Black Banks Largely Trail Asian and Hispanic Banks In Number And Assets — Hurting Their Ability To Boost Black Wealth
New data show Black banks fall extremely short in number and assets compared to banks owned by other ethnic groups across the United States.
Exactly 19 Black-owned banks had $7 billion in assets of the first quarter of this year, based on the “Mid-Year 2022 Minority Bank And Thrift Review” by Creative Investment Research. In contrast , 77 Asian-owned banks had $172 billion in assets and 33 Hispanic-owned banks had $141.6 billion in assets during the same time.
Simultaneously, 17 women-owned banks had assets of just over $9.75 billion.
The analysis reveals Black banks hold just roughly 2% of the $338 billion-plus for all ethnic banks examined. In contrast, Asian banks hold around 51% and Hispanic banks have about 42% of those assets.
“Black banks will never be meaningful at this level,” says William Michael Cunningham, an economist and owner of Creative Investment Research in Washington, D.C.
“They will always have limited impact.”
Assets at Black banks have grown since the George Floyd murder and COVID-19’s introduction to the world two years ago. Though relative to bank assets owned by other ethnic groups, not much has changed, Cunningham says.
The findings show Black banks lag peer banks in the key operating areas even as some of the nation’s largest banks have pledged billions of dollars to help African American banks grow in the past two years. The lower figures also mean it will most likely take Black banks more time to trim the nation’s wealth gap for Black individuals and entrepreneurs, something much needed in the community.
The solution is to meaningfully increase the number and assets of Black banks, Cunningham says.
“You need at least 50 new Black banks with $1 billion in assets each.” He added that could potentially happen if the Federal Reserve provided the capital and invited new Black participants into the sector.
Cunningham offered a $50 billion solution to the Black banking crisis in an opinion piece.
He tells BLACK ENTERPRISE the fresh research showed Asian and Hispanic banks have grown to their size because they have access to capital from people in their native countries. And he claims they don’t face the same elevated level of racial dissemination Black banks face, diminishing their ability to raise capital.
“Nothing will change for Black banks without the same kind of extra capital effort that the Fed made to prop up white banks after the 2008 financial crisis and the 2020 pandemic,” Cunningham says.
