JPMorgan Chase – Liberty Bank CEO says JPMorgan investment will mean $150M more community lending | Business News
Liberty Bank CEO Alden McDonald said an investment from JPMorgan Chase that was announced Tuesday will mean his 49-year-old community bank will be able to make at least $150 million more in loans to the traditionally underserved customers his bank caters to.
The $16 million investment by JPMorgan Chase, the largest banking group in the country, is large for a bank of New Orleans-based Liberty’s size, with current assets totaling about $700 million.
“The significance of the investment is that it will allow us to grow our lending capability and expand and reach $1 billion in assets sooner than we would otherwise be able to,” McDonald said. “It will help us move the economic needle for homeowners and small businesses in the communities we serve.”
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In addition to New Orleans, Liberty operates branches in Baton Rouge; Detroit; Forest Park, Illinois; Jackson, Mississippi; Kansas City, Kansas; Kansas City, Missouri; Louisville, Kentucky; and Montgomery and Tuskegee, Alabama, according to its website.
The investment is in the form of “equity-like” instruments, including perpetual preferred stock — a kind of indefinite loan. It comes as part of a $30 billion initiative started last October by JP Morgan CEO Jamie Dimon aimed at “advancing racial equity.”
Liberty Bank is among the first four “minority depository institutions and diverse-led community development financial institutions” chosen by JP Morgan for an equity investment. The others are North Carolina-based M&F Bank, New York-based Carver Federal Savings Bank and Los Angeles-based Broadway Federal Bank.
The equity-type investment counts as so-called Tier 1 capital, which allows the banks to leverage that to borrow cheaply and lend much more to their customers.
JP Morgan’s initiative last October came after a summer of protest over the deaths of George Floyd and other unarmed Black men and women by police. The protests brought to the fore long-simmering questions of racial inequality across the board, including in financial services where studies have supported the fact that traditional banks have systemically discriminated against Black and other minority customers.
Launching the program, Dimon said that “systemic racism is a tragic part of America’s history,” adding that “it’s long past time that society addresses racial inequities in a more tangible, meaningful way.”
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As well as the direct investment in Liberty Bank, the JP Morgan program also channels funds to banks through New Markets Tax Credits, as well as an investment-share program that gives companies like Google a chance to contribute.
McDonald said that he has been doing business with JP Morgan well before last year’s resurgence of the Black Lives Matter protests and sees the latest investment as simply good business.
“We’ve done partnerships with JP Morgan before the Black Lives Matter sensitivities came about and they’ve been doing initiatives in the community long before it became popular,” McDonald said.
“We’ve been a profitable institution for a very long period of time, so (the investment) makes all the economic sense in the world,” McDonald said.
In New Orleans, the city’s economic development agency, the New Orleans Business Alliance has pointed out that 40% of small businesses in the city are Black-owned but only account for 2% of total sales receipts. They have identified lack of access to capital as one of the principal reasons holding Black-owned businesses back.