Leaner, meaner and braced for change: black banks and thrifts are evaluating the impact of the Community Reinvestment Act, as insurance companies struggle to redefine their market - Black Enterprise Top 25 Financial and Insurance Companies - Cover Story

Black Enterprise, June, 1994 by Gracian Mack

Emma Chappell, chief executive officer of United Bank of Philadelphia, which was not ranked among the top 25 black financial institutions last year, has made several aggressive moves that landed the two-year-old bank in 18th position on this year's list. United, with $75.3 million in assets, $67.3 million in deposits and $48.9 million in loans, took successful advantage of the RTC bidding process and CRA opportunities as well.

In August, the RTC approved the sale of two Chase Federal Savings and Loan Association branches to United Bank. Chase Federal had total assets of $17.3 million and liabilities of $19.5 million.

One month later in September, United joined with PNC Bank Corp. and acquired two offices of the faded Home Unity Federal Savings and Loan from the RTC. Those two offices had combined deposits of $65 million. PNC is a majority-owned bank and investor in United under the CRA.

Industry observers say that United seems to be mirroring the firebrand approach adopted by City National's Prezeau. Just a few years ago, City, was in dire straits despite its then-current $65 million asset holding. Under a CRA initiative, First Fidelity Bancorp, a majority-owned institution, invested $367,000 in an equity infusion, which allowed City to grow from $61.9 million in assets in 1992 to its current asset base of $75 million in 1993. The fiscal condition of City was also helped by other financial and private investors for an additional $1.183 million in new money.

"Survival is a tough thing for a minority banker," said Prezeau. "But survive is what we have done in the past. We have done it through depressions and recessions. And we have done it by clearly demonstrating our knowledge of the industry and by acknowledging that we continually have to do more with less."

Prezeau mused that the black banking community has historically been very lobby oriented and an active participant in the push for federal regulators to establish and maintain so-called "fair credit" channels that create a favorable environment for black bankers to effectively and gainfully serve the black community.

"When I look at interstate banking today, we minority bankers should consider the benefits of mergers, both as a means to garner financial strength and tap into technological benefits", he said.

As if "putting his money where his mouth is, Prezeau announced in April that City National had established a $50 million line of credit with AT&T, the global communications and computer giant headquartered in New York. City will act as the leader of a syndicate of more than 50 minority banks located throughout the country.

Corporations like AT&T pay up-front fees to set up credit lines, similar to revolving lines of credit individuals have at local banks. Additional fees are paid when funds are withdrawn.

There is also news from lower in the ranks as Drexel National Bank inched up to No. 7 from No. 8 last year. The move pairs Drexel with No. 6 Independence Bank of Chicago. Both banks are part of the Indecorp sale under negotiation with OmniBanc Corp., a black-owned bank holding company that includes River Rouge, Mich.-based OmniBank. (See "Building a Financial Powerhouse" in this issue.)