The Department of Justice and the U.S. Attorney’s Office for the Southern District of Indiana today filed a complaint and settlement agreement, resolving allegations that First Merchants Bank engaged in lending discrimination by “redlining” predominantly African-American neighborhoods within Indianapolis, Indiana. “Redlining” is a term describing an illegal practice in which lenders intentionally avoid providing services to individuals living in predominantly minority neighborhoods because of the race of the residents in those neighborhoods.

The Department alleges in a complaint filed in the U.S. District Court for the Southern District of Indiana that First Merchants violated the Fair Housing Act and Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race in their mortgage lending services. The complaint alleges that, from 2011 to at least 2017, First Merchants engaged in unlawful redlining in Indianapolis by intentionally avoiding predominantly African-American neighborhoods because of the race of the people living in those neighborhoods. The Department also alleges in the complaint that First Merchants adopted a residential mortgage lending policy that had the effect of denying residents of predominantly African-American neighborhoods equal access to credit in violation of federal law.

“Federal law prohibits lenders from discriminating against mortgage applicants and other potential customers based on race,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “We commend First Merchants for cooperatively resolving this case by taking steps to ensure that its residential lending products and services are made available to everyone in Indianapolis, regardless of race.”

“Discriminatory race-based lending practices have no place in our District,” said Josh Minkler, U.S. Attorney for the Southern District of Indiana. “This case involving First Merchants Bank shows our commitment to ensure this reality.”

First Merchants Bank is headquartered in Muncie, Indiana, with branches throughout the Midwest. First Merchants is one of the largest full-service banks in Central Indiana with more than $9 billion in assets and 110 branches in Indiana alone. Under the settlement agreement, which is subject to court approval, First Merchants will expand its marketing efforts, lending, and banking services to specifically include predominantly African-American neighborhoods in Indianapolis. To remedy the harm to those living in the redlined areas, the Bank will invest $1.12 million in a loan subsidy fund to increase credit opportunities to residents of predominantly African-American neighborhoods, and will devote $500,000 toward advertising, community outreach, and credit repair and education. The Bank will also open a branch and loan production office to serve the banking and credit needs of residents in predominantly African-American neighborhoods in Indianapolis. The Bank will employ a director of community lending and development who will oversee these efforts and work in close consultation with the Bank’s leadership.

The Justice Department’s enforcement of fair lending laws is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section. Additional information about the Section’s fair lending enforcement can be found at