Despite controversies, OneUnited chief executive hopes to raise private equity
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The bank involved in the Maxine Waters ethics case says it’s the leading Internet and interstate bank for black Americans, although its chairman’s past run-ins with the law and denials of wrongdoing have made news for other reasons this week.
Now OneUnited Bank, which is based in Boston but does most of its business in L.A., is talking about adding another line to its resume: the best capitalized bank for African Americans.
That could be a challenge, given that OneUnited’s investments in Fannie Mae and Freddie Mac cost it more than $50 million when the mortgage giants nearly went under in 2008.
OneUnited has been boosted by a $17-million investment from Boston’s State Street Corp., which said it wanted to preserve Massachusetts’ only minority-owned bank. It also received $12 million in government bailout funds, which it hasn’t repaid.
Yet even after those infusions of cash, OneUnited is only ‘adequately’ capitalized. That’s not what regulators prefer to see in the aftermath of the financial crisis.
Kevin Cohee, OneUnited’s chairman and chief executive, told the Times in an interview Thursday that he is in talks with private equity investors. ‘We could raise $50 million or $100 million here,’ he said.
That would, of course, dilute the holdings of Cohee and other current shareholders. At last report, the bank had $37 million in equity capital, and that could dwindle if its adds to its provisions for losses.
But Cohee, who has been running OneUnited for 15 years, said dilution is OK if OneUnited indeed can become the best capitalized black institution in the nation. He said he’s positioning the bank to grow over the long haul.
Compared to Bank of America, Wells Fargo or Citibank, ‘This is a baby bank,’ he said.
Cohee also said OneUnited’s board had discussed his future as its leader “and continues to talk about it.’
“To this point, fortunately, they are behind us,” he said.
-- E. Scott Reckard
