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High Growth, Low Returns Found at Minority Banks

From: American Banker Newspaper
Wednesday, September 19, 2007
By Katie Kuehner-Hebert

Banks that target minority groups, particularly Hispanics and Asian-Americans, are reporting asset growth well above the industry average, largely because of an influx of immigrants.

However, on average these banks are less profitable and less efficient than mainstream ones, according to a report published last week by Creative Investment Research Inc., a Washington consulting firm that focuses on minority banking.

Assets at minority-owned banks are on pace to increase by an average of 17.43% this year, compared with the overall industry average of 6.38%, according to the report, which cited data from the Federal Deposit Insurance Corp. and other sources.

William Michael Cunningham, the consulting firm's president and chief executive, said the trend reflects both the increased number of start-ups targeting Hispanics — about a dozen have opened since the end of 2005 — and the continued asset g…