Indecorp acquires Drexel National Bank

Black Enterprise, May, 1995 by Alfred Jr. Edmond

IN JUNE OF 1989, INDEPENDENCE Bank of Chicago was recognized as BLACK ENTERPRISE Bank of the Year. One of the nation's most prominent black-controlled financial institutions, with assets of $117.3 million in 1988, Independence had been among the top five largest black-owned commercial banks for the previous decade.

But what earned Independence the Bank of the Year honors was its landmark acquisition of majority-owned Drexel National Bank in Chicago. The transaction, which brought Drexel under the umbrella of Independence's bank holding company, Indecorp, marked the first acquisition of a healthy white-owned financial institution by a black financial institution.

The move was part of Indecorp President and CEO Alvin J. Boutte's aggressive acquisitions strategy aimed at taking advantage of a deregulated banking environment to gain a foothold in investment banking and foreign currency exchange, primarily unchartered territory for black banks.

Analysts estimate that Indecorp paid about $8 million--about 1.5 times book value--for Drexel. In return, they got $113 million in additional assets, $3 million in lending capacity, two new branches, $50 million in passbook savings accounts, Drexel's client base of 20,000 and a capital base of about $17 million.

"We have acquired a sleeping giant with enormous earnings potential," Boutte told BE at the time of the deal. "Our combined lending limit doubles with this acquisition. We can now take larger positions in deals throughout the city."

In 1993, Boutte and Indecorp Chairman George E. Johnson almost made more banking history when they agreed to be acquired by Detroit-based Omnibanc Corp. The deal would have created the first interstate black-owned banking operation, but unfortunately it fell through (see "No Big Deal," Newspoints, April 1995).

1988-1989

* February 1988--Former Wall Street investment banker W. Don Cornwell and New York attorney Stuart Beck established Granite Broadcasting to buy and operate a string of network-affiliated television stations. Granite debuted at No. 18 on the BE INDUSTRIAL/SERVICE 100 list two years later.

* June 1988--The BE 100 became the BE 100s, which is comprised of two lists: the BE INDUSTRIAL/SERVICE 100 and the BE AUTO DEALER 100. The growing number of African-American-owned auto dealerships, formerly included among the BE 100, prompted the development of a separate listing. Long Beach, Calif.-based ShackWoods & Associates, No. 1 on the BE AUTO DEALER 100, became the first BE Auto Dealer of the Year.

* November 1989--Bertram Lee and Peter Bynoe paid $8 million for a 37.5% stake in the National Basketball Association's Denver Nuggets, becoming one of a handful of African-Americans to own a major sports franchise.