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What are Black-owned banks and how to support them?

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Where you bank can promote racial equity and inclusion. Supporting Black-owned banks can help economically empower an underserved community, in which Black and African Americans historically have faced discriminatory banking practices and systemic racism.

As an alternative to larger institutions, Black-owned banks have provided mortgages, loans and accounts to people of color when other banks would not provide those services to them.

“Black banks are typically mission-focused, and they are all community banks,” says Michael Neal, principal research associate for the Housing Finance Policy Center at the Urban Institute.

What is a Black-owned bank?

Being a Black-owned bank or credit union is a federal designation. The Federal Deposit Insurance Corp, or FDIC, classifies these institutions as Minority Depository Institutions, or MDIs. The federal government defines MDIs as any depository institution in which minority ownership is 51 percent or more, or in which the majority of board members is composed of minority members and the community the bank serves is predominantly minority.

“What makes that more poignant is that Black-owned banks have a fraction of the assets that the mainstream banks have,” says Stephone Coward, co-founder of Bank Black USA, an organization that formed out of the larger #BankBlack movement to encourage consumers to move their money to Black-owned banks.

The four largest banks in the U.S. each have more than $1.6 trillion in assets. By comparison, only one Black-owned bank has more than $1 billion in assets.

“It is crystal clear that Black banks have not benefited from the same level of support from the government and big business that the ‘Big Banks’ have,” Coward says. “They have significantly fewer resources to pull from to support the communities they serve and beyond.”

Black-owned banks and credit unions

Banks

Largest U.S. banks owned or directed by Black or African Americans (by asset size):

Bank Headquarters Total assets
(in $ millions)*
City First Bank Washington $1,092.8
Liberty Bank and Trust New Orleans $971.1
Carver Federal Savings Bank New York $723.3
Citizens Trust Bank Atlanta $668.8
OneUnited Bank Boston $643.4
Industrial Bank Washington, D.C. $625.4
First Independence Bank Detroit $412.3
Mechanics and Farmers Bank Durham, N.C. $365.2
The Harbor Bank of Maryland Baltimore $329.8
Optus Bank Columbia, S.C. $315.5
Unity National Bank of Houston Houston $253.8
Citizens Savings Bank and Trust Co. Nashville, Tenn. $134.5
Tri-State Bank of Memphis** Memphis, Tenn. $110.1
GN Bank Chicago $84.7
United Bank of Philadelphia Philadelphia $64.4
Carver State Bank Savannah, Ga. $61.9
First Security Bank and Trust Co. Oklahoma City, Okla. $61.3
Commonwealth National Bank Mobile, Ala. $56.9
Columbia Savings and Loan Association Milwaukee $26.9
Alamerica Bank Birmingham, Ala. $16.0

*As of Dec. 31, 2021.
**Tri-State Bank of Memphis merged with Liberty Bank and Trust on Oct. 8, 2021.

Source: FDIC

Credit unions

As of Sept. 30, 2021, there were 518 credit unions that qualify as minority institutions out of 4,990 total credit unions. Seventy-one percent of these minority credit unions were partially or completely Black owned.

The top 10 credit unions serving Black Americans (by asset size):

Credit union  Headquarters Total assets
in $ millions
HawaiiUSA Honolulu $2,319
Andrews Federal Credit Union Suitland, Md. $2,288
Self-Help Durham, N.C. $1,788
U.S. Eagle Albuquerque, N.M. $1,421
MECU Baltimore $1,362
San Francisco Federal Credit Union San Francisco $1,299
Los Angeles Federal Credit Union Glendale, Calif. $1,271
Tropical Financial Miramar, Fla. $965
El Paso Area Teachers El Paso, Texas $848
USC Credit Union Los Angeles $752

Source: National Credit Union Administration (NCUA)

Fintech firms

Though not federally designated, Black-owned fintech firms are gaining momentum in the minority-focused banking sector. They include Brooklyn, New York-based Breaux Capital and Novae Financing, Conyers, Georgia, among many others.

How you can support Black-owned banks

One of the primary ways to support Black-owned banks is simply by doing business with them, either by opening an account or taking out a loan or line of credit. Another approach is to become an equity stockholder in a Black-owned financial institution.

A common misconception is that Black-owned banks only lend to minorities, which couldn’t be further from the truth, says Kenneth Kelly, former chairman of the National Bankers Association (NBA), the trade group for minority banking, and CEO and chairman of First Independence Bank in Detroit.

“While true that these institutions have a propensity for serving minorities, they also serve the needs of any people who desire to do business with them,” Kelly says.

Because Black-owned banks serve an essential role in building wealth in minority communities — but are declining in number — these institutions need support on a policy level, too, says Neal of the Urban Institute.

“Calling your member of Congress is one key way of putting that on his or her mind,” Neal says. “It’s an inexpensive, immediate step people can take, particularly since this is an election year.”

History of Black-owned banks

Black-owned banks have been around for more than 130 years, dating back to the charter of the True Reformers Bank in 1888. The bank came into existence after the failure of the Freedman’s Savings Bank, which the U.S. government established in 1865 to offer financial services for newly freed African Americans.

“Unfortunately, it was not run by African Americans, so there was a disconnect in terms of the investments made by those managers,” Kelly says. Freedman’s Savings went bankrupt in less than a decade.

Black-owned banks flourished during the civil rights movement of the 1950s and ‘60s, and about 50 institutions were operating by 1976. Those numbers shrunk during the savings and loan crisis of the 1980s, and again during the Great Recession. Only about half of the Black-owned banks that existed in the early 2000s remain today.

The Black Lives Matter movement has helped raise awareness about Black-owned banks, with initiatives like OneUnited Bank’s #BankBlack  movement — which started in 2016 after deadly police shootings in Black communities — challenging more people to open accounts with these institutions.

“This is an opportunity for everyone to consciously include a sector or financial institution that historically they may not have,” the Urban Institute’s Neal says.

Why should someone consider banking with a Black-owned bank

Doing business with a Black-owned bank or credit union is a way to show solidarity with Black communities that may have experienced discriminatory banking practices and systemic racism.

“It is crystal clear that Black banks have not benefited from the same level of support from the government and big business that the ‘Big Banks’ have,” says Coward of Bank Black USA. “They have significantly fewer resources to pull from to support the communities they serve and beyond.”

As community banks, these institutions can provide opportunities to develop a closer relationship with your banker.

Small businesses trying to obtain federal Paycheck Protection Program (PPP) money during the COVID-19 pandemic were an example of how community banks can provide an advantage, says First Independence Bank’s Kelly.

“Those customers who had relationships with their bankers were more likely to be successful earlier than those who did not,” Kelly says. “When you’re working with larger institutions, sometimes it’s easy to get lost.”

How to switch banks

When deciding to move your money from one institution to another, Bank Black USA’s Coward recommends doing so at a pace that is comfortable to you. “Making the switch does not mean that you have to move all your money at once,” Coward says. “You can start with savings and build your way up to a checking account.”

Anytime you switch your funds to a new bank account, remember to also move your direct deposits and automated transfers. Also, factor in any fees your new bank may charge.

Even though not all areas of the country have a Black-owned bank, you can search sites like Mighty Deposits to find an institution where you can open an account online.

“Black banks, by themselves, are by no means the panacea to closing the racial wealth gap or ending systemic racism,” Coward says. “However, they can be a tool, an arrow in the quiver and part of a multipronged approach to improving the financial stability and, ultimately, the financial literacy of communities in need.”

Learn more:

–Staff writer Matthew Goldberg contributed to this article.

Written by
Autumn Cafiero Giusti
Contributing writer
Autumn Cafiero Giusti is an award-winning journalist with over two decades of professional experience. She writes about mortgages, real estate and banking.
Edited by
Wealth editor