City National Bank's Louis E. Prezeau

Walking into the headquarters of City National Bank in Newark, N.J., memories of my first bank experience with my father came to mind: a quiet, intimate setting; no fancy lighting or décor; and people who looked like me. Fast-forward to the bank around the corner today, with its video kiosks, fancy ATM machines, gifts, e-banking services, late hours and people of all shades representing Blacks, and you can’t help but wonder how City National can compete.

The truth of the matter is City National Bank, along with other Black owned and operated financial institutions, may well be the saving grace of small minority businesses. While many Black-owned banks are slow to change the way they operate or look, they remain true to their mission: They’re responsible to the communities they serve. It is to these neighborhood banks that many small business owners return when they fail to obtain the capital they need to grow their businesses from the major banks.

The Turnaround
Established in 1973 in Newark by Charles L. Whigham, a local businessman and community leader, City National is the only Black owned and operated commercial bank in the state of New Jersey. It has branches in Newark, Hackensack and Paterson, N.J., as well as in Harlem, Brooklyn and on Long Island in New York. Faced with closure by federal regulators for allegedly questionable business practices, City National posted a $17 million loss in 1988 and lost most of its longtime clients. Today, the bank shows more than $300 million in assets, $281 million in deposits, $16.3 million in capital and $159.4 million in loans. The turnaround is attributed to the management skills of Louis E. Prezeau, a Haitian native who was named president and chief executive officer in 1989.

“What I offer is a niche market. I do the deals that are too small for the major banks. The small deal makes a lot of sense to us. We lend money when other banks are not willing to take a long-term risk with them, so I think this market will be around for a long time,” says Prezeau. A CPA with strong management skills, Prezeau has been working with community-based groups and churches to make a noticeable difference in New Jersey and other urban markets that the bank serves. Under his management, City National has become a leader in church loans for new construction, expansion and revitalization projects throughout Newark. It is also a competitive commercial mortgage lender.

The bank is certified by the U.S. Small Business Administration as a preferred lender, which means it can approve requests for SBA loans in-house rather than going through the time-consuming process of obtaining approval from the SBA itself. Indeed, Prezeau has made good use of federal programs and the incentives they provide to larger banks for working with smaller institutions like City National to increase the number of loans it makes to small businesses. He has also used the various programs of the New Jersey Economic Development Authority and the New Jersey Housing and Mortgage Finance Agency to mitigate risk and meet customer demand. His partnerships with nonprofit organizations and faith-based institutions have spurred a renaissance in Newark.

“I think that my product is as good as the other bank products. Not only that, I think we treat our people with a lot more respect and dignity. No matter who you are, no matter how poor you are, as long as I’m president of City National Bank you will be treated with dignity. I don’t think the other banks can service everyone with that amount of dignity. I need to be [conscious] of whom I serve and what their needs are,” Prezeau says.

As a result of its community loan portfolio, the bank enjoys an “outstanding” Community Reinvestment Act rating, the highest rating assigned an institution by the FDIC following an evaluation of the institution’s performance in meeting the credit needs of the community it serves. The Treasury Department has also designated it a Community Development Financial Institution and Community Development Entity. City National’s turnaround drew national attention when it was awarded the Treasury Department’s Bank Enterprise Award.

New Challenges
But Prezeau and his staff are now faced with the challenges of a new generation of banking customers and an economic environment characterized by loss of jobs, an insecure middle class and highly competitive financial institutions. Visionary that he is, Prezeau is ready to meet these challenges head-on.

“There is always going to be a segment of the population that believes in hands-on services and access to the decision maker. If they have a problem they can get to Louis Prezeau, president of City National Bank, and we can resolve it. They can get to my executive vice president or my senior people a lot faster than if they went to CitiBank, Commerce or anyone. That’s what we have to sell. You can compete with products, but service is the key to a good bank . . . flexibility, service, access,” he says.

Though still ignored by Wall Street, shares of publicly traded Black banks are now some of the nation’s best-performing equities. With rising profits, lower interest rates and greater visibility in the communities they serve, they continue to deliver higher returns to their investors. Still, one wonders how, in a tough and highly competitive banking environment, City National can continue to offer above-market performance, make a profit and still be socially responsible. It’s all about managing your business well, Prezeau says.

“You have to be smart in knowing how to invest your money. We can provide an environment that is appealing to the African-American market and still make a profit. If you’re a smart banker and [you] control your cost and manage your risk, there is an opportunity to have a fair return,” he says. “The biggest dilemma for so many minority businesses is having good financials. You can’t have your cake and eat it too. If you want to create a business that is viable and that people are willing to invest in, you have to give them the confidence that you have good financials. Many times you would like to do a deal, yet where is your ability to repay me? Our job is to educate the business owner that if he wants to become successful, he has to pay the price,” he says.

Standing Above Others
City National has taken on the heavy load of being an engine of Black economic development, of being a bank that stands above others when it comes to social responsibility. “We want to be the most profitable minority institution with a heart. Our mission is a lot greater than those of the new banks. My goal is to have an organization that works with the community to open up opportunities for African-Americans to become wealthy and improve the communities we live in,” Prezeau says. “There is no better advertising than doing the right thing. If we do as well as I think we can do, the people will stay with us . . . and I know that we can do it,” he says.