The Potential and Limits of Black-Owned Banks

Brief

The Potential and Limits of Black-Owned Banks

March 17, 2020

Abstract

To help policymakers and other stakeholders better understand the role and trends of Black-owned banks, we evaluate the most recent comprehensive data. We find that the typical Black-owned bank is a community bank that serves predominantly Black communities in many ways. Black-owned bank lending helps small businesses, nonprofits, as well as Black homebuyers. They have always maintained their focus on predominantly Black communities, increasing their mortgage lending to these communities and to Black borrowers during the housing crisis, while other institutions backed off. These banks are typically willing to serve their communities and generally lend in greater shares to moderate- and low-income communities in ways that may protect diversity in these neighborhoods. However, these banks have declined significantly in numbers and likely face headwinds that extend beyond those of the community banking sector as a whole.

This brief was updated on March 18, 2020. We updated figure 8 on page 10 to correct the name of a bank that we mislabeled on the previous map (Citizens Trust Bank) and to add it to the list of banks below. The updated map also consolidates the bank locations to include only headquarters. The previous map included indicators for all bank branches.

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