Chicago’s Biggest Black Bank May Go Out Of Business
Despite a recent push for people to bank Black, Chicago’s largest Black-owned bank Seaway Bank & Trust, is at risk of failing.
According to Chicago Business, “all of the $29 million in capital that was on the bank’s balance sheet at the start of 2016 was wiped out through nine months of the year.” This was due to continued losses and an accounting standard that required the bank to write off almost $14 million in deferred tax benefits. Currently the bank has just over $7 million of capital after getting a short-term $7.5 million loan from unspecified private parties. Still, Seaway’s capital is below the minimum banks need to avoid closure by federal regulators.
To avoid closure they need to raise a “bare minimum of $22 million” under a December 2014 consent order. So the bank is actively looking for investors.
In a statement, Seaway said, “We are making good progress in our efforts to improve the stability of the bank and are working closely and cooperatively with our regulators to do so. . . .The bank remains focused on the recapitalization currently underway. We have received excellent responses from investors, which gives us a clear indication that we will be able to meet our targets.”
Seaway, which has been seeking a new CEO for more than a year, has tried to lure in Black customers with its “Move Your Money” campaign, which did yield $8 million in new deposits since its inception.
There are only two African-American-owned banks left in Chicago and the other bank has had its share of financial woes as well. “Earlier this year, a Ghanaian-American family rescued the city’s other Black-owned bank on the brink of failure, Illinois Service Federal, with a $9 million infusion,” reported Chicago Business.