The Performance of Black-Owned Commercial Banks: A Comparative Analysis 1

The objective of this study was to examine performance differences among black banks of different asset sizes, as compared with average nonminority banks of similar asset size from 1985 to 1991. The study found that large black banks with assets over $50 million outperformed smaller black banks with assets less than $50 million in terms of return on assets (ROA) and return on owners’ equity. Also, when compared with average nonminority banks with assets less than $300 million, the large black banks exhibited a statistically significant higher ROA than average nonminority banks in 1985 through 1987. However, the differences were found to be statistically insignificant in terms of return on owners’ equity (ROE) during the study period. Regression results show that provision for loan loss, high liquidity, and investment in treasury and government securities continue to impact negatively on small black banks’ performance but these factors have no statistically significant impact on large black banks’ performance.