Federal regulators late Friday shut down Covenant Bank on the West Side, which has been losing money since its 2008 founding by megachurch pastor Bill Winston.Liberty Bank appears to be a Black-owned bank so such an institution will be continuing to serve the West Side of Chicago. The official website for Covenant Bank is still up! Usually such websites of failed financial institutions are often shut down with a notice that it had been shut down by the FDIC.
The Federal Deposit Insurance Corp. sold the bank’s assets to Liberty Bank and Trust Co. of New Orleans. Liberty will continue to operate Covenant’s only office at 1111 S. Homan.
The sale will protect account holders, who are insured up to the $250,000 per-account maximum. But it will wipe out the bank’s owners, including members of Winston’s Living Word Christian Center in Forest Park who provided cash for the purchase.
The FDIC estimated the closure will cost its insurance fund $21.8 million. It said that as of year-end 2012, Covenant had $58.4 million in assets.
Many of the bank’s owners, who provided Winston at least $1,000 each, are people of modest means. Winston did not return a call Friday.
He purchased the former Community Bank of Lawndale for a reported $3 million, preaching the need to put religious faith into practice by supporting revitalization of the West Side. But FDIC records show the bank’s losses have been heavy, especially in the last couple of years.