In a time of widespread consolidation and a shrinking number of minority-owned banks, the institution Joseph Haskins Jr. helped found 33 years ago is becoming rarer.
Amid more stringent federal oversight, many community banks are finding it more expensive to operate and are selling themselves to larger banks. Haskins says Harbor Bank, the Baltimore-based institution where he serves as chairman, president and CEO, has to be "very strategic" to offset the increased costs.
The Federal Reserve counts just 23 African-American owned banks in the country, down from 40 in 2003. Harbor Bank, with $233 million in assets, is one of them. Two other minority-owned banks in Baltimore vanished in recent years — Advance Bank was acquired by Municipal Employees Credit Union of Baltimore in 2013 and Ideal Federal Savings Bank was closed by regulators in 2010.
Haskins said Harbor Bank serves as a catalyst for economic development, offering small and mid-size businesses loans, running a non-profit community development corporation, and lending in distressed areas. Harbor Bank also has been involved in lending for the East Baltimore Development Inc. project.
What's it like to run a community bank at a time when many experts are saying banks need at least $500 million in assets?
Running a community bank has always been more demanding, in my opinion, requiring a broader knowledge base in order to be successful, as a community banker "wears more hats." The increasing regulatory burden becomes expensive as you're expending much more time and money on administrative compliance versus banking and generating profits. You have to be very strategic to offset that, focusing on only offering the most profitable products and services that best fit the needs of the community.
What's the difference between how a community bank operates versus a large bank?
Community bankers are not only of the communities they serve, they are an integral part of the local market. The community bank often acts as a catalyst to economic development and/or as a conduit, linking businesses and making introductions to other banks when necessary. Community banks don't have access to the capital markets like Wall Street banks, nor that scale. Community banking requires intricate knowledge of your community and customers.
Can you tell me about the history of The Harbor Bank of Maryland?
The Harbor Bank of Maryland opened for business in September of 1982, becoming the first minority owned full-service commercial bank in Baltimore's history. The founders were progressive. Of the 21 initial board members, there were five different nationalities and two females. This framework was clearly 20 years ahead of the business world with innovative board representation. Our current board continues to operate in alignment with the initial mindset of forward-thinking and progressive actions that are vital to the development of a community.
With the ever-changing banking environment and Harbor Bank's need to increase its ability to serve the community while simultaneously preserving a strong income stream, Harbor Bankshares Corporation was formed in September of 1992. The corporation has three subsidiaries which include: The bank, The Harbor Bank of Maryland; a not-for-profit community development corporation, and a for-profit community development entity.
Both the corporation and its primary subsidiary, Harbor Bank, have been successful in winning a Community Development Financial Institution designation from the U.S. Department of Treasury. These have resulted in Harbor Bank winning more than $2 million in Bank Enterprise Awards and the corporation winning $174 million in New Market Tax Credit awards.
These awards enable us to place loans in distressed areas. Harbor Bank has been a perennial winner that has been consistently recognized nationally as a top performing bank in this category.
The New Market Tax Credit awards are highly coveted because of the tax benefits to private sector investors who are willing to invest in low income communities. The awards are highly competitive across the nation. The corporation is the only Maryland chartered financial institution to win the coveted awards five times. The $174 million has directly leveraged approximately $800 million of development throughout the Inner Harbor, East Baltimore and West Baltimore and has indirectly initiated more than $1.5 billion dollars of new development in the various surrounding communities.
What's the Harbor Bank of Maryland involved with now?
Harbor Bank continues to focus on providing the financial products and services necessary for our customers to thrive. Our specialty is lending to small and mid-size businesses. We also place an emphasis on residential mortgages and offer incredible rates to those with excellent credit and equity on both the residential mortgage and commercial lending sides. We provide the tools that many only associate with large multi-national banks.
One subsidiary continues to focus on New Market Tax Credits, while the non-profit subsidiary focuses on lending to other community-based projects. The $2 billion East Baltimore Development Inc. project is an example of our work. Harbor Bankshares Corp., through its three subsidiaries, has played a significant financial role in EBDI, financing science buildings and the East Baltimore Community School.
How important is it for community banks to adapt to new technologies like mobile banking?
Adapting to new technology is vital for the survival of all banks. Harbor Bank offers Mobile Banking, Online Banking and a lot of other convenient products and services that save customers time. As community bankers, we still enjoy our customers visiting our branches, however, and we take great pleasure in going to see our commercial and faith-based clients. At Harbor Bank, like in most other community banks, you're more than an account. We like to know our customers. We believe it enables us to better serve.
Joseph Haskins Jr.
Title: Chairman and president and CEO, Harbor Bankshares Corp.
Education: B.A. in economics from Morgan State University, M.B.A. in finance from New York University, Masters of Liberal Arts with a concentration in economics from the Johns Hopkins University, Advanced banking certificate from the University of Pennsylvania Wharton School of Business
Family: Wife, teenage daughter