The Penny Savings Loan & Investment Co. - one of the first black-owned banks in Georgia- existed for only 18 years.

Even so, it's memory lives on as a milestone in Augusta black history.

For evidence, look at Augusta's Broad Street branch of Atlanta-based Capitol City Bank & Trust Co. The black-owned bank serves the community just as Penny Savings did nearly a century ago.

"If it were not for the Penny Savings banks of the world, a Capitol City Bank would not be able to come to a community like Augusta and receive such a warm reception," said President and CEO George Andrews, who opened the Augusta branch in January 2005.

In the days of segregation, blacks needed a trusted place to bank where they could get proper services they couldn't get from anywhere else.

"Blatant segregation and racism" created an obvious market for institutions such as Penny Savings, said Robert James, the president of Savannah's black-owned Carver State Bank, which celebrates 79 years in business this month.

Today, there are only about 38 black-owned banks across the U.S., according to the National Bankers Association, a Washington-based trade group representing minority-owned banks.

Entrepreneurs rally

In 1910, 15 entrepreneurs banded together as directors of the new Penny Savings to provide a safe place for blacks to save their money.

Referred to as "The Negro Bank" in the Nov. 6, 1910, edition of The Augusta Chronicle, the bank's formation received much praise:

"Many attempts have been made in the past at launching a negro bank in this city, but the effort only came to fruition when the men whose names appear in the ad of the Penny Savings Loan and Investment Company got behind the movement and began to push it," the article says.

Adjacent to the story, an advertisement lists the following men as directors of Penny Savings: R.S. Williams, F.M. Dugas, A.M. Sherrill, Robert Shuften, James H. Williams, Dr. G.S. Burruss, Alfred Berrien, J.S. Harper, Dr. G.N. Stoney, the Rev. C.T. Walker, Albert Taylor, Oscar Cook, A.G. Sartor, John F. Dugas and H.C. Dugas.

"That the youngest corporation among the negroes of Augusta is destined to a bright and successful future is simply attested by the character and business acumen of the men in charge," the article said.

The bank, which was located at the corner of Ninth Street and Laney-Walker Boulevard, sat in the middle of Augusta's black business community. The building still exists and is currently used as a psychologists's office.

On May 25, 1924, Penny Savings offered advice to the community in an advertisement published in The Augusta Chronicle:

"Some people fritter away the best and most precious years of their lives waiting for some fortunate accident to happen, far better it is to save up all your nickels, dimes and dollars, put them in a bank account and have fortune guaranteed."

Voluntary bankruptcy

On Feb. 16, 1928, less than four years after that ad ran, the bank closed its doors.

An Augusta Chronicle article the next day reported that Penny Savings had entered into "voluntary bankruptcy" based on the "dormant conditions of assets."

It appears much of the bank's assets were in real estate and not actual money, preventing the bank from meeting the withdrawal demands of the depositors. The frozen assets resulted after Penny Savings merged with Atlanta-based Citizens Trust Co., according to newspaper reports.

Despite the bankruptcy, the bank remained a reputable establishment, based on Augusta Chronicle reports.

"An investigation of the affairs of the company shows that not a penny has been misappropriated and that its affairs have been in the hands of some of the best negro citizens of this community, or any other community for that matter," an opinion piece stated in the Feb. 23, 1928, edition.

On the same day, the newspaper reported the bank would begin again "under the supervision of the State Department of Banking" as an assurance to the bank's customers.

Although subsequent articles reported reorganization plans and even published a charter for the new bank, Augusta Chronicle archives show no further evidence of Penny Savings reopening after 1928. The stock market crash of 1929 occurred shortly after these discussions, ushering in The Great Depression.

The legacy

Though it closed, Penny Savings remains an inspiration today.

"That's a legacy I certainly took under consideration when I decided to start Capitol City Bank and bring a branch to a city like Augusta," said Mr. Andrews, whose bank now has seven branches throughout Georgia.

"It showed that an African-American-owned financial institution could provide these services and do it in a way to empower the community," he said.

Over the years, new struggles have emerged for black-owned businesses.

Bigger banks have realized "African Americans pay mortgage loans just like other people," Mr. James said.

These banks have begun targeting successful black businesses, making the market more competitive for minority institutions, he said.

The need still exists for black-owned banks, Mr. James said.

"African-American banks are as essential today as they have ever been," he said. "They create role models. African-American males, especially, lack successful role models. There's just not enough, so they turn to entertainers and athletes."

"In other communities, people turn to Bill Gates to be a role model. I'm convinced if we are going to create those types of role models we need our own financial institutions that focus on creating successful African-American entrepreneurs," he said.

Reach Tony Lombardo at (706) 823-3227 or tony.lombardo@augustachronicle.com.