Partners (Spring 2000)

Fannie Mae and Citizens Trust Bank Join Forces to Expand Housing Opportunities

By Keenan Conigland

James E. Young, Citizens Trust Bank President

For most banks, construction of affordable housing in low- to moderate-income communities is a noble but challenging endeavor. Prospects for success increase dramatically, however, when you are able to join forces with the likes of the Federal National Mortgage Association — known more commonly as “Fannie Mae.” In an effort to increase lending opportunities in traditionally under-served communities, Fannie Mae, the largest source of financing for home mortgages in the country, recently made a $1.5 million equity investment into Citizens Bancshares Corporation, the parent company of Citizens Trust Bank, Atlanta, Georgia (CTB).

With assets of $215 million at year-end 1999, CTB is the largest African-American controlled bank in the southeast and the fourth largest in the U.S. The bank was founded in 1921 by a group of black businessmen led by Herman E. Perry, who had made his fortune in the insurance business.

Fannie Mae’s $1.5 million stock investment gave the agency a 9.9% ownership interest in return — an amount below the 10% threshold under the Change in Bank Control Act. The equity funds, which now represent Fannie Mae’s largest Community Development Financial Institution (CDFI) investment in the southeast, will be used to promote greater development in the metropolitan Atlanta area served by CTB.

Chuck Lewis, chief operating officer and senior executive vice president of CTB, explains the bank’s strategy. “Our vision is to make loans and then invest back into the community so that it will flourish. We can also be an advocate for these communities and businesses by becoming part of their neighborhood associations, and giving our time and talent.” Lewis works closely with the South Dekalb Business Association, Old National Highway Merchants Association, and Cascade Business Association. In the same spirit of corporate citizenship, James E. Young, president and CEO of Citizens Bancshares Corporation and CTB, is active with the Atlanta/Dekalb Chamber, Sweet Auburn, and a host of other organizations.

Because of that kind of community vision and involvement, Fannie Mae felt comfortable in making its second CDFI investment in the institution in as little as three years. “They penetrate under-served communities much better than traditional banks,” explains Archie Hill, director of Fannie Mae’s Atlanta Partnership Office. “They have a targeted outreach that works.”

In an effort to serve markets where residents have demonstrated income but lack convenient access to financial services, CTB has opened branches in the College Park, South Dekalb, and Cascade areas. “These are viable areas but they need access to capital. We know how to make loans safely and profitably in these communities. We’re trained to do it,” says Lewis.

CTB’s overall strategy is fairly straightforward: it simply aspires to “grow” the community. “By planting financial seeds in the community, we can generate wealth and business opportunities,” Lewis says. “We now give free financial plans and makeovers. As an approved SBA lender, we can do anything a full service bank can do, including internet banking.”

Minorities constitute 99% of CTB’s market. Of this segment, 64% are first-time homebuyers, and 28% are single women heads of households. “We invest time in getting to know our customers,” offers Paul Ramirez, who heads up CTB Mortgage Services (CTBMS). “With us, trust, believability, and face-to-face contact are what make the difference.”

Citizens Bancshares Corporation merged with First Southern Bancshares in 1998. Based in metro Atlanta’s south Dekalb county, First Southern was also an African-American financial institution founded by successful entrepreneurs. The assets of the Atlanta-based institution recently increased from $215 to $245 million when it acquired the assets of Atlanta-based, 75-year-old Mutual Federal Savings and Loan, following receivership.

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