A new lease on banking

Under new and younger leadership, Carver Federal Savings Bank digs in its heels for the long term by opening a mortgage and small business lending center

FOR EIGHT YEARS, THE BROOKLYN, New York-based Bedford Stuyvesant Restoration Corp. had been trying to secure a loan to help renovate its 250,000-sq.-ft. commercial plaza, a hub of activity to more than 1.5 million visitors annually. The plaza is home to such tenants as Pathmark Supermarket, a Post Office mini-station and the Billie Holiday Theater.

Finally, this past February, the nation's oldest community development organization was able to get a much needed $3.15 million loan from Carver Federal Savings Bank, the nation's largest African American-managed bank. The bulk of the money was used to refinance--at below prime interest rate--an existing $2.7 million mortgage.

"The loan is an indication that Carver has a new strategic direction that is evident by its going public and its new president," says Restoration President Roderick B. Mitchell. "Carver is looking to do business in a new way and to be more active in making certain types of business loans."

Indeed, the commercial loan Restoration received from Carver represents the largest single loan in the bank's history. It's also just one example of Carver's new lease on banking and its commitment to servicing the needs of the community.

Carver has gone through major changes over last two years. In 1994, it went public, becoming the first and only black bank on NASDAQ and one of only 11 black publicly traded companies. Last year, Richard Greene, an octogenarian who led Carver for 25 years, was replaced as director, president and CEO by 52-year-old Thomas Clark, Jr. Changing its mission, the bank now places greater emphasis on lending by way of a new mortgage center, which includes a small business loan division.

Despite these changes, Carver has retained its stature as the largest black-owned financial institution in the nation with $363 million in assets, of which 70% is invested in mortgage loans. About 21%, or $80 million, is invested in direct loans, compared with 13% in the previous year. Moreover, Carver is one of the safest and best run black financial institutions in the country.

In addition to increasing commercial and mortgage lending, bank is looking to shore up its services by opening new branches and providing enhanced services. These new services include ATM machines at each branch, a secured credit card and various investment options, among other things. The execution of a successful presidential succession, commitment to customer satisfaction, community dedication and a consistent record of strong capitalization all support BE 's choice of Carver Federal Savings Bank as the financial company of the year.

BUILDING FROM HUMBLE BEGINNINGS

Carver has come a long way from its days as a storefront with two employees and one cash register. Today, the Harlem bank is headquartered in a state-of-the-art, granite building, with nine teller service windows, 108 employees and all the amenities of a modern financial institution.

Carver has built a system of eight branches throughout the New York boroughs of Brooklyn, Queens, Manhattan and Long Island. In most cases, Carver bought the branches of white commercial banks fleeing from minority neighborhoods.

Named after African American scientist and educator, George Washington Carver, the bank was founded by a coalition of 13 black businesspersons, and civic and church leaders who were troubled by the difficulty African Americans were facing getting credit throughout the city. Originally chartered in 1948 as Carver Federal Savings & Loan Association, the financial institution changed its name to Carver Federal Savings Bank in 1986 as an attempt to lure more customers.

Greene, who was president at the time, felt the title of savings bank was more meaningful to the public. "It didn't change the nature of the operation," he says. (Carver is not a commercial bank but refers to itself as a community development bank.)

At the time, the only other financial institution servicing New York's African American community was Freedom National Bank, which was founded in 1964. Freedom's demise in 1990 signified the precarious position of minority-owned commercial banks, particularly since the reforms brought about by the S&L crisis of the late '80s.

Carver is a prime example that the strong survive. It was left unscathed by the S&L crisis, although a large proportion of S&Ls struggled and died in 1989, unable to meet the tough new capital requirements of the Financial Institutions Reform, Recovery and Enforcement Act. Not only did Carver withstand the changes brought about by the act, but it was touted as a model for the nation's thrifts because of its capital cushion of $238 million in assets.

Still, tragedy struck in 1992. The bank's original headquarters burned down due to an electrical fire, and it took four years before it reopened. Using insurance money and funds from their operating budget, Carver built a new $5 million, corporate, four-story office at its original location on 125th Street in Harlem.