Three African-American-owned banks are getting into the brokerage business through a joint venture with Jackson, Shanklin & Sonia Investments, a New Orleans brokerage firm.
Liberty Bank and Trust Co. of New Orleans, Harbor Bankshares of Baltimore, and First Tuskegee (Ala.) Bank have jointly taken a 49% equity stake in the venture, to be called Jackson, Shanklin & Sonia Securities.
The venture will be based in New Orleans, like its parent, also a minority-owned company. The banks have taken equal stakes, and Jackson Shanklin controls the remaining 51%. The four companies declined to say how much they had invested.
The broker-dealer received National Association of Securities Dealers approval Oct. 1, and this week will begin selling investment products in First Tuskegee's three branches. Brokers are already in place in Liberty's eight branches. Jackson Shanklin employs 10 brokers but will add more as needed.
First Tuskegee and Liberty had not sold investments in their branches. Last year Liberty launched a mutual fund, the Liberty Freedom Fund, which it sells through Jackson, Shanklin & Sonia Investments.
Harbor sells equities, mutual funds, and annuities in its eight branches through the third-party marketing firm Invest Financial Corp. of Tampa. Gregg Baty, vice president of the banking company's financial services unit, said Harbor's relationship with Invest would continue for the time being.
"The goal is to demonstrate there can be strength in numbers," said Charles H. Jackson, president and chief executive of Jackson Shanklin. By joining forces, three small banks -- whose combined assets total about $420 million -- "can do the same deals as Merrill Lynch," he said.
"This gives customers access in a way they couldn't get before," said Gregory St. Etienne, executive vice president and chief operating officer of Liberty. "People who are not financially savvy, but always trusted their banker, can put their toe in the water."
Jackson Shanklin faces stiff competition. Merrill Lynch, Charles Schwab & Co., and American Express Co. are all trying to attract black investors, a group that has lagged other market segments in buying investment products.
But Mellody Hobson, a senior vice president and marketing director at Ariel Capital Management Inc., a black-owned money management firm in Chicago, said the banks' customer relationships give them an advantage.
"A major barrier to African-Americans investing is lack of trust," she said. "A local bank that has lent people money for their first house can immediately capitalize on that bond."
Though the initial purpose of the joint venture is to offer African-Americans greater investment opportunities, Mr. Jackson said, Jackson Shanklin hopes eventually to put brokers in community banks throughout the country.
"Banks recognize if they don't offer this service, they stand a chance of losing a significant number" of customers, he said.
