Industrial Bank in Washington is breathing new life into the operations of the failed bank it bought seven weeks ago.
The $425 million-asset Industrial acquired the assets and deposits of
Industrial has been “overwhelmed” by the positive response it’s encountered since taking over City National's three branches, including a location on West 125th Street in Harlem, said CEO Doyle Mitchell.
“We’ve been extremely well received,” Mitchell said. “Services and lending had been limited, so people were excited that a viable, strong institution purchased City National. They’re also excited we’re a black-owned bank.”
City National had lost a total of $6.3 million in 2018 and the first nine months of this year. Its loan portfolio had shrunk by 60% over the five years prior to its closure, totaling just $60.1 million on Sept. 30.
Industrial, in contrast, has earned $938,000 this year, while total loans have increased by 24% since late 2014, to $308 million. The bank had been considering ways to expand between Washington and New York, going as far as engaging in preliminary discussions with a few banks, Mitchell said.
Newark, located just across the Hudson River from Gotham, is part of the sprawling New York metropolitan area that is home to an estimated 20 million people.
“We’d been thinking about this for a number of years,” Mitchell, said.
Mitchell, however, said he never wanted Industrial’s growth to result from another bank’s failure — particularly City National’s. “We’d been working with City National a number of years to help them out any way we could,” he said.
City National’s failure leaves 21 black-owned banks, down from 33 just after the financial crisis, according to the Federal Deposit Insurance Corp. The steady disappearance of black-owned banks has alarmed members of Congress. Rep. Maxine Waters, D-Calif., who chairs the House Financial Services Committee, called it a “crisis” during a Dec. 10 hearing.
The hearing was held to mark up a series of bills, including Rep. Gregory Meeks’ proposed Ensuring Diversity in Community Banking Act of 2019. Meeks, D-N.Y., introduced
Meeks' bill, which has attracted significant bipartisan support, would also create a new “impact bank” designation for institutions that make more than half their loans to low-income borrowers.
Mitchell has worked with the the National Bankers Association, a trade group representing black-owned banks, on issues important to minority depository institutions. He has lobbied for a revived federal deposit program that he said could provide a lifeline to a group of banks that struggles to raise capital in the private sector.
“The capital markets don’t necessarily understand our [customers] or our mission,” said Mitchell, who serves on the board of the banker association.
For now, Mitchell and Industrial are keeping busy, working to smooth the transition for City National’s clients. While Mitchell said he sees plenty of opportunities to pick off disaffected individuals and small businesses from bigger banks, the immediate focus will involve retaining existing customers that “stayed loyal through a lot of tough times."
Since the acquisition, Mitchell said he’s made numerous train trips to Newark and Harlem to meet customers. As soon as that process is complete, he plans to start calling on others in the community “who may not have done business with City National.”
Eventually, Mitchell expects to hire a market president to manage the new operations in New Jersey and New York. Until then, much of the work of introducing Industrial's brand to the area is falling on his shoulders.
That’s likely to mean a lot more time on the train.
“It takes time for word to spread,” Mitchell said. “I don’t have a large bank budget to advertise."
