Opening Remarks
of
Vice Chairman Martin J. Gruenberg
Minority Depository Institutions National Conference
Miami Beach, Florida
August 2, 2006
Good morning. I am pleased to welcome you to the FDIC's national minority depository
institutions conference. The FDIC, together with our colleagues from the Office of the
Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), the Federal
Reserve, and state banking departments, hope that this conference will serve as a
valuable learning and networking opportunity for all of us. We also hope that it will
promote an open dialogue on the unique challenges and opportunities faced by minority
banks today. I would like to recognize John Carter, Director of the FDIC's San Francisco
Regional Office, and Anthony Lowe, Deputy Director of the FDIC's Dallas Regional
Office, for the leadership they provided in organizing this conference.
Importance of Minority Banks in the U.S. Financial System
Minority banks have long performed a vital role in the American financial system by
serving the market needs of their local communities. Indeed, African-American owned
banks date back to 1888 when the first such minority institutions opened their doors in
Richmond, Virginia and Washington, D.C. The history of minority banks in the United
States is one of remarkable dedication, resilience, and perseverance. The founder of
one of these first minority banks, W. W. Browne, is said to have run his bank out of his
own home for its first three years. Later, during the three-year Panic of 1893, the worst
economic crisis in the United States at that time, his was the only bank in Richmond,
Virginia, to remain open on a normal operating basis.
More recently, we've witnessed the determination and resilience of minority banks in the
aftermath of Hurricane Katrina. As many of you know, three banks in the hardest-hit
areas of New Orleans are minority owned. In fact, the leaders of these three institutions
are here with us today. I'd like to recognize Alden MacDonald, President and CEO of
Liberty Bank and Trust Co., Howard Brooks, President and CEO of United Bank and
Trust, and Charles Teamer, Chairman of Dryades Savings Bank. These individuals
have been true leaders not just for their institutions, but for the entire New Orleans
community as it struggles to recover from the impact of the hurricane.
Minority Banks Today
Today there are 190 minority banks promoting the economic development of minority
and underserved communities in the United States and its territories. These institutions
operate over 1,700 offices in 32 states and territories.
of
Vice Chairman Martin J. Gruenberg
Minority Depository Institutions National Conference
Miami Beach, Florida
August 2, 2006
Good morning. I am pleased to welcome you to the FDIC's national minority depository
institutions conference. The FDIC, together with our colleagues from the Office of the
Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), the Federal
Reserve, and state banking departments, hope that this conference will serve as a
valuable learning and networking opportunity for all of us. We also hope that it will
promote an open dialogue on the unique challenges and opportunities faced by minority
banks today. I would like to recognize John Carter, Director of the FDIC's San Francisco
Regional Office, and Anthony Lowe, Deputy Director of the FDIC's Dallas Regional
Office, for the leadership they provided in organizing this conference.
Importance of Minority Banks in the U.S. Financial System
Minority banks have long performed a vital role in the American financial system by
serving the market needs of their local communities. Indeed, African-American owned
banks date back to 1888 when the first such minority institutions opened their doors in
Richmond, Virginia and Washington, D.C. The history of minority banks in the United
States is one of remarkable dedication, resilience, and perseverance. The founder of
one of these first minority banks, W. W. Browne, is said to have run his bank out of his
own home for its first three years. Later, during the three-year Panic of 1893, the worst
economic crisis in the United States at that time, his was the only bank in Richmond,
Virginia, to remain open on a normal operating basis.
More recently, we've witnessed the determination and resilience of minority banks in the
aftermath of Hurricane Katrina. As many of you know, three banks in the hardest-hit
areas of New Orleans are minority owned. In fact, the leaders of these three institutions
are here with us today. I'd like to recognize Alden MacDonald, President and CEO of
Liberty Bank and Trust Co., Howard Brooks, President and CEO of United Bank and
Trust, and Charles Teamer, Chairman of Dryades Savings Bank. These individuals
have been true leaders not just for their institutions, but for the entire New Orleans
community as it struggles to recover from the impact of the hurricane.
Minority Banks Today
Today there are 190 minority banks promoting the economic development of minority
and underserved communities in the United States and its territories. These institutions
operate over 1,700 offices in 32 states and territories.
Minority banks are growing, in some areas of the country at a faster rate than non-
minority banks. Overall, the number of minority banks has grown over 20 percent since
2000, while FDIC-insured institutions as a whole declined 11 percent. The combined
assets of today's 190 institutions amount to $188 billion compared to $74 billion six
years ago. This reflects an increase of more than 150 percent over that period
compared to a 50 percent increase in the assets of all FDIC-insured banks.
Today's minority banks are an increasingly diverse group of institutions. Of today's 190
minority banks, 38 percent are Asian or Pacific Islander owned, 24 percent are African-
American owned, 23 percent are Hispanic-American owned, and 10 percent are Native
American or Alaskan Native owned.
Moreover, as the population of the United States becomes increasingly diverse, the
importance of minority banks and the role they play in the U.S. financial system should
continue to increase. There is perhaps no better location in the United States that
demonstrates this than right here in Miami, Florida. A significant trend in the increased
diversity of our minority institutions is reflected in the increasing importance of Hispanic-
American owned banks, which grew in number from 28 to 44 banks from year-end 2000
to March of this year, a 57 percent increase. Hispanic-American owned banks now
account for almost a quarter of minority banks in the U.S.
Challenges Faced by Minority Depository Institutions
Clearly the growth and diversity of minority banks is a success story.
But we are here today not only to celebrate the success of minority banks but to discuss
the challenges they face and identify the opportunities that will carry forward their
development and growth.
I don't need to tell you about the unique challenges facing your institutions, particularly
the smaller ones.
Minority banks must compete with larger financial institutions for both business and a
talented work force. Due to their commitment to serve local communities and ethnic
populations, some minority banks, particularly those that are smaller, may have difficulty
diversifying geographical and credit risk exposures and avoiding concentration risk.
Some minority institutions are also challenged with operating in an economically
depressed market area, which can affect their asset quality, earnings, and capital
performance. Minority banks also face the challenge of maintaining their minority
identity and primary customer base while attempting to expand their products, services
and overall market presence.
Minority banks more often have to evaluate the need to inject additional capital or face
merger with another institution in order to ensure continued business expansion and
survival in a highly competitive marketplace. In addition, as with other financial
institutions, minority institutions have to guard against poor accounting and internal
minority banks. Overall, the number of minority banks has grown over 20 percent since
2000, while FDIC-insured institutions as a whole declined 11 percent. The combined
assets of today's 190 institutions amount to $188 billion compared to $74 billion six
years ago. This reflects an increase of more than 150 percent over that period
compared to a 50 percent increase in the assets of all FDIC-insured banks.
Today's minority banks are an increasingly diverse group of institutions. Of today's 190
minority banks, 38 percent are Asian or Pacific Islander owned, 24 percent are African-
American owned, 23 percent are Hispanic-American owned, and 10 percent are Native
American or Alaskan Native owned.
Moreover, as the population of the United States becomes increasingly diverse, the
importance of minority banks and the role they play in the U.S. financial system should
continue to increase. There is perhaps no better location in the United States that
demonstrates this than right here in Miami, Florida. A significant trend in the increased
diversity of our minority institutions is reflected in the increasing importance of Hispanic-
American owned banks, which grew in number from 28 to 44 banks from year-end 2000
to March of this year, a 57 percent increase. Hispanic-American owned banks now
account for almost a quarter of minority banks in the U.S.
Challenges Faced by Minority Depository Institutions
Clearly the growth and diversity of minority banks is a success story.
But we are here today not only to celebrate the success of minority banks but to discuss
the challenges they face and identify the opportunities that will carry forward their
development and growth.
I don't need to tell you about the unique challenges facing your institutions, particularly
the smaller ones.
Minority banks must compete with larger financial institutions for both business and a
talented work force. Due to their commitment to serve local communities and ethnic
populations, some minority banks, particularly those that are smaller, may have difficulty
diversifying geographical and credit risk exposures and avoiding concentration risk.
Some minority institutions are also challenged with operating in an economically
depressed market area, which can affect their asset quality, earnings, and capital
performance. Minority banks also face the challenge of maintaining their minority
identity and primary customer base while attempting to expand their products, services
and overall market presence.
Minority banks more often have to evaluate the need to inject additional capital or face
merger with another institution in order to ensure continued business expansion and
survival in a highly competitive marketplace. In addition, as with other financial
institutions, minority institutions have to guard against poor accounting and internal