Crain's: Urban Partnership Bank for sale

https://www.upbnk.com/

Steve Daniels who wrote a number of reports regarding the woes of the former Seaway National Bank, writes about Urban Partnership Bank now seeking a buyer.

Urban Partnership Bank, formed to carry on the mission of ShoreBank following that high-profile community lender's 2010 collapse, is seeking a buyer.

Chicago-based UPB has hired investment bank Sandler O'Neill & Partners to gauge interest as the bank determines whether it should remain a small, independent bank or join forces with a larger player, Chairman David Vitale said in an interview.

UPB was profitable in 2017 for the first time since its inception. It posted earnings of $7.4 million, but that was only after booking $10.6 million held in loan-loss reserves as the quality of the bank's loan portfolio has improved. UPB has shrunk dramatically as it's finally completed the mammoth task of working through thousands of troubled loans made by the old ShoreBank. At year-end its assets were $472 million, less than half its $982 million at the end of 2013. Its workforce of 113 compares with 260 it employed back then.

But, while the bank is far smaller than the old ShoreBank, which had more than $2 billion in assets at its peak, UPB remains an active business lender in its South and West side neighborhoods and holds symbolic importance. The Great Recession claimed all but one of Chicago's black-owned banks, including Seaway Bank & Trust, for decades the largest and most prominent minority bank in town.

UPB isn't black-owned, but it's officially designated a minority bank by virtue of a board with more than half minority representation.

I see an opportunity to bring a Black-owned lender back to our community who says that Liberty Bank on the west side or Illinois Service Federal in Chatham & Bronzeville have to be the only players in our city. Of course while Chairman Vitale would like to see a Black ownership group purchase UPB according this article, that's not the only path to a sale.

But UPB is conducting a broad search for a buyer and will consider becoming part of a far larger, conventional bank, too.

UPB doesn't need the capital, he said. The bank arguably is too small and might be better off as a unit of a better capitalized institution, he said.

"We're supposed to be a billion dollar bank. Now we're a $500 million bank," he said.

Remaining independent is an option, Vitale said. He believes he will know by the spring what course the bank will take.

Vitale said the decision to seek a buyer wasn't due to pressure from investors, most of which are large financial institutions like JPMorgan Chase, Bank of America, Goldman Sachs and Northern Trust. UPB was initially capitalized with more than $140 million those companies provided at the behest of Sheila Bair, then the Federal Deposit Insurance Corp.'s chair, who initially was trying to save ShoreBank.

What will the future hold for UPB? Time will tell and looking forward to finding out.