Friday, June 26, 2020

Black Bank Survey

We are conducting a customer satisfaction survey on Black Banks

To participate, see:

Questions include:

1. How frequently do you utilize Black-owned Banks?
2. What is your overall satisfaction level when dealing with Black-owned banks? (5 starts - highest).
3. Have you had success in getting  loans, etc. from Black-owned Banks?
4. Are/were you worried about the financial stability of Black-owned banks?
5. Do you believe that Black-owned banks prioritize your needs?

For a list of Black banks, see:

See: The country’s last black-owned banks are in a fight for their survival.

2011 - Crisis - The Current State of #BlackBanks 

2016 - Creative Investment released an analysis of the Black banking sector, drawing on 30 years of research. Recent efforts to increase deposits in Black banks are admirable, but the number of Black banks has fallen from 55 in 1994 to 23 in 2016. - The State of #BlackBanks #BankBlack 

Thursday, June 25, 2020

Is capital haul too much of a good thing for Black-run banks? By John Reosti, American Banker Newspaper, June 24, 2020

An effort encouraging investors to buy stock in Black-run banks could create new challenges for
the leaders of those companies.

The Buying Black movement, which took root last week, led to sharp increases in the shares of
companies such as Broadway Financial in Los Angeles, Carver Bancorp in New York and M&F
Bancorp in Durham, N.C.

An influx of new investors could increase pressure to improve shareholder returns, while any
strategic effort designed to generate higher profits could also draw a backlash. At the same time,
markets are fickle — most shares in Black-run banks have fallen significantly in recent days as
some existing shareholders cashed out.

Indeed, Broadway's biggest investor — who had been pushing for the company's sale —
abruptly sold all of its stock after the value of its holdings soared.

Leaders of Black-run banks contend that what they need more than capital is more partnerships
with bigger banks to extend their reach to underserved customers.

Broadway has faced all of those challenges since Capital Corps bought a nearly 10% stake from
the Treasury Department in May 2019.

Capital Corps, a mortgage lender founded by former Banc of California CEO Steven Sugarman,
briefly mounted a proxy challenge after offering to buy Broadway. Sugarman claimed that the
$504 million-asset company had strayed from its mission of lending to minority communities.
After facing stiff resistance from Broadway’s management and board, Sugarman opted to sell
the shares. Capital Corps liquidated its stock at roughly $2.62 a share, or nearly double what it
paid the Treasury.

The saga at Broadway serves to illustrate why minority-run banks are often reluctant to court
new investors.

Black-run banks “like the status quo,” said William Michael Cunningham, CEO of Creative
Investment Research in Washington and a longtime proponent of Black-owned banks.
“They don’t necessarily want a lot of attention, and they’re super-conservative, in part because
they don’t have a sufficient asset base" to grow aggressively, Cunningham added. "They really
have to guard every penny.” (As the links below show, we forecast the decline in Black Banks.)

See: Crisis - The Current State of Black Banking. By: Creative Investment Research, Inc. June 14, 2011. 

The Current State of Black Banking. Aug. 12, 2016 

William Michael Cunningham announces support for USBC/Liberty Bank #BankBlack Credit Card. Jan. 23, 2017

See our Black Bank Survey.

 For a list of Black banks, see:

Instead, Black-run banks are eager to strike partnerships to access more customers, said Kenneth Kelly, CEO of First Independence Bank, a $265 million-asset Black-owned bank in Detroit. The bank's $102 million portfolio is split between commercial real estate and one- to four-family mortgages.

Establishing partnerships between African American banks and larger institutions has been a
priority for the Treasury Department. It established a mentor-protégé program that has helped
several Black-owned banks, including First Independence and the $108 million-asset Unity
National Bank in Houston, gain a share of fee income tied to processing financial transactions.
“We’re open to partnerships with larger banks that could allow us to deliver” more retail products,
Kelly said. “But that’s not where our business model is right now.”

Broadway, like First Independence, is limited by its lack of scale.

Balance sheet constraints, exacerbated by rising home prices around Los Angeles, have
influenced Broadway's business model. The company focuses more on lending to multifamily
developers than residential mortgages, said CEO Wayne-Kent Bradshaw.

More than three-fourths of Broadway’s $430 million loan portfolio was concentrated in
multifamily lending at March 31, according to the Federal Deposit Insurance Corp. Mortgages
made up less than 15% of total loans.

“Working poor people don’t have the opportunity to buy houses,” Bradshaw said in response to
Sugarman’s criticism.

Funding five- to 25-unit apartment buildings in minority communities “is damn near God’s work,”
Bradshaw added. “We’re very committed to the low- and middle-income community.”

Previous efforts designed to help Black-owned banks have delivered fleeting benefits.

The 2016 Black Money Matters movement, led by the rapper Michael Render, led to an initial
uptick in deposits. The lift was short-lived; deposits at Black-owned banks have fallen steadily in
recent years, according to FDIC data.

Total assets held by Black-owned banks have fallen by nearly 30% since peaking at $6.8 billion in

Capital Corps said in a letter included with Tuesday’s regulatory filing that it had offered to
provide Broadway with “at least $1 million in pro bono services and technical assistance” to help
the bank make more mortgage, consumer and small-business loans.

While he did not address Sugarman's offer, Bradshaw said he "was very glad" Capital Corps
cashed out. “They bought at a discount and sold for quite a premium.”

Shares of Black-owned banks are typically thinly traded and subject to wild fluctuations. While
they can shoot up quickly with an influx of investors, they can also plummet if shareholders like
Capital Corps decide to sell.

Carver’s stock, which rose sixfold last week to reach $12.20 a share on Friday, is down 28% this
week, ending Tuesday at $8.78 a share. While M&F’s shares increased by 57% last week, ending
Friday at $5.10, they closed at $3.50 on Tuesday.

Broadway’s stock got as high as $7.23 a share on Friday. It ended Tuesday at $2.56.
To be sure, some stocks have continued to rise, including IBW Financial, the parent of Industrial
Bank in Washington, which is up 9.3% this week after rising by 35% a week earlier. Shares of
Harbor Bankshares in Baltimore have quadrupled since June 12, closing at $2 a share on Tuesday.
Lenders need reliable long-term investment, said Kelly, who chairs the National Bankers
Association, the trade group representing African American banks.

“We really don’t need episodic support as much as we need systemic support,” Kelly said.
“I hope what we’re seeing in the high level of interest is something that is sustainable and is
systemic moving forward," he added. "We do serve a unique population, and it should be part of
the American Dream.”

John Reosti, Reporter, American Banker Newspaper.

Wednesday, June 17, 2020

American Corporate Responses to Black Lives Matter now total $4.628 billion.

American Corporate Responses to Black Lives Matter now total $4.628 billion.

See our crowdfunding campaign...Help make it happen for American Corporate Responses to Black Lives Matter on @indiegogo

Tuesday, June 16, 2020

$60 Billion in Additional SBA Grant Funding

On June 15, 2020, the SBA announced they were restarting the EIDL program with an additional $60 billion in funding. 

Independent contractors, freelancers, and gig workers can receive a $1,000 grant which you do not have to repay. Small businesses can apply for a grant of up to $1,000 per employee. Maximum $10,000. Loans from $150,000 to $2,000,000 may also be available.

See the video at right for more information.

Friday, June 5, 2020

The Current Crisis

Five months ago, our nation was made host to a virulent, deadly visitor, brought to this continent surreptitiously. A new virus, uncovered in China, unsparing in occurrence.

Now we are engaged in a great experiment, testing whether any nation with fearsome, monstrous divisions based on race and wealth, can survive in the face of such a disease. We have come to give our testimony while we still can, in an increasingly authoritarian environment. We do so to support the survival of all who participate in this society. We are writing not as people of wealth and privilege but as ordinary people, like the medical and public safety workers who gave their lives that this nation might live. As citizens of the world, we have an obligation to speak out. As citizens of the US, we have the right to do so.

We offer an independent viewpoint, having gained insight from American history – in this case, Black Wall Street/Tulsa, Oklahoma. Our perspective helps us better understand the exact nature of the problem the country now faces. Of course, in a larger sense, we know that monetary impacts pale in the face of human pain and suffering. This mandates a focus on the human, not the economic.

The world will not notice, nor remember, what is written by common people of limited means, without the ability to correct the current condition. Our goal is to simply suggest that this situation should not be used to argue for the inherent inferiority of those most impacted. We are dying at elevated rates not due to some ingrained defect. Rather, the defect resides in a racist, bigoted and biased system for the allocation of resources, including police and health care resources. This crisis offers an opportunity to correct this misallocation.

As an organization, Creative Investment Research has long been dedicated to this unfinished work. We call upon you, the reader, to insure that these deaths ultimately have meaning —and that democratic government, tasked with providing fairness and equity, will not cease to exist.

Tuesday, June 2, 2020

The Intersection of ESG & Covid-19, Lana Feteiha, Impact Investing Intern

COVID-19 has forever altered standard business practices.

Prior to recent events, Environmental, Social, and Governance efforts have been an afterthought. But the global pandemic demonstrates the fundamental role that ESG plays in corporate investments. The presentation focused on three main points: corporations’ social responses and disclosures to stakeholders regarding ESG factors, how investors incorporate ESG factors into business decisions, and how this crisis will affect what happens next.

The first speaker, Martin Whittaker, is the CEO of Just Capital; a non-profit organization that strives to create a more just market in America through the collection of data. Whittaker discussed the importance of corporate social responses in today’s climate by addressing the Environment and Social aspects of the crisis. COVID-19 has resulted in hazardous working conditions, so companies should be prioritizing the wellbeing of their employees. According to Whittaker, the proper treatment of workers is pivotal for investors. Therefore, companies that protect the health and wellbeing of their employees are more resilient. Whittaker applauded the corporate social response of some, stating that the humanity of business has shone through during the crisis, as companies continue to support stakeholders as we slowly start to reopen.

The head of International and Corporate Strategy for BlackRock, Mark Wiedman, spoke next. He detailed the importance of implementing sustainable business strategies, citing that this year, 90% of them have outperformed their conventional counterparts. This statistic is significant because it notes a distinct correlation between ESG efforts and a company’s success. Moving forward, Wiedman believes that corporate strategy, risk management, and human management will be the long-term focus of businesses. Therefore, improved and accurate disclosure of ESG efforts should be a priority.

Katherine Collins, the head of Sustainable Investing at Putnam Investments, expanded on the importance of ESG reporting and data. She acknowledged that the improvement of data has allowed companies to provide more real time data. However, there is still a gap between businesses reporting ESG, and businesses that are not. This gap not only exists because companies are at different points in making their operations sustainable, but also because some companies are disclosing irrelevant information. For the purpose of investing, Collins recommended that ESG reports be tailored to each corporations’ main function. In doing so, ESG reports will more accurately reflect on the efforts of each individual business. This is important because companies shifting to sustainable outlines will attract larger groups of investors. As we shift away from crisis mode, Collins recommends financing sustainable practices and decision making as a long-term solution. Although these efforts are not typically noticeable on a surface level, these types of investments payoff overtime.

The last speaker was John Goldstein, the head of the Sustainable Finance Group for Goldman Sachs. He spoke about ESG as a whole, claiming that some may get caught up in which letter of the acronym is more important. Goldstein sets the record straight by declaring Environmental, Social, and Governance of equal significance since all three components determine the financial performance of a business. He predicts that the key focus of sustainability will be strategic clarity, data, and making information accessible and relevant.

The COVID-19 crisis brought the foundational cracks in certain corporations to the forefront,
emphasizing the importance of ascertaining ESG requirements in order to remain resilient.

Monday, June 1, 2020

Maybe the U.S. Small Business Administration (SBA) wasn’t best choice to deliver PPP benefits to minority businesses.

"Committed though the government might be too small and minority-owned contractors, from the contractor standpoint making a living is never easy. Now they’ve got the COVID-19 situation. For what the landscape looks like for minority-owned businesses, Federal Drive with Tom Temin turned to Creative Investment Research economist and principal William Michael Cunningham."