As a trade association, we are dedicated to supporting Minority Depository Institutions – mission-driven community lenders who provide access to capital and credit in communities nationwide. In keeping with our mission, we were delighted to have recently hosted a book event for journalist Oscar Abello (Next City). Oscar’s new book, The Banks We Deserve: Reclaiming Community Banking for a Just Economy, features several of our member banks in his powerful account of why community lending remains indispensable for the wellbeing of our nation and its various communities.
Along with Oscar, our event featured insights from Kim Ramos (Ponce bank – based in the Bronx), Zo Amani (Industrial Bank – based in DC), and Brett Theodos (Senior Fellow at the Urban Institute in DC.) Our Research and Impact Director Anthony Barr moderated the event, during a lunch hour event at Busboys and Poets.
Here are five key takeaways from the book event:
1): Community banks built our country.
Community banks are commonly defined as small banks that have $10billion or less in assets. Community banks are known for their strong ties to their local context. These banks are profitable, but they are motivated by more than just profit: they actively desire to see their communities flourish, and the bank’s lending to businesses and households is a core dimension to that flourishing.
During our event, Oscar highlighted that community banks built our nation – literally. After our nation’s founding, it was community banks that stepped in to finance our canals and waterways and bridges and later railroads and other aspects of our shared built environment. It is also community banks that have built much of the commercial real estate throughout our nation’s various towns and cities.
This tradition of local lending also stretches back before our founding to ancient times. Oscar noted that the earliest fragments from ancient Mesopotamia are lending records, and he highlighted that across various other ancient civilizations, it was local lenders who were at the heart of local economic activity. Today’s community bank sector continues this legacy, providing the engine for small business, commercial real estate, and affordable housing across the U.S.
2): MDIs continue to serve communities through high impact products and services
Our panel featured two representatives from the MDI sector: Kim Ramos from Ponce bank (based in the Bronx, NY) and Zo Amani from Industrial Bank (based in DC.) Both representatives highlighted the ongoing social impact of their institutions in the communities they serve.
Kim shared about a recent small business loan to a local restaurant owner who started out with one restaurant and who now operate five restaurants, collectively employing more than 90 workers. When Ponce’s credit committee meets to discuss loan opportunities like the one to that restaurant owner, they consider the typical financial aspects (risk, liquidity, return rate), but they also consider what this loan will do for the neighborhoods their bank serves. The community impact is woven into decision-making, with mission every bit as motivating as opportunities for profit.
Zo talked about the important work that Industrial does with local inmates of DC jails and prisons. Industrial staff provide several week-long financial education courses within the prisons that culminates in inmates participating in a graduation ceremony where they shake the hand of the bank’s president Doyle Mitchell and receive a certificate. Zo stressed that for many participants, this is the first major ceremony that they’ve experienced that celebrates their hard work and educational progress. In addition to the education component, Industrial has special savings accounts that current inmates can sign up for which helps set them up for success when they reenter society.
3): We need to dramatically increase the scale of dollars flowing to disinvested neighborhoods
Panelist Brett Theodos is a senior fellow and director of the Community Economic Development Hub at the Urban Institute. During his panel remarks, Brett shared that we have the right toolkit for community development – a toolkit that certainly includes mission-driven local lenders. But the current amount of resources available within that toolkit is too small to fully confront the challenges facing disinvested neighborhoods.
Brett’s research finds that it takes approximately 1 billion dollars to take a neighborhood that has suffered from decades of disinvestment and help transform it into an economically flourishing community. Banking, government, the broader private sector, and the philanthropic sector all have a role to play in helping scale the number of resources available to leverage the community finance toolkit effectively.
4): Growing the community banking sector is vital to reaching these disinvested communities.
In his book, Oscar highlights the growing concentration of assets in the largest banks relative to community banks. He writes, “In 1984 there were 15,767 community banks, representing 39 percent of banking industry assets. By the first quarter of 2024, there were just 4,128 community banks, representing just 11.31 percent of banking industry assets.” The effects of this concentration are staggering. For example, he notes that if community banks were still 39 percent of the banking sector, they would have $3.2 trillion more dollars invested in real estate loans and $513 billion more invested in small business loans.
During our event, Oscar argued that we need to both increase the number of community banks and increase their share of total banking assets. Scaling the sector in both ways would unlock more capital to leverage for community development – particularly in places that are in dire need of that capital. In Oscar’s words, all communities should have the right to self-determine, and that means all communities deserve to have locally-based financial institutions that are responsive to their needs and motivated by a sense of ownership in community outcomes.
5): A Call To Action: Advocate for mission-driven community lenders in your networks
We ended the book event with a call to action for our audience (which includes you if you’re reading this!) In an era of political polarization, it is vital that all of our stakeholders advocate for mission-driven community lenders. So, look for opportunities to champion the work of community lenders, in your professional networks. Buy a couple copies of Oscar’s book to share with friends and colleagues. And always be ready to share the good news about mission-driven lenders who are creating social impact nationwide.
Watch the full panel discussion here.
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