May 26--Associated Bank, whose compliance with fair-housing laws has been under investigation, said it has reached a settlement with the U.S. government that will require boosting its lending and expanding its presence in minority neighborhoods in the Chicago area.
The Green Bay-based lender, which has about two dozen Chicago-area branches and which locally ranks 15th in deposit market share, said late Friday that it has signed a "conciliation agreement" with the U.S. Department of Housing and Urban Development. The deal, said the publicly traded bank, resolves HUD's investigation into Associated's lending practices between 2008 and 2011, and requires the institution to take several actions.
HUD had alleged that Associated Bank discriminated by disproportionately denying loan applications of blacks and Hispanics and that it "underserved" neighborhoods with significant black or Hispanic populations, despite demand for residential mortgage loans in those areas.
"Associated is pleased to have concluded these discussions and will fully comply with the agreement," Chief Executive Philip Flynn said. "We agree with HUD that we can improve our performance in some of the communities and neighborhoods we serve," namely by helping promote homeownership and lending in those areas, he said.
The agreement requires Associated to take several actions over the next three years, according to a copy of the HUD agreement filed Monday morning with the Securities and Exchange Commission.
Associated said employees involved in residential lending must take four hours of training related to fair-housing issues.
The bank said it will also add a branch location and loan production offices.
The new full-service branch, with an estimated cost of $2 million, will be in a minority area of Chicago and must remain open for at least five years.
Associated must also open one loan production office in a minority area of Milwaukee; two in Chicago; and one in either Cook County, which may also be in Chicago, or DuPage County. Those offices, too, must stay open for at least five years and have first-floor retail space and an ATM.
It must expand special financing programs and affordable home repair grants.
Associated must create a fund of at least $7.2 million to help subsidize -- through reduced interest rates, down payments and closing-cost help -- residential loan applicants in the Chicago area, according to the agreement.
As part of that program, Associated also must originate or buy $144 million in mortgage loans in minority areas in the Chicago market over the next three years.
It must raise awareness of the programs by spending $1 million to market to minorities in the Chicago area through print, radio, TV or nontraditional media outlets. During each year of the agreement, for example, Associated must advertise in and on at least one print publication and one radio station catering to blacks in minority neighborhoods, and at least one each directed to Hispanics.
Associated Bank also must offer 12 financial-education courses a year, or three dozen over the life of the agreement, to individual and small-business owners in the Chicago area.
"When combined with the company's current lending efforts, these commitments will generate almost $200 million in new loans in targeted areas over the next three years," said the bank, which has $27 billion in assets consisting mostly of loans.
Associated said that, in response to the agency's complaint, it has already opened branches in or near minority areas in Racine, Wis., and Milwaukee at a cost of $3 million and $1 million, respectively.
byerak@tribpub.com
