Mention Kevin Cohee’s name and the reactions you get are similar to that of announcing a rainstorm. To those inlanders suffering a drought, it’s great news. To fishermen, it can’t possibly mean glad tidings.

Cohee, chairman and chief executive officer of the $150 million-asset Boston Bank of Commerce, recently announced the merger of his bank with the $100 million-asset Founders National Bank of Los Angeles. This comes on the heels of BBOC’s acquisition of Peoples Bank of Commerce in Miami in 1999. The merger creates a foundation for the first national minority bank that is controlled and managed by blacks.

Founders and BBOC were recently ranked 19th and 15th, respectively, in Blackenterprise.com’s “Powerhouses of the New Economy” banking section. BBOC already owns 7 1/2 percent of shares in the No. 1 bank on the list, Carver Federal Savings Bank of New York, the largest black-owned bank in the country. Within the last year Cohee had been in a very public struggle with Carver, first tendering merger offers which were refused and later following controversy and lawsuits, settling for a board position with the bank for himself and his wife, Teri Williams, the executive vice president of BBOC.

It was that struggle that first caught the attention of Founders Chairman Jheryl Busby.

“I was aware of what was going on at Carver and felt that Kevin was after the same thing [I was] and so requested a meeting,” he said of his desire for a national bank. The meeting took place in a Miami boutique owned by Busby. “When I heard his strategic plan, it felt as if he had sat in on some of our strategic meetings,” said Busby.

Busby had been on a mission of his own, transforming Founders, which he said looked and acted more like a thrift at the time, into a profitable full-service bank. Busby said he was working on expanding the bank throughout California via acquisition and “meeting some resistance,” so a merger with like-minded Cohee seemed like a good idea. While working to improve the bank, he said he discovered “an opportunity to take athletes and entertainers and get them to reinvest in the inner city community through equity, which is regulated. It’s safe, which allowed them to participate in the communities which support their careers,” he said.

Shareholders of the bank include former NBA star Earvin “Magic” Johnson and singer Janet Jackson. A 30-year veteran of the entertainment industry, Busby previously served as president and chief executive officer of Motown Records.

This was the subplot occurring on the home front while Busby shopped for a merger partner.

“Kevin was a natural fit because he had a strong vision and great skill sets. Teri brought strong management skills. Teri felt like the operator and Kevin felt like the visionary,” he said.

The two banks fit together as well, explained Busby, because Cohee’s bank was focused on future possibilities while Busby’s was focused on banking as it exists today.

“We think, with markets like Los Angeles, New York, Miami and Boston, as well as others – Atlanta, Detroit – being a financial holding company and provid[ing] a full array of financial services in those markets is not only a great financial opportunity, but it also will strengthen the bank.” said Cohee.

The results of such a venture, if successful, are clear, said Cohee. It will provide a network for banks in those cities to rely upon. “So instead of having small, weak banks in each of those markets, each of those markets will have the access to the capital and expertise of the combined entity,” he said.

The significance of the merger is not lost on either Cohee or Busby, who in a meeting with employees to announce the merger, told them they would now be under a microscope.

But both men say they are ready for the challenge.

“If minority banks do not evolve from their existing business model they will not survive,” said Cohee. “It’s very clear and if you look at minority banks as a sector, you can literally see them die. What we’re doing is we’re evolving – very much like a land-based animal that has to learn how to fly in order to survive.”

Cohee said taking his bank to a national level was what he envisioned all along.

“We’re evolving, we’re creating the business model for minority banks that will allow them to prosper and to serve their communities as we move into the 21st century. That’s why people are very concerned and want to make sure that what we do works,” he said.

However, while creating a national bank, the two say they will not forget why they have been successful.

“The beauty of this is, I believe, that you keep a community bank focus. We don’t want to kill the [easily identified] logos that took years to cook [up],” said Busby as an example. “It’s a community bank with national backup,” he said, echoing Cohee’s words.

“The only advantage we have is service. We won’t cut a better deal than the big boys. We know that the key to everything for us is service. Most of the people who bank with us bank out of pride. The thing that walked them in the front door on day one is pride. So we have to take that pride and add service,” said Busby.

One way in which the two plan to continue their community focus is to expand programs each has started in his own locale. For Cohee, it’s teaching urban black women about finances through the Money Matters program, which involves everything from budgeting to retirement and investing.

“In these communities, as in all communities, the role of the woman in helping to manage financial matters is critically important,” said Cohee.

“What this is about goes beyond CRA [Community Reinvestment Act]. What we’re talking about is being a source of strength … We’re what’s underneath all of these small businesses and not-for-profits and individuals who are in these communities … This is a place where you can go where people will know who you are and are interested in dealing with and solving your problems,” said Cohee.

To retain this personal touch, each institution will have a management structure that is focused on local needs, said Cohee. “Think nationally but act locally … The local branches are staffed with people from those communities who know those communities, who are out in those communities, who are acting on behalf of those communities. Every one of our operations, we look at and view them as separate banks,” he said.

Desirable Market
Although Cohee’s desire to bring New York’s Carver into the fold is not unknown in the industry, he said the bank is not a crucial acquisition in order to make the national bank vision a success.

“It’s not necessary, but obviously New York is the largest market in the country. With Los Angeles we now have the second largest in the country … It’s [New York] not necessary, but it is a desirable market,” he said.

When asked directly if he has plans to go after Carver again, Cohee said, “We don’t have any plans at this time to do anything other than what we’re doing.” In March, many of the seats on the board of directors at Carver will again be up for election.

Meanwhile, Busby and Cohee both have high hopes for the BBOC/Founder’s merger. If only one benefit is assured from the merger, Busby said he hopes that “we’ve created a model that worked that would become an example to other financial institutions that served inner-city communities. … We showed we can pool our resources into one source … This needs to work,” he said.

Because of consolidation in the industry, said Busby, an important service has been all but erased from the banking landscape. It’s a “‘Good morning, Mrs. Jones, how’s your husband?’ It’s an emotion that has left the banking industry. It’s called knowing your customer and knowing the community you are in.”

Boston Bank of Commerce Looks Beyond Its Backyard

by Banker & Tradesman time to read: 5 min
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