Seaway Bank is closed down by FDIC

This is the page you will see when you visit Seaway Bank's online home as of Friday night. For the many supporters of Seaway Bank this is truly a sad day. Unfortunately what did them was the purchase of assets from two other failed banks and essentially loan losses.

Read more about it at Crain's. Which now says Chicago now has only one Black-owned bank in Illinois Service Federal. Then of course Liberty Bank on the city's west side (formerly Community Bank of Lawndale and Covenant Bank) which is actually based on New Orleans.

BTW, Seaway Bank recently started a ig account unfortunately it has been deleted. I took a screencap of that also. And even worse the immediate last post after the screen cap posted to ig was of a group of young men who were at the bank being mentored on working in the banking industry.

2015 the year that was

 Earlier this year Chicagoans went to the polls to either vote out their incumbent Alderman or to vote in new ones. In addition, the city threw the mayoral contest to a run off for the first time and resulted in a victory for Rahm Emanuel and a second term for mayor.

As a result of the recent municipal elections Ald. Roderick Sawyer replaced Ald. Howard Brookins as chairman of the city council Black Caucus. Ald. Sawyer has been all over the McDonald shooting and the release of the police footage of that incident.

In addition, Ald. Brookins is running for the 1st Congressional District seat held by Bobby Rush. Congressman Rush had reportedly been looking at retirement until he revealed later that he plans to run for re-election in 2016.

Though he's been re-elected a recent reversal of events during the last two months of 2015 has activists calling for his resignation. The reversal involves a police shooting last year of Laquan McDonald shot by a police officer 16 times and any footage of this incident suppress by Mayor Emanuel & state's attorney Anita Alvarez.

Speaking of the state's attorney as a result of her alleged role in the suppression of police footage of the McDonald incident activists are calling for her to resign as well. For the moment while the next mayoral election is 2019, Alvarez has a primary coming up next year. She already has some seemingly strong opponents going up against her so we shall see if she can eke out the Democratic nomination - which is certainly a shoo-in for being elected in November.

Another Chicago politico in Circuit Court Clerk Dorothy Brown as a result of federal investigations into her campaign has lost the support of the Cook County Democratic Party. She had originally been slated but federal warrants caused Democratic "bosses" in Chicago to remove their original slating.

We're still following the Whole Foods Market coming to 63rd & Halsted. Thanks to Bruce Montgomery on instagram we've been seeing some progress as far as construction of the future site of Whole Foods Market Englewood.

Disclosure: One of the bloggers here at The Sixth Ward is a team member at Whole Foods Market.

In addition local lender Seaway Bank celebrated 50 years in business. While loyal customers and the bank's employees are celebrating there are some hiccups and that includes the sudden resignation of their new President & CEO who had been installed in 2014.

Also another local lender Highland Community Bank failed and taken over by a Indiana-based bank. As a matter of fact in different times Seaway had been in talks to buy the bank located on 87th Street near Ashland Avenue.

BTW, on the south side Pullman after a new factory opened up and a national monument designation is in the running as of this posting for 2015 Curbed Cup neighborhood of the year. In the meanwhile near the end of the year Chatham was the recipient of further attention thanks to the many modernist homes built in the area over the years.

What is a story you followed during the past year? What are you predictions and expectations in 2016?

Going back into the vault for a moment...

[VIDEO] During the early days of this blog, we shared a video from a blogger based in Atlanta. The gist was basically was save money and do business with a Black-owned financial institution. He even showed us that he was putting his money where his mouth is and made a deposit at this bank.

Capitol City Bank & Trust had a branch not too far away from the campus of the Atlanta University Center home of Morehouse College, Spelman College, and Clark-Atlanta University. How many students pass this branch and never think to open an account there.

Anyway I found our recently that Capitol City failed earlier this year. This only brings to mind the dwindling number of Black-owned financial institutions in the nation. It's probably not much different that how many other banks in the country failed in the midst of the financial crisis.

Unfortunately just like the fate of a Chicago based Black-owned bank Highland Community Bank, the assets of the Highland and Capitol City are now owned by majority-owned institutions. Highland is now owned by a bank based in Indiana and Capitol City is now owned by a North Carolina based bank.

Also consider in recent months that another locally owned Black-owned bank - Illinois Service Federal - is looking to go from a depositor owned spendthrift to a shareholder owned institution. They are seeking an infusion of capital for its survival.

Highland Community Bank closed and Seaway Bank 2.0 suffers a "glitch"

Highland Community Bank

Today in the news I saw that Highland Community Bank HQ @ 1701 W. 87th St. had been taken over by the FDIC. Over the years Seaway Bank had attempted to buy Highland but to no avail and somehow Highland was able to survive. There are those who follow community lenders who wondered WHEN that small lender would finally fail. 

Today we have our answer.

Regulators have closed a small lender in Chicago, making it the second U.S. bank failure of 2015 following 18 closures last year.

The Federal Deposit Insurance Corp. said Friday that it has taken over Highland Community Bank, which operated two branches.

The bank had $54.7 million in assets and $53.5 million in deposits as of Dec. 31.

United Fidelity Bank, based in Evansville, Indiana, agreed to assume all of Highland Community Bank's deposits and to buy the failed bank's assets.

So that makes it only three Black-owned banks in Chicago, which includes Seaway Bank, Illinois Service Federal, and New Orleans, Louisiana based Liberty Bank (which operates a branch on Chicago's west side formerly owned by Covenant Bank and Community Bank of Lawndale).

Speaking of Seaway it was recently in the news that they have been hit with a consent order by the FDIC:

Seaway 2.0 has stumbled on a glitch.

Seaway Bank & Trust, Chicago's largest African-American-owned bank, based on the South Side, has been slapped with a consent order by its regulators. The order requires it to hold elevated capital levels, strengthen management, halt dividend payments to investors and beef up controls to detect money-laundering and other criminal activity by customers.

The Federal Deposit Insurance Corp. along with the Illinois Division of Banking issued the order Dec. 16, little more than a month after Seaway had declared itself a successful turnaround following restatement of six quarters worth of earnings that substantially improved the bank's financial condition.

The order, which the bank consented to without admitting or denying charges of unsafe or unsound banking practices, requires Seaway to boost its “Tier 1” capital to 8 percent of its assets within 60 days. Based on Sept. 30 figures, the bank would need to raise nearly $8 million to hit that benchmark.

Seaway is celebrating 50 years in business this year. Hopefully they won't go the way of Highland Bank in the near future.

In the meanwhile as you read in the article for Highland, they will be taken over by Indiana-based United Fidelity Bank. In fact if you clicked on Highland official website it's noted on that with a link to that bank.

Are the loss of Black-owned neighborhood banks a loss for our neighborhoods?

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.

Crain's: Possible rescue for black-owned, South Side bank

To be sure, Seaway Bank had been in talks years ago with Highland Community Bank to by them out but they never appeared to get together on a deal. And Seaway had already acquired two banks in 2010 and 2011 who were failing so Seaway isn't in the running this time.

A would-be savior has emerged for foundering Highland Community Bank, one of just three black-owned banks left in Chicago.

But the definitive agreement from the parent of startup Generations Community Bank to acquire Highland, announced today, is subject to raising at least $8 million in equity both to absorb loan losses at Highland and to capitalize it to grow.

Matthew Roth, the former Harris Bank executive who has pursued starting up a minority-focused community lender on the South Side for several years, said in an interview that he and his team believe they understand the depth of the loan problems at Highland. He declined to say how much he thinks he needs to raise from investors, but one person familiar with Highland said it's at least $8 million and probably more.

Mr. Roth, who would run the newly named Generations Community Bank as president and CEO if the deal closes, said he hopes to complete the capital raise and garner regulatory approvals in the early third quarter.

“We feel optimistic about our prospects to raise the capital,” he said. “It's ambitious, but we think we can get there.”

Also:

If Mr. Roth is successful, Highland could well lose its status as a black-owned bank, but would be officially listed as a “minority-led” institution because more than half of its board would be minority individuals, he said.

Edward Williams, another former Harris Bank executive and an African-American, would serve as chairman of Generations Community Bank.

I clicked through to another Crain's article that showed how minority-banks are faring in the current economic climate. I think it's worth a look if you're interested. It had been published last November.

Thinking about the significance of Shore Bank

The following post was supposed to have been posted around June 21 of this year. While not quite as timely, it is still relevant as we just had a "Shop Local Day", and Urban Partnership, which has replaced Shore Bank as a corporation, still has many of the same staff and the same local attitude that made it a vital institution in our neighborhood.

This is a comment Worlee made on the Chatham Avalon Park Community Council blog, also note that Worlee made similar comments posted last month (May) on this blog.

While to most, this is just another bank failure but if Shorebank fails it will wipe away over 40 years of history and progress of the Chatham community.

ShoreBank started as South Shore Bank was started by a multicultural group of individuals to address the lack of capital available to individuals in South Shore as the community changed from being a primarily White Jewish community to African American.

Independence Bank was started at 79th Cottage Grove by a group of African American business men who decided they would control their destiny by creating a bank that would serve African Americans.

In the mid 80's these two banks merged together to create ShoreBank as we know it today.

The combined entities continued to carry out its mission of giving access to capital to those who traditionally were denied access. This access has allowed our community based organizations, social service agencies, churches, real estate investors and homeowners to help build our community.

Although we now have several commercial banking organizations entering the community, the loss of a true "community bank" like ShoreBank which makes decisions based on what is best for its customers and the community, would be a major blow we can ill afford to imagine.

The financial situations of Illinois Service Federal, Seaway and Highland Bank are questionable and the takeover of ShoreBank by an institution with no history in the Chatham community or commitment to serving Chicago ’s urban neighborhoods is sure to lessen the likelihood of an inclusive economic recovery.

I thought these comments were very significant.

What are your experiences with community banks such as Shore Bank and others?