A community bank from Alabama whose leadership shares common ties to the family of Paul "Bear" Bryant and the University of Alabama football family rarely makes mortgage loans to African-American and Latino borrowers.
I became interested in this small bank after reading a recent story ("Paul Bryant Jr.'s Bank is the Tie that Binds UA Trustees") in the Birmingham News, The story focused on the close ties between the University of Alabama football program, Bryant Bank, and The University of Alabama System Board of Trustees ("UASBOT"). In Alabama, the closure of the University of Alabama-Birmingham's football team has sparked a lot of hard feelings. Among those reactions, a number are pointing their fingers at UASBOT. Football is important in Alabama. The state spends a lot of money on two nationally-ranked programs. But Bear Bryant was never thrilled about another program drawing on fans from the state's largest city. With that history in the background, it is not surprising that Birmingham's leading newspaper would spend some time reviewing the mysterious bank associated with Bear's family.
The News pointed out that the UASBOT and Bryant Bank share similar governing styles. Only trustees of the UASBOT can select new trustees, and for years, those choices were made in private behind closed doors. The Trustees oversee a private foundation, which is managed in a similar fashion. Recently the Crimson Tide Foundation opted to stop releasing its IRS forms, as required by law because it was a government entity. But another filing mandated by the State of Alabama found that the foundation purchased a $3.1 million home for Nick Saban, coach of the U of A football team.
Bryant Bank was founded by Paul Bryant, Jr., the son of Paul "Bear" Bryant. The Alabama football "family" is deeply connected to Bryant Bank. These connections are not anecdotal speculation, either. The University of Alabama system, which some consider to be the state's most valuable asset, is led by some of the same individuals that are in charge of this small bank.
- Karen Brooks is a Director of Bryant Bank and the President Pro Tempore of UASBOT.
- Alabama Governor Robert Bentley is an ex officio member of UASBOT. His son is Vice President of Bryant Bank.
- Angus Cooper II is a long time member of UASBOT and now a lifetime trustee emeritus. His son is a Director of Bryant Bank.
- Barbara Humphrey is a member of UASBOT and serves on its football committee. Her husband, Bobby Humphrey, was a star football player at the University of Alabama. He is now a Vice President of Bryant Bank.
- Bryant Bank founder Paul Bryant, Jr. is also the Chairman of the Crimson Tide Foundation.
- Scott Phelps, the Treasurer of the Crimson Tide Foundation, was a founder of Bryant Bank and currently serves on its Board of Directors.
- Other senior leaders at the University of Alabama have ties to Bryant Bank. UA Senior Associate Athletics Director Finus Gaston is a Director of Bryant Bank. William Hughes, the Assistant Director of Planned Giving at UA, is also a Director of Bryant Bank.
So what kind of bank is Bryant Bank? While it is headquartered in Tuscaloosa (home of the University of Alabama's main campus), the majority of its branches are in greater Birmingham. In addition to those two cities, Bryant also operates branches in Huntsville and suburban Mobile. Bryant's model echoes that of the typical community bank, with emphases in small business and mortgage lending. They are not in venture capital, credit cards, and small auto loan portfolio.
But if they are involved in mortgage lending, do they provide credit to all of the community? Or does the evidence paint a different picture?
Well, they pick their spots. When it comes to single-family residential property lending, they are very pro-active in serving investors who want to buy single-family residential homes.
But race matters in Alabama and Bryant Bank walks an interesting line when it comes to providing capital to minorities in a state whose metro area populations include many African-Americans.
My review of their Home Mortgage Disclosure Act data suggests that they rarely extend the same opportunity to minorities who want to buy a home for their families. Between 2011 and 2013, the bank made two owner-occupant loans to African-American borrowers, two to Asian applicants, and another to a Latino applicant. They made a home purchase mortgage loan to an African-American in 2010, but they did not do so in 2008 or 2009.
As has been the case with most lenders during the last few years, more of Bryant's mortgage lending has been for refinancing. Again, if we focus on owner-occupants, then refinances made up 54.2 percent of lending at Bryant between 2008 and 2013. But the same racial discrepancy holds true on the refinance side as well. The ratio of refinance loans to white owner-occupants versus black owner occupants is 145 to 4. During the same period (2008 to 2013), the same ratio for home purchase is 122 to 3.
Tuscaloosa County Lending
As might be expected, Bryant has a significant presence in Tuscaloosa. According to the FDIC, Bryant had about $460 million in deposits held in accounts in Tuscaloosa County. That sum ranked second in the area, trailing only to Regions Bank. Regions held approximately $670 million in deposits at Tuscaloosa branches at the end of June 2014. Synovus was third, with a shade less than $391 million in Tuscaloosa deposits.
Bryant made no loans in this segment to African-Americans (home purchases or refinance) in Tuscaloosa in 2013. In 2012, they made one of these loans, a refinance on a single-family residential home for $18,000 to a borrower with $124,000 in income. The loan was registered as "high-cost" because it bore an interest rate that was 3.8 percentage points above a comparably-termed Treasury. If I had to estimate the actual rate, based upon a review of 10-year rates during that time, the interest rate was probably 5 3/4 percent.
At Regions, twelve African-Americans received a loan from Regions to buy a home in 2013 alone in Tuscaloosa County. Twenty-seven received a refinance loan. None were reported as "high-cost" in either 2012 or 2013.
Synovus' performance would seem to support the record at Bryant, as it too avoided making any loans (refinance or home purchase) to African-Americans related to an owner-occupied property during 2013. In 2012, Synovus originated a home purchase and a refinance loan for this group. There were no high-cost loans.
In the context of this conversation, it is only fair to acknowledge that most banks have reported lending numbers showing higher rates of lending to non-minorities, after controlling for the demographics of local populations. That is especially the case when the analyses are limited to reviews of conventional lending and exclusive of FHA and VA loans. For the most part, Bryant shies away from FHA and VA, and accordingly, the die is cast to a certain degree merely because of what loan styles they offer.
Nonetheless, Bryant's numbers are far outside the normal range. Regions Bank, for example, made 75 home purchase loans for owner-occupant African-Americans in just Birmingham in 2013 alone. As opposed to a 40-fold difference, Regions made 7.4 home purchase owner-occupied loans to white borrowers for each one it made to an African-American.