Despite a tenuous national economy, some African-American holding companies, including some in the New York metropolitan area, are reporting a substantial increase in profits for fiscal 2005. At a time when African-Amer-icans are opting for “becoming their own bosses” in record numbers, the hope is that these banks will become major lenders to Black-owned businesses, which often cite poor access to financing as a key obstacle to expansion and growth. Many already offer credit lines, commercial real estate loans, equipment financing, accounts receivable financing and U.S. Small Business Administration loans.
Between 1997 and 2002, the number of Black-owned businesses grew by 45 percent, almost four times the national growth rate of 10.3 percent, according to Survey of Business Owners: Black-Owned Firms: 2002, a recently released U.S. Census Bureau report. Revenues generated by the nation’s 1.2 million Black businesses rose 25 percent to $88.8 billion for the same five-year period, the most current surveyed.
In May, Harlem-based Carver Bancorp Inc., the parent company of Carver Federal Savings Bank, announ-ced that assets for the recently ended fiscal year increased by nearly $35 million. Deborah Wright, Carver’s president and CEO, says the bank closed out the fourth quarter with a solid operating performance and profitability.
Wright attributes the growth, in part, to the bank’s recent acquisition of Community Capital Bank, a major small business lender in Brooklyn, N.Y., for about $11.1 million in cash. She announced the acquisition in April, with the deal expected to close by late September. “Community Capital has distinguished itself in the New York City marketplace as a leading SBA lender, particularly to minority and women-owned businesses and nonprofits. Their experience in these areas is an excellent complement to Carver’s existing strengths in commercial, construction and residential real estate lending,” Wright said at the time.
Also joining the ranks of African-American-owned banks that are enjoying record earnings growth is The Harbor Bank of Maryland. In April, the Baltimore-based bank reported that its 2005 earnings jumped by nearly half, or about $550,000, from the previous year. Joseph Haskins Jr., the bank’s CEO, says Harbor’s solid performance is due in part to strong loan growth, efficient operations and intense marketing of services offered by the bank. In addition, deposits to the bank jumped by about $220,000 compared with 2004.
Haskins says the bank’s 2005 earnings were the best in the bank’s 23-year history.
According to reports from the Federal Deposit Insurance Corporation (FDIC)—the short-term rates banks pay to borrow money are increasing, while the long-term rates they earn on loans remain virtually the same. This has increased competition among banks for deposits, thus making the increase in deposits at Harbor Bank significant, Haskins says.
At Carver, Wright says once the acquisition of Community Capital Savings is completed later this year, total assets for Carver Bank will hover near $900 million, solidifying its place as the largest African-American-owned bank in the country.
Currently, The Harbor Bank of Maryland has assets of about $234 million, making it the ninth largest African-American-owned bank in the country.