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

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

 

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