Demanding an end to "apartheid banking," a Philadelphia neighborhood coalition is calling for a federal investigation into the lending practices of New Jersey's Commerce Bancorp.

The Neighborhood Economic Survival Coalition is accusing the Cherry Hill-based company of "systemic racism" in denying services to low-income and minority communities through "redlining" in the Philadelphia area. The group filed a discrimination complaint last Thursday with the Department of Housing and Urban Development under the Fair Housing Act.

Commerce officials vehemently denied that the bank discriminates, taking "strong exception" to the group's allegation of racism. The bank issued a strongly worded statement in defense of its community reinvestment work, listing nine current initiatives to boost services to low-income areas in its market.

"Frankly, I have no opinion on their motives," said Thomas H. Arasz, Commerce's community reinvestment officer. "I'm at a loss, particularly in light of the comprehensive proposal we made to address their concerns."

At the crux of the problem are two branch offices the $2.3 billion-asset Commerce plans to open in low-income areas as part of an agreement with the NESC. The organization, a coalition of 15 community groups seeking more investment in Philadelphia's poor and minority communities, demanded to have final say over their location, a decision the bank would not allow them to make.

"The board cannot abdicate its responsibility to control the final decision," Mr. Arasz said.

The refusal drew a slew of accusations from the coalition, which has tangled with Commerce over its community reinvestment in the past.

"Commerce Bancorp's business plan is a throwback to the 'redlining' practiced by banks in the past and responsible for helping destroy low- income and minority communities," the group said in a press release.

The NESC said Commerce officials had been negotiating with the coalition since early March, but talks broke down last week when Commerce refused a coalition demand to set up two small branches in low- and moderate-income areas within 18 months, followed by a third within three years if the first two break even, said Chris Schweitzer, director of the Kensington Joint Action Council, a coalition member.

"We thought it was a very fair proposal, given their aggressive growth in the suburbs," Mr. Schweitzer said. "After a 20-year history of redlining and having a racist history, for them to refuse and balk at this is outrageous."

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