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

For example, Boston Bank of Commerce is bailing water after snagging a red light on a watch-list compiled by Veribanc Inc., a bank analysis database in Massachusetts. According to Veribanc's statistics, Boston had $68 million in assets at the end of 1993, with a 5.6 percentage ratio of equity to assets, and a net income of minus $873,000, which is a 22.96% loss as a percentage of equity. "If you know anything about the New England economy, you know that we've been hit hard" says Ron Homer, CEO of Boston Bank.

Two small black banks not ranked on the BE FINANCIAL 25 LIST closed last year. New Atlantic Bank closed on August 12 due to lack of capital. Formerly located in Norfolk, Va., the bank's $15.1 million worth of assets were acquired by majority-owned Bank of Hampton Roads in Chesapeake, Va.

Elsewhere, Emerald City Bank, formerly Liberty Bank of Seattle, with assets of $10.477 million was acquired by majority-owned Key Bank, based in Albany, N.Y.

INSURANCE COMPANIES SEEKING NEW DIRECTIONS

There were no major changes in the ranking of the top 15 black-owned insurance companies. However, the group is ready to reap the rewards of higher interest rates.

The BE INSURANCE companies posted a total of $698.407 million among them and more than $20.268 billion of insurance coverage in force.

North Carolina Mutual Life Insurance Co. defended its first-place position with $217.741 million in assets and $8.7 billion of insurance in force.

In second place, Atlanta Life Insurance Co. underwent an executive change with longtime head honcho Jessie Hill Jr. stepping aside as the company's chairman and CEO. Replacing Hill is Don M. Royster Sr., former president and COO. Royster, who had been a vice president of operations at Washington National Insurance Co. in Evanston, Ill., has been with Atlanta Life since 1992.

"We were profitable, more in '93 than '92 [but still] not as profitable as we had planned to be," said Larkin Teasley, president of No. 3 ranked Golden State Mutual Life Insurance Co. in Los Angeles. "Interest rates are low and that is not positive for the industry. The life insurance industry is not a borrower. Lenders such as insurance companies that lend their own money and not deposits, ended up with considerably less interest income [than] they had in previous [years when interest rates were higher]."

Despite the problems, North Carolina Mutual's Bert Collins, president and CEO, said: "The future is bright, but you have to have good employees and find your niche. They [most smaller black companies] don't have to work on trying to find their advantage. The opportunities are there."

All the BE FINANCIAL respondents agreed that "meeting community demand" is the linchpin for all secular or niche market business, but the pledge may have a deeper significance when applied to the black community.

"Think of all of the social ills in the community. Well, the [financial institutions] are the controlling institutions in the community," says M.R. Beal's DeWalt. "The kinds of loans the bank can make in the community decide what type of community that will be."