The details of the settlement made by BancorpSouth with the DOJ and the CFPB are shocking. The complaint outlines how a bank developed an explicit policy of not making loans in minority neighborhoods. The DOJ and the CFPB rightfully called out BancorpSouth for violations of the Equal Credit Opportunity Act and the Fair Housing Act. But why was BancorpSouth able to have these policies in place and then receive a "Satisfactory" on its CRA exam?
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This year, we ranked about 70 banks by an index formula that sought to identify and quantify the quality of a bank's service to the community. We graded the institutions on their ability to provide capital to low-income populations and to small business borrowers.
Bancorp South (BXS) did well on both scores. They scored particularly well on business banking, but they were still able to demonstrate a fairly high level of mortgage lending for low-income borrowers and low-income neighborhoods.