Support Is Increasing for More Black-Owned Banks

Support Is Increasing for More Black-Owned Banks

There are more than 40 million African-Americans living in the U.S., but less than 1 percent of all federally chartered banks are black-owned. That’s a disappointing fact that several banking organizations, universities and nonprofit advocacy groups are working hard to change. 

NerdWallet recently analyzed Federal Reserve data on banks owned by minority groups to discover that, although 13.1% of the U.S. population is African-American, only 0.35% (24 in total) of U.S. banks are black-owned.

That finding is strongly contrasted by African-American’s participation in the broader economy. Some 7% of all U.S. government awards to small businesses went to black-operated companies in 2012. That’s still not up to par with the demographics of the country as a whole, but it is far more representative than the dearth of black-owned banks in America would suggest.

The number of black-owned banks also lags behind the number of financial institutions owned by Asian-Americans, who made up 5.1% of the total U.S. population of about 314 million people in 2012. Asian-Americans own 40 banks nationwide, according to the Federal Reserve.

Hispanics or Latinos, who represent 16.9 percent of the general U.S. population, control just 15 banks, according to the government.

The 24 African-American owned banks in operation today represents a sharp drop from the 30 in operation 10 years ago. The number of black-owned bank reached its peak in 2007, at 41 black-owned institutions.

Despite this decline in raw numbers, the proportion of all U.S. banks owned by African-Americans has remained relatively steady in recent years thanks to a consolidated financial industry. Though not once in the past 10 years have black-owned banks represented more than 1% of the entire industry, it seems things haven’t gotten significantly worse.

Still, nearly 20% of African-Americans have no connection to the traditional banking system. Some experts see that as both a cause for concern, and an opportunity for growth.

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Source: NerdWallet.com

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