The last remaining African American-owned bank in the Washington area got a boost last month when it received $1 million from the Congressional Black Caucus Foundation.
The foundation purchased $1 million worth of certificates of deposit from Industrial Bank as part of a new initiative to help make loans more readily available to underbanked communities and minority-owned business.
“Minority and women-owned banks have been an important source of credit and other financial services to minority communities,” said A. Shuanise Washington, president and chief executive of the Congressional Black Caucus Foundation.
Minority-owned banks have been particularly hard hit during the recession. Many are smaller institutions with less than $100 million in assets that have struggled to stay afloat amid recent financial turmoil.
There were 54 African American-owned banks in 1994. Today there are 21, according to the Federal Deposit Insurance Corp.
“The crisis had a devastating effect on the economy of the country, but it had even more of an impact on the minority community,” said Rep. Chaka Fattah (D-Pa.), the chairman of the foundation.
The investment, among the most substantial given to African-American banks in recent years, reflects a renewed interest among national organizations that are looking to invest in minority-based businesses, said William Michael Cunningham, who helps area businesses find socially responsible ways to invest their money.
“Certainly there is a growing trend here,” Cunningham said. “It is yet another example of how communities are finding resources for dedicated causes, in this case African-American banks.”
A total of five African American-owned banks received $1 million a piece. The other beneficiaries were Seaway Bank and Trust in Chicago, Liberty Bank and Trust in New Orleans, City National Bank in Newark and M&F Bancorp in Durham.
Eighty percent of the funds have been dispersed. The remaining $1 million will be distributed among the five banks in the first quarter of 2014, Washington said.
This is the first time the foundation has invested in African-American owned banks, Fattah said. The organization generally focuses its efforts on advancing the role of African Americans in politics and public policy.
“Given financial needs in the black community, a community that experienced a 54 percent decline in wealth as a result of the great recession, this focus is entirely justified,” Cunningham said.
Industrial Bank, which was founded in Washington in 1934, has $350 million in assets. The bank has eight branches — six in the District, and two in Prince George’s County.
“These deposits provide the liquidity for Industrial Bank and others to make loans in the hardest-hit communities across the nation,” B. Doyle Mitchell Jr., president and chief executive of Industrial Bank, said in a statement.
“We’ve seen investments like this used effectively before,” Cunningham added. “After the Los Angeles riots [in the 1990s], for example, many church groups increased their investments in the inner cities.”