Two Black banks—M&F Bank and The Harbor Bank of Maryland —will get a combined $7.5 million investment from HubSpot.
Describing itself as a customer relationship management (CRM) platform for scaling companies, HubSpot reports the investment is the remaining amount of its $20 million social impact investing commitment backing Minority Depository Institutions (MDIs). The firm says the investment continues its pledge to Black communities to help stop systemic racism through introspection, investment, inclusion, and impact.
The investment will help support M&F Bank and The Harbor Bank of Maryland through the J.P. Morgan Asset Management’s Empower share class. A new institutional money market share class created in February 2021 for exclusive distribution by minority and diverse-led financial institutions.
With the share class, J.P. Morgan takes on the administrative and back-office work while training and mentoring the MDIs throughout the process. HubSpot explained that the MDIs gain a revenue share for most of the management fees charged on these accounts. That allows MDIs to gain a new recurring income stream without any of the regulatory challenges that come with taking large deposits directly into their bank, so they can better serve their communities.
M&F Bank and The Harbor Bank of Maryland are on the BE Banks list of the nation’s largest Black-owned banks. The $7.5 million investment will be split equally between the banks. The banks offer consumer and commercial banking services. HubSpot noted the banks could use the revenue generated through the share class program to increase lending to Black individuals and businesses in their communities.
Black banks can use the support. Though some of the country’s largest banks have invested hundreds of millions of dollars into Black banks, those firms may need more help to avoid a shutdown.
The most recent figures show just 20 banks in America as of the third quarter of 2021, per the Federal Deposit Insurance Corp. That number was down from a robust 48 in 2001.
“The Harbor Bank of Maryland has a long history of providing capital and financial services to the communities that it serves,” stated John Lewis, president and chief operating officer of The Harbor Bank of Maryland. “We continue pushing forward on our mission to provide equitable access to financial resources. We are encouraged by our partners JPM Asset Management and HubSpot in furthering our efforts.”
HubSpot believes its investment will help expand banking to Black businesses and families.
“By partnering with M&F Bank and The Harbor Bank of Maryland via the Empower share class program, we hope to help close the racial wealth, health, and opportunity gap for the underbanked Black communities these MDIs serve and build strong relationships with the banks to help them grow, support and nurture their customer base,” HubSpot CFO Kate Bueker told BLACK ENTERPRISE by email.