Banking

Cadence Bank warned on fair lending, in settlement talks with DOJ

Cadence Bancorp in Houston is in settlement talks with the Justice Department over an investigation into potential violations of fair lending laws, according to a regulatory filing by the bank Monday.

The $18.7 billion-asset bank made the disclosure as it is in the process of being acquired by the $24 billion-asset BancorpSouth Bank in Tupelo, Mississippi. BancorpSouth has supported Cadence’s discussions with the DOJ, according to the filing.

Cadence received a letter from the DOJ on July 21 warning of a potential lawsuit, alleging that Fair Housing Act and Equal Credit Opportunity Act violations took place in the Houston market between 2013 and 2017, the filing stated.

The Department of Justice, which reportedly received a referral from Cadence’s regulators during the Trump administration, has new leadership under Attorney General Merrick Garland.

The DOJ indicated in its letter that it would seek injunctive relief and potential civil penalties, the bank stated in the filing.

Cadence was reportedly under investigation by the Trump-era Office of the Comptroller of the Currency for potential mortgage lending problems, according to a report last year from ProPublica and The Capitol Forum.

In late 2018, the OCC referred the matter to the Justice Department as a potential civil rights concern, according to the article, which relied on anonymous sources and agency documents. The Justice Department reportedly would not comment last year on the status of the investigation, but said that it had not taken any action to date.

OCC officials in 2019 decided not to publicly sanction Cadence, according to the ProPublica article. A spokesperson for the OCC declined to comment Monday about whether that investigation had been revived.

A Cadence spokesperson also declined to comment Monday, but in its securities filing the bank said that it does not believe violations took place.

Last year, Cadence said in a statement to ProPublica and the Capitol Forum: “Cadence Bank does — and always has — treated minority consumers in a fair and non-discriminatory manner and is always looking for ways we can do better.”

Spokespeople for BancorpSouth and the DOJ did not immediately respond Monday to requests for comment.

Michael Hsu took over as acting Comptroller of the Currency in May. He has been making organizational changes and unwinding rules issued during the Trump era. And the Justice Department has new leadership in the Biden era under Attorney General Merrick Garland.

Cadence’s filing on Monday also included disclosures that the company has settled with shareholders that had raised issues with the BancorpSouth deal.



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