Illustration: Eniola Odetunde/Axios

Bank failures, mergers and closures have fueled a drop-off in the number of minority-owned banks.

Why it matters: The institutions seek to provide financial services to communities left behind and underserved by the mainstream banking sector.

What they're saying: "The perspectives and values of bank owners ... influence how institutions make decisions about bank leadership, strategy, new products and target markets," Beverly Cole, a member of the executive staff at the Office of the Comptroller of the Currency, which regulates some of these banks, told Congress on Wednesday.

Driving the news: Cole spoke at a hearing that, among other things, weighed legislation that would up federal government deposits and try to incentivize investment in minority banks, as American Banker reports.

The big picture: The entire banking industry has undergone a transformation since the financial crisis. Banks closed branches at the fastest clip in decades last year, per the WSJ.

  • "You're finding that larger institutions have ... moved out of some of the areas" served by minority-backed banks, Kenneth Kelly, CEO of Detroit-based First Independence Bank, which is minority-owned, tells Axios.
  • That, along with the shuttering of minority-backed banks, leaves fewer options for "financial services to low-to-moderate income and minority communities in urban, rural and suburban areas that are often economically distressed," says Rhonda Thomas-Whitley, vice president and regulatory counsel for ICBA, the industry's trade group.

By the numbers: The number of black-owned banks is at the lowest level in recent history, according to data from the Federal Deposit Insurance Corporation, a government agency that regulates banks.

  • There are 21 of those banks left — down from the recent peak of 48 before the financial crisis — following the failure of New Jersey's lone black-owned bank earlier this month.

Yes, but: Though the number of minority-backed banks is shrinking, their assets keep growing — though they're a small sliver of the entire U.S. banking industry's $17.5 trillion in assets.

  • Minority banks are formed to serve either Asian American, Hispanic American, African American or Native American communities.

When they shutter, more than three-fourths of the assets of the closed banks are distributed into other minority-backed banks, per the FDIC.

The bottom line: Minority-backed institutions have been more volatile compared with other types of banking institutions.

  • Those banks are about "half as likely as community banks to operate continuously," according to FDIC research.
  • They're also "two and a half times as likely to fail as all other banks."

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Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

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Scoop: Mike Bloomberg's anti-chaos theory

CNN's Anderson Cooper questions Joe Biden last night at a drive-in town hall in Moosic, Pa., outside Scranton. Photo: CNN

Mike Bloomberg's $100 million Florida blitz begins today and will continue "wall to wall" in all 10 TV markets through Election Day, advisers tell me.

Why it matters: Bloomberg thinks that Joe Biden putting away Florida is the most feasible way to head off the national chaos we could have if the outcome of Trump v. Biden remained uncertain long after Election Day.

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Photo Illustration: Eniola Odetunde/Axios. Getty Images photos: Mark Reinstein

When he talks about Russia, Joe Biden has sounded like Ronald Reagan all summer, setting up a potential Day 1 confrontation with Russian President Vladimir Putin if Biden were to win.

Why it matters: Biden has promised a forceful response against Russia for both election interference and alleged bounty payments to target American troops in Afghanistan. But being tougher than President Trump could be the easy part. The risk is overdoing it and making diplomacy impossible.