First Merchants in Muncie, Ind., has reached a settlement with the Department of Justice over the company's lending practices.
The $10.2 billion-asset company said in a press release Thursday that the agreement ends an investigation that began in June 2017 and focused on issues tied to the Equal Credit Opportunity Act and the Fair Housing Act. First Merchants said there was no actual finding or adjudication tied to any matter alleged by the Justice Department.
First Merchants agreed to invest more than $1 million over four years in a loan subsidy fund that will offer improved access to mortgages and home improvement loans to residents in majority black census tracts in Indianapolis and Marion County. The company will also open a full-service branch in a majority-black census tract in that market, along with a loan production office.
“The settlement provides an opportunity for the bank to devote additional resources in serving the communities in which it operates, including helping meet the credit needs of all borrowers in those communities," Michael Rechin, the company's president and CEO, said in the release.
The investigation focused on the bank's lending practices in Indianapolis and Marion County between 2011 and 2016.
In mid-2017, the company completed a comprehensive fair lending assessment for 2016, concluding that it needed to enhance its mortgage lending strategy in neighborhoods with mostly minority residents. First Merchants said it then began making improvements.
First Merchants and the Fair Housing Center of Central Indiana announced new initiatives designed to increase mortgage lending to residents in Marion County’s majority-black neighborhoods.
With the issue resolved, First Merchants can proceed with its proposed acquisition of MBT Financial, which was announced in October. First Merchants, which had originally requested a waiver from the Federal Reserve, has applied with the Federal Reserve Bank of Chicago for approval of the deal.
The Federal Deposit Insurance Corp. approved the deal in January; the Indiana Department of Financial Institutions signed off on the transaction the following month.
First Merchants has said that it plans to complete the acquisition in the third quarter.
