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Bank merger aims to finance black neighborhoods
Thu Aug 1, 9:49 AM ET
By SIMON AVERY, AP Business Writer
LOS ANGELES - Boston Bank of Commerce and Family Savings Bank have agreed to merge and create the largest black-owned bank in the United States.
Together, the two private banks have assets of about dlrs 460 million.
"These are small banks that by bringing them together we start to create the same strengths you have in much larger, more vibrant institutions," said Kevin Cohee, chairman and chief executive of Boston Bank of Commerce Wednesday.
Family Savings Bank's core business of home mortgage lending will complement Boston Bank of Commerce's deposit business, said Cohee, who will take the helm of the new bank.
The combined entity will continue to use the celebrity status of some of its shareholders — including former NBA star Earvin "Magic" Johnson, entertainer Janet Jackson and former Motown Records president Jheryl Busby — to help establish a banking network in black neighborhoods.
"In these times of economic turbulence, this merger serves as a beacon of light and hope to the people living in our often forgotten communities. It guarantees access to capital, the key ingredient to our communities' stability and growth," Busby said.
The deal has been approved by both banks' board of directors, but still requires shareholder and regulatory approval. The transaction should be completed by the first quarter of 2003, Cohee said.
The definitive agreement by the two banks to merge all but ends a contentious auction that began when Family Savings' largest shareholder, WattsHealth Systems, ran into financial trouble and was forced to put its stake on the block.
Family Savings had agreed in March to sell to FBOP Corp., a large, white-owned banking company based in Illinois.
But community leaders protested, saying black ownership should be maintained, and convinced the board to consider other offers.
Last year, Boston Bank of Commerce purchased Founders National Bank, another Los Angeles-based black-owned bank, giving it about dlrs 260 million in assets.
Cohee said Boston Bank of Commerce will continue looking for other partners or acquisition targets in the black community to "change the economic paradigm of inner city America."
There are about 50 black-owned banks in the United States with combined assets of about dlrs 7 billion, Cohee said.
Boston Bank of Commerce, established in 1892, has offices in Boston, Los Angeles and Florida. Family Savings Bank is the largest black-owned thrift in California.
SOURCE: Virgin Records
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