DNC invests in minority-owned banks for North Carolina convention
theGRIO REPORT - In an effort to demonstrate that its 'People's Convention' mantra is more than just a slogan, the Democratic National Convention Committee deposited $4 million in convention funds into two minority owned North Carolina banks...
In an effort to demonstrate that its ‘People’s Convention’ mantra is more than just a slogan, the Democratic National Convention Committee deposited $4 million in convention funds into two minority owned North Carolina banks. The deposits were made during a ceremony in Durham, North Carolina Wednesday afternoon.
According to Steve Kerrigan, CEO of the DNCC, depositing a portion of the convention’s operating budget into minority owned banks is an important tradition that helps the DNCC to truly become a part of the local economy. “We are depositing in minority owned banks as a way of helping the community over the next several months; by giving [the banks] the opportunity to invest.”
The organizers of The Democratic National Convention, which will be held in Charlotte, North Carolina, beginning September 3rd, have promised that this year’s event will be accessible and people friendly. The DNCC deposited $2 million into the Latino Community Credit Union and Mechanics and Farmers Bank, respectively.
The banks were selected by the DNCC based upon their individual records of investing in the financial interests of people of color. The DNCC’s money will be held in interest free accounts at both institutions.
Mechanics and Farmers Bank was founded over one hundred years ago by a group of African American professionals who recognized the lack of opportunities for blacks to obtain financing and deposit their money safely. Since then, the bank has made promoting personal and community development amongst African Americans a top priority.
“These deposits are the fuel that we need in order to make loans,” said Kim Saunders, President and CEO of Mechanics and Farmers Bank. “These deposits will provide us with additional resources to be able to provide loans to small and medium sized businesses as well as individuals.”
Based in Durham, Mechanics and Farmers Bank is a Community Development Financial Institution, meaning that its mission includes serving those who are often ignored by traditional financial institutions. It has branches in Raleigh, Durham, Winston-Salem, Greensboro and Charlotte, North Carolina’s major urban centers.
Saunders said that she is appreciative and pleased that the DNCC selected Mechanics and Farmers. She was confident that Mechanics and Farmers stood out to the DNCC based upon the merits of the banks distinguished track record.
“We have an unbroken record of profitability,” said Saunders. “Since the bank opened its doors in 1908 the bank has never lost money in any single year. That consecutive record of profitability is stellar not only for minority banks but for banks and companies in general in our country.”
Mechanics and Farmers also received an ‘outstanding’ Community Reinvestment Act rating in 2010 from the Federal Deposit Insurance Corp. Out of the 120 institutions that were examined nationwide, Mechanics and Farmers was one of three to be recognized as “outstanding”.
The money that was deposited into the banks comes from an approximately $17 million grant from the Federal Election Commission.
The grant is provided to the convention committee to pay for staff and administrative costs and is separate from the money that is raised by the host committee to produce the event. According to Steve Kerrigan, the $4 million figure was selected after a careful assessment of the DNCC’s financial needs between now and the convention.
“We looked very hard at what our cash flow projections were going to be over the course of the year. What we didn’t want to do was invest a larger amount of money, and then have to take it back earlier,” said Kerrigan.
“This is the amount of money that we realized we could invest and have a comfort level that we could leave in the banks and give them the most opportunity to invest for the longest period of time.” Kerrigan went on to say that the accounts at the minority banks will be used last and will be drawn down slowly.
The short-term economic impact of the Democratic National Convention is expected to be at least $200 million. This infusion of cash could have a positive impact upon North Carolina’s black owned businesses.
According to the 2010 Census, 10.5 percent of the state’s businesses are black owned, which is higher than the national average of 7 percent. The DNCC has also announced plans to organize a local business directory that aims to help keep convention funds in the community. The directory will highlight local minority and women owned firms.
