Bob Johnson Looking to Buy a Bank

[CrimsonTide4]

By SIMON AVERY
AP Business Writer

LOS ANGELES (AP)-- Boston Bank of Commerce and Family Savings Bank have agreed to merge and create the nation's largest black-owned bank.

Together, the two private banks have assets of about $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 $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 nationwide with combined assets of about $7 billion, Cohee said.

Boston Bank of Commerce, established in 1892, has offices in Boston, Los Angeles and Florida.

Family Savings Bank, the largest black-owned thrift in California, has about $208 million in assets and branches in Compton, Ladera Heights and Pasadena.

[CrimsonTide4]

BET Founder May Try to Buy Thrift
Johnson Eyes Independence

By Nicholas Johnston
Washington Post Staff Writer
Friday, June 13, 2003; Page E01


Robert L. Johnson, the billionaire founder of Black Entertainment Television, said he is interested in acquiring a controlling interest in embattled Independence Federal Savings Bank, the area's second-largest minority-owned financial institution.

"I think the bank is a good institution and it has a great brand in the minority community," Johnson said. "It is a bank I would like to own."

Since selling D.C.-based BET to Viacom Inc. in 2001 for $3 billion, Johnson has been expanding his financial interests into a variety of enterprises. He is building hotels in some cities and recently launched an expansion franchise in Charlotte for the National Basketball Association.

Earlier this week he told a gathering at the NAACP headquarters in Baltimore that he was interested in buying a financial institution that would provide minority customers with better access to banking services. He said yesterday that he has already bought about 3 percent of Independence Federal.

But Johnson might have competition for the thrift.

D.C.-based Independence is widely considered to be on the block, though a board member denied earlier this year that the savings and loan was for sale. Independence already has one other potential buyer: Morton A. Bender, a longtime D.C. real estate investor who has accumulated a 9.8 percent stake in Independence Federal, gotten two of his representatives elected to the nine-member board and has sought permission from federal regulators to buy the 90 percent of Independence he doesn't already own.

Independence Federal has had several years of spotty performance and has gone through two rancorous proxy fights over the makeup of its board of directors. The savings and loan also became embroiled earlier this year in an embezzlement scandal at the Washington Teachers Union. Union staffers improperly cashed union checks at an Independence Federal branch. The thrift is currently being sued over the matter.

Earlier this year Bender led a proxy battle to shake up the thrift's board, eventually succeeding in April with the appointment of two new directors. The fight was Independence Federal's second in three years. In 2001, as the thrift's fortunes waned, dissident investors elected three members to its board.

In the recent proxy fight Bender charged the savings and loan was being badly managed. Chief executive Donna F. Shuler, the daughter of Independence's founder, unsuccessfully asked shareholders to vote against Bender's slate of directors, saying Bender's interests might conflict with other shareholders' because Bender has expressed interest in buying the thrift and merging it with Colombo Bank, a Rockville thrift he already owns. In proxy materials on file with the Office of Thrift Supervision, Shuler also said a Bender victory would put the minority-owned status of the institution at risk.

Shares of Independence Federal shot up earlier this year on sale speculation after the thrift hired investment bankers. They closed yesterday at $14.95, about 40 percent higher than they were at the beginning of the year. Analysts have said a thrift of Independence Federal's size could be worth as much as $30 per share, though because of its poor performance a sale price would probably be lower.

Bender said last night that he, as a shareholder, merely wants the thrift to perform better financially and hopes the new board -- elected April 30 -- will help it become more profitable. Independence Federal lost $424,000 in the first three months of the year.

"All I wanted was to get some directors on there that would do what they're supposed to do and would change the bank and have it make money," Bender said.

He said he hasn't made any decision on whether to ultimately buy the thrift outright.

"I might," Bender said. He added that he was unaware of Johnson's interest in the thrift.

Independence Federal hired an investment bank six months ago in an effort to improve shareholder value, a move widely interpreted as an invitation to potential acquirers.

Members of the board either declined to comment or could not be reached last night.

Independence Federal officials did not return calls seeking comment and Shuler, the bank's chief executive, has been on administrative leave since a special meeting of the board of directors last week. Her assistant, who declined to give her name, did not know when Shuler would return to work at the thrift.

Shuler is the daughter of William B. Fitzgerald, who founded Independence Federal in 1968. The thrift was formed to provide mortgage loans to D.C. residents, a market underserved by other banks in the wake of the riots that broke out after the assassination of the Rev. Martin Luther King Jr.

As the District became a more attractive banking market, however, increased competition from regional banks hurt Independence Federal's growth and margins. When Shuler took over the thrift after Fitzgerald's death in 1998, its size had already peaked and begun to wane. As of March 31, the thrift had $246.9 million in assets, down from its high of around $270 million in 1997.


© 2003 The Washington Post Company