African American owned bank taken over by Indian American owned bank
Seaway Bank and Trust was closed on January 27, 2017, by the Illinois Department of Financial and Professional Regulation, Division of Banking, and the Federal Deposit Insurance Corporation was appointed as receiver.
DALLAS, TX- State Bank of Texas (SBT)—a $740-million asset bank headquartered in Dallas, TX—announced that it has acquired Seaway Bank and Trust Company, headquartered in Chicago, IL.
State Bank of Texas entered into a purchase and assumption agreement with the Federal Deposit Insurance Corporation (FDIC) as Receiver to assume all of the deposits of Seaway Bank and Trust Company and to acquire most of its assets following Seaway’s closure by the State of Illinois, Department of Financial and Professional Regulation, Division of Banking.
As of September 30, 2016, Seaway Bank and Trust had approximately $361,197,000 in total assets and $307,118,000 in total deposits. This transaction will strengthen State Bank of Texas’ position as the largest Indian-American-owned and -operated bank in the United States with over $1 billion in total assets.
This will also take SBT to the Top 25 in size of all minority-owned banks in the entire nation. The acquisition provides a unique opportunity for SBT to expand its operations in the major market of Chicago while retaining its strong lending foothold in the lodging industry.
State Bank of Texas is led by Chan Patel, CEO and Chairman, his two sons, Sushil Patel, President, and Rajan Patel, Chief Lending Officer, and its CFO and Executive Vice President, Janna B. Hayes.
On June 8, 2015, Black Enterprise reported:
Chicago’s Oldest Black Bank in Jeopardy
Two black-owned financial institutions left standing, oldest is in need of rescuing
Seaway Bank and Trust Co., on the South side of Chicago, may become the last black-owned financial company left standing in the Windy City. Currently, Seaway Bank ranks third on the BE100s Financial Services Banks list with $551.6 million in assets in 2014.
According to Crain’s Chicago Business, Illinois Service Federal Savings & Loan, a thrift founded by 13 African-American men in 1934 as a depositor-owned lender, is seeking a $7 million lifeline.
Source: Seaway Bank
Seaway Bank and Trust Company was established in 1965 as Seaway National Bank of Chicago, it was created to counter discriminatory lending practices on Chicago’s South Side. The founders, a group of local businessmen, sold shares door to door throughout the community to raise the $1,000,000 in capital needed to secure the Federal charter.
By the end of its first year, Seaway’s assets had climbed to over $5,000,000, and the bank has grown steadily over the years.
1965 Seaway opened for business on January 2nd in a rented storefront at 8555 S. Cottage Grove Avenue in Chicago. Permanent headquarters (Chatham Branch) at 645 E. 87th Street was opened on November 18th. Second floor was added in 1969.
1974 The East Chatham Drive-Up was opened at 825 E. 87th Street.
In 1983, Seaway acquired Union National Bank (now Roseland Branch) and became the largest Black-owned bank in the country.
1990 The West Chatham branch opened at 87th Street and the Dan Ryan Expressway (I-94).
1992 Seaway established a Corporate Trust Department to serve public and corporate debt market.
1994 Seaway established the Seaway Community Development Corporation to rebuild neighborhoods.
1997 A new branch opened in University Park (operated until 1999).
1998 Seaway became the first Black-owned bank to offer online banking.
2000 Seaway moved bookkeeping and data processing operations to a renovated facility on 87th Street. Seaway began Foreign Currency Exchange services in Terminal 5 at O’Hare International Airport, expanding into all terminals the following year.
2001 Seaway became a certified Community Development Financial Institution (CDFI) under the U.S. Department of the Treasury.
2002 Seaway received an “outstanding” CRA rating from bank regulators and introduced a foreign currency facility at Chicago Midway Airport to accommodate the addition of international flights.
2004 Seaway opened a Loan Production Office in Waukegan (expanded to full service in 2009 and closed in September 2012).
2007 In May Seaway opened a new branch at 11116 S. Michigan Avenue in Chicago’s Roseland neighborhood. On December 30th, Seaway National Bank received a State Charter and was renamed Seaway Bank and Trust Company.
2009 Seaway opened a branch in Chicago’s historic Bronzeville neighborhood in September.
2010 In October, Seaway acquired First Suburban National Bank, with branches in Maywood, Broadview and Crestwood.
2011 In March, Seaway acquired Legacy Bank, with one branch in Milwaukee, WI.
2013 Seaway Bank becomes the largest Black-owned and woman-owned bank in the nation.
2015 Seaway Bank celebrated its year-long 50th Anniversary.
By December 31, 2015, Seaway had more than $378 million in assets and approximately 220 employees.
Source: State Bank of Texas
Born in Bombay India in 1945, Chan Patel is an example of the American Dream personified. He grew up in a 5 x 8 room in the Dadar area of Mumbai, India with 4 siblings and his parents, and through hard work and dedication, he earned his Bachelor’s degree with top honors.
As a result of his dedication, he was accepted to some of the finest graduate institutions in America, including Massachusetts Institute of Technology, Columbia, and Stanford. In 1965 with $600 (his father’s whole life savings) he came to the United States to attend Stanford University.
This was the beginning of Chan’s journey to the American dream, a journey that would help transform the face of the hospitality industry.
After earning Masters degrees from both Stanford and John’s Hopkins University, Chan took a job as a programmer with Braniff Airlines; a job that brought him to Dallas, Texas where he would spend the rest of his life making his mark.
In 1976 Chan bought his first hotel. In his first year as a hotel owner he worked 3 jobs to support his investment and his new family. However, because of his dedication his hotel quickly began to make money and he was able to stop working with Braniff and devote himself to becoming a hotelier.
It took him no time at all to become a giant in the hotel industry, and he quickly expanded his empire to include a total of 17 hotels. However, Chan Patel has never been a man to rest on his laurels. In his journey to become a hotel owner, he learned that many of his fellow immigrants found it difficult to get a loan due to cultural differences. From this observation, a dream was born.
Chan Patel knew that his fellow immigrants were smart, hard-working, and able entrepreneurs but the lack of lending solutions for them made it difficult for them to purchase cars let alone start businesses and begin to build their own American Dream.
So, he decided the best way to help would be to create a bank designed to meet the lending needs of the immigrant community, especially those who were in the hospitality industry.
His journey to begin the State Bank of Texas was not an easy one. In the 80’s much like today the economy was struggling and capital was extremely limited. But obstacles have never been a problem for Chan Patel.
In order to start a bank at that time, it required $2 million of capital. With Chan willing to invest $1 million himself, he approached other local Indian businessmen and professionals to purchase shares at the $10 per share. With banking being such a new venture, he was unable to raise the capital.
He then approached several family members and friends to invest $100,000 each. In exchange, he promised that each of them would become a professional banker and be Director of the bank throughout his lifetime. With this novel approach, he was able to raise the remaining $1 million within two weeks.
Soon October 19, 1987, Black Monday (the day the stock market crashed), Chan Patel began the State Bank of Texas with a single paid employee. With all eyes watching these “Motel Patels” opening a bank, Chan wanted to ensure the success of the bank. To this end he, his investors and their spouses took the necessary bank training courses and ran the bank with only one paid employee. With perseverance they made it through the worst of the recession and later hired trained bankers to serve their growing customer base. From the second quarter of the opening to this day, State Bank of Texas has not reported any operating losses in any quarter since its existence.
Today nearly 30 years later, the State Bank of Texas is still a family owned and operated bank, specializing in providing lending solutions for the hospitality industry. Under the leadership of Chan Patel, along with the execution and drive from his two sons, Sushil Patel and Rajan Patel, State Bank of Texas continues to shape the banking and hospitality industry.
What happened to the African American financial institutions?
Click images to enlarge for better viewing. Click your return arrow to return to this topic.