Seaway Bank and Trust Co., the Chicago-based company that purchased Milwaukee’s Legacy Bank five years ago, has been shuttered by the Illinois Department of Financial and Professional Regulation – Division of Banking.
The Federal Deposit Insurance Corp. was appointed as the receiver. Just like it did at Legacy Bank in 2011, the FDIC facilitated the sale of Seaway’s deposits and $309 million of its assets to State Bank of Texas in Dallas. Seaway had nine Illinois branches and one Wisconsin branch, the former Legacy at 2102 W. Fond du Lac Ave. in Milwaukee, which will now operate under the State Bank of Texas moniker.
Seaway Bank was established in 1965 as Seaway National Bank of Chicago, with the goal of reducing discriminatory lending practices on Chicago’s South Side.
State Bank of Texas will assume the accounts of Seaway’s depositors. The defunct bank’s 10 branches will be absorbed by State Bank of Texas and continue operating. The system’s transition is currently underway and customers should continue using their current branches and the bank’s services as usual.
Seaway Bank and Trust had about $361.2 million in total assets and $307.1 million in total deposits as of Sept. 30. It reported a net loss of $12.5 million in the third quarter of 2016. The $52 million in assets not acquired by State Bank of Texas will be retained by the FDIC for disposition at a future date.
The transaction is not expected to significantly impact Milwaukee operations. Sushil Patel, president of State Bank of Texas, said the manager and nameplate will remain in place at Seaway’s Milwaukee branch. As for the Milwaukee employees being retained, he said: “I’m not sure, but yes as of now.”
Seaway’s failure and the resolutions implemented by the FDIC cost about $57.2 million, which was the most inexpensive option available.
This is the second bank in the U.S. to fail in 2017. More information about the bank takeover is available by clicking here.