A New Merger Creates The Nation’s First Black Controlled Bank With $1 Billion In Assets
Yesterday, City First Bank in Washington, and Broadway Federal Bank in Los Angeles, announced a merger, creating the nation’s largest black- controlled bank and the first with over $1 billion dollars in assets.
These two banks specialize in lending to potential business and home owners who lack the access to larger bank loans. This merger will focus on multi family affordable housing, small business and nonprofit development.
This isn’t the first time two banks have merged to become a financial powerhouse. “In 2019, two black investment banks Siebert Cisneros Shank and CO. LLC and The Williams Capital Group L.P merged to leverage each firm’s experience in corporate and municipal underwriting, and debt and equity sales and trading.” – NY Times
It appears, black banks are realizing their power and combining forces to become what the black community needs.
How Banks Work
Banks are just like any other business, they strive to make as much money as possible. They use the money you deposit to loan out to others for homes, businesses, and other ventures. They earn interest and a return on this money while also maintaining your money and accounts for you. So, each dollar you put into your account with the bank makes them a little bit of money.
How This Affects Black Banks
Many black owned banks emerged during segregation when many African Americans didn’t have access to capital. If you haven’t yet, look up the movie The Banker featuring Anthony Mackie, Nia Long, and Samuel L. Jackson. The Banker tells the story of two black businessmen who buy a bank and use the money they earn to give loans to black businesses and aspiring homeowners in the community. This is essentially what black banks do in our communities.
How they make money is dependent on who is investing in them and how they’re investing. Banks need more comprehensive relationships with customers – including loans and credit cards. “The problem isn’t unique to black banks, it’s something all small banks face.” Operating cost and regulatory costs are expensive and can make or break a small bank.
How Black Banks Help Black Communities
“A recent study by the Federal Deposit Insurance Corporation found that minority-led institutions outperformed traditional banks in originating mortgages and federally backed small-business loans to borrowers in low- and moderate-income census tracts.” – NY Times”
Among banks that are not black owned, fewer than 1% of mortgages go to African Americans versus 67% in black owned banks.
In short, black banks fund the black community. Entrepreneurs and homeowners looking to increase profits and improve their livelihood are more likely to receive funding from a black owned bank than they are a large, non black owned bank.
“There are black people in their 50’s and 60’s who have never sent foot in a bank because they didn’t feel welcome,” says a black bank owner. Black banks form more intimate relationships with their customers, creating a more inviting and safe atmosphere for black patrons.
OneUnited, one of the country’s largest black-owned banks by assets, offers second-chance checking for customers who’ve been denied an account in the past, secured credit cards for those rebuilding damaged credit, and education for first-time home buyers.
Many other Black-owned banks aim to combat the wealth disparity gap through community development lending, supporting minority businesses and nonprofits, offering financial literacy workshops for community members, providing financial aid to underserved black communities, and second chance accounts for people who can’t get accounts at other banks.
How Do We Help?
Banking black is a full-circle cycle. Banking black, is a direct correlation in helping black communities, black entrepreneurs, and black homeowners thrive. Black banks, help black people, help black communities.
Since the #bankblack push in 2016, many patrons have opened accounts with black banks in addition to or in replacement of their current big bank institutions. Even with this recent push, many blank bank owners and leaders would say it still isn’t enough to put black banks where they need to be.
“Checking and savings accounts, especially unused ones, are financial liabilities, because they require banks to pay for online banking and other services without much of a return — meaning #BankBlack supporters should move their larger finances, too.”
The Bank Black Challenge, launched by One United Bank, is challenging one million people to open a $100 savings account at a Black-owned bank to generate $100 million of economic power. This challenge started in 2016 and is still ongoing today.
Many black banks have convenient services that patrons look for, including online and mobile banking, bill pay and remote deposit for checks.If you want to #BankBlack, check out these options