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Johnson Buys Bank to Build Black-Focused Financial Firm
Robert L. Johnson is building a financial services empire.
(Peter Morgan - Reuters)
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Johnson would not disclose the purchase terms, but described them as "nominal." He also would not disclose how much of his own money he plans to invest in the new business.
Urban Trust will be headquartered in Bethesda and plans to open its first branch this summer at 1350 I St. NW, on downtown's Franklin Square.
Dwight L. Bush, a former Sallie Mae and Chase Manhattan Bank executive, will be Urban Trust's chief executive. He said yesterday that the bank will focus at first on offering basic deposit and lending services in the Washington market, and that it plans to open several branches in the next two years.
However, Bush said, the company plans to immediately begin marketing college loans nationally, through university financial-aid departments.
"Most important for us at the start is to validate the investment premise in Washington," Bush said. "But the student loan business will be a nationwide business."
Bush said a key part of Urban Trust's business plan is to provide financial education to the black community "to help them gain and hold onto the wealth they're creating. You'll see us spend a lot of afternoons in churches giving seminars on getting a home mortgage."
Dozens of black-owned banks were formed in the 1970s and reached their financial peak in the mid-1980s, according to William Michael Cunningham, head of Creative Investment Research Inc. of Minneapolis and a longtime expert in minority financial institutions.
In the 1990s, tougher federal community reinvestment laws forced major banks to better serve urban black neighborhoods, prompting a new wave of competition for black-owned banks.
"The age of socially responsible community investment really began with black banks," Cunningham said. "But they're not the only game in town anymore. What happened is that minority banks didn't innovate. They thought they could hold on to their little niche. But the demand changed as their neighborhoods gentrified, and the supply changed as bigger banks moved in."
Cunningham thinks that Johnson's efforts could bear fruit, particularly if he focuses on black communities on the East Coast, where Cunningham said black wealth is growing most rapidly.
"The Washington area is about as good a banking market as you can find," Cunningham said.
