For the second time in its 110-year history, Durham’s black-owned financial institution M&F Bank lost money for a year.
M&F reported on Friday that it lost $2.6 million in 2017 — partly due to a new federal tax law that created a one-time charge of $2.1 million, the company said.
M&F, one of the nation’s oldest and largest African-American-owned financial institutions, also lost $1.8 million in 2016 — the first year the company had failed to turn an annual profit since it opened its first branch in 1908.
“The enactment of the new federal tax law ... negatively affected the net loss for the company for the year,” M&F CEO James Sills said in a statement.
Because of the tax cut, M&F had to slash the value of its deferred tax assets — past losses that businesses can carry forward on their balance sheets to decrease future tax bills. Those deferred assets are worth less when the corporate tax rate decreases.
Many of the largest banks in the country have similarly decreased the value of their assets, including Charlotte-based Bank of America, which wrote down $3 billion of assets.
Sills added that the reduction in the federal tax rate for companies will be a benefit going into the future, however, as the rate drops from 35 percent to 21 percent.
Total assets at M&F Bank were down for the year as well. The bank reported it had $255 million in assets, down 0.52 percent from the year before.
Founded in 1907 as Mechanics and Farmers Bank, M&F Bank is the second-oldest minority-owned bank in the U.S. and has long been a symbol of Durham’s African-American community. It’s the only black-owned bank based in North Carolina, with branches in Durham, Raleigh, Charlotte, Greensboro and Winston-Salem.
The bank, along with N.C. Mutual Life Insurance, made up what was known as Durham’s Black Wall Street, a grouping of black businesses in downtown that became an economic engine for the city’s African-American community during the Jim Crow era of racial segregation.
But the bank has struggled, like most black-owned banks, in recent years. The number of black-owned banks has fallen consistently for the past 15 years, declining to its lowest number in recent history this year, according to a report from The Wall Street Journal.
That decline has been exacerbated by a lack of interest from younger customers, with fewer millennials opening accounts at black-owned banks than previous generations. M&F has recently begun looking at different ways to bring in younger customers.
Attracting younger customers is critical, Sills told The Herald-Sun last year.
“Eventually our older, extremely loyal customers will not be around, and for any bank (we) need new customers,” he said.
The amount of interest-bearing deposits increased by $1.3 million to $183.1 million in 2017, while noninterest-bearing deposits decreased $271,000 to $47.3 million.
Interest income at M&F also fell more than 8.6 percent to $2.2 million in the last three months of 2017 compared to the year prior.