United We Stand

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

partners to provide foreign currency exchange transaction services at the Los Angeles International Airport– an opportunity that will add a significant source of revenue for Founders over the next five years.

IN SEARCH OF THE COMPETITIVE EDGE
As super regional banks such as Fleet Bank and NationsBank continue to consolidate, they remain focused on economies of scale and technology. Big banks have produced cost savings and created efficiencies, thanks to downsizing and by adding more ATMs, banking by telephone and PC banking to their branch networks.

Black-owned financial institutions can’t afford to cut back on staff. In fact, many are hoping to capitalize on displaced, experienced bank executives. And instead of reducing branches, black banks must find the resources to expand by acquiring branches.

Still, this hasn’t stopped such black financial institutions as City National Bank of New Jersey (No. 8 on the BE FINANCIAL 25) and Industrial Bank in Newark, New Jersey, from developing their technology systems. “We realize the new generation is very computer-oriented. We are strategically looking at new methods to approach them,” says Louis E. Prezeau, City National’s CEO and president. The bank currently provides telephone banking. By year-end, it will offer PC/home banking and its Web site (www.cityNJ.com) will allow customers to fill out loan applications online.

Industrial Bank recently linked its local area networks to a wide area network to enhance the efficiency of its various divisions. It also has added banking-by-telephone services and PC banking for small businesses as a part of its cash-management product offering.

There is still some debate over how advanced black banks and thrifts can become and still serve their customers. Those black-owned banks that can afford ATMs, a home page on the Internet and telephony services are benefiting. But it will take longer for minority institutions to profit from PC/home banking, especially since major institutions haven’t seen a big pay-off from these services yet.

AN UPSWING IN MINORITY LENDING
The biggest drawing point for black financial institutions is personalized banking, which includes mortgage lending and financing small community businesses.

“We have done a number of non-SBA guaranteed loans that average in size around $100,000,” says Carlton J. Jenkins, president and CEO of Founders National Bank in Los Angeles. “But we intend to aggressively pursue more full-guaranteed SBA loans.” Founders’ commercial lending increased a good deal last year–from $ 19 million to $28 million–in small business loans.

In addition, Founders is establishing a new mortgage lending center. “We have a $60 million loan portfolio. About 60% of that is multifamily lending,” says Jenkins. “Originating single family homes will be a new direction for us. Founders is in the process of obtaining approval by Fannie Mae as a seller/ servicer of loans. Loans were up from $58.17 million in 1995 to $61.45 million last year; $46 million were in residential real estate loans.

With $372 million in assets, New York City-based Carver Bancorp Inc. (No. 1 on the BE FINANCIAL 25) has come a long way in its lending–with a $240 million loan portfolio, up from $59.36 million a year ago.

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