Just a year ago the future of Chicago’s two black-owned banks—Illinois Service Federal and Seaway Bank and Trust—looked grim. Both banks were under consent orders from federal regulators to raise capital after years of shrinking income brought them to the brink of failure. They badly needed an influx of new deposits to continue making loans, and millions of dollars in investment to keep shareholders from bailing.
The influx of new deposits means Seaway will be able to make more loans to individuals and businesses, which will generate the interest that becomes income for the bank.
“Savvy investors are always going to be looking at the bank in terms of deposits,” Newell says. “Deposits increase the value of the bank.”
Black-owned banks were also hard hit during the 2008 subprime mortgage crisis and subsequent recession. This contributed to the growth of so-called “banking deserts”—areas with no commercial financial services and a proliferation of check-cashers and payday lenders. Between 2009 and 2011, half of Illinois’s black population had little to no access to banks.
