Abigail Adams National Bancorp, Inc.
Abigail Adams National Bancorp, Inc.
1627 K Street N.W.
Washington, District of Columbia 20006
Web site: http://www.adamsbank.com
Incorporated: 1977 as The Women’s National Bank of
Total Assets: $112.16 million (1996)
Stock Exchanges: NASDAQ
SICs: 6022 State Commercial Banks
Abigail Adams National Bancorp, Inc. is a bank holding company overseeing its sole wholly owned subsidiary, The Adams National Bank. The Bank provides banking and other financial services to individuals, small to medium-sized businesses and nonprofit and other organizations. Adams National Bank was the first federally chartered bank in the United States to be owned and managed by women. Originally named The Women’s National Bank, the bank changed its name in 1986 to The Adams National Bank. The bank serves the nation’s capital through three full-service offices in Washington, D.C.
The Adams National Bank is the largest U.S. bank owned predominantly by women, and the first such federally-chartered bank. As it enters its third decade, the bank continues to grow by paying attention to traditionally underserved niches. In the mid-1990s Adams completed a successful stock offering, which retained the female character of its ownership while supplying capital to expand beyond downtown Washington, D.C.
The Women’s Movement Spawns a New Bank in the 1970s
Banking is the most conservative of businesses, and in spite of the growth of the feminist movement, credit and respect remained more difficult for women to come by even to the end of the century. Banks traditionally insisted on dealing with the head of the household—the male head of the household, i.e.—when approving loans. In 1977 the Women’s National Bank was chartered in Washington, D.C.; its purpose was to incorporate more women on both sides of the operation: as owners and as customers. Offices were established at 1627 K Street N.W. The bank was not alone in its mission—the First Women’s Bank of Maryland, the Women’s Bank of Richmond, and the First Women’s Bank of New York were similar enterprises launched in the mid-1970s.
Emily Womach, a respected Delaware banker, served as the first president and led the board of directors—assuming the title of “chair” rather than the traditional “chairman.” Womach had been elected treasurer of Delaware in 1970 and fielded an unsuccessful campaign for governor two years later. Although unimpressed by the methods employed by another feminist financial institution, the First Women’s Bank of New York, she agreed to lead Women’s National due to what she perceived as its more responsible grounding.
In April 1978 the company completed a $2-million initial stock offering, which had begun six months earlier. Although 1,000 investors subscribed at $20 per share, a partnership of two Washington-area developers and their wives became the largest shareholders. However, this auspicious event would ultimately threaten the company’s sovereignty. A decade later, significant losses in the local real estate market would force the partners to default on a $4.5 million loan and relinquish controlling ownership (71 percent) to Citibank.
The Women’s National Bank opened for business in May 1978. The bank posted a first year loss of $76,000—quite respectable compared to the $400,000 the First Women’s Bank of New York lost during its first half year. In addition, the Women’s National Bank had already begun to operate profitably on a monthly basis, well ahead of the two years it took most start-up banks to achieve that status. By this time assets had grown to $7 million; deposits of $4.6 million indicated it was still the smallest bank in Washington. However, as results improved year after year, it became fifth most profitable by 1981, when it earned $240,345 after taxes. Nevertheless, its small size made compliance with inflexible and cumbersome banking regulations seem an inordinate burden.
Approximately two-thirds of the bank’s 5,000 customers were women, as were most of the officers and directors. Women were granted about 60 percent of all loans. The bank geared its personalized service and educational efforts towards making women feel comfortable and confident in the world of finance. The bank’s interior design, complete with plants and local pieces of art, reflected a feminine touch as well.
Significant practical benefits accompanied the bank’s pioneering status at a time when the Equal Credit Opportunity Act gave women more assertiveness in dealing with banks. The federal government encouraged businesses owned by minorities and women, and the bank received preferential treatment from the federal government’s Minority Bank Deposit Program, both through direct grants and by requiring its various agencies and contractors to utilize these businesses. Unfortunately, some of these funds were placed in special accounts in the Federal Reserve, out of the bank’s control.
Lagging behind in the 1980s
Although its phenomenal initial growth could not be sustained, the Women’s National Bank remained strong. The initial momentum was gone by the mid-1980s, as men shied away from the feminist institution. Other threats included a very serious national inflation rate and disproportionate taxes from the local District of Columbia government.
Women’s National hired Barbara Davis Blum as CEO in 1983. Blum was formerly a senior executive at the Environmental Protection Agency. In 1986, the bank’s name was changed to The Adams National Bank in honor of Abigail Adams, wife of President John Adams. The financially-savvy, pioneering feminist seemed an ideal symbol. However, the name change emphasized that the expanding bank was interested in serving not only women. Still, its feminist agenda would remain relevant into the 1990s. Although women carried more leverage as consumers, there still remained a perceivable gap when it came to women as independent entrepreneurs seeking bank loans—at least without a male co-signer.
Citibank assumed control of the Adams National Bank in 1988 when a group of its investors defaulted on a real estate loan. In 1989 the bank had three branches and had assets worth $63.1 million. While the rest of the country was celebrating a revived economy, Adams National was missing many opportunities as it stood neglected under Citibank’s indifferent yoke. However, in the mid-1990s the bank did successfully bid for the assets of some failed financial institutions in the Washington area. In 1994 it began issuing its own Visa credit cards, enhancing its consumer offerings.
New Investors, New Hope in the 1990s
Women and minorities are classified together for the purposes of government entitlement programs. Using this logic, Citibank agreed to the sale of Adams in 1994 to National Bancshares, an African-American veterans group. However, Adams management, offended at the assault on the bank’s identity, vigorously defended the feminine character of its ownership. National Bancshares abandoned its pursuit, and a series of lawsuits were initiated between company management and Citibank.
A search for new capital produced West Virginian Marshall T. Reynolds, whose group of eight investors included five women. Besides being more in tune with the bank’s tradition, the Reynolds group offered to pay substantially more per share—$17—than National Bancshares, with an additional $4-per-share premium to minority shareholders (though most kept their shares). Reynolds, chairman and CEO of printing and office product supplier Champion Industries Inc., also invested in other community banks in the South.
In the spring of 1996, Adams National initiated a public stock offering to fund new expansion plans. The offering was made in the bank’s holding company, Abigail Adams National Bancorp (known until 1986 as First WNB Corp.), through NASDAQ. In order to maintain the bank’s minority status, the bank’s broker, Ferris Baker Watts Inc., pitched the investment specifically to women. Men were encouraged to buy shares jointly or as gifts for female relatives. The unprecedented offering was wildly successful, raising nearly $7 million. Women retained a narrow majority of ownership, and the bank retained such privileges as the right to keep its three ATMs in Union Station (owned by the Department of Transportation), and the other business the federal government steered its way—at the time, seven percent of deposits and four percent of loans. However, the bank would have to tabulate its female ownership annually in order to remain eligible.
The newly-liberated bank, with assets valued at $89 million, embarked on an energetic search for acquisitions in Washington’s neighboring suburbs, where the bank reported making 55 percent of its loans. Several likely candidates emerged in Virginia and Maryland, two states that allowed interstate branching. The bank also opened its fifth office in the District of Columbia, at the MCI Center in Chinatown, in fall 1997, and scouted locations for its own branches in the neighboring states.
In spring 1997, Abigail Adams National Bancorp agreed to buy Ballston Bancorp, Inc., the holding company of the Bank of Northern Virginia, in a deal worth $14 million. In November 1997, Marshall Reynolds, the bank’s largest shareholder, withdrew his support for the merger, claiming its financial liabilities would overshadow its strategic advantages. Blum had already designated her son Devin to head the acquisition’s lending operations.
Adams National invested heavily in technology—an approach that had been initiated when it introduced the first dual-language, English/Spanish ATM in the capital. CEO Barbara Blum told American Banker, “We want to move ahead of the curve of community banks in this area and offer the same technological services that you can find at the big banks.” However, she pointed out in Inc. magazine that most small business customers were not vitally interested in such innovations as PC-based banking, although Adams did market this service, under the “ExecuBanc” label. Twenty-four-hour telephone banking was also available. The company launched a web site in July 1996 that enabled on-line credit applications and bill payment. The bank’s physical branches were linked via a PC-based network. Adams subcontracted its data processing and back room operations.
In 1997 federal set-asides accounted for five percent of the bank’s deposits. It made three percent of its loans through preferential federal programs. The bank concentrated on small businesses, professional organizations, and the nonprofit organizations that clustered in and around the nation’s capital, which accounted for $1.5 million of the bank’s commercial and real estate loan portfolio in 1996. Labor unions owned some of the bank’s largest accounts; however, the company’s own employees were not represented by a union. Some Fortune 500 corporations also banked at Adams National.
As part of its focus on local small businesses, the bank participated in the financing program run by the Small Business Administration (SBA), which offered loans at favorable, flexible terms in order to spur development of the small business sector. Most of the money lent was guaranteed by the SBA; therefore, the bank expected to cultivate some long term relationships with these growing businesses while exposed to little risk. The bank’s commercial and real estate SBA loans were worth $3 million at the end of 1996.
Net income for 1996, the bank’s most successful year to date, was $1.13 million, up nearly 20 percent from the previous year, and assets totaled $112.2 million. Commercial loans were worth $39.4 million in 1996. Construction loans totaled $4.1 million. Commercial real estate loans accounted for $24.8 million and residential, $2.6 million. Loans to consumers were worth $2.2 million. In the late 1990s Adams National seemed poised for a promising new century, and women for a new era in financial empowerment.
The Adams National Bank.
Andrejczak, Matt, “Adams National Eyes Merger Partners in Suburbs,” Washington Business Journal, April 7, 1997.
——, “Adams Shareholder Opposes Bank Merger,” Washington Business Journal, November 24, 1997.
Cannon, Carl M., “The Adams Chronicle,” Working Woman, October 1997, pp. 24–27, 88.
Fraser, Jill Andresky, “Will Banking Go Virtual?” Inc. Technology #3, 1996, p. 49.
Gaiter, Dorothy J., “Energy Agency Moves on Aiding Minority Businesses; Deposits at Certain Banks to Be Increased Tenfold to $250 Million,” Wall Street Journal, May 26, 1992, p. B2.
McDermott, John P., “Adams National Tries to Calm Depositors, Fight off Buy out,” Washington Business Journal, April 22, 1994, p. 6.
Peabody, Alvin, “Disability Discrimination Suit Resolved with Adams Bank,” Washington Informer, June 29, 1994.
Rhoads, Christopher, “Freed from Hobbles, Adams National Looks to Run,” American Banker, July 22, 1996, p. 12.
Seaberry, Jane, “A New Generation of Women’s Banks,” Washington Post, June 27, 1979, pp. D8, D13.
——, “New Women’s National Bank Now Part of Establishment,” Washington Post, March 29, 1979, pp. C1, C3.
——, “Women’s National Bank Still Optimistic,” Washington Post, March 27, 1980, p. B3.
“US Banks: Hitting the Big Time,” The Banker, April 1982, pp. 80–81.
Williams, Fred O., “Adams Hits Bull’s Eye in Woman-Targeted Offering,” Washington Business Journal, July 22, 1996.
Young, Wayne A., “Disabled Workers Sue Adams National Bank,” Washington Afro-American, June 4, 1994.
—Frederick C. Ingram