By Nupur Anand
NEW YORK Minority-owned banks in the U.S. have stayed resilient during this year's industry turmoil thanks in part to government and industry support, despite concerns that they would struggle to survive, executives said.
Minority depository institutions, or MDIs, "have emerged stronger now coming out of the pandemic and the recent crisis due to the government support and help from the big banks," James Sills, CEO of M&F Bank, a Black-owned lender based in Durham, North Carolina. He spoke at an MDI event in New York on Thursday hosted by JPMorgan Chase & Co.
There were 148 MDIs in the U.S. at the end of March, according to the Federal Deposit Insurance Corp. In just over a decade, more than 25% have disappeared due to consolidation or insolvency.
"Coming out of the crisis, as a sector we now have a stronger return on investment, more income avenues and are better placed as we head into a possible recession," said Robert James, CEO of Carver State Bank headquartered in Savannah, Georgia.
U.S. banking giants have expanded their racial-equity pledges in the years after 2020, when the killing of George Floyd, a Black man, by a police officer sparked global protests.
That year, JPMorgan, the largest U.S. lender, committed to invest $30 billion to bridge racial inequality over five years. It has invested over $100 million to date in MDIs.
Partnering with JPMorgan has enabled MDIs to gain access to capital, add employees and improve their technology, the lenders said.
It has also helped minority-owned banks to expand their revenue sources, cushioning their balance sheets, said Samuel Cox, chief financial officer of Citizens Trust Bank, a Black-owned lender based in Atlanta.
MDIs have bolstered their balance sheets even as rising interest rates lured depositors away to products with higher yields. These banks have also withstood the turmoil caused by the collapse of three large regional lenders, which prompted customers to seek safety in the biggest institutions.
Bank of America Corp has pledged to deposit $200 million into minority-focused lenders. It has also made $42.5 million in equity investments in 22 MDIs and Community Development Financial Institutions.
(Reporting by Nupur Anand in New York; Editing by Lananh Nguyen and Matthew Lewis)