Analyzing branch penetration helps lenders see how many branches are in minority areas.  Several legal cases point to the importance of self-monitoring by conducting a branch penetration analysis that shows the concentration of your branches in high-minority areas. 

In March 2017, the U.S. Department of Housing and Urban Development (HUD) reached a fair lending Conciliation Agreement with a bank in Illinois which resulted from allegations that the bank’s branch concentration in low-minority constituted a violation of the Fair Housing Act.  What we know from this settlement is that HUD determined that the lender’s business service areas excluded majority Black and Hispanic neighborhoods.

Branch Analysis

The easiest way to self-monitor is to conduct a branch penetration analysis.  It requires looking at how many branches your company has in minority areas compared to all other lenders with branches.  It is possible to count the number of total census tracts, the number of census tracts that are majority minority and then, calculate an overall branch penetration rate.  Ideally, the percentage of branches in majority minority areas won’t differ dramatically from the overall majority percentage.

In the example below, we used LendingPatterns™ to generate a spreadsheet to look at the number of lenders with 5 or more branches in the Rockford MSA.  There is a total of 84 census tracts in the MSA, of which, 15 of the tracts are majority minority.  The table below shows 6 lenders with branches in the MSA in 2016.  Of the 95 bank branch locations, only 1 is located in a majority minority census tract.

Branch Penetration Analysis


LendingPatterns™ also encourages mapping to illustrate branch penetration. The map below shows the 95 bank branch locations with red push-pins.   You will want to consider conducting an analysis of the number of branches that are located in majority minority census tracts especially as the new American Community Survey (2011-2015) census data shows changing demographics nationwide.

Branch Locations in Rockford, MSA