Friday, August 2, 2013

Crain's: Deal off to rescue black-owned bank on South Side

Highland Community Bank
It appears that Highland Community Bank located west of Ashland on 87th Street won't be acquired after all:
Matthew Roth, a former Harris Bank executive who has attempted for several years to start a bank on Chicago's South Side, confirmed that his deal announced in March to recapitalize Highland is off. He would provide no other details.

The lack of a deal leaves Highland, a 43-year-old lender owned by former University of Illinois football player George Brokemond, at risk of failing by the end of the year.

Highland needs millions to continue. Mr. Roth's startup, Generations Community Bank, would have needed $8 million or more to recapitalize the bank.

Highland posted a $781,000 loss in the first half of the year, enough to push its capital levels to the danger point. Highland's “Tier I” capital — the type of capital most valued by regulators — was just 2.5 percent of its assets, leaving the bank undercapitalized. A Tier I leverage ratio at 2 percent or lower typically means regulators will seize a bank soon thereafter.

Highland CEO Dennis Irvin didn't respond yesterday to requests for comment.
I'm very curious as to what scuttled that deal. Here's more on its significance and what could happen if the many issues there could cause it to fail like Covenant Bank who was taken over by the FDIC and ultimately bought by a New Orleans based Black-owned financial institution:
That would leave just two African-American-owned institutions in the city — Seaway Bank & Trust Co. and Illinois Service Federal Savings & Loan Association of Chicago, both on the South Side. Seaway, which has grown by acquiring the deposits and assets of two failed banks in the last few years, would be expected to bid on Highland's deposits and assets if regulators move to seize it.

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 Joe Zekas ran the real estate news website YoChicago . If you have been following that site and their social media channels i.e. YouTube o...