Holding their ground: to win today's turf wars, BE financial services firms must develop new products and find strategic partners.SQUEEZED BY INCREASED COMPETITION and the crucial need to grow customer base, increase capital, and offer 21st-century products and services, black-owned financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. companies are being prompted to become more creative and modernize mod·ern·ize v. mo·dern·ized, mo·dern·iz·ing, mo·dern·iz·es v.tr. To make modern in appearance, style, or character; update. v.intr. To accept or adopt modern ways, ideas, or style. operations. Throughout his 40 years in the insurance business, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Larkin Teasley has never seen competition so fierce for his company and his peers. His company, Los Angeles-based Golden State Mutual Life Insurance Co. (No. 2 on the BE INSURANCE COMPANIES list with $112.8 million in assets), celebrates its 80th anniversary this year. Teasley says the biggest challenges over the next few years for black-owned insurers are to grow capital, add customers, and protect existing ones from behemoths such as Allstate Corp. and American General Life Insurance Co. "If they are not able to do that within five years, they may very well have some serious problems," Teasley says. In today's transient A malfunction that occurs at random intervals and lasts for a short duration such as a spike or surge in a power line or a memory cell that intermittently fails. See spike and power surge. transient - 1. business climate, Teasley and other CEOs of black-owned financial services entities--such as banks, private equity firms, asset managers, insurance companies, and investment banks--are dealing with some of their most daunting daunt tr.v. daunt·ed, daunt·ing, daunts To abate the courage of; discourage. See Synonyms at dismay. [Middle English daunten, from Old French danter, from Latin challenges yet. "Black-owned financial services companies will continue to face aggressive competition from mainline mainline Drug slang verb To inject a drug companies that have not previously targeted African Americans African American Multiculture A person having origins in any of the black racial groups of Africa. See Race. and Hispanics as a specific customer base," says Buddy Howard, a banking analyst and president of Equity Research Services Inc. in Raleigh, North Carolina For other uses of this name, see Raleigh. Raleigh (IPA: /ˈrɑli/, ral-ee) is the capital of the State of North Carolina and the county seat of Wake County. . With competition invading in·vade v. in·vad·ed, in·vad·ing, in·vades v.tr. 1. To enter by force in order to conquer or pillage. 2. its core market, black-owned financial services companies are being forced to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. not only to grow but also to survive. BANKING ON NEW PRODUCTS In addition to fighting against mainstream banks that are gaining ground through multibillion-dollar mergers, black-owned banks are looking at new ways to market to their clientele. Jim Young This article is about the Canadian football player. For other uses, see Jim Young (disambiguation). James Norman "Dirty Thirty" Young (born June 6, 1943 in Hamilton, Ontario)[1] is a former professional American football and Canadian football player. , chairman of the National Bankers Association in Washington, D.C., said that most black-owned banks had a profitable year in 2004. "I think they did admirably ad·mi·ra·ble adj. Deserving admiration. ad  mi·ra·ble·ness n.ad well given the markets they serve and the competition they faced," he says. However, TriState Bank of Memphis (No. 15 on the BE BNAKS list with $113 million in assets) is one entity that found 2004 to be a bearish Bearish Words used to describe investor attitude. A bearish investor believes that a particular asset or the market as a whole will decline in value. bearish climate. CEO Jesse H. Turner Jr. says the completion of a new arena for the NBA's Memphis Grizzlies This is an article about the National Basketball Association team; for the defunct World Football League team, see Memphis Southmen. The Memphis Grizzlies are a professional basketball team based in Memphis, Tennessee. caused assets to fall by 20% when the local sports authority Sports Authority is the USA's largest full line sporting goods retailer. The company is headquartered in Englewood, Colorado. It operates over 400 stores in 45 U.S. states under the Sports Authority name. Total sales for the fiscal year ending January 29 2005 were $2.44 billion. withdrew funds to pay the arena's builder. Tri-State's profits dipped 18% to $679,000 because of the $28 million drop in assets, higher expenses, and lower-yielding assets. Its lending was flat because of the weak economy, particularly in the black community, and it had fewer consumer loan and church mortgage loan requests. "While the recovery in America remains sluggish, there is no recovery in black America. While the bank can do better if it can capture business from other banks, generally it can do no better than the community," Turner says. But the news was not all bad. At Atlanta-based Capitol City Capitol City may refer to:
Some black-owned banks might realize that it's much easier to grow by acquiring a $100 million-asset bank than just trying to grow on their own, Young says. "They'll see it as a faster way to grow, something that will allow them to grow more loans." MANAGING ASSETS IN A LESS BEARISH MARKET For some black-owned asset managers, 2004 was a more bullish Bullish Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook. bullish market than they've seen in recent years. Atlanta-based EARNEST Partners (No. 2 on the BE ASSET MANAGERS list) saw its assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. rise a whopping 70%, from $8.2 billion in 2003 to nearly $14 billion in 2004. CEO Paul Viera says strong investment results from its portfolio of funds were key drivers of the growth. "Because we've had consistently strong investment performances over time, that helped us attract new institutional and mutual fund clients that brought in $1 billion last year." The firm's investment portfolios, which include small- and mid-cap funds, rose some 25% in 2004. Top firms like Boston-based Rhumbline Advisers (No. 3 on the BE ASSET MANAGERS list) watched its assets under management grow nearly $3 billion last year, from $7.4 billion in 2003 to about $10.3 billion in 2004, while Seattle's Pugh Capital Management Inc. (No. 15 on the BE ASSET MANAGERS list) had its assets under management grow by $219 million last year, up 32.5% from 2003. "We have just under $900 million in assets under management," says CEO Mary Pugh. "A benchmark for us would be to hit $1 billion. We hope to hit it this year." Even a volatile equity market and tougher regulations stemming from mutual fund scandals in recent years didn't deter some firms. Chicago's Ariel Capital Management L.L.C. (No. 1 on the BE ASSET MANAGERS list) saw its 2004 revenues reach the $105.3 million mark, up from $73.6 million, and its assets under management jumped to $21.4 billion from $16.1 billion. Ariel Capital's CEO, John W. Rogers Jr., attributed the growth to good investment performance and a stronger brand name recognition. "More and more employees are going to their human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. departments and asking to have the Ariel Mutual Funds added to their 401(k) plan investment options," Rogers says. To continue to grow, Pamela Anderson
Pamela Denise Anderson (born July 1, 1967) is a Canadian-born actress, sex symbol, glamour model, producer, TV personality, and author. , executive director of the National Association of Securities Professionals in Washington, D.C., said that like other firms, these companies will have to be fluid and dynamic. She also says they will have to form strategic alliances in their core markets and look for more global business. INSURERS RETOOL re·tool v. re·tooled, re·tool·ing, re·tools v.tr. 1. To fit out (a factory, for example) with a new set of machinery and tools for making a different product. 2. TO FOSTER GROWTH To remain vibrant, black-owned insurers are adopting plans to buy other companies, sell products more aggressively to win affluent customers, and exit money-losing businesses. For example, North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. Mutual Life Insurance Co. (No. 1 on the BE INSURANCE COMPANIES list) left the student group life accident business. CEO James H. Speed Jr. says assets fell from $175.7 million in 2003 to $161.2 million last year due to the settlement of outstanding reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. contracts. The Durham, North Carolina-based firm posted a loss of $650,000 compared with a $10.7 million loss in 2003. Speed says North Carolina Mutual will buy other companies, or blocks of businesses from other life insurers, to add customers and boost profits. "You'll see a North Carolina Mutual that will be making bold steps to grow and gain market share." Charles Blackmon, executive director of the National Insurance Association in Durham, contends that some black insurers might be forced to merge during the next five to 10 years, whether they want to or not. "They won't be able to compete on their own when it comes to marketing, distribution, and having the support structure to serve the customers," he says. For Atlanta Life Financial Group (No. 3 on the BL INSURANCE COMPANIES list), 2004 was a year of transition. CEO Ronald D. Brown says assets in the company's life insurance business fell 23% to $76.4 million and premium income dropped 15% to $49.2 million, mainly because of adverse mortality rates. But a 16% drop in expenses helped boost profits for Atlanta Life to $200,000; the company suffered an $800,000 profit loss in 2003. Brown says Atlanta Life will focus on building its asset management and group reinsurance units and expand on its recent launch into the pre-need business. Last year was a time of reassessment Reassessment The process of re-determining the value of property or land for tax purposes. Notes: Property is usually reassessed on an annual basis. You may request a "reassessment" if you disagree with your assessment. for Golden State Mutual. Teasley, the insurer's CEO, says profits grew to $500,000 as investment income rose in value, up from a profit loss of $457,000 in 2003. This year, the carrier is launching an aggressive marketing effort to boost the number of policyholders from 80,000 to 90,000 by year's end and to 200,000 or more by 2010. "We're raising in the range of $6 million in additional capital this year to do some things we have not done in the past," says Teasley. DIVERSIFYING TO GROW For some institutions, whether a private equity firm or investment bank, the capital markets continue to pose tough challenges as well as opportunities. At Fairview Capital Partners Inc. (No. 1 on the Be PRIVATE EQUITY FIRMS list), the Farmington, Connecticut Farmington is a town located in Hartford County in central Connecticut in the United States. The population was 23,641 at the 2000 census. It is home to the world headquarters of several large corporations including Carrier Corporation, Otis Elevator Company, and Carvel. , firm's capital under management rose to $1.6 billion in nine funds last year, from $900 million in seven funds in 2003. JoAnn Price, the firm's president and a managing partner, says two major clients led the growth. The first client, Constitution Liquidating Fund, which has the State of Connecticut Pension Fund as its primary investor, added about $640 million last year. The second client, New York/Fairview Emerging Managers L.P, mainly consists of pension funds for the city of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and brought in about $60 million. Regarding future growth, Price says, "We're looking to expand into the international marketplace by either a joint venture opportunity or an acquisition." The Williams Capital Group L.P. (No. 1 on the BE INVESTMENT BANKS The following is a list of investment banks Financial conglomerates Large financial-services conglomerates combine commercial banking and investment banking, and sometimes insurance. list with $122.3 billion in total managed issues) is investing more of its resources into high value-added products. CEO Christopher J. Williams says the firm launched its first-ever private equity fund last year. It hopes to complete the fundraising
While others look to expansion efforts, analysts say black private equity firms still lag behind when it comes to getting their fair share. Robert L. Greene
Robert L. Greene is an American psychologist known for his work on human learning and memory. , president of the National Association of Investment Companies, says the biggest challenge is increasing the number of pension plans deploying capital in the "emerging domestic market." While minority-owned firms manage less than 2%--or about $6 billion--of the private equity business in the U.S. marketplace at any given time, the total amount deployed in the U.S. is about $300 billion. "The bottom line is, until significantly more capital is invested into the minority marketplace, a number of African American entrepreneurs will face a capital deficit," Greene says. Financial Services [Eligibility] [B.E. Banks] These are commercial banks or savings and loans savings and loan n. a banking and lending institution, chartered either by a state or the Federal government. Savings and loans only make loans secured by real property from deposits, upon which they pay interest slightly higher than that paid by most banks. that are classified by the Federal Reserve as black institutions and have been fully operational for the previous calendar year, An institution's financial status is measured in terms of total assets, capital, deposits, and loans. including mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. for the calendar year. In compiling our list of the leading 25 institutions, we received surveys from black-owned institutions and consulted the Federal Reserve, state banking commissions, and industry associations. [B.E. Insurance Companies] A life insurance company must be at least 51% black-owned and have been fully operational for the previous calendar year. An institution's financial status is measured in terms of total assets, life insurance in force, premium income. annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. income, net investment income statutory reserves, and surplus. The top five insurance companies on our list sell individual and/or group life insurance policies. (No institution that is strictly in the business of selling property and casualty insurance has been included.) In compiling the list, we received surveys from these institutions and consulted the rating services, state regulatory agencies state regulatory agency A state body responsible for establishing professional standards, and for certifying professionals or organizations through appropriate documentation , and industry associations. [B.E. Investment Banks] An investment bank must be at least 51% black-owned and have been fully operational for the previous calendar year. The top 10 investment banks on our list engage in activities such as underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. , initial public offerings (IPOs), mergers and acquisitions (M&A), retail brokerage, institutional research and sales, and financial advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal . A firm's financial status is measured in terms of total dollar amount of issues derived from the underwriting of municipal and corporate bonds and equities for the calendar year. In addition to receiving surveys from these companies, we rank the firms based on information provided by Thomson Financial Thomson Financial A major provider of information, analytical tools, and consulting services to the financial community. The firm, a division of Thomson Corporation, is best known to investors for its First Call segment, which publishes consensus earnings Securities Data, which tracks investment bank transactions reviews SEC filings, and serves as the industry standard for measuring such activities. An investment bank's ranking is based on a total of debt, equity and municipal bond transactions. [B.E. Asset Managers] An asset management firm must be at least 51% black-owned and have been fully operational for the previous calendar year. The top 15 firms on our list include those that invest financial assets Financial assets Claims on real assets. for individuals and institutions such as pension funds of government agencies and corporations, and the endowments of colleges and universities. (Asset managers that specialize spe·cial·ize v. 1. To limit one's profession to a particular specialty or subject area for study, research, or treatment. 2. To adapt to a particular function or environment. in real estate and other types of investment vehicles or operate hedge funds hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" are not eligible for inclusion on this year's list.) A firm's financial status is measured in terms of total dollar amount of managed assets derived from equities fixed-income and tax-exempt investments, and cash for the calendar year. In addition to receiving surveys from these companies, we consulted federal and state regulatory agencies and industry associations. All firms on our list must be registered with the Securities and Exchange Commission (SEC) and have filed their annual assets under management with the SEC at the time of publication. The rankings of these firms are based on total assets under management for the previous calendar year that have been verified by the SEC. [B.E. Private Equity Firms] A private equity firm must be at least 51% black-owned and have been fully operational for the previous calendar year. The leading 10 firms on our 1st include those that manage funds making equity investments in and/or providing financing for operating entities, including startup firms, established companies, and private equity firms or private equity partnerships that invest in operating companies operating company A business that engages in transactions with outsiders. . (Private equity firms that specialize in real estate investments are not eligible for inclusion on this year's list.) These investments are made on behalf of the firm and its individual and institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. . A firm's financial status s measured n terms of total managed capital for the calendar year. Additional information provided to BE includes a firm s total number of funds as well as its portfolio of companies or private equity partnerships. In addition to receiving surveys from these companies we consulted regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. and industry associations. As indicated, BE consulted industry analysts and other sources to verify the information contained in the lists Companies that may have previously appeared on the BE 100s but have been excluded this year are either no longer black-owned or their financial status has dropped below the minimum threshold to make the lists.
Financial Services Summaries
Top 25 Banks
2004 2003 % Change
Number of Employees 2,015 2,065 -2.42
Assets * $5,076.958 $4,714.139 7.70
Capital * 427.021 411.644 3.74
Deposits * 4,098.706 3,815.498 7.42
Loans * 3,449.778 3,134.041 10.07
Top 10 Private Equity Firms
2004 2003 % Change
Number of Employees 90 94 -4.26
Capital Under Management * $3,134.000 $2,959.000 5.91
Number of Funds 29 27 7.41
Total No. of Portfolio Compani 272 163 66.87
Top 15 Asset Management Firms
2004 2003 % Change
Number of Employees 371 328 13.11
Assets Under Management * $73,331.000 $59,585.930 23.07
SOURCE: SECURITIES AND AXCHANGE COMMISSION
Top 10 Investment Banks
2004 2003 % Change
Number of Employees 398 510 -21.96
Total Issues ** $547.273 $677.340 -19.20
** IN BILLIONS OF DOLLARS, TO THE NEAREST MILLION. AS OF DEC. 31.
SOURCE: THOMSON FINANCIAL
Top 5 Insurance Companies
2004 2003 % Change
Number of Employees 556 571 -2.63
Assets * $417.007 $472.503 -11.75
Statutory Reserves * 256.271 243.970 5.04
Insurance in Force * 30,442.083 30,617.990 -0.57
Premium Income * 155.137 171.537 -9.56
Net Investment Income * 16.514 20.080 -17.76
* IN MILLIONS OF DOLLARS, TO THE NEAREST THOUSANDS. AS OF DEC. 31.
PREPARED BY B.E. RESEARCH. REVIEWED BY THE CERTIFIED PUBLIC
ACCOUNTING FIRM EDWARDS & CO.
B.E. Insurance Companies
THIS LAST CHIEF
YEAR YEAR COMPANY/LOCATION EXECUTIVE
1 1 North Carolina Mutual James H. Speed Jr.
Life Insurance Co.
Durham, NC
2 2 Golden State Mutual Larkin Teasley
Life Insurance Co.
Los Angeles, CA
3 3 Atlanta Life Financial Group Ronald D. Brown
Atlanta, 6A
4 4 Booker T. Washington Walter Howlett Jr.
Insurance Co.
Birmingham, AL
5 -- Williams-Progressive Life Patrick Fontenot
& Accident Insurance Co.
Opelousas, LA
THIS LAST YEAR STATUTORY
YEAR YEAR STARTED STAFF ASSETS * RESERVES *
1 1 1898 147 161.207 92.288
2 2 1925 250 112.836 88.899
3 3 1905 30 76.389 16.459
4 4 1931 85 56.209 50.820
5 -- 1947 44 10.366 7.805
THIS LAST INSURANCE PREMIUM INVESTMENT
YEAR YEAR IN FORCE * INCOME * INCOME *
1 1 14,372.304 67.891 5.478
2 2 2,842.000 28.559 6.520
3 3 11,809.837 49.242 2.108
4 4 1,382.784 8.131 1.911
5 -- 35.158 1.314 0.497
* IN MILLIONS OF DOLLARS, TO THE NEAREST THOUSAND, AS OF DEC. 31, 2004.
PREPARED BY B.E.
RESEARCH REVIEWED BY THE CERTIFIED PUBLIC ACCOUNTING FIRM EDWARDS & CO.
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