United We Stand

The cooperative economics of consolidatingresources is the trend helping black-ownedbanks capture new customers in new markets

notes that these alliances spur economic development by supporting the participating banks and providing other initiatives that boost their capital growth.

A little over a year ago, Seaway was appointed lead loan syndicator of a consortium of 75 minority- and women-owned financial institutions. Seaway’s partner banks comprise the BE FINANCIAL 25.
The consortium, led by Seaway, marks the largest alliance of minority banks and the largest total loan commitment to date. The consortium has been tapped to provide a total of $245 million in lines of credit to seven major corporations: $65 million to General Electric, $30 million to Colgate-Palmolive, $25 million to McDonald’s Corp., $25 million to Philip Morris Companies, $20 million to Sarah Lee Corp., $40 million to Sears, Roebuck and Co. and $40 million to E.I. DuPont. Seaway’s senior vice president and director of marketing and business development, Emma Taylor, says the banks benefit from their newly established relationships with the major corporations. In turn, the corporations get to expand their minority vendor relationships.

Loan syndication is by no means a novel approach. In fact, Seaway has led consortiums for the past decade, but the biggest deal prior to the 1996 consortium involved around 40 institutions and $40 million. Last year, St. Louis-based Gateway National was the lead bank in a nine- member consortium of minority banks, including Seaway, which established a $10 million line of credit to Union Electric Corp.
The strate
gy has helped Seaway’s total assets rise to $247 million, up from $230 million in 1995. Total loans for the bank were $105 million, up from $86.97 million. But Seaway hasn’t relied too much on just one strategy for growth. Last year, the bank acquired a branch of Bridgeview Bank and Trust Co. in University Park, Illinois, some 30 miles outside of Chicago. Seaway seeks to increase its income by acquiring other branches, growing its investment trust products, financing local vendor programs, working with local churches and sponsoring bank-at-school programs.

The idea of bank consortiums and syndication lending has caught on with black-owned banks in a big way. First Southern Bank in Lithonia, Georgia (No. 24 on the BE FINANCIAL 25), was among four minority-controlled banks to kick in a $700,000 loan as part of a refinancing deal coordinated by NationsBank for Pepsi-Cola of Washington, D.C., L.P. First Southern also participated in a loan syndication with NationsBank to loan $2.5 million to Omega Psi Phi fraternity. A number of the mega- banks are willing to participate in loan syndications with minority banks as a way to meet Community Reinvestment Act (CRA) requirements.

In addition, black-owned banks are partnering with each other to complete nontraditional loans that help communities and local businesses. Nashville-based Citizens Savings Bank & Trust partnered with the Jefferson St. Missionary Baptist Church, the Metropolitan Development Housing Authority and Tennessee State University to finance a 22-unit dormitory facility for TSU students.

And Founders National Bank of Los Angeles is working with the Urban League and Nissan Motor Corp. to finance minority dealerships. The bank is also working with majority

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