Carver Vs. One United

In the battle for market share and customers, the nation's two largest black banks seek to grow through acquisition. Which one will ultimately win the fight to be No. 1?

This is not the first time Bender and the board of Independence Federal have been at odds; he sued the bank unsuccessfully in December 2003. Bender was attempting to remove most of the board members via a special shareholders meeting.

Cohee maintains that Wright offered too much for Independence Federal in the first place and says he purposely stayed away from the bidding because “We saw the people who were involved … and thought it would end up being a waste of time. [We thought] somebody would make a mistake and that’s what happened,” he says, referring to Wright and her team. “It was a good example of what can go wrong when you do deals [without the proper] expertise. You would never fix a price on an asset that’s deteriorating in value.”

But experts had a different opinion as to why Cohee decided not to engage in the bidding process. “OneUnited is a little thin in the capital ratios [department] to [have been involved in] a deal of this size right now,” says John W. McCune, a research director at SNL Financial. OneUnited’s total assets fell $61 million between the end of 2002 and the end of 2003. And while the institution’s capital rose from $24 million in 2002 to $28 million in 2003, $28 million is still $4 million less than what Carver was going to pay for Independence Federal. “The problem Kevin has is money,” says William Michael Cunningham, CEO of Creative Investment Research Inc., publisher of the Minority Bank Monitor. “His bank is still chugging along but that whole Los Angeles area fell off the radar screen after the Rodney King riots. Kevin didn’t want to lose out on Independence Federal. Money was the turning point for him.”

At the end of 2003, Carver had $56 million in capital, and the fact that it’s publicly traded gave it an advantage. “One can do a mix of stock and cash to finance a deal if a company is public. [A private company] generally has to pay cash,” explains McCune. Citizens Trust’s Young agrees, “If I decide to buy a bank, I can offer them stock. I will be able to liquidate the stock if I have to. This is the value of being publicly traded.”

Cohee refutes such statements. “We have access to as much capital as we need,” he says. “We can buy anybody we want to buy, anytime we want to buy them. We have no problem trying to access capital.”

THE PUSH FOR GROWTH
While it may appear to be tit for tat, the moves of Cohee and Wright are not mere vanity plays. Both need to grow their institutions to a size that will give them the economies of scale to tackle the current banking environment. For instance, mortgages continue to be a target growth area for most black-owned banks, but with limited resources, an institution loses its competitive advantage.

Major banks, such as JPMorgan Chase, Wachovia, or Banco Popular, employ hundreds of loan officers who approve billions of dollars

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