Saturday, February 18, 2017

Urbanization has led to disproportionate economic growth in the largest US metro areas


The question here is where do we see this economic growth via Brookings Institute:
One such change economic developers must grapple with is the federal political landscape, which has shifted dramatically following the 2016 elections. Though the impacts of policies from the Trump administration and GOP-led Congress on cities remain unclear, two outcomes seem likely. First, there will be fewer dollars flowing to localities. The Trump administration and GOP-led Congress are reportedly considering across-the-board cuts to federal non-discretionary spending, which has declined steadily as a percentage of GDP since the recession and is already approaching 50-year lows. Second, there will be more discretion provided to states and local communities. President Trump has indicated a preference for block grants and devolving power from the federal government, declaring in his inaugural address that “today… we are transferring power from Washington, D.C. and giving it back to you, the people.” Both outcomes would place a greater burden on local actors to create good jobs and close income disparities in their region. In other words, the work of economic developers and their partners at the metropolitan and regional scale has never been more important.
h/t Newsalert

Thursday, February 16, 2017

Why did Seaway Bank die?


Cover Seaway Bancshares Inc. 1996 annual report
We've covered bank closings before especially those that directly affected our community. Shore Bank had been a presence in Chatham for example and in 2010 it failed and purchased by Urban Partnership Bank. The loss of Seaway is painful surely for the many longtime supporters and even the shareholders who held stock through Seaway Bancshares from the beginning.

My often stated hope since the failure last month has been that Seaway will be back in the hands of a Black ownership group. It's gone, that bank that was is history. If you want to come up a possible holding company that could own whatever was left of Seaway you need cash for that.

Greg Hinz wrote a piece about why Seaway was allowed to wither. From some of our political leaders the response to this big event was tepid. While it's something I would like to explore in a future post, Hinz pointed to Mayor Rahm Emanuel and county board president Toni Preckwinkle for allowing this bank to fail.

The point of this post is to share my ideas as to what happened as I see it. Perhaps even as it has been reported. So four visible indications that Seaway Bank was in trouble long before January.
  1. Purchase of two failed banks - As an observer I was glad to see Seaway expand into the market served by the Maywood, Illinois based First Suburban Bank and into Milwaukee served by the Black-owned Legacy Bank. Both banks were purchased the same way Seaway Bank had been purchased itself, both banks were shut down by the FDIC and their state regulators. Both banks failed near the tail end of the sub-prime loan crisis where a number of banks failed around the country. The purchase of those two banks caused Seaway to suffer losses after a long period of profitability.
  2. Jacoby Dickens dies - Until 2013 the majority owner and chairman of the board of directors was Mr. Jacoby Dickens. It doesn't take long to do a Google search and find out the impact he's had on the community and the influence he's had in Chicago's business community or even in Chicago Politics. His untimely demise unfortunately moved forward the next series of changes which are the next bullet points. If he was still living it's possible that the executive management team would've remained the same and perhaps the bank would survive.
  3. Veranda Dickens takes the reins - Greg Hinz refers to the now former Chairwoman of Seaway's board of directors as "well-intended but inexperienced widow." I will take great pains to not point at her as the reason for the banks untimely demise. Bottom line was that she was at the top when the FDIC shut down the bank. Many of the issues Seaway had predated her succession to Mr. Dickens role in 2014. Regardless, although she wasn't wrong to overhaul the bank and bring in consultants that remained until the very end one can only wonder if this was a disastrous decision at the worst possible time. We see the results of this now!
  4. Departure of President/CEO Darrell Jackson - One could say that if former CEO Walter Grady or any of his management team remained at the helm Seaway would likely be OK. Unfortunately Grady retired or who knows perhaps it wasn't his decision. The savior could've been Darrell Jackson except that he departed after only 14 months, with Mrs. Dickens assuming his role on an interim basis afterwards. I did a blog post about this development which asked "What is going on at that bank?" We may never know but one can only wonder did he like what he saw? Either way from roughly October 2014 to January 2016 Seaway Bank had no permanent President/CEO, the consultants remained until the very end, and issues with recaptization. The regulators took note surely of all those factors and pulled the plug.

If you look at quite a few reports by Crain's reporter Steve Daniels you see an anatomy of Seaway's problems within the last three years. I've shared many of his reports especially the issues with gaining more capital for the bank - refer to Daniels' final report before the January failure - or the "c-suite" shuffle .i.e. Darrell Jackson or even attempts in 2016 to get more capitol. Daniels' work was noted by Hinz as they're colleagues at Crain's Chicago Business.

Now the assets that were the former Seaway Bank - also known as Seaway National Bank or Seaway Bank & Trust Company - are in the hands of the Indian-American owned State Bank of Texas. In recognition of Seaway's history and stature in our community they've opted to keep the name. However, I recognize that they have a business to run and they're going to do things their way to insure the success of their business. In spite of what happened we're still talking about business and the main language of business is money. That's the main reason Seaway is gone...

Sunday, February 12, 2017

Streets by VICE: Halsted Street



[VIDEO] Starting in Bridgeport and then through roughly Auburn Gresham then up near the West Loop then back to Altgeld Gardenx and then back to the former Stockyards and then back north to Boystown we get a look at Halsted Street long considered Chicago's backbone. We see all that's available along this long street in Chicago whether entertainment, dining or even a shoeshine. We especially look at pockets of wealth and poverty and the segregation. An interesting look at our fair city.

Friday, February 10, 2017

Are Seaway Bank account holders withdrawing their accounts?

@th3melan8dgawd
I wonder if this is going to be an ongoing trend with Seaway Bank under non-Black ownership:
Seaway customer Gwen Hicks said she planned to withdraw all her money and close her account. She said she would start banking at Illinois Service Federal.

“I definitely want to keep our money in our community and not in Texas,” she said. “Texas isn’t going to do anything for our South Side streets, our neighborhood.”

Sushil Patel, president of State Bank of Texas told Crain’s Chicago Business that he understands some depositors want to bank with an institution that’s putting money back into the community. State Bank of Texas declined to be interviewed by WBEZ.

Despite State Bank of Texas being a minority-owned operation, Viveca Ware of Independent Community Bankers of America said there will be cultural differences.

Ware said minority-owned banks don’t necessarily translate from one to the next.

“It’s really amazing to sit there and listen to the cultural difference and how they need to modify their operations to address to provide meaningful services to those communities,” Ware said.
Worlee said on Nextdoor that "If the new owners think just keeping the name is enough they are in for a rude awakening."

I'm learning more and more how passionate our community was about Seaway. It was an important financial institution in our community and it slipped out of local hands. Now that there are some moves to cut down on the workforce for Seaway it won't be something of an economic engine it once was.

Wednesday, February 8, 2017

Capitol Fax: Yet another failure

10001 South Woodlawn Ave
This "failure" is located at the south side's Olive Harvey College located east of the Bishop Ford - formerly Calumet Expressway - on 103rd Street. OHC was supposed to be home to a "Transportation, Distribution and Logistics Center". Another job training program provided by the City Colleges of Chicago.

Unfortunately we've learned - especially if you've read this recent post over at CapFax or indeed the Tribune article linked within the post - the program has stalled. The City of Chicago, City Colleges, and also State of Illinois aren't able to come up with funds to finish this project.

Plus when this project was started it was before the transition from Governor Pat Quinn to Governor Bruce Rauner. And if you've been reading CapFax for the past two years we know there has been something of a serious budget stalemate.

Monday, February 6, 2017

Crain's: Seaway Bank buyer rolls dice on African-American acceptance

www.seawaybank.us
It's almost been two weeks since the formerly Black-owned Seaway Bank was purchased by the Dallas, TX based State Bank of Texas which is owned by an Indian-American family. We already know that the Seaway name will be retained primarily in an effort to maintain some of the predominantly Black customers.
What does the "bank black" movement stand for? The Indian-American family that just took ownership of Chicago's largest African-American-owned bank is about to find out.

Dallas-based State Bank of Texas, a lender mainly known for making loans to Indian-American operators of hotels around the U.S., was tapped Jan. 27 by federal bank regulators to assume the deposits and most of the assets of Seaway Bank & Trust, based on Chicago's South Side.

A large percentage of Seaway's depositors are drawn at least in part by its status as African-American-owned. Seaway's "bank black" campaign last year brought in at least $8 million, with new customers depositing their money at the bank on the basis of its ownership even though its financial condition was rapidly deteriorating.

How many of those depositors will want to stay with a Seaway Bank under Indian-American ownership?

Sushil Patel, president of State Bank of Texas, acknowledges the potential issue.

"I'm not a black bank," he says in an interview. "I'm not a white bank, but I'm definitely not a black bank."

The most important consideration for depositors, he says, is whether their money is safe.

"Banking is still banking," Patel says. "I respect the idea of depositors wanting to put money into a bank that will put money back into that community."
We learn for the first time one of the other bidders of Seaway:
There was competition in the bidding the Federal Deposit Insurance Corp. held for Seaway's assets and deposits. The three other bidders included another black-owned bank, Liberty Bank & Trust of New Orleans, according to an FDIC disclosure.

The agency didn't say how much Liberty bid or even whether its bid met the FDIC's specifications. Other bidders were Republic Bank of Chicago, owned by Greek Americans, and Raleigh, N.C.-based First-Citizens Bank & Trust, a publicly traded, $31 billion-asset lender.

Usually, regulators take pains to try to find a buyer for a failed minority-owned bank with the same ethnicity. That was the case in 2014 when State Bank of Texas took over failed National Republic Bank of Chicago, also an Indian-American-owned lender. Likewise, Seaway was the chosen buyer for Milwaukee's black-owned Legacy Bank in 2011.

In its deal with State Bank of Texas, the FDIC effectively paid the bank more than $40 million to take ownership of most of Seaway, according to the purchase agreement (see the PDF).

That will incentivize State Bank of Texas to work out Seaway's bad loans as efficiently and cost-effectively as possible.

The FDIC contacted 350 banks, including 102 owned by minorities, to bid on Seaway, a spokesman says. The Texas bank's was the lowest cost for the agency, which by law had to accept it, he says.

As with many Indian-American-owned banks, State Bank of Texas' lending expertise is chiefly in the hotel industry, accounting for about 60 percent of its loan portfolio.

Otherwise, it mainly makes commercial real estate loans, so it has little experience in Seaway's bread-and-butter business loans and mortgages.

"At the end of the day, it's still lending," Patel says.

Once Seaway's bad loans are charged off, sold or worked out, the bank will continue making the same kinds of loans it used to, he says. The Patels won't install a new bank president for Seaway. Instead, the three family members—Sushil, his father, Chan Patel, who is chairman and CEO, and his brother Rajan Patel, chief lending officer—will take turns being in Chicago and running the operations, he says.
Liberty Bank has a branch on the west side where the former Community Bank of Lawndale/Covenant Bank was headquartered. Seaway won't have their own management team for the time being as you saw in the excerpt.

In recognition that this is a business we're talking about my hope is that in the next few years State Bank could possibly set up Seaway for a sale to a Black-ownership group. This is their business for now as you see in the screencap above so it's ultimately up to them whether or not they want to eventually sell.

In the meanwhile, we see that in this article Illinois Service Federal is setting themselves up as the only locally Black-owned bank here in Chicago. Also we see in this article actions taken by the community whenever a Black-owned financial institution is taken over by someone outside of the community - for example the former Community Bank of Lawndale.

What many of us should be concerned about particularly customers are the status of the many jobs that could be at stake during the course of this transition. State Bank doesn't have as many branches as Seaway so it's possible there will be some layoffs.

I suggest you read the whole thing.

Thursday, February 2, 2017

Did top gang thugs in Chicago really send a message to the White House...

You know this is all fine good, but there are some questions about this statement made yesterday at the White House:
Dr. Darrell Scott, senior pastor of New Revival Center in Cleveland Heights, Ohio, was a guest of Trump’s at an African-American History Month meeting at the White House. He said he is a “black Trump supporter,” and claimed he was “contacted by some of the top gang thugs in Chicago for a sit-down.”

Taking a swipe at former President Obama, who began his political career as a community organizer in Chicago, Scott said the gangs “want to work with the administration … they believe in this administration; they didn’t believe in the prior administration. They told me this outta their mouths.”

“They reached out to me, because they’re associating me with you. They respect you. They believe in what you’re doing, and they want to have a sit-down about lowering that body count. So in a couple weeks, I’m going into Chicago,” Scott said. “I said we’ve got to lower that body count. We don’t want to talk about anything else; get that body count down, and they agreed that the principals that can do it – these are guys straight from the streets, no politicians, straight street guys – but they’re going to commit that if they lower that body count, we’ll come in and we’ll do some social programs.”
The questions were who were these top thugs? Why didn't they approach anyone here in Chicago? And do they not think there would be resistance to this by those activists and ministers here in Chicago?

Then I see Dr. Scott had to walk back these comments:
An Ohio pastor told FOX 32 that he "misspoke" at the White House. He created a national sensation by telling President Trump Wednesday that Chicago gang leaders would "lower the body count" if given new federal programs.

FOX 32: So, there are no gang leaders offering to reduce the body count in exchange for federal funds?

“No! I mean, c'mon now! (laughs) No!” Pastor Darrell Scott said.
...
Pastor Darrell Scott also told FOX 32 a lack of sleep caused him to tell President Trump that Chicago gangs had offered to "lower the body count." He said he actually spoke to one former gang member, and not to any gang leaders.
While the truth seemed to have gotten murky there, I'm glad to see a federal focus on the crime and violence here in Chicago.
 

Wednesday, February 1, 2017

Seaway Bank's website is back up...

Click for larger resolution
Down since Friday as of Wednesday the online home of Seaway Bank is back up with a descriptor "Welcome to the State Bank of Texas". Seaway Bank was closed by the FDIC and state authorities with the bank taken over by the Indian-American owned State Bank of Texas.

How appropriate that we start Black History Month talking about Black-owned banks with a column by Mary Mitchell. The loss of Seaway Bank itself as a Black-owned financial institution she says is a wake-up call. She notes the long history of such banks dating back to the Civil War.

Let's start with the situation of the only locally owned Black-owned bank left - Illinois Service Federal:
In recent years, Chicago has lost several black-owned banks, including Highland Community Bank and Covenant Bank, a black-owned bank on the West Side.

When Illinois Service Federal Savings & Loan Association, founded in 1934, threatened to fail, the Nduom family of Ghana stepped up and invested $9 million to rescue it.

Papa Kwesi Nduom, a former Deloitte & Touche partner who chairs the bank’s board of directors, said you cannot take Seaway’s closure in isolation.

 “Many of our banks have been closing in good part because of the housing market prices. All banks were hit, but it hit black banks the most,” Nduom noted in a phone interview.

He listed three reasons for the discrepancy: low level of capital; most vulnerable customers; and the areas where black banks operate have been the slowest to get out of the housing slump.

“The values have not risen like some of the other majority areas. If you are holding a mortgage from our community, you are bound to sustain losses, and when you combine those losses with the low levels of capital that our banks begin with, then you see a swift erosion of capital and inability to continue,” Nduom said.

He pointed out that “big banks were bailed out but small banks did not get any help.”

“Our banks have been left to sink or swim. Only a few have managed to find resources and enhance their capital and to be recapitalized. Seaway tried but could not get people willing to invest their monies to recapitalize or strengthen its capital base,” he added.
And then there's more a new challenge for Black-owned banks in this country. According to this column as of 2016 there had been 24 such banks down from 54 in 2001:
“It took 13 black men to start Illinois Service Federal because the people in the community could not get mortgages from anywhere else,” Nduom reminded me.

“You come to the present where the well-to-do in the community have a variety of places to go to meet their needs. But somehow the places that they go have not included the black banks,” he said. Additionally, he pointed out what black banks have been funding is not the “best portfolio.”

“But somebody’s got to do it and it will not be the big majority bank. It has to be a strong community bank,” he said.

“How do you become a strong community bank? You need the best customers — individuals and businesses — in addition to the marginal ones. You need a variety. That is what our broader community needs to understand. If somebody is going to help the community out, everybody has to help. If people have choices, they must make the choice to help our community,” he said.
 The Seaway Bank name survives but can the business itself survive under new ownership? Will the communities Seaway serves in Crestwood, Maywood, Chatham, Bronzeville, and Roseland continue to use the products & services it provides? Time will tell what the future holds.

Tuesday, January 31, 2017

Is Trump right that Chicago is more dangerous than Afghanistan? Yes and no.

According to the website AEI:
In an interview with ABC News, President Donald Trump talked about the “carnage” taking place in Chicago, declaring, “Afghanistan is not like what’s happening in Chicago. People are being shot left and right. Thousands of people over a short period of time.”

Is Trump right that Chicago is more dangerous that Afghanistan? For Americans, yes. If you compare US casualties in Afghanistan to those in Chicago, the “Windy City” has been a far more perilous place for Americans. Consider the statistics.

The total number of Americans killed in Afghanistan since 2001 under Operation Enduring Freedom and Operation Freedom’s Sentinel is 2,377. By contrast, there have been 8,229 murders in Chicago during that same time period.
...
Indeed, since just the middle of 2011 when Mayor Rahm Emanuel took office, there have been 2,980 murders in Chicago. So, more Americans have died in Chicago in five years under Rahm Emanuel than have died in Afghanistan in the 15 years since the September 11, 2001 terrorist attacks.
...
The death toll for Americans in Chicago not only exceeds those in Afghanistan; it exceeds the total number of Americans killed in Afghanistan and Iraq combined. According to the Department of Defense, 4,518 Americans have been killed in Iraq since the start of combat operations in 2003: 4,412 Americans killed in Operation Iraqi Freedom, another 73 killed in Operation New Dawn, and 33 in Operation Inherent Resolve.
...
In other words, Afghanistan is a much more dangerous place for civilians than Chicago. But of course, that is to be expected. Afghanistan is an actual war zone. Chicago is not – at least, it shouldn’t be.

The fact is, most murders in Chicago are concentrated in certain high-crime neighborhoods where most outsiders never venture. Most Americans would not set foot in Afghanistan, unless they were sent there by the US military, the press, or international organizations. But millions of Americans visit Chicago every year. Indeed, in 2015 Chicago set a tourism milestone, with 51 million visitors – more than any other year on record. The Windy City is setting both tourism records and murder records at the same time. Go figure.
I cherrypicked some quotes here and click the above link if you want further numbers. Is Chicago far more dangerous for American civilians? What do you believe? And I hate the comparison to an actual warzone of which Afghanistan is certainly not the only one around the world.

 Hat-tip Newsalert.

Monday, January 30, 2017

The future of the Seaway Bank

Does the bank & name survive?
The closure of Seaway Bank and FDIC orchestrated purchase by the State Bank of Texas has certainly come as a huge shock. There have been rumblings that there had been trouble at the bank for the past two years. This even though it was in the news that Seaway Bank within the last three years was actually making a profit.

What this means is that Veranda Dickens is no longer majority owner and Seaway Bancshares holding company no longer own the 52 year old bank. Essentially and perhaps many of you already figured this out, the bank is no longer Black-owned. Regardless as happens in situations like that such as this operations are basically status quo for a while at which point the new ownership starts making decisions that makes sense for them.


Saturday night I saw that Seaway's ig account had been reactivated with the last post was to let the world know that the bank is hiring. Problem is the website is still down unless job seeking individuals should for the moment visit the career page of the State Bank of Texas - which has no job postings at all. BTW, State Bank already has a presence on Devon Avenue so they're not that unfamiliar with the Chicago market.

The reactivation of the bank's ig account could be one indication that the Seaway name will survive. That may mean the brand is still significant and they recognize as an Indian-American owned bank that they will be serving a different market now. I could see them keeping Seaway as a subsidiary until whatever time they may decide to sell the bank. Perhaps depending on whether or not regulators may approve any potential sale. Or whether or not this is a successful enough operation where they will choose to keep the bank.

BTW, we've covered bank closings before especially the ShoreBank closing. We covered that somewhat with all the media attention because of any perceived political favoritism towards them. Seaway had been one of the largest Black-owned banks in the nation until the FDIC and State Bank took over. This is a very significant story and like the closure of ShoreBank takes place directly in our community.

For this new re-iteration of Seaway Bank under non-Black ownership what does the future hold?