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Talk about putting your money where your mouth is. Fifty investors in South Carolina, led by Benedict College President and Black Enterprise Board of Economists member David Swinton, Ph.D., raised over $3 million to purchase some of the assets of the failed Victory Savings and Loan Bank in Columbia, South Carolina. The new bank has assumed responsibility for all of the old bank’s debts.
Victory, founded in 1921, was the only African American bank in the state, and was closed by the FDIC in March after posting losses of $798,883 at the end of 1998. But rather than let the bank fall by the wayside or be bought by others, a group of local investors that included Swinton, real estate broker Charles B. Gary and chemical company owner Martha Crawford, saw the bank’s failure as an opportunity. In petitioning for the bank’s assets, the investors had to present a capitalization plan, a business plan, appoint officers and file an application for a bank charter. They also had to have their money in place. In the end they beat out 13 other bidders for the assets of Victory. After acquiring $12 million in deposits and $13.9 million in assets, the institution was renamed South Carolina Community Bank. With a charter in hand, it’s already open for business.
“It was networking at its best,” says Gary. “Each of us contacted some people we knew. They, in turn, contacted people they knew, and we were able to quietly and effectively pull this deal together.” Gary enlisted Swinton as his first recruit in the bank acquisition effort. Benedict’s Board of Trustees decided to invest $600,000 for a 5% share in the new bank. “I’ve always thought that HBCU’s have a responsibility to cause economic development to happen in the communities they serve,” says Swinton. “If we don’t do things differently to build our communities, then how are we ever going to have different outcomes?” Swinton will serve as the bank’s chairman and CEO.
Swinton says the school already had a banking relationship with the institution and the money would have been invested in any case. It made sense to the board, he says, to invest the funds with a black institution. “We invest our endowment [$20 million] anyway,” says Swinton. “In today’s market, a safe investment in a sav-ings account would only net 5%, or $30,000, on the $600,000 we invested.” Swinton says Benedict stands to gain much more from investing in the bank and being an active participant in economic development. In addition, he said that the school has an exit option after five years.
All told, 95% of the 50 investors are African American and include a group of business owners in enterprises ranging from construction to sports management. Each member of the group invested anywhere from $10,000 to $100,000.
The bank’s new board of eight directors-seven men and one woman-say they will forego any compensation for two years as they attempt to get the bank up and running.