Hills Bank and Trust Company has approved and closed more loans to Latino borrowers than any other institution in our market and is proud of its service to a wide diversity of customers. We strongly dispute any inference of discrimination.
The data referenced from the Reveal study referenced in recent media does not accurately reflect the reality of our service to a diverse customer base and is the result of our internal reporting procedures rather than any discrimination. Hills Bank has determined that it unfortunately over-reported data due to procedures which are inconsistent with other financial institutions.
First, there are varying practices within the industry of reporting loan applications. Many institutions have a prequalification process in which potential denials are not reported or are classified as withdrawals rather than denials. In contrast, Hills Bank has lacked such a prequalification process and has erred on the side of encouraging all people to apply whether qualified or not. This approach eliminates any potential discouragement of applications yet comes with the risk of higher denial rates.
Second, in reviewing our data, we discovered that we double-reported loan denials to both Latino and non-Latino applicants in 2015 and 2016, resulting in overstated denials. We will continue to review our internal policies and reporting procedures that contributed to this disparity.
The American Bankers Association published a response to the study in which it strongly refuted the analysis in the Reveal study. A link to this statement can be found by clicking here.
We value the diversity of our customer base and look forward to continuing to expand and develop this diversity in the years to come.