A North Carolina credit union has agreed to buy most of the operations of a Chicago bank that failed earlier this year.
Self-Help Credit Union in Durham, N.C., will buy nine branches and $200 million in deposits that once belonged to Seaway Bank & Trust from State Bank of Texas in Dallas. State Bank bought the bulk of Seaway when regulators closed the bank on Jan. 27.
State Bank is keeping $194 million in loans, 14,000 deposit accounts and a branch in O’Hare Airport where it will offer foreign-exchange services, said CEO Chan Patel.
The deal is expected to close on May 1. Patel declined to discuss specific pricing for the branches, though he said the deposits were being sold for a premium between 1% and 2%.
State Bank was aware of Self-Help’s interest in Seaway before it failed, Patel said, adding that the Federal Deposit Insurance Corp. shared that information with all bidders for what was once the nation’s biggest black-owned bank.
Patel said it made sense to work with Self-Help, which specializes in lending to minority and low-income groups. The credit union already has a branch and deposits in Chicago, which it bought in 2012 from Wintrust Financial.
State Bank has a policy where it addresses outstanding issues with a purchased portfolio before making new loans, Patel said. Selling to Self-Help creates a situation where the credit union can immediately begin making credit available in the former Seaway’s communities, he said.
State Bank is starting to work through defaults and delinquencies in the Seaway portfolio, Patel said. About 80% of the portfolio is evenly split between residential mortgages and church loans; the rest consists of various consumer loans.
Self-Help is expected to retain the Seaway name.
“Seaway built a long history of financial service to families and businesses of modest means,” Martin Eakes, Self-Help’s CEO, said in a brief statement. “We seek to carry Seaway’s torch forward.”
Patel said he had no issues working with a credit union.
“They are helping people who really need them,” Patel said. “As a nonprofit organization you can see their motives are really clear.”