Seaway Bank's website is back up...

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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.