ISF Bank Taking Aggressive Steps to Become Viable Black-Owned Community Development Bank in Chicago

ISF Bank of Chicago has teamed with Allpoint, the world’s largest surcharge-free ATM network. The deal means that the bank’s customers can use 4,000 ATMs across the city for free.

The bank, formerly named Illinois Service Federal, hopes to boost lending by $20 million this year, money it plans to lend to black homebuyers and black-owned businesses.

Those are just two of many bold steps the bank’s new owners are taking to show the lender is serious about becoming an efficient and viable bank in the nation’s third largest city.  This month marks a year since a Ghanaian-American family took over the lender and began revitalizing it.

Perhaps more importantly, that commitment is elevated with the January exit of Seaway Trust and Bank. Chicago’s dominant black bank for many years, Seaway was closed by regulators and sold to the State Bank of Texas. The action left ISF Bank as the oldest and last black-owned Chicago-based bank.

Seaway joined Highland Community Bank and Covenant Bank among black-owned banks that have closed in Chicago the past four years, reports the Illinois Department of Financial and Professional Regulation Division of Banking. The closures come as the city has a black population of 910,899 and 78,010 black businesses, the latest U.S. Census Bureau estimates show. The sheer size of Chicago’s black community makes it a potentially lucrative market opportunity for financial institutions.

And big mainstream banks are historically not as vigorous as black banks to lend to blacks to start or expand businesses, buy homes or churches for new construction, or renovation projects.

“The closure of Seaway and other black banks leaves us with a great responsibility to bear in Chicago because the black community will be looking to us to serve their needs,” says Papa Kwesi Nduom, chairman of ISF Bank. “So it’s a big responsibility, one that we accept.”

Nduom is also president of the Nduom Group, a conglomerate that owns some 55 businesses in industries such as investment banking, hospitality, and media in Africa, Europe, and North America. The Nduom family became ISF Bank’s largest shareholder last April after investing $9 million of new capital into it. The investment provided the bank needed funds to save it from a possible closure or takeover by another institution.

ISF Bank is a thrift with two branches that was started by 13 African Americans in 1934 in the Chicago historic neighborhood of Bronzeville. Nduom swears the bank’s new mission is not just to survive, but to become a viable community development bank to serve Chicago’s South Side.



What is being done to let Chicago’s black community know they can rely on ISF Bank?


We have been honest with people by letting them know that we’re doing what is needed so that the bank is there for them. We just had 80 small businesses show up for a National Mom and Pop Day we hosted. The bank has re-connected with the community through faith-based institutions, community groups, and events with small businesses. We’re making serious efforts to diversify our client base with the likes of youth, professionals, businesses, colleges, anyone in need of banking services. We are no longer a quiet bank.  We plan to work with leading African American-owned businesses in Chicago to offer entrepreneurship counseling as well.


In terms of new products and services, what is the bank offering that it did not before?


We added a banking app that allows e-banking with no need to physically visit the bank to deposit checks, open accounts, or transfer funds. We want to expedite the time it takes to get a home mortgage or small business loan approved. We’re talking to newspapers, radio, and social media to inform the public we’re making those loans. We’re launching an aggressive public relations, marketing, and advertising campaign in the next six months to increase our visibility and attract more people. We now have about 7,000 customers.

On the technology side, we have opened up a very active Facebook page to reach out to the more technology-savvy people on the South Side.

All told, we have invested about $13.7 million, including money used for new capital and to eliminate bad loans from the bank.


How is the bank performing when it comes to assets, loans, and deposits?


Deposits have risen to $100 million currently, including about $2 million of new deposits that came from the #BankBlack movement. Deposits are poised to rise to $125 million by the end of 2017. We expect the increase to come from our community outreach efforts as well as residents and businesses on the South Side moving accounts to our bank from other banks. Loans have risen to $50 million currently and we expect to reach $70 million by year end. About 50% of that gain will come from money lent for home purchases and the rest from small business lending. Assets were at $110 million as of March 31, 2017, up from $106 million the same time a year ago.


The bank is still operating under a consent decree issued in 2015 by the U.S. Office of the Comptroller of the Currency. How is that process going?


The consent order called for the bank to improve capital, improve management, improve management of our loan portfolio and ensure customer deposits are safe. We’re adding people and working diligently to make sure that all of the regulatory requirements are met. In February 2017, we (the Ndoum family) injected another $1.2 million in new capital to ensure we’re adequately capitalized. We’ve brought in a new CEO and senior loan officer to manage the loan portfolio. We’re hoping that the OCC consent order is lifted by the end of next year.

The bank had suffered losses for more than five years and its capital eroded due to mortgage loan defaults. Our expectation now is that the bank will return to profitability by the end of this year. Within the next five years, we’re confident that this bank can reach $1 billion in assets if it applies a superior service delivery system, new technology, and strong management.


Jeffrey McKinney is a long-time freelance business writer and reporter, contributing to Black Enterprise magazine for several years on a broad range of business and financial topics.