"This is a problem we thought we put behind us a couple of decades ago," said Schneiderman, who was joined at the news conference by more than a dozen representatives from civic organizations including the NAACP, New York Civil Liberties Union and Partnership for the Public Good.
Evans Bank is headquartered in the suburb of Hamburg and has 13 branches in western New York and $830 million in total assets.
The bank's president and chief executive, David Nasca, called the accusations "meritless" and said Evans will vigorously defend itself.
"We remain confident that our residential lending practices meet all applicable laws and regulations," Nasca said in the statement emailed to The Associated Press.
He said the company would have no further comment because of the pending legal action.
Schneiderman said the lawsuit is part of a wider investigation by his office into redlining, in which a lender denies access to mortgages or charges more in certain neighborhoods based on race. It seeks unspecified civil fines and punitive damages.
Between 2009 and 2012, four of the 1,114 mortgage applications Evans received were from black applicants, according to the complaint, and only one was from a black applicant from the east side.
The lawsuit included a map that Evans used to define its lending area. The area, as well as the locations of its branches and ATMs, forms nearly a complete ring, broken only by the Lake Erie shoreline, around the east side.
"Evans probably would put floating branches out here," Schneiderman said, motioning to the lake, "before they'd go into the east side."
The bank's made loans in some mostly white neighborhoods with socio-economic circumstances similar to those of the struggling east side, he said.
"There is nothing to explain this other than race," Schneiderman said.
John Curr III, director of the NYCLU's Buffalo office, said a black city resident had a better chance of winning the state lottery than of being offered a mortgage from Evans Bank.
"This isn't about special treatment. This isn't about a thumb on the scale," Curr said. "This is about unequal chance at the scale. To not even be offered these products is disheartening and it's illegal."
Nasca said the bank had tried to resolve the issues with Schneiderman's office, but "a resolution unfortunately could not be reached."
Schneiderman said the talks failed because the bank refused to accept responsibility for the alleged discrimination.