Citadel Federal Credit Union in Exton, Pa., agreed to pay about $6.5 million to address claims that it failed to provide mortgage lending services to majority Black and Hispanic neighborhoods in and around Philadelphia.
The Department of Justice accused the $5.8 billion-asset credit union of redlining between 2017 and 2021.
Citadel will provide $6 million in mortgage loan subsidies over five years for majority Black and Hispanic census tracts in Philadelphia County. It pledged $270,000 toward focused marketing, consumer financial education and outreach and $250,000 to community development partnerships.
The credit union will open three branches in predominantly Black and Hispanic neighborhoods of Philadelphia; it hired a community lending officer in August to oversee lending practices in communities of color. The credit union also appointed a vice president dedicated to philanthropy and community engagement to bolster its Citadel Cares program.
The situation stems from inaction rather than intentional misconduct, Bill Brown, Citadel’s president and CEO, said in a press release. The credit union’s shift toward digital banking reduced its focus on physical branches, particularly in Philadelphia.
“While Citadel respectfully disagrees with the allegations regarding our lending practices, we view this settlement as a vital opportunity to enhance our commitment to proactive community engagement,” Bill Brown, Citadel’s president and CEO, said in a press release. “We acknowledge that our efforts did not allow us to reach majority Black and Hispanic census tracts in Philadelphia.”