In 1992, Emma C. Chappell founded United Bank of Philadelphia, after an epic five-year effort. It was the first African-American-owned bank the city had seen in 35 years. Today, the bank is considered a leader in lending to minorities, and Chappell, the bank's chairman, president, and chief executive officer, has made it a priority to give other black entrepreneurs a leg up. (See Business Week frontier Online, "A Black Entrepreneur in Banking Gives Others a Break," June 30, 1999). How did she do it? First of all, Chappell won't take "no" for an answer. And she has heard the word plenty often as an African-American woman who started a bank. "I am one person who hates to fail. So if I say I am going to do something, I am going to put all of my time and energy into making it happen," she says.

Chappell started her career as a clerk-photographer for Continental Bank (now part of PNC Bank), one of Philadelphia's largest financial institutions. She worked there for more than 30 years, moving up the ranks. She was the first woman to go through its executive training program and finally became vice-president of the community business loan and development department.

In 1984, Reverend Jesse Jackson tapped her to become treasurer of his Presidential campaign. She took a three-year leave of absence from the bank to work with him, helping to found Operation PUSH, a nonprofit organization dedicated to achieving financial equality for minorities, and then acting as the first vice-president for administration of the National Rainbow Coalition.

But banking lured Chappell back from politics. In 1987, while she was still in Washington, a group of Philadelphia businessmen, bankers, and lawyers approached her with the idea of forming a minority-owned bank in the city. They showed her a 1987 survey with these sobering statistics: Six major banks in Philadelphia had lent about $387 million locally for mortgages. Of that, less than $8 million went to minorities, and less than $2 million to women. "We could not believe it," Chappell says. "The sad part is if you look at most of these minority communities, most of the households are headed up by women." Chappell said the study convinced her that Philadelphia needed a bank that had the community's interests at heart. She set out to create one.

It was a bad year to try to found a bank. In October, 1987, the stock market crashed, and Chappell's financial supporters vanished. "In the meantime, I had put my name out there. I had gone out to the community, been on talk shows, been in the churches, and to the people I knew," Chappell says. "I started drumming up the idea of: 'If we could get a bank going, would you support it?' and they all had said, 'Yes, you do it, and we will support you.'"

The harsh effects of the early 1990s recession on the African-American community in Philadelphia only hardened Chappell's resolve. She decided not to pursue large investors for capital. Instead, she turned to the community. Over the next two years, she set up the bank's structure and sold shares to 3,000 black investors, in $500 blocks.

By 1989, Chappell says she raised $3 million, the amount Pennsylvania regulators told her she needed to capitalize the bank. "But then as I got to Harrisburg...to tell them: 'Here is our business plan, and I have $3 million in the bank,' they told me it wasn't enough, that I needed $5 million. And that is when my heart really sunk." The rationale? Chappell says racism may have been a factor. Another possibility: The savings and loan crisis, and the spectacle of so many small banks failing, may have chilled regulators to the plan. "They never gave a reason, other than to say it was a different economy, so you need more money to start," says Chappell. It took her another year, but she raised an additional $3 million, this time from big investors -- $1 million more than the regulators had demanded.

Shortly after its opening, the bank acquired six more branches -- failed savings and loans in other minority neighborhoods in Philadelphia -- which it bought from the Resolution Trust Corp. "My mission has been to maintain banking services in these underserved neighborhoods, which then allows for the economic viability of those neighborhoods," Chappell says. Today, the bank has assets of $122 million. Its efforts to promote other entrepreneurs include business education and a hands-on approach to lending to them. The bank doesn't just lend to local small-business people. It works closely with them to make sure they have suitable business plans and that they manage their finances properly.

The bank has had its own financial ups and downs in the process. In 1998, the bank's net income fell 94%, to a minuscule $10,000, because a $1 million-plus loan ran into trouble, forcing the bank to increase its loan-loss reserves. The situation has since turned around, says Chappell, who projects 1999 net income at $361,000.

She remains a high-profile figure. Last year, she accompanied President Clinton and the First Lady to Africa, where Chappell says she met with bankers and members of chambers of commerce. In June, she received the Blue Chip Enterprise Initiative Award of the U.S. Chamber of Commerce, which honors small-business owners who have overcome adversity to create opportunities for themselves and their communities. The bank's mission, Chappell says, is "about leveling the playing field and letting people earn money to fulfill their dreams." The most important lesson of her years as an entrepreneur and a banker? Perseverance. "That has been my success," she says. And it's a quality she exemplifies.

By Jeremy Quittner in New York
jeremy_quittner@businessweek.com

A Slave's Daughter Was the First Black Woman Bank Founder in the U.S.