Timeless lessons from the first black woman to start a bank

In a summer that otherwise will be long remembered for racial conflict and the tearing down of divisive symbols of the past, the recent dedication of a statue in Virginia to the historic banker Maggie Walker was better timed than any of its organizers could have imagined.

Walker founded St. Luke Penny Savings Bank in 1903, a time when institutionalized prejudice prevented most African-Americans from borrowing money. Walker understood the importance of having a black-owned bank in a black community to keep money in their own hands and gain economic empowerment.

A towering statue of Walker as she lived — her glasses pinned to her lapel, a checkbook in hand, eyes looking firmly into the distance — was unveiled in July, on her 153th birthday, in Richmond to commemorate her contribution to black banking, businesses and the local community. Her accomplishments cannot be understated.

“What she is most famous for is becoming the first African-American woman to charter a bank,” said Benjamin Anderson, a park guide at Maggie L. Walker National Historic Site. “The bank started in Richmond, Va., in 1903, [was] started by an African-American, [and was] started by a woman. This is the South. This is the former capital of Confederacy. This is long before women can vote.”

Walker might be disappointed to find out, as the events in Charlottesville and their aftermath remind, that racism endures and modern U.S. society has not put the past in its place.

However, she might have been encouraged to know that the campaign for economic justice she waged at her local level is still viable, if not reborn.
The #BankBlack movement, which just celebrated its first anniversary, is a modern-day version of what Walker did over 100 years ago, and more effort is needed to uplift black banks and communities.

Over 100 years later, members of the black community are moving their money back to black-owned banks to protect the economic interest of black people.

“Maggie Walker is smiling at us right now,” said Teri Williams, the president and chief operating officer of OneUnited Bank in Boston, which has been one of the movement’s leaders and beneficiaries. “She would think of it as we’re following in her footsteps to achieve what she would like to have seen.”

Legacy in action

St. Luke Penny Savings Bank issued loans to qualified black customers at a fair rate to encourage economic independence and thrift in the black community. The Jackson ward neighborhood where the bank was located was once dubbed America’s “Black Wall Street,” with thriving banks, theaters and stores.

“Let us put our moneys together,” Walker said in 1901. “Let us have a bank that will take the nickels and turn them into dollars.”

The bank is now owned by Premier Financial Bancorp and has been renamed the Consolidated Division of Premier Bank. Under the leadership of Darryl Winston, the Consolidated Division’s president, it retains customers who are familiar with the branch and continues to serve the local black community.

“[Walker’s] legacy still stands here,” said Winston, who says he is deeply inspired by Walker’s story. “The bank today is open to everyone. We don’t discriminate, and we can’t discriminate.”

With a lot of merger and consolidation, the number of black-owned banks has fallen from 55 in 1994 to 23 today. One big problem surrounding black banks is size and scale. Nine of the remaining black-owned banks have less than $100 million in assets, and none of them have more than $700 million in assets, according to Federal Deposit Insurance Corp. data.

The #BankBlack movement started after a call by Michael Render, a rap artist professionally known as Killer Mike, for the black community to put its money into black-owned banks and credit unions a year ago. It has swept the nation and bolstered the 23 black-owned banks left in the country.

The $661 million-asset OneUnited bank saw a surge in deposits. It added $6.7 million in deposits in the second half of 2016, according to Federal Deposit Insurance Corp. records. Its number of depositors has increased over 30% in the past year, Williams said.

The significant increase in deposits fueled loans to minorities. Over 70% of OneUnited Bank’s lending takes place in minority community, and the bank is serving the black community by lending to them, Williams said.

“We put our money where our mouth is,” Williams said. “This is really about uplifting the black community and getting the community to see how economic justice and social justice are intertwined. I think that’s what Maggie Walker saw at her time.”

The #BankBlack movement provided a good opportunity for banks to introduce black people to the financial mainstream, and that’s what Walker wanted to do in her time — to raise consciousness about getting into the financial system the right way, said Evelyn Smalls, president and CEO of United Bank of Philadelphia.

The $54 million-asset United was the first bank founded by an African-American woman since Maggie Walker, roughly 90 years later. The bank was started by Emma Chappell in 1992 with a mission to support small businesses in the local community.

“I think she [Walker] would really want people to think about developing a sustainable relationship with financial institutions. It really has to be an ongoing relationship if you’re really serious about supporting the growth and sustainability of these banks,” Smalls said.

United Bank of Philadelphia developed new relationships with people in the community through the movement, and it is thinking about utilizing those relationships to support businesses and provide affordable loans and financial services to people throughout the community, Smalls said.

Challenges ahead

The #BankBlack movement may have slowed the decline of black banks, but it hasn’t reversed the overall direction, said William Michael Cunningham, the founder of Creative Investment Research and a longtime advocate of black banks.

“Some of these recent efforts, such as #BankBlack, have the potential to be really powerful, but they are disorganized and segregated,” Cunningham said. “Unless something significant happens, and by significant, I mean a significant pile of capital for these black banks, I don’t think black banks have a future.”

A study by Creative Investment Research showed that only four or five African-American-owned institutions will remain open in 2028. A major reason for the decline is a lack of capital and higher volatility of incomes from people that black banks serve.

Smalls admitted that black banks need to continue to think about their business models and create capital to have real growth. But she was upbeat about the prospects for black banks.

“We would like to think the future is bright. I know overall it’s been suggested that community banks, including minority banks, are very important to the financial system.”

These banks will look to endure and evolve, like the story of Maggie Walker and the ways in which people interpret its contemporary meaning. Walker's legacy stands tall, not far from ground zero of a summer of discontent in 2017, amid hopes that she will ultimately outlast the vestiges of the system she challenged.