Over 45 days, Black Enterprise
shares 45 milestone events among the nation’s largest
black-owned businesses that have had widespread impact on black
economic development and American industry across four decades.
This is in tribute to the 45th anniversary of Black
Enterprise’s iconic BE 100s yearly list of the largest
black-owned companies.

Today we reveal No. 38 in the web series “Great Moments in
Black Business.” 

1988: Independence Bank of Chicago makes
history with its acquisition of Drexel National, the first time
ever an African American institution bought a healthy
white-owned financial institution.

The advertisement revealed pictures of dead presidents—Lincoln,
Jackson, Grant—with a catchy tagline: “We’d be very happy to
see a few new faces at our banks.” The ad would also
communicate the historic milestone as part of its customer
service message: “We formed the largest black-owned bank
holding company in America to serve the needs of communities
like yours.”

(Image: File)


Roughly two years before that ad’s appearance in BLACK
and other black periodicals, the late Alvin
J. Boutte—the man lauded as “an entrepreneurial wizard in
Chicago’s banking community”—performed a bit of deal-making
magic. In 1988, the president and CEO of Indecorp, the holding
company of the nation’s fifth largest black bank, Independence
Bank of Chicago, completed the landmark acquisition of
majority-owned Drexel National Bank, also located in the Windy

First Time Ever: Black Financial Institution Buys White-Owned


The transaction, which brought Drexel under the Indecorp’s
umbrella, marked the first time that a black-controlled
financial institution purchased a solid white-owned banking
establishment. In fact, at that time, the acquisition
represented one of the largest deals in minority banking

(Image: Black Enterprise


Analysts had estimated that Indecorp paid roughly $8
million—about 1.5 times book value —for Drexel. It was a
bargain: Boutte gained $109 million in additional assets, $3
million in lending capacity, two new branches, $50 million in
passbook savings accounts and Drexel’s 20,000 customers. One of
the nation’s most prominent black financial institutions,
Independence had assets of $118 million in 1998. Due to the
groundbreaking acquisition, BE recognized
Independence as the 1989 Bank of the Year.

By 1990, Indecorp had two institutions, Independence (No. 5)
and Drexel (No. 6), on the 37-member BE Banks list.
Collectively, Indecorp’s total assets were roughly $227
million. The 1990 bank list leader: rival Seaway National Bank
of Chicago with assets of $164 million was now dwarfed by the
size of its chief competitor. “We have acquired a sleeping
giant with enormous earnings potential,” Boutte told BE at the
time of the deal. “Our combined lending limit doubles with this
acquisition. We can now take larger positions in deals
throughout the city.”

Spirit of An Entrepreneur


The astute, focused Boutte was the right man to operate the
institution. The spirit of an entrepreneur coursed through the
Lake Charles, Louisiana, native and Xavier University-educated
pharmacist who founded Independent Drug Stores and built it
into the nation’s largest black-owned pharmacy chain. After
selling his business, he was tapped to become president of
Independence in 1970.

(Image: Black
Enterprise Magazine)


Despite the bank being robbed on his first day, Boutte was
extremely excited about its growth prospects. Launched in 1964
by investors like George Johnson, president of Johnson Products
Co., the maker of haircare products such as Afro Sheen and
Ultra Sheen, the bank had pretty much languished. Boutte put in
place a multipronged plan that included developing an
aggressive marketing campaign to attract corporate and
government customers; assembling an experienced staff to
execute on his initiatives; and expanding its loan portfolio.

Boutte Takes Assets to $100 Million


Over the course of a decade, he persuaded major corporations
such as Shell Oil and American Hospital Supply to become
clients as well as structured a $30 million revolving loan
agreement with Sears, Roebuck & Co. with Independence
leading a consortium of 60 minority banks to handle the
retailer’s credit and lending needs. Moreover, he took over the
deposits of two failed institutions, increasing the bank’s
assets by more than 35% in 1979. Within 10 years, from 1970 to
1980, he increased assets from a mere $11 million to a whopping
$100 million. During this period, he also created the holding
company Indecorp as a vehicle to acquire other financial

After the Drexel deal in 1988, Boutte sought to take advantage
of a deregulated banking environment by crafting an audacious
strategy focused on acquisitions and alliances. With increased
lending power, Indecorp broke new ground for black banks in
areas like foreign currency exchange, trust services, and
municipal bond underwriting. In fact, the holding company also
became the first black institution to engage in a joint venture
with a majority investment bank, Kane McKenna and Associates,
the Chicago affiliate of Robert W. Baird, a diversified
financial services firm.

A Setback


But Indecorp CEO Boutte and its Chairman George E. Johnson
would fail in their bid to make history a second time by
creating the first black interstate banking operation. By 1993,
Boutte and George Johnson had decided to put Indecorp on the
auction block. Its suitor: Omnibanc Corp., a Detroit-based
black financial holding company with just $23 million in
assets. Omnibanc’s Chairman William Johnson gained capital from
former Detroit Pistons superstar Isiah Thomas and other
investors to meet Indecorp’s $35 million price tag. After
Boutte and William Johnson shook on the deal in September 1993,
all parties had to wait for Federal Reserve approval.

The deal, however, unraveled due to timing and interest rates.

Over the course of a year, the Fed raised interest rates to
keep inflation at bay. However, the hike depressed the value of
Indecorp’s bond portfolio, which represented two-thirds of its
assets. Reviewing the books again, Johnson decided to shave the
offering price to $26 million. Boutte wouldn’t budge. The Fed’s
approval expired December 1994 and so did the deal.

Indecorp was eventually sold. In 1995, much to the
disappointment of thousands of black Chicagoans, majority-owned
ShoreBank Corp., the holding company for South Shore Bank in
Chicago, acquired Indecorp, which, in turn, lost its black
ownership status.

As for Omnibanc: It was seized by the Federal Deposit Insurance
Corp. and then the failed institutions were sold in 1988. The
acquirer: ShoreBank Corp.


Access the entire digital version of the 2017
May/June issue of BLACK ENTERPRISE featuring our 2017 BE 100s
report and subscribe to Black Enterprise Magazine here.

And view the full list of the 2017 BE
100s here.