This episode of the Strategic Finance Lab podcast—available now on Apple and Spotify—shines a light on the Mission Driven Bank Fund—a private investment fund that invests in banks that provide credit and financial services to lower-wealth communities, rural communities, and communities of color across the United States. Its goal is to help close the racial wealth gap. The Federal Deposit Insurance Corp. encouraged the development of the fund in 2021, as detailed in a NeuGroup Insights article based on an informational session for NeuGroup members led by NeuGroup peer group leader Andy Podolsky. The fund invests capital in FDIC-insured minority depository institutions (MDIs) and community development financial institutions (CDFIs) that serve low- and moderate-income communities. In the podcast, Mr. Podolsky speaks to Paul Welch, portfolio manager of the fund and Head of Private Equity at Elizabeth Park Capital Management—a minority-owned firm that specializes in investing in U.S. Banks. They are joined by Eric Heisner, a Director of Strategy at Calvert Impact and a relationship manager for the fund. Calvert oversees technical services offered to the banks as well as impact management and measurement for the fund. The fund began making investments in 2024 and has raised more than $177 million so far from corporations and financial institutions.
“We have made seven investments in our first year, and we have the largest investment pipeline in the fund’s history,” Mr. Welch said. “So we’re very excited about the momentum that we see and the opportunity to make an impact at a grassroots level.”
In the interview, Mr. Heisner shares some specific stories illustrating the impact banks have already had in their communities since receiving investments and support. One bank is helping fund the renovation of a motel to provide housing for kids leaving foster care and transitioning into adulthood to attend college or start jobs. Another example involves a small business loan to an eye doctor looking to expand her practice.
The fund takes an active role in tracking the impact its investments have on communities. “We meet with all of our banks every single quarter after investment,” Mr. Heisner said. “This fund is meant to be a partnership. It’s not just a capital investment. We are constantly working with our banks to see how we can help them improve.”
Note: This podcast is intended for informational purposes only and should not be used as the basis for an investment decision. The Fund discussed in this episode is a 506(c) private placement offering that is available only to accredited investors, and may only be sold in jurisdictions where it is legally permissible. Please be aware that any forward-looking statements made during this podcast are based on current expectations and assumptions and are subject to change. Please refer to the complete offering documents for full details, including risk factors, disclosures, eligibility requirements, and other important information.
