How to Find Banks Financing Black and Hispanic Neighborhoods in Chicago [or any other city or zip]
In a piece published early June, City Bureau and WBEZ-FM 91.5 revealed the vast disparity in dollars lent for mortgages in white, Black and Hispanic neighborhoods in Chicago.
So, where can you put your dollars if you want to invest in banks that invest in Black and Brown communities?
Below are ways to use Mighty to help you answer this question.
There’s currently no way to see the racial demographics of all loan recipients for all loan types for every bank in the country, due to limitations in government data.
The City Bureau and WBEZ reporting was based on Home Mortgage Disclosure Act reports, which show the census tracts where banks make home loans.
Mighty’s platform is grounded in Call Report data, which outlines what money is in the bank and what happens to it (includes: bank's income statement, balance sheet, loan information, deposit information, investment information, and several other sections discussing aspects of the bank's viability). Home lending is a subset of this data. But information about borrowers (race, income) is not.
Below is data that is available and relevant from the Call Report, and tips for navigating it.
Mighty will be incorporating additional data reports — including HMDA data — in time.
We’re designing the Mighty platform so that you can learn as you go, and use data to better understand how banks invest in communities
KNOW YOUR BASELINE
Before you get started searching for banks, see what your money is doing in your bank(s) right now
OPTION #1 : Learn About Black + Hispanic Led Banks
SEARCH “CHICAGO” FOR BANKS THAT SUPPORT “AFRICAN AMERICAN EQUITY” OR “HISPANIC AMERICAN EQUITY”
THESE BADGES MEAN THE BANK IS BLACK OR HISPANIC-CONTROLLED
There are no banks with a branch in Chicago that are certified by the FDIC as being Hispanic-led.
WHAT THIS DATA TELLS US
This search will show us any banks with a branch in Chicago that are Black-led.
The Federal Deposit Insurance Corporation (FDIC) certifies banks as Black-led if they are majority owned (at the voting stock level) by Black Americans, or majority governed (at the Board of Directors level) by Black Americans and primarily serve Black communities.
Research has established that having people of a marginalized group in positions of power helps to elevate others within the same marginalized group. Hence, Mighty labels certified Black-led banks as banks that are advancing Black equity.
Just like the communities they aim to serve, Black-led banks face unique struggles that are compounded by historical challenges and lack of resources. In recent years, several Black-led banks in Chicago have been acquired.
THE LIMITS OF THIS DATA
Some banks that may qualify for the industry-recognized designation of being Black or Hispanic-led do not apply for this designation. This sometimes is due to the challenges that a Black or Hispanic-led bank may face in recruiting customers that are not Black or Hispanic and who may not be clear if they can bank there (they can).
Some banks have Black and/or Hispanic ownership and/or governance that is proportionate to the communities they serve, or more, but not a majority. There is no standardized reporting for this level of diversity within bank ownership nor governance, though a growing number of banks do include diversity reporting in an annual ESG/impact report, for example.
Mighty is working to enable banks to share this sort of data, voluntarily, with audiences via Mighty.
OPTION #2 : Learn About Banks Making 60% or More Of Their Loans in Economically Distressed Areas (Low- & Moderate- Income Communities, & Communities of Color)
SEARCH “CHICAGO” FOR BANKS THAT SUPPORT “AREAS OF GREATEST NEED”
SWITCH TO MAP VIEW TO SEARCH FOR BRANCH LOCATIONS IN A SPECIFIC AREA
THIS BADGE MEANS THE BANK FOCUSES THE MAJORITY OF ITS LENDING IN ECONOMICALLY DISTRESSED AREAS (LOW-INCOME COMMUNITIES + COMMUNITIES OF COLOR)
WHAT THIS DATA TELLS US
The U.S. Department of the Treasury certifies banks that have a primary mission of community development and direct at least 60 percent of financing to economically distressed areas, low income populations, or communities of color. These banks are known as Community Development Financial Institutions, or CDFIs.
Due to the lack of cash within the communities these banks look to serve, these banks often need to recruit deposits from outside their local area in order to generate lending to the extent that the local area requires.
THE LIMITS OF THIS DATA
Some banks that could qualify for the industry certification above do not apply for the certification. Banks that do apply for the certification usually do so strategically in order to signal to stakeholders the bank’s lending focus, and to qualify for industry funding targeting banks like these.
OPTION #3: Learn To Identify How Focused A Bank Is On Making Community Loans
FIND BANKS PUTTING A LARGER SHARE OF MONEY INTO COMMUNITY FINANCING THAN THE BANK INDUSTRY AVERAGE
This includes lending for housing, business, construction, households, farms, and public works, as well as public works securities financing.
If you’re interested in searching for banks that do more of a specific type of community lending — like for housing or small business — select that metric from the drop down menu and hit search.
THESE BADGES MEAN THE BANK FOCUSES MORE OF THE MONEY IN ITS BANK ON COMMUNITY FINANCING (TYPES OF FINANCING LISTED BELOW) THAN THE BANK INDUSTRY AVERAGE
WHAT THIS DATA TELLS US
Banks regularly report how much community financing they do as part of their public reporting requirements. This data is published by the Federal Financial Institutions Examination Council (FFIEC).
Community financing consists of lending for housing, business, construction, household consumption (like auto loans), farms, and public works. It also includes public works securities.
Mighty gives a bank a badge for its community financing activity if the bank invests more of its money (assets) in community loans (and in the case of public works, loans and securities) than the bank industry average.
THE LIMITS OF THIS DATA
Banks report the amount of community financing they do as a bank, overall, but don’t have to publicly disclose the location of each loan (some banks do complete HMDA and CRA reports, which do indicate the census tracts in which home loans and overall community financing loans by the bank were made, respectively; but not all banks report this).
To have some indication about where a bank is likely to focus its lending, Mighty suggests looking at the relative amount of deposits a bank keeps across its branches. Read more below.
OPTION #4: Learn To Identify Banks That May Be More Likely To Be Lending In Communities of Color
FIND BANKS THAT HAVE A MEANINGFUL AMOUNT OF MONEY BASED IN MAJORITY BLACK + HISPANIC ZIP CODES
We report where a bank bases its deposits (whether it’s across a few branches, or thousands). We use this as a reference point to suggest how one bank may focus its community financing across areas versus other banks.
It is approximated by where the bank has branches, and the relative amount of deposits the bank manages from each branch. (These deposits may come from people and organizations based near the branch, or across the country. Public reporting does not indicate the location of depositors with each bank).
Bank regulation encourages banks to meet the credit needs of communities in which they do business.
Banks with a larger share of their deposits in one zip code versus another may suggest that the bank is likely to proportionately focus its lending there and in neighboring communities.
Click through bank profiles to LEARN MORE and see deposit location detail by county.
Want to collaborate with us? Work with us? Need help navigating the data?
Thanks for learning with Mighty. Have a nice day!