The Wright move.

Carver taps former head of Harlem empowerment zone to head bank

The nation's largest black-owned bank recently ushered in a new era, announcing that Deborah C. Wright, former commissioner of Housing Preservation and Development in New York City and the recent head of the Upper Manhattan Empowerment Zone Development Corp., had been appointed chief executive of Carver Federal Savings Bank.

The Harvard-educated lawyer joins the bank at a tumultuous time. Carver recently refused a merger offer from Kevin Cohee of the Boston Bank of Commerce. Cohee's bank had acquired a 7% stake in the bank, making it the largest single shareholder.

For the time being, Wright's first task is to wage an aggressive battle to turn Carver around. She must clean up the bank's balance sheet and improve its record on making inner-city business loans. With assets currently at $420 million, Carver must also address the $5 million loss it took in the third quarter, ended December 1998, attributed to charge-offs related to the bank's consumer loan portfolio and problems related to the installation of a new computer system. The loss cost the former bank president, Thomas Clark Jr., his job.

For her part, Wright says she's determined to turn Carver into a one-stop financial services bank for inner-city customers who don't usually have the broad selection of goods and services, among them insurance and investment advice as well as small business loans, available to other citizens.

"We should also be able to increase other services that our community uses on a regular basis, like check-cashing and money-wiring capabilities," she says. First on Wright's agenda is spearheading a campaign to bring Carver into the 21st century by introducing electronic banking and items like debit cards.

Carver has also been regularly criticized for making few inner-city business loans. Instead, the institution has invested its assets in conservative, mortgage-backed securities. Many of its $6 million in neighborhood consumer and car loans were of poor quality because of loose underwriting standards at the seven branches. But Wright plans on changing that as well.

Wright has already inaugurated a plan to recruit a new banking team, drawn from the pool of top executives left unemployed by the flurry of recent bank mergers, and to seek out new lending opportunities.

Current Carver CEO David R. Jones headed the selection committee that ultimately chose Wright for the position. He says Wright stood out from the pack because of her vision, youth and energy.

"We were looking for someone to take Carver into the next century. We couldn't go back to a garden-variety banking background. We needed someone that could assemble a team of high-class, young African American talent. Her prior posts with both the empowerment zone and housing preservation showed that she had the skills in terms of understanding financial issues and the ability to mobilize a large group of people on critical issues," he says.

But Wright's selection did surprise some banking analysts because of her lack of a financial background. "I was surprised. I just thought they would be looking for someone with commercial banking experience," says Joe Gladue, an equity analyst with the Baltimore investment bank the Chapman Co. "Typically, when you're looking for someone to really turn an institution around, you're looking for someone that has a solid background in that industry."

Gladue says Wright's first objectives should be to add people to the bank's management team on the lending side. "They have to maintain and increase a focus on lending; at the same time, they have to lend profitably. Since Carver is publicly traded, the people that invest money in there aren't doing it to sock their cash away. They want to see a return on their investment. But you can't do that by not lending. It doesn't help the community or investors if it doesn't promote lending."

Jones agrees. But he says that first the bank must get its own financial house in order. "We want to make Carver a generator for investor returns. But we haven't had returns that we find to be acceptable, and we must make that happen. That's our main priority. Once that happens, we intend to pursue our broader mission of community development.

"But we can't get there until the institution is getting returns that match and exceed its peers'," he adds. "We have customer loyalty that is second to none and our customers stay with us. If we can provide superior service, we won't have a problem attracting depositors."