Turf War

As megabanks make a grab for market share, black institutions hold their ground via joint ventures and new financial products

Carver Bancorp in New York, the largest be bank in 1998. With a $5 million loss in the third quarter of 1998 — the result of problem loans — and a sagging stock price, Carver recently fired Thomas Clark, the former banking regulator who served as its president and CEO for four years. "The major reason for the loss was a venture into a new business — consumer lending," says Chairman David R. Jones. "Our expertise has been in home mortgages. We’re likely to begin by emphasizing our strengths."

For now, four of Carver’s board members are spending a day or two a week at the bank to stabilize operations. "Our capital ratios have not been impaired," says Jones. "We are not in a turnaround situation." And the recent announcement of Deborah C. Wright, a former investment banker, as the institution’s new chief will mean that part of Carver’s focus will be placing more dollars in developing inner-city communities — namely Harlem.

But such talk hasn’t kept the wolves at bay. Boston Bank of Commerce (No. 18 on the be banks list with $105.4 million in assets and $77.1 million in deposits) recently made overtures to acquire the institution. The offer was turned down by the bank’s board as not being in the shareholders’ best interests.

All banks are wrestling with the Y2K bug, the threat that computers will go haywire when the calendar flips over from 1999 to 2000. "Community banks will be ready for Y2K," asserts Judith Knight, director of the Center for Community Development at the American Bankers Association. "They’ve been taking preparations very seriously. The big problem now seems to be dealing with customers’ perceptions." Efforts to cope with the Y2K problem haven’t kept black banks from keeping up with technology. Many have developed Websites to provide information to the public; others are preparing for the introduction of online banking.

As black banks make their operations more nimble and efficient, Urrabazo of the National Bankers Association believes that minority-owned institutions need not be overly concerned with competition from large banks. "They may be a bit cheaper on some products and services, but we’re quicker," he says. "We react to changes in the marketplace more rapidly, and we can approve a transaction while a large bank is waiting to hear from its regional headquarters."

BE banks CEOs believe their institutions will continue to thrive, even in today’s competitive climate, by fostering relationships and inspiring loyalty. "Community banks can be successful," says City National’s Prezeau. "The key is to fill a niche that’s otherwise not being served and to offer customers a personal touch. We offer everything a major bank can offer, but we do it with more heart."

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NUMBER OF EMPLOYEES 2,030 2062 1.58%
ASSETS* $3,572.372 $3,924.341 $ 9.85%
CAPITAL* $304.684 $315.118