Become an Ally
The NBA strongly endorses capital investments and other partnerships with minority owned and operated banks. Specifically, the NBA encourages allies in the fight against racial and economic injustice to consider the following priorities that would broadly benefit minority owned and operated banks and the communities they serve
Capital and Equity Investments
There are three major types of equity investments that help minority banks. Stock investments with the terms covered by investment agreements that provide maximum financial flexibility for minority banks are one. Another great equity investments are mission-driven grants. These grants can strengthen banks' capital and loan loss reserves and enable minority owned banks to increase their lending to small businesses, nonprofits, and individuals. They can also help banks make critical investments in technology infrastructure and provide additional financial education and technical assistance. All in all, equity funds that are focused on minority banks, MDIs, and CDFIs can help these financial institutions flourish.
Another way that banks create capital is through retained earnings. Allies can support minority owned banks and the work they do in their communities by introducing them into meaningful roles in their financial service supply chains. Our banks would greatly benefit from being able to provide lines of credit, participate in corporate debt transactions, and perform services in the payments stream, all of which would serve improve asset quality, boost earnings, and generate ongoing revenue that will support the sustainability of minority banks.
If minority-owned banks are able to increase equity capital, low-cost, long-term deposits will be needed to fund the credit needs of the communities our members serve. Of course, the NBA appreciates the recent expressions of interest in providing large-scale deposits to minority banks. Some members have need of low-cost deposits, but deposits are actually liabilities on bank balance sheets and serve to dilute the limited capital bases of many of our members. Because of this fact, increasing deposits without first increasing our capital bases can weaken our banks instead of strengthening them. For every $1 in equity, we will be able to take in roughly $10 in deposits and then be strengthened in our ability to provide this capital to our communities. We encourage well-meaning depositors to consider equity investments, followed by revenue opportunities, and then deposits.
Our strategic partners and advisory council are dedicated to helping us end the racial wealth gap.