Black-owned bank in Chicago is in serious financial trouble
By Michal Ortner
Seaway Bank and Trust Co. is ranked third on BE100s Financial Service Banks list and is possibly the last Black-owned institution of finance in Chicago, IL. In 2014, the bank had a recorded $551.6 million in assets. This news comes after other Black-owned banks across America took serious hits this past year.
“I would venture to say that [the vast majority of black banks] are in varying degrees of trouble,” said Darrell Jackson, chief executive and president of Seaway Bank.
Seaway is celebrating its 50th anniversary, while other minority-owned banks are struggling to stay afloat. “Crain’s Chicago Business” reported that Illinois Service Federal Savings and Loan has requested $7 million to help keep them in business.
Their company was founded in 1934 by 13 African-American men. The business is feeling pressure from the U.S. Office of the Comptroller of the Currency to get their act together or face “corrective action.”
Highland Community Bank, located on the South Side of Chicago, was once ranked 13th on the BE100 list, holding $67.2 million in assets, but was taken over by the Federal Deposit Insurance Corp. earlier this year. Covenant Bank, on Chicago’s West Side, was closed in 2013.
Illinois Service is seeking to raise money in order to keep their doors open, changing from only depositor-owned to shareholder-owned. According to CEO Norman Williams, is it a “demutualization” process that must take place to gain new investors.
Williams has high hopes and is “as confident as anyone can be, having had the (economic) shock of the last four years.”
“I would be naive not to recognize that 1,000 other bankers in my shoes (whose banks ultimately failed) in the last decade have felt the same way,” he added.
According to Williams, the high rate of unemployment and low level of property value from the recession has caused Illinois Service to take major hits. They have lost nearly $9 million in assets—about two-thirds of its capital.
The bank has some investors lined up, though they haven’t been named. Stifel Nicolaus, an investment banking firm, and Vedder Price, a law firm, have been hired to help salvage the company.
“The African American community itself is going to have to do more to support its businesses, which includes the banks,” said Michael Grant, president of the National Bankers Association. “Why are we boycotting our own businesses? These are the banks that were there for us before integration. We should be there for them now.”