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CEO Tries to Save Historic Black Bank

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From Associated Press

Kim Saunders left a vibrant financial institution in Washington for a rescue mission: reviving a century-old black-owned bank hobbled by bad loans and dogged by government regulators.

“Everyone should do everything to keep it operating,” said Saunders, president and chief executive of Consolidated Bank & Trust Co. “I think it’s a national treasure.”

She doesn’t have much time. Regulators are alarmed by deteriorating financial conditions at Consolidated, the oldest continually operating black-owned bank in the country. The privately held institution founded by Maggie Lena Walker, the first female president of a chartered U.S. bank, has struggled with millions of dollars in loan losses.

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“There’s a great deal of work to be done in a very short time, and the institution will definitely present a challenge,” said Banking Commissioner E. Joseph Face Jr. of the State Corporation Commission’s Bureau of Financial Institutions.

The Federal Reserve Bank of Richmond and the Bureau of Financial Institutions are concerned by, among other things, Consolidated’s dwindling capital-to-assets ratio -- a key measure of a bank’s health.

By Sept. 30, that ratio had dropped to 4.1%. At less than 4%, a bank is undercapitalized and must find a way to attract funds. At less than 2%, a receiver could be appointed and the bank might be closed.

The bank launched a campaign to raise $3 million in capital by the end of 2003. Although that target was not reached, Consolidated said it had commitment letters from potential investors for amounts exceeding its goal.

In 2003’s third quarter, Consolidated lost almost $470,000, or $1.86 a share, compared with a profit of $1.2 million, or $4.96, a year earlier.

Saunders said she believed she had the background to fix it. “Everything I have done has prepared me for this job,” she said.

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Saunders, 43, was an assistant treasurer at Chase Manhattan Bank in New York. She later became executive vice president and chief lending officer of City First Bank of Washington. She worked at City First from its start in 1998, establishing a reputation as a tough but fair lender.

Consolidated has been under scrutiny for more than three years; in September 2000, it agreed to strengthen its management structure, submit financial status reports and maintain an adequate allowance for loan losses.

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