Tag: NC

How Wilmington’s top bank has navigated the U.S. banking crisis

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Live Oak Bank in Wilmington, NC is the fourth largest state-chartered bank in North Carolina and a national leader for funding small businesses.

Zachery Eanes

zeanes@newsobserver.com

In March, following the collapse of Silicon Valley Bank and Signature Bank, clients moved billions of dollars out of smaller U.S. banks and into money markets and the handful of giant banks deemed to be “too big to fail.”

For Live Oak Bank, a regional bank based in Wilmington, this meant an exodus of deposits.

In the two weeks after a bank run toppled Silicon Valley Bank, Live Oak customers removed around $250 million in uninsured deposits, the company noted during its latest earnings report. This outflow wiped away the more than 6% growth in deposits the bank had seen over the first two months of the year.

But retreating 2023 gains weren’t the Wilmington bank’s primary concern. Its executives were determined to shield their institution from a burgeoning U.S. banking crisis.

“It was a frightening time,” said Live Oak President Huntley Garriott. “There were a lot of unknowns, and contagion is a scary thing.”

Live Oak’s unique banking approach

With around $10 billion in assets, Live Oak straddles the line between a community bank and a regional bank. It’s the fourth-largest state-chartered bank in North Carolina and leads the nation in providing a specific type of small business loan: According to the U.S. Small Business Administration, Live Oak has approved more SBA-sponsored loans, in terms of total dollars, than any other bank in each of the past six years.

Garriott said community and regional banks like Live Oak often make loans that wouldn’t qualify under the blanket tests used by the largest banks.

“We will go through a lot of work in our underwriting to understand the story, to get to know the borrower, to make sure they’re the right person to take on,” he said. “Small businesses, by nature, have more volatility, so you’ve got to be able to work with them and be along for that journey.”

Live Oak Bank, which has no physical branches, has become the largest SBA lender in the country. Live Oak Bank

Even before the current industry upheaval, small and midsize banks have been disappearing in North Carolina, mirroring nationwide sector consolidation. According to the North Carolina Commissioner of Banks, there were 87 state-chartered banks in April 2003, 71 in April 2013, and only 35 last month.

“You’ve seen deposits declining in the smaller bank sector,” said Gerald Cohen, chief economist at the Kenan Institute of Private Enterprise, a think tank affiliated with the UNC Kenan-Flagler Business School. “And that is deleterious to commercial and industrial loan activity.”

Live Oak is branchless, serving clients only online. Its workforce includes around 650 people in Wilmington and another two dozen in both Raleigh and Charlotte. In the Triangle, it has an office on North Carolina State University’s Centennial Campus and a small coworking space at American Underground in downtown Durham.

Founded in 2008 by banking entrepreneur Chip Mahan, Live Oak has grown by focusing on specific industries: first loans to veterinarians, then expanding to other recession-resistant businesses like funeral homes and dentists. Four years ago, Live Oak opened a division serving early-stage startups, a mini-version of Silicon Valley Bank.

But since March, the last thing Live Oak has wanted to be is the next SVB.

‘War gaming’ during a crisis

Located about 15 minutes from the beach, Live Oak’s headquarters was a hive of activity the weekend after SVB’s demise.

Garriott described it as “war gaming.”

“The first thing that we did, that I think everyone did, was really access our balance sheet, our liquidity, and start to run scenarios of what could happen,” he said. “You have to do that really fast and have a really good team around you. Where are there available sources of financing and liquidity? We spent the better part of the weekend doing all of that. Talking to our board. Talking to regulators.”

In late March, Live Oak raised its interest rates on deposits .5% in an attempt to attract new deposits.

Originally from Kentucky, Chip Mahan moved to Wilmington in the mid-2000s, after his wife was diagnosed with cancer. The couple wanted to be closer to Duke University, where she was being treated. Live Oak Bank

As deposits dropped and concerns over systematic bank runs mounted, Live Oak executives also weighed their communication strategy. Should the bank broadcast its underlying financial strength with press releases to assure customers, a step taken by some of its competitors? Or would doing so only raise alarms?

“We, at the end of the day, stayed relatively quiet,” Garriott said. “Our customers are largely insured, and we have a lot of capital. We didn’t see the stress, and so we didn’t need to put out the types of releases that others were trying to stop a crisis of confidence. But we were prepared to do so.”

How Live Oak reversed its deposit decline

Compared to the overall U.S. banking industry, Live Oak had a low percentage of uninsured deposits, a key metric many have used in recent months to assess institutional stability. The Federal Deposit Insurance Corporation (FDIC) guarantees up to $250,000 in each account, and any higher amounts are uninsured.

For the first quarter of 2023, 85% of Live Oak deposits were insured, compared to the sector average of 56%. For context, only 10% of SVB deposits were insured at the end of last year.

“My initial reading tells me Live Oak does not have any of the features which triggered a run on SVB,” said Rahul Vashishtha, a professor of accounting at the Duke University Fuqua School of Business who reviewed the bank’s first-quarter earnings report for The News & Observer.

Vashishtha highlighted Live Oak’s “minimal reliance on uninsured depositors” as well as its little unrealized losses on its loan portfolio.

In its earnings report, released on April 27, Live Oak reported having $4.2 billion in cash and immediate borrowing capacity, enough to cover three times its uninsured deposits.

In the past 10 years, Live Oak Bank’s campus in Wilmington has grown to multiple buildings. Zachery Eanes zeanes@newsobserver.com

Live Oak actually finished 2023’s first quarter with higher total customer deposits, up 2.7% — a reversal Vashishtha called “astounding.”

While it hemorrhaged uninsured deposits, Live Oak continued adding new accounts in the weeks after the crisis began. Around March 23, its balances began to bounce back. Elevated savings rates may have drawn in new accounts while business owners like Alex Lassiter, the CEO and founder of the startup Green Places in Raleigh, came to Live Oak after fleeing SVB.

“They’ve been great to work with and good partners,” Lassiter said.

Over the past two months, the branchless Wilmington bank has bucked an industry trend among small U.S. commercial banks, which overall have not seen their post-SVB deposits return, according to data from the Federal Reserve.

But Live Oak wasn’t the only North Carolina bank to end the volatile first quarter with deposits up. First Bank, a commercial bank in Southern Pines, saw its balance rise 3.7%. Asheville’s HomeTrust Bank and Catawba County’s Peoples Bank each reported even deposit change between Jan. 1 and March 31.

“I’m surprised at that,” Cohen at the Kenan Institute said of the absence of deposit losses. “Because the (sectorwide) data I’m looking at is suggesting otherwise.”

Deposits rebounded. Stock price hasn’t

But even as deposits surpassed pre-crisis levels, the value of community and regional banks on the stock market have sunk since Silicon Valley Bank’s downfall.

For the year, Live Oak stock is down 25%. Peoples Bank is down 46%, First Bank down 24%, and HomeTrust down 11%.

Since Jan. 1, the share price of PacWest, a California-based business bank that many speculate is operating on shaky ground, has plummeted 66%. Conversely, banks considered “too big to fail,” have seen modest stock declines (like Wells Fargo) or even increases (like Chase).

“What you want is the market to be a reflection of the performance of the business,” Garriott said. “Not the market to actually drive the performance of the business. When you’re in that position, it’s difficult.”

U.S. banking concerns are certainly not over.

On May 1, First Republic Bank became the third major U.S. bank to fall this year after a bank run. Many believe the question is when, not if, additional banks will fail.

At Live Oak, Garriott said the feeling is “cautiously optimistic.”

“I don’t think anybody is declaring victory,” he said. “But if you didn’t look at the news, and you didn’t look at our stock price, with the exception of the outflows of uninsured deposits for the two weeks at the end of March, you wouldn’t actually know anything happened.”

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.

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This story was originally published May 25, 2023, 7:00 AM.

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Brian Gordon is the Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He writes about jobs, start-ups and all the big tech things transforming the Triangle.

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May 25, 2023
Wells Fargo executive Mary Mack, lauded for actions during massive scandal, is retiring

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Wells Fargo’s Mary Mack, a top executive in Charlotte, will retire this summer after nearly 40 years in the banking industry and navigating a massive scandal at the bank.

Mack led the transformation of Wells Fargo’s retail bank branch network as CEO of its consumer and small business banking for the past seven years.

Mack also served as president and head of Wells Fargo Advisors, and other leadership roles in consumer banking, brokerage, commercial banking and corporate and investment banking, according to a bank news release Thursday.

“Mary has spent her entire career at Wells Fargo, which spans nearly four decades,” CEO Charlie Scharf said Thursday in a statement. “I can think of few Wells Fargo colleagues who have done as much for our company — and who have been as visible in the communities that we serve — over such a long period of time.”

Mary Mack, head of community banking for Wells Fargo in Charlotte, is retiring after a 40-year career. Observer file photo Observer file photo

Mary Mack’s leadership at Wells Fargo

In 2016, Mack became one of Wells Fargo’s first top executives in Charlotte leading community banking after Carrie Tolstedt stepped own — right before the San Francisco-based bank was fined $185 million over fake accounts.

Wells Fargo employees created millions of fake accounts for customers without their knowledge in order to meet aggressive sales goals. Mack was tasked with winning back angry customers, reinventing the sales culture for 94,000 employees and restoring a tarnished brand.

“Mary is not intimidated by a challenge,” retired Wells Fargo executive John Tate, who hired her into a position at Charlotte-based First Union in the 1980s, told The Charlotte Observer in 2016. “She will meet it head on.”

Under Mack, the community banking division underwent an overhaul including eliminating product sales goals for bankers who sell traditional products like checking accounts and credit cards. The bank also launched a nationwide ad campaign that said the bank was founded in 1852 and “re-established” in 2018, referring to changes that were made to move forward.

Mack was lauded in the financial community for her actions in the aftermath of the scandal, which included “listening tours” with Wells employees across the U.S. in the scandal’s wake.

Mary Mack, Wells Fargo’s CEO of consumer and small business banking, has also been active in the Charlotte community. Diedra Laird dlaird@charlotteobserver.com

Career and community

A native of Augusta, Ga., Mack graduated from Davidson College. Her first job in banking was as a commercial lender in 1984 at Charlotte-based First Union. She eventually managed commercial banking for the East Coast and health care banking group in the capital markets side of the business.

In 2001, when First Union bought Winston-Salem-based Wachovia, she was a regional president in the community bank. By 2006, Mack ran the brokerage business inside bank branches. In 2008, Wells Fargo acquired Wachovia.

In Fort Mill, S.C., the Mary Warner Mack Dog Park at the Anne Springs Close Greenway is named in honor of Mack’s eldest of three daughters who died at age 23 in 2014. Mack and husband Barry were credited as major drivers of the project.

Fortune magazine named Mary Mack one of the “50 Most Powerful Women in Business” for six consecutive years, starting in 2016, and she made American Banker magazine’s top 10 list of “Most Powerful Women in Banking” in 2021 and last year. Diedra Laird dlaird@charlotteobserver.com

Mack also has been involved in the community, including Habitat for Humanity International, Charlotte Executive Leadership Council and United Way Worldwide’s Board of Trustees, according to Wells Fargo website.

Fortune magazine named her one of the “50 Most Powerful Women in Business” for six consecutive years, starting in 2016, and she made American Banker magazine’s top 10 list of “Most Powerful Women in Banking” in 2021 and last year.

New roles after Mack’s departure

Saul Van Beurden, head of technology at Wells Fargo, will succeed Mack, effective May 15. Tracy Kerrins, head of consumer technology, will fill Van Beurden’s seat.

Van Beurden also held senior leadership roles at ING Group, running operations and technology for international retail and direct banks.

Kerrins has worked in the technology and finance industries for over 20 years.

More about Wells Fargo in Charlotte

Wells Fargo is headquartered in San Francisco but has its largest employment hub in Charlotte, with about 27,000 workers.

In late January, the bank announced it was moving all of its workers out of two uptown towers to consolidate into one space. The bank also is spending over $500 million in the next five years to upgrade its northeast Charlotte campus.

Since the 2016 scandal, regulators identified additional problems with how the bank handled mortgages, auto loans and consumer deposit accounts. That culminated in a $3.7 billion charge in fines and restitution from the Consumer Financial Protection Bureau last year.

This story was originally published April 13, 2023, 1:47 PM.

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Catherine Muccigrosso is the retail business reporter for The Charlotte Observer. An award-winning journalist, she has worked for multiple newspapers and McClatchy for more than a decade.

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April 13, 2023
Guest Essay: Legalizing marijuana in North Carolina will help patients, won’t endanger teens | Opinion – Medical Marijuana Program Connection

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“What about the children?”

This was arguably the most frequently posed question by critics in the years prior to state-level marijuana legalization. Many opponents presumed that legalizing cannabis for adults would undoubtedly lead to an increase in marijuana access and use among teens.

But 10 years following the first states’ decisions to legalize and regulate adult-use cannabis sales, data conclusively shows that these fears were unfounded.

For example, data provided this year by the U.S. Centers for Disease Control and Prevention determined that the percentage of high schoolers who report having used cannabis over the past 30 days fell from 23% in 2011 to 16%in 2021.

Likewise, the percentage of teens who acknowledge having ever tried cannabis has similarly declined. These downward trends coincide with the period where over 20 U.S. states legalized cannabis use by adults.

States that have legalized the adult-use cannabis market have experienced similar declines in underage use. According to the findings of a 2020 study published in the Journal of Adolescent Health, the adoption of state-level legalization laws “predicted a small significant decline in the level of marijuana use among [youth] users.”

In short, states’ real-world experience with marijuana legalization affirms that these policies can be implemented in…

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March 26, 2023
Does Charlotte have a startup culture? We asked these experts what they think

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Dan Roselli and Sara Garcés-Roselli (right and left of screen) are the founders of RevTech Labs, which offers an accelerator program for Charlotte startups. “Charlotte has one of the steepest growth curves for entrepreneurs in the country,” said Dan, pictured here with the program’s most recent cohort.

In early January, a Charlotte reddit user with an entrepreneurial streak and software development experience was searching for a sense of community beyond the crowded tables and pastry crumbs of the local coffee shop.

“Is there any startup culture in Charlotte?” They asked via the r/Charlotte reddit thread, adding that they mostly pursued side projects while sitting at cafes. “It’s a lot of fun and fulfilling, but a bit lonely.”

Charlotte’s startup scene has been steadily growing for the better part of two decades: Organizations like RevTech Labs and Carolina Fintech Hub sprung up to support new businesses. Companies like LendingTree and AvidXchange proved homegrown firms could make it big.

Big names like Robinhood and Credit Karma targeted the city for key expansions — boosting the city’s profile as a growing tech town even if some of those plans didn’t pan out.

But Charlotte’s startup scene still has a ways to go to catch up to other cities of similar size, local tech leaders told The Charlotte Observer in recent interviews. And the city’s deep roots in risk-averse industries — enough to be nicknamed Banktown — doesn’t always mix with a growing entrepreneurial ecosystem.

The Observer spoke with three local leaders to ask them: Does Charlotte have a ‘startup culture’? And if not, what do we need to build it? Here’s what they told us.

It’s tough to access startup funding in Charlotte

Ten years ago, Charlotte didn’t have much of a startup scene at all, said Juan Garzón, managing director of Charlotte Inno and executive director of the entrepreneurial networking event PitchBreakfast.

“You would have a few entrepreneurs who’d get together,” said Garzón, who also works as entrepreneurship and innovation lead for the city of Charlotte. “If you were really early, there wasn’t a whole lot of community.”

Charlotte now has a reputation for launching fintech companies, Garzón said. But there’s also a growing number of health technology firms, thanks to its two large hospital systems, and investments like The Pearl, Atrium Health’s new $1.5 billion innovation district that will house a new medical school in midtown Charlotte.

“I’m hoping that some of the energy that we’ve seen around FinTech, we’re going to see the same energy around health tech after the (district) opens up,” Garzón said.

But there’s one part of a startup culture that is still lacking in the city, he noted: access to capital.

“We have a lot of money in Charlotte,” he said. “But that money is harder to access than it would be if you’re in a community where capital is in the hands of people with a tech or more entrepreneurial background.”

But Charlotte’s expanding beyond fintech startups

Stefan Friend is executive director of Tabbris, a coworking space and incubator in South End. He agreed that access to funding needs to grow — and that wariness from would-be investors can play a role.

“There’s a lot more hesitation and apprehension around making that extremely risky bet,” he said.

But the size and diversity of startup companies in Charlotte is growing, he added: “We’re not only putting out fintech companies anymore.” The city could soon rival that of more well-known tech towns, he said.

“Another 10 years from now, I really believe that Charlotte will be in the same breadth as Atlanta or Boston on the East Coast,” he said. “We have the foundation to get there.”

‘One of the steepest growth curves’

Back when husband and wife Dan Roselli and Sara Garcés-Roselli founded uptown’s Packard Place, one of Charlotte’s first coworking spaces, the entrepreneurial community here was so small that “you could attend each event personally,” Dan Roselli told the Observer.

“If a Charlotte entrepreneur got funding, it was most likely from a (venture capital fund) in New York or San Francisco,” Dan Roselli said. “And the first question they would ask is: ‘When are you moving to New York or San Francisco?”

When Dan Roselli and Sara Garcés-Roselli founded Packard Place, pictured here in this 2017 file photo, Charlotte’s startup scene a fraction of the size it is now, Dan Roselli said. Ely Portillo

But over the next 10 years, the number of new companies skyrocketed in the city. “We were starting from a dead stop, and it just took off,” Dan Roselli said. “Charlotte has one of the steepest growth curves for entrepreneurs in the country.”

“I think people are finally starting to realize that bringing startups to your community is also a huge form of economic development,” Sara Garcés-Roselli added.

Dan Roselli acknowledged that Charlotte is still a city where most people make their money avoiding risk. But, he said, success stories like AvidXchange are beginning to change that narrative. The Charlotte ‘unicorn’ — a name given to a privately held company with a valuation greater than $1 billion — went public in a $660 million IPO last October.

Those companies may inspire a new generation of potential investors, Dan Roselli said: those willing to bet on a small local firm one day earning huge returns.

“That cycle picks up momentum, but we’re early on. That’s a 20, 30, or 40-year cycle. We’re still in our adolescence,” he said. “We are incredibly bullish on the entrepreneurial and tech community here.”

This story was originally published January 24, 2023 5:50 AM.

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Hannah Lang covers banking, finance and economic equity for The Charlotte Observer. Her work has appeared in The Wall Street Journal, the Triangle Business Journal and the Greensboro News & Record. She studied business journalism at the University of North Carolina at Chapel Hill and grew up in the same town as her alma mater.

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January 24, 2023
Native Americans in NC and beyond face ‘longstanding inequities.’ New report offers answers

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North Carolina is home to eight state-recognized Native American tribes and two with federal recognition. South of Charlotte, there’s also the Catawba Indian Reservation, the lands of South Carolina’s only federally recognized tribe.

File photo/The Herald

When COVID lockdowns stifled the economy in the spring of 2020, shuttering hotels, restaurants and entertainment venues, it hit Native American communities especially hard.

Unemployment skyrocketed as tourism halted and businesses like casinos and restaurants closed. Tribal revenues plummeted, and some tribes were forced to reduce services they offered to members.

In North Carolina and beyond, American Indian tribes often rely on industries like gaming and tourism that can be extra-sensitive to an economic downturn. The Charlotte region is home to one such business: Two Kings Casino in Kings Mountain, run by the S.C.-based Catawba Indian Nation.

Reliance on those kinds of industries affects financial resilience of tribal communities in tough times, and piles on obstacles for a population already facing higher odds of poverty and joblessness. That’s according to a new report from Wells Fargo’s Native American Banking division.

With a potential recession looming and just ahead of Native American Heritage Month that starts Nov. 1, the report offers ways to build economic resilience in Indian Country so tribal communities can better weather the next crisis.

“We really wanted to use the (impact of the) pandemic as an opportunity to reflect on what… Native American communities can do to prepare themselves for economic shocks in the future,” Dawson Her Many Horses, head of Native American Banking at Wells Fargo, said in an interview with The Charlotte Observer. He is based in Las Vegas.

Dawon Her Many Horses, head of Native American Banking at Wells Fargo Etti Photography Wells Fargo

‘Longstanding inequities’

Native Americans face lower median income levels and higher rates of poverty and joblessness than other racial groups, including white, Black and Hispanic Americans, according to census data.

In North Carolina, Native Americans are more likely to live in rural areas. Just over 300,000 people who identify as Native American or Alaska Native reside in the state, according to the 2020 Census. That’s 3% of the population statewide.

“If you’re looking at a map of where Native Americans are in North Carolina, you see them all around the edges of the state, typically far from the more urban areas,” said Mary Ann Jacobs, chair of the American Indian Studies department at UNC Pembroke.

Economic challenges and that rural geography combine to shape other inequities, like health disparities, she said.

North Carolina is home to eight state-recognized and two federally recognized Native American tribes. UNC Pembroke, in Robeson County, began as a school to train American Indian teachers. Will Wright

In the Wells Fargo report, analysts state that diversifying tribal economies and driving new investment into tribal areas can help address “long standing economic and social inequities” for Native Americans across the country.

The bank, one of Charlotte’s largest employers, holds $3.9 billion in deposits for tribal governments and tribally owned entities across the country.

“It’s in our roots as a company,” Her Many Horses said, referring to the bank’s Western origins. “We want to elevate (awareness of) the challenges that exist from a financial perspective.”

Building awareness

A persistent lack of data remains one of the most significant obstacles to driving economic development in tribal communities, Her Many Horses said.

Tribe-owned businesses drive much of the economic activity in Indian Country — a term used by Native Americans and others to describe self-governing Native American communities throughout the U.S.

Those sovereign governments aren’t required to disclose information the way that other entities are, like state governments or public companies, the report stated.

“Tribal governments and businesses are the primary economic actors, not entrepreneurs and small businesses like mainstream America,” said Her Many Horses, an enrolled member of the Rosebud Sioux Tribe of South Dakota.

The report also highlights two other obstacles: a gap in broadband access and a fragmented capital landscape — meaning investments in tribal areas often come from many different kinds of financial institutions.

Wells Fargo proposed a few broad solutions, such as increasing partnerships between governments and private firms to drive more capital to Indian Land, and strengthening inter-tribe coalitions to make joint investments that fuel development

“We don’t want to just identify issues,” Her Many Horses said. “We want to help.”

In North Carolina, Jacobs said, a good start would be just increasing awareness of the state’s Native American communities.

“Most people don’t know that North Carolina has eight state-recognized tribes,” she said. “I think the biggest thing to know is that our state has and continues to have one of the largest populations of Native Americans east of the Mississippi.”

This story was originally published October 27, 2022 5:40 AM.

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Hannah Lang covers banking, finance and economic equity for The Charlotte Observer. Her work has appeared in The Wall Street Journal, the Triangle Business Journal and the Greensboro News & Record. She studied business journalism at the University of North Carolina at Chapel Hill and grew up in the same town as her alma mater.

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October 27, 2022
Bank of America now offering zero-down mortgages for Black, Latino first-time homebuyers

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Bank of America announced a broad shake-up of its senior management last week, including significant changes for two of Charlotte’s most prominent banking leaders.

Chuck Burton

AP

Bank of America is launching a new program in Charlotte and several other cities that will offer home loans with no down payments and no closing costs to Black and Latino communities.

The program, dubbed the “Community Affordable Loan Solution,” aims to offer more affordable mortgages and address the racial homeownership gap between white and Black or Latino Americans, the bank said this week.

The Charlotte-based bank is also launching the initiative in Dallas, Detroit, Los Angeles and Miami.

The program will evaluate the creditworthiness of first-time homebuyers based on factors like timely rent, utility bill, phone and auto insurance payments.

Individual eligibility for the loans will depend on income and home location. Prospective buyers will need to complete a homebuyer certification course before application.

It was not immediately disclosed when the program will begin accepting applicants.

The Bank of America mortgage announcement cited data from the National Association of Realtors that shows a nearly 30% percent gap between white and Black homeownerhsip rates. Patrick Schneider PatrickSchneiderPhoto.com

Addressing racial home ownership gap

The Bank of America announcement cited data from the National Association of Realtors that shows a nearly 30% gap between white and Black homeownerhsip rates. The gap between white and Latino homeowners is nearly 20%.

That nationwide gap is about on par with Charlotte’s, according to a March report from Stacker, an online news outlet focused on data analysis.

“The competitive housing market has made it even more difficult for potential homebuyers, especially people of color, to buy homes,” Bank of America said in its release said.

Homeownership helps families build wealth over time, AJ Barkley, head of neighborhood and community lending at Bank of America said in a news release.

“Our Community Affordable Loan Solution will help make the dream of sustained homeownership attainable for more Black and Hispanic families,” she said.

Bank of America is the largest bank in Charlotte by assets and by deposits, with some 62% of the market. It employs about 16,000 people here.

Enough to close the gap?

Michael Hoard is a local real estate attorney and president of Charlotte Crown Black Real Estate Association. Programs like Bank of America’s new initiative can be helpful, he said, but don’t remedy deep-seated homeownership disparities.

“There’s so many different ways in which Black (borrowers) were discriminated against over time,” Hoard said. “Bank of America’s program is a great effort. I don’t think it’s going to be enough to really close the gap significantly.”

In his experience in Charlotte, programs that go beyond providing capital can be a more effective solution.

“It’s not just about giving somebody something, it’s also about making sure they’re able to maintain and keep it,” Hoard said. “Giving loans without maybe having some type of wraparound counseling or checks over time for folks — it still makes it a challenge, especially for first-time homebuyers.”

Small business grant program

Bank of America is also launching a small business grant program in Charlotte to support women and minority-owned small businesses, according to the bank. It’s designed to extend credit to “historically disadvantaged” small business borrowers and make commercial real estate more affordable.

The program will offer down payment grants of up to $25,000 for eligible businesses applying for commercial real estate loans. Applicants will need to make a 5% minimum down payment.

It’s also launching in Atlanta, Chicago, Dallas and Los Angeles, with plans to expand in 2023.

Other racial equity initiatives

Bank of America has committed significant philanthropic resources to racial equity efforts in recent years.

In Charlotte, that’s included a $10 million investment in Johnson C. Smith University, the city’s only historically black university. It’s part of the $25 million the bank committed to the Mayor’s Racial Equity Initiative, a public-private partnership aimed at addressing longstanding racial disparities in the city.

The bank also gifted $10 million in August to offer in-school healthcare for students in Charlotte-Mecklenburg’s Title 1 schools, in partnership with Atrium Health.

Bank of America also made headlines in June 2020 for a $1 billion pledge to advance racial equity in America, following the murder of George Floyd. Bank of America later increased the amount to $1.25 billion.

This story was originally published September 1, 2022 10:00 AM.

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Hannah Lang covers banking, finance and economic equity for The Charlotte Observer. Her work has appeared in The Wall Street Journal, the Triangle Business Journal and the Greensboro News & Record. She studied business journalism at the University of North Carolina at Chapel Hill and grew up in the same town as her alma mater.

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September 1, 2022