JPMorgan Chase is investing another $60 million into minority-led depository institutions and community development financial institutions, more than doubling a commitment it made earlier this year.
The nation’s biggest bank by assets said Tuesday that it has made equity investments in 10 institutions, adding to the $40 million it invested in four Black-owned banks in February.
Citizens Trust Bank in Atlanta, one of the recent recipients, intends to use the investment to scale up existing businesses, including small-business lending, first-time-homebuyer counseling and down payment assistance, according to Citizens Trust President and CEO Cynthia Day.
“We anticipate increasing our small-business lending significantly over the next couple of years,” she said.
Day added that she hopes the $638 million-asset community development financial institution will be able to grow to over $1 billion in assets over the next year or two as a result of the investment.
Other recipients in JPMorgan’s most recent round of investments are: Southern Bancorp in Arkansas; Sunstate Bank in Florida; Carver State Bank in Georgia; the Harbor Bank of Maryland; First Independence Bank in Michigan; Optus Bank in South Carolina; Industrial Bank in Washington, D.C.; and Rio Bank and Unity National Bank, both in Texas.
JPMorgan is also offering customers of those financial institutions free access to Chase ATMs beginning in November.
While the New York company will become a shareholder in the small banks, it will have no say over how they use the investments, said Andrew Guida, managing director of the financial institutions group at JPMorgan Chase’s commercial bank. Previous recipients have used the funds to make moves like opening new branches or engaging in dealmaking.
JPMorgan Chase also said that an investment vehicle for minority depository institutions that it launched seven months ago has surpassed $5 billion of assets. That product, dubbed the Empowering Change money market share fund, is meant to help minority depository institutions to expand their revenue sources.
“This really provides them a sustainable way to diversify the revenue base while creating capital over the long term,” Guida said. He added that such products are increasingly in demand from institutional investors, many of which have their own diversity goals to meet.
The investments in minority depository institutions are part of a broader $30 billion pledge that JPMorgan Chase made last year to advance racial equity. A number of large and regional banks made similar commitments following George Floyd’s murder and the ensuing social upheaval last year.
Minority-led banks and community development financial institutions have sometimes struggled to raise capital simply because many investors aren’t familiar with them, Day said. She expressed hope that the increased visibility from the JPMorgan investments will encourage other large financial institutions and investors to take a second look.
“It’s just human nature not to want to invest in something you don’t understand,” Day said. “We’re getting a lot of opportunities to tell our story and show how we’re being part of the solution.”
