In light of recent industry events, the National Bankers Association wants to assure consumers that your money is safe with minority banks.
Minority depository institutions are very different from both SVB (Silicon Valley Bank) and Signature Bank, which had high concentrations in crypto deposits and volatile venture capital. Minority banks are not exposed to riskier asset classes and have the capital and strong liquidity to best serve consumers and small businesses.
“If your’re looking for a place to bring your deposits and have greater impact, bring your deposits to minority banks” said Nicole Elam, president and CEO of the National Bankers Association.
“The Biden-Harris Administration, FDIC, and Federal Reserve worked hard this weekend to make sure that these bank failures are the exception, not the rule, and that all Americans can continue to have confidence in our banking system. I also applaud bipartisan leaders in Congress for keeping stakeholders informed about how hard-earned deposits are being kept safe,” said Robert James II, chairman of the National Bankers Association and president/CEO of Carver Financial Corporation.
The National Bankers Association is the nation’s leading trade association for the country’s minority depository institutions (MDIs). MDIs have always focused on safety and soundness as a part of our conservative, relationship-based business model. We continue to monitor SVB’s impact on large corporate deposit concentrations, fintech, tech companies, and larger financial institutions that have partnerships with MDIs or who have made investments in MDIs.
MDIs are in the strongest position ever to support their customers.
Here’s why:
- Traditional Banking Model with Diverse & Secure Assets: MDIs are diversified in terms of their assets, predominately focused on well-collateralized loans, and are not exposed to riskier asset classes. Unlike both SVB and Signature Bank, MDIs have very limited exposure to the venture capital industry and crypto.
- Well-Capitalized and Strong Liquidity: MDIs are in the strongest position ever. The sector is exceptionally well capitalized, enjoys substantial liquidity overall, and has grown by 33 percent over the last three years in total assets. Nearly $4 billion in new, permanent capital has flowed to MDIs and currently, the median MDI common equity ratio is 16.4 percent versus 14.8 percent for non-MDIs.
- Positioned for Impact: 77 percent of MDI branches are in areas with a higher average share of minorities compared to 31 percent for all FDIC-insured depository institutions. According to a Dallas Fed Study in 2022, MDIs originate almost 40 percent of their mortgages to minority borrowers, versus only 10 percent by other banks. Additionally, MDIs originate 30 percent of small business loans to low- to moderate-income communities in comparison to 20 percent at community banks and 24 percent at large banks. Customer deposits are not only extremely safe in an MDI but are far more likely to have a positive impact in the community.
