Report finds MDIs key to closing racial wealth gap

Assets at minority depository institutions grew from $246 billion in 2010 to $329 billion in 2022, with a significant amount of that growth occurring between 2019 and 2021, according to a new report on MDIs by the National Bankers Association Foundation. The report also found that nearly two in three MDI branches (62%) are located in zip codes with poverty rates higher than the national average, compared to 38% of non-MDI branches.

There were 147 MDIs in the U.S. as of the fourth quarter of 2022, with more than 1,500 branches, according to the report. The median MDI branch is located in a zip code that is 49% nonwhite. A quarter of branches are located in zip codes where the MDI is the only physical bank present, with MDIs the only branch available to 3.5 million people.

MDI assets grew by 24% during the COVID-19 pandemic, which was true for the banking industry as a whole, according to the report. The growth in assets was driven in part by the Treasury Department’s Emergency Capital Investment Program, which invested $3.1 billion in the sector, as well as by private sector investments driven by racial equity in the aftermath of the murder of George Floyd.

“Our analysis demonstrates that MDIs continue to serve a crucial role in increasing financial inclusion for underserved individuals and communities,” the report said. “As mission-driven banks, MDIs are key institutions in the broader work of closing the racial wealth gap, particularly through creating opportunities for homeownership and entrepreneurship.”


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