History of Black Owned Banks

One of the first Black banks came out of the Freedman's Bureau. In an attempt to transition newly freed enslaved Africans, Congress and President Lincoln established the Freedman’s Bank on March 3, 1865.

The Freedman's Bank aided Black Americans in financial literacy. When the Emancipation Proclamation was signed in 1863, Black Americans owned less than 1 percent of the country’s wealth.

Unfortunately, today that percentage has barely changed according to educator and historian, Dr. Claude Anderson of the Harvest Institute and author of “Black Labor, White Wealth: A Search for Power and Economic Justice.”

In fact, the Institute of Policy Studies reports that 37% of Black families have zero or negative wealth, meaning their debt is equal to or greater than their assets, compared to only 15.5% of white families facing similar circumstances.

A bank's primary role is to take deposits and make loans. But a 2021 Brookings Institute found that Black borrowers and depositors face serious challenges when attempting to access services.

Investing in Black-owned banks can provide much-needed resources and services to help reverse these inequalities.

Frequently asked questions

What is the largest Black-owned bank?

The largest Black-owned bank in the United States is OneUnited Bank. It is headquartered in Boston, Massachusetts, and has branches in California, Florida, and Georgia. As of 2021, OneUnited Bank had assets of approximately $1.1 billion and was recognized as one of the top 30 largest Black-owned banks in the country.

How many Black-owned banks is there?

Currently, there are 21 Black-owned banks across 23 States providing much needed financial services to minority communities. The term “Black-owned bank” is used to refer to a financial institution that is at least 51% owned by individuals from the Black community or a majority of the board of directors is minority and the community that the institution serves is predominantly minority according to the Federal Deposit Insurance Corporation.

What is the best Black-owned bank?

Our overall top pick for the best Black-owned bank is OneUnited Bank due to its online access to people throughout the U.S. and variety of checking, savings, credit card, personal and mortgage loan products.

What is the oldest Black-owned bank?

In 1889, The Savings Bank of the Grand Fountain, United Order of True Reformers was founded by William Washington Browne in Jackson Ward, Richmond VA. The first day’s deposits totaled $1,269.28 ($33,476.29 today). The bank thrived despite the Financial Panic of 1893, and was the only bank in Richmond to maintain full operation.

What designates a bank as Black-owned?

According to the Federal Deposit Insurance Corp. (FDIC), a minority depository institution (MDI) must be: (1) 51 percent or more of the voting stock is owned by minority individuals; or (2) a majority of the board of directors is minority and the community that the institution serves is predominantly minority.

Why Black owned banks are important

Black owned banks play a major role in underserved communities. Lack of access to traditional banking means Black Americans depend more on costly alternative financial services that include money orders, check cashing services, payday loans, pawn shop loans, auto title loans, and rent-to-own services.

These types of alternative financial services typically far outnumber traditional banking institutions in Black American communities.

Black borrowers and depositors have limited access to banking services including deposits, residential mortgage credit, and business loans. For generations, Black-owned banks have provided credit, capital and financial services to low- and moderate-income people and businesses that have historically been underserved by the financial services industry.

In fact, the majority of business loans to churches, small businesses, and community organizations in Black American communities are provided by Black owned banks.

Black owned banks offer an option for the unbanked

As a group, Black Americans have the highest unbanked and underbanked numbers even though recent numbers from the FDIC show a slight improvement. Unbanked people waste a lot of money with check cashing stores, prepaid cards and payday lenders.

ChexSystems and Early Warning Services are often the reason Black Americans are barred from opening a bank account. Banking mistakes happen that can cause the need for second chance banking options. Black owned banks like OneUnited Bank offer an online second chance checking account anyone can open.

New Black-Owned Banks on the Horizon

Recently, Fintechs like Greenwood opened online to offer banking services specifically designed to meet the financial needs Black and Latino customers. In May 2023, Greenwood announced its acquisition of Kinly, a Fintech concentrating on building generational wealth for Black America and its allies. These companies are the two largest fintechs focused on enhancing personal finance options for the Black community.

In February 2023, Redemption Holding Company (RHC) announced a group of Black investors, announced a plan to purchase Holladay Bank and Trust, a Utah-based bank. This would be the first time in US history that an existing commercial bank will become a Black-Owned Minority Depository Institution (MDI).

Adelphi Bank opened its doors in May 2023 as Ohio's first Black-owned bank.

Final thoughts

The numbers of Black owned banks have dwindled over the years but the positive impact on Black American communities remains. These institutions offer services that Black communities need to thrive, such as financial literacy, home ownership, building wealth, and fixing credit issues.

By circulating more dollars in a predominately Black community along with practicing collective economics, Black-owned banks help improve the wealth gap.

Assets Source: Federal Deposit Insurance Corp. “Minority Depository Institutions Program, First Quarter 2023.”