have been acquired were sold out of necessity, not because the owners wanted to sell. He says BBOC’s acquisition of the financially troubled Florida bank is a good example.
Gladue says one black-owned bank that could be a likely takeover candidate is the United Bank of Philadelphia (No. 14 on the B.E. Banks list), now under an enforcement agreement with that city’s Federal Reserve Bank to improve its operations and capital ratios. He says the inability of United Bank of Philadelphia to meet those demands could force it to sell out.
But Dr. Emma Chappell, chairman and chief executive of the United Bank of Philadelphia, says the community bank isn’t for sale. Moreover, the bank is making changes to remain independent and meet regulators’ demands.
“We have no intention at all to sell,” Chappell says. “We’re taking steps to make sure we can produce the type of revenues and profits we’ll need to continue our growth and meet shareholders’ needs.”
She says the black-owned institution is taking action to reduce expenses, increase profits and revenues and is implementing a succession plan to ensure it has the leadership to sustain its growth and longevity.
Chappell says that those changes include consolidating its eight-branch network in mostly inner-city neighborhoods to five to cut costs. She says the company is also trying to offer new products, such as car insurance and life insurance, by early next year. She says that move would allow the bank to expand its product mix and provide it with a new stream of fee income. Chappell also says United Bank of Philadelphia is expanding credit card lending to existing and new customers and that it has grown to nearly $150 million in assets with eight branches and 35 ATM locations.
COMMUNITY SERVICE NICHE IS KEY
But not all bankers agree the law will in itself bring more deals among black-owned banks. Rather, the unique niche they serve will keep them independent.
Lester Johnson, chief operating officer at the Harbor Bank of Maryland in Baltimore (No. 8 on the B.E. Banks list), says most black-owned banks are probably not vulnerable to being acquired by larger banks because of their small asset size, branches in predominantly black neighborhoods, small market share and, in some cases, level of profits.
“As community banks, black banks have always been more familiar with their customer base and generally able to provide better service,” says Johnson. “In that regard, the bank reform bill shouldn’t have a significant impact.”
Whatever the results, most black bankers agree the law will forever change how minority-owned banks do business, if by nothing else than forcing them to reexamine their operations and cope with the industry’s latest transformation.