After 40 years in business, Liberty Bank & Trust and Co. has exited Chicago’s North Lawndale neighborhood, where it was the last black-owned bank on the city’s West Side.
The New Orleans-based bank closed its brick-and-mortar branch at 1111 S. Homan Ave. on Sept. 14, leaving its suburban Forest Park branch as one of the few remaining brick-and-mortar Liberty Banks in the Chicago area, according to Crain’s Chicago Business.
Liberty Bank represented the most popular bank in the area and, along with offering mortgages and wealth building services, operated with the aim of strengthening and stabilizing the North Lawndale community.
The branch held $34 million in deposits as of June 30, 2017, which represented 6 percent of Liberty’s total deposits of $554 million, according the most recent data available from the Federal Deposit Insurance Corporation (FDIC). Forest Park held just $3.3 million during the same time frame.
In a statement, Wendy Ryce-Smith, regional vice president, said Liberty closed the West Side branch because it was “underutilized” and will focus on its electronic transactions business.
“We are updating our operations to better accommodate our customers and allow them the freedom to manage their money wherever they are,” Ryce-Smith said in a statement. “We are mindful that many of our customers are not tech savvy, and we plan to work with them in the transition. We will maintain ATM service in the Homan neighborhood, and we will continue personal banking operations at our Forest Park branch.”
Liberty Bank opened in 1898, and offered its first mortgage for just $1,800.
In February 2013, Liberty Bank paid more than $58 million to buy the assets of the then-Covenant Bank. Covenant had been purchased by Living Word Christian Center in Forest Park in 2008. Prior to Living Word’s ownership, the bank existed for 30 years as Community Bank of Lawndale, its founders a group of black investors who launched the bank after Sears Roebuck & Co. moved its headquarters and banking operations from the West Side to the Sears Tower in the early 1970s.
Living Word acquired Community Bank of Lawndale for $3 million in 2008, much of it coming from relatively small investments made by more than 3,000 church members. U.S. Rep. Danny Davis (7th) was one of the bank’s early investors and a depositor.
In a written statement, Rev. Bill Winston, the businessman who heads Living Word and the Joseph Business School, said he purchased Community Bank of Lawndale as a way to provide black entrepreneurs access to capital. He planned to open a second branch in Forest Park, where Living Word devotees would deposit, and which he said would provide a continuous revenue stream to stabilize the North Lawndale branch. But in 2008, Covenant ran out of capital because of the “mortgage crisis,” Winston said, and regulators denied his request to open a second branch locally.
The roughly 3,000 church members who bought shares of the bank lost their investments when the bank failed, although depositors continued to have access to their funds, which were insured by the FDIC. At the time, Chicago Banking Attorney James Hannon of the firm Gozdecki, Del Guidice, Americus, Farkas told the Forest Park Review that Covenant’s deposit scheme was not typical, saying “a typical community bank has a group of business people in the community and they invest larger amounts.”
“Typically, there are between 100 and 150 investors, and they’re sophisticated people; they understand the risks,” Hannon said.
Customers of Liberty Bank can access their funds at 7610 Roosevelt in the Forest Park Plaza, the mall that is also owned by Living Word. Liberty Bank in Forest Park is one of six remaining brick-and-mortar locations in the Chicago area.
“As a legacy financial institution, Liberty is committed to Chicago,” President Alden McDonald Jr. said in a statement. “We will continue to provide affordable mortgages, low rate Visa cards, convenient loans, and quality banking services for the people of Chicago. We look forward to a brighter future for our people.”
CONTACT: ntepper@wjinc.com
