Steve Daniels
February 28, 2005
Crain’s Chicago
Business

The city’s largest African-American-owned bank is in talks to buy Chicago’s
only other black-owned bank.

 

Seaway Bancshares Inc. is in advanced negotiations to
acquire Highland Community Co., both South Side banks founded more than 35
years ago, according to people familiar with the discussions. These people say
Seaway has completed its review of Highland’s
operations, but the two sides have not settled on a price. As a result, there’s
no assurance a deal will be completed.

Highland, which owns Highland
Community Bank, has been for sale for nearly two years and has had trouble
finding a buyer. Its owners, led by Chairman George Brokemond, have wanted to
sell to an African-American company or investment team, limiting the pool of
potential buyers.

Highland has been seeking a price
above its book value, which sits at around $11 million, say people familiar
with the bank’s thinking. Seaway is blanching at the asking price after
reviewing Highland’s assets.

Seaway CEO Walter Grady declined comment and said majority owner Jacoby
Dickens, 73, was traveling and unavailable for comment. Highland CEO Dennis
Irvin didn’t return calls. A representative of William Blair & Co., which
is managing the Highland sale, also declined comment.


deal would be reprieve

If a deal is completed, it will be a reprieve for African-Americans concerned a
year ago about the potential loss of all the city’s black-owned banks, as both
Seaway and Highland were
entertaining offers. Ratcheting up the concern at the time was the November
2003 sale of black-owned Community Bank of Lawndale
to Asian-owned International Bank of Chicago,
a move that prompted a brief flurry of protests in Lawndale’s
West Side market.

”Minority-owned banks often have more of a sense of the market and are able to
tailor products more specifically to minority communities,” says Marva
Williams, senior vice-president at the Woodstock Institute, a Chicago
think tank on financial issues in low-income communities. ”I think a
(black-owned) bank is sort of symbolic of advancement and the potential to play
a part in the mainstream financial system.”


both profitable last year

Both Seaway and Highland have
emerged from recent regulatory problems. Seaway was operating until the middle
of last year under a consent decree with the U.S. Office of the Comptroller of
the Currency. The regulators required Seaway to beef up management and its
credit controls. Likewise, Highland’s
decision to sell followed the lifting of a 2000 cease-and-desist order by the
Federal Deposit Insurance Corp.

Both banks were profitable last year. Seaway posted net income of $3 million,
level with 2003. Highland had
profits of $553,000, down from $1.26 million in 2003. With $318 million in
assets, Seaway is more than three times the size of Highland.

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