FDIC: Minority Bank Performance Remained Sound in 2019

Financial performance among minority depository institutions remained sound through the end of 2019, according to the FDIC’s annual report on preserving and promoting MDIs. Full-year net income at the 144 MDIs fell 4% from the previous year, primarily due to rising interest and non-interest expenses. Net operating revenue grew by 6.2%. Loan balances 30-89 days past due rose by 15.7% in 2019 over 2018, driven by single-family mortgage, consumer and business loans, the FDIC said, but non-current and net charge-off balances declined.

However, more than 14% of MDIs were unprofitable in 2019, compared with 3.81% for all community banks, largely driven by the markets many MDIs serve. “The unprofitable institutions generally are smaller institutions, many of which are located either in urban areas that experienced significant economic distress during the financial crisis or smaller rural markets with economic challenges,” the FDIC noted.

The report also documented FDIC efforts in 2019 to strengthen MDIs, including research, events, technical assistance and seeking to maintain MDI status when resolving an failing bank (as happened with the only MDI to be closed in 2019).

In April, the American Bankers Association announced its own strategic partnership with the National Bankers Association to promote the health and well-being of MDIs. Building on the existing membership overlap among ABA and NBA members, the partnership is designed to enhance collaboration on policy issues, expand NBA member access to ABA training and events and deepen participation in the Treasury Department’s MDI mentor/protégé program.