Regulators fine BancorpSouth $10.6 million for redlining

The bank also denied more loans to African Americans and other minorities when compared to neighborhoods with smaller minority populations, the Justice Department and CFPB said Wednesday, and minorities who were approved for loans were given higher interest rates when compared to non-minorities.

"BancorpSouth's discrimination throughout the mortgage lending process harmed the people who were overcharged or denied their dream of home ownership based on their race, and it harmed the Memphis minority neighborhoods that were redlined and denied equal access to affordable credit," said CFPB Director Richard Cordray in prepared remarks.

In a stark example of the discriminatory culture at BancorpSouth at the time, bank employees were audio-taped using racial epithets, followed by laughter, when discussing the possibility of hiring of an African-American employee, according to the documents released by Justice Department and CFPB.

If approved by the court, BancorpSouth Inc. will provide $4 million in direct loan subsidies in minority neighborhoods in Memphis, spend at least $800,000 on community programs and minority outreach, $2.78 million to African American customers who were overcharged or denied loans as well as a $3 million penalty.