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Wall St. And Business Wednesdays: Are We Honoring The Legacy Of The Black Woman Entrepreneur, Maggie L. Walker?

As an African-American woman and a bank founder, United Bank of Philadelphia's Emma Chappell has had few modern peers. Yet she followed a path forged at the start of the century by Maggie L. Walker, the illegitimate daughter of a former slave and a white abolitionist. The bank Walker started -- the first founded by a black woman in the U.S. -- still exists, though under another name.

Born in 1867 in Richmond, Va., Walker started the St. Luke Penny Savings Bank in 1903 with $9,430 in deposits gathered from members of the Independent Order of St. Luke, an African-American benevolent society. The order had been formed after the Civil War to take care of the sick and cover funeral expenses of members in exchange for small monthly dues.

Since girlhood, Walker had been active in the order. At the turn of the century, when she became its executive secretary, its membership began to dwindle. Walker reinvigorated the institution, building its national membership to 100,000.

In the process, she found that white-owned banks did not want to take deposits from a black organization, says Vernard W. Henley, chairman and chief executive officer of Consolidated Bank & Trust Co., the current name of the bank she started. White bankers' reluctance gave her the idea to start a bank, which would be the order's financial arm. "Let us put our moneys together; let us put our money out at usury among ourselves, and reap the benefit ourselves," Walker said in a 1901 speech to the group. "Let us have a bank that will take the nickels and turn them into dollars."

Two years later, St. Luke Penny Savings Bank was formed, with Walker as its president. By 1913, assets had grown to over $300,000, and she presided over the flourishing black community of Jackson Ward in Richmond, sometimes called the Harlem of the South. It was home to five other black-owned banks and scores of other African-American-owned businesses. "She made loans to black businesses, she made loans to students, she made loans to people to buy houses," says historian Muriel Branch, co-author of the biography, Pennies to Dollars: The Story of Maggie Lena Walker. Walker also set up a weekly newspaper, the St. Luke Herald, which she edited, and a department store that ultimately failed after the white community boycotted it and its suppliers.

While many of the largest black-owned banks went under during the Great Depression, Walker's bank survived, in part by merging with two smaller, black-owned banks in 1930, when it was renamed Consolidated Bank & Trust. Today, Consolidated has assets of $116 million, and the majority of its shareholders, who include two of Walker's descendants, are African Americans. "I think what she had in mind was that African Americans ought to help themselves, and they ought to provide the opportunities for employment and development," says Henley, who adds that her philosophy is one the bank still upholds.

By Jeremy Quittner in New York

- Note: This article appeared in the July 6, 1999 edition of BusinessWeek

Copyright 1999, by The McGraw-Hill Companies Inc. All rights reserved.


Black-owned bank loses 2 executives

Institution, under federal scrutiny, faces dubious future

October 24, 2003

RICHMOND -- Just as Consolidated Bank & Trust prepared to celebrate its 100th anniversary in less than two weeks, the nation's oldest continually operating black-owned bank - and one of the first to be founded by a woman - faces an uncertain future.

Consolidated said on Thursday that its chief executive officer and another official resigned "in the wake of continued reporting of earning deficits." The bank has faced regulatory scrutiny since 2000, when federal and state regulators forced bank officials to submit a plan that would restore the bank to profitability.

The bank gave no further explanation for the resignation of President and CEO Leon Scott, a former Hampton University vice president for financial and business affairs and treasurer brought in to help fix the bank in early 2001.

Consolidated, which is based in Richmond and has offices in Hampton and Newport News, traces its heritage to St. Luke Penny Savings Bank, which a former slave's daughter, Maggie L. Walker, launched in 1903. Walker's former home in Richmond is a historic site overseen by the National Park Service.

The bank and the park service are moving ahead with plans to mark the centennial celebration Nov. 1 and 2 in Richmond, with a gala at the bank's headquarters and a parade near the bank's original location.

Consolidated said Randolph Shelton, its senior vice president and chief operating officer, also resigned. He started working for the bank in 1999, after two decades in Virginia banking. Neither Scott nor Shelton could be reached for comment Thursday. But the bank has struggled to come up with the $3 million needed to cover bad loans in one of its portfolios. The bank remains under close regulatory watch.

Scott and Shelton inherited many of the bank's problems from previous administrators, but faced pressure to right the bank's situation quickly, said Clarence Townes, Jr., a board member of the bank.

"They were dealing with something that was really tough to change instantly," Townes said.

A troubled loan portfolio that included about 250 loans, which the bank sold at a discount in Aug. 2002, contributed to the bank's financial difficulties. The portfolio's face value was $8.9 million, but it sold for $7 million to a group of private investors.

In 2000, as part of the agreement, regulators told the bank to cut costs. Last year, the bank closed its Phoebus branch and two Richmond offices. Besides the branches in Newport News and Hampton, it still operates two Richmond offices.

As of June 30, the bank's total assets were $95.4 million, down from $107.7 million a year earlier. Total liabilities were $90.7 million, down from $103.3 million the year before. The number of employees fell to 65 from 78.

In July, the Federal Reserve Bank of Richmond and the Virginia Bureau of Financial Institutions amended their earlier agreement with Consolidated officials, saying they had uncovered more problems the bank would need to fix.

Among a number of actions the regulators said were required: hire additional senior credit administration staff and a qualified internal auditor; increase the number of outside directors with banking experience; submit a plan to maintain sufficient capital; and establish credit limits for certain industries and types of loans.

Joe Face, state banking commissioner, said confidentiality rules prohibit officials from releasing details about the bank's progress. Several of the deadlines set in the agreement have passed, but Face said he couldn't reveal whether the regulators demands were met.

"They are making some progress," he said. "We are prepared to do whatever we have to do to protect the public interest."

The bank will soon begin a capital campaign to raise $3 million to $5 million, Townes said, although he did not say what that would entail.

Officials hope to resume talks with Richmond Community Hospital Foundation, which had offered to buy a 16 percent stake in the bank for $1.2 million, Townes said.

That plan was dropped over the summer after bank officials said they were considering a merger with another historic black-owned bank in North Carolina, Townes said.

"That's not going to happen," he said of the rumored merger. "It's off the table."

Novelda Sommers can be reached at 247-4767 or by e-mail at

Copyright 2003 The Daily Press

Wednesday, October 29, 2003

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