BOSTON - Kevin Cohee and Teri Williams already know how to make millions in one of the most competitive financial services markets: credit cards. But their latest venture could be an even tougher challenge.
The black husband-and-wife investor team is on a mission. They consider themselves beneficiaries of the civil rights movement and affirmative action; now they want to give something back.
Having injected $1 million into minority-owned Boston Bank of Commerce in June, Mr. Cohee and Ms. Williams have drawn up ambitious plans to turn the $86 million-asset, two-branch bank into a national marketing force for blacks. Their plan would channel funds from customers nationwide into inner-city charities and economic development projects.
Their efforts are centered on two products: a new community development certificate of deposit, which they are now introducing in the Boston area, and the nation's first affinity card for blacks.
And though they've been at the bank for only five months, Mr. Cohee and Ms. Williams hope to launch the credit card nationwide by January.
"With all the government cutbacks and private funding sources drying up, what's really needed in the African-American community is a vehicle that will allow people who are geographically dispersed to come together and support the organizations that are pillars of our community," said Mr. Cohee, who became chairman and chief executive after the infusion.
The two 37-year-old Harvard Business School graduates gained their business experience in New York. Mr. Cohee worked as an investment banker at Salomon Brothers Inc.; Ms. Williams joined American Express Co. and by age 29 was its youngest vice president.
The two, who come from modest backgrounds, made their fortune in a leveraged buyout of an affinity credit card company in 1988. After selling off $40 million in receivables to First Chicago Corp. in 1992 for "multiple millions," they had enough cash to make an investment in Bank of Commerce.
The business plan centers on the notion that the problem facing the nation's black communities is not lack of resources but an inability to route enough money where it's needed.
The tendency of prosperous black families to move out of the inner city hinders the development of a sense of unity within the black community, Mr. Cohee said.
"Because we're integrated into society so thoroughly, we don't have a mechanism for utilizing our spending power to help our communities," he said. "People who have the means of support move away, while the people who don't, stay and the community deteriorates."
Mr. Cohee said the capital to solve the problem already exists within the black community, which spends about $350 billion per year, "more than South Africa and Canada spend." But, he said, "it's dispersed into American society and it isn't put into the community to help."
What the nation's black community needs, he said, is a conduit, a product that would "take blacks all over the country, capture their spending power, and redirect it back to the people who need it."
That's where Boston Bank of Commerce enters the picture.
"In most people's minds, a community bank in a particular geographic community offers services to that community," said Ms. Williams, the bank's senior vice president for marketing. Boston Bank of Commerce, for example, maintains a branch in Roxbury, a Boston minority neighborhood, in addition to its downtown headquarters.
"But the community is much larger than that," she added. There are people who live in Boston's Jamaica Plain neighborhood or Brookline suburb "that have financial needs and an interest in being a part of and supporting the African-American community."
To respond to those needs and interests, Mr. Cohee and Ms. Williams came up with the community development CD, which they have already begun promoting in the Boston area.
Superficially, the product has the same characteristics as any other FDIC-insured CD. But depositors can designate how they want the bank to invest their money (the minimum deposit is $10,000) - in loans for housing, commercial real estate development, small businesses, or community service projects.
On top of the CD, the duo is preparing for a January launch of the affinity credit card.
Under that program, an as-yet-undetermined percentage of the purchase value will be donated to a charity selected by the cardholder. Customers can select from half a dozen national organizations or a foundation that will donate to local organizations around the country.
"It's the first credit card targeted to blacks by an African-American- owned bank, designed to help black communities," said Ms. Williams. "It's the first in a lot of areas."
Donations from the credit cards will probably go to charities that help minorities, and loans using the CD funds will be made in the bank's market area of five mostly minority Boston neighborhoods.
Boston Bank of Commerce had sought capital several times in the five years before the Cohee-Williams investment, said William M. Cunningham of Washington-based Creative Investment Research, which studies minority-owned banks.
No other Boston bank has a stronger record in lending to minorities, he noted. Black leaders and minority banks from around the country have expressed support for the couple's efforts.
Ironically, even Ms. Williams' former employer, American Express, has been looking at marketing a card aimed at blacks, Mr. Cunningham said. "I think these guys are on to something really, really viable," he said. "They're right on target."
