US minority-owned banks withstand industry turmoil, executives say

Reuters

Published Jun 09, 2023 12:16PM ET

By Nupur Anand

NEW YORK (Reuters) - 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. (NYSE:JPM)

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.