Bob Adkins, promoted to chief executive officer at Neighborhood National Bank, has been charged with developing loans for small businesses in low- and moderate-income communities. (photo/lambertphoto.com)

Neighborhood National Bank has promoted Bob Adkins, its president and chief operating officer, to chief executive officer. The move is one of several the 8-year-old bank is making to raise its profile in traditionally underserved low- to moderate-income areas.

Adkins’ promotion comes four years after he joined Neighborhood in 2001 as chief financial officer. Bob McGill, the outgoing CEO, will continue as CEO of Neighborhood’s holding company, Neighborhood Bancorp.

Neighborhood National Bank is 91 percent owned by the holding company with Fannie Mae owning the remaining 9 percent. Adkins’ promotion will free McGill to concentrate more on holding company projects.

“We’re in partnership with Cambridge Capital in Indianapolis and Kurt Chilcott’s group (San Diego-based CDC Small Business Finance) to form a mezzanine capital loan fund, Goodman Capital Fund, that we’re just in the process of capitalizing, primarily from larger banks,” McGill says.

Goodman’s charge, says McGill, will be to lend to small businesses “that for one reason or another don’t fit into a banking box, businesses that need mezzanine capital. It’s really capital for businesses that have a higher risk profile for one reason or another than bank loans would be. The fund will help businesses in low- and moderate-income communities to get capital they need to grow for a new product line, or to deal with a generational transition that doesn’t quite fit into a bank’s lending capability.”

The holding company also is supporting Neighborhood Opportunities Corp., a nonprofit 501(c)3. “It provides financial literacy classes to consumers, and now we’re just getting into providing resources to small businesses,” McGill says.

Another Bancorp project, Neighborhood Capital Advisors, is a consultancy that assists other banks in accessing capital from the Community Development Financial Institutional Fund at the U.S. Treasury.

McGill says these plans complement the bank’s efforts to reach out to Latino, Asian and African-American owned businesses in its back yard, also known as the Bronze Triangle, and beyond. The triangle is bounded by State Route 94 on the north, Interstate 15 on the east and Interstate 5 on the west and south, comprising Stockton, Grant Hill and Logan Heights.

“Outreach is a big part of what we do,” says McGill. “When we were set up, our mission was to go in and focus on communities that weren’t being well-served by traditional banks in economically challenged areas. We do a lot of our lending activities to target Latino, Asian and African-American owned businesses.

“I think we still may be the only commercial bank located in the Bronze Triangle,” McGill adds. “There’s a supermarket branch (of a big bank) on the eastern edge, and a credit union office off Market Street near a Costco, but we’re the only stand-alone commercial bank in the Triangle.”

Since Neighborhood National’s inception, the bank has made 70 loans worth $13 million in the Bronze Triangle. “For a bank our size, that’s a significant commitment, especially for an area that hasn’t gotten much attention in the past,” says McGill.

Clients include MAAC (Metropolitan Area Advisory Committee) in National City, where the bank supports housing projects, and Bethel AME Church in San Diego. Bethel’s pastor, Rev. C. Dennis Williams, served on the bank’s board for a time, McGill adds.

For the first quarter ended March 31, Neighborhood National Bank earned $53,261, with assets of $78.3 million, including $50.5 million of net loans, compared with a loss of $996 and total assets of $68.3 million, including net loans $48.4 million a year earlier.

For the entire 2004, the bank earned $435,475, with assets of $79 million including net loans of $49.6 million, compared with 2003 earnings of $675,000, with year-end assets of $67.4 million including $44.5 million in net loans.

Loading up the expenses of the parent corporation, over which McGill does but Adkins does not preside, the Bancorp lost a consolidated $130,000 in the recent first quarter, compared with $146,000 lost a year earlier. For the full 2004, the parent lost $123,000.

Adkins notes that the $675,000 earned by the bank in 2003 included about $530,000 in federal awards for NNB’s mission as a community development bank. Because of odd timing, the bank earned no such awards last year, so its $435,475 in profit represents strong improvement in core earnings. “The plan is to continue to grow core earnings,” says Adkins. “But because of our mission, if (federal community development) awards are available, we’ll always go after them. We’re serving the underserved communities… This year we’re expecting a pretty strong award.”

The portfolio consists of $25.4 million in commercial loans, $18.6 million in real estate and construction loans, $4.7 million in consumer loans and about $1.9 million in mortgage loans and overdrafts.

Despite the progress, McGill says challenges remain. “Culturally … depending on wherever the immigrants came from, it could be that they don’t trust banks for whatever reasons. Language is another challenge, despite the fact that a third of our staff speaks Spanish as a first or second language.”

But McGill says that since his bank can’t afford major media buys, it must rely on word of mouth to spread its message.

With the hiring of Pamela Davis as chief credit officer in 2003, McGill’s promotion, and Ricardo Huerta as chief financial officer, the bank has a diverse executive team.

“We’re walking the walk,” says McGill.

Although McGill says economic conditions are “decent,” he’s concerned that the focus in Washington, D.C., has “shifted off of community development; people inside Washington aren’t paying attention to the challenges in the inner city.”

As an example, McGill points to the Community Development Financial Institutional Fund. “It has had funding available for projects in certain census tracts, but those funds have been cut in half or more in the past four years,” he says.

McGill is in discussions with a former banker that may lead to Neighborhood Bancorp forming a banking subsidiary focused on the Hispanic market.