Seaway Bank & Trust, the largest black-owned bank in the Midwest, may have to start raising money to stay solvent, according to a June 11 Crain’s report. As of March 31, the business publication noted, Seaway had lost a total of $16 million over the last 15 months.
“Seaway is currently engaging investment bankers for a capital raise,” a spokesman for the South Side-based institution emailed Crain’s. “We remain committed to our mission and our markets.”
The outcome of that capital campaign, which one source told Crain’s would be at least $15 million, could mean new ownership for the African-American banking giant and a loss of its black-owned status.
This most recent announcement is a long way from 18 months ago, Crain’s reports, when Seaway’s executive chairman, Veranda Dickens, announced that outside financial assistance wouldn’t be necessary to keep the bank afloat. The most recent news comes in the wake of consultants having discovered “material accounting errors not in the bank’s favor,” Crain’s notes.
“After financials were reinstated for all of 2013 and half of 2014, a substantial loss was changed to a profit for 2014,” Crain’s reports. “Since then, however, losses have piled up, leaving Seaway with just $25 million in equity. At the end of 2014, when Dickens made her declaration, the bank’s equity stood at $43 million.”
But the perils don’t end there. There’s no guarantee that Seaway will be able to find investors, considering that Urban Partnership Bank, another South Side bank catering to black borrowers, is trying to raise $20 million.
The Crain’s report pits UPB in competition with Seaway for possible investors, indicating that the funding pool for both institutions is very limited. To make matters worse for Seaway, the bank has been without a permanent CEO since September, when it’s last top official, Darrell Jackson, left after only a year.
According to Crain’s, Seaway held assets of $373 million as of March 31, but more than $9 million in consulting and advisory costs contributed to the bank taking a nearly $12 million loss in 2015.
The bank has branches in Broadview and Maywood, the latter of which has been on relatively rocky ground with the bank over the last several years.
In April, this publication reported that Seaway Bank filed a $300,000 lawsuit against Maywood after the owners of a failed grocery store here defaulted on a loan on which the village had co-signed.
And in 2013, the Maywood Public Library was forced to close its doors for a few weeks after Seaway Bank had tightened the conditions of a loan. That issue, however, was resolved after bank officials offered the library an extension and an additional line of credit.
Crain’s reports that the Chicago area “has been losing black-owned banks, with two failing in recent years. Another on the verge of failure — South Side thrift Illinois Service Federal, formed during the Great Migration of blacks to Chicago from the South — recently was rescued with $9 million from a Ghanaian-American family.”
To read the full Crain’s article, click here. VFP