As with many things within minority communities, black-owned banks were born out of necessity. Primarily, a need for access to capital and banking services made unavailable due to racial discrimination within financial institutions.
Centuries after the founding of the first black-owned bank, minorities still find themselves combating the effects of systemic racism in the financial sector. And this experience is everywhere from mortgage rate discrimination to difficulties acquiring small business loans. Unfortunately, African Americans are still left unequally served by financial institutions.
As a result, black-owned banks exist to provide opportunities to those who do not receive adequate services from traditional, mainstream banks. Though often lesser-known and publicized, these banks play a pivotal role in communities across the nation.
What is a black-owned bank?
According to the Federal Deposit Insurance Corporation (FDIC), a black-owned bank is one that has at least 51% Black ownership or a majority Black board while providing services to a predominately minority community.
These institutions exist to provide access to banking services and to provide community support and financial education. With disparities in financial education and access to financial institutions, black banks help solve a significant problem within minority communities.
A study done by the FDIC found that 21.7% of black households are unbanked while nearly 18% of all US households are underbanked. Combined, this reveals that many black communities do not have access to bank accounts or adequate financial institutions.
As a result, already disenfranchised communities are left prey to predatory financial practices. For instance, high-cost check-cashing services and payday loans. This lack of appropriate banking services, coupled with little to no financial literacy, easily widens the racial wealth gap. This in turn puts black families at a further financial disadvantage.
Who funds black-owned banks?
In general, banks get funding from their depositors. The money under holding by banks is for creating loans and other financial products. This in turn yields a return and generates more capital for these banks. Banks also make money from fees and other charges for services.
In 2020, Fortune cited that the combined capital of the top 20 black-owned banks was a meager $5.5 Billion in assets compared to the trillions of dollars held by other individual banks.
As a way to increase black-owned banking, there are several organizations making efforts. For instance in 2016, a social movement called "Bank Black". This movement brings awareness to the necessity of banking black. Organizers and supporters urge individuals to deposit at least $100 into a savings account with a black bank to provide capital for lending and other services that can empower black communities.
Large corporations and other banks have also been stepping in to support by providing capital to black banks so that more funding can get to minority communities.
Why bank black?
Ultimately, putting your money into a black bank is more than being fiscally responsible. It is helping in the fight against wealth disparities due to race. By putting your money in a black-owned bank that services black communities, they are able to provide business loans and other types of financing to local residents. As a result, it leads to more job creation, more home purchases, and communities are able to build economic power.
Nonetheless, before switching to a black-only bank, it's imperative that you still do your due diligence as you would with any other bank. Here are a few things to consider when choosing any bank.
FDIC insurance
One of the most important things to consider is if the bank is FDIC insured. This simply means that you have protection against a financial loss of up to $250,000 if something were to happen to the bank. Knowing that your money has this protection is extremely important when deciding where you want to place it.
Provides services & accounts that you need
Before committing to a bank, you want to be sure that they’ll be able to service all or most of your needs. For instance, if you’re a business owner, you may want to consider a bank that offers business loans. Consider what you need for your financial goals and select a bank accordingly.
Online & mobile banking capabilities
Today, online and mobile banking is a must for banks. As more and more people leverage technology to manage their money, this should be a strong factor in determining who you bank with. Do they have a mobile app? Can you deposit checks from your phone? Are you able to access your account online? These are all questions that you need to consider.
ATM access should be available
Often, one downside of local banks is inadequate access to ATMs. So if you are an avid traveler and need access to cash, this is something to consider. You may be charged a fee to use other ATMs to withdraw cash, which is one of the banking fees that you want to avoid.
Black-owned banks in the US
Over the last several years, the number of black-owned banks in the US has been on a decline. Currently, there are less than 20 active black-owned banks in the US. This does not include credit unions that exist to serve minority communities. Below are U.S. black-owned banks on a national and local level.
National/regional black-owned banks
Below is a list of the national and regional black-owned banks.
Citizens Trust Bank
Servicing parts of Georgia and Alabama, Citizens Trust Bank offers both personal, business, and commercial banking services. Additionally, they provide lending for homes and automobiles, personal & commercial loans, and credit cards. Locations in: GA, AL
Industrial Bank
Founded in 1934, Industrial Bank had a goal to support the communities within Washington, D.C. Decades later, it has expanded its reach to include locations in Maryland, New Jersey, and New York. Industrial Bank offers both personal and business banking services, including lending. Locations in: DC, MD, NJ, NY
OneUnited Bank
OneUnited Bank is one of the largest black-owned banks in the US. It has branch locations in Los Angeles, Compton, Miami, and Boston including other areas of Massachusetts. The bank, founded after combining several black-owned banks across the US, provides personal & business accounts and real estate lending. Locations in: CA, FL, MA
Unity National Bank
Unity National Bank was founded in 1963 and, after being charted in 1985, became the only black-owned bank in Texas. It currently services two locations in Texas and one in Atlanta, GA. The bank offers both business and personal banking and credit options. Locations in: TX, GA
Local black-owned banks
Here is a listing of local black-owned banks by state.
Alabama
Alamerica Bank
Alamerica Bank opened its doors in 2000 and services patrons of Birmingham, Alabama. The bank offers both personal and business accounts along with commercial and personal loans.
Commonwealth National Bank
Beginning its operations in 1976, Commonwealth National Bank has operations within Mobile, Alabama. It offers both consumer and business services.
Georgia
Carver State Bank
Originally founded as Georgia Savings and Realty Corporation in 1927. Carver State Bank provides commercial and consumer services for the Savannah, GA area.
Illinois
GN Bank
With its original mission being to provide mortgage lending to people of color in the 1930s, GN Bank has since expanded to include personal & business banking services. The bank continues its operations decades later in Chicago, IL.
Maryland
The Harbor Bank of Maryland
The Harbor Bank of Maryland has six branch locations serving the Baltimore, Maryland Metropolitan area. They offer checking, savings, time deposits, credit cards, debit cards, commercial real estate, personal, home improvement, automobile, and other installment and term loans.
Michigan
First Independence Bank
First Independence Bank was founded in 1970 and operates in two locations in Michigan. Their mission to be a beacon for capital accumulation for individuals and business entities by delivering financial services with an affinity for under-served and minority communities.
New York
Carver Federal Savings Bank
Carver Federal Savings Bank has seven full-service branches in New York City servicing Brooklyn, Manhattan, and Queens. They are also the largest African and Caribbean-American managed and publicly traded Minority bank in the U.S. Their mission is to provide customers with access to a full range of competitively priced banking solutions regardless of their income level.
North Carolina
Mechanics & Farmers Bank
With its inception in 1907, Mechanics & Farmers Bank is the second oldest minority-owned bank in the US. In addition to personal and business banking options, this bank also offers wealth management and financial planning services.
Oklahoma
First Security Bank & Trust
Located in Oklahoma City, Oklahoma, First Security Bank & Trust has a majority of African American ownership. Its services include personal & business savings and checking accounts and personal & business loans.
Pennsylvania
United Bank of Philadelphia
Founded in 1992, the United Bank of Philadelphia provides services to businesses and individuals in Philadelphia. The bank highlights that it has a special sensitivity to Black, Hispanics, Asians, and women.
South Carolina
Optus Bank
Optus Bank was founded over a century ago as Victory Savings and Loan. Its mission is to help close the racial wealth gap. The bank, located in Columbia, SC, provides banking and borrowing services for individuals and small businesses.
Tennessee
Citizens Bank
Citizens Bank began its operations as the first minority-owned bank in Tennessee in 1904. The bank services customers in Nashville and Memphis, TN. If offers bother personal and business banking options and loans.
Tri-State Bank of Memphis
Located in Memphis, TN. Tri-State Bank was founded in 1946 to help transform community conditions through financial and community services. The bank offers personal and business banking services and lending. They merged with Liberty Bank & Trust bank to create what is now the largest African American-owned financial institution in the U.S.
Wisconsin
Columbia Savings & Loan
Serving Milwaukee since 1924. Columbia Savings & Loan offers home, business, and personal loans. The bank also offers certificates of deposits and IRAs.
How to find black-owned banks near me
Many of the banks mentioned above have online banking available. As a result, you don’t have to be centrally located to take advantage of their services. You can simply open an account online without having to go to a branch location. Otherwise, if you would like to find a branch near you, begin by visiting the sites of the banks listed above. There, you will be able to see their branch locations.
Final thoughts
Black-owned banks play a vital role in the economic development of minority communities. They provide access to financial services and lending that may not always be available to people of color. Additionally, they focus strongly on imparting financial literacy in their communities. This is an important factor in helping to reduce financial inequality within the US.