M&F Bancorp CEO James Sills joined High Point University President Nido Qubein in the Power List interview, a partnership for discussions with influential leaders. The interview was edited for clarity.
Sills has led North Carolina’s only African-American-owned bank since 2014, after working for the previous five years as chief information officer for the state of Delaware. Earlier this year, he helped M&F Bank win regulatory approval for a plan to convert preferred shares at a major discount. The move boosted capital by more than $50 million and made it harder for an investor group to gain control of the institution. It has 90 employees, assets of $525 million and offices in Charlotte, Durham, Greensboro, Raleigh and Winston-Salem. Net income in 2024 was $4.8 million, excluding preferred dividends. Sills has a bachelor’s degree from Morehouse College and a master’s in public administration from the University of Pittsburgh.
I’m intrigued that you are CEO of a bank that has been in business for 117 years and is the second-oldest minority-owned bank in the country. Which was the first?
The oldest African-American-owned bank is Citizens Bank of Nashville. They had been in business about three years prior to M&F Bank coming into formation.
How did you arrive at M&F?
I moved down here from Wilmington, Delaware. I was recruited by the board of directors to come transform the bank, to make it more relevant to the markets that we serve all across North Carolina. I love the business of banking because we serve as middlemen of taking the customer’s deposits and redeploying it into the form of loans back out into the communities that we serve. I just think it’s a great business model. And I’ve loved every minute of my banking career.
How would you rank the times we’re in now? Are we in good times?
Banks are a litmus test for how the economy is doing, whether people are building, borrowing, expanding their business, investing in equipment, etc. Banks are doing well where the economy overall is good. It’s not as good as it was a few years ago, but it’s good.
North Carolina is a tremendous state for banking. We have a number of new entrants here. Some of the largest banks in the country are expanding here. That is sign that this is a very healthy state and banking market.
If banks are doing so well, how come the stocks of banks today are not where they should be?
It’s all based on earnings. It’s all based on growth. It is also based on where your bank is physically located. I think bank stocks will come back if we have less regulation.
I think you’ll see interest rates come down a little bit more. I think you’ll see bank stocks continue to increase over time.
Is there a standard ratio of the relationship between assets and liabilities? You are half a billion or so in assets. You have deposits of $372 million. Is there a relationship between those two?
There’s an acceptable relationship. It’s monitored by the state banking department and FDIC. The way I look at it is the percentage of capital to total assets. And so a healthy bank is going to have a capital-to-asset ratio of at least 8% or 9%. Our capital-to-asset ratio is about 15%. So we’re one of the strongest banks in North Carolina.
How do you raise capital?
We are very fortunate. We are capital-rich. We have about $130 million in capital. We’ve raised the majority of that since the murder of George Floyd [in 2020]. And so the bank has actually grown, from about $250 million in total assets to about $525 million over the last five years. So we’ve experienced tremendous growth.
And why is that?
Besides an excellent CEO, ha ha? And we have a great board. We have a great management team. Because of the mission of the bank in terms of serving low and moderate-income individuals, and also providing access to capital to small and medium-sized businesses. People, corporations, non-profits, large banks and others want to support the mission of the bank.
What is the CEO or your management team looking at when somebody comes to you for a loan to invest in starting or expanding a business?
We look at the total person. We look at the total relationship that the business has with the institution. Do they have management experience? Have they been in business for at least three to five years? Our whole goal is to work with small- and medium-sized businesses to help them expand.
How do you define small and medium businesses?
A small business has gross revenues of less than $5 million per year. Medium-size would be $15 million to $20 million.
For college graduates who have a dream to be entrepreneurs and build a business, where would they go for capital?
It’s going to be tough, but it is possible. You go to friends and family. You leverage credit cards.
There are grant opportunities that they can apply for. There are other programs that they can participate in. There are programs where they can participate in various shark tanks and win prizes. So that’s how they would normally raise capital.
What’s your biggest challenge as CEO of M&F Bank? What is it you worry about when you go to sleep at night?
Can we get the talent? That’s my biggest concern. We have the capital to grow to $1 billion in total assets. We’re a little over half a billion at the moment.
Why aren’t you there?
Because it just takes time. It’s a relationship business. You have to have the people in place. You have to have excellent marketing. You have to have excellent technology. It’s very competitive. The markets here are very, very competitive.
Speaking of technology, how does an M&F Bank with $500 million in assets have a backroom operation to compete with those who have significant funding?
We utilize a third-party vendor that is the core technology provider for about 2,200 banks across the United States. That’s how we’re able to kind of keep pace with some of the larger banks.
So we have online banking and mobile banking and all the technology and all the bells and whistles that the large banks have.
We have to continue to invest in technology if we want to stay relevant.
A few years ago, we had roughly 5,000 banks in America, and there was so much chatter that these banks were going to disappear. We were going to end up with 50 big banks, and small community banks were going to disappear. That hasn’t happened. We have about 4,500, so we lost 500 from mergers and acquisitions. A couple went bankrupt, but generally, they get scooped up by somebody. Do you think that’s good?
Yes, I think it’s good. It really helps the end consumer. For small business owners, you always want to have access to financial institutions and to capital. The more banks that you have, the easier it becomes for the consumer and the small business owner to have a relationship with a bank.
We’re the only country in the world that has that community bank model. Most large countries only have a handful of banks. Canada has six banks. So I think it’s great.
One point I want to make sure that I communicate is that community banks normally focus on a specific area and they’re focused on helping small and medium-sized businesses grow, or professionals like doctors and lawyers.
Community banks provide 60% of all the small business loans under $1 million. And community banks provide 80% of all agriculture loans across the country and about 40% of mortgage loans. So community banks are a critical component to the financial system. My definition of a community bank is any bank that is under $5 billion in total assets.
You mentioned talent as being a challenge, meaning attracting the right associates who can help you grow. North Carolina has become a magnet for companies of all sizes to come here. That’s going to put pressure on the existing companies and the communities to create more workforce. How will M&F deal with that?
We have to be creative in how we attract talent to the bank. We have to do a lot of outreach. We’ve had a management trainee program for the past five years and we normally hire two college students and develop them. We rotate them through our departments.
But we also try to take talent from other institutions. People want to work with you because you have a specific vision, mission and values, and they want to be a part of that. We sell the mission.
What do you see as a challenge for North Carolina as it attracts more people here?
Again, I think the biggest challenge is talent. We need to attract more talent here. We have great schools. We have great community colleges. We need to have better relations with the schools and the universities and the state and local chambers and various public-private partnerships to make sure people are aware of all the talent that is here.
When you look at your own position as a leader in the state and as someone who’s trying to educate young people and others to join your group, what is it you sell them on?
I sell the history of the mission of the bank. In terms of personal characteristics, I strongly encourage someone to be a generalist and not a specialist. I’ve been a generalist, and I think that’s how I’ve been able to rise through the ranks. I think you want to be a continuous learner.
I’m looking for individuals that have leadership characteristics, good adaptability and they take initiative.
How is artificial intelligence going to affect your bank and other banks of your size?
Over time, it will make our bank more efficient. We will have better interaction with our customers. Our processes will be more efficient. We’ll be faster in terms of how we get capital out on every other institution. But I think for us to be competitive, we have to do that. We have to invest in those types of technology not just to survive, but to be successful.
Is it going to take away the distinction of an institution because we’re standardizing everything?
We want to make sure we’re looking at the data. We want to make sure that there are no biases through AI. And so we’re always going to be checking the AI output, because we want to make sure that we’re not making an incorrect decision based on utilizing AI. You’re always going to have a model where you’re using AI, but you always want to have a human checking behind the AI.
The co-founder of Apple Computer, Steve Wozniak, says you can have all the artificial intelligence you want, but you never have artificial wisdom.
I agree with that. I heard someone say, knowledge is knowing that a tomato is a fruit. Wisdom is knowing not to put the tomato in a fruit salad. Life skills, soft skills, communication, connecting with people and understanding people are important. ■