Five things you need to know before you #BankBlack (Part 2)

In the previous post, I discussed the first two things I felt were important to know before deciding to bank black. I went over the role of banks, how to choose a bank, and the history of black banks. In this post, I will provide information on the characteristics of successful and unsuccessful black banks. Additionally, I will provide a list of all the black banks in the United States with some general information and ratings.

Reason 3: Before you bank black you should know the characteristics of a successful black bank

Price in 1990, wrote an article on the performance of banks. It was concluded that regardless if a bank is minority or non-minority owned, it is important that they have experience with navigating customer and market needs. Banks can navigate customer and market needs by servicing the target community, achieving the objectives of the bank mission statement, not taking too many risks, and running the bank efficiently.

In terms of black banks, back in 1976, a high earning black bank had total assets ranging from 8.3 to 56.3 million and had a return on investment of 10% or better. According to the Consumer Price Index and adjusting for inflation,  that is approximately 35 to 237 million in 2016.

In addition to total assets being an indicator of a high earning black bank, there are several other characteristics that need to be present. Successful black banks:

(1) Give out loans in real estate

(2) Favor tax free municipals

(3) Locate in areas where there is competition

(4) Are not too small

(5) Have quality financial management

(6) Do not copy the management practices of non-minority banks, they mold management to match the community needs

(7) Have high employee retention. Employees stay at bank long enough for  education and experience to pay off

(8) Have management with graduate education

(9) Are involved with their community

Reason 4: Before you bank black you should know the characteristics of an unsuccessful black bank

Black banks that are unsuccessful tend to not have large assets and are run inefficiently. Unsuccessful black banks:

(1) Locate in less competitive, but concentrated markets

(2) Are new banks that are less than 4 years’ old

(3) Don’t meet short-term financial obligations

(4) Don’t diversify types of risk

(5) Are small

(6) Lack quality management

(7) Have loan losses that take up the operating expenses

(8) Have high operating costs

(9) Have more employees than assets

(10) Use operating costs in an inefficient manner

(11) Invest heavily in U.S. treasury securities

(12) Have less capital position

Reason 5: Before you bank black you should know Bank ratings and location

What I have written thus far is a summary of all the information I found while trying to decide on a bank. When sharing with friends that I was going to put money into a black owned bank, they told me of banks. However, not every one of those banks referred were actually black-owned. The Federal Reserve website was a great resource for me to know which banks were majority black owned. Additionally, the Federal Reserve website has information on location, bank ownership information, and assets/deposits. To find out more information about the financial management of the bank, I used the website Bankrate. To find out if the bank is an FDIC member, I searched the bank name on the FDIC Bank Find tool.

Based on this information, I narrowed my choices down to three banks and I will make my decision soon.

At the end of this post is a list of black owned banks, organized by state, with a link to Bankrate information. I hope it gives you information on which bank is the best for your individual or business needs.

Please note that the Federal Reserve last updated the information in March 2016 and Bankrate last updated information in December 2015.

There recently has been a push to bank black. I am unsure if an increase in membership will change the financial information provided. I am sure you can use the information below to help narrow your choices and then wait until the next fiscal quarter to make your decision based on updated information.

Concluding thoughts

Black banks tend to hire minority employees, they are attuned to community needs, and they don’t have discriminatory loan practices. Overall, I think that placing even 100 dollars into a savings account with a black bank is worth it. Black banks were started to serve the community because other institutions were not serving the needs of individuals and business owners. Whether or not you want to take an economic or political stance, black banks are still relevant today.

Finding the right financial institution is based on individual preference. What might be the perfect bank for you, might not be for your friend. Think about what you need and then make your decisions from there.

Please let me know in the comments if you have any information you would like to share. A lot of the information that I found is dated, so I would love links to updated studies. If you are a student, consider doing research on this topic, there is definitely a need.

***Lisa-Marie

 

List of black owned banks in the United States

 

Alabama

(1) Bank Name: Alamerica Bank  based in Birmingham

Branches: Birmingham, AL

Charter Authority – State

Federal Reserve Member – Non-member/Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-member bank

Assets – $34,170, 000

Deposit – $28,435, 000

Bankrate Information 

 

(2) Bank Name: Commonwealth National Bank  based in Mobile

Branches: Mobile, AL

Charter authority – Federal

Federal Reserve Member –  Member

Primary Insurer – Deposit Insurance Fund

Entity Type – National bank

Assets – $57,869, 000

Deposits – $53,424, 000

Bankrate Information 

 

California

(3) Bank Name: Broadway Federal Bank

Branches: Los Angeles and Inglewood, CA

Charter authority – Federal

Federal Reserve Member – Non-member/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Federal Savings Banks

Assets – $387,237,000

Deposit – $261,290,000

Bankrate Information 

Florida

 

(4) Bank Name: Axiom Bank

Branches – Maitland, Bartow, Bradenton, Brandon, Gibsonton, Orlando, Jacksonville, Kissimmee, Lakleland, Leesburg, Ocala, Orange Park, Osprey, Palmetto, Port Orange, Saint Cloud, Sanford, Winter Haven

Charter Authority – Federal

Federal Reserve Member –  Non-member/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Federal Savings Bank

Assets – $666,241,000

Deposits – $496,614,000

Bankrate Information 

Georgia

 

(5) Bank Name: Carver State Bank

Branches – Savannah

Charter authority – State

Federal Reserve Member – Non-member/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-member bank

Assets – $40,368,000

Deposits – $33,957,000

Bankrate Information 

 

(6) Citizens Trust Bank

Branches – East Point,  Lithonia, Columbus, Stone Mountain,  (also locations in Eutaw and Birmingham Alabama

Charter authority – State

Federal Reserve Member – Member

Primary Insurer – Deposit Insurance Fund

Entity Type – State Member Bank

Assets – $403,747,000

Deposits – 343,138,000

Bankrate Information 

Illinois

 

(7) Bank Name: Illinois-Service Federal Savings and Loan Association

Branches – Chicago, Broadview, Crestwood, Maywood, [also in Milwaukee, WI]

Charter authority – Federal

Federal Reserve Member – Nonmember/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Savings and Loan Association

Assets – $101,004,000

Deposits – $95,606,000

Bankrate Information

 

(8) Bank Name: Seaway Bank and Trust Company

Branches: Chicago, Broadview, Crestwood, Maywood, IL; Milwaukee, WI

Charter authority – State

Federal Reserve Member – Non-Member/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-member bank

Assets – $372,982,000

Deposits – $298,992,000

Bankrate Information 

Kentucky

(9) Bank Name: Metro Bank

Branches  – Louisville

Charter authority – State

Federal Reserve Member – Nonmember/NA

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-member bank

Assets – $31,479,000

Deposits – $25,803,000

Bankrate Information 

Louisiana

(10) Bank Name: Liberty Bank and Trust Company based in New Orleans

Branches –   Baton Rouge [ also Kansas City, KS/MO; Chicago, Forest Park, IL; Montgomery & Tuskegee, AL; Jackson, MS; Detroit, MI]

Charter authority – State

Federal Reserve Member – Non-Member/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-Member Bank

Assets – $613,660,000

Deposits – $542,938,000

Bankrate Information 

Maryland

(11) Bank Name: Harbor Bank of Maryland based in Baltimore, MD

Branches – Baltimore, Randallstown, Riverdale

Charter authority – State

Federal Reserve Member – Nonmember/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-member Bank

Assets – $266,014,000

Deposits – $233,448, 000

Bankrate Information 

Massachusetts

(12) Bank Name: One United Bank based in Boston

Branches – Online also with branches in Los Angeles, Gardena, Lynwood, CA; Dorchester, Boston; Miami, FL

Charter authority – State

Federal Reserve Member – Nonmember/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-member bank

Assets – $621,978,000

Deposits – $362,208,000

Bankrate Information 

Michigan

(13) Bank Name: First Independence Bank based in Detroit

Branches –  Detroit; Clinton Township

Charter authority – State

Federal Reserve Member – Nonmember/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-member bank

Assets – $256,503,000

Deposits – $208,153,000

Bankrate Information 

New Jersey

(14) Bank Name: City National Bank of New Jersey based in Newark

Branches –  Newark, Patterson, NJ; Brooklyn, NY, New York, NY

Charter authority – Federal/National

Federal Reserve Member –  Member

Primary Insurer – Deposit Insurance Fund

Entity Type – National Bank

Assets – $262,304,000

Deposits – $236,996,000

Bankrate Information

North Carolina

(15) Bank Name: Mechanics and Farmers Bank  based in Durham

Branches –  Charlotte, Greensboro, Durham, Raleigh, Winston Salem

Charter authority – State

Federal Reserve Member – Nonmember/ Not applicable

Primary Insurer – Depsit Insurance Fund

Entity Type – non-member bank

Assets – $304,346,000

Deposits – $263,051,000

Bankrate Information 

Pennsylvania

(16) Bank Name: United Bank of Philadelphia based in Philadelphia

Branches – Philadelphia

Charter authority  – state

Federal Reserve Member – nonmember/ not applicable

Primary Insurer – deposit insurance fund

Entity Type – nonmember bank

Assets – $54,501,000

Deposits –  $51,583,000

Bankrate Information 

South Carolina

(17) Bank Name: South Carolina Community Bank based in Columbia

Branches – Columbia

Charter authority – State

Federal Reserve Member – nonmember/not applicable

Primary Insurer deposit insurance fund

Entity Type – nonmember bank

Assets – $53,066,000

Deposits – $48,061,000

Bankrate Information 

Tennessee

(18) Bank Name: Citizens Savings Bank and Trust Company based in Nashville

Branches-  Nashville and Memphis

Charter authority – state

Federal Reserve Member –  nonmember/ Not applicable

Primary Insurer – deposit insurance fund

Entity Type -nonmember bank

Assets – $105,790,000

Deposits – $92,819,000

Bankrate Information 

 

(19) Tri-State Bank of Memphis based in Memphis

Branches – Memphis

Federal Reserve Member –  nonmember/ Not applicable

Primary Insurer – deposit insurance fund

Entity Type -nonmember bank

Assets – $105,233,000

Deposits – $89,934,000

Bankrate Information 

Texas

(20) Bank Name: Unity National Bank of Houston based in Houston

Branches –  Houston and Missouri City

Charter authority – Federal

Federal Reserve Member – Member

Primary Insurer – Deposit Insurance Fund

Entity Type – National Bank

Assets – $84,003,000

Deposits – $76,409,000

Bankrate Information 

Virginia

(21) Bank Name: First State Bank based in Danville

Branches –  Danville

Charter authority – State

Federal Reserve Member – Nonmember/ Not Applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Nonmember bank

Assets – $34,545,000

Deposits – $33,280,000

Bankrate Information 

Wisconsin

(22) Bank Name: Columbia Savings and Loan Association based in Milwaukee

Branches –  Milwaukee

Charter authority – State

Federal Reserve Member – Nonmember/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – savings and loan association

Assets – $23,907,000

Deposits – 21,410,000

Bankrate Information 

Washington, D.C

(23) Bank Name: Industrial Bank 

Branches – Washington, DC; District Heights, MD; Oxon Hill, MD

Charter authority-  State

Federal Reserve Member – Non-member/ Not applicable

Primary Insurer – Deposit Insurance Fund

Entity Type – Non-member bank

Assets – $386,688,000

Deposits – #310,738,000

Bankrate Information 

 

Bank with a minority board

Urban partnership Bank in Chicago (with branches in Bellwood [also in Detroit, MI]

 

Further reading

 

Ammons, L. (1996). The evolution of Black-owned banks in the United States between the 1880s and 1990s. Journal of Black Studies, 26(4), 467-489.

 

Blanchflower, D., Levine, P., Zimmerman, D. (2003). Discrimination in the small business credit market. Review of Economics and Statistics, 85(4), 930-943.

 

Bates, T. (1997). Unequal access: Financial institution lending to black-and white-owned small business startups. Journal of Urban Affairs, 19(4), 487-95.

 

Bates, T. (1991). Commercial bank financing of white-and black-owned small business startups. Quartertly Review of Economics and Business, 31(1), 64-80.

Federal Reserve (last updated March 2016). List of Minority-owned depository institutions.  Retrieved from

 

Gardner, M.J. (1982). Black-owned commercial banks: A new look at their performance and management. The Review of Black Political Economy, 12(1), 91-101.

 

Lepley, W., Nagy, R., and Teclezion, M. (2015). Impact of the 2008-2009 recession on African American owned US banks. Managerial Finance, 41(4), 385-395.

 

Price, D. (1990). Minority-owned banks: History and trends. Federal Reserve Bank of Cleveland Economic Commentary. 1-5.

Summers, B.J. and Tucker, J.F. (1976). Performance characteristics of high-earning minority banks. Federal Reserve Bank Richmond Economic Review, 62, 3-12.

 

Resources

Black bank comparison spreadsheet 

Map of black banks in the United States

Hashtags to follow: #BankBlack, #BankDifferent, #BuyBlack

 

Photo credit: Fabian Blank

 

Five things you need to know before you #BankBlack

I’ve always thought I wasn’t an activist because I never march, but I’m realizing that there are many ways to be a change agent. Each person has their own way of being a change agent and mine is through social and economic capital. I enjoy volunteering for causes that I feel are important and I also believe upward mobility occurs through financial means.

In a capitalistic society, obtaining economic power is an important step towards moving towards equality. This belief has led me to invest in minority-owned businesses, start my own business, and decide to place my savings in a black-owned bank. These decisions came after self-reflection, discussions with family, and doing my research.

When I decided to place my money in a black-owned bank and a woman-owned investment company (more on that in a future post), I turned to Google for more information. However, it turns out finding information on black owned banks was not as easy as I thought it would be. Even though most academic papers I found were written between the 1970s and 1990s and a lot of current blogs were reiterating the same thing by listing the black-owned banks, I still was able to put together a resource.

My desire to find out information on black owned banks led me down a rabbit hole of information. So much so, that I decided to make a bank black series.  In this series, I share things that I think are important to know before deciding to bank black.

Five things you should know before you bank black is the first in the series. This particular post discusses the first two things I think are important –  the role of banks and the history of black owned banks.

I hope this blog post can serve as a starting point in your quest to bank black. Please share in the comments any insights on how you choose a bank.

Reason 1: Before you bank black you should know the role of banks and how to choose one

I will be completely honest. I did not do any research when I chose my current banks. I chose them when I was in college because one was walking distance from my dorm and the other was where my family banked. Now that I have increased my financial literacy, I realize it is important to have some basic knowledge of financial institutions. Before deciding on banking black, it is important to know the role of banks and how to generally choose one.

Banks exist to provide a secure place to store money, complete transactions, provide financial advice, and distribute loans.

When choosing a bank, you will want to look at a few factors:

(1) Location: Consider choosing a bank that is close to where you work and live and has plenty of ATMs. However, depending on your needs, it may not matter where the bank is located if they have online banking options.

(2) Products and services: What product and services are you looking for in a bank?  As an individual or business, you might choose your bank based on services and account types. If you are someone who travels frequently, you might need a bank where you can still use its services abroad.

(3) Fees are not fun. You might want to look into a bank that has little to no fees because it can add up in the long run.

(4) If you are thinking of getting a loan or have had poor financial history, you might want to consider a bank that is second chance friendly and is willing to work with those with poor financial history.

(5) FDIC, is a government insurance corporation that formed after the Great Depression as a way to insure and secure banks. It is important to see if the bank you choose is an FDIC member. You can do this by searching the bank name on the FDIC Bank Find tool.

Reason 2: Before you bank black you should know black bank history

According to the Federal Reserve there are 156 minority-owned depository institutions of which 23 are black-owned. For a bank to be considered a minority institution, the FDIC says it either needs a minority board that serves black, Hispanic, Asian, or multi-racial communities or is majority-owned by one of those groups. Some other governing bodies, also include women as a minority-owned business. If you are looking to bank black you should look to see if the bank has a minority board that serves the black community or is majority owned by blacks.

When I was looking into black banks, I found an article by Lila Ammons, written in 1996, in which she wrote about the history of black banks in the United States from 1888 to 1992. Ammons splits black bank history into five phases, excluding the pre-civil war era.

Pre-civil war

Prior to enslavement in the United States, those brought over were well established merchants in their countries. When they came to the United States the spirit of trade and commerce did not end. Though there were laws forbidding business activity by slaves, there were those who still were able to create forms of commerce and trade, mostly in service areas.

Phase 1

1888 to 1928

In 1851, there was a meeting in which people thought it was important to own a bank.  They thought owning banks could help with savings in their communities and help those who wanted to start businesses. Though this meeting occurred in 1851, the first black-owned banks did not open until 1888. These banks were Savings Bank of the Grand Fountain United Order of True Reforms, in Richmond, Virginia and Capital Savings Bank in Washington, DC.  These banks stemmed from people involved in fraternal societies, organizations, and churches that were able to get enough money to start banks and other businesses in their communities.

These black banks were established to:

(1) Provide capital and credit for businesses

(2) Finance programs and projects led by the fraternal societies

(3) Provide general bank services that were not provided by non-minority banks

(4) Provide the security and confidence to participate in a post-emancipation society

(5) Serve as a place to get loans

Phase 2

1929 to 1953

Phase two was a period of little to no growth in the number of black owned banks. Most banks during this time lasted an average of nine years before failing. This time period was a difficult one in general because it comprised of WWII, the Great Depression, and many other financial and political shocks to the economy that made it difficult for banks to survive or open.

Phase 3

1954 to 1969

In the 1960s when there were economic development problems in urban black areas, there was the idea that banks could help attract customers that typically would not have been banking. Migration of blacks from the south to the north allowed for banks in those areas to do somewhat better. In comparison many of the southern banks closed because of the population decline.

In phase one the banks were investing money into real estate, fraternal societies, and projects that were going to serve the black community. However, the banks in phase three shifted to investing in US government bonds and portfolios.

During this time period legislation played a role in the black bank receiving support from the federal government. Because of integration, the market changed for black banks. Blacks were no longer ‘forced’ to use black banks because there were other options. Additionally, black banks had to think of ways to retain not only customers, but also employees.

Phase 4

1970 to 1979

This era was the best era for black banks in terms of number of new bank openings; 34 banks were created. The banks that were established continued to strengthen ties with the U.S. government and many bank total assets were linked to the U.S. government and bonds.

According Summers and Tucker’s 1976 study, there were three main reasons for the increase of minority banks during this time period:

(1) There was a growing interest in entrepreneurs owning commercial banks and the profits that would be gained from owning a bank. This was also during a time when minorities were improving their economic status in the country.

(2) Civil rights legislation that passed, made it feasible for individuals to obtain commercial banks. This was also a time when minority groups were gaining economic and political stature in the country.

(3) People were opening banks because it was believed that it could stimulate the economy in minority communities.

Phase 5

1980 to 1990s

During phase five, the number of new banks establishing slowed down. This was time period when black banks were attempting to find ways to attract other minorities to their banks and diversify their services.

Phase ? 

I am speculating, but if there was a follow up study on the evolution and history of black banks, it could be said that black banks have gone through two more phases. The first, like all banks would be the recession and post-recession time. The second, would be present day, because of the racial tensions and dissatisfaction in this country, there is a revived interest in banking black/minority.

Concluding thoughts

I think it is important to understand the foundations of a topic, which is why this part of the series focused on the role of banks, how to choose a bank, and the history of black banks. The next post will focus on what makes a successful black bank, what makes an unsuccessful black bank, and a complete list of current black owned banks and their ratings.

***Lisa-Marie 

 

Further reading

Ammons, L. (1996). The evolution of Black-owned banks in the United States between the 1880s and 1990s. Journal of Black Studies, 26(4), 467-489.

Bankrate. Bank Shopping: Here’s how to choose.

ING. The role of banks.

Ivestopedia. Banking.

Smart Asset. Four things to look for when choosing a bank.

Hashtags to follow: #BankBlack, #BankDifferent, #BuyBlack

 

Photo credit: Fabian Blank

The number one resource that helped me learn about blogging

Over six years ago, I created a blog. I didn’t know anything about blogging, branding, marketing, or web design, but I knew I enjoyed writing and sharing stories with friends and family. Like with any new hobby I pick up, I totally immersed myself in the craft of blogging. I checked out tons of books from the library about building websites and businesses, and I read everything I could about how to be a great blogger.

 

The number one resource that helped me learn about blogging was Darren Rowse of Problogger. I read all of his articles and purchased his workbook called 31 Days to Build a Better Blog (31DBBB). Problogger is where I gained a lot of knowledge about the dos and don’ts of blogging. I learned how to make money off of blogging and so much more. I have evolved over the years in terms of how ‘hardcore’ I am about blogging, but I still read Problogger posts. And it is great to see that Darren Rowse has continued his 31DBBB tradition.

 

If you are new to blogging or an online business, I highly recommend following Problogger. You don’t need to buy the workbook to gain knowledge. The blog posts and podcasts are filled with information to help you reach your goals.  Also if you follow the hashtag #31DBBB, you will get some great tips.

 

And nope, this isn’t a paid advertisement – I would tell you – I just like sharing good stuff!

 

What helped you become a better blogger?

***Lisa-Marie 

A geography PhD student finding peace in creating a balance between the mind, body, soul, & environment.

Facebook  – Instagram – Pinterest – Twitter – Subscribe for email updates

Photo Credit: Kristina B. 

No risk, no reward

Entering the third month of the new year, I have been reflecting on my goals and aspirations and how to bring them into fruition. To reach my goals, I have to continue stepping out of my comfort zone. I will not move, if I do not take a step.

This is just a short post to remind you and myself that without taking risk, reward will not be gained. Do not get caught up on the word risk. Risk can be taking a chance that something you give up will lead to something of value; there is a grey area of uncertainty, but that grey can lead to something fulfilling. Risk could mean quitting your job, moving to Thailand, and becoming a chef. Or risk can be as small as changing eating habits or nail polish color. You can also take calculated risks; taking a risk does not mean it has to be spontaneous, it can be planned.

If there is something you strive for, you won’t get it sitting down and hoping it will fall in your lap. You have to make changes to your habits. You have to take some calculated and uncalculated risks and once that happens, once you put in the hard work and effort, you arrive at the reward.

This post was inspired by a drawing posted by a talented graphic artist who is a student at Arizona State University. Every Monday, Scott draws  an inspirational quote on the wall of my office building. It is amazing to see the detail. You should check out Scott’s work on his website or his Instagram.

***Lisa-Marie 

An urban planning PhD student finding peace in creating a balance between the mind, body, soul, & environment.

Facebook  – Instagram – Pinterest – Twitter – Subscribe for email updates

Photo Credit: Scott Biersack