Printer Friendly

ARCO INVESTS $1 MILLION IN MINORITY-OWNED INNER CITY BANK; PLEDGES TO MATCH ADDITIONAL MILLION IN NEW CAPITAL INVESTMENT

 LOS ANGELES, Dec. 16 /PRNewswire/ -- ARCO (NYSE: ARC) has committed to make a capital investment of $1 million in California's only African-American owned commercial bank, the Founders National Bank of Los Angeles.
 ARCO has also offered up to an additional $1 million through a "challenge investment" whereby the Los Angeles-based oil and gas company will match dollar for dollar new capital investment in the bank by other corporations through Dec. 31, 1993.
 ARCO's initial $1 million investment will be in a series A perpetual non-voting, non-cumulative, non-convertible preferred stock which qualifies as tier one core capital.
 In addition, ARCO may, at its option, reinvest its dividends in Founders National Bank which could provide up to another $2 million in capital for the financial institution over the next 20 years if the challenge investment is met. In all, Founders National Bank could realize more than $4 million from ARCO's investment.
 "ARCO's investment allows us to leverage our lending capacity by $15 for every dollar invested," said Carlton Jenkins, managing director of the bank.
 The Federal banking capitalization guidelines enable Founders to lend up to $15 for every dollar of additional capital while maintaining its classification as a well capitalized financial institution under the FDIC Improvement Act of 1991. It will also enable the bank to hire additional loan processing personnel.
 "But more importantly," Jenkins said, "ARCO's investment signals an end to the myth that the inner city represents an inordinate and unacceptable level of financial risk that has kept corporate America from investing in these communities.
 "ARCO's participation will provide the bank with the financial wherewithal to pursue its mission of expanding its physical presence in the Los Angeles community by targeting funds for commercial loans with special attention to micro business and entrepreneurial loans for areas affected by the disturbance of April 1992," Jenkins explained.
 Founders National Bank is headquartered at 3910 W. Martin Luther King Jr. Blvd. in South Central Los Angeles and has branches in
Gardena and Compton. It is the only commercial bank headquartered in South Central Los Angeles.
 "ARCO evaluated the overall financial integrity of the bank, the expertise of its management and its success potential relative to the communities it serves and we serve," said Camron Cooper, ARCO's senior vice president and treasurer.
 "We believe that this capital commitment represents a unique opportunity to support Founders' stated mission of providing quality banking services that are needed by consumers, small and medium businesses, and professionals located in its market areas. We see this as a sound business decision," she added.
 Jenkins said: "One cannot seriously speak to rebuilding the inner cities of America without some genuine focus on building the financial infrastructure of these communities. ARCO recognized this and addressed it.
 "Maintenance of adequate capital levels is a problem confronting minority-owned financial institutions nationwide. There are currently fewer than 40 African-American owned banks in this country and that number is shrinking rapidly. None of the traditional sources of equity capital, such as investment bankers, high net worth investors, pension funds, or mutual funds, have ever seriously focused their time, energy or money on the minority banking community."
 Corporate America has only recently embraced the minority banking community by using certain banks for deposits and involvement in lines of credit that in many cases are never drawn down, according to Jenkins.
 "I believe the ARCO investment marks the first time on the West Coast that a major Fortune 100' company has looked creatively toward using its resources to permanently empower an inner city minority- owned financial institution by becoming a shareholder through the purchase of preferred stock. This purchase provides Founders National Bank with the capital and credit to serve portions of this community that have been unserved historically," Jenkins said.
 Founders' total capital for the quarter ending Sept. 30, 1992 was slightly more than $5.2 million, resulting in capital ratios of 7.5 percent for capital to total assets and 16.9 percent for capital to risk-based assets. Both of these ratios are well above the regulatory capital requirements. Since the bank began its operations in 1991, it has reported 1991 net earnings of $1.2 million on total assets of $61.4 million for a return on assets of 1 .99 percent. This ranked Founders Bank as one of the most profitable banks in the state.
 Founders National Bank began doing business on Jan. 22, 1991. It acquired certain assets and assumed deposits of what had been Founders Federal Savings and Loan Association from the Resolution Trust Corp. There are six shareholders who own all of the issued and outstanding common capital stock.
 "The kind of investment being made by ARCO will serve as both a model and beacon to minority institutions throughout the country that are grappling with the capital dilemma," Jenkins said. "The concept has been approved by banking regulators and will provide industry leaders with an incentive to consider a different approach to investing in minority financial institutions throughout the country."
 -0- 12/16/92
 /CONTACT: Scott Loll of ARCO, 213-486-2562/
 (ARC)


CO: ARCO; Founders National Bank ST: California IN: OIL FIN SU:

LS-BP -- LA032 -- 7791 12/16/92 14:12 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Dec 16, 1992
Words:861
Previous Article:KEVIN COSTNER TO STAR IN WESTERN FILM ABOUT WYATT EARP DIRECTED BY LAWRENCE KASDAN AND RELEASED BY WARNER BROS.
Next Article:JACOBS BUILDS MAJOR MTBE PRODUCTION UNIT FOR CHEVRON USA
Topics:


Related Articles
THE BOSTON COMPANY COMMITS $35 MILLION TO AFFORDABLE HOUSING
Philly gets new bank.
SHELL ANNOUNCES $10 MILLION PROGRAM TO HELP LOS ANGELES REVITALIZATION EFFORT
ARCO TO SPEND $7 MILLION FOR NEW PROJECTS FOCUSING ON JOBS, BUSINESS DEVELOPMENT, REVITALIZING INNER CITY LOS ANGELES
ARCO CONTRIBUTES $800,000 TO CARECEN FOR THE CONVERSION OF A FORMER INS DETENTION CENTER INTO A CENTRAL AMERICAN COMMUNITY CENTER
Chemical creates $100M housing development fund.
Leaner, meaner and braced for change: black banks and thrifts are evaluating the impact of the Community Reinvestment Act, as insurance companies...
Shell Oil Company Announces Expansion of Community Banking Program To Washington D.C.
Shell Oil Company Announces Expansion of Community Banking Program to New York.
Sprint Invests $7 Million with Minority-Owned Financial Institutions.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters