Summary of recent news
articles on black-owned banks
Black-owned banks tend to serve communities with weaker repaying ability that have been hardest hit by the financial crisis. This has led to black bank losses, and as larger banks expand to take market share in black communities, black-owned banks need to develop new business models to balance social mission and profitability.
Recent black community economic empowerment efforts have encouraged many African Americans to bank at black-owned banks and patronize black-owned business. The question is how can black-owned banks make this movement sustainable?
“It is critical
for the black community to utilize our $1.2 trillion in annual spending power
to create jobs and build wealth in our community,” said Teri Williams,
president and chief operating officer of OneUnited Bank. Killer Mike started
the Balck Banking Challenge, and then other celebrities including Beyonce,
Queen Latifah, Jesse Williams and Alicia Keys, quickly jumped on the bandwagon.
In July, calls to
“bank Black” generated nearly a million dollars of new deposits for Citizens
Trust Bank in Georgia and Alabama. The only black-owned bank in Michigan, Frist
Independence received more than 200 new deposits in July that totaled
approximately $200,000. African American-owned banks are a tiny percentage of
the U.S. banking industry, and they continue to struggle. The efforts to build
African American-owned institutions was thought to be part of the historic
civil rights movement.
In a detailed proposal released Monday, a consortium of
more than 50 civil rights groups laid out an ambitious plan to improve the
financial lives of black Americans with a heavy emphasis on reparations,
investing in black communities and economic justice. Part of the proposal called for federal money that is typically
earmarked for policing and prisons to be reinvested in education, employment
and other services in predominantly black communities.
The black community’s economic empowerment movement came to
Miami on Saturday, when about 1,000 turned out at OneUnited Bank and about 550
new bank accounts were opened in the three-hour event, following a similar
event in Los Angeles that saw 150 to 200 new accounts opened in three hours.
After the shootings of Alton Sterling and Philando Castile,
black activists nationwide organized boycotts of major banks and retailers, and
called on African-Americans to patronize black-owned stores and banks. Such
efforts have resulted in an uptick in black business, since black buying power
was estimated to be $1.2 trillion in 2015, with potential to reach $1.4
trillion in 2020.
Citizens Trust Bank in Atlanta and Unity National bank in
Texas are experiencing a sudden surge of deposits, powered by a campaign aimed
at bolstering black-owned financial institutions following the death of Alton
Sterling and Philandro Castile. Rapper Killer Mike implored the black community
to deploy "a portion" of its financial resources to make a
difference.
Chicago's largest black-owned bank Seaway Bank & Trust
is nearing completion of about a $15 million equity infusion. As of March 31,
Seaway had suffered $16 million in total losses over the previous five
quarters. Other large black-owned banks around the country have been successful
in raising emergency capital in recent years, including Carver Federal Savings
Bank in New York and Broadway Federal Bank in Los Angeles.
After Chicago lost two black-owned banks in recent years,
Seaway, Chicago's largest black-owned bank and one of the biggest in the
country is raising fresh capital. Another South Side bank catering to
African-Americans Urban Partnership Bank, also is seeking more than $20 million
in new equity. Seaway's and Urban Partnership Bank's problems, underscore just
how hard it's been for low-income urban neighborhoods to recover from the
financial crisis and recession.
