Amalgamated CEO Eager to Grow Nation's Biggest Union-Owned Bank
Debtors and their lenders will square off before the Supreme Court next month over a bidding tactic that secured lenders use to preserve collateral in bankruptcy cases.March 20
Two private-equity groups have agreed to invest a combined $100 million in a union-owned, New York bank that intends to use the proceeds to beef up its lending.September 26
The choice of private equity's Edward Grebow to lead the union-owned Amalgamated Bank might still be considered an odd coupling if the deficit-laden institution wasn't bleeding out profits and capital.May 5
From a union march in Denver, to the halls of the U.S. Supreme Court, it has been a busy year for Edward Grebow, the president and chief executive of Amalgamated Bank.
Since the $4 billion-asset bank received a $100 million investment from private-equity funds WL Ross and Yucaipa last fall, Grebow has diversified the product line of the nation's biggest union-owned bank, which had been struggling under a pile of bad loans.
A former private-equity executive, Grebow, who was hired in May 2011, has used the capital to develop a new prepaid card, establish the New York bank's first residential mortgage unit and expand offerings in the trust department.
Last week, Grebow participated in the Service Employees International Union's annual conference in Denver, where organized labor protested income inequality. In May, the bank prevailed in a case brought before the Supreme Court, in which Amalgamated sought to protect its rights, as a secured lender in Chapter 11 bankruptcy cases, to engage in credit bidding.
To further bolster its street cred among progressive groups, Amalgamated was chosen as the official bank of the Occupy Wall Street movement.
In a wide-ranging interview Wednesday, Grebow discussed ongoing efforts to rebuild and remake Amalgamated, capitalizing on its core organized labor client base. Here is an excerpt.
How has the bank performed since it received the $100 million capital investment?
GREBOW: We've just finished our fifth consecutive profitable month. The first quarter was the bank's first real profitable quarter since 2009. We're not out of the woods yet, but we've appeared to turn the corner.
The bank had struggled with nonperforming loans. Have you sold any of those loans?
We've sold off very few of our loans. The bad loans we're working out, and the good ones, we're holding on to them. I just don't like the prices [of other distressed loan sales]. Really, it seems that in most cases, the prices in the market don't reflect the true economic value of the loan. Now that we have capital, we can afford to take time and get the best value.
What else has the capital allowed you to pursue?
We're taking a big piece of the capital and investing it in new products. We just rolled out our reloadable prepaid card. We're using our labor union and not-for-profit clients to distribute the card.
We just hired [someone] for our new residential mortgage operation, which will go live on July 1. And we've launched new products in our trust department. We've got $31 billion in assets in our trust department. We're picking up a lot of business from the big banks who don't seem interested in that business any more.
Our clients are labor unions and progressive groups, like the New York-New Jersey Regional Joint Board of Workers United, and they have a lot of interest in using the prepaid card in serving underbanked groups. Many of their members don't have access to bank accounts and they're finding the prepaid card very attractive.
We have a large remittance volume, but we're never done remittances through a card product. A lot of card users have relatives overseas [and funds can be transferred from one card to another card]. We expect the prepaid card to expand our consumer remittances business.
Large banks have decided that customers with few deposits are not profitable.
Do you disagree with them on that point?
We've seen a significant increase in our consumer banking business. We're one of the few banks in New York with real, free-checking accounts. We also have money market accounts and card products for folks who don't have a lot of deposits, as other banks have abandoned lower- and middle-income families.
With scale, this will be a good business for us. A lot of it depends on how you count profitability. The way [JPMorgan] Chase does it, they've decided that lower income families are unprofitable, but for us it's a good business. We participated in a major march against Wells Fargo last week [at the SEIU convention]. They take advantage of lower-income families, who we're trying to take care of.
What is your thinking on residential mortgages?
We've never had our own residential mortgage department before. We're aggressively going after single-family home mortgages. We think for our customer base … this is an important product. You need to underwrite carefully. We're going to focus on the New York market and some of the groups we work with. Refi is a lot of the market right now, obviously.
What are your thoughts the House panel approving a bill to exempt Emigrant Bank from the Dodd-Frank Act's higher capital standards?
I'm not a big fan of passing legislation for one institution. Otherwise I don't want to comment on that.