Showing posts with label PNC. Show all posts
Showing posts with label PNC. Show all posts

Thursday, March 25, 2021

Black Banking Startup Raises $40 Million

According to a press release, "Greenwood, the digital banking platform for Black and Latino individuals and business owners, today announced it has closed $40 million of Series A funding from six of the seven largest U.S. banks and the top two payment technology companies: Truist, Bank of America, PNC, JPMorgan Chase, Wells Fargo (Its still time to Clean House at Wells), Mastercard, and Visa."

The investor group also includes the largest Hispanic bank in the US, Banco Popular. (Looks like the crisis has finally forced the realization that, as MLK noted, "we must 'live together as brothers or perish together as fools." )

FIS, TTV Capital, SoftBank Opportunity Fund, Lightspeed Venture Partners and All-Pro NFL running back Alvin Kamara were also listed as investors.

For a startup to receive funding from six of the seven largest firms in its industry is significant. The key question is why and what will they do with this funding?

Greenwood started out of the BankBlack movement, an effort to redress years of neglect and discrimination.

We have observed a remarkable increase in the performance of minority bank stock: these stocks (blue line) have outperformed the S&P 500 (green line).




The S&P 500 Index (green) returned 74.73% over the past year. The Minority Bank portfolio (blue) returned 112.27% over the same time period. 

At the Federal Reserve Bank of Kansas City in 1994, I suggested the Federal Reserve purchase mortgage-backed securities (MBS) originated by Black banks as part of open market operations. The Fed, then under Alan Greenspan, refused, reversing course only in 2008, when large non-minority banks got into trouble.

We still believe the Fed will need to create a Black bank liquidity pool totaling at least $50 billion by conducting repo and reverse repo transactions, purchasing Treasury, MBS securities (and/or SBA PPP loans) from Black banks, asset managers and fintech firms with a record of actually making loans to the Black community.

Greenwood may very well be one of these. We will see.

Wednesday, May 19, 2010

ShoreBank's Rescue Gives Community Lenders Hope

Summary version from The American Banker Newspaper. Wednesday, May 19, 2010. Story by Robert Barba.

Sources said early Tuesday that the struggling $2.3 billion-asset lender had secured $140 million in capital commitments, well exceeding the $125 million it needed to become eligible for a $75 million investment from the Treasury Department.

Though most of the companies on the roster have been solid supporters of community development financial institutions, Goldman Sachs Group Inc. and General Electric Co.'s GE Capital were two newcomers. They also were among the biggest investors in the group, kicking in $25 million and $20 million, respectively.

Another headline investor in ShoreBank is Citigroup Inc., at $20 million. Others include Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., U.S. Bancorp, Morgan Stanley, Northern Trust Corp. and PNC Financial Services Group Inc. Also on board were State Farm, the Ford Foundation and the John D. and Catherine T. MacArthur Foundation.

Though the commitments could signal renewed interest in helping out institutions serving the neediest communities, William Michael Cunningham, a social-investing adviser and the founder of the minority bank fund MBF LP in Washington, said the unit of ShoreBank Corp. is the only struggling bank in the country likely to secure such aid.

"This just shows the power of their brand," Cunningham said Tuesday. "It is so impressive that they were able to get these guys to pony up. For other institutions … it would have been an impossible task."


ShoreBank, which has been described as the darling of President Clinton, has deep political ties, including with the Obama administration. Several sources, however, rebuffed speculation that the investments stemmed from political pressure. For instance, Bank of Montreal's Harris Bank said in an e-mail that it has "long recognized and supported ShoreBank's role in the Chicago community and can confirm that we are also assisting with their recapitalization effort."

Still, Cunningham said implicit political pressure, as well as reputational pressure, was probably exerted.

Whatever the investors' motivations, Cunningham said, without the investment, ShoreBank would not have survived. "If you are ShoreBank, you don't care if it is out of good public relations or if they are angels; they are doing it," he said.

For a year ShoreBank's credit problems have been eating away its capital. At March 31, it had $360 million in nonperforming assets and its total risk-based capital ratio had dwindled to 3.36%, leaving it critically undercapitalized. Rumors had begun to swirl in Chicago that regulators were starting an auction for its assets.

Analysts have said that a $200 million investment would be enough to solve ShoreBank's capital issues and give it room to absorb losses in its credit portfolio.

Copyright, 2010, American Banker Newspaper/Source Media.