Soul Business--Roxbury's Unity Bank

LAST SPRING, shortly after the death of Rev. Martin Luther King, Donald E. Sneed, president of the new Unity Bank and Trust Company in Roxbury--the first bi-racial bank in New England--spoke in Hilles Library at Radcliffe. He was angry then, and one couldn't help but be struck by his overwhelming determination. He told a spellbound audience of 200, "We are going to be the fastest growing commercial bank in New England and everybody is going to help. If you don't help, someday you're going to sit back and say, 'I should have listened to that guy.' The time has come for people to get together. Because if you don't, you're going to be standing by yourself in the middle of nothing."

Calling Unity "constructive black power," he urged the audience to bank by mail and place their accounts at Unity. "Every mail box is a branch office of the Unity Bank," he said.

There are 14,500 commercial banks in the United States; 20 are black controlled. This great gap underlines the economic and entrepreneurial difference between the white economic power structure and black communities in this country. When Unity Bank opened on June 24, it became the first bi-racial bank in the history of New England and the second to exist in the country--The Freedom National Bank in Harlem, established in 1964, was the first.

Located on Warren Street in central Roxbury, Unity Bank is an unimpressive grey building with large arched doorways. Inside, the walls are just beginning to crack in some places and the bank seems small. Up the street, a drab, pre-fabricated government housing project stands alone, near completion, in the middle of a large barren lot. And directly across from Unity lies another lot--this one empty and muddy. But Unity's forlorn appearance and surroundings are deceiving.

Though it is basically a commercial bank like Harvard Trust and Cambridge. Unity is distinguished by its innovations in banking and its direct involvement with the community. Established to give equal economic opportunity to the ghetto-dwellers of Roxbury-Dorchester, it is, as its slogan states, 'The Bank With a Purpose."

From its extra hours (Unity opens daily at 8:30 a.m. and is open on Saturdays) to the free financial counseling that it provides, Unity is oriented to the working people of the Roxbury community. The bank sponsors free seminars on consumer education, investment, maintenance of credit, and the hows's and why's of using a bank. Its loan officers provide free counsel to existing and prospective black entrepreneurs and enable them to enter business through progressive loan policies. They hope this will have the two-fold effect of increasing the percentage of black owned businesses in Roxbury and opening up new employment opportunities.

BERNARD FULP, assistant Vice President of Unity and its chief loan officers, explained in a recent interview that discriminatory policies of commercial banks have consistently forced black people into economic slavery at the mercy of loan sharks and finance companies. "Place of residency is given more weight than any other factor when commercial banks grant loans," he said. "Slum residents are eliminated solely on the basis of where they live. This drives those who can least afford it to finance companies and loan sharks who charge unreasonable interest."

Fulp, who previously worked at two large banks in Boston, is well-acquainted with the policies of commercial banks. As he explained it, the unfair deal ghetto residents constantly receive works the following way: a man who may hope to purchase a car finds that he can only do so by paying exorbitant interest to a finance company. He borrows the money, buys the car, naturally finds it impossible to keep up with the payments and within a short period of time loses both his car and the possibility of obtaining future financial credit. Then there is a real reason for commercial banks to turn him away. The cycle is vicious and the effect debilitating.

Unity is trying to change all that. Its interest rates are no different from other commercial banks but the loan policies are equitable. No one will be turned away because of the color of his skin or the place where he lives. According to Fulp, Unity grants high education loans "so the kids in this community can go to college, home improvement loans to make the houses here liveable, and business loans so small businesses can be bought by black people."

HOWEVER, Fulp admitted that the problem of meeting financial commitments is a real one for many ghetto dwellers. "People here have no reason to believe anything but that they are at the bottom today and they'll be there tomorrow," he said. "We try to convince them of the greater possibilities so they will have a reason to accept their responsibilities."

A "risk-pool," financed by businesses in the greater Boston area, is used to grant loans to these "marginal people," thereby helping Unity to overcome this problem.

Intense concern was reflected on Fulp's face as he described some of the individuals who enter his tiny office seeking help. He views everyone as a person with a problem and no one is sent away without some advice, even if Unity can't help. He told the story of one man who came in, seeking a lawyer because his son had been drafted. "Because he worked on a job that his credit union thought would be phased out, he was denied a loan," Fulp said. "That man had held the same job for 20 years and the possibility of it being phased out was not large. We gave him the loan."

Community agencies within Roxbury-Dorchester are also receiving free business expertise from Unity. The United Front Foundation, the Joint Center for Inner-City Change, the New England Development Corporation, and Opportunities Industrial Center fall into this group.

UNITY was conceived two years ago by John T. Hayden, a black graduate of the Harvard Business School. After writing a term paper about the economic needs of the ghetto community, Hayden decided to establish a community-based commercial bank in Roxbury. He contacted Sneed, who, at, that time, owned a small real estate business in Roxbury and was involved in civil rights boycotts and bussing attempts.

Hayden and Sneed laid the plans for Unity, contacting faculty members at the Business School and black professional people in Roxbury for advice. The Unity Bank Association, consisting of 88 organizers of the bank was formed in late 1966, and carried on the work without Hayden when he was drafted soon after graduation.

Unity finally capitalized last year at $1.2 million and was the first bank in New England to sell its stock to the general public. Many of the $10 shares were sold in $50 blocks to people who had never conceived of owning stock in anything. Roy G. Guittar, executive vice president and the bank's only white employee, said that 70 to 80 percent of the 3,358 shares are owned by residents of the predominantly black Roxbury-Dorchester community. According to Guittar, there is no controlling interest in the bank and the 22-man, unpaid, board of directors--of which 16 are black--owns less than ten percent of the stock. In most commercial banks the board of directors usually extends about 50 percent of the capital, Guittar said.

Demand for Unity's stock was so great that the initial capitalization, set at $1 million by the State Board of Banking Corporation, was raised to $1.2 million and stock requests totaling $44,000 still had to be returned. Guittar recalls one rich white businessman who wanted to purchase $400,000 worth of Unity stock. He was refused because the board of directors had established the policy of scrutinizing all requests over $10,000 and set a $25,000 maximum. "We wanted to avoid any controlling interest," Guittar explained.

Unity became the first state chartered bank to over capitalize prior to opening for business and now, in a mere 90 business days of existence, it is on the verge of making a profit, a feat that, according to Sneed, usually takes a commercial bank three to five years. Since the stockholders are chiefly citizens of Roxbury and Dorchester, Unity's success will profit the entire community.

Sneed, a tall, dark brown pillar of a man, works out of a seven-by-seven foot office allotted for the president. He is involved--unlike most bank presidents--in the day-to-day business of the bank and spends almost half his time assisting individual customers in the bank's main room. "We give really human service here and know our customers by name, not number," he boasted in a recent interview. But Unity is probably one of the only banks in the country where all customers have access to the executives at almost any time.

As a budding black enterprise at a time when the need for black entrepreneurship is much publicized by urban politicians and ghetto leaders, it would seem that Unity faces a dilemma. The bank must be concerned with extending new loan oportunities to people who may not have upheld their commitments in the past and must be concerned with its own success as a financial endeavor. Sneed and Fulp see this problem differently. "There are factions of both the black and white community that are watching to see whether we are going to pass the supreme test of survival," Sneed said. But Fulp refuses to succumb to this pressure.

"We are a going establishment and intend to remain here with a quasicrusading role," Fulp said in his softspoken but intense manner. "Black institutions historically have had inferiority complexes. This is a handicap that we need not have to deal with. Even though we see this in print and know it to be a fact," he said, referring to the pressure on black institutions to succeed, "it must be treated as an irrelevancy. In order for people at this bank to be free to perform, they must be mentally free. This compex can't be allowed to immobilize us. Every time someone comes in here I can't think "We mustn't take this risk because we are a new black bank.'"

But Sneed is the president of the bank and the chairman of the board of directors and must be concerned with Unity's success. And he also speaks from experience. When he first approached the State Board of Banking Corporation to obtain a charter for Unity, the bank was required to capitalize at $1 million. According to Massachusetts statute, the capitalization requirement is determined by the population of the area where the bank is located. On that basis, Unity should have been able to capitalize at $450,000, not $1 million. "They figured we wouldn't be able to meet that and eventually fade into the woodwork," Sneed said of the board's action. "But we wouldn't be stopped by the restrictions they put on us." Demand for Unity stock was so great that eventually its board of directors requested an increase in capitalization to $1.2 million and got it.

Other experiences have made Sneed cynical. When Unity was establishing itself, Only one-tenth of one percent of the corporations invited to be stockholders actually responded. John Hancock, American Mutual, and Liberty Mutual are among those that did. The main task facing the bank now is soliciting accounts. Response, generally, has been good, with the Commonwealth of Massachusetts placing $360,000 in Unity last week to become the largest single depositor. Previously, the United Front Foundation had the largest account. Brandeis, Andover Theological School, Northeastern University, and Boston College have all become depositors and M.I.T. is a stockholder. A few large Boston corporations including New England Mutual, Prudential Life, New England Telephone, and Boston Gas have also responded. But 65 percent of the 40,000 accounts on record as of last week are from Roxbury and Dorchester.

Sneed said that "life insurance companies (like N.E. Mutual) are banking here because it's good business. They may find a new market for their service, and by establishing positive relations with Unity's presence in Roxbury has forced large white banks to entertain propositions from black businesses that they never