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Seaway Bank & Trust Co. — Chicago’s largest black-owned bank — was doing a-okay, ’till it hit troubled waters after acquiring two failed banks: Maywood’s First Suburban National Bank and Milwaukee’s Legacy Bank. The result? A loss of $4.4 million, ChicagoBusiness reports.

By the end of 2013, Seaway’s equity dropped from $47 million to $33 million — this is just a hair above the minimum capital requirement to be considered “well-capitalized” by bank regulators. At first, getting a hold of First Suburban National and Milwaukee’s Legacy Bank boosted Seaway’s assets by one-third, to $552 million. But soon after, the loss projections for both banks began to increase.

Legacy, in particular, is to blame. The bank, which was owned by three Black women and failed in 2011, boosted Seaway’s own loss projections from $43.5 million to $84.3 million. “The big decline in Seaway’s value is a shock for a politically connected institution that has prided itself on staying profitable through even the worst credit cycles,” ChicagoBusiness says.

Seaway, America’s third largest black-owned bank, attributed its success to conservative lending practices and possessing exclusive deals with Chicago’s Midway International Airport and O’Hare International Airport. Just based on these airline contracts alone, Seaway reeled in more than $3 million annually in revenue.

So is Seaway headed for failure? Maybe, maybe not. Just as the death of Jacoby Dickens — Seaway’s longtime owner — brought loss to the community, his passing also provided good fortune for the Chicago-based bank. Veranda Dickens, his widow, has inherited her late husband’s stake and will replace him as bank chairman.

“The bank does remain well-capitalized, if barely,” ChicagoBusiness adds, “and would be expected to return to profitability absent any more unexpected writedowns on its acquired loans.” Seaway can restore its capital levels back to health via earnings over time. But are Ms. Dickens and Walter Grady, Seaway’s CEO, willing to take that challenge?

In the past, Mr. Dickens has contemplated selling Seaway, but to African-American buyers only. But this never happened — the pool of minority buyers were too slim. Today, if Ms, Dickens and Grady were to attempt to fulfill Mr. Grady’s wish, it would be a lot more difficult.

“There are only two African-American-owned banks larger than Seaway — one in New York and one in Boston,” ChicagoBusiness adds. And the New York bank, Carver Federal Savings Bank, barely survived the recession with a $55 million bailout.

Currently, there are only 24 black-owned banks in the country, less than one percent of the industry! If Seaway doesn’t pull itself together, America’s third largest black-owned bank may cease to exist.

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