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Bankers in Harrisburg: Who is Gov. Wolf listening to?

Two very different bankers on his transition team

Pennsylvania Gov.-elect Tom Wolf has a couple of bankers on his 250-member transition team. One is Dan Fitzpatrick, head of Citizens Bank of Pennsylvania (one of the state's dominant lenders) and past chairman of the Greater Philadelphia Chamber of Commerce. He's the indispensable man in Pennsylvania banking: Fitzpatrick also served as a transition team member four years ago for Gov. Tom Corbett, the Republican who Democrat Wolf beat in November. More about Fitzpatrick and Wolf in my column in today's Philadelphia Inquirer here. 

And what does that make Emma Chappell, the other banker Wolf tapped for his transition team? She is best remembered for pressuring Philadelphians, including the city's mainstream banks (remember them?), into financing United Bank of Philadelphia as the city's only African American-run commercial bank -- only to lose control of United as expenses soared, loans languished, and her own hand-picked board joined the Federal Reserve in critizicing Chappell's free-spending ways (Fed report here). Post-Chappell, United Bank has shrunk by more than half to just three offices and $60 million in loans and investments; it keeps losing money, spending down its remaining capital.

Chappell hasn't worked in banking since she was forced out of United 15 years ago, though she has retained at least some of her old activism: Walt McRee of the Pennsylvania Public Bank Project tells me Chappell has joined with his group in urging state and city officials to set up government-run "public banks" that would use government deposits to fund cheap loans. (Public banks, common in U.S. banking's early phase, have mostly gone out of business, except in North Dakota.)

I asked Wolf's spokesman Jeffrey Sheridan early last week to explain what the Governor hoped to gain from Chappell's advice. (Update:) "She has diverse experience," he told me.

When I reached Chappell, she was humble about the situation: "What can I tell the Governor?" she asked me. "I'm just honored that he asked me to assist."

Does Chappell think Wolf should set up a state bank? "I've been impressed with a lot of what I read about it," as a way to raise low-cost funding for "economic develoment projects," she told me. "It could work." What did she learn from her years as a bank CEO and her departure? "You can make mistakes. You can fall down. But we get up." At 73, she is pretty much retired, she added: "I don't have a lot of stress on me now."

Below is an article about Emma Chappell and United Bank that I wrote with my terrific colleague Jennifer Lin for the Inquirer Magazine back in 2001:

Founding United Bank took zeal and courage. Running it was something else.
By Joseph N. DiStefano and Jennifer Lin
Sunday, January 21, 2001 

As dusk dimmed to darkness in Old City on Dec. 9, 1999, Emma Chappell threw open the doors of the new headquarters of United Bank of Philadelphia for a holiday bash. More than 100 friends and customers, as well as bank directors and staff, filed up the stairs of the 130-year-old building, a granite gem at Third and Vine Streets.

Usually, Chappell took her staff out to dinner to hand out end-of-the-year bonuses. But this year she wanted to show off the new offices. It was Emma's building for Emma's bank, as United Bank was affectionately called in the African American community. Chappell had bought the property for $1.3 million that spring and leased it to the 7 1/2-year-old bank.

In the lobby, enormous wreaths of fresh evergreens filled tall windows. Guests milled from floor to floor, finding food and drink wherever they turned. Their chatter mixing with music, they helped themselves to meats from a carving station or dollops of special-order mashed potatoes.

United Bank, the only black-run commercial bank in the city, was Chappell's pride, her baby. Chappell rose from bank teller to bank founder, ignoring naysayers who said the city didn't need a special bank for the black community and single-handedly raised millions to get it started.

"The whole thing was, in Emma's mind, a way of telling the world that the bank - and she - didn't have any problems," one guest recalled.

But it was a message of reassurance delivered from the edge of a precipice.

Six days after the Christmas party, Chappell faced her directors, all but one of whom were hand-picked friends from the black business community and churches. She had bad news: Federal and state bank examiners had declared that the bank was in "troubled condition" - an alarming assessment from the regulators.

This was the first time most directors understood just how fragile the situation had become. Earlier, Chappell had projected that in 1999 the bank would earn its biggest profit. Instead of making money, United Bank would lose $1.2 million - bringing losses since the bank's inception to $5 million.

Administrative expenses were out of control - more than double the rate that other banks were paying, a consultant later found. And some United loans were starting to go bad. It didn't help that Chappell was spending extra to keep up appearances: The tab for the Christmas party and year-end bonuses was $30,000.

One of the biggest drains, however, was the proud new headquarters. Chappell, the landlord, was charging the bank $10,000 a month in unnecessary rent, according to a lawsuit that was filed - and later settled - by directors.

If the once-compliant board was alarmed about United's problems, it was the Federal Reserve that forced it into action. On Feb. 22, 2000, every director, including Chappell, had to sign a pledge with the Federal Reserve that they would raise more capital and make serious changes in the way the bank was managed.

It was akin to regulators reading the board the riot act. Her allies, long accustomed to giving unquestioning support, were coming to the conclusion it was time for Emma Chappell to leave Emma's bank.

On May 25, she was fired.

Emma Chappell started a bank, and it made her a celebrity.As an African American woman who projected herself into the pale, male precincts of American finance and won over skeptics to her vision, Chappell bridged strong currents of money and race, power and opportunity.

"The African American community must invest in itself," Chappell, 59, said in written answers to questions for this story. "We must build ourselves up and we can't wait around for someone else to do it. That's what United Bank was all about when I was there helping the underserved to establish a foothold in the world. "

Chappell raised $5.6 million to start United Bank in 1992. Supporters in the African American community came up with not quite half of the money; most of the rest came from the city's corporate and political elite.

Those investors had a stake in Chappell's success - and in the idea that taxpayer and corporate money should be used to spur bootstrap development in minority communities.

Chappell became a symbol and a beneficiary of popular political, economic and social agendas. Soon, additional doors and funding opened at the highest levels of corporate Philadelphia and the U.S. government. She was a repeat guest at the White House, where she drank tea with Wall Street executives and slept in the Lincoln bedroom. She joined President Clinton on a trade mission to Africa and rode in Air Force One to a conference in Atlanta.

If Chappell attracted attention, she also embraced it. An icon of can-do entrepreneurship, she was hailed as one of the 50 smartest women in the financial business by Money magazine and a "titan of business" by Black Enterprise magazine. Chappell collected awards from the U.S. Chamber of Commerce and the Small Business Administration, and five honorary doctoral degrees from small Philadelphia-area colleges - prompting Chappell to insist she be addressed as "Doctor. "

But the arenas in which Chappell excelled had little to do with how well she was actually running her bank.

If Chappell had the gift of making banking seem glamorous, that didn't change the rigorously routine nature of the work involved in keeping any small bank solvent.

It's easy to lend money, but tough to get it back. Banking requires a mastery of mind-numbing administrative tasks and an effective system of financial checks and balances.

But at United, Chappell ran everything herself.

"Emma has the same problem as a lot of people who organize things: They invest too much of themselves into it," said former Mayor W. Wilson Goode, a longtime friend and admirer. "She tried to do too much herself and not rely on other people with banking experience. "

Born in segregation, raised on rising expectations, and advancing in an era of expanding opportunities, Chappell enjoyed the rare achievement of making her dream a bricks-and-mortar reality.

"The bank was Emma's creation, almost like her child," said Augusta Clark, a former city councilwoman and friend for more than 30 years.

But, like a parent, Chappell had a hard time letting go.

At most banks, vital financial details are handled by specialists. A chief financial officer keeps the books; a chief lending officer oversees loans.

But at United, with 74 employees, there was no chief financial officer and Chappell was in charge of loan oversight. At the same time, she was chairman of the board, chief executive officer, and president - reporting to a board of hand-picked supporters, only one of whom was a banker.

An outside consultant later reported that Chappell's "unfocused management style required, despite organizational charts, that everyone report" to her.

Chappell blames the bank's problems on a confluence of events. "We had several issues that came together at once as we were trying to grow the bank - buying several First Union branches, moving headquarters and Y2K issues - and they hurt the bottom line in the short term," she said in a written answer. "But they were clearly moves that the bank needed to make to thrive in the long term. Nothing was done without board approval. "

United Bank may yet take its place as a significant Philadelphia financial institution. It could remain as one of the niche banks targeting customers who dislike giants such as First Union, Mellon and PNC. It might be forced to sell to another company. But one thing is for sure: Its formidable founder won't be playing a role.

Under Chappell, United Bank at its biggest was smaller than most of Philadelphia's savings and loans and some of its credit unions.

But Chappell's bank was more than the sum of its loans and deposits. It was designed to represent a mass movement, a monument as much as an engine in the progress of a people.

Every Sunday, Emma Bayton went with her parents - a Horn & Hardart cook and a homemaker - to Zion Baptist Church in North Philadelphia to hear the Rev. Leon H. Sullivan. The heralded "Lion of Zion" was a shrewd tactician of the civil rights movement who understood the full meaning of the tenet "Power is money, money is power. "

A teenage Emma Bayton saw how Mr. Sullivan wielded the sword of black buying power. In 1958, he organized 400 black preachers in the city to launch boycotts against companies that discriminated against blacks. From the pulpit, ministers targeted companies such as Tasty Baking Co., Girard Bank, PSFS, even big labor unions.

The boycotts worked. "We opened up jobs for blacks all over the city," Mr. Sullivan said.

One of the beneficiaries was Emma Bayton. After graduating from West Philadelphia High School, she followed the advice of her pastor to put her head for numbers to good use.

In 1959, at age 18, she went to work as a $45-a-week clerk making photographic copies of checks at Broad Street Trust Co., which eventually became Continental Bank. The next year, she met Verdayne Chappell, a 22-year-old just out of the service who was working at the post office. They married and had two daughters, Tracey and Verdaynea.

Chappell was promoted to teller - the first of many barriers she would break in banking. "It was a Jackie Robinson kind of moment," recalled Augusta Clark, who used to bank at the branch where Chappell worked. "If you didn't clean the bank, there was no work for you in the bank. So to have someone dressed up and working behind the cage handling money was a very big moment. "

By 1964, North Philadelphia was raging, with race riots breaking out that summer. Chappell said in a 1984 interview with The Inquirer that she was "radicalized" by the events.

Chappell became particularly taken by the work of a dynamic young preacher: the Rev. Jesse Jackson. Mr. Jackson expanded upon the economic empowerment message of Mr. Sullivan. His Operation PUSH - People United to Serve Humanity - directed attention to the political and economic needs of blacks and the poor, adopting as its slogan "Jobs and Justice. "

Weekend after weekend, the Chappells traveled from their home in Southwest Philadelphia to attend PUSH meetings in North Philadelphia. She became an officer of the local chapter and was increasingly active behind the political scenes. She would become national treasurer of Jesse Jackson's 1984 presidential campaign and was cochairman of Goode's 1987 re-election bid. "We were the people who propped up black political power," said her friend, Joann Bell, now a special projects manager for the city's Commerce Department and a member of United's advisory board.

But her involvement took a toll at home. "Jesse Jackson and all of that, it gets kind of old," said Verdayne Chappell, who separated from his wife in 1983. They divorced in 1992.

At Continental Bank, Chappell shifted to community lending, making loans to minority businesses. In 1975, she was promoted to vice president - the first woman to reach that position at Continental and its highest-ranking African American.

Chappell headed a unit called urban development services. Competitors took note of what she was doing, including James Bodine, the president of First Pennsylvania Bank and member of an old and wealthy Main Line family. "She was a good, tough competitor and I got to respect her," he said. "She knew her market better than we did. After all, we were white and she was not. "

For years, black leaders had accused the big banks of not lending money in poor and black neighborhoods.

"Many banks would not admit to redlining, but we redlined," Bodine says now. "We got applications from certain zip codes and we tossed them in the waste can. "

Congress eventually required banks to disclose where they were lending and mandated that banks reinvest in struggling neighborhoods. At the same time, banks began recruiting black talent.

But even as strides were being made at establishment banks, some African American leaders called for something more: a bank of their own.

Philadelphia has a proud history of black savings institutions, starting with Berean Federal Savings, founded in 1888 as a building and loan society at Berean Presbyterian Church in West Philadelphia.

The city also was home to Citizens & Southern Bank, for years the only commercial bank owned and operated by blacks north of the Mason-Dixon Line. But in 1956, a group of white businessmen and lawyers acquired that bank.

In the late 1980s, a group of prominent blacks - including investment banker Malcolm Pryor, lawyer H. Patrick Swygert, and the Rev. William B. Moore, then president of the Black Clergy of Philadelphia and Vicinity - revived the idea of a black-run commercial bank and asked Chappell to join them.

At first, "it was a tough concept to sell," said A. Bruce Crawley, a former executive of First Pennsylvania Bank who worked as an adviser in the start-up phase of United Bank.

The city's big banks didn't like being told that they were ignoring minority neighborhoods. And within the African American community, there was skepticism about Chappell's ability to run a bank.

But the backers of United Bank had compelling arguments. In 1987, for example, a mere 3 percent of mortgages made by the city's six largest banks went to families in predominantly minority neighborhoods, according to government data.

Chappell and the backers launched the campaign on Nov. 9, 1989, at the Union League, the bastion of Philadelphia business, meeting with corporate executives, investors, community leaders and the press.

Living off her savings, Chappell spent two years raising money for the bank. To get federal insurance and a state charter, a bank must have significant capital in hand before it can accept deposits or make loans. For United Bank, the target was $5 million.

"To know Emma was to know that she talked about the bank all the time," said Joann Bell. Bell said she would invite Chappell over for dinner and catch her drifting off to sleep at the table after a long day stumping for the bank.

Armed with a contagious enthusiasm that could rise at times to righteous certainty, Chappell won confidence from diverse crowds. She charmed skeptics even as she leaned on them to open their wallets. "She had charisma and chutzpah," Bell said. "She was unafraid to put herself out there, to ask people to join her dream. "

Chappell made pitches from the pulpit at black churches - whose pastors wrote letters of support to corporate leaders. Pop singer Patti LaBelle, whose then-husband, L. Armstead Edwards, is a founding United director, produced a radio spot for United Bank. Schoolchildren pooled their savings to buy stock in the bank. Working parents invested for their children's future.

Not everyone, however, was supportive from the start. "People scoffed at it, thought it was a pipe dream," said Marian Tasco, a city councilwoman and friend. "Every time I went to a PUSH dinner she'd talk about the black-owned bank. And I heard the sneers. "

Funds were being raised in the black community in blocks of hundreds and thousands of dollars. But Chappell knew that to reach her goal she had to enlist the corporate elite and its millions.

One of the first members of the business establishment to sign on was Bodine, by then retired from First Pennsylvania. In 1990, Chappell asked him to join the board. Bodine accepted, eventually becoming one of the largest individual shareholders in the bank - and its only white director.

At first the banking elite did not see why it should support a new, black-run competitor. "All the bank leadership was white and, save for me, white male," said Rosemarie Greco, at the time president of Fidelity Bank. Chappell argued that African Americans needed a bank that was run by people of their own heritage and race, Greco recalled. "And once we were convinced that that belief was prevalent, certain of the bankers in town agreed to support in the capitalization. " They signed on to Emma's "mission," as Greco called it.

Meridian, Mellon, Provident and Continental Banks together put up $1.3 million. Donations from Fidelity and CoreStates enabled the Greater Philadelphia Urban Coalition to buy $475,000 worth of stock. Walt D'Alessio, a politically savvy property investor who used to head the city Redevelopment Authority, opened corporate doors for Chappell. As a result, she got six-figure commitments from the likes of Philadelphia Electric Co. and Provident Mutual Life Insurance Co.

D'Alessio recalled the reasoning of one corporate investor: "I'm doing this to be supportive in Philadelphia. I don't expect to make money, but I don't expect this money to be lost. "

In the end, Chappell managed to raise even more money than regulations required - $5.6 million - and on March 23, 1992, hundreds of well-wishers and customers waited in the cold at 714 Market St. for the grand opening of United Bank.

The bank lobby was jammed with VIPs and filled with bouquets of blue balloons with the United Bank logo. Gov. Robert P. Casey came in from Harrisburg, while Jesse Jackson took the honor of cutting the ribbon.

"This bank takes on a bigger meaning than just banking," Mr. Jackson said. "It's an oasis of hope. "

And with a snip of the scissors, United Bank came to life with a great burst of "Amens" and "Hallelujahs" from the crowd.

United Bank opened at the very time when most of Philadelphia's big, historic white-run commercial banks were running out of steam and selling out to giant national companies. Their demise didn't quite mean the end of Philadelphia-based banking: Dozens of suburban banks and new "boutique" lenders still make a living, though seldom big profits, by focusing on niche markets the big banks can't reach - or don't want.

But Chappell wanted more than that. She believed it was possible to buck the powerful trends in the industry and build a successful mass-market bank serving all classes of people.

Image was important. For its well-off customers, United would have the impressive offices and other trappings of the big-bank world. "She wanted not to look like a mom-and-pop operation," Joann Bell said.

But United Bank also would embrace a social mission, educating those who didn't use banks, who relied on check-cashing agencies and other high-cost services.

"It's expensive" to service both groups, said Bell, one of several friends Chappell referred questions to after she left United. In particular, the "check-cashing crowd" needed some costly hand-holding, Bell said. United eventually decided to set up a nonprofit corporation, run by Chappell's daughter Tracey Carter, to teach financial skills to customers.

But was a black-run commercial bank the best way to achieve those goals?

At the beginning of the decade, Chappell blasted big banks for ignoring black communities. By the end of the decade, however, the city's biggest banks - First Union, PNC and Mellon - had increased efforts to reach the black community and were making hundreds of mortgages each year to African American buyers. In comparison, federal records show that in 1999, when United was at its maximum size, it made only 4 home-purchase loans, out of 15,000 in the city.

But United wasn't founded primarily as a mortgage bank. In Chappell's final quarter as chairman, United told the Federal Deposit Insurance Corp. it was servicing $9.7 million in commercial and industrial loans, which for a bank of United's size is a substantial commitment. (A significant number of those loans have since gone bad. )

Chappell and the veteran bankers who ran the smaller, mortgage-oriented Berean Federal Savings complained bemusedly that they had a tough time getting the best borrowers because working- and middle-class families were being courted by mainstream banks. (Like other bankers who face a tough time winning new business, Chappell tried to buy growth, purchasing other banks' unwanted branches, as well auto loans and student loans, but these acquisitions carried hidden computer costs and other expenses. )

After decades of resisting, commercial banks had become the busiest lenders in inner-city Philadelphia. They had no choice. The Community Reinvestment Act of 1977 allowed the Federal Reserve to block mergers of banks that were skirting or ignoring low-income and minority neighborhoods.

The major banks formed "community reinvestment" offices and hired teams to find minority customers. Borrowers voted with their feet and overwhelmingly bypassed United, Berean and church credit unions.

At the end of 1997, after losing more than $3 million in its first five years, United Bank turned a small profit, about $180,000.

Chappell's admirers in Washington responded with honors and cash.

Within a year:

* Federally backed mortgage giant Fannie Mae invested $797,000 in United Bank.

* The U.S. Treasury made the first of an eventual $3.5 million in fund commitments under the Clinton administration's community-development finance program.

* The Small Business Administration put Chappell on its National Advisory Council and urged the bank to make more SBA-subsidized loans.

That cash helped United bulk up. Assets rose from less than $100 million in 1996 to nearly $150 million at the bank's peak. It appeared that United was beginning to achieve some of the loftier goals of its founders.

Meanwhile, the bank staff had outgrown its crowded, leased offices. Chappell reasoned that the bank deserved a home of its own.

In December 1998, United's board endorsed her plan for the bank to acquire the vacant Old City building. While it was remote from both the financial district and African American neighborhoods, the building was grand enough to echo the stone and marble towers favored by the old, big-city bankers Chappell hoped to emulate.

But a serious problem had been developing: Chappell was adding staff and branches more quickly than she was gaining customers. By mid-1998, the bank was losing money again.

The only experienced banker on the board, Bodine, said that over the years he tried to warn Chappell and other directors about runaway expenses. But he confided to friends that, as the only white board member, he felt constrained from becoming too confrontational. He let confidantes know, in so many words, that he thought it would be difficult to speak out because it would be perceived as racist.

Regulators quietly pressed Chappell to draft a new financial plan that would enable the bank to pay its costs and build its cash reserves.

Her plan, completed in early 1999, projected a $389,000 profit for the year.

The events of 1999 were pivotal in the eventual break between Chappell and the board. Because of the confidentiality clauses in their eventual legal settlement, a reconstruction of what happened relies largely on documents entered by both sides in the board's lawsuit of last summer. (In addition to the confidentiality clause, a joint statement was issued saying "all claims and allegations by each against the other have been withdrawn. ")

In their filing, the directors argued that the building deal Chappell worked out - without the approval of the board - ended up enriching her at the expense of the bank.

At a Feb. 17 board meeting, Chappell told directors that the Federal Reserve refused to permit the bank to buy its headquarters, given its other financial challenges. She offered an alternative: Let her buy it and rent the needed space to United.

The board agreed. More than a year later, the suit said, it discovered that the Federal Reserve had never made such a blanket statement. (The Fed would not comment. )

To qualify for a mortgage, Chappell had promised her lender, Jefferson Bank, that United would take the whole 25,000-square-foot building - even though United needed only 10,000 to 15,000 square feet.

On April 9, Chappell got a $1.3 million loan for the building, two nearby parking lots, and improvements.

Soon after, director Ernest Wright discovered that Chappell had committed the bank to leasing the whole building - an increase of thousands of dollars in monthly rent. On June 13 he wrote to Chappell and the board's executive committee, the suit said, urging that a third party review the lease.

Too late. Two days earlier, Chappell had gotten vice chairman Bodine to sign the lease - which, according to the lawsuit, he thought was for 15,000 square feet, as the board had requested, and not for the whole building. Chappell also had increased the rental rate from $13 to $13.75 per square foot, also without permission, the board alleged.

Wright's concerns were presented at a July 13 board meeting. But no mention of his comments appeared in the final version of the meeting minutes. In its suit, United said Chappell "illegally" doctored the minutes. With no mention in the minutes, federal examiners, already monitoring the bank, wouldn't know of Wright's challenge.

In its lawsuit, the board accused Chappell of engineering a $10,000 monthly "windfall" - the difference between what the bank paid her in rent and her mortgage cost.

According to Bell, Chappell expected the extra space to be subleased, some of which eventually was.

Around the same time, the bank's day-to-day business was taking a hit. In August, Chappell revised the operating plan to show the bank would merely break even for the year.

That fall, things got worse. A major United borrower, WT Development, had stopped payment on its loan for a troubled housing development in Sharon Hill. As WT bickered with its contractors, United was forced to write off much of its $1.2 million in loans to the project and begin seizing property to recoup its losses.

Publicly, Chappell was still the dynamic symbol. In November, she visited Beulah Baptist Christian Day School in West Philadelphia and made a surprise announcement to the 78 young students: Her bank would send them to college. Chappell said United was setting up an endowment fund that would eventually send 2,000 children to college or trade school. Some of the children cried when they learned of the promise, according to the Daily News.

That fall, a team of Federal Reserve examiners, backed by counterparts from the state Department of Banking, arrived at United for an in-depth examination. At the December board meeting, just days after the jubilant Christmas party, directors were told highlights of the examiners' report, which portrayed a "troubled" institution plagued by weak lending, spending and management controls.

Within two months, the Fed took an unusual step: It forced the bank to agree to sweeping reforms - and made them public.

The deal, as announced by the Fed's Board of Governors in Washington, is couched in careful bureaucratic language. But it points straight at the bank's founder as the source of its problems and the object of its cure.

That was the turning point for any on the board who hadn't by then realized the gravity of the situation and the inevitable remedies.

Without directly calling for Chappell's ouster, the Fed gave the bank 90 days to "strengthen the bank's management" and provide an "orderly management succession. " Without discussing Chappell's high-spending ways, it ordered studies of United's management and spending.

And then the Fed required the bank to remove Chappell from United's audit committee, which oversees spending - forcing directors, for the first time, to evaluate Chappell without relying on her own view of her performance.

The resulting independent reports were sharply critical and found "a clear lack of consistency between the Bank's stated mission of providing banking services to the underserved minority community and the level of expenses. " United's overhead and rental costs were more than double those of similar-size banks. Personnel costs - the biggest budget item - were 37 percent higher than at comparable banks. (Chappell herself made $186,683 in 1999, a figure comparable to CEO pay at similar-size banks. )

Joann Bell said what happened next was a coup. The directors, she said, were "afraid of the Feds. And they began to like running that bank. "

On May 25, United announced that Chappell was stepping down as head of the bank but would remain a director. United did not disclose that she had been fired.

Emma Chappell is hardly the only bank CEO in Philadelphia to leave the job under a cloud. The city watched flamboyant John Bunting run, cripple and lose control of the city's dominant financial institution, First Pennsylvania; saw the overextended Hal Pote removed as head of freewheeling Fidelity Bank; and witnessed a string of Wall Street executives shred their reputations in the slow collapse of the Philadelphia Saving Fund Society.

Typically, however, the complex, often ugly details of high-level corporate departures are kept private. Surprisingly, Chappell took steps that all but ensured that the accusations against her would become public - and make it possible to tell this story.

Within weeks of her firing, Chappell filed an arbitration claim for more than $250,000 in severance and related payments.

United's board was outraged.

On July 31, the board sued Chappell in federal court, accusing her of fraud and forgery in the headquarters deal and complaining that her "self-dealing and misconduct," had cost the bank more than $1 million.

Chappell's lawyer, Louis Fryman, dismissed the complaint as "baseless. " He argued that the case was an employment dispute that should be settled by arbitration and, as proof, introduced into the public record previously confidential company accusations against Chappell of fraud, forgery, mismanagement and misappropriation of bank funds and federal grants that went far beyond the controversy surrounding the building purchase.

United Bank moved quickly to cut costs after Chappell's departure. The company regrouped under Bodine and L. Armstead Edwards, the new cochairmen and two of the largest individual shareholders.

The bank laid off workers, tightened financial standards and wrote off bad accounts. Losses continued, though bank officials promise the worst is behind them.

The trouble at United Bank has roiled the African American community. Staunch political and corporate allies of Chappell, including Augusta Clark, have rallied behind her. "She felt bushwhacked," Clark said. ". . . she was hassled and feeling disrespected, unwanted and unloved. "

But other community leaders and observers remain perplexed by the contradiction between Chappell's public persona and the description of the founder's behavior described in the board's lawsuit.

"She had conflicting yet complementary motivation: She wanted to do good for the bank and good for herself," said Frederick Miller, chairman of Berean Federal Savings Bank and a deacon at Zion Baptist. "There are people who are disappointed, both those who were serious investors . . . and many . . . who feel disappointed because Emma was a symbol. "

In written replies to questions, Chappell said she was not certain of her next move. "I know that there continues to be a need for what the bank was when I was there," she said. "I will continue to work to serve the underserved. "

But some of the projects that Chappell launched while at United Bank have unraveled.

After the Treasury Department canceled $3 million in funding, the nonprofit set up to teach people about banking discontinued services.

And Chappell's promise to the children at Beulah Baptist Church - to pay for their college education - will not be met by United Bank, according to A. Bruce Crawley, now a company spokesman. He said the money was never set aside and that Chappell did not discuss her promise with the board.

Chappell's spokesman, John Miller, said, "Fulfilling this commitment is one of the many projects [she is] currently working on. "

Beneath a brilliant stained glass of a calmly gazing Jesus, the shareholders of United Bank took their places in the pews of Bright Hope Baptist Church in North Philadelphia, anxious for the annual meeting to begin.

For the first time since the opening of United Bank, Emma Chappell was not presiding.

Investors were furious during the meeting, last Oct. 27. The United Bank stock that they purchased years earlier was worth a fraction of what they had paid. The company had never paid a dividend. And shareholders were still unclear on the real reasons for Chappell's ouster.

Ten days earlier, Chappell and the bank had settled their legal dispute. United got ownership of the Old City building in return for giving Chappell $1.3 million to pay off her mortgage.

"I'm disgusted," a middle-aged woman snapped. The audience applauded.

"Don't the board members look at where the money is going?" asked the next questioner.

"I'm taking my money out of this bank," threatened a younger man.

In response to questions, a bank lawyer, citing the confidentiality clause limiting his comments, suggested that investors read the original lawsuit.

Evelyn Smalls, who was promoted to president after Chappell's exit, tried to calm them. Smalls said the bank would save $100,000 a year on travel and entertainment expenses - a reminder of Chappell's lavish ways. Smalls also said that now the bank would save $165,000 a year on rent.

After two hours, shareholders remained restive. As Bodine, now cochairman, got up to make closing remarks, the Rev. William B. Moore, a director and staunch Chappell supporter, seized the microphone instead.

With his basso delivery, he reminded the audience of the mission of United Bank. "In the whole Commonwealth of Pennsylvania, there had not been a full-service [black-run] commercial bank in over 30 years," Moore boomed. "So this is new territory for us. We did that at a time when the Mellons and PNCs and CoreStates and Meridians of the world were leaving our communities. "

Heads began nodding.

"And the only thing left in our communities were churches and bars. So we started this crazy notion of trying to economically empower African Americans.

"And we have to not turn on each other. We have to turn to each other. "

"Amens" rippled through the crowd.

And for a brief moment, shareholders remembered why they had joined Emma's bank.

How this story was put together: Information was gathered from court papers, IRS filings, and the Federal Reserve's settlement with United Bank. Directors and employees of United Bank and friends of Emma Chappell, among others, were interviewed. Chappell declined to be interviewed but responded to written questions.

Joseph N. DiStefano's e-mail address is