Seaway Bank and Trust Co., one of Chicago’s largest Black-owned banks, was closed Friday, Jan. 27, and sold to the State Bank of Texas in Dallas. Surprisingly, the bank’s abrupt closure has gone largely unnoticed by major news sites — namely, the Black-owned ones.
Seaway Bank was ultimately closed due to “operations of an unsafe and unsound nature that resulted in inadequate capital to protect its depositors,” the FDIC said in a written statement issued to Atlanta Black Star. The Black-owned institution was founded in 1965 in response to the racist and discriminatory lending practices of major banks and soon opened branch locations across Chicago, the south and west suburbs and O’Hare International Airport, according to the Chicago Sun-Times.
The FDIC confirmed that all 10 of the bank’s locations would immediately operate under the ownership of the State Bank of Texas, which was founded by Indian-American businessman Chan Patel. The corporation assured Seaway Bank’s former depositors that their funds would not be affected by the transition.
“We want to stress that not one depositor will lose a penny as a result of this action,” Kerri A. Doll, director of banking for the Illinois Department of Financial and Professional Regulation said.
Financial woes for the historic Black bank began during Chicago’s crippling housing market crash between 2006 and 2012, during which home values in the area declined a whopping 35 percent, according to theGrio. The market has slowly recovered over the past four years but only managed to regain 10 percent of its value, making it that much harder for the bank to survive the crash.
The failing Illinois Service Federal Savings and Loan Association, another Black-owned bank in Chicago, was close to suffering a similar fate until the Groupe Nduom of Ghana decided to invest $9 million in capital to revive the bank’s struggling operations. The Ghanaian financial firm acquired the ISF bank in May 2016, Atlanta Black Star reported.
“Our mission is to be a viable, growing, community development financial services institution responding innovatively to our primarily underserved and minority constituency with customer service which ensures each customer feels they are our only customer,” the bank’s website states.
Prior to its acquisition by the State Bank of Texas, Seaway Bank had approximately $361.2 million in total assets and $307.1 million in total deposits, the FDIC’s press release stated. But the institution’s heavy involvement in the #BankBlack movement last year still wasn’t enough to secure much-needed depositors from the African-American community.
For many, the failure of such a prominent Black-owned bank is concerning. What’s even more disturbing is the fact that major Black news outlets haven’t really covered the Seaway Bank collapse.
For instance, theGrio pointed out that Chicago-based Ebony Magazine, which reported on the rapid growth of the #BankBlack movement last summer, hasn’t discussed the Seaway Bank since then. Black Enterprise, touted as the leading finance and investment resource for African-Americans, has yet to report on the bank’s closure either.
The failure to notice such a bank’s demise is troubling, considering the vital role(s) Black-owned banks have played in the African-American community. Black banks have provided essential funding for Black entrepreneurs, businesses and institutions, and those who were simply going through hard times, Atlanta Black Star reported. Moreover, Black banks helped sustain the African-American community, especially during the Jim Crow era when Black folk struggled to attain economic success.
There were more than 130 Black-owned banks in the U.S between 1888 and 1934, according to the FDIC. Over the years, that number plummeted to 48 in 2001, with only 22 remaining in 2016.