The State of America's Black-Owned Banks

By Robert E. James, II 

President and CEO, Carver Financial Corporation

Chairman, National Bankers Association

A month ago, The Washington Post published an article entitled "What Happened to Wall Street's post-Floyd Bet on Black Banking." Without input from leaders of any actual Black-owned banks, some of which are over 100 years old, the story instead focused on a non-bank start-up entity that, in the wake of George Floyd's murder, was able to raise several hundred million dollars from large banks and currently markets an expensive debit card to Black consumers.  

In honor of Black History Month, and as the leader of the nation's only Black-owned multi-bank holding company, and chairman of the National Bankers Association--the only trade group that exclusively advocates for the common interests of America's minority banks--I thought I'd give some perspective on the state of Black banks in 2024. Our banks are stronger than at any time since the 1980s, and we have an unprecedented opportunity to continue to increase in scale and impact in the years to come.  

Black Banks on the Rise: 

The FDIC reports that out of 4,645 banks in the U.S. as of October 2023, only 22, less than one percent, are Black-owned or operated. While this percentage should be higher, there's a positive trend – the number of Black-owned banks is increasing. Historically, major recessions have led to the failure of half of Black-owned banks due to low equity capital. However, recent years have seen an increase from 19 to 22 Black banks. Experienced Black bankers have tirelessly worked to raise capital, assemble management teams, and overcome regulatory hurdles, benefiting both the industry and local communities. 

Historic Capital Infusion: 

Traditionally, Black-owned banks faced challenges attracting substantial outside investment. The tragic events surrounding George Floyd's murder and the impacts of the COVID-19 pandemic highlighted the crucial role Black banks play in reducing economic inequality. Major banks made permanent, non-voting investments in Black bank capital, and the Treasury injected new capital into the sector. With over $1 billion in new permanent capital, Black-owned banks can potentially generate $10 billion in new economic impact annually by leveraging deposits. 

Building Partnerships: 

Black-owned banks are fostering unprecedented collaboration with each other and other institutions. Notable examples include the historic all-Black-bank refinancing of the Atlanta Hawks training facility and collaborative efforts within the National Bankers Association to measure community impact. Partnerships include large banks opening ATM networks without surcharges for Black bank customers and corporations sharing AI-driven technology solutions to drive impact through technology. 

Small But Impactful: 

Despite being small in numbers and capital, Black-owned banks are consequential. They play a vital role in supporting small businesses, providing loans to developers, and offering mortgages to homeowners. Could the resources directed at non-bank lifestyle platforms have been better deployed with our banks? Yes. But we have added historic amounts of capital and are focusing on building new capacity and leveraging this capital for even greater impact.  

As we emerge from what we hope is the first round of Wall Street investment in Black banks, the state of America's Black-owned banks is strong, with a positive trajectory marked by increasing numbers, historic capital infusion, and collaborative partnerships. We respect the legacy and the idea of the founders of Black banks, and pioneers like the brave entrepreneurs who built "Black Wall Streets" across the country, most famously in Tulsa's Greenwood district. Some of our members have direct family ties to the massacre, and we all honor that proud history every day through our work. To make blanket statements about Black banks when covering a non-bank fintech without quote or comment from Black bank operators wholly misrepresents the current landscape. Respectfully, we will continue to do the work, grow our banks, and make capital available to the members of our community who are most often overlooked.

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