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Chicago’s last Black-owned bank struggling, reports reveal

GN Bank, Chicago’s last Black-owned bank in Bronzeville, is struggling amid staff turnover, complaints, and lawsuits from customers who were given foreclosure notices despite being current on their mortgages, according to an investigative report by ProPublica.

The non-profit news outlet in a second story reported the owner of the former Illinois Service Federal Savings and Loan (ISFSL) is down to just one branch after the institution was forced to give back a $20 million deposit from the city of Chicago in 2020 because it was unable to pay nearly $300,000 interest the loan generated after it was deposited in 2017.

Both reports paint a disturbing picture of GN. Its owner, Papa Kwesi Nduom, an entrepreneur from Ghana, and board members are reportedly scrambling to place the bank on “solid financial footing” as lawsuits threaten the future of a Black institution with roots dating back to 1934.

On December 21, ProPublica published a lengthy investigative story, “What’s Gone Wrong at Chicago’s Last Black-Owned Bank?” The report said Nduom and his family in April 2016 spent $9 million to acquire the ISFSL, located at 4619 S. King Drive.

Two Crusader journalists, including Glenn Reedus, current interim editor and publisher for the Chicago Reporter, first broke the story in 2016 after the Nduom family granted them an exclusive interview.

Hopes ran high as Chicago was down to its last two Black-owned banks, ISFSL and Seaway Bank in Chatham. But before ISFSL was acquired in 2016, it was struggling amid the Recession, according to the report.

Citing federal data, ProPublica reported that bank loans plummeted from 32 in 2012 to just nine in 2014 as the bank’s income and capital dropped. The report said as loan delinquencies continued to mount, federal regulators concluded that ISFSL was engaged in “unsafe or unsound banking practices.”

After federal regulators closed Seaway in 2017, ISFSL remained Chicago’s last surviving Black-owned bank. Two years after it was acquired, ISFSL was renamed GN Bank in 2018 after the Groupe Nduom, the owner’s business conglomerate in Ghana, which includes banks, hotels and an investment firm, according to ProPublica.

Longtime customers and bank employees reportedly thought changing ISFSL to GN Bank was a mistake because of the bank’s original, well-known name. An undated black and white photo in the Crusader archives shows gospel singer Mahalia Jackson standing in line at the bank.

But rebranding wasn’t the only concern facing the GN Bank, according to the ProPublica report. The news outlet reported that under Nduom, staff turnover accelerated, especially in management positions, and the number of full-time employees dropped. Customers reportedly experienced challenges in reaching anyone at the bank by phone, and tellers often were unable to provide information about their accounts.

According to ProPublica, last summer GN Bank closed its only branch location, in Chatham. Citing federal data, the report said the move reportedly left GN Bank with just one office and fewer than a dozen full-time employees. Customers say it has been harder than ever to deal with the bank, according to ProPublica.

After many risky loans, the bank reportedly is under a consent order by the federal Office of the Comptroller of the Currency (OCC), which complicates efforts to make loans and raise revenues.

The report also said GN Bank is facing lawsuits after it sold several mortgages to a company it created in 2018 to move troubled loans and foreclosed properties off its books.

Called Yorke Properties, Illinois LLC, the company has the same address as the GN Bank on South Martin Luther King Drive. The report said GN Bank gave at least 16 active mortgages to Yorke Properties, which used those properties as collateral to borrow from a lender in California.

But the report also said Yorke Properties had the right to collect payments and foreclose on loans. One customer, Emily Pierce, who has a mortgage for a condominium in South Shore, was reportedly sent a foreclosure notice despite her being current on her mortgage. She was eventually able to save her property with the help of a board member of the bank whom she discovered lived in her building.

The report said another woman, Sharon Stewart from Morgan Park, last spring was notified in a letter by Yorke Properties that she and her mother were in default for two mortgages on a three-flat and had to pay $25,396.75 within 35 days to avoid foreclosure.

The report said after Stewart requested copies of her bank records, Nduom allegedly sent text messages to her with offers to “regularize” her mortgage.

The report also said Stewart discovered Yorke Properties was entangled in a Cook County lawsuit after it defaulted on a $2 million loan from a California lender in 2020. In a lawsuit filed in Cook County, attorneys for Yorke and the Nduoms tried to compel Stewart and other borrowers to pay Yorke more money by threatening to foreclose on their homes.

According to the report, another customer, prominent restauranteur Josephine Wade-Smith, owner of Josephine’s Southern Cooking (formerly known as Captain Hard Times) in Chatham, was sent a foreclosure notice in 2018 even though she was current on her mortgage. The report said for a while, bank employees allegedly told Wade-Smith they would only accept cash and she continued to make payments in person at the bank until they stopped giving her receipts more than a year ago. Citing text messages from Wade-Smith’s cell phone, the report said in April Nduom texted her that he was trying to get her mortgage “regularized.”

In 2020 Congressman Bobby Rush sponsored a bill to create an office within the OCC to help Black-owned and community banks. In an interview, Rush urged the Biden administration to get behind the measure as part of an effort to lift minority communities.

“In Chicago, we’re down to one Black-owned bank, GN Bank, and it’s on life support even as we speak,” Rush said. “It’s one sure sign that the economy in the Black community is fragile at best.”

According to ProPublica, the bank is Nduom’s first in the country. His conglomerate Groupe Nduom in Ghana is also experiencing problems.

In 2019, the conglomerate’s 23 Ghanian banks were reportedly shut down after the country revoked their operating license. Regulators said on August 16, 2019, the Bank of Ghana revoked the licenses of Nduom’s 23 banks. It had gone insolvent, the central bank regulators said, because the banks allowed Groupe Nduom companies to withdraw money “under circumstances that violated prudential norms.”

Back in Chicago, the problems continued for GN Bank. In a separate ProPublica report in 2017, under City Treasurer Kurt Summers, the city of Chicago deposited $20 million in a move that made national headlines as Black-owned banks across the country continued to suffer. The next year, Governor J.B. Pritzker put $1 million of his own money in GN Bank.

But the report said that year, city officials were alarmed when the bank was unable to readily produce records charting its loan activity one year after it made its $20 million deposit. When the bank eventually produced those records, it showed few loans were reportedly made at the time.

By August 2019, the city’s $20 million deposit had reportedly generated $295,585 in interest. The report said GN Bank was in such grave condition that they realized they couldn’t afford to pay the interest on the public deposits.

On March 24, 2020, GN Bank reportedly told the city it would return its money.

In a statement sent to ProPublica, Nduom did not respond to questions about customer complaints, but efforts are underway by the bank’s board to help the bank “thrive and are bearing fruit for the community.” (sic)

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