ABC bank, which was founded in Austin over a century ago and is still headquartered in Galewood, is expected to be purchased by Aurora-based Old Second Bank.
According to a statement released by both companies, Old Second will pay around $41.1 million in cash for the acquisition. The deal will expand Old Second’s presence in Chicago, where it currently has one branch. ABC Bank customers will be able to take advantage of Old Second ATMs in the western and southwestern suburbs, and have access to more services. The sale is expected to be finalized sometime during the spring.
ABC Bank was founded in 1891 as Austin State Bank. By the time Greater Chicago Financial Corporation acquired the bank in 1987, it was known as the Austin Bank of Chicago. In 2002, the bank was rebranded as ABC Bank.
The bank is currently headquartered on the Galewood side of the Chicago/Oak Park border, at 6400 W. North Avenue. There’s also a branch in suburban Bensenville and two branches in Chicago — one in Little Italy and one on the Far South Side.
“ABC Bank is committed to building value for our communities by sponsoring community events and supporting local fundraisers that are sponsored by non-profit organizations,” according to the bank’s website.
“Sponsorship participation includes the contribution of funds, employees’ time and corporate in-kind services,” the website states. “Consideration is given to activities that help improve the quality of life and well-being for the people of our communities.”
In 1990, the bank established a scholarship geared toward high school students living in non-Galewood portions of Austin, as well as a portion of West Garfield Park, west of Pulaski Road. It also held multiple “fill a food pantry” fundraisers and supported various fundraising events.
As previously reported by Austin Weekly News, the ability to set up checking accounts is a major issue on the West Side, especially for residents who have bad financial records. To accommodate that, ABC Bank offers “second chance” checking accounts.
Unlike the bank’s regular checking accounts, which don’t come with any fees, it charges a $14 a month maintenance fee, but if the account holders don’t overdraft for 12 months and attends one of the bank’s financial literacy seminars, they can convert their account to a regular checking account.
Acquiring ABC Bank will expand Old Second Bank’s Chicago footprint. The majority of its branches are located in Aurora, Elgin, Joliet and other suburbs in DuPage, Kane, DeKalb and Will counties. It didn’t have any Chicago presence at all until November 2016, when it completed the purchase of Talmer Bank and Trust’s downtown branch, located in the Loop.
The two banks announced the impending purchase on Dec. 26, 2017. In a joint statement, James Eccher, President and Chief Executive Officer of Old Second, described the purchase will benefit the ABC Bank customers
“This opportunity increases our presence in the city, allows us to leverage our existing capital and will provide customers of ABC Bank with an expanded menu of deposit, lending and financial management products,” he stated.
Sam Scott, Chairman of Greater Chicago Financial Corp, echoed the sentiment.
“We believe this transaction offers benefits to our customers and the communities we serve, value for our shareholders and opportunities for our employees,” he stated.
While the statement doesn’t elaborate on what those benefits will be, a look at both banks’ websites reveal some details. Old Second has a program that would help residents who need their checks cashed. If they need to cash larger checks, it can actually be a cheaper alternative to currency exchanges.
While Old Second’s cash-checking fees for checks less than $500 are $5 — higher than the 2.5 percent of the check value rate currency exchanges can currently charge — for checks worth $500 or more, the bank charges one percent of the check’s value.
That means that if, for example, a resident wants to cash a $600 check, a currency exchange can charge up to $13.50, while Old Second would only charge $6.
In addition, Old Second’s basic checking accounts may be easier to open than ABC Bank’s. Like ABC Bank, they don’t have a minimum balance and don’t come with monthly fees; and while ABC Bank requires an opening deposit of at least $100, Old Second requires at least $50.
Old Second, however, doesn’t have the equivalent of “second chance” accounts. It is not clear whether ABC branches will still offer them once they merge will Old Second.
In the joint statement, Scott said that Old Second shares his bank’s commitment to serving the communities they are located in.
“We are pleased to partner with Old Second, an organization with a demonstrated commitment to its communities,” he stated.
Eccher stated that ABC Bank’s community service is one of the reasons why his bank is excited to buy it.
“ABC Bank’s track record in meeting the credit needs of its communities is exemplary,” he stated.
On its website, Old Second mentions that giving back to communities is an “important part of [their] culture.”
“We proudly support the communities in which we operate, not only through our banking operations, but through our employees’ volunteer and community-service efforts,” the website states.
“Whether it’s a project-specific donation to help fund a new building for a homeless shelter or an ongoing financial partnership with a charity like United Way, Old Second has made it a habit to help out our neighbors.”
The website also states that Old Second prioritizes diversity as an important part of its hiring practices, stating that “diverse markets require diverse perspectives” and that “it’s a tradition at Old Second to capitalize on the broad spectrum of backgrounds of our employees.”
Old Second doesn’t offer any community scholarships. It is not clear whether it will preserve ABC Bank’s scholarship.
Austin Weekly News reached out to officials from both banks to clarify this and other issues, but none of them responded by deadline