When a Church Could Use a Friend, an Orange Banker Shows His Faith

The Rev. Joe Ealy had a difficult time finding a bank that would lend him money to build a new church.

“For at least a year or a year-and-a-half, we tried almost every place to secure a loan,” Ealy said. He is the pastor of the Gospel Memorial Church of God in Christ in Long Beach. Starting in 1983, Ealy said he was turned down repeatedly when he approached a number of Los Angeles County banks.

“They were very nice and kind but they let you know that they were not interested in lending to a church organization,” Ealy said. “They said it was a public relations type thing--if they had to foreclose on a church, it would look bad in the community.”

Finally, one of the members of Ealy’s congregation of 257 saw Wallace Linn, founder, president, and chief executive officer of New City Bank in Orange, appearing on the “700 Club” show on Christian Broadcasting Network, a cable network.

Ealy and his congregation applied for a loan in November, 1984, and in March, New City agreed to lend the church $315,000 during the next five years.

Though unusual for most banks, lending to churches is common practice for Linn. Since founding New City Bank 20 months ago, Linn has made loans to 15 churches.

And that may just be a beginning. The fundamentalist Christian banker said he would allow up to 25% of his bank’s total loans to be made to churches and related religious organizations.

“God doesn’t deal clearly with corporations in the Bible,” admitted Linn, and he said there is a “crying need” for someone to teach churches and their congregations about debits and credits.

Lending money to congregations, Linn said, is part of his philosophy of assisting fellow Christians and others with their financial problems. He already hosts a Wednesday afternoon talk show, “Let’s Talk About Money,” on Christian-format radio station KBRT.

Formerly a vice president with El Camino and Lloyds banks, Linn founded New City Bank in October 1983. The name has nothing to do with the bank’s age: Chosen by Linn’s wife Vicki, it is a reference to the New City of Jerusalem in the Bible.

Since then, New City’s assets have grown to $28.5 million and deposits to $25.1 million.

Profit Reported

Like many start-up banks, New City lost $501,000 during 1983 and lost an additional $187,000 in 1984. But in the first quarter of this year, New City reported a profit of $75,942 and net income through May totaled $196,608.

Beside its growing church-related line of business, the New City is also expanding in secular directions and plans to open a thrift and loan subsidiary later this year. New City Bancorp, the bank’s holding company, also owns a car leasing firm, New City Leasing.

Linn believes his banking concept will be so successful that he is already mapping plans to franchise New City across the country and open a chain of Christian credit counseling centers.

“People often refer to us as a Christian bank,” Linn said. “I don’t know what that means. We are a full-service commercial banking institution that happens to be Christian. Our purpose is to provide the best banking service in the world.”

But even New City can’t lend money to every church.

Careful Look

“We look at a church just like we look at a business,” Linn said. “We don’t help all of them--we turn down more than we help.”

However, he said at New City “we understand what makes a church tick,” unlike other banks.

“The reason is they don’t understand how a church works and they don’t have any confidence in how a church operates,” Linn said. “Look what it might do to their image, foreclosing on a church.”

Bank analyst Gerry Findley agreed that many banks are wary of lending to churches, because bankers don’t consider churches to have a regular method of income. Instead, they are dependent on commitments made by church members.

“It’s the factor of the reliance upon a cash flow situation; it’s not like a product,” Findley said. “Essentially, it’s the goodness of somebody’s heart and the potential that the congregation will hold together,” he said.

Seek More Money

That kind of contribution is how Ealy and his congregation plan to get the rest of the money for their new church complex to be built at the corner of New York and Atlantic avenues.

“We’ve had bake sales, baby contests, and teen-age pageants,” Ealy said. “You name it, we’ve had it.”

Beside the $315,000 loan, the rest of the estimated $700,000 to $800,000 cost for the new building, able to hold 800 people, and the auditorium, classrooms, and offices will be covered by the church’s own fund-raising efforts.

“There’s nothing wrong with church financing if done in the proper way,” Findley said. And New City is “doing pretty well,” he added. “Their principles and their values are reasonably intact.”

But, he said, “our position is that the banking business has to be primary. You can’t be very charitable if you’re not making any money.”