M&F Bancorp in Durham, N.C., has outsize ambitions for the capital it recently received from a number of larger banks — including a sweeping upgrade of its digital capabilities.
Social distancing measures put in place a year ago to combat the spread of coronavirus hastened the use of digital banking among the Black-run bank’s clients, highlighting a need for improvements.
Much of the work is needed on the commercial side. About 90% of the $309 million-asset bank’s loans are to small and midsize businesses.
“We are behind the curve here from a digital banking perspective,” said James Sills III, M&F’s president and chief executive. Expanding digital commercial loan application offerings is “very high on our priority list.”
The company has more funding to make those fixes.
In the wake of the social unrest touched off by the killing of George Floyd in police custody in 2020, M&F has brought in $18 million in capital from Bank of America, Wells Fargo, Citigroup and JPMorgan Chase. The infusions, intended to help
Since the onset of the pandemic, digital and ATM transactions have increased 30% at M&F, a change that will likely endure, Sills said. Older clients who had preferred handling routine banking business at branches have adapted to more efficient digital services.
The funding will also help M&F, an active 7(a) lender, offer a wider variety of loans backed by the Small Business Administration, including SBA Express loans.
M&F is exploring ways to use technology to make underwriting more efficient and, by extension, allow the bank to make more loans. The bank also plans to renovate its seven branches — spread across several North Carolina cities — to shift from being teller-heavy offices to ones where bankers can be more like consultants.
Corporate America, big banks included, has become more active in addressing racism and income inequality, with the Floyd episode and ensuing protests highlighting the needs of underserved communities. Companies are taking a special interest in
“It was a very horrific situation,” Sills said of Floyd’s death, “but it is translating into a lot more people asking what else can they do to reduce the wealth gap and create an inclusive and fair society. … I’ve been in community banking for 30 years, and I’ve never seen a change like this.”
Though the number of Black-owned banks has been cut in half in the past 20 years, with 18 remaining, they have made important gains in the last year.
Assets at those banks increased by 14% in 2020 from a year earlier to $5.6 billion, the first increase in seven years, according to the Federal Deposit Insurance Corp.
At M&F, assets rose by 16%, and loans and deposits both grew. The company’s earnings increased by 10% to $1.1 million.
Several groups are courting investors to form banks to largely focus on the
BossUp Bank co-founder James Lindsay said in a March interview that there is enough demand among minority groups to support more banks and online lenders. BossUp plans to work with retail partners to launch an ATM network and work with existing banks to provide loans and financial services to underserved populations.
“If anything, we need more and more minority-owned banks,” Lindsay said.
