Orders Issued Under Sections 3 and 4 of the Bank Holding Company Act

Federal Reserve Bulletin, Nov, 1999

Examiners noted that Firstar Wisconsin made extensive use of innovative and flexible lending practices and programs. For example, examiners cited favorably Firstar's continued participation in the AdvoCap program, a state sponsored program that provides mortgages with flexible underwriting standards to LMI families that are first-time homebuyers.

C. HMDA Data

The Board also has considered the lending record of Firstar's subsidiaries in light of the comments on their HMDA data. The most recent data available for 1998 generally indicate that Firstar's record of lending in Ohio and Wisconsin compare favorably to the record of lenders in the aggregate in these states. For example, Firstar Ohio originated a higher percentage of HMDA-reportable loans in Ohio in 1998 to African Americans, Hispanics, LMI borrowers, and LMI residents than lenders in the aggregate. In Wisconsin, Firstar originated the same or a higher percentage of its HMDA-reportable loans in 1998 to African Americans and Hispanics than did lenders in the aggregate.

The data for 1996, 1997, and 1998, however, reflect certain disparities in the rates of loan applications and denials among members of different racial groups and persons of different income levels.(29) The Board is concerned when the record of an institution indicates disparities in lending, and believes that all banks are obligated to ensure that their lending practices are based on criteria that ensure not only safe and sound lending but also equal access to credit by creditworthy applicants regardless of their race or income level.

The Board recognizes that HMDA data alone provide an incomplete measure of an institution's lending in its community because these data cover only a few categories of housing-related lending. HMDA data, moreover, provide only limited information about the covered loans.(30) HMDA data, therefore, have limitations that make them an inadequate basis, absent other information, for concluding that an institution has not adequately assisted in meeting its community's credit needs or has engaged in illegal lending discrimination.

Because of the limitations of HMDA data, the Board considered these data carefully in light of other information. The CRA performance examinations found no evidence of prohibited discrimination or illegal credit practices at Firstar's subsidiary banks. Examiners concluded that the banks solicited and accepted credit applications from all segments of their communities. Examiners also generally noted that loans made by the banks were reasonably distributed throughout the local communities served, including LMI areas, and that the banks served all members of these communities, including LMI individuals. In addition, examiners generally determined that the banks' delineations of the local communities they served were reasonable and did not arbitrarily exclude any LMI census tracts. Moreover, the programs and lending efforts that Firstar has designed to address the credit needs of all the communities served by Firstar do not indicate any prohibited discrimination or illegal credit practices at Firstar's subsidiary banks and the lending subsidiaries of these banks. The Board also notes that, in addition to offering home mortgage programs to LMI and minority individuals, Firstar has a number of programs, including the programs described above, designed to address the diverse credit needs of these individuals.