Proclaiming a "historic" pact that will help erase pockets of blight in Baltimore, a group of 60 African-American churches formally agreed yesterday to have exclusive banking relationships with four local financial institutions, including NationsBank, the area's largest.
In exchange, the financial institutions agreed to treat the churches and their members fairly, not denying them loans or making them pay a penalty simply for living or operating in the inner city. The banks will also provide an array of perquisites, including summer internships and scholarships for member-church high school and college students.
"History has been made in this place today," said the Rev. Vashti McKenzie, president of the Collective Banking Group of Baltimore and Vicinity, after signing agreements with the bank presidents.
The interdenominational collective represents several hundred thousand members in some of Baltimore's most venerable religious institutions and includes a few suburban churches and other institutions, leaders said.
Leaders of the collective said they expect that the banks would get millions of dollars in new deposits from the churches alone.
At New Shiloh Baptist Church yesterday, 300 church members greeted the presidents of NationsBank and First Union Corp. and two black-owned institutions, Harbor Bank of Maryland and Advance Federal Savings and Loan, with loud applause. The two-hour program at the West Baltimore church combined the characteristics of a church service and a corporate board meeting, and culminated in the signing of the agreements.
Mayor Kurt L. Schmoke hailed the agreements as proof that "business is once again discovering there is an advantage to doing business in the inner city."
Church members were equally enthusiastic.
"I'm going to move my business and my personal accounts to one of these banks," said Harriett Pearson, owner of the Millard Development Co. and a member of McKenzie's Payne Memorial African Methodist Episcopal Church in West Baltimore.
"It's time for us to come together financially, and the church is the place to do it."
Each financial institution reported opening three to 10 accounts yesterday and talking to dozens of people who plan to open accounts.
"It is simply good business to be involved in the collective," said William Couper, NationsBank president for the greater Baltimore area.
Couper said NationsBank has made $13 million in loans to African-American churches in Baltimore over the past two years and expects to do significantly more church-related business under the collective.
Couper said the collective has the potential to help transform depressed areas of the city.
He said one of NationsBank's first loans under the collective agreement will probably be to New Shiloh, which plans to purchase and renovate the long-closed Cloverland Dairy, located next to the church on Clifton Avenue in West Baltimore.
The church plans to raze some buildings for parking and renovate others for community-related activities, including a job-training program, said the Rev. Harold A. Carter, New Shiloh's pastor.
The banking collective is an affiliate of the 2-year-old Collective Banking Group of Prince George's County and Vicinity, with 75 member churches. That collective has made some $15 million in new deposits to its member banks and received $70 million in loans, helping to fuel a church building boom there, said McKenzie.
In Baltimore, "more churches are going to be built or expanded and neighborhoods are going to be revitalized" as a result of the collective, McKenzie said in an interview.
The collective's key goal is to give the community greater power to monitor and influence banking practices.
The lending institutions' representatives will meet with the collective's leaders quarterly to review denials of loans requested by member churches and individuals. And churches will encourage their members to do business exclusively with the four institutions.
For years, black churches have complained that banks eagerly take their deposits but are often reluctant to make loans to churches, fearing they won't be repaid. But statistics show that few churches default on loans, the ministers said.
Many churches have been unable to build or fix up churches and surrounding buildings because of restrictive banking practices, church leaders say.
Schmoke said that in 1993 he called a meeting of several bank presidents in his office to discuss lending practices with black churches. "I told them, if anyone is going to pay their bills it's our churches," said Schmoke to thunderous applause.
Several churches were granted loans or received more favorable terms on loans as a result of that meeting, Schmoke said.
But after that initial spurt of activity, bank-church relations fizzled as local banks merged with out-of-town banks and new local bank leaders emerged who hadn't attended Schmoke's meeting, ministers said.