Financial FREE-For-All

Black-owned banks are poised to profit from repeal of the Glass-Steagall Act

kinds of “new economy” mergers that could pose a threat to the stability of black-owned banks, sources say.

Industry experts and executives also contend that the changing financial scene will soon erase the days when black-owned banks could just rely on offering customers residential mortgages and checking and savings accounts, for years their bread-and-butter businesses. Minority-owned banks have used those products-a focus on personal service and niche marketing primarily targeted to black customers in inner-city neighborhoods-to give them their own identity and a competitive edge over larger, mainstream banks.

Ironically, it’s their unique position and cultural elements that will also keep black-owned banks from becoming extinct, and possibly keep them from being acquired by larger banks as mergers among those entities intensify, experts say.

Already, Seaway National Bank, one of the nation’s largest black-owned banks, with assets of $279.3 million, 25,000 individual customers and four branches in the Chicago area, is considering expanding into the insurance and brokerage businesses. That means Seaway could eventually offer nonbanking products such as annuities and car insurance as soon as this year.

Meanwhile, Boston Bank of Commerce (BBOC) (No. 15 on the B.E. Banks list) intends to grow primarily through acquisitions. In September 1999, it purchased Florida’s Peoples National Bank of Commerce, with assets of $40 million, becoming the nation’s first black-owned interstate bank. Now known as the Peoples Bank of Commerce, the former Peoples National operates branches in Miami’s Liberty City section and in Lauderdale Lakes, a suburb of Fort Lauderdale.

Kevin Cohee, BBOC’s chairman and chief executive, says anticipation of Gramm-Leach-Bliley partly triggered his bank’s $29.7 million bid a year ago for the stock of New York City’s Carver Bancorp, holding company of Carver Federal Savings Bank (No. 1 on the B.E. Banks list). Carver is the nation’s largest black-owned bank, with assets of $413 million, 50,000 customers and seven branches in the Big Apple. If the bid is successful, the combined entity would have assets of more than $525 million and count New York, Boston, Miami and Fort Lauderdale as its major markets. An expansion in New York alone would allow BBOC to tap into a market with a population of some 2 million African American consumers. And BBOC hopes to buy another bank or thrift in a major black market where it does not now operate, by this spring.

“We have seen this legislation coming for the past two years, and have been positioning ourselves for the changes,” Cohee says. “In today’s financial-services environment, particularly for black-owned banks, if you don’t remake yourself, you won’t survive.”

But as this brave new world dawns for African American-owned banks, some fear the old congeniality in the industry could be replaced by an increase in hostile takeovers.

For instance, take the increasingly bitter battle between Carver Bancorp and BBOC. BBOC’s takeover attempt has sparked one of the most contentious business disputes in Harlem in years, one that appears to be far from over.

Carver Bancorp won the latest round in late February when it kept two

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