A bank whose board chairman is Durham Mayor Bill Bell has agreed to overhaul its operations after running afoul of federal and state regulators.Well today, July 9, Durham’s only daily newspaper, the Durham Herald Sun, finally got around to reporting on the story.
[Durham’s] Mutual Community Savings Bank has agreed to an order that, among other things, calls for it to stop operating with "inadequate management" and "in such a manner as to produce net operating losses?"
The story’s worth looking at not so much for what it reveals about the bank’s problems, but for what it tells us about the H-S.
The H-S’s story begins:
Federal banking regulators are putting pressure on Durham's Mutual Community Savings Bank to change its senior management in order to stop bleeding red ink, a move bank officers and experts say will have minimal impact on customers.The H-S story continues here.
It is unclear whether merger discussions between the 86-year-old bank and another historically black Durham institution, Mechanics & Farmers Bank, might be affected by a cease-and-desist order issued recently by the Federal Deposit Insurance Corp. and the N.C. Commissioner of Banks.
In the order, regulators criticized the bank's "unsafe and unsound banking practices."
The order also demanded that the bank, based on East Chapel Hill Street downtown, look into the performance of chief executive officer William Smith and chief financial officer Donna Sylver and "have and retain qualified management" with regulators' supervision.
Tony Plath, a UNC Charlotte finance professor who has been following the issue, said the order is "very, very serious."
"What the FDIC is telling the bank is that they're needing to make changes to the management team," he said.
But the impact on customers will be minimal, Plath said. Smith echoed that.
"Our customer deposits are still FDIC insured," Smith said
But Smith and Mayor Bill Bell, chairman of the Mutual board, could not say what impact the order might have on merger talks with Mechanics & Farmers. .
In its first paragraph the N&O let readers know Mayor Bell was the bank’s board chair; the H-S didn’t mention that until the ninth paragraph, and then only in the context of the Mayor being unable to comment on merger talks.
Bell is one of seven members of Mutual Community’s Board of Directors. All are prominent African-Americans and most live in Durham. But Bell is the only Mutual director the H-S identified as such.
The N&O provided a sidebar to its story which listed six board members along with their most recent annual compensation. The N&O failed to list Mutual president and CEO William G. Smith as a board member.
Mutual board members include Bishop Elroy Lewis, one of Durham’s best known clergymen and pastor of the historic Fisher Memorial United Holy Church. Lewis has been active in support of what NC NAACP chair Rev. Dr. William Barber II has called his organization’s “monitoring of the Duke rape case." The N&O reported Lewis received $4,250 in 2006 for his service as a Mutual director.
NC Central University Provost and former Durham School Board member Dr. Beverly Washington Jones is also a board member. Her 2006 compensation was $4,500.
Bell, as bank board chair, received $7,500 for his 2006 service.
Why didn’t the H-S mention the very prominent Durhamites who serve on the Mutual board? Why didn’t it report on any attempts it made to interview them?
The H-S knows Durham leaders such Bishop Lewis and Provost Jones are Mutual board members.
Even if the H-S by some chance “missed” the N&O’s July 4 story, with 30 seconds of googling the H-S could have found this page where Mutual provides photos and bios of its board members and this page where it lists the directors’ committee memberships.
The only reasonable conclusion to the questions of why the H-S didn’t report on the prominent Durhamites who are Mutual board members and their compensation is it decided not to.
When H-S editor Bob Ashley took over the paper in January, 2005 he told people to give him a chance and watch what he would do with the paper.
People have watched. That’s why the H-S’s circulation has dropped about 30% since Ashley took over.
Mutual’s financial problems can be fixed and personnel changes can be made. In any case, Durham has many financially strong, service-oriented banks that compete for our individual and commercial business.
But we have only the H-S as a community newspaper. And that’s a major problem because today’s Mutual bank story is typical of how the H-S often cuts and spins the news to satisfy those on Bob Ashley’s “Don’t Upset” list.