Profitability, CRA Activity Up At Banks Owned by Minorities

WASHINGTON - Both community reinvestment and profitability are up at banks and thrifts owned by women and minorities, according to the latest study by Creative Investment Research.

"Overall, the Native American banks have increased their community outreach efforts the most, followed by black banks and Hispanic banks," Creative Investment president William M. Cunningham said. "Asian banks continued to do a poor job of reaching out to the community."

The study also found that minority-owned institutions are growing, both in numbers and assets. There are now 173 minority institutions, an increase of four from 1993.

And, they hold $41.5 billion of assets, up nearly $2 billion. Although net income fell $20 million, the median return on assets more than doubled in 1994, to 0.91%.

The company, which tracks minority-bank performance, uses a complex formula to determine which banks provide the most assistance to their communities while earning the highest profits. It accounts for the condition of the bank's community - including the number of people on welfare and unemployment rates - and how the bank is meeting those challenges.

"We look to see what they are doing," he said. "Are they working with Fannie Mae? Are they working with the Housing Authority. And, then we look at their CRA rating."

Mr. Cunningham found that banks owned by Native Americans did an exceptional job serving their communities, with two of the eight banks receiving outstanding CRA ratings.

"They may be showing us something here," he said. "They may know how to reach out to their communities."

Black-owned banks also improved. Of the 57 black-owned banks and thrifts, 11 received outstanding ratings in 1994, compared to four in 1993.

"They have finally gotten religion," he said. "They have finally gotten to understand that if they don't serve the credit needs of their communities, the large nonminority banks will."

Black-owned institutions should continue to thrive, he said.

"The ones that have survived have taken advantage of Resolution Trust Corp. programs to acquire assets and branches," he said. "It means it gives them an expanded geographic base."

Asian-American banks had the worst community reinvestment ratings, he said. Only three of 66 banks received outstandings.

Units of Hispanic-owned International Bancshares took the top two spots on Mr. Cunningham's top 10 list.

The $110 million-asset Commerce Bank in Laredo, Tex., took top honors, and $89 million-asset International Bank of Commerce in Zapata, Tex., finished second."They've always done a very good job reaching out to the community," Mr. Cunningham said of Hispanic-owned banks. Three others also placed in his top 10.

"You are always gratified when someone comes out of nowhere and recognizes you," said International Bancshares chairman Dennis Nixon. He said the company pushes all of its employees to participate in civic activities. That enriches the town, and thus boosts bank profits, he said.

"We are inextricably tied together," Mr. Nixon said. "The bank really is a reflection of its town."

Carlos Villarreal, Laredo's assistant city manager, said the bank deserves the recognition. "They are very much involved in the community and they carry out a lot of positive endeavors in the community," he said.

Third on the list was First State Bank of Hulbert, Okla., a $24 million- asset institution owned by Native Americans.

The top black-owned institution was $81 million-asset Citizens Federal Savings Bank of Birmingham, Ala., which came in eighth.

Citizens president Bunny Stokes Jr. said the thrift works extensively with local churches and community groups. Also, he said, it tries to stick to mortgage lending.

"We have stuck to our charter," he said. "We didn't try to be everybody else."

The top bank owned by women was Citizens State Bank of Choteau, Mont., which placed 10th.

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