I walked into City National Bank, Newark, N.J.'s $75 millionset minority bank, with a slight ip on my shoulder. But Louis E. Prezeau, the Haitian-born accounnt who is president and chief ecutive, quickly removed that lip with his first response to my testions.

"Why do we need a minority bank? Because of limited capital and resources, minority banks can't provide more credit to minority people than a well-run community bank of any type could, as long as the officers who lend do not show prejudice. And often, with their vast resources, a major establishment bank can lend more," I suggested.

Louis Prezeau answered: "Any small borrower needs hand-holding, respect, and dignity, especially when serving minorities, where often special consideration must be rendered. He needs to see a responsive face behind the desk, willing to work with him and make the credit feasible by probing to find where the potential borrower has hidden resources. This exercise alone is very time-consuming. Seriously, would a larger bank take the time to draw this information out?"

Julian Marsh. City National's mortgage officer, an old friend and former student, added: "We take the time to carefully review every credit report. For example, a man may have a bad loan on his credit history, but by investigating further, we find it is only a minor payment dispute, sometimes less than $20 outstanding."

Mr. Prezeau cleared up another misconception of mine. I had always felt that church loans were an unfortunate credit on a bank's portfolio, because it is hard to repossess a church without terrible publicity.

"Not so," replied Mr. Prezeau. "Our church loans perform very well and are stable relationships. In most situations, the entire congregation commits to repaying the loan as part of their weekly offering."

"What if the congregation does not fulfill its obligation?"

"We will then repossess the church. There is indeed a big market for churches, with many smaller storefront congregations dying to get a church building. We get calls from brokers oftentimes asking if we have any churches available?"

But while lending at City National is done as at most community banks - asking for personal guarantees and being willing to foreclose if necessary to protect depositors and shareholders - on the deposit side its minority status makes this bank a little different.

The annual report indicates that 14 major institutions use it for tax and loan deposits with the Treasury.

More substantial a contribution to its health, and that of the country's other 57 minority banks, are relationships shared by Prudential and AT&T. These companies maintain secured lines of credit, generating fee income that City National spreads out to the other banks participating in the credit.

In addition, Prudential keeps $100,000 in certificates of deposit at each of the banks. City National also manages the Treasury's tax and loan program, under which earnings for tax deposits are distributed among other minority banks.

To me this support is the key. Mr Prezeau estimated, when asked, that an average of $10 million to $12 million of City National's $64 million of deposits would not exist if it were not a minority bank.

"All community banks get some support from state and city treasurers, but this is the extra support needed to continue to serve the underserved," he said. City National tries to justify this support by actively lending to small businesses, offering the Residential Express Mortgage program through a partnership with GE Mortgage (which generated 86 loan applications totaling nearly $10 million and issuing 35 mortgages reaching $4.5 million in 1993), and by working with the Small Business Administration and the New Jersey Economic Development Authority.

Mr. Prezeau, incidentally, is the incoming chairman-elect of the National Bankers Association, which comprises more than 50 minority- and women-owned institutions throughout the country.

The bank has 1,905 shareholders, but the last trade initiated by a market maker was in November 1990. The bank would love to have a market for its stock, but it fears that if it gets one, the buyers will not represent the community it serves, and the bank will weaken its ability to fulfill the mission it has had for over 20 years.

And Mr. Prezeau has another issue to face, not as unpleasant but also very familiar to the other community banks.

When his son Louis Jr., who is now with the bank, joined Marsh and his dad at our meeting, I asked whether in 10 years he would like to be with a minority bank or an establishment bank. He pointed to his father's chair and said, "I want to sit fight there."

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