Black-owned banks see surge in deposits
The rallying cry emerged after a summer that saw the nation, once again, engaged in discussions about race, policing, and inequality.
Instead of just taking to the streets after the deaths of black men at the hands of police and the subsequent murder of officers, protesters were urged — through hashtags like #bankblack and #blackdollarsmatter — to deposit $100 each into black-owned banks.
And for Boston-based OneUnited Bank, the nation’s largest black-owned bank, the impact of the “Bank Black” movement was almost immediate. The bank, which has struggled in recent years, added more than $10 million in deposits in less than a month, said Teri Williams, the bank’s president.
“The goal of the Bank Black movement is not just to get people to move their money but also to move their minds,” Williams said. “We’re one of the only communities that’s not circulating our dollars within our community. Just 2 percent of our dollars are spent in the black community.”
The bank started its own #bankblack challenge, holding events in Los Angeles and Miami, where it also has branches, and will hold an event at Jubilee Christian Church in Mattapan on Saturday.
Matthew K. Thompson, senior pastor at Jubilee, said he was unaware of the social media campaign that began in July, when he was celebrating his anniversary in Paris. But while he was in the City of Light, he said, he received a serendipitous message from God about the church becoming a steward of congregants’ fiscal as well as spiritual health. When Thompson returned home, he contacted OneUnited.
“I had read some things about them, some positive things and some negative things, but never had a personal, one-on-one, conversation with them,” Thompson said of the bank that loaned his father the money for Jubilee to purchase one of its first buildings.
Black-owned banks in Georgia and North Carolina are also seeing increased interest and activity as a result of the social media campaign that started in July, after the fatal shooting of two black men by police officers in Minnesota and Louisiana and the death of five Dallas police officers, allegedly killed in revenge by a black man. Black celebrities — such as Rapper Killer Mike and Solange Knowles (Beyonce’s sister) — urged people to express their frustration not by taking to the streets but by moving their money.
At Saturday’s #BankBlackBoston event, new accounts can be opened and there will be a talk on financial literacy. At OneUnited’s Miami event, 550 new accounts were opened, Williams said.
The windfall of new business marks a turnaround for an institution that drew widespread attention over the past few years after failing to repay a $12 million government loan it received after the recession and nearly shutting down a historic black Boston church after it failed to pay back a construction loan.
The profits of the Boston-based bank, which has about $630 million in assets, have tumbled over the years, with the bank making a profit of just $48,000 last year, according to the FDIC. And it has written just over half a dozen mortgage loans in the Boston area since 2014, while community banks of similar size in Massachusetts make that many loans in a month.
Black-owned banks across the country have struggled in recent years to keep pace with a changing world. Many only had one or two branches in urban areas with large black populations. As middle-class blacks began relocating to the suburbs, few black-owned banks followed.
The banks were also slow to adopt the technology that has become ubiquitous with banking today. And black-owned banks were hit particularly hard by the recession in 2008 and subsequent real estate crisis.
Over the years, the numbers have dwindled, going from 48 in 2001 to just 23 today, according to the Federal Reserve.
The Bank Black movement, however, is not new but one with a long history in the United States, according to James Jennings, professor emeritus of race, politics, and urban policy at Tufts University.
For decades, activists and civil rights leaders realized economics was destiny, arguing that without economic power, political and civil rights gains would be fleeting. Martin Luther King Jr., in his last speech in 1968, called for a “bank-in movement,” telling blacks in Memphis to “take your money out of the banks downtown and deposit your money in Tri-State Bank,” a black-owned bank.
Black-owned banks became cornerstones in African-American neighborhoods, lending money for homes, college funds, and businesses at a time when mainstream banks and the federal government often did not.
“Economic power and wealth infrastructure is something that is less easily taken away in the political arena than other things,” Jennings said. “Not that it’s a panacea, but being able to hire people, being able to make decisions about how a community is going to look based on the economic activities that are going on, that could be very, very powerful.”
William Michael Cunningham, a social investing adviser with Creative Investing Research, said that although the need for black-owned banks remains as real today as when they were established, many do not have the political capital to effect systemic change.
Since 2004, Cunningham said, investors have poured billions into banks. “And virtually none of that has been allocated to black-owned banks,” he said. “So as long as that’s the case . . . having an event on Saturday with a failing black-owned bank won’t make a long-term difference. It won’t make a long-term dent.”
Black buying power is about $1.1 trillion, according to Nielsen consumer reports.
In the Greater Boston area, the total median assets — home, car, retirement fund, life insurance — for a black family is $700; while the total median assets for a white family is about $256,000, said a 2015 study by the Federal Reserve Bank of Boston.
“The question becomes: How do you harness and channel the spending of that $1.1 trillion so you’re actually benefiting from it?” said Darnell Williams, head of the Urban League of Eastern Massachusetts, whose mortgage is with OneUnited. There is a multiplier effect that comes when money circulates through a community by helping to create jobs and establish wealth, he said. “As long as the product is available, why wouldn’t you want to support your own?”