Like many other Black-owned financial institutions, Mechanics and Farmers Bank in Durham, North Carolina, reportedly the country’s second-oldest Black-owned bank — as it was founded 115 years ago — has struggled to remain open over the years.
But M&F Bank is receiving a much-needed shot in the arm now that it is the recipient of an $80 million investment by the U.S. Treasury. The investment is part of the agency’s Emergency Capital Investment Program. The program was established by the Consolidated Appropriations Act, 2021. Through the program, low- and moderate-income community financial institutions receive support so they can serve small businesses and consumers in their communities.
The program “will provide up to $9 billion in capital directly to depository institutions that are certified Community Development Financial Institutions or minority depository institutions to, among other things, provide loans, grants and forbearance for small businesses, minority-owned businesses and consumers, especially in low-income and underserved communities, that may be disproportionately impacted by the economic effects of the COVID-19 pandemic,” the Treasury’s press announcement read.
The investment for M&F Bank comes at a time the bank is trying to grow. While the bank had a record $343 million in assets as of March 31, 2021, according to its Investor Relations Report, before the investment, M&F’s capital was just $39 million.
Bank capital is the difference between a bank’s assets and its liabilities, according to Investopedia. The capital represents the net worth of the bank or its equity value to investors. The asset portion of a bank’s capital, meanwhile, includes cash, government securities and interest-earning loans (such as mortgages, letters of credit and inter-bank loans).
M&F’s capital now exceeds $119 million, according to company president and CEO James J. Sills III. “This investment is a testament to the strength of the M&F Bank franchise, the health and soundness of the Company, and its abilities to positively impact disadvantaged communities within its markets,” Sills said in a statement. “This investment will allow us to build on our recent successes by providing even more ways for us to support small businesses in our community.”
The ECIP investment will help the bank continue on its path of helping the Black community in the five major North Carolina cities it has branches: Durham, Charlotte, Raleigh, Greensboro and Winston-Salem.
The bank has fallen on hard times before. Following the Great Recession (December 2007 to June 2009), M&F nearly closed down. And in 2017, the bank reported its first net loss since its inception.
“We’re the only African American-owned bank in North Carolina,” Sills previously told The News & Observer, “and given that there are only about 17 African American-owned banks in the United States, we have to continue the mission of our organization to continue to provide access to capital…. Other banks do great, but they’re not focused on the same demographics or diverse populations that we are.”
The year 2021 was M&F’s most successful year in 2021, raising about $100 million in total assets.
According to Sills, he wants to take the company to $1 billion in assets, and to do so, the bank is focused on its expanded digital platforms, fostering financial literacy and improving its technologies to facilitate easier customer transactions.
“The key is that we continue what we were founded to do,” Sills said. “…The bank is here to work with everybody in the community. We have customers of all ethnicities, and we’re focused on small business owners. We really want to help everybody grow their business.”