B of A to Hear Offer on Units in Inner City : Banking: Minority-owned Founders wants behemoth to provide seller financing for unwanted branches in South-Central Los Angeles.
Less than two weeks after acquiring competitor Security Pacific Corp. in a stock swap valued at $5 billion, Bank of America Corp. has agreed to discuss a proposal that Founders National Bank of Los Angeles take over the banking behemoth’s unwanted inner-city branches.
The proposal by Founders, California’s largest black-owned commercial bank with $61.4 million in assets, comes amid longstanding community concern over closing of financial institutions in South-Central Los Angeles, which has only about 20 banks and thrifts serving 257,469 people. By contrast, there are 2,263 bank and thrift branches throughout Los Angeles County.
Carlton Jenkins, managing director of Founders, said his bank has not offered to buy any specific number of branches from B of A and acknowledged that Founders has the financial wherewithal to purchase only a single branch.
But Jenkins, as well as community and political leaders, are hoping to persuade B of A to provide seller financing to Founders and other minority financial institutions that have been steadily losing market share as mainstream banks and thrift have gotten larger through mergers.
“The most endangered species in American banking today is minority-owned banks,” said Robert Gnaizda, general counsel for the Greenlining Coalition, a San Francisco-based community group. “There are only 36 African-American banks nationwide, with assets of under $2 billion. . . . We feel there is a special obligation on the part of B of A to consider the needs of the African-American community and the African-American banks.”
City Councilman Mark Ridley-Thomas, who represents the 8th District encompassing part of South-Central Los Angeles, said he is “very supportive of the concept . . . . There have been no significant kinds of outreach efforts to the underserved community in South-Central Los Angeles. It seems to me that if the new Bank of America wanted to turn over a new leaf in terms of how it relates to the African-American community, it would seriously consider the offer.”
A spokesman for San Francisco-based B of A would not comment about the planned meeting on Friday with officials of Founders, which has branches in Gardena, Compton and at 3910 W. Martin Luther King Blvd. in Los Angeles.
However, Bank of America has told federal regulators that it will divest 52 California branches representing deposits of approximately $1.9 billion in order to mitigate the potentially anti-competitive effects of its merger with Security Pacific.
B of A has also indicated that it will not close a branch if it “is the only insured bank or thrift institution providing services in a lower-income service area,” according to a 95-page Federal Reserve System order issued in March approving the merger with Security Pacific.
And B of A has assured regulators that where there is redundancy among its inner-city branches, it will “attempt to sell one of the two branch locations to another financial institution instead of closing it” or transfer “the branch to a community-based nonprofit organization.”
Despite having little money to acquire branches, Jenkins insisted that seller financing would be preferable to B of A giving away unwanted branches if it can find no buyers.
“Giving a building away doesn’t help keep banking services in the community,” he said. “What I’m saying is here’s a solution to the problem--here’s another way the community would have another banking choice, and it would be with a minority-owned institution.”
Jenkins said Donald A. Mullane, a B of A executive vice president, and another B of A official agreed to the meeting last week after several months of inquiries from Founders. Jenkins said B of A executives had been reluctant to discuss any proposal until their merger with Security Pacific was consummated.
Mullane, who last year served on a city task force that examined how banks might better serve inner-city consumers, could not be reached for comment.
However, political and community leaders say concern about the flight of banks and thrifts from South-Central Los Angeles has intensified in the wake of the merger of B of A and Security Pacific--which operate about a dozen of the 20 banks and thrifts remaining in South-Central.
