Cornell’s Baker Program in Real Estate was recently honored to welcome John Lewis (ILR ’98), Executive Vice President of The Harbor Bankshares Corporation, to keynote our weekly Distinguished Speaker Series. Lewis, is also the Chief Administrative Officer of The Harbor Bankshares Corporation’s principal subsidiary, The Harbor Bank of Maryland where his work in lending is diverse and includes, in addition to business financing, both residential and commercial real estate loans. Lewis delivered a message that was not at all esoteric but relatable. He impacts the community of Baltimore through his work. The Harbor Bank of Maryland is rejecting the somewhat neo-traditional format frequently seen these days of large national or international banks lending based on the bottom-line of prearranged terms. Instead, The Harbor Bank of Maryland embraces the notion of community banking. As Lewis explained in his interview on the Real Estate Review Podcast available on iTunes, local entrepreneurs and especially real estate developers should have a personal connection to their bankers. In this capacity solutions in lending can be found that suit unique business endeavors. Lewis noted that this catalytic business model allows Harbor Bank to “do good, while doing good.”
Lewis has followed an interesting and varied career path. A Cornell alum, Lewis earned his Bachelor of Science in Industrial and Labor Relations in 1998. After graduating, Lewis held officer level positions at Credit Suisse First Boston and FleetBoston Financial Group until 2002. He then went to earn his MBA from Harvard Business School where he was a Robert Toigo Fellow. During his MBA he accepted an internship as a summer analyst at Bear Sterns but declined to return after graduation—a decision perhaps wiser than he had realized at the time given the company’s collapse in 2008. He instead accepted an offer at M&T Bank headquartered in Buffalo, NY, where he was raised. During his lecture he took a moment to explain the importance of recognizing whether a company has a plan for your career or not. Lewis did not get the sense that M&T Bank had a plan for him and, without gainful employment in place elsewhere, he left his job one day after the expiration of his one-year contract. At just 27 years old he took a position as Chief Financial Officer for Bank Production Distribution in the Global Banking Group at Merrill Lynch & Co.. From this experience he recalls that every document must pass the desk of a CFO of any company and for that reason he gained valuable exposure to many aspects of banking that still inform him today.
After some time at Merrill Lynch there was a bit of a structural shift in his career. He set off as an entrepreneur by starting a FinTech company that he ultimately sold primarily for the software. As an entrepreneur, Lewis quickly realized that the goals are different when not under the command of significant leadership and it seemed that he found the autonomy somewhat liberating. The sale left him with a decent amount of capital that allowed him to take his time when choosing his next offer. Lewis declined an offer from the pre-IPO and now infamous ride sharing service, Uber, noting that the culture simply didn’t present the right fit for him. He did, however, find his fit at the Harbor Bankshares Capital Corp.. After a discussion with the CEO, Lewis was given the reigns of a Community Development Fund with $600,000 that had been mothballed since the global financial crisis. Lewis noted that it is easy to see how this role may be perceived as something of a step backwards for someone with such an impressive track record, but he likes the nontraditional jobs that are “different but put you on fast tracks to experience.”
Harbor Bank Bankshares is one of only twenty-one African-American owned minority depository institutions and is a certified Community Development Financial Institutions (CDFI). A CDFI certification is designated by the United States Treasury that requires the commitment of not less than 60% of products and services be allocated to minorities. There are four subsidiaries under the Harbor Bankshares Corporation. Within those four, there is a minority pre-seed venture capital fund, an EB-5 Immigrant Investor Regional Center, and a multitude of other catalytic initiatives including the Program for Investment in Microentrepreneurs, and the Partnership for Lending in Underserved Markets. In 2018, Lewis with Harbor Bankshares founded the Harbor Bankshares Capital Corporation, a private equity financial advisory and asset manager.
The notion of catalytic business practices was perhaps the imperative take away from Lewis’s keynote. When it comes to real estate Lewis is particularly focused on the recently enacted Opportunity Zone legislation. In a similar vein of the long-utilized 1031 exchange program, Opportunity Zones are locally identified, federally certified distressed census tracts in which investors may invest capital gains. Lewis presented a series of overlaid maps drawing the connection between policy from the Federal Housing Authority (FHA) in the 1930’s to the current designated Opportunity Zones. From 1934 to 1968, the Federal Housing Authority made home ownership nearly impossible for black communities by “redlining” certain neighborhoods. These redlined neighborhoods would be labeled as “hazardous” or “declining” largely based on the presence of African Americans. On one of Lewis’s slides there was text taken directly from an FHA document explaining a redline around one of Baltimore’s neighborhoods: “An old residential section seriously threatened with negro encroachment.” In those days a redline meant that potential homeowners could not get mortgage insurance. Given the economic disadvantage of minorities in America, no insurance meant no mortgage which meant no property ownership. Home ownership has historically been very important to budding entrepreneurs as the means of taking out a home equity line of credit to fund their venture. Redlining has led to a domino effect that has left still evident patterns of social and environmental inequities.
Lewis sees the Opportunity Zones as providing prospects far greater than tax benefits. He sees the new policy as a tool to help capital flow into distressed and previously redlined neighborhoods. Lewis recognizes that there are developers seeking to extract value using Opportunity Zones. However, his vision aligns with that of a value investor seeking profitable returns by creating vitality and shared economic enrichment in the neighborhoods to which he lends. He describes his investment choices as “catalytic” in nature. When asked how he balances lending practices with gentrification, he expressed the importance of being a community bank that directly engages with local residents. Lewis takes time to ensure that the community will understand how investments will benefit the residents and how development—when done right—can stimulate the neighborhood to create economic wealth for the neighborhood without displacement.