York. His goal: 12 branches in New Jersey and New York with assets of $300 million by 2005. “The bank is well positioned and capitalized,” he says. “We have aggressive growth plans to expand our branch network.”
At New Orleans-based Dryades Savings Bank (No. 14 on the BE BANKS list with $123.35 million in assets), CEO Virgil Robinson Jr. spent the last year getting the institution into shape. By slashing expenses, boosting fee income, and increasing higher mortgage lending, it posted a $300,000 profit last year, compared to a $44,000 loss in 2001.
And Dryades seems like it’s just getting warmed up. The institution recently sold two unprofitable branches in New Orleans, which could help boost after-tax operating profits to $680,000 in 2003. Moreover, it will expand mortgage lending throughout Louisiana and Mississippi in an attempt to grow its mortgage loan origination to $300 million by 2005, up from $42 million last year. But Robinson admits such maneuvers in today’s business climate will not be easy: “In a booming economy, black-owned banks already have tough challenges. They’re multiplied when you have a tougher economy.”
MANAGING ASSETS IN A BEAR MARKET
For many black-owned asset managers, 2002 was one of the most turbulent times they can recall. Durham, North Carolina-based NCM Capital Management Group Inc. (No. 8 on the BE ASSET MANAGERS list) saw its asset under management drop a staggering 57%, from $4.96 billion in 2001 to $2.13 billion in 2002. The reason for NCM’s
decline? It lost two key subadvisory relationships — one with The Dreyfus Corp. and another with The Calvert Group. “I guess if I had a mutual fund company, and the market performed the way it did, I’d cut some subadvisory relationships and reduce my fees as well,” says CEO Maceo Sloan, who witnessed heavyweights such as Fidelity and Alliance Capital trimming staffs by as much as 40%. “I’ve been doing this for over 30 years, and I’ve never seen it this bad.”
NCM wasn’t alone. Top firms such as Baltimore-based Brown Capital Management Inc. (No. 5 on the BE ASSET MANAGERS list) saw its assets under management plunge 25%, from $5.6 billion in 2001 to $4.2 billion in 2002, while Cleveland-based Goode Investment Management’s (No. 12 on the BE ASSET MANAGERS list) fell 11.43%, from $1.4 billion in 2001 to $1.24 billion in 2002.
Despite the recession, war fears, and a bearish equity market, some firms had a bullish year. Chicago-based Ariel Capital Management Inc., the BE ASSET MANAGERS’ reigning champ, reaped big gains by applying its “slow and steady wins the race” approach. The firm’s 2002 revenues grew to $56.7 million, up from $34.3 million in 2001, as assets under management rose to a whopping $10.3 billion from $7.8 billion.
Ariel Capital’s CEO, John W. Rogers Jr., attributed his firm’s substantial growth largely to three consistent years of strong performance and beefing up sponsorship and marketing efforts. “It appears that with this volatile market, many investors liked our steady and conservative approach to asset management,” he asserts.
INSURERS DIVERSIFY NEW REVENUE SOURCES