Tag: Seaway Bank

Report: Seaway Bank’s Failure Was Self-inflicted, Acquiring Maywood Bank Didn’t Help

Friday, September 22, 2017 || By Michael Romain || @maywoodnews 

A report released in August by the Federal Deposit Insurance Corporation concluded that Seaway Bank & Trust failed because of bad governance and risk management practices that flowed from the institution’s board of directors.

Continue reading “Report: Seaway Bank’s Failure Was Self-inflicted, Acquiring Maywood Bank Didn’t Help”

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MB Financial Replaces Seaway Bank As Maywood’s Largest Account Holder

Seaway Bank

Thursday, July 27, 2017 || By Michael Romain || @maywoodnews

MB Financial has replaced the defunct Seaway Bank & Trust as Maywood’s largest account holder. During a regular meeting on July 18, the Maywood Board of Trustees voted on a resolution designating MB Financial a public depository for the village.

Less than two years ago, according to village records, Maywood was parking funds from at least nine different accounts at Seaway, including the corporate, water, motor fuel and general fund and payroll accounts. On Nov. 29, 2015, the total ending balance of village funds at Seaway was over $2.5 million. At the time, MB Financial was not an authorized public depository for the village.

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Crain’s: Failed Seaway Bank Gets Yet Another Owner — A Credit Union

Seaway Bank

Friday, March 10, 2017 || By Local News Curator || @maywoodnews

Seaway Bank & Trust — once the state’s largest black-owned minority bank and the sixth largest in the country — has yet another owner after the bank shutdown and its assets were acquired by State Bank of Texas in January.

A March 10 Crain’s report announced that the Dallas-based bank is selling the branches and deposits it acquired  from Seaway to a North Carolina-based credit union called Self-Help Federal  Credit Union.

According to Crain’s, Self-Help “specializes in lending to low-income and minority customers and already owns a Chicago lender focused on Hispanics.”

State Bank of Texas “will continue to hold and manage Seaway’s existing loans and will operate the foreign-exchange concessions at O’Hare and Midway airports,” Crain’s reports.

“Self-Help,” Crain’s adds, “is clearly a better fit with the mission of what had been Chicago’s largest black-owned bank for decades — provide credit in communities other banks avoid.”

Crain’s notes that Self-Help, which will have $200 million in deposits “but none of Seaway’s loans” will “quickly establish a mortgage lending operation from scratch.”

Martin Eakes, the credit union’s CEO, said that his institution will focus what it does best — “lend to households without a lot of savings but with steady income.”

Self-Help isn’t black-owned but most of its board members are African-American. Eakes said the credit union won’t “try to pretend we’re black-owned.” He noted, rather, that the institution is “multi-ethnic and member-owned.”

Seaway still has branches in Maywood, at 150 S. 5th Ave., and Broadview, at 2100 Roosevelt Rd. The Crain’s article didn’t detail what might happen to those branches once Self-Help takes over the Seaway franchise, a process that is expected to begin in May. VFP

Read the full Crain’s article here

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Crain’s: Seaway Bank’s New Owners Will Preserve Its Name, Say Deposits are Safe | But Who to Blame for the Failure?

Seaway Bank Draped in Purple

Seaway Bank & Trusts’ Maywood branch. Chicago’s largest black-owned bank failed earlier this year. | File

Monday, February 13, 2017 || By Local News Curator || @maywoodnews

A Feb. 4 Crain’s Chicago Business report caught up with Sushil Patel, the president of State Bank of Texas, which now owns the now-defunct Seaway Bank & Trust, once the state’s largest black-owned bank.

Patel told Crain’s reporter Steve Daniels that he knows he isn’t a blank bank, but that should be of secondary importance to depositors.

“I’m not a black bank,” Patel, whose bank is owned by Indian-Americans, told Daniels. “I’m not a white bank, but I’m definitely not a black bank.”

“Banking is still banking,” Patel said. “I respect the idea of depositors wanting to put money into a bank that will put money back into that community.”

“To that end,” Daniels reported, “the Patel family, which owns State Bank of Texas, will preserve the Seaway name for the 10 Seaway branches in the Chicago area and Milwaukee. State Bank of Texas’ one other branch in Chicago, on Devon Avenue, will continue with that name.”

Now with Seaway out of the picture, the Chicago area’s only remaining black-owned bank, Illinois Service Federal, is looking to seize the moment.

“Those who want to bank black have a place they can do that in Chicago,” ISF Executive Vice President Monica Thomas told Daniels.

Crain’s Greg Hinz investigates institutional homicide

In a Feb. 10 article, Crain’s columnist Greg Hinz put on his detective’s hat and began sniffing out the main suspects responsible for Seaway’s demise:

“As in an Agatha Christie mystery, there are a lot of perpetrators in its demise,” Hinz wrote. “But in the end, no one with the wherewithal in Chicago cared enough to intervene, not City Hall or anyone in the city’s still substantial black business community. And Chicago is left with a stinking corpse.”

For a list of perpetrators, read Hinz’s full article here. Read Daniels’ full article here.

Don’t forget First Suburban National 

While journalists conduct a postmortem of black-owned Seaway, let the locals not forget the death of the local bank, First Suburban National, in 2010. First Suburban had served Maywood since 1943.

You can read Crain’s coverage of Seaway’s takeover of First Suburban seven years ago here.

So, remember, this isn’t  just a story of the demise of black-owned business. It’s also a story, told over and over again, of the demise of the small business that prioritizes the interests of a particular community over those of dispersed, atomized investors. VFP

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Breaking: Seaway Bank Shut Down, Maywood Could Take Its Deposits Elsewhere, Says Village Manager

Seaway Bank Draped in Purple

Seaway Bank & Trust’s Maywood Branch. | File

Friday, January 27, 2017 || By Michael Romain || @maywoodnews || Updated: 1/28/17

Seaway Bank & Trust, the state’s largest black-owned minority bank and the sixth largest in the country, was shut down today by state bank regulators, according to multiple reports. According to a Crain’s report published today, all of the bank’s deposits and a majority of its assets will be transferred to State Bank of Texas, effective Saturday.

According to a report by the Chicago Tribune, “All 10 branches of Seaway Bank and Trust will continue to be open during normal business hours under the new ownership, the FDIC [Federal Deposit Insurance Corporation] said. During the weekend, people with deposits will be able to access their money by writing checks or using ATMs or debit cards. Deposits will continue to be insured by the FDIC.”

Crain’s reports that State Bank is based in Dallas and owned by Indian-Americans, not the kind of fate that Seaway’s African American owners had hoped for the 52-year-old institution. In the wake of recent financial struggles, the bank’s owners had sought out black investors to come to the rescue. Ultimately, however, that didn’t happen.

The bank’s failure means that the Village of Maywood, which still has hundreds of thousands of dollars in deposits at Seaway, could go shopping for another place to park that money even though the amount the village has with the failed bank is insured by the FDIC and isn’t required to be collateralized.

“Essentially, the money that’s held at Seaway is below the [$250,000] federal [threshold], so if there is a failure we don’t lose any money nor are we at a capacity where the money has to be collateralized,” said Village Manager Willie Norfleet, Jr. during an interview today.

Late last year, the village transferred funds from its corporate, water and escrow accounts from Seaway to Hinsdale Bank.

“Several months ago, the issue was to get us below the level at which funds need to be collateralized,” Norfleet said. “Hinsdale Bank came in and we moved money from those accounts and only wired money to Seaway when checks had to be cleared, so if the bank failed we’d be covered by federal insurance.”

Norfleet said that the village still banks with Seaway to cover payroll and water payments, among other matters. Last year, he said, Seaway officials approached Maywood requesting that the village take out any money that would put it over the level at which it would need to collateralize its deposits.

For the bank, the collateralization meant additional costs that only added to its already strained finances.

“They were trying to say, ‘Hey, it’s not like we’re kicking you out, but you can’t be here and have a risk because [the bank] will have a problem, too,'” Norfleet said, adding that the village might consider other banks to park its deposits.

“That’s always on the board, continuously, it’s just that we didn’t formally bid out [to other banks] to take all of our funds,” he said. “Eventually, though, we’ll have to take [our money out of Seaway].

“The issue, however, is that Hinsdale doesn’t have [a sufficient amount of readily available] checks. We have to have a whole bunch of checks to keep operating. If you’re going to switch over, you have to have those checks from the other bank to cut. Another thing with Hinsdale is that there isn’t a close physical location to take deposits. So, there are logistical challenges.”

When asked if the village would consider transferring its deposits to nearby U.S. Bank, which has a Maywood branch at the corner of Madison St. and 5th Ave., Norfleet said that the possibility prompts other concerns.

“How much do they really want to take?” Norfleet said. “We think banks are just happy to take money, but they have to pay service fees, accumulate charges and then they have to collateralize because that costs money. So, they have their own expenses associated with [large accounts]. The bank is a business, too.”

Seaway has branches in Maywood, at 150 S. 5th Ave., and Broadview, at 2100 Roosevelt Rd., both of which will be affected by the closure.

According to Crain’s, with Seaway having failed, only one black-owned bank remains in the Chicago area — Illinois Service Federal.

“That bank, also in danger of failing, was rescued early last year with $9 million from a Ghanian-American family, keeping it black-owned,” Crain’s reported, adding that the FDIC has estimated that Seaway’s failure “would cost its insurance fund $57.2 million. The FDIC retained $52 million of Seaway’s assets for later sale.” VFP

To read the full Crain’s report, click here.To read the full Tribune report, click here.

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Maywood to Pay Down $220K Loan to, Sever Ties with, Seaway Bank

Seaway Bank

The Maywood branch of Seaway Bank and Trust. | Google Earth

Thursday, October 27, 2016 || By Michael Romain || @maywoodnews

The relationship between the Village of Maywood and Seaway Bank, widely considered to be the largest black-owned bank in the Midwest, appears to be headed to an end.

During an Oct. 26 Legal, License and Ordinance Committee meeting, Trustee Ron Rivers said that the bank wants to sever ties with Maywood. The subject was broached during a discussion about the village possibly paying down, in full, the remaining balance on a $300,000 loan it owes the bank.

In 2010, the developer of the Maywood Market grocery store, which has since closed down, approached the village about co-signing a $250,000 loan from Seaway in order to “float cash for operations, according to an August 2015 memo drafted by village attorney Michael Jurusik.

When the developer defaulted on the $250,000 loan in 2011, and when their whereabouts couldn’t be identified by bank officials, Seaway decided to pursue Maywood. 

“That promissory note of $250,000 was not paid,” said Jurusik at a board meeting in April. “Interest has been accruing since 2010.”

The amount of the principal, the interest, late penalties and attorney’s fees totaled more than $300,000, records indicate.

At Wednesday’s LLOC meeting, Village Manager Willie Norfleet, Jr., indicated that the village still owes around $220,000 on that loan — an outstanding balance that he said he would like the board’s approval to pay down in full.

“I would like to pay the full amount off rather than making $10,000 a month payments,” Norfleet said, adding that the money to pay the full amount would come from the village’s Madison/5th Ave. TIF district.

“Would this payoff sever ties with Seaway,” asked Trustee Ron Rivers, “because it’s my understanding that Seaway wants to sever ties with the Village of Maywood?”

Norfleet said that, at a meeting last week, board members were given a handout in which Seaway requested that Maywood “reduce our deposits from the bank to the level where [they don’t] have to be collateralized.

“In other words, they are asking you to take your money out for several months. This issue [of the $220,000 bulk payment] is separate,” Norfleet said.

“You have a loan and you want to pay the loan off independently of positions being taken by the bank. That’s something totally different,” he noted. “Even if you took your money out of the bank and went someplace else, you’d still have to pay that obligation.”

Norfleet added that Seaway, whose lone Maywood branch is located across the street from the police department, has requested that the village reduce its deposits by Oct. 28. He also said that the village treasurer has been in talks with other banks in anticipation of Maywood moving all of its deposit elsewhere.

Seaway Bank officials could not be immediately reached for comment.

In June, Crain’s Chicago Business reported that Seaway Bank & Trust may have had to start raising money in order to stay solvent. As of March 31, Crain’s reported, the financial institution had lost $16 million within the last 15 months.

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. 

The Board of Trustees is expected to take a binding vote to approve the remaining $220,000 balance at a Nov. 1 regular meeting.

Trustee Melvin Lightford provided the only vote against the motion to move the payment to the regular meeting, while Trustee Isiah Brandon abstained. All other board members voted in favor of the motion. VFP

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Seaway Bank, Lender to Maywood Taxing Bodies, in Financial Trouble

Seaway Bank Draped in Purple

Wednesday, June 15, 2016 || By Michael Romain || @maywoodnews || @village_free

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

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