Black banks offer huge stock returns

Black banks offer huge stock returns

Long shunned by Wall Street, shares of publicly traded African American banks are now some of the nation’s best performing stocks. “For various reasons, these stocks have outperformed others,” says Joe Gladue, a banking analyst at Philadelphia-based Cohen Bros. & Co. Gladue has measured the performance of both black-owned banks and major market indices from Dec. 29, 2000, through Dec. 26, 2003. Some of the factors for the stock growth of black banks include rising profits, lower interest rates, and greater visibility — all of which allow the banks to deliver higher returns to their investors.

Among the handful of black-owned banks or thrift stocks that have traded with any regularity and performed very well since 2000 are Los Angeles-based Broadway Financial Corp., the holding company of Broadway Federal Bank (No. 10 on the BE BANKS list with $204.9 million in assets); Atlanta’s Citizens Bancshares Corp., parent company of Citizens Trust Bank (No. 5 on the BE BANKS list with $277.3 million in assets); New York’s Carver Bancorp Inc., holding company of Carver Federal Savings Bank (No. 2 on the BE BANKS list with $484.4 million in assets); and Independence Federal Savings Bank of Washington, D.C. (No. 6 on the BE BANKS list with $251 million in assets). In March, Bancorp acquired Independence in a transaction valued at $32.6 million.

The above-market performance of the black-owned bank stocks is profound because the appreciation came in a tough and highly competitive banking environment, explains James E. Young, president and CEO of Citizens Bancshares.

Top-PerformingBlack Banks
Institution Share Price
12/26/03 Gain
Broadway $3.81 $13.52 254.86%
Citizens 5.50 13.00 136.36
Carver 9.75 25.75 164.10
Independence 8.68 23.20 167.28
Note: Over the same three-year period,the S&P 500 Index lost 17%, the NASDAQComposite Index lost 20.1%, and theNASDAQ Bank Index gained 48.7%.Source: Cohen Bros & Co