Banking on diversification: from investment banks to insurers, B.E. financial services companies are discovering that they must diversify to achieve the competitive edge - B.E. Financial Services Overview - Industry Overview

What's next? Wright plans to grow the bank's distribution network, now five branches and 11 ATMs, to 20 neighborhoods. Moreover, she seeks to retain existing customers through free online banking services--an option favored by 18% of depositors in a recent survey. Another part of her digital plan calls for a fee-based "e-commerce mart" that will link customers to 60 major retailers.

For Atlanta-based Citizens Trust Bank (No. 3 on the BE BANKS list with $292.4 million in assets), acquisitions could be the key to future growth. CEO James Young is shopping for other black-owned banks with assets between $20 million and $100 million, including two in Alabama. Seeking to complete a "friendly" acquisition by year's end, he has amassed a hefty war chest to target institutions in cities such as Chattanooga, Tennessee, and Little Rock, Arkansas. His goal is to buy banks or branches from other financial entities that will enable Citizens to become a $1 billion monolith.

Boston Bank of Commerce (No. 6 on the BE BANKS list with $261.7 million in assets) is another institution that seeks to surpass the $1 billion asset mark. In fact, the nation's first African American interstate bank recently made a bid for Los Angeles-based Family Savings Bank (No. 9 on the BE BANKS list with $196.6 million in assets). In recent years, BBOC has acquired Founders Bank, another Los Angeles-based institution, co-owned by basketball superstar-cum-entrepreneur Earvin "Magic" Johnson, pop star Janet Jackson, recording executive Jheryl Busby, and Miami-based Peoples National Bank. If successful in this latest conquest, the combined entity would give BBOC assets of $450 million, making it a contender for the nation's largest black-owned bank.

But completing the deal will be no easy feat. CEO Kevin Cohee's team is competing against three major bidders for Family Savings, including FBOP Corp., an Oak Park, Illinois-based holding firm with assets of $8.4 billion. "In L.A., we're offering a cash price in the eight digits for Family Savings," Cohee says. "Our focus for the remainder of 2002 will be to make that happen. But if we're not successful, we'll move on and look at another large, black-owned bank in another major city."

Cohee continues to stick to his script: gobble up underperforming firms, including black-owned asset management firms, insurers, and brokerages in major cities with large black populations, and transform the entities into profitable institutions. The three banks under his holding company had combined profits in 2001 of $2.4 million, up from $1.6 million in 2000. Says Cohee: "We want to be a black-owned and controlled entity that has the financial resources, products, and services that can serve and support the communities we do business in. We have the management team, technology, know-how, and, now, capital in place to do that."

MANAGING ASSETS IN TURBULENT TIMES

Last year was not kind to a number of asset managers. Durham, North Carolina-based NCM Capital Management (No. 4 on the BE ASSET MANAGERS list) had a staggering 17.7% drop in assets under management, from $6.027 billion in 2000 to $4.961 billion in 2001, and Utendahl Capital Management (No. 5 on the BE ASSET MANAGERS list) slid 12.2%, from $4.1 billion in 2000 to $3.6 billion in 2001.