Tough time for historic Baltimore bank

Posted: 1:10 pm Wed, March 10, 2010
By Danielle Ulman
Daily Record Business Writer

Ideal Federal Savings Bank’s single branch has anchored the corner of Druid Hill Avenue and Wilson Street since 1920, when its founders opened to give loans to community members when no one else would.

But the neighborhood mainstay and historic black Baltimore financial institution could serve its last customer this spring.

Federal regulators have ordered the bank to find a merger partner or an institution to buy its assets, after it failed to improve its capital levels and fix its lending issues.

The Office of Thrift Supervision wants to see a binding merger agreement by March 31 and complete the deal by May 1.

The bank is one of many in Maryland and elsewhere to fall victim to the recession and poor lending standards. Joseph Haskins Jr., president and CEO of The Harbor Bank of Maryland, the state’s only other black-owned bank, said it’s a testament to the strength of the family-owned institution that it has been around for 90 years.

“They have done tremendous good in the community where they are domiciled and they have done it for years,” he said. “It’s a compliment to having survived that long to have gone through the depression and probably four or five recessions.

“It’s unfortunate that this particular recessionary environment has been their downfall,” Haskins said.

Accounts of the bank’s early days in The Baltimore Sun say it served customers on Thursday nights, the one night of the week that household staff like cooks and maids were given time off. Banking became a social event as women chatted and men played cards or had a drink together.

On Wednesday afternoon, there was no sign that the bank was a social meeting place for the community, and no customers approached the building.

The bank was founded by Teackle Wallis Lansey to help black families secure mortgage loans to purchase homes in Baltimore. Yvonne F. Lansey, who serves as the bank’s chairman and CEO and is one of its two employees, is the founder’s granddaughter.

Yvonne Lansey said Wednesday she could not comment on the bank’s next steps.

Down the street from the bank in Marble Hill, a mural depicting neighborhood luminaries, like Teackle Lansey; Thurgood Marshall, the first black Supreme Court Justice; Afro-American newspaper founder John H. Murphy and others, was painted in 2001 to remind residents of the neighborhood’s rich history.

The bank did not stray from its mission of serving black community members even when it began operating five days a week. In 1992, when Koinonia Baptist Church opened its doors in East Baltimore, only Ideal would accept it as a customer, said its founder, Bishop Douglas Miles.

Miles had grown up in Baltimore and opened his first personal account at Ideal because it was close to the hospital where he worked. After failing to get an account with a bank closer to his church because it did not have a charter and its first deposit was less than $500, Miles said he turned to Ideal.

“That’s the thing that’s going to be missed, the commitment to the African-American community and to poor people,” he said.

Miles said he felt as though the community had let the bank down by not investing enough in deposits into the institution to keep it alive. At the end of 2009, Ideal had $6.3 million in assets and $5.9 million in deposits, according to the Federal Deposit Insurance Corp.

“It’s my hope that they will find a partner that will allow the ideals of Ideal to continue within the African-American community,” Miles said.

But Bert Ely, a Virginia banking consultant, said that kind of buyer could be hard to find.

“It becomes a little trickier to find a buyer because they try to preserve the minority-owner status,” he said. “[Regulators] only cut them so much slack.”

He said if Harbor Bank had interest, it could be a logical fit.

As of the end of 2009, 11.4 percent of Ideal’s loans were noncurrent, meaning borrowers were 90 days or more behind on payments. With less than $10 million in assets, Ely said it was not practical to remain a separate institution in an urban area.

“When they’re in trouble like that, a weak bank cannot serve its community. …I don’t care what kind of community it serves; it still is not a viable proposition,” Ely said.

The bank has been under federal scrutiny since August 2008, when regulators ordered it to sell or merge by the end of the year because of poor lending standards.

Ideal’s Web site says the bank is believed to be the oldest black-owned financial institution in the state.