Black-owned banks face challenges

By | May 10, 2013

The once-towering stature of the Black bank has diminished. After almost 125 years of serving the underserved, the Black banking community has been brought to a new low by a shrinking clientele, questions of relevance, competition from big banks and the fluctuating fortunes of its traditional client base—churches, small businesses and lower- and middle-income Blacks, who have borne the brunt of the economic recession.

“The state of Black banks is bleak,” said Paul O’Connor, founder of Angkor Strategic Advisors, a Chicago-based investment firm that works with Black banks, speaking about conditions within the minority banking community in that city.

In the past few years, several Black-owned banks, including the $2 billion-asset ShoreBank, one of the most active lenders on Chicago’s South Side, Covenant Bank and Highland Community Bank have closed or been absorbed into another institution.

And the city’s statistics mirror those nationwide. The number of Black banks has been steadily dwindling since the 1960s. As of March 2011, the FDIC counted 28 Black-owned banks in the United States, down from 54 in 1994. And there are several others teetering on the brink of extinction. (New Pittsburgh Courier)

Click here for more…

  • bankalchemist

    the loss of Covenant Bank for the 3000 shareholders was unfortunate. Its hard to separate the needs of a religious based community (helping everyone) with the requirements of banking regulations. In the case of Covenant Bank the Rev Bill Winston could not understand and apply the safety and soundness regulations as required by the FDIC. To include adequate levels of capital. If you change capital you change control by diluting the previous owners or changing the element of control. For Bill Winston that was an insurmountable task…to not be in control. See Bill required all to support what we read on the Dollar Bill, “In God We Trust” but when its Banking it changes to “In the FDIC We Do”.