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A Minority Niche: A sharp focus on a specific population can yield returns

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Preston D. Pinkett III, CEO and Chairman, City National Bank.
Preston D. Pinkett III, CEO and Chairman, City National Bank. - ()

In June, Bayonne-based BCB Community Bank announced a merger agreement with Indus-American Bank, an Edison-based institution that focuses on the Indian-American community. The deal was the first “ethnic” foray for BCB, but it probably won't be the last, according to BCB's CEO Tom Coughlin.

“As part of our general growth strategy, we’ve been trying to develop the South Asian market, since it represents one of the fastest-growing populations in the New Jersey-New York metropolitan area,” says Coughlin, who adds that the brand name “Indus-American Bank” will continue to be used.

“The South Asian community contains many small-business owners, as well as Small Business Administration borrowers and individual depositors, and we wanted to enter this market in a meaningful way. The M&A with Indus-American Bank—which is making its way through regulatory review—will enable us to do this in a very efficient manner.”

For years, the growth of minority populations and projected increases in their buying power have provided “significant opportunities for retail growth by financial institutions,” according to a report from the Office of the Comptroller of the Currency, a federal agency that charters, regulates and supervises national banks and federal savings associations.

The report highlighted the growing diversity across states, noting that “Census data confirm that racial and ethnic diversity, once primarily a characteristic of urban areas, has rapidly become a hallmark of suburbs and small towns. Community banks are using a variety of strategies to target specific minority markets in the United States.”

Banks like Indus-American typically have bi-lingual employees that can easily connect with new immigrants and others who want a taste of their heritage and culture.

“Different ethnic groups are assimilating into the U.S. melting pot, but outreach activities like this merger will let us more easily reach new arrivals and others,” notes Coughlin. “We’re also taking other steps to reach out to additional ethnic groups. For example, BCB has already engaged in strategic partnerships with the [Lyndhurst-based] Statewide Hispanic Chamber of Commerce of New Jersey.”

BCB is also tapping in to the LBGT community—working with the Wayne-based NJ LGBT Chamber. “We want to give back to the community while expanding our contacts with potential business sources,” explains Coughlin. “Communities need banks that can cater to all of their individual needs, and we look forward to continuing our efforts in this area.”

Some bank CEOs are quick to point out that their focus on a particular group doesn’t define the entire institution. Take Newark-based City National Bank, which was established in 1973 by a group of African American community leaders who believed Newark needed a financial institution that would be sensitive to the financial needs of minority residents whose access to credit and banking services had historically been limited.

“But I would hope that people look at the work we do and feel inspired, regardless of their ethnicity,” says City National Bank CEO Preston D. Pinkett III, a former senior vice president for the New Jersey Economic Development Authority. “I’m a banker who happens to be African American, not an African American who happens to be a banker. The founders of City National Bank reflected different races, as do our employees today. We’re all people.”

Pinkett says the bank serves minorities and underserved, lower-income populations. “Our mission is to be useful to the public,” he explains, acknowledging that it can be a challenge. “It’s not easy to work with low-income communities and still turn a profit—for example we have tighter margins. But we also provide important services for people with spotty credit or no credit. Among other programs, City National Bank offers secured credit cards that help people to improve their credit profile.”

The benefits flow both ways, adds Pinkett. “As people get successful, they’ll remember that when they were starting out, it was this small bank that helped them.”

In one case, after Pinkett’s bank worked with a nonprofit that rehabilitates buildings and provides housing for low-income individuals and families, “the agency refers customers to us. Another time, we financed a small business owner who later sold his company at a profit, built another and continued his banking relationship with us. So it’s all synergistic.”

A Minority NicheA sharp focus ona specific populationcan yield returnsby Martin DaksIn June, Bayonne-based BCB Community Bank announced a merger agreement with Indus-American Bank, an Edison-based institution that focuses on the Indian-American community. The deal was the first “ethnic” foray for BCB, but it probably won’t be the last, according to BCB’s CEO Tom Coughlin.“As part of our general growth strategy, we’ve been trying to develop the South Asian market, since it represents one of the fastest-growing populations in the New Jersey-New York metropolitan area,” says Coughlin, who adds that the brand name “Indus-American Bank” will continue to be used. “The South Asian community contains many small-business owners, as well as Small Business Administration borrowers and individual depositors, and we wanted to enter this market in a meaningful way. The M&A with Indus-American Bank—which is making its way through regulatory review—will enable us to do this in a very efficient manner.”For years, the growth of minority populations and projected increases in their buying power have provided “significant opportunities for retail growth by financial institutions,” according to a report from the Office of the Comptroller of the Currency, a federal agency that charters, regulates and supervises national banks and federal savings associations. The report highlighted the growing diversity across states, noting that “Census data confirm that racial and ethnic diversity, once primarily a characteristic of urban areas, has rapidly become a hallmark of suburbs and small towns. Community banks are using a variety of strategies to target specific minority markets in the United States.”Banks like Indus-American typically have bi-lingual employees that can easily connect with new immigrants and others who want a taste of their heritage and culture. “Different ethnic groups are assimilating into the U.S. melting pot, but outreach activities like this merger will let us more easily reach new arrivals and others,” notes Coughlin. “We’re also taking other steps to reach out to additional ethnic groups. For example, BCB has already engaged in strategic partnerships with the [Lyndhurst-based] Statewide Hispanic Chamber of Commerce of New Jersey.”BCB is also tapping in to the LBGT community—working with the Wayne-based NJ LGBT Chamber. “We want to give back to the community while expanding our contacts with potential business sources,” explains Coughlin. “Communities need banks that can cater to all of their individual needs, and we look forward to continuing our efforts in this area.”Some bank CEOs are quick to point out that their focus on a particular group doesn’t define the entire institution. Take Newark-based City National Bank, which was established in 1973 by a group of African American community leaders who believed Newark needed a financial institution that would be sensitive to the financial needs of minority residents whose access to credit and banking services had historically been limited.“But I would hope that people look at the work we do and feel inspired, regardless of their ethnicity,” says City National Bank CEO Preston D. Pinkett III, a former senior vice president for the New Jersey Economic Development Authority. “I’m a banker who happens to be African American, not an African American who happens to be a banker. The founders of City National Bank reflected different races, as do our employees today. We’re all people.”Pinkett says the bank serves minorities and underserved, lower-income populations. “Our mission is to be useful to the public,” he explains, acknowledging that it can be a challenge. “It’s not easy to work with low-income communities and still turn a profit—for example we have tighter margins. But we also provide important services for people with spotty credit or no credit. Among other programs, City National Bank offers secured credit cards that help people to improve their credit profile.”The benefits flow both ways, adds Pinkett. “As people get successful, they’ll remember that when they were starting out, it was this small bank that helped them.” In one case, after Pinkett’s bank worked with a nonprofit that rehabilitates buildings and provides housing for low-income individuals and families, “the agency refers customers to us. Another time, we financed a small business owner who later sold his company at a profit, built another and continued his banking relationship with us. So it’s all synergistic.”

Advice from a woman banker

“Throughout my career, there have been a few occasions when I have felt that people treated me differently because I was a woman,” says Angela Synder, CEO of Fulton Bank of New Jersey, a division of Lancaster, Pa.-based Fulton Financial Corp. “However, overall, I have always tried to seek out people —both men and women – who I felt supported me and believed in me. I have looked to them as mentors and have learned a lot from them.”

By focusing on herself, and working to improve her skills and broadening her perspective, Snyder has been “been better able to demonstrate my capabilities and my willingness to learn, which has resulted in my being asked to take on new challenges, responsibilities and leadership roles.”

She just completed a year as chairwoman for NJ Bankers, and says “a major focus for me during that year was to help others realize how important it is for all of us to develop today’s young professionals, both women and men, who will become tomorrow’s leaders in the financial industry.”

Her advice to women and others: “Focus on the things you can control. Find a good mentor, eagerly embrace change, continue to grow your skills, and be the person who puts your hand up for those stretch assignments and new challenges. The opportunities will come, but if they don’t, reassess your workplace and consider whether it is time for you to make a change.”

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