Skip to main content

FDIC selling controlling stake in Black-owned bank. The American Banker Newspaper. By John Reosti. December 01, 2021

The Federal Deposit Insurance Corp. plans to auction off a controlling stake in Birmingham, Alabama-based Alamerica Bank on Wednesday, a move that could result in Alamerica passing out of minority ownership.

While a preliminary bidder’s list included several large Black-owned banks, it also included some non-minority bidders. Founded in January 2000, the $15.4 million-asset Alamerica is the smallest of the 17 remaining Black-owned banks in the United States.

According to William Michael Cunningham, CEO at Creative Investment Research and an authority on Black-owned banks, the FDIC-owned shares were used as security for a $4 million loan from Silverton Bank. They passed into the FDIC’s possession following Atlanta-based Silverton’s failure in May 2009.

The FDIC “certainly has the right to do this,” Cunningham said Tuesday, but he called it troubling that Alamerica might wind up outside the minority banking sector as a result of the auction.

“If Alamerica is no longer Black-owned, that could damage perceptions of Black banks from a social and cultural perspective, especially given the bank's location in Birmingham, called Bombingham during the Civil Rights era due to the 50 dynamite explosions that occurred in the city during this time span. Another factor damaging perceptions is the supposed support for Black banks following the death of George Floyd. This situation leads some to question the validity of that support,” Cunningham said.

Alamerica has struggled with controversy and poor performance in recent years. In March 2019, Donald Watkins, the bank's founder and largest shareholder, was convicted of wire and bank fraud in connection with a scheme that involved the theft of more than $10 million from a group of investors and Alamerica itself. According to the U.S. Attorney for the Northern District of Alabama, Watkins used a straw borrower to obtain $900,000 in loans from the bank.

At the same time, the bank has reported losses each year since 2017, including a total of $635,000 lost through the first nine months of 2021.

Matthew Morris, who has served as Alamerica’s interim CEO since December 2020, said the bank's staff was taking a “business-as-usual” approach ahead of the Wednesday auction.

“It’s hard to know what will happen, but we’ll still be serving our customers whoever ends up being the owner,” Morris said Tuesday. An FDIC spokesman declined to comment.

The number of Black-owned banks has been declining steadily for decades. As recently as 2001, there were 48, but the number dropped to 17 as of June 30 this year. In April, Broadway Financial Corp. in Los Angeles and CFBanc Corp. in Washington, D.C., closed a merger of equals creating the nation’s largest Black-owned banking company. The $1.1 billion-asset company kept the Los Angeles company's name.

In November 2019, the Black-owned City National Bank of New Jersey in Newark failed. Its assets and deposits were assumed by the Black-owned Industrial Bank in Washington, D.C.

To counter the downward trend, organizers in Columbus, Ohio, are planning to raise $20 million to open a Black-owned bank there. 

(NOTE: Alamerica's stock was purchased by Black-owned Carver Financial, located in Georgia, for $1.1 million.)

Edited by William Michael Cunningham.

Popular posts from this blog

Maternal Health Financing Facility for Black Women: A Solution to an Urgent Problem

Maternal mortality is a significant issue in the United States, with Black women disproportionately affected. Research conducted by the Centers for Disease Control and Prevention (CDC) has shown that Black women are more likely to die from pregnancy-related causes than their white counterparts. However, the issue is not new, and despite the increasing amount of data available, the disparities have remained unaddressed for far too long.  Creative Investment Research (CIR) is among the organizations that believe there is a solution to the problem. Through our proposed impact investing vehicle , the Maternal Health Financing Facility for Black Women (MHFFBW), we aim to tackle the mortality gap and support Black women during childbirth, which will, in turn, benefit their communities. The Facility, based on legally binding financing agreements containing terms and conditions that direct resources to individuals and institutions capable of addressing supply-side conditions at the heart of

Projected Impact of Gun Laws on Corporate Profits in Texas

More Fortune 500 companies are located in Texas than in any other state. Texas successfully used low taxes and minimal regulations as bait to recruit companies like Tesla and Oracle. The state promoted these “advantages” in ads highlighting their “free-market” environment and criticizing the "tax and spend policies of liberal leadership" in Democrat-run states. Four million people migrated to Texas over the past ten years. Our economic models predict a reversal, however. State of Texas corporations on the Fortune 1000 list generate $2.2 trillion in revenue, $158 billion in profit. They have a market value of $3.8 trillion and employ 2.5 million people nationwide. We continue to believe this increased corporate presence in Texas imposes a tax on the nation as a whole. Texas allows anyone 21 or older to carry handguns without training or licenses, and maintains lower gun purchase age limits. Beyond the recent abortion bill, which allows people to sue those who "aid and abe

BRICS Summit 2023: Navigating the Transformation of Global Finance

Recent developments in the global financial landscape have captured the attention of the finance world, promising a new era of integration, transformation, and collaboration. Amidst the excitement, however, it is essential to acknowledge the formidable obstacles that stand in the way of realizing these ambitions. The 2023 BRICS Summit , slated to convene amidst this shifting landscape, is poised to be a significant juncture that could have profound implications for the future of international finance. The resurgence of Bitcoin, marked by an impressive, if smaller, year-to-date price surge, has underscored its enduring relevance. Similar concerns surround the exploration of central bank digital currencies (CBDCs). The UK's digital pound initiative, while forward-looking, raises questions about stability, security, and privacy and potential economic power imbalances. The notion of a BRICS digital currency, potentially extended to include several countries, reflects a desire to chall