in front of Jefferson Bank and Trust to protest the bank’s lack of black employees as well as overall discriminatory employment practices in St. Louis business. The demonstrations were the largest act of civil disobedience in St. Louis and a key civil rights event in St. Louis history.

“Fifty years later, this report finds that banks are doing better at hiring minority employees, but there are serious disparities for minorities in bank leadership positions and access to credit,” Risch said.

Risch recommends that community members and organizations hold their banks accountable.

“Consider moving your money from banks with poor performance into banks with strong performance of meeting the needs of the community,” she said.

Individuals can evaluate their bank’s performance based on the data provided in this report or SLEHCRA’s evaluations posted online.

The full report is available for download at www.slehcra.org, or by contacting Elisabeth Risch at erisch@ehoc-stl.org or 314-534-5800 ext. 7012.