Seaway Bank & Trust, the state’s largest black-owned minority bank and the sixth largest black-owned minority bank in the country, was shut down last Friday by state bank regulators. On Saturday, all of the bank’s deposits and a majority of its assets were transferred to the Dallas-based State Bank of Texas.
Seaway’s 10 branches — most of which are located in the western suburbs and on the city’s South Side — will continue to operate during normal business hours and the deposits will continue to be insured by the Federal Deposit Insurance Corporation.
This isn’t 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. State Bank is owned by Indian-Americans.
At the time of its closure, according to state regulators, Seaway had approximately $360 million in assets. A major contributing factor to the bank’s financial insolvency was Seaway’s purchase from the FDIC of two failed banks in 2010 and 2011.
The bank also had to contend with the loss of key administrative personnel, such as former president Darrell Jackson, who left the bank in 2015 after barely a year at the helm. In 2013, the bank’s longtime chairman, Jacoby Dickens, died. The next year, Seaway’s longtime CEO, Walter Grady, exited after more than 30 years in that position.
Less than three years ago, Crain’s Chicago Business had reported that Seaway had turned a net loss of $4.4 million into nearly $1 million in profit after correcting errors in its financial statements made by management officials in 2013 and 2014.
In December 2014, however, state regulators with the Illinois Department of Financial and Professional Regulation issued a consent order against Seaway due to “unsafe and unsound” banking practices.
Last June, Crain’s reported that as of March 31, 2016, Seaway had lost $16 million over the previous 15 months and was “currently engaging investment bankers for a capital raise,” according to an email statement a Seaway spokesman emailed to Crain’s at the time.
Even then, some banking experts realized that the outcome of that capital campaign could mean new ownership for the African-American financial power and a loss of the bank’s black-owned status.
According to a Jan. 27 Crain’s report, 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.