BankBlackwell Clears Last Major Regulatory Hurdle
Organizers focus on boosting efforts to raise funds as they organize the nation's first African American-owned Internet bank
By Philana Patterson

BankBlackwell, which is hoping to be the first African American-owned Internet bank, received deposit insurance approval from the Federal Deposit Insurance Corp., clearing its last major regulatory hurdle.

“We applied for FDIC insurance on May 28, 2004. It's something we've been working hard [to achieve],” says James R. Mundy, president and chief executive of BankBlackwell, who is leading the group organizing the bank.

FDIC insurance protects consumers against the loss of deposits if an FDIC-insured bank or savings association fails. The FDIC insures deposit accounts such as checking, negotiable order of withdrawal accounts, savings accounts, money market accounts, and certificates of deposit. The basic insurance limit is $100,000 per depositor per insured bank.



The approval clears the way for the bank's organizers to focus on raising funds through its $17.5 million public offering Mundy says. The bank's founders initially raised $860,000 and earlier this year issued an offering of up to 1,664,000 shares of common stock to individual and institutional investors at $10 a share. He would not reveal how many shares the bank has sold so far; but Mundy hopes to raise adequate capital and to begin operations in late 2005 or early 2006.

Until recently, the organizers had focused much of their efforts on marketing shares in New England, but they have now launched a national campaign to sell the remaining stock. The bank recently held two informational seminars for potential investors in Atlanta and has meetings scheduled in Cleveland on Sept. 13; Augusta, Georgia on Oct. 4; and Fort Lauderdale on Oct. 6. Additional meetings are being planned for Chicago, Detroit, Los Angeles, Miami, New York, and Washington, D.C.

Some experts believe the group may be able to successfully attract more African Americans to invest. But “it's not for everyone,” cautions Stephen Washington, founder of the Black Wealth Network, which is hosting BankBlackwell's investor seminar in Cleveland. “It's for individuals who are pretty established from a wealth management perspective for retirement.”

Once operations are up and running, the company plans to target potential customers through direct mail, and African American target media outlets.

If BankBlackwell's share sale is successful and it commences operations, it will offer savings accounts, certificates of deposit, mortgage, home equity, and church loans. BankBlackwell won't offer checking accounts, but like some other Internet-only banks, it will provide tools that allow customers to link BankBlackwell accounts to an existing checking account. The company will allow customers to bank by mail and phone, but will encourage customers to use the Internet.

“For a long time we've been talking about how to harness the economic spending power of the African American community,” Mundy says. “This will truly be a national bank serving African Americans and we want African Americans to be our owners.”

For more information on the BankBlackwell call 877-226-5229 or visit www.bankblackwell.com .