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Evans Bank Settles New York ‘Redlining’ Lawsuit

Redlining, the practice of denying mortgages to predominantly African-American neighborhoods, was supposed to be a relic of a long-gone era. But a settlement on Thursday between the New York attorney general and a small bank near Buffalo suggests that the practice persists.

The bank, Evans Bancorp, agreed to pay nearly $1 million to put to rest a lawsuit that has dogged the bank, whose business in western New York dates to 1920, for more than a year.

In the lawsuit, prosecutors outlined how the bank, since at least 2009, created a map that defined the “trade area” — places in the Buffalo metropolitan region where the bank concentrated its lending. Missing from that area, prosecutors said, was much of Buffalo’s East Side, an area that is predominately African-American. Regardless of their credit score, the prosecutors contended, African-Americans were excluded.

Rival banks, the authorities said, lent far more generously, suggesting that Evans’s pattern of lending did not arise from an absence of willing borrowers. The dearth of borrowing opportunities stung a wide swath of Buffalo’s community, according to the New York attorney general, Eric T. Schneiderman. More than a third of the city’s total population is African-American.

The case, brought under the Fair Housing Act — a federal law intended to ensure equal access to credit — is a harbinger of other lawsuits that could be brought against some of the nation’s largest banks, several people briefed on the investigations said.

“That we continue to see systematic racial and housing discrimination in New York in 2015 is shocking,” Mr. Schneiderman said in a news release.

In a statement, Evans said: “Throughout the course of this matter, no specific incidents were ever claimed, described or identified and as such, we believe the underlying lawsuit was based upon unsubstantiated information and Evans would have eventually prevailed in court. Regardless, Evans believes that this settlement is in the best interests of the community and our shareholders to end this unfortunate matter.”

The suit, which was filed last year, indicates that it has been difficult to root out discriminatory lending practices.

The retreat from lending to African-American communities followed a kind of credit bonanza that left many of those communities riddled with foreclosures. In the years leading up to the financial crisis, Wall Street’s mortgage machine churned out loans to black and Hispanic neighborhoods regardless of their credit. When those loans began to sour, some banks retreated, leaving some state and federal authorities concerned that some minority communities were unfairly cut off from access to mortgage credit.

Without that access, authorities say, minority communities are deprived of homeownership — a cornerstone of economic mobility.

Part of the settlement will be used to support the development of affordable housing in Buffalo.

Evans Bancorp has also agreed to invest $200,000 in advertising and marketing to reach residents of the city’s East Side.

A version of this article appears in print on  , Section B, Page 6 of the New York edition with the headline: Buffalo Bank Settles Charge of ‘Redlining’. Order Reprints | Today’s Paper | Subscribe

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