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

SAVINGS AND LOANS HANGING TOUGH

The consistency of performance among the black-owned S&L's has wrought few changes in the hierarchical order of last year's best performing BE S&Ls.

Carver Federal Savings Bank, in Harlem, N.Y., defended its No. 1 spot on the BE FINANCIAL 25 with $301.7 million in assets, $247.4 million in deposits and $198.3 million in loans. Carver, New York's only black-owned savings bank, made a move on the other side of the CRA last year. Instead of receiving outside cash, the bank increased its CRA activity by luring a $1 million account from banking giants Chemical Bank and Citibank.

In yet another move toward capital expansion, Richard T. Greene, president and CEO of Carver, announced in March that the bank had initiated a conversion from mutual to stock form.

According to Greene, customers with existing accounts may subscribe to purchase common stock shares at a range between $10-$15 through the end of the subscription period. After the subscription period ends, Carver's stock will trade on NASDAQ.

On the opposite coast, Family Savings Bank in Los Angeles returned to the fifth position on the list, and its win-win scenario for Family keeps getting better. Family posted assets of $181 million, up from $140.1 million a year ago. Deposits increased to $169 million from $114.8 million, and loans rose to $136 million from $115.2 million.

A year ago, Family Savings (FSB) was in danger of being shut down for failing to meet the minimum capital requirements set by the Office of Thrift Supervision. Located deep in South Central L.A., FSB is 93% owned by OFC Inc., a Washington, D.C.-based firm controlled by Opportunity Funding Corp. OFC solicits private capital for minority and community businesses.

Shortly before the L.A. riots wrecked the region last year, Keystone Holdings funneled $1 million through its subsidiary American Savings Bank to FSB. At the time, American had $17 billion in assets and its investment in FSB was lauded throughout the industry as a model use of the CRA.

Keystone is owned and operated by the billionaire Bass brothers of Texas, who also structured the investment to qualify as the first use of the qualified stock issuance provision of the Financial Institution Reform, Recovery and Enforcement Act of 1989. The provision allows an S&L holding company to acquire up to 15% in equity interests in an undercapitalized thrift without usurping control of that thrift. The cash infusion booted Family's assets up to $140 million and allowed the bank to acquire Enterprise S&L Association from the RTC for about $20,000.

The FDIC reports that nationwide in 1993, 42 banks with $3.8 billion in total assets failed. Rather than a dour outlook, that statistic is actually an indicator of the stabilization of the banking industry and an upswing for the general economy. According to the FDIC: 168 banks failed in 1990 for a total of $16.3 billion; 124 in 1991 for $64.3 billion; and 120 in 1992 for $46.1 billion.

Unfortunately, some black-owned institutions found themselves to be too overburdened by a myriad of ills to remain afloat.