Shell Boosts Bank’s Minority Lending Efforts
Shell Oil Co. will team up with Founders National Bank of Los Angeles to expand its reach into underserved communities, in what Founders executives Wednesday called the bank’s most significant corporate relationship yet.
In addition to $7.5 million in loans over the next three years, Shell, a unit of Royal Dutch/Shell Group, will deposit $1 million and purchase a $250,000 non-controlling equity interest in the South-Central bank, said Founders Chairman Carlton Jenkins.
The relationship, which builds on an array of corporate partnerships recently sealed by Founders, will allow the bank to take on more ambitious economic development projects because the oil giant will assume 40% of the risk on joint loans.
“It’s a major relationship for us and a major statement for Shell,” Jenkins said. “It’s very difficult for us as it is, given the market we’ve chosen. To have a partner willing to step up and share 40% of the risk allows us to do some deals that we might have not been able to do before.”
Shell President Phil Carroll in Houston on Wednesday announced the company’s first alliance with minority-owned Unity National Bank of Houston. The oil company is expected to announce the Founders alliance today.
Under the partnership, Shell will work through Founders to more than double the value of its certificates of deposit with 25 minority- and women-owned banks across the country, and to establish a fee-based credit facility totaling $59 million with 45 minority- and women-owned banks.
Founders will also help the oil company facilitate creation of new West Coast minority- and women-owned Shell dealerships, Jenkins said.
Founders, launched in 1991, is the largest black-owned commercial bank west of the Mississippi. It held $105 million in assets as of December, with a loan portfolio of $70 million for real estate, small business and consumer lending.
The Shell partnership comes as an increasing number of corporations look to stable minority-owned banks to help them expand their involvement in underserved communities.
Founders’ other corporate partners are Atlantic Richfield, Sumitomo Bank of California, State Farm, Automobile Club of Southern California, Bank of America and Citibank in New York. All are Founders shareholders.
Last November, Texaco established a $50-million credit line with a syndicate of 45 minority-owned banks, including Founders, but the company is not a Founders shareholder.
Jenkins said each relationship has allowed Founders to launch projects in the community but that none has “equaled the scope of the Shell relationship.”
