By Dan Brown, Chris Lewis and Avery Weisel
ABA DataBank
Access to capital varies significantly across the United States, with areas of the country that face persistent financing gaps. Minority depository institutions are critical to filling those gaps. The FDIC definition requires an institution meet one of two criteria:
There are currently 151 U.S. MDI banks — defined as a bank for which either 51 percent or more of its voting stock is owned by minority individuals or for which a majority of its board of directors comprises minority individuals and that serves a predominantly minority community — that collectively hold $366 billion in assets. A recent National Bankers Association report underscores MDIs’ impact, revealing that MDI assets have grown 90% over the last decade and play a crucial role as consumer lenders in the communities they serve. With this significant increase in assets, this staff analysis will more closely examine MDI bank branches, the communities they serve, and explore how they address financing gaps for consumers and small businesses.
The changing profile of the MDI sector
Figure 1 showcases the change in the number of MDIs in the United States over the past 10 years. While the longer-term trend mirrors the broader industry’s themes of consolidation and lack of de novo bank formation, the number of MDIs has risen steadily since the pandemic.
Figure 1: MDI institutions over time, 2014-2024
Source FDIC.
MDIs have also experienced significant asset growth over the last several years, as shown in Figure 2. As the chart illustrates, assets of South Carolina MDIs have jumped 750%; Colorado 204.2%; New Mexico 158.1%; and Wisconsin 132.1%. It should be noted that the reduction in MDI assets in Kentucky and Tennessee resulted from mergers with MDIs in other states, so overall MDI assets were not affected.
Figure 2: Asset growth of MDIs by state, 2019-2024
Source: FDIC, ABA calculations.
The geographic distribution of MDIs, including branches, closely aligns with minority population centers, with key clusters concentrated in metropolitan areas like New York City, San Francisco, Los Angeles, Houston and Miami. Texas hosts the most MDI headquarters and branches, with 21 MDIs and 302 branches, strategically positioned across both northern metropolitan areas like Dallas-Fort Worth as well as southern regions with significant minority populations.
Figure 3: Locations of MDI branches 2025
Source: FDIC, ABA calculations.
While many MDI branch locations follow expected demographic patterns, Oklahoma jumps out. Despite having only 12 MDI banks within the state of Oklahoma, the state hosts 64 branches spread across a wide geographical area. Notably, 10 of these MDIs are Native American-owned. Since Oklahoma is home to one of the largest American Indian populations, these Native American-owned MDIs serve as critical economic catalysts, providing essential financial services to communities across the state.
How MDIs meet financing gaps
As Figure 4 illustrates, more than two-thirds of MDI branches are located in low-, moderate-, or middle-income communities.
Figure 4: MDI bank branch by area income level
Source: FDIC, census, ABA calculations.
Figure 4 corroborates similar findings by the National Bankers Association, revealing that MDI lending areas exhibit higher poverty concentrations compared to the general United States.
MDIs are key drivers of small business capital access. According to the 2024 Q4 FDIC Call Report, MDIs maintained about $160 billion in outstanding small business loans, including roughly $36 billion in commercial and industrial loans, and $124 billion in commercial real estate loans (Figure 5).
Figure 5: Outstanding small business loans held by MDIs, 2020 Q4
CRE loans include construction and development loans, loans secured by multifamily properties and loans secured by nonfarm residential real estate. Source: FDIC Call Report.
MDIs’ small business lending impact is further illustrated through Small Business Administration 7(a) lending. In FY2024 alone, MDIs originated roughly 2,500 SBA loans totaling $2.2 billion—a remarkable increase of over 250% from pre-Covid figures in 2019, when MDIs distributed approximately $616 million in SBA loans.
Figure 6: Top 7(a) loan industries for MDIs in 2024
Source: SBA 7(a) data.
Hotels and motels led MDI 7(a) lending with $460 million, followed by gas stations and convenience stores at $366 million, alcohol retailers at $197 million and full-service restaurants at $196 million.
Conclusion
MDI bank branch locations strategically serve both key population centers and communities with outsized minority populations. These institutions deliver critical capital to consumers and small businesses, functioning as economic engines in their local communities. Future research will explore additional MDI business lines and borrower characteristics.
Dan Brown is senior director, economist, banking and financial services at ABA. Chris Lewis is VP, MDI/CDFI at ABA. Avery Weisel is senior director, banking and economic research policy at ABA. For additional research and analysis from the ABA’s Office of the Chief Economist, please see the OCE website.
