Two recent deals with much larger financial institutions have Kenneth Kelly feeling that First Independence Bank is poised to move to a stronger position in the marketplace.
Kelly, the chairman and CEO of the Detroit-based First Independence — Michigan’s largest Black-owned bank — said that despite recent headlines of new partnerships with Bank of America and Comerica Inc., conversations had been ongoing between the institutions for approaching a year.
In the short term, the deals with Bank of America and Comerica position First Independence to be in a stronger lending position regardless of broader economic challenges.
Longer term, Kelly said the deals send a message to the rest of the banking industry that these types of deals are needed to address gaps.
“And so my vision would be five years from now, it wouldn’t be just two major institutions, it may be three or four or five of them,” he told Crain’s in an interview.
The 50-year-old First Independence Bank, born out of the 1967 riot in Detroit, stands as the 55th largest bank in the state with deposits of $206 million, according to Crain’s most recent list of largest banks.
Kelly’s kind of bank, known as a minority depository institution, is fairly rare in the world of commercial banking in the U.S.
As of the end of 2019 there just 144 federally insured MDIs. Those institutions have combined assets of nearly $249 billion, according to a report from the Federal Deposit Insurance Corp.
The banks that First Independence has now aligned itself with — Comerica and Bank of America — stand as the second and third largest banks in the state, respectively, each with in-state deposits of over $20 billion. First Independence is a fraction of their size.
But the deals have the potential to be a game changer for First Independence and propel the bank into new markets, said Michael Tierney, president and CEO of the East Lansing trade group Community Bankers of Michigan.
“I think they’re really poised to really make a big move. They need exactly that kind of help,” said Tierney, adding that such deals could help the bank broaden its reach in areas like financing from the Small Business Administration. “They need some of the banks to just help them get going in a few of these businesses that they traditionally did not engage in.“”