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April 7, 2005

Entrepreneur launches online bank

Mark Jewell

(AP) — America’s first black-owned bank to obtain a federal charter in a decade hopes to offer Internet banking services primarily to middle- and upper-income blacks nationwide.

By targeting this growing consumer segment, Boston-based BankBlackwell is diverging from the strategy of most existing black-owned banks, which focus on low-income, inner-city clientele traditionally underserved by bigger banks.

According to a prospectus BankBlackwell began distributing on Monday to potential investors, the nation’s growing ranks of wealthier, suburban blacks face few options for investing in banks serving their communities.

Most black-owned banks focusing on an urban clientele “have struggled to be competitive in terms of price and convenience, because they have been unwilling to forego their historical core constituency but lack the resources necessary for new product development, targeted marketing initiatives and suburban branch expansions,” according to the prospectus.

BankBlackwell, which hopes to raise $17 million through a stock offering, plans to reduce overhead by operating no branches, instead focusing on online banking. The bank will offer savings and loan products primarily to black customers and black faith-based organizations, including churches.

Officials with BankBlackwell declined to comment, citing regulatory restrictions on what they can say in advance of the initial stock offering.

The bank is believed to be the first black-owned bank to secure a federal banking charter since New Orleans-based Dryades Savings Bank was chartered in 1994, and will join just 47 black financial institutions operating as of last September, according to federal records.

Those banks hold just $5.7 billion in assets, compared with $104 billion at the nation’s 36 Hispanic-owned banks.

BankBlackwell’s founder is James Mundy, a former executive at the nation’s second-largest black-owned bank, Boston-based OneUnited Bank. Mundy is among 13 organizing founders who have committed to buy a 9.9 percent stake in the company.

Boston entrepreneur Tony Robinson, who hopes to start a separate bank focused on underserved minority and immigrant populations, said BankBlackwell’s wealthier target market offers a lucrative opportunity.

“I think it will succeed,’’ said Robinson, who is not involved in the BankBlackwell venture. “One thing the African American community needs to do is to build up their own deposit base, because that enables them to invest the dollars in their communities.”

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