Holding Their Ground

To win today's turf wars, BE financial services firms must develop new products and find strategic partners

businesses, and churches in particular, which boosted 2004 profits to more than $2 million. To sustain business, the bank plans to sell some of its stock to raise $3 million to $5 million in capital. “A major problem with African American- or minority-owned banks, throughout the country, is finding a source of capital to facilitate expanding,” he says. “My plan is to raise more capital so that we can continue growing.”

Some black-owned banks might realize that it’s much easier to grow by acquiring a $100 million-asset bank than just trying to grow on their own, Young says. “They’ll see it as a faster way to grow, something that will allow them to grow more loans.”

MANAGING ASSETS IN A LESS BEARISH MARKET
For some black-owned asset managers, 2004 was a more bullish market than they’ve seen in recent years. Atlanta-based EARNEST Partners (No. 2 on the BE ASSET MANAGERS list) saw its assets under management rise a whopping 70%, from $8.2 billion in 2003 to nearly $14 billion in 2004. CEO Paul Viera says strong investment results from its portfolio of funds were key drivers of the growth. “Because we’ve had consistently strong investment performances over time, that helped us attract new institutional and mutual fund clients that brought in $1 billion last year.” The firm’s investment portfolios, which include small- and mid-cap funds, rose some 25% in 2004.

Top firms like Boston-based Rhumbline Advisers (No. 3 on the BE ASSET MANAGERS list) watched its assets under management grow nearly $3 billion last year, from $7.4 billion in 2003 to about $10.3 billion in 2004, while Seattle’s Pugh Capital Management Inc. (No. 15 on the BE ASSET MANAGERS list) had its assets under management grow by $219 million last year, up 32.5% from 2003. “We have just under $900 million in assets under management,” says CEO Mary Pugh. “A benchmark for us would be to hit $1 billion. We hope to hit it this year.”

Even a volatile equity market and tougher regulations stemming from mutual fund scandals in recent years didn’t deter some firms. Chicago’s Ariel Capital Management L.L.C. (No. 1 on the BE ASSET MANAGERS list) saw its 2004 revenues reach the $105.3 million mark, up from $73.6 million, and its assets under management jumped to $21.4 billion from $16.1 billion. Ariel Capital’s CEO, John W. Rogers Jr., attributed the growth to good investment performance and a stronger brand name recognition. “More and more employees are going to their human resources departments and asking to have the Ariel Mutual Funds added to their 401(k) plan investment options,” Rogers says. To continue to grow, Pamela Anderson, executive director of the National Association of Securities Professionals in Washington, D.C., said that like other firms, these companies will have to be fluid and dynamic. She also says they will have to form strategic alliances in their core markets and look for more global business.

INSURERS RETOOL TO FOSTER GROWTH
To remain vibrant, black-owned insurers are adopting plans to buy other companies, sell products more aggressively to

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