State Street Corp. in Boston has achieved its goal of placing $100 million of deposits into minority banks and community development financial institutions by the end of this year.
The custody bank selected three more lenders — Liberty Bank & Trust in New Orleans, Native American Bank in Denver and Sunrise Banks in St. Paul, Minnesota — to receive a portion of the $100 million of stable, low-cost deposits it pledged earlier this year, it said in a press release.
That brings the total number of recipients to eight. Optus Bank in Columbia, South Carolina, and M&F Bank in Durham, North Carolina, were the first MDIs to receive deposits as part of State Street's commitment, which it
The latest investment is "a significant milestone in [State Street's] commitment to foster economic inclusion and drive positive change in communities across the U.S.," Kimberly DeTrask, the company's treasurer, said in the press release. "State Street is proud to continue to leverage its resources to help create opportunities and empower communities for the long term."
State Street did not disclose the total amount of deposits placed at each bank. The $338.5 billion-asset firm also did not say how much interest it will collect from placing deposits at minority banks and CDFIs.
At Liberty Bank & Trust, the partnership with State Street "will help address community inequities and advance our financial inclusion and economic empowerment mission," Todd McDonald, president of the $1.1 billion-asset Black-owned bank, said in the press release.
Placing low-cost deposits into historically undercapitalized MDIs and CDFIs, which provide credit and other banking services to underbanked neighborhoods, is one way that larger banks and corporations have supported minority banks in the years since the 2020 murder of George Floyd and the subsequent civil unrest, which shone a spotlight on the nation's racial wealth gap.
Big banks and the U.S. government also poured billions of dollars of equity capital into minority banks and CDFIs. But to leverage that capital, they need deposits, so much of the focus has been on
The Economic Opportunity Coalition — a group of large corporations and foundations, including large and regional banks — has been trying to secure $3 billion of deposits for MDIs and CDFIs. The coalition, which was announced in 2022, is part of the Biden administration's efforts to use public- and private-sector investments to address economic inequality in communities of color.
IntraFi has joined two banking industry trade groups spearheading an effort to source large institutional deposits at small, cash-starved CDFI and MDI banks.
The group, which
The Rockefeller Foundation, which is incubating the coalition, did not immediately respond Monday to a question about whether the $2 billion deposit goal has been reached.
Native American Bank, the only national Native American-owned community development bank in the U.S., plans to use State Street's deposits to "bring access to capital in Indian Country," Tom Ogaard, president and CEO of the $401.1 million-asset company, said in the release.
Meanwhile, Sunrise Banks' deposits will help the company "invest in more projects and initiatives designed to empower financial wellness, foster inclusivity and support economic growth," David Reiling, president and CEO, said in the release.
Sunrise is a CDFI that's also a certified B corporation, which means the nonprofit network B Lab determined it met social and environmental standards. Sunrise also operates in Minneapolis and Sioux Falls, South Dakota.
