About 30% of its assets are invested in direct loans compared with 13% in 1995. The bank is increasing efforts to take advantage of its certification to grant loans by the Federal Housing Administration and Fannie Mae.
City National maintains its lending strength, having become experts in the 203K program under the Department of Housing and Urban Development. The bank is working with local churches and a Muslim mosque, to help them take advantage of HUD programs.
In addition, City National recently partnered with the City of Newark to rehabilitate 20 houses that normally would be auctioned. “We are qualifying buyers based on their ability to pay the cost of the house, which ranges from $70,000-$80,00, then we will hold a lottery,” says Prezeau. “This way, we will have people who can afford the mortgage and put the houses back on the tax rolls.” City National has begun similar programs in Cleveland and the Bronx, New York.
When it comes to implementing new programs to expand products and services, there’s a limit to what some black-owned banks and thrifts can do. Many are simply trying to manage their operations. “When you have less than $100 million in assets, it becomes increasingly difficult to compete with the various new bells and whistles that keep getting developed,” says George Quick, CEO of Mutual Community Savings Bank in Durham, North Carolina (No.23 on the BE FINANCIAL 25). “We accept the fact we can’t be all things to all people.”
No doubt, personal service will be the key for most black-owned banks and thrifts. The one major advantage they have over the heavy resources of larger regional banks is their clear understanding of community banking. But in order to thrive and survive, they must use that advantage to create new opportunities to expand their institutions. Whether acquiring new branches, funding church economic development, providing low-to moderate-income housing or granting mortgage and small business loans, the challenge is on–and black-owned banks will have to prove up to it.
1997 TOP 25 FINANCIAL INSTITUTIONS SUMMARY
Black Insurance Firms: Diversifying To Reach New Markets
After the National Insurance Association, a Chicago-based trade group of black-owned insurance companies, decided that reclaiming the African American TX: market would boost their fortunes for 1996, it became clear that something more would be needed. Black-owned life insurance companies have primarily been in the home services part of the industry– issuing policies that cover burial costs. However, such policies are expensive to service and not performance. To break free from a financial vice tightened by a competitive industry, black-owned insurance companies must increase their market share by broadening their offering and services or by providing investment-related products to attract greater numbers of consumers.
A prime example of the successful use of this strat
egy is the Atlanta Life Insurance Co., which will launch an annuity product–a tax-deferred investment account. “Our goal is to become a conduit helping to close the net-worth gap between African Americans and the majority population through education and through services and products,” says CEO Charles H.