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?

in loans every year, and you can find a branch of many major banks on almost every block of a major city. Carver only has four loan officers who wrote about $82 million in mortgages in fiscal 2004 and purchased another $94 million worth of loans from other financial institutions during the same period. OneUnited, on the other hand, controls banks in three different states but only manages a total of 10 branches. It boasted about $158 million in originated mortgages in 2003.

OneUnited and Carver want to play on the big boys’ turf. “We need more customized products, such as loans for people with less than perfect credit, [and] the ability to contribute more to nonprofits and churches,” says Wright. As a small business, Carver has a much smaller contributions budget, which makes it more difficult to compete with big banks where charitable contributions are concerned.

Carver recently opened two new bran-ches and has plans to start construction on another branch in Harlem, New York, this winter. The bank is also building more ATM centers to reach new customers. But these young, progressive African American men and women are expensive to reach. Wright estimates that it costs about $1.5 million to build a branch. “You need $30 million in deposits to break even on a branch, so you must be careful not to do it for vanity purposes,” she warns. If it had acquired Independence Federal, Carver would have added five branches in Washington, D.C., to its existing eight branches in New York. “We are the largest (black bank) and we are just getting to that point to move the needle.”

Wright must contend with the failed acquisition of Independence Federal as well as the loss of a major shareholder and boardroom ally. In June, the Provender Opportunities Fund L.P., a private equity fund, sold its 60,000 shares of Carver stock to Keefe, Bruyette & Woods Inc., a New York-based investment bank and brokerage firm. Provender Capital Group CEO Frederick O. Terrell is also chairman of Carver’s board. He says his firm’s sale of its Carver stock didn’t have anything to do with bad investments. “After four years, we simply sought to create a successful liquidity event on behalf of our limited partners who are investors in our fund,” says Terrell. “I remain very actively committed to the bank as chairman, and continue to own shares personally in the company.”

Provender purchased its shares in 2000, which made it Carver’s largest shareholder at the time. It gave Wright the muscle she needed to ward off Cohee who was the largest shareholder until Provender came on board.

Cohee says he didn’t feel any pressure from the attempted Carver—Independence Federal alliance. But that doesn’t mean the two institutions won’t be competing for the next big deal.

Cunningham of Creative Investment Research says logical targets for Carver and OneUnited to pursue at this time would be banks along the Eastern Seaboard. Carver is now in New York City. OneUnited has a presence in Boston, Florida,

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