Chicago’s Last Black-Owned Bank Gets $20 Million Cash Infusion
In an effort to spark economic development activity within the black community, the city of Chicago has deposited $20 million into ISF Bank—the oldest and last black-owned Chicago-based bank.
The bank, formerly named Illinois Service Federal Savings and Loan Association, plans to use the money for multiple purposes, says Papa Kwesi Nduom, the bank’s chairman.
(L-R: ISF Bank Directors: Donald Davison, James Buckner, Papa Kwesi Nduom; Cliff Rome, owner of Peaches Restaurant. Image: Courtesy of Papa Kwesi Nduom)
Located on the city’s South Side, ISF Bank was founded in Chicago in 1934 to serve communities historically underserved by traditional financial institutions. ISF Bank is No. 11 on the BE 100s Banks list.
(ISF Bank. Image: Facebook/ISF Bank)
Boosting the Bank’s Capacity to Serve Customers
Nduom says the money could be used to provide loans to black entrepreneurs wanting to open or expand businesses. Another use would be to lend to commercial developers to build houses, condos, or apartments—as well as to black homebuyers—in neighborhoods it serves.
He says the deposit provides “a much-needed boost to our financial foundation, ensuring that we can strengthen the economic base of our communities and help people fulfill their dreams.”
“This will help us become a more significant player in the economic revitalization in the Chicago black community,” Nduom says. “This will do some good and wonderful things for the bank.”
The investment comes at a dicey time for the city. Observers are hopeful it will help erase some violent activity, create jobs, and lessen economic disparity some say exists in the city.
City Treasurer Kurt Summers told Black Enterprise via email that the deposited money would indeed allow ISF Bank to make more loans and invest more directly back into the communities where many of their customers reside.
(Kurt Summers announces the $20 M deposit. Image: Facebook/Kurt Summers)
He added, “It is our hope that with this deposit and the confidence it conveys to other organizations and individuals recognizing the important role that community banks serve here in Chicago and elsewhere, and entertain opening accounts of their own.”
Making an Investment into Community Banking
According to Summers, the city maintains roughly $300 million to $700 million in larger non-black owned banks during the course of a fiscal year. Yet, Summers says the deposit into ISF Bank highlights the commitment the City Treasurer’s office is making into community banking but more importantly to the overall community on the Southside of Chicago.
“We heard it first-hand right after the press announcement where local small business owners and community members who were present at the event highlighted that they will open an account with ISF Bank to support them,” Summers says. “The community heard the call to action in regards to supporting ISF Bank and they are willing to do their part as we were willing to do ours and invest in them.”
(ISF Bank conducts a networking event for small businesses in Chicago. Image: Facebook/ISF Bank)
Nduom says the city has deposited the money and opened an account, adding it has “great expectations” the bank will disperse the money for good purposes. He says the city has expressed it may deposit more with the bank once it sees the funds are being used appropriately.
He emphasized the bank has a responsibility to the city and its regulators to ensure that this money is used prudently and in safe and sound manner.
Deposit Could Help Generate New Business Activity
The deposit might help the bank, now with assets of around $105 million, attract new business. Nduom says the investment has already improved the bank’s credibility, making it a more viable option for individuals, businesses, and organizations to consider for loans, deposits, and other relationships.
“It is making some people look at us with more favorable eyes,” he says.
Larger banks are historically not as vigorous as black banks to lend to blacks to start or expand businesses, buy homes or churches for new construction, or renovation projects.
Other black institutions, including Seaway Trust and Bank, Highland Community Bank and Covenant Bank, are among black-owned banks that have closed in Chicago the past four years, reports the Illinois Department of Financial and Professional Regulation Division of Banking.
Nduom says the deposit is a big deal for the bank and the black community. To his knowledge, he says, it marks the first time that a high-ranking city official has come to the community and said the problems on the city’s South Side are economic in nature.
“The city is making an economic statement with this deposit,” he says. “It’s historic and in the right direction for the community.”