Churches form banking collective Congregations seek alliance with lenders

February 07, 1997|By Marilyn McCraven | Marilyn McCraven,SUN STAFF

Tired of going hat in hand to banks only to be rejected or face many hurdles in obtaining a loan, about 30 local African-American churches have formed a group to get better treatment.

The Collective Banking Group of Baltimore and Vicinity plans to sign agreements in a few weeks with the officers of several local banks who promise "to be sensitive to our needs and watch out for our interests," said the Rev. Vashti McKenzie, president of the Baltimore collective and pastor of Payne Memorial AME in West Baltimore.

The goal is to give the community greater power to monitor and influence banking practices. Church representatives would meet with member banks quarterly to review denials of loans requested by member churches and individuals. In return, banks expect the churches and their members to move accounts to the banks.

"We definitely see the value that the [collective] brings to NationsBank as customers," said Stephen Fitzgerald, a vice president of NationsBank, which is in talks with the collective about becoming a member bank. "It would allow us to reach a large group with a unified approach."

The Baltimore group is a branch of a 2-year-old Prince George's County collective that has generated $80 million in loans and new deposits for four banks in its first year of operation. Baltimore pastors hope to be at least as successful.

"The black church in Baltimore deposits over $1 million in banks every week, yet we're treated as if we do nothing when it comes time to borrow money. As a group we'll have power we wouldn't have as individual churches," said the Rev. Marvis May, pastor of Macedonia Baptist Church in West Baltimore and a collective member.

An economic force

This unprecedented, ecumenical approach to church finances in the black community has the potential to become a major economic force in Baltimore, harnessing the economic power necessary to transform pockets of urban blight into viable neighborhoods and create jobs, members say.

The ministers dream of not only building churches but also renovating abandoned buildings for such uses as housing, day care and recreation centers.

The collective includes some of the city's most venerable institutions, including Bethel AME, New Shiloh Baptist, St. James Episcopal, Douglas Memorial Community Church, Enon Baptist and Union Baptist. Some suburban churches are members, too.

The relationship forged by the alliance will cover churches as well as their more than 100,000 individual members.

If a collective member church or individual member is "denied a loan, it won't be because of the color of their skin or where they live," said McKenzie. "We're not trying to get something we don't deserve; we just want to be treated fairly, justly."

"The African-American community is recognizing that we've got to begin to do more for ourselves, and for the churches to recognize the power they have collectively and to then wield that power is exciting," said Rodney Orange, Baltimore NAACP president.

Banking hurdles

Despite African-Americans' advances in government and business, church and civic leaders say it's still difficult to tap banks for money for church building and other projects to enhance the black community.

Large banks typically don't treat churches as they would businesses with similar financial histories, say ministers and others. For instance, churches don't get favorable interest rates for being loyal customers with large deposits. And there are more hurdles to jump -- church trustees may be asked to personally guarantee a church's loan.

Spokesmen for large banks claim not to discriminate based on an applicant's race or location, which is against the law. However, they say prudent banking practices require them to make sure churches have the necessary income to repay a loan.

The crux of the church-bank relationship appears to concern a church's ability to repay a loan.

For Mount Calvary African Methodist Episcopal Church in Towson, the lack of solid future income projections was a key sticking point in getting a $675,000 loan to build a new church.

"Initially, we weren't able to get the bank to seriously consider us for a loan," said the Rev. Ann Lightner-Fuller, the pastor.

Eventually, an official of NationsBank who was cultivating church business got involved and Mount Calvary received its mortgage. The groundbreaking will be held next month.

Ability to repay

"It's a unique kind of financing, one that requires the [bank] have some people who know the leadership of the churches -- senior leaders as well as clergy -- to know their ability to repay," said John Bowers, executive vice president of the Maryland Bankers' Association.

But, Bowers said, "We have awakened a number of banks to the fact that there are business opportunities with churches, if they sit down and take the time and send the people out into the community to make contacts with the churches."

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