Margaret Henningsen remembers the moment she had the idea to start Legacy Bank, a successful minority-owned bank started by three women a decade ago in a distressed area on Milwaukee’s north side.

Serving as part of a blue ribbon panel formed to study the problem minorities had in obtaining home mortgage loans in Milwaukee, Henningsen had just finished meeting with some people who had a particularly bad experience in applying for a loan. Sitting in her office at the former Firstar Bank the day after her 50th birthday, Henningsen realized it was time to take the bull by the horns.

“Maybe the people didn’t have money, or they held jobs that didn’t pay enough,” she recalls. “But when you [as a lender] are all having the same experiences, it was more than they just don’t meet the guidelines. I got to thinking that maybe we need another financial institution in Milwaukee to work with customers who had issues to make sure they got those mortgage loans.”

Prior to that realization, Henningsen read with interest a 1989 Pulitzer Prize winning newspaper series by a reporter with the Atlanta Journal-Constitution that analyzed minority lending practices. In the exhaustive study of 20 major U.S. cities, Milwaukee rose to the top of the list, with African Americans four times as likely to be denied a mortgage loan. She remembers calling the reporter, Bill Dedman, and talking to him at length.

“Over a 20- to 30- year period, we were all feeling this stress about why it was so hard for our customers to get loans,” says Henningsen, now an executive vice president for Legacy. “I have a long history in real estate sales and mortgage lending, and have had many personal experiences of customers unable to get a home loan or financing to start a business.”
At the time, Henningsen was also paying attention to the trend of boutique banks that focus on a specialized set of customers springing up across the country. That ultimately led to the partnership involving herself, Deloris Sims, and Shirley Lanier — all African- American Milwaukee banking veterans.

In the spring of 1998, the trio traveled to Madison to meet with regulators at the Wisconsin Department of Financial Institutions. While starting a bank is not an easy proposition, they were put on the hot seat, as regulators asked why Milwaukee needed another inner city bank in what they perceived as a crime-ridden neighborhood. The standards that the women were asked to meet were high: They would need to raise $5 million (they ultimately raised $6.9 million), invest $150,000 each of their personal assets and provide a list of 300 prospective customers in the immediate area of the bank, which is located in a historic 1920s building at the corner of 21st Street and Fond du Lac Avenue in Milwaukee’s central city.

“We left there feeling that they were throwing these impossible tasks at us — sort of like in ‘The Wizard of Oz’ when the wizard tells Dorothy: Bring me the broom of the Wicked Witch of the West,’” Henningsen recalls. “There were some things we were asked to do that other startup banks weren’t asked to do.”

Mission accomplished

Fast forward ten years later — Legacy celebrated its 10th anniversary in July  — and the results speak volumes about a vision that has been successfully realized. Legacy Bank has provided financing to more than 500 small and medium-sized businesses, creating or sustaining 6,000-plus jobs. More than 75 percent of those loans were made to Legacy’s target market of minorities and women.

In its 10-year history, Legacy Bank and its employees have received more than 50 awards. This summer, Black Enterprise magazine named Legacy Bank as its financial institution of the year.

The bank’s current $225 million in assets more than doubled the original 10-year goal, and put Legacy at No. 13 on the Black Enterprise list of black-owned banks across the country. In a feature story, an apt headline dubbed Legacy as the “loan rangers.”

“We feel very strongly that a number of the loans we have done would not have gotten done without Legacy Bank,” says Henningsen. “Banks started to tighten up lending criteria dating back to our founding. Loans that they considered to be high-risk have turned out to be our bread and butter  — they are not as high risk. Our customers have told us that ‘without you, we would not be in this position,’ and we feel very good about that.”

Legacy's roster of successful entrepreneurs includes Jimmie Johnson, who runs a concrete and demolition business. Without Legacy’s help, the 52-year-old Johnson says he wouldn’t be in business.

“Legacy came along, lending me the financing I need and showing me the support networks that were out there,” Johnson says. “They have helped me with my bookkeeping, and everything that a small business needs. I can’t thank them enough.”

Johnson and his crew were able to get work hauling concrete forms on the Pabst City project downtown thanks to Legacy’s efforts to help him procure the right kind of trucks to do the job.

“I would say for any small businessperson trying to get started in business, they have been a great resource, and I thank God for them,” Johnson says.

A big part of Legacy’s success is being sensitive to the needs of the immediate community it serves, Sims says. Bank employees spend extra time with customers cultivating and ensuring their success. This is accomplished through mentoring, roundtable discussions with other business people and establishing partnerships with other businesses.

Rebuilding the community

Sims recalls when the group was starting the bank 10 years ago and giving presentations to African-American churches, community groups, other banks and wealthy Milwaukee residents, that some people literally laughed in their face at the prospect of three minority women starting a bank. But now some of those early skeptics are among the bank’s best customers as they continue to win them over.

“I am a conservative banker with an accounting background,” Sims adds. “The reason I joined this effort is that I had 30-plus years of banking experience, and just the thought of being able to make a difference in my community and leave a legacy behind. Most people don’t get an opportunity to do that in their lifetime.”

In the 10-square block area that surrounds Legacy, the goal is to try and bring the neighborhood back to a standard that hasn’t existed since the early 1960s, when race riots and other social forces tore apart the fabric of Milwaukee’s inner city.

“What we are trying to do is build and bring goods and services back to this area that has been underdeveloped for the last four decades,” says Sims, who now serves as bank chairman after passing on the role of president to Jose Mantilla in April. “We are just trying to make it like it used to be when it was a thriving neighborhood. Strong neighborhoods are what make businesses thrive or fail.”

Carolyn Walker, the owner of Great Impressions, a north side Milwaukee printing company, says she identifies with Legacy as a partner in that she feels like they are in the struggle together.

“I think Legacy identifies better with me as a small business, in trying to seriously grow a business,” Walker says. “I feel like they are very supportive of what I am doing here in the community, and we tie into some of the same concerns here in the community. They are also a customer, so they send me work, but they also refer work to me. I really feel like we are on the same path as women-owned businesses. I feel that they are in the struggle with me.”

Henningsen says she takes satisfaction in occasionally driving through the community and seeing the businesses and housing that Legacy Bank has helped to make happen.

“Our rapid growth had everything to do with the demand that was out there,” she says. “Our strategic focus was that we would lend. If they came to us with a good plan, we would raise positive sources of funds to make those loans happen. That was my goal. We were not just going to sit up here and collect deposits, but to really reach out to people who are underserved — people who had difficulty getting loans from major financial institutions — and do it in a thoughtful and strategic way.”

More than a community bank

Legacy has not confined its business to the immediate area of the bank, but has availed itself of every available program, both state and national, to reach out to new customers.
When Milwaukee Mayor Tom Barrett asked Legacy to apply for New Market Tax Credits, Legacy was the first bank in the country to complete a NMTC deal with a minority business. In 2005, Legacy Waveland Advisors, LLC (a joint venture between Legacy Bancorp and Waveland Ventures LLC) allocated $3.7 million in NMTC to Lena’s Food Market. Since then, Legacy Waveland Advisors has completed 13 NMTC deals, including:

• Palermo Villa, Inc., a frozen pizza producer, which received a NMTC of $22 million to construct a new plant in the Menomonee Valley.

• Iron Horse, a luxury boutique hotel near the Harley-Davidson museum, which received two NMTC allocations, totaling $31.7 million.

• Proven Direct, a direct marketing company, which received $11 million in NMTC to build a new facility in the Menomonee Valley.

• Ponderosa Steakhouse on Martin Luther King Drive, which received $2 million in NMTC.  The location was the first African-American woman-owned Ponderosa franchise in the company’s history, which has since gone independent. 

The bank’s customers comprise a diverse mix, and includes converts such as Marta Bianchini and her husband, Marc, who own and operate downtown restaurants Osteria del Mondo, Cubanitas and Indulge Wine Room, a wine bar.

After opening Indulge, which was financed by Legacy, Bianchini transferred 10 checking and savings accounts and two other small accounts to Legacy Bank. Previously, she had to manage those accounts with 10 different passwords that would change every three months.

“Now, I manage all of my accounts on the same screen,” Bianchini says. “I can transfer funds on the same screen – they have literally saved me an hour of work everyday. Their online service is really, really great. Other people think they need to stay with a bigger bank, but bigger isn’t necessarily better.”

While the recession has been tough on Legacy’s customer base, the bank’s new president says the emphasis now is on getting through these turbulent times while remaining fundamentally sound and strong.

“Our bank is grassroots — it’s a social mission that says market forces will bring the economy up, will create jobs, better income and stability within the community,” says Mantilla, a Milwaukee native who came to Legacy from Key Bank in Cleveland.

“We still have a lot of room for growth,” he adds. “It’s a market that we know and understand, and there are partnerships that we can grow and expand. We have a lot more work to do, and we will be more effective as an independent [bank] accomplishing the tasks as we are today.”

By John Rondy