A quietly successful bank

December 13, 1990|By Eric Addison

In the midst of all the bad news from the banking industry these days, the city's first and only minority-owned commercial bank, Harbor Bank of Maryland, can say that it has not been making headlines.

Harbor Bank opened in Baltimore in September 1983. It now has assets of about $32.5 million, a loan portfolio of nearly $22 million and, according to the bank's president, Joseph Haskins Jr., it has been profitable since the end of its second year of operation.

"The original intent of the bank was to service the Baltimore metropolitan community, and essentially have a focus on providing banking services for the minority community. Over the past eight years we have much followed this purpose," Mr. Haskins says.

Harbor Bank has its roots in the 1970s, a time of "revolutionary activity" in the nation's black communities, Mr. Haskins says. In their search for greater economic power, many black people, particularly minority business owners, began to feel that they were being excluded from the banking process, he says.

"We have sought to be inclusive. We try to meet the needs of those members of the minority business community who are bank-qualifiable and who meet the guidelines. For those who do not meet the guidelines, we try to give direction and instruction so that they can at some future time become bank-qualified.

"We are different from many banks in that we have a stronger focus on customer service," Mr. Haskins says. "We believe in spending a little more time with our customers, in hopes of building strong ties that lead to long-term relationships. This means taking the time to understand what our customers' needs are."

Because time is money in any business, focusing on customer service can be a costly way of doing things, he admits, but he believes that in the long run it is the least costly way of achieving the bank's objectives.

"I don't believe that we are smarter than all other banks in being able to rewrite credit lending criteria to make loans that no one else can make and end up being successful. . . . To adjust your standards downward doesn't help your clients if they have weak financial systems, inadequate capital, poor inventory control, etc. we don't help them adjust those problems, not only will we suffer, but they will suffer. By forcing them to meet bank-qualifying standards, we help their enterprise to survive."

Harbor's president points to his bank's loan portfolio as evidence that the bank has been using the right approach.

"Our portfolio has a large representation of minority businesses that are doing well. We probably have a relationship with more than half the major minority businesses in the city."

A more informal indicator of the bank's success is that other banks are beginning to copy Harbor Bank's style, Mr. Haskins says.

"Customer service is the distinction point between one bank and another," he says. "I think others have heard about our customer service and have sought to enhance their performance in that area. The other thing I

have noted is that since the existence of Harbor Bank, a couple of other banks have formed departments that focus on small and/or minority businesses."

Mr. Haskins believes that the current troubles of the banking industry will be worked out "over the next two or three years," and that Harbor Bank is well positioned to withstand the storm.

He also makes distinctions between Harbor Bank and the increasing number of minority-owned community banks that are experiencing financial problems. Twenty-six-year-old Freedom National Bank in New York City's Harlem neighborhood, which recently was forced to accept a takeover by non-minority owners, is a prime example.

Mr. Haskins says that although management competence always is a factor in the case of a troubled bank, many of these institutions are tied to communities where incomes are low, employment is volatile and recession hits hardest.

"Harbor Bank is positioned a little differently," he says. "Although we are a community bank, the community we serve is more diverse than those of some of the banks that are not doing well. We can diversify our portfolio; and we have, so that we are not too concentrated in areas or businesses that can feel a recession too severely."

The opening of Harbor Bank's second branch and third location at 5109 York Road in Baltimore this fall was just another step in the bank's five-year plan to extend more service to its customers, Mr. Haskins says. The bank also set up its own credit card this year, offering Visa and MasterCard at a below-industry rate of 15.9 percent.

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