Contenders

These companies are battling with competitors to move up the ranks and, possibly, get a title shot

There’s a fine line separating the champions from the rest of the pack. To remain on top, title holders fend off challenger after challenger-ambitious contenders working to knock reigning champs off their perches.

In the business arena, contenders are companies that are holding their own through today’s combative climate or are retooling strategies to mount impressive turnarounds. Pressured to restructure operations as a result of demanding customers and the need to tap into fresh sources of revenue, these firms expanded into new businesses offering customized products and services. For instance, the nation’s largest black-owned financial services firms spent much of the year fending off punishing blows from rising interest rates, a turbulent stock market, and an uncertain geopolitical environment.

According to the Federal Deposit Insurance Corp., the number-and assets-of minority banking institutions rose in 2005, but their profitability fell. There were 189 minority-owned institutions, up from 174 in 2004. Their assets totaled $184.2 billion, up from $157.2 billion in 2004. But their return on assets was 1.15% in 2005, down from 1.34% the prior year, and their net interest margin last year was 3.38%, down from 3.54% in 2004. Both are key profitability measures.

The business environment was challenging for Mary Pugh, CEO of Seattle-based Pugh Capital Management Inc. Her firm, (No. 15 on the BE ASSET MANAGERS list with $1.02 billion in assets under management) invests in fixed-income securities and had to contend with the Federal Reserve raising interest rates. Despite the Fed’s policy, the company’s assets under management grew by $122 million last year, up 14%. Pugh says the increase was a result of new corporate and public sector clients and additional assets for existing clients. “We’re pleased that all of our products outperformed the benchmarks,” she says.

Fritzi Pikes Woods, president and CEO of Prime Source Food Service Equipment Inc. (No. 48 on the BE INDUSTRIAL/SERVICE 100 list with $84.1 million in sales), is looking to propel the company she acquired in 2004 into the upper ranks. Despite an 11.8% drop in revenues, the Dallas-based distributor of food service equipment actually saw an increase in profitability. Last year, Pikes re-engineered the company’s business model. “We are focusing on companies that will increase our market share,” she says, “and we’re going after more profitable businesses versus going after new chains, where you have to invest more marketing and up-front acquisition costs.”

Advertising agencies have been against the ropes for several years now. In fact, few black agencies are serious contenders in their industry. Market conditions forced many to find additional lines of business to bolster their core competencies. Among them was Matlock Advertising & Public Relations (No. 7 on the BE ADVERTISING AGENCIES list with $63.1 million in billings). The firm acquired Ventana Marketing, a small Atlanta-based Latino agency. Although financial details were not disclosed, the deal included a handful of the agency’s clients, including Western Union. “The Hispanic market is an area that is on everybody’s mind right now. So what I had hoped to do was to find the right

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