Amalgamated Bank of Chicago faced a dilemma last summer when its former president became the Clinton administration's point man on getting the North American Free Trade Agreement through Congress.
"After a 70-plus year history of being pro-labor, we didn't want to get a bum rap," said Robert M. Wrobel, the bank's president for the past year. "Labor was not on the Nafta band-wagon."
So Amalgamated -- one of a handful of U.S. banks devoted to the labor community -- bent over backward to let its customers know where it stood.
"We did make it very clear that we have a very close relationship with labor and, if labor felt that strongly about Nafta or any other situation, that the bank's sympathies were with labor," Mr. Wrobel said.
In fact, the $500 million-asset bank was founded by the Amalgamated Clothing Workers Union in 1992 and the union continues to represent the bank's employees today. In addition, the union continues to operate Amalgamated Bank of New York, which opened in 1923.
In 1966, the union sold its Chicago bank to a group of private investors led by Eugene P. Heytow, now the bank's chairman and chief executive. But the bank stuck to serving unions.
Unions Hold 5% Stake
"The other banks that were around didn't have the same expertise in the area," said Mr. Heytow, who had previously owned a bank on Chicago's South Side, but had no prior experience with unions.Amalgamated Bankof Chicago at a GlanceEstablished 1922President Robert M. WrobelAssets $500 millionROA 0.91%ROE 14.19%Net interestmargin 4.93%Employees 180Source: Amalgamated Bank of Chicago,Ferguson & Co.
In a sign of the continued commitment to labor, Amalgamated remains 5% union-owned.
Mr. Wrobel, a soft-spoken 45-year-old, joined the downtown Chicago-based bank in 1972, was named executive vice president in 1985, and became president last summer.
Board member Mickey Holzman said he initially was concerned about Mr. Wrobel's relative youth. However, "I think he's doing an outstanding job," said Mr. Holzman, business manager of Carpenters Union Local 1539 in Northbrook, Ill., which has done business with Amalgamated since the bank's early days. "He's young, he's very aggressive and very knowledgeable."
The roughest part of Mr. Wrobel's year-long tenure came just after he took the reins. The bank's previous president, William Daley, assumed a key role supporting Nafta -- to the dismay of many of Amalgamated's customers.
From Political Family
Mr. Daley had joined Amalgamated in August 1989 and was elected president in September 1990. The brother and son of Chicago mayors, Mr. Daley was President Clinton's campaign chairman for Illinois in 1992 and -- according to Mr. Wrobel -- was on a short list to join the cabinet after the election.
When he didn't get the nod, "I think it caused him to step back and reflect on his career," Mr. Wrobel said. Mr. Daley left the bank in May 1993, returning to his law practice. In August became chairman of the president's task force on Nafta.
Some Amalgamated customers, including some who didn't realize he had left the bank, mis-interpreted the bank's stance. "A union may have said, 'We're not sure we want to bank at Amalgamated because of Amalgamated's support of Nafta, so we're going to pull our accounts and move them somewhere else,'" Mr. Wrobel said.
However, Mr. Wrobel and other officers spoke with Amalgamated's union clients to ensure that they understood the situation and that Mr. Daley no longer had ties to the bank. The bank didn't lose business, Mr. Wrobel said.
Aside from the short-lived Nafta confusion, Mr. Wrobel and his colleagues have continued to focus on the labor niche, as well as state and local government, small-business, and professional customers.
For 1993, the bank posted return on assets of 0.91% and return on equity of 14.19%. Equity capital to average assets was 6.78% and Tier 1 risk-based capital was 16.2%.
"I think you could draw the conclusion they're adequately capitalized and well run," said Charles Hebert, senior vice president of Ferguson & Co. in Irving, Tex. "It looks like a clean, middle-of-the-road operation."
Examining the bank's call reports, Mr. Hebert concluded that Amalgamated conservatively manages its balance sheet, pays attention to fee income, and has virtually no problem assets.
One big income source is the bank's trust operations. In January 1993, the bank launched its wholly owned subsidiary, Amalgatrust, which focuses on the investment management and custody of labor unions' pension and health and welfare funds.
The bank's own trust department continues to do land trust and corporate trust work.
Combined assets held at Amalgatrust and the trust department were $7.2 billion in 1993, the bank reported.
Its trust business has allowed Amalgamated to expand to Washington, D.C., home to the international headquarters of many of its local unions. In fact, Amalgamated opened a trust office in the nation's capital a few years back.
Tie-In with Goldman Sachs
And to increase its investment management service and lure larger funds, in 1990 Amalgamated struck a strategic alliance with Goldman Sachs Asset Management.
"That has given us the opportunity to go after $50 million or even $100 million at a crack from some of these funds that are $3 to $5 billion," Mr. Wrobel said.
Cross-selling products and services to existing clients is an important part of the bank's strategy.
"The more products that one customer is buying from us, the tougher it's going to be for one of our competitors to knock on the door and take the business away," Mr. Wrobel said.
Another big line of business for the bank is its national credit card program, which was begun in 1987.
About $115 million of the bank's $168 million loan portfolio is consumer loans, according to Ferguson & Co. Of those, $108 million are in credit cards. "That's why their net interest margin is so high," Mr. Hebert said of the bank's 4.93% interest margin.
Customers of the bank's union-affinity program receive the normal affinity-related low rates and no annual fee. But this card also has a skip-payment option in the event a union goes on strike. Cardholders can skip up to five months, by which time most strikes are settled, Mr. Wrobel said.