Seaway Bank and Trust Co.
Established: 1965
Largest black-owned bank in the Midwest
President and CEO: Walter E. Grady
Headquarters: 645 E. 87th St. on Chicago’s South Side
Bank Branches: 11, including the former Legacy Bank in Milwaukee
Bank Assets: $696.3 million (as of 3/31)
As one of the casualties of the Great Recession, the failure of Legacy Bank on Milwaukee’s north side has become an opportunity for another minority-owned bank to continue the tradition started by the three African American women founders.
Seaway Bank and Trust Co. of Chicago acquired the assets of the failed Legacy Bank at 2102 W. Fond du Lac Ave., which was shut down by the Federal Deposit Insurance Corp. (FDIC) on March 11 after defaulted loans grew and assets shrunk below acceptable levels.
Started in 1999 by Deloris Sims, Margaret Henningsen and Shirley Lanier, Legacy Bank was a casualty of the economic downturn that left much of its inner city customer base unable to pay back loans. Legacy lost $9.2 million last year after losing $15.2 million in 2009. Almost 26 percent of the loans on its books were classified as noncurrent at the end of last year, including a portfolio in which 41 percent of mortgage loans were overdue.
Seaway Bank saw opportunity to continue Legacy’s mission, which is similar to its own, said Walter Grady, the 71-year-old president and chief executive officer of Seaway, which is headquartered on Chicago’s south side.
“I had talked with the (Legacy Bank) chairman. We had met in banking circles,” Grady said. “We found their history was similar to that of our own – we both wanted to provide financial services to the underserved and underbanked.”
Seaway made a similar acquisition last year, as it took over First Suburban National Bank of Maywood, Ill., a bank with about $149 million in assets compared with Legacy’s $190 million.
Seaway is the largest black-owned bank in the Midwest, and the fourth-largest such bank in the country. It is one of the few minority-owned banks to offer corporate trust services. It was created in 1965 to counter discriminatory lending practices on Chicago’s south side, and got its start when local businessmen went door-to-door throughout the community to raise one million dollars in capital to secure a federal charter.
Grady says the primary focus in Milwaukee is to build the strength and the viability back in the bank in order for it to become a profitable financial institution.
“As we move along in building that, we hope to get back into the banking business of supporting the community and providing the credit needs of the community,” said Grady, who is currently serving his 31st year as president of Seaway. “Our initial effort is just to turn the bank around and make it viable and profitable.
“We are a very conservative institution, and that has enabled us to grow and remain profitable though good and bad times,” he said. “We have been through this before.”
Since 2008, the downturn in the economy that impacted Legacy has resulted in 457 bank failures, including 43 banks so far this year. Grady says Legacy was a good bank that got swamped by the economic tidal wave that swept over the real estate market and commercial development.
“When you have $300,0000 homes selling for $60,000 to $80,000, you’re underwater,” he said.
Seaway adheres to community-based, family-oriented banking practices with accessible customer service and a commitment to local initiatives. Special programs include a home buying program that allows customers to buy a home by making a down payment of just one percent of the home’s value.
Seaway had 278 employees at the end of last year and has 11 bank branches, including Milwaukee.
“I think the fact a black-owned bank came in and took over took courage,” said Ruben Hopkins, president and CEO of the Wisconsin Black Chamber of Commerce. “It’s no secret that Milwaukee is a tough market. But, much of it has to do with the fact that, historically, our black business leadership has done a terrible job. That is why, according to Forbes, we are number 52 out of 52 metropolitan for economic development for minorities.”
Hopkins says the Wisconsin Black Chamber’s role is to help better prepare business owners so that when they go to Seaway seeking a loan, their chances of getting one will increase. And, for Seaway, which has greater financial resources than Legacy did, it means being willing to put those resources on the line, Hopkins said.
Grady says Seaway will do everything it can to make the transition seamless, and customers can expect to see the same familiar faces serving them, as about 90 percent of the former Legacy Bank employees were retained when the bank opened under its new name on March 12.
“We have great respect for what Legacy Bank has done for Milwaukee, and we will work diligently to earn the continued trust of customers and neighbors in this community,” Grady said.
