I had the privilege of attending the 6th Annual Minority Depository Institution in Miami Beach this past week. Although that sounds like a mouthful, it was simply an opportunity for regulatory agencies, minority bankers, and supporters to share best practices. It was exciting to see an entrepreneurial spirit, so quintessentially American, alive and well in our industry - and it's growing.
Today there are approximately 240 minority owned banks in the country with an ever-growing list of de novo banks and projects focused on establishing themselves as their community's primary financial catalyst. Their missions often follow a common theme of profitable banking through empowerment of local business and people in their community through the delivery of intelligent and innovative financial services.
These institutions are incubating viable solutions to the tough challenges like predatory lending and the foreclosure calamity, to charting a healthy path for those historically considered un-bankable, to countering the devastating impacts of Katrina. Our agenda was packed with examples of institutions taking a lead in making economic citizenship more attainable throughout the country.
One example presented by Alden McDonald, President of Liberty Bank in New Orleans www.libertybank.net, was his establishment of small dollar loan program focused on countering the crushing fees of payday lenders and check cashiers. These services, commonly used by folks in low-to-moderate income areas, often charge rates 300 - 400% more than your common retail bank. His approach of ‘doing good while well' demonstrated to the audience that a bank could attract customers, improve their financial condition, and convert them into profitable long-term relationships.
Starting any new endeavour can be a challenge. Starting a new bank can be outright daunting. It takes inspiration, courage, and commitment. Something I witnessed time and time again at this conference. It is something I continue to see in the folks I work with in their pursuit of building smart banks. Inevitably the consistent answer to the question I always ask, "Why do you want to start a bank?" is the same, "I want to bring quality banking services to my community where the ‘big box retail banks' are not cutting it. I know I can do a better job of serving my community's banking needs"
According to Thomas Curry, a director of the FDIC, one challenge it appears that all banks have is that net interest margins are at their lowest level in 15 years. This is the same for both minority and non-minority banks. However, where the income differences appear is in non-interest income; for some reason minority banks seem to have less non-interest income. As minority banks focus on increasing their non-interest income, profit levels will raise, thus becoming stronger, more competitive financial institutions.
It is that drive that I look for when an individual or group approaches me and ask me to help them organize a new bank, help them submit their application, or raise capital so they can get their doors open and their communities growing.
 This information came from a presentation he delivered at the Minority Depository Institutions Interagency National Conference, held July 31st - August 2nd, 2007 at Miami Beach, FL.