The Crusader Newspaper Group

Historic Black-owned bank saved from closure

By Glenn Reedus

The old adage of “Buy Black’ is taking on a cousin slogan according to the new owners of the Illinois Service Federal Savings and Loan (ISF Bank). The saying, Kweku Nduom said it’s time to Bank Black.

Nduom is one of two brothers, who along with their parents make up Groupe Nduom, a business conglomerate based in Ghana, West Africa. The group, founded by Dr. Paa Kwesi Nduom, owns 41 companies. ISF is the first venture outside of Africa.

Kweku’s brother Chiefy, who will be more involved in the Chicago operation, said current plans for ISF include expanding the customer base by engaging and educating small business owners on how to gain better access to capital, teaching young Chicagoans the benefits of saving, and “be the place to go for those seeking a mortgage.”

Chiefy added the group will draw partly on its experience of owning the 200-branch GN Bank in Ghana, as well as the institutional memory found among ISF customers and employees. “There is no need to re-invent the wheel,” he noted. One target of the new owners’ efforts will be unbanked and under-banked individuals – those who must rely on currency exchanges, payday loan stores and cash-for-titles operations. They are known as alternative financial services and are concentrated in low-income areas and often charge more than three times the interest rate of traditional lenders.

In the U.S. approximately 30 percent of adults are under-banked or unbanked. The reverse proportion is true in Ghana.

CHIEFY NDUOM, an attorney and vice president and general counsel for Groupe Nduom, explains his future goals for the Illinois Service Federal Savings and Loan during a meeting with the Chicago Crusader on Wednesday, May 4. (Photo by Erick Johnson)
CHIEFY NDUOM, an attorney and vice president and general counsel for Groupe Nduom, explains his future goals for the Illinois Service Federal Savings and Loan during a meeting with the Chicago Crusader on Wednesday, May 4. (Photo by Erick Johnson)

The bankers will emphasize opening savings accounts, a staple of young people in Ghana. “They don’t seem to be ready for that, here,” Chiefy said, continuing “we want to encourage people to open up savings accounts, getting the message to them that a saving culture is how to get to the core of a wealth building practice.

Young people who typically shun traditional banking will be targeted with more online offerings allowing them to do most of their banking online. Kweku added making increased use of technology is vital to the bank’s mission. He said his father; a former Deloitte Touche employee sold computing services for that accounting firm.

“We want people to know that this is also a place to get a mortgage. That has been the history of this bank. We are looking to revitalize the immediate surroundings,” Kweku said. Those surroundings include the area near the bank’s headquarters at 46th and King Drive and its branch at 87th & King Drive. He added the bank’s growth will be incremental. After the bank opened in the mid-1930s it became known as the institution that would give mortgages when others would not.

Part of that change the new owners will bring will be improving the local housing stock through re-structuring loans, acquiring some houses and re-selling them, as well as taking over some that go into foreclosure.

Customers won’t see brick-and-mortar changes but they will notice customer service improvements, better technology and more automated teller machines (ATMs). What South Side residents will see according to Kweku, is strong support for Black-owned businesses. ISF is in a solid financial position with assets at more than $101 million. The capital position is $11.5 million. The near 10-1 ratio qualifies the bank as very low risk.

“We really will rely heavily on (bank) team members to do more in terms of outreach and generally be in the community more.” Chiefy added a team approach between the bank and the community is needed to ensure the growth of ISF. “Illinois Service Federal is not going anywhere, but we will need everyone on board in order to go.”

The family spent more than two years acquiring the bank, according to Kweku–their first in the U.S. Groupe Nduom is comprised of several businesses with the hospitality division being the largest. The Coconut Grove Hotel anchors that sector and GN Bank is the crown of the financial institutions jewel. Kweku serves as the vice president of business development and finance and Chiefy, an attorney is vice president and general counsel.

According to the group’s announcement, a weak loan portfolio meant ISF was in jeopardy of closing. The announcement also read “Illinois Service Federal Savings and Loan (ISF Bank) is located at 4619 South Martin Luther King Drive in Bronzeville and was established in 1934 during the Great Migration, when African Americans moved to Chicago and other Northern areas escaping the segregated South and its limited economic opportunities. When these new community members were denied loans from local banks, they decided to establish their own banks that would serve the African American community.

Due to recent challenges to the banking industry in general and the Black-owned banks in particular, ISF Bank was in danger of closing due to the large number of delinquent loans it was holding in its portfolio. With the Nduom family acquiring the Bank, it is expected that this storied financial institution will diversify its holdings and introduce new and innovative products that will increase its customer base and generate more profits.”

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