ShoreBank successor Urban Partnership seeks a reboot

Steve Daniels from Crain's Chicago Business wrote about the capital raise of Urban Partnership Bank after his interview with William Michael Cunningham from Creative Investment Research, Inc.

"After burning through the capital from Goldman Sachs and Morgan Stanley, Urban Partnership Bank turns to Chicago headquartered banks this time to raise at least $15 million in fresh equity. One challenge UPB faces is to convince local banking chiefs that it won’t need further investment in the future, and the other is to be innovative enough to have a small-scale business model different from ShoreBank, said William Michael Cunningham."

Click on http://www.chicagobusiness.com/article/20160820/ISSUE01/308209991/shorebank-successor-urban-partnership-seeks-a-reboot to read the full story.

When it Comes to Black Financial Institutions, Representation Matters

Arionne Nettles from Chicago Defender wrote about the importance of supporting black-owned banks after his interview with William Michael Cunningham from Creative Investment Research, Inc. 

As the importance of Black banks comes back into the spotlight, seeing the bigger picture is essential, an expert says.

The long-term benefit is protecting and building the Black community’s financial interests, according to William Michael Cunningham, an economist and impact investing specialist at Creative Investment Research. If there are no more Black-owned banks, he says, Blacks will lose power, and that past instances show how certain groups can be targeted for profit.

“I would tell [anyone who questions the importance of Black banks] to think about the recent financial crisis and how a lot of the large, non-minority financial institutions did not represent or protect their financial interests,” Cunningham said. “They put a lot of them, their neighbors, friends, and family members into loans that were inappropriate.”

During the Great Recession, a disproportionate number of Black Americans were advised to take out mortgages that they could not afford to pay off. Federal Reserve studies show that there were more subprime loans in low-income areas in which unemployment rates were high.

Wells Fargo — the largest home mortgage lender in the U.S. — eventually settled a discrimination suit in Baltimore in 2012 after the city alleged it targeted minorities, and just this year, it agreed to pay the U.S. government $1.2 billion for hiding bad loans. Being at the mercy of these banks, Cunningham says, is not ideal for the community.

If we’re in trouble without Black banks, then the situation is becoming a serious one. In 1994, the U.S. had 55 Black-owned banks compared to today’s 23. The number of Black banks in Chicago dropped from 6 to two during that period. Only Seaway Bank and Trust Company and Illinois –Service Federal Savings and Loans.

Recent police brutality cases brought along a surge in new accounts at Black banks across the country to build up Black buying power and banks like Seaway saw a surge. In July, 574 new accounts were opened at Seaway, which brought in $2 million in deposits. It was the most the bank ever received in a single month. Bank officials are hoping that the momentum continues.

“One of the reasons Chicago is important, because of the long history that Chicago has had with the strong Black middle class out of Chicago,” Cunningham said. “Chicago had more Black banks than any other major city back in 1994. You had Black disposable income, strong Black wages, and strong Black employment in Chicago.”

Those Black banks mean inclusion and representation, Cunningham says.

“We’d be pretty much shut out and at the mercy of others to represent our financial interests within this global community,” he said. “So, there might be things that are culturally specific to our community are going to go unknown and unrecognized in the broader community.”

Culturally-specific understanding can support small business lending and generate employment.

Cunningham uses this as an example: if a Black person requested a business loan from a majority bank in the 1980s to buy turntables, it would likely not work out. But, a Black bank, with representatives that know of Run DMC and the potential of hip-hop culture would know that his loan request was valid.

“If you don’t have that hook into the culture, it’s going to sound silly,” he said.

That connection to your needs is why Cunningham recommends that every Black person opens up an account at a bank “run by people who look like you and where you have the expectation that they will look out for or at least be sensitive to both your issues and your culture.”

This need is increasingly important for Blacks who are unbanked (not using any financial institution) or underbanked and (using mostly check cashers). For Black America, these percentages lie around 21 and 33 percent, respectively, according to Federal Deposit Insurance Corporation.

Cunningham says staying away from check cashing companies is a way to keep money circulating within the community.

“Another thing that a lot of Black people know is that so many check cashers and all of these other vampires are in our community is because they’re making money,” Cunningham said. “They wouldn’t be there if they weren’t. So, they are after that $1.2 trillion in spending power, and this is another way that spending power is siphoned out of the Black community. You have to have a long-term perspective.”

Click on https://chicagodefender.com/when-it-comes-to-black-financial-institutions-representation-matters/ to read the full story.

Summary of recent news articles on black-owned banks 08/14/16-08/20/16

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?

Black-owned Banks are Disappearing at an Alarming Rate. By Rob Wile, Fusion. August 17, 2016.

The number of black-owned financial institutions fell by 24% from 2007 to 2009, partly due to the consolidation trends taking place in the banking industry, but more importantly the lack of commitment from federal bank regulators to supporting minority banking institutions. A rep for the FDIC says they are particularly focused on this issue and how it relates to MDIs and are eager to work with interested parties.

Nonprofit BMe Deposits $1,000,000 in Black-Owned Bank, Calls on Others to #BankBlack. By Breanna Edwards, The Root. August 18, 2016.

BMe Community, a national network dedicated to strengthening communities with the help of black men, is redirecting $1 million of its deposits into OneUnited, the nation’s largest black-owned bank, making BMe the “preferred nonprofit” for the bank, while OneUnited has become the “preferred bank” for the organization.

As #BankBlack Moves Money, Black Credit Unions are Ready. By Zenobia Jeffries, Yes!Magazine. August 20, 2016.

While the number of Black-owned banks is down to only 22, there are 318 Black credit unions uniquely positioned to invest in their communities. Supporting African American institutions and businesses, particularly credit unions can directly help close the wealth gap between Black families and White families. Any time a credit union does well, a community does well, said Jim Nussle, head of the Credit Union National Association.

ShoreBank Successor Urban Partnership Seeks a Reboot. By Steve Daniels, Crain’s Chicago Business. August 20, 2016.

After burning through the capital from Goldman Sachs and Morgan Stanley, Urban Partnership Bank turns to Chicago headquartered banks this time to raise at least $15 million in fresh equity. One challenge UPB faces is to convince local banking chiefs that it won’t need further investment in the future, and the other is to be innovative enough to have a small-scale business model different from ShoreBank, said William Michael Cunningham.

Whenit Comes to Black Financial Institutions, Representation Matters. By Arionne Nettles, Chicago Defender. August 20, 2016.

Chicago has the strong Black middle class, but the number of Black banks in Chicago has dropped from 6 to 2 since 1994. William Michael Cunningham, a social investing advisor at Creative Investment Research said that the long-term benefit of preserving black-owned banks is protecting and building the Black community’s financial interests. Non-minority financial institutions did not represent the best financial interests of blacks.

US to end Minority Bank Deposit Program

On August 18, 2016, "the U.S. Department of Energy announced the completion of the crude oil overcharge refund program. The end of the crude oil overcharge refund program also brings to a close the Bank Deposit Financial Assistance Program (BDFAP)..established to strengthen and expand minority and women-owned small business enterprises across the United States by purchasing certificates of deposit (CD’s) from minority-owned financial institutions. CD’s are savings accounts with fixed interest rates than can only be withdrawn after a specified date. The Department’s purchase of CD’s was done in coordination with the Treasury’s existing Minority Bank Deposit Program. The Department subsequently invested the bulk of the federal share of the crude oil overcharge funds in the BDFAP.

Approximately 140 banks participated in the BDFAP over its term. With the new CD’s, minority-owned financial institutions in communities across the country were able to provide loans and other banking services that supported small businesses and improved the financial health of their communities."

We will host a webinar on Black Banks The Webinar will be held on Wednesday, August 24, 2016 from 4:00 PM to 6:00 PM (EDT). To attend, please go to the link below. (Copy and paste into your browser.) http://blackbanks.eventbrite.com

As we noted, the number of black-owned financial institutions fell by by 24% from 2007 to 2009,

See: http://fusion.net/story/336786/black-owned-banks-study-cir/

Black-owned banks are disappearing at an alarming rate

Rob Wile from Fusion wrote about the current situation of black-owned banks after his interview with William Michael Cunningham and Crystal Liu from Creative Investment Research. 

The Great Recession of 2008 changed banking in the U.S. forever, not least by drastically consolidating the entire financial sector. From 2007 to 2013, the number of U.S. banks declined by 14%, representing more than 800 institutions that either shut down, were sold, or merged with other banks.

Minority owned institutions were hit even harder. The number of black-owned financial institutions fell by by 24% from 2007 to 2009, according to Creative Investment Research (CIR), an investment research and management company founded in 1989 that focuses on minority-owned financial institutions.

Today, there are just 23 black-owned banks left in America, CIR says. And despite the efforts of the recent #bankblack movement, CIR now projects that there will be just seven black-owned banks left by 2028.

In a presentation shared with Fusion, CIR showed how that would represent an 87% decline from the height of the black bank era, reached around 1994, when there were 55 black-owned banks in America.

This image was removed due to legal reasons.

There are two main reasons for this decline, William Michael Cunningham, CIR'S impact investing specialist and report co-author Crystal Liu told me by phone. And they have nothing to do with subprime lending, which Cunningham said almost all black-owned banks stayed away from.

The first is the simple fact of the consolidation trends that are taking place in the rest of the banking industry. The number of banks in America has continued to decline even during the recovery, with an annual average of about 4% fewer institutions each year.

"Given trends in consolidation, you're going to see larger and larger financial institutions," Cunningham said. He pointed out that there is already no black-owned bank with more than $1 billion in assets, which makes it harder for banks to make investments and absorb losses.

More consequential, Cunningham argues, has been a lack of commitment from federal bank regulators to supporting minority banking institutions. Regulators, he says, have seemed to abandon Section 308 of the 1989 Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which established a goal of "[preserving] the number of minority depository institutions." And the Dodd-Frank financial reform bill passed after the recession included a directive to establish offices of Minority and and Women Inclusion—offices that Cunningham says have been mostly dormant.

"Neither [directive] has been effective as measured by numbers and the data," Cunningham said.

In an email, a Federal Reserve spokesperson pointed Fusion to its Partnership for Progress program, which seeks to help minority owned banks through "one-on-one guidance, workshops, and an extensive interactive web-based resource and information center."

A rep for the Federal Deposit Insurance Corporation (FDIC), which insures Americans' bank accounts, said that FDIC regional managers regularly meet with boards of directors of minority-owned banks. However, it did acknowledge the decline in minority-owned banks, which it attributed to the lack of "a talented pipeline of managers at a time when a number of senior bank managers are at or nearing retirement."

"We at the FDIC are looking closely at the succession planning issue at institutions of all types across the country," the FDIC rep said. "We are particularly focused on this issue and how it relates to MDIs and are eager to work with interested parties."

Cunningham, CIR'S impact investing specialist, told me that the importance of having black-owned banks isn't just symbolic. The day before Martin Luther King, Jr. was assassinated, Cunningham explained, he spoke about the need for black people to keep and build wealth within their own communities. Those needs have not changed, Cunningham said.

"Its not that blacks don’t have money," he said, noting that black people currently have $1.2 trillion in purchasing power and climbing. "It's that the money is going to non-black owned banks. That doesn’t support their interests. We know that because you had large financial institutions selling instruments diametrically opposed to the interest of the black community."

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.

Click on https://splinternews.com/black-owned-banks-are-disappearing-at-an-alarming-rate-1793861193  to read the full story.

Summary of recent news articles on black-owned banks 08/06/16-08/13/16

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?

#MoveYourMoney…Black Family Summit Addresses #BankBlack Social Media Movement. By Diane I. Daniels, New Pittsburgh Courier. August 12, 2016.

Because of the #BankBlack and #MoveYourMoney campaign on social media, one of the two full service Black Federal financial institutions in Pennsylvania, Hill District Federal Credit Union had 54 new memberships in July. The Member Service Representative Erica Witherspoon will discuss the benefits of being involved with a credit union and the campaign during the fifth annual Sisters Saving Ourselves Now Black Family Summit Aug. 13 at Carlow University.

Local Pastors Make the Case for Black Banks. By Arionne Nettles, Chicago Defender. August 12, 2016.

Chicago faith leaders gathered to share their initiative to encourage their congregations to open accounts at one of the city’s Black-owned banks, Seaway Bank and Trust Company. The group, which contains 100 pastors from across Chicagoland, held a press conference on Aug. 9 to promise $100,000 in deposits for Seaway. Banking with Seaway, the pastors say, is a way to directly help Chicago’s Black communities.

Why Black Banks Are So Important, According to Teri Williams. By Lakin Sterling, Fader. August 12, 2016.

The President of One United Bank, the largest black bank and the first black bank with online banking: “It’s about moving our money, moving our minds and it has to continue.” Teri Williams said #BankBlack is just the beginning of the movement to encourage African Americans to switch to black-owned business, to change people’s mindset, to view economic autonomy just as important as the protests against police violence.

Women Business Owners Call to Action: #DivestToInvest in Black Banks. By Carolyn M. Brown, Black Enterprise. August 12, 2016.

Four African American women business owners and professionals recently hosted #DivestToInvest black bank enrollment event in Washington, DC to increase awareness about the widening wealth gap. Over 100 business owners, stakeholders, and community leaders attended the event. The meeting called for members of the black community to support black-owned banks and businesses. It also called for increased financial literacy, opportunities, and resources for communities of color.

Some Black Business Owners Strain to Sell to Black Customers. By AP, Crain’s Chicago Business. August 10, 2016.

While calls have been increasing for black consumers to support black-owned businesses in social media, some black business owners share that they can find it hard to sell to black consumers. The factors can be logistical or practical, such as being located farther away or having higher prices than big chain stories, and also emotional, such as the perception that national brands are better. Black consumers with lower incomes, little spare time and lacking the means to travel might have difficulty devoting to the endeavor.

This New Chrome Extension Helps You Find Black-owned Businesses. By Alana Levinson, Fusion. August 9, 2016.

As part of a Reboot Safety hackathon, Coleman, the organization’s programs and outreach director, decided to build the BuyBlack Chrome extension, which helps online shoppers find black-owned businesses. Coleman hopes that the eventually, users of BuyBlack will be able to easily submit businesses and build lists of their favorites.

How Black Co-Ops Can Fight Institutional Racism. By Sage Howard, VICE Media. August 9, 2016.

As the extension of Black Lives Matter, a great deal of conversation happen right now around what needs to be done to address the economic plight of blacks and how that struggle is connected to topical issues like police brutality. Dr. Nembhard shared that investing in co-ops, instead of some black businesses as capitalist and exploitative as white-owned businesses, can address the systemic racism in America today.

Killer Mike Urges Michael Jordan to Invest Air Jordan Profits into Black-Owned Banks. By Kyle Rooney, HotNewHipHop.com. August 8, 2016.

Killer Mike has been at the forefront of a collective movement to promote social change, specifically his call for people to start supporting black-owned banks. In an effort to influence others to support his cause, Killer Mike has publicly called out Michael Jordan to send the recent profits from last weekend's "Tinker Alternate" Air Jordan 7 into black-owned banks.

Community Group, Bank to Host Account-opening Drive for Nashville's Black Residents. By Will Racke, Nashville Business Journal. August 5, 2016.

As Nashville's oldest minority-owned financial institution, Citizens Bank will host an account-opening drive on Saturday to promote financial literacy and economic independence among Nashville's black community. Nashville native and talk show host Sha Dixon is a key figure in the local push of #BankBlack movement. 

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?

Black Banking Challenge stimulates interest. By Billie Jordan, Los Angeles Wave. August 4, 2016.

“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.

“Move Your Money” Campaign Steers Dollars to Black-Owned Banks. By Zenobia Jeffries, YES! Magazine. August 3, 2016.

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.

Next battle for Black Lives Matter: Economic justice. By Tanzina Vega, CNN Money. August 2, 2016.

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.

1,000 turn out for Miami #BankBlack event. BY David J. Neal, Miami Herald. August 1, 2016

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.

'Black Dollars Matter': Bank-Ins May Be The Way to Empowerment. By Ko Bragg, NBC News. July 20, 2016

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.

Black-owned banks get rush of new depositors. By Nathan Bomey, USA TODAY. July 17, 2016

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.

African-American investors aim to rescue Seaway, a historic black-owned bank. By Steve Daniels, Crain's Chicago Business. July 30, 2016

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.

Is Chicago about to lose another black-owned bank? By Steve Daniels, Crain's Chicago Business. June 11, 2016

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.