Description

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The nation’s 149 Minority Depository Institutions (MDIs) are mission-driven banks that provide access to credit and financial services to marginalized communities across the United States.

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In this second annual State of MDI report, we provide updated statistics documenting changes in the size, scale, and characteristics of the sector and the communities MDIs serve. We also examine 2023 lending data from a sample of MDI banks, exploring the characteristics of the places that received loans and highlighting a couple of qualitative impact stories. Finally, we share survey data and qualitative insights from several MDIs that participated in our annual strategic planning retreat

 

Main Findings Include:

• There are currently 149 MDI banks who collectively hold more than $355 billion in assets, with the average MDI holding $475 million in assets as of Q2 2024. 

• Total MDI assets have increased 90% since 2014 (ten years ago), 42.8% since 2019 (pandemic era), and 1.7% since 2023. Similarly, MDI deposits have increased by 46.5% since 2019. 

• MDIs operate more than 1,500 branches across 43 states and territories, representing a jump from 32 states and territories in 2022-2023. More than 58 million people live in zip codes with MDIs present, representing roughly 17% of the total U.S. population. 

• Communities with an MDI present have better credit health – as measured by factors like credit score, total credit available, and credit utilization rates – relative to demographically similar communities that do not have an MDI present. 

• A lending sample of 14 MDIs deployed $1.5 billion in loan originations, with more than 60% of loans going to majority-minority communities, and 54% of loans going to communities with a higher poverty rate than the national rate.

• An MDI Survey of 20 MDIs finds that 89% of surveyed members are either very confident or somewhat confident about the economy, and 85.7% are very confident or somewhat confident about their bank’s growth prospects. In addition, 96% of surveyed MDIs identified digital banking services as a key growth area, and 46% identified launching new products and services. 

 

Implications

Our findings highlight the significance of MDIs as key institutions engaged in the work of closing the racial wealth gap. We invite policymakers, corporate partners, and other key stakeholders to help support the sector through the following strategies:

• Placing low-cost, sticky deposits in the sector to strengthen liquidity and grow total originations. 

• Driving capital into the sector as part of broader social impact investing, and leveraging both program related investments and mission-related investments to support the sector. 

• Creating fee revenue generating opportunities, and providing loan loss reserves, guarantees, and letters of credit to help increase the scale of MDI lending. 

• Collaborating on consumer education and market-building to develop a pipeline of viable deals and offering co-lending and loan participation to provide learning-by-doing opportunities, particularly on climate-related projects. 

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Download  the 2024 State of MDI Report

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Published October 9, 2024

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Acknowledgements:

The authors would like to thank TransUnion for sharing data – and particularly Tracie Anderson, Gene Volchek, Don McManamy, Greg Schlichter, Vanessa Phy, and Charlie Wise for providing us with administrative support and expertise throughout the process. The authors would also like to thank Carl Romer, previously at the National Bankers Association Foundation, for his work on data gathering and analysis in support of various aspects of this project.