Why banking in our own community may offer better financial advantages and outcomes.
Last summer, in the aftermath of the police shooting deaths of Alton Sterling and Philando Castile, the #BankBlack hashtag on social media urged African-Americans to move their money from mainstream financial institutions to those for us, by us. It resulted in a surge of business for the institutions that have historically been key to our economic growth.
Up until the 1970's, "most banks avoided providing financial services to African-American communities on the theory that the customers in these communities are high risk," says Preston D. Pinkett III, chairman of the National Bankers Association, the trade association for minority-owned banks. In response, Black-owned banks sprang up to make loans available to Black consumers.
Today the Equal Credit Opportunity Act makes it illegal for lenders to discriminate based on race, but evidence suggests that Black Americans still don't always get a fair deal. For example, just last summer the Consumer Financial Protection Bureau sued BancorpSouth Bank for rejecting Black mortgage applicants and charging them more for loans than their White counterparts.
"In determining the creditworthiness of an individual seeking a loan at a Black bank, race will never be a factor," says Michael A. Grant, president of the National Bankers Association. But even more important, the money put in Black banks continues to circulate in our communities, providing capital for mortgages, college loans, small-business loans and other financial needs. "The Black bank is still there playing its role of serving the community," says Grant. "Now what we've got to do is get the community to come back to the Black bank." Read on to discover how you can add your dollars to the mix.
The #BankBlack movement has opened the door to more financial gains for us.
YEAR FOUNDED: 1968
ASSETS: $655 MILLION*
At a time when home ownership for much of Black America was little more than a pipe dream, OneUnited Bank opened its doors in Boston to give Blacks a source of borrowing. It rose from the ashes of another Black-owned bank, Unity Bank & Trust, which was founded by Marvin E. Gilmore, Jr. (He also served as president and CEO of the Community Development Corporation of Boston.) With many mainstream banks denying loans to minorities, "it made it very difficult for us not only to get home loans but also to sell our homes or to buy homes which deflated the values of real estate in our community," says Teri Williams, president and COO of OneUnited. It is the largest privately held Black-owned bank in the country, with branches in Los Angeles, Boston and Miami.
OneUnited has grown primarily by acquiring other Black-owned banks in Miami and Los Angeles. By focusing on technology embracing online banking capabilities, for example it has attracted customers in such widespread places as Chicago, Houston and Hawaii.
Williams and her husband, bank chairman and CEO Kevin Cohee, are the majority shareholders. After investing in the bank 20 years ago, they grew it from a $50 million entity to the $655 million institution it is today. Other shareholders include Magic Johnson and Janet Jackson.
In 2016 the bank financed more than $130 million in loans. OneUnited has also won the U.S. Treasury Department's Bank Enterprise Award designation for financial institutions that advance development in disadvantaged communities ten times.
"Our focus is to be unapologetically Black and unapologetically focused on building wealth in our community," Williams says. That means providing some products that are uniquely suited to help financially
struggling customers. For example, people with a history of writing bad checks are often denied the ability to open checking accounts. OneUnited Bank's U2 Checking Account offers a second chance.
Since the #BankBlack movement started, $20 million was deposited in OneUnited Bank within four months, and the bank has increased its staff by 10 percent. "This has its roots in the Civil Rights Movement," Williams says. "This is an extension of what we have been trying to do for ourselves for generations."
YEAR FOUNDED: 1934
ASSETS: $384 MILLION*
In 1934 Jesse H. Mitchell saw the need for a Black bank in Shaw, a Black-and-thriving neighborhood in Washington, D.C. "Blacks could deposit their funds anywhere they wanted to, but they couldn't borrow money," says his grandson B. Doyle Mitchell, Jr. So Mitchell raised $65,000 from businesspeople, churches and other members of the community to found Industrial Bank. Today the younger Mitchell serves as its president and CEO.
Industrial is a Community Development Financial Institution (CDFI), so it provides services in low- and moderate-income areas. "Industrial Bank sent people to college for the first time, helped open businesses for the first time, financed churches," Mitchell says. Now it has branches in Washington, D.C., and Maryland, but online banking allows it to cater to clients everywhere. In fact, since July, Industrial Bank has seen customers open accounts from 17 different states, thanks to #BankBlack.
Industrial also ensures that customers aren't targeted with predatory loans. African-Americans and Latinos were preyed upon during the mortgage crisis, he says. The bank offers education sessions to improve financial literacy.
What's more, in honor of its eightieth anniversary, in 2014, Industrial Bank awarded five grants totaling $80,000 to local community businesses. "The Black bank has always been the linchpin of the African-American business community, and pound for pound, we still are," Mitchell says.
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LIBERTY BANK & TRUST
YEAR FOUNDED: 1972
ASSETS: $625 MILLION*
Liberty Bank & Trust, in New Orleans, is proof of what a good idea can lead to. Founded by local banking executive Alden J. McDonald, Jr., and then Xavier University president Norman Francis as a way to overcome mortgage lending disparities in the 1970's, the bank would go on to acquire smaller minority-owned banks in cities such as Baton Rouge, Louisiana; Kansas City, Kansas; and Detroit. With five acquisitions completed in the past eight years, Liberty Bank now has branches in Louisiana, Mississippi, Kansas, Missouri, Michigan, Illinois and Alabama. "Our goal is to keep minority banking opportunities in our communities," says McDonald, its president and CEO. Today people can open an account with the bank without ever stepping inside its doors. "Even if you wanted a business loan, we can converse over the telephone," McDonald adds.
Liberty sees itself as a force for community development. In 1993 it established The Liberty Foundation, a nonprofit that has raised more than $1 million for housing, education and neighborhood restoration activities in the areas that the bank serves.
Furthermore, 80 percent of Liberty Bank & Trust's loans go to those in minority communities. "It helps create wealth in home ownership by having the ability to have credit at a reasonable price. It affords our
community the opportunity to create jobs," says McDonald. Basically, it gives the Black community a way to chart our own course, he says: "We can change our situation by doing business with each other."
CITIZENS TRUST BANK
YEAR FOUNDED: 1921
ASSETS: $396 MILLION*
Nearly a decade before the Great Depression, five Atlanta-area businessmen, led by entrepreneur Heman E. Perry, had a vision of economic empowerment. "They wanted to take ownership and stimulate economic growth in African-American communities," says Cynthia N. Day, president and CEO of Citizens Trust Bank, which has branches in Georgia and Alabama. "We were underserved and wanted to create our ownÖ."
In 1934 Citizens Trust Bank became the first African-American institution to be insured by the Federal Deposit Insurance Corp. (FDIC). Then, in 1948, it was the first African-American owned bank to become a member of the Federal Reserve System, Day says. The bank was also a bedrock of the Civil Rights Movement, with Martin Luther King, Sr., serving on its board at one time. "This institution has survived the Great Depression, and now it's survived the Great Recession," she says. "That speaks to the resilience of our community and of this bank."
While the bank boasts the same mainstream products as its competitors, such as mobile banking and remote deposit capture, Day is prouder of its focus on financial education: "Our founders emphasized the importance of fiscal responsibility and economic empowerment for our communities. That's still our guiding principle."
When the #BankBlack movement began, Citizens Trust Bank saw thousands of accounts opened after rapper Killer Mike urged people to support it. However, folks shouldn't look at the #BankBlack movement as coming from a place of lack, Day says. "It's not that we're asking for people to support us because we're not strong," she continues. "We are strong. We just believe that we could be stronger."
This feature originally appeared in the March 2017 Issue of ESSENCE Magazine.