DOEREN MAYHEW Continued from page 1
Almost All Branches in Majority White Areas
Citadel operated between 20 and 24 branches in its market area , all of which offered a full suite of retail products and services , including accepting residential mortgage loan inquiries and applications . Only one of its branches was operated in the Black and Hispanic tract , even though those census tracts represented approximately 24 % of the credit union ’ s overall market area . This sole branch opened in a majority Black and Hispanic neighborhood in 1963 in Chester County , when Citadel served only employees of Lukens Steel Company and not the surrounding area .
According to the DOJ , Citadel ’ s expansion and branching decisions show an intent to avoid providing credit in majority Black and Hispanic tracts in its market area . Between 2009 and 2016 , Citadel expanded out of Chester County and opened 11 branches in Bucks , Delaware , Lancaster and Montgomery counties , all of which were in White census tracts . It also opened three additional branches in White areas . Despite it containing 34 % of the market area ’ s overall population and over three-quarters of its majority Black and Hispanic census tracts , Citadel had no branches in Philadelphia County .
The DOJ believes the credit union knew it was not serving the credit needs of minority applicants in its market area but did not take steps to address these deficiencies . A third-party analysis of annual Home Mortgage Disclosure Act ( HMDA ) data showed Citadel trailed its peers in mortgage applications and originations from minority customers in nearly every county in its field of membership since at least 2016 . Yet , Citadel chose to open all its new branches in majority White areas . By concentrating all but one of its branches in majority White areas , the DOJ contends Citadel discouraged residents of majority Black and Hispanic areas from applying for and obtaining home loans , restricting their access to its credit and mortgage lending services .
Not Responsive to NCUA ’ s Concerns
Beginning in 2006 , and on several occasions since then , the NCUA informed Citadel it was concerned the credit union was failing to provide credit services to underserved areas in Philadelphia County . In 2009 , NCUA approved Citadel to expand its field of membership after the credit union represented it would provide credit services to underserved areas in Philadelphia County by opening three branches and conducting targeted outreach .
Citadel failed to follow through on these representations . Since 2009 , the credit union failed to open a branch or conduct any outreach and marketing to Philadelphia County . Once NCUA approved the charter expansion , the credit union appeared to pivot away from Philadelphia . In a board meeting soon after receiving approval for the charter expansion , Citadel ’ s President and CEO noted the proposal to the NCUA was not a promise to open branches in particular areas .
Inadequate Policies and Practices to Monitor Fair Lending
The DOJ claims Citadel lacked adequate policies and practices to monitor fair lending compliance and ensure it was providing equal access to credit to majority Black and Hispanic neighborhoods . Although the credit union had a written fair lending policy in place since at least 2012 , it had not taken adequate measures to implement its policy or monitor compliance with federal fair lending laws . In 2020 , an NCUA exam found the credit union did not provide fair lending training to officials , including its board of directors and supervisory committee . Additionally , it had never conducted a comprehensive fair lending risk assessment .
At the request of the NCUA , Citadel finally retained a third party to conduct an independent audit of its fair lending program . The auditor found the credit union lacked adequate procedures and personnel to monitor compliance with fair lending laws and recommended the credit union establish “ a fair lending committee or other governing body dedicated to fair lending issues .” Citadel rejected this recommendation and had not conducted a redlining risk assessment as of November 2022 .
02 | VIEWPOINTS : REGULATORY COMPLIANCE EDITION