Bank’s New, Non-Black Ownership Protested
Tammy Chase, suntimes.com (Chicago), Mar. 5
Residents of the West Side Lawndale neighborhood plan a protest today at the Community Bank of Lawndale, frustrated that the new bank owners are not African-American.
A group of bank customers and former shareholders led by the Rev. Marvin Hunter have launched a bid to get a Forest Park bank, New Covenant Bank, to buy Lawndale. And they’re demanding that regulators investigate the sale of the bank in November to the Asian-American-owned International Bank.
Hunter insisted that “this is not a race issue. This is an economic issue. We don’t believe other people can look out for the interests of black people.”
New Covenant officials could not be reached late Thursday for comment.
Lawndale’s new owners insist the bank is not for sale. “We rescued this bank from failing,” said Ben Shapiro, attorney for International Bank. “We don’t want to sell what we’ve put a lot of money into.”
The bank — whose most recent chairman was Chicago School Board President Michael Scott — was in such poor financial shape before it was sold that it was going to be taken over by the state’s banking regulator, the Office of Banks and Real Estate, by Dec. 29 if bank officials didn’t boost its cash reserves.
The bank’s board sought investors for the bank to recapitalize, and also buyers, according to people familiar with the sale. These people said few banks wanted or could afford Lawndale, given how close it was to failing.
The sale came after state and federal regulators issued a so-called cease-and-desist order last April, criticizing the bank for inaccurate accounting and inadequate capital. They ordered the bank to come up with a new management plan and to restore itself as a “safe and sound bank.”
Scott, an investor in the bank and a board member, became chairman of the board in the summer and hired LaSalle Bank executive John Eck in August to run the bank. Lawndale, with $50.7 million of assets as of last September, lost more than $5 million in 2003 alone.
“I am comfortable with the Herculean efforts a lot of people made to try to save the bank,” Scott said.
Uptown-based International Bank got involved because it had a $720,000 loan to Lawndale’s former owners, Sable Bancshares, a loan backed with the bank’s stock as collateral. International Bank hoped Lawndale would find a buyer because if the bank went into receivership, it would lose its money.
As of Oct. 1, Lawndale was in default of that loan, it had yet to get its capital levels up to satisfy regulators, and it faced the Dec. 29 deadline of being taken over. International Bank “essentially foreclosed on our loan, in the form of an acquisition,” Shapiro said.
Hunter is angry that shareholders weren’t given enough notice about the sale. A person familiar with the sale said an investor that could have kept the former ownership in place fell through at the last minute, thus the short notice to investors.
And Hunter insists the bank, serving an all-black community, ought to be owned and run by black people. “We have no other economic engine … to fix our blighted neighborhood,” he said of the bank, which was started in 1977 to help redevelop Lawndale, which had been devastated by the Chicago riots nearly a decade before, after the Rev. Martin Luther King Jr. was assassinated.
Shapiro says his bank is working on college scholarships for black students, as a start to reach out to Lawndale. He says his bank can serve Lawndale well: “You lend in your community because it’s good business, whether they’re black, white or purple.”