Black-owned banks, credit unions and nonprofits play important roles in the effort to close the racial wealth gap in the U.S. Historically, these institutions have provided loans and financing to Black Americans who have often been excluded from wealth-generating financial tools like mortgages and business loans at other banking institutions. However, even in 2024, many Black communities remain underbanked.
Ahead, we share the legacy of Black-owned banks and how organizations like Southern Communities Initiative (SCI) are helping support Black-owned banks and businesses through community development financial institutions (CDFIs) and minority depository institutions (MDIs).
The Legacy of Black-Owned Banks in the U.S.
In 1865, the Freedman’s Savings Bank was established, becoming the first bank to offer financial services to Black Americans. In 1903, Maggie L. Walker became the first Black woman to charter a bank in the U.S. She served as president of Saint Luke Penny Bank in Richmond, VA, for thirty years and grew bank assets tenfold during her tenure.
During the height of the Civil Rights Movement, Civil Rights leaders urged their communities to support Black banking institutions. “[W]e’ve got to strengthen Black institutions,” said Dr. Martin Luther King, Jr. in his “I’ve Been to the Mountaintop” speech. “I call upon you to take your money out of the banks downtown and deposit your money in Tri-State Bank [a Black-owned bank]—we want a bank-in movement in Memphis.” In the 1970s, the number of Black banks in the U.S. peaked at 50 before dropping in subsequent decades.
Even though the number of Black banks has decreased in recent years, many Black-owned banks have been successful. Over the past few years, major professional sports franchises have chosen to work with syndicates of Black-owned banks on large loans. In 2020, the Atlanta Hawks refinanced their construction loan for Emory Sports Medicine Complex through a Black-owned bank. Major League Soccer also worked with a syndicate of Black-owned backs for a historic $25 million loan facilitated by the National Black Bank Foundation (NBBF).
How SCI Supports Black-Owned Banks, CDFIs and MDIs
The trailblazing work done by people like Walker and Dr. King, and institutions like NBBF, have inspired organizations to continue their endeavors, including SCI. SCI is a catalytic program for advancing racial equity across six Southern communities that represent more than 50% of the Black population in the U.S. Robert F. Smith co-leads SCI, where he works with local and national partners to help establish and upgrade banking infrastructure in the regions SCI supports, including:
- Greater New Orleans, Louisiana
- Birmingham, Alabama
- Charlotte, North Carolina
- Houston, Texas
- Memphis, Tennessee
- Atlanta, Georgia
SCI helps support businesses of Black and other underrepresented communities and boosts access to capital for communities that historically lacked access to resources. SCI’s racial equity priorities include modernizing Black-owned banks and Black-serving banking systems and increasing the capacity of MDIs and CDFIs to issue more capital to Black-owned businesses. Providing financial services to under-banked areas helps boost local business and increase homeownership, enabling these communities to create generational wealth.
In addition, SCI has partnered with over 90 organizations to support its mission of racial equity, including Grameen America, an organization focused on helping female entrepreneurs succeed.
For more information about Black-owned banks and SCI, follow Smith on LinkedIn.
