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Pastor Bill Winston’s Covenant Bank on Chicago’s West Side Shut Down For Loss of Money

pastor bill winston covenant bank

Pastor Bill Winston’s Covenant Bank on Chicago’s West Side Shut Down For Loss of Money

The feds came in on last Friday to shut down Pastor Bill Winston’s Covenant Bank on the West Side. They state the bank has been losing money since its 2008  which was founded by megachurch pastor Bill Winston.

In the process of shutting it down, the Federal Deposit Insurance Corp. sold the bank’s assets to Liberty Bank and Trust Co. of New Orleans. Liberty will continue to operate Covenant’s only office at 1111 S. Homan.

At the bank’s website, it leaves a message to Covenant Bank members:

On Friday, February 15, 2013, Covenant Bank, Chicago, IL was closed by the Illinois Department of Financial & Professional Regulation – Division of Banking. Subsequently, the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed. All deposit accounts, excluding certain brokered deposits, have been transferred to Liberty Bank and Trust Company, New Orleans, LA. For more information on Liberty Bank and Trust Company, visit us at www.libertybank.net. 

Source

We can not imagine bank members not being given a notice that all of their monies would be considered none and void one faithful day.

Fortunately for the private account holders, the sale “will protect those who are insured up to the $250,000 per-account maximum. But it will wipe out the bank’s owners, including members of Winston’s Living Word Christian Center in Forest Park who provided cash for the purchase,” reports Chicago- Sun Times.

This would mean that everyone else over the $250,000 maximum would not be insured and would lose all of their money, subsequently. That seems to be a blow to his biggest investors in the institution. It appears Liberty Bank will take over and maybe this will rectify the situation.

The FDIC estimated the closure will cost its insurance fund $21.8 million. It said that as of year-end 2012, Covenant had $58.4 million in assets.

Many of the bank’s owners, who provided Winston at least $1,000 each, are people of modest means.

Pastor Bill Winston purchased the former Community Bank of Lawndale for a reported $3 million, preaching the need to put religious faith into practice by supporting revitalization of the West Side. But FDIC records show the bank’s losses have been heavy, especially in the last couple of years, says the Sun Times.

All of last year through Sept. 30, the bank lost $2.2 million and $1.2 million for the same nine-month period of 2011. Since June of 2011, it has operated under regulatory orders to raise at least $3 million in capital.

Banks often do that by finding new investors or issuing preferred stock. But the regulatory filings show Covenant was unsuccessful in seeking cash infusions.

Its financial reports showed that as of last Sept. 30, it had only $573,000 on hand to support further losses, giving it a so-called Tier 1 ratio of just 1.5 percent. Tier 1 is a measure of bank’s core strength, including equity capital and reserves. Covenant was under orders to increase that ratio to 9 percent.

 provided by Covenant Bank Chicago 60624

In June of 2011, the FDIC told the church to increase its capital by $2 million in the next 60 days. At that time, they had $69 million in assets and an additional $2 million would be its requirement.

Back in Nov. 2012, a state representative LaShawn Ford wanted to introduce ways to save the Covenant bank but there was an issue with this. State Rep. LaShawn Ford was under investigation for bank fraud by federal authorities, yet he continued his work in the community by introducing a resolution to the General Assembly to help save a troubled West Side bank.

Ford was indicted on Nov. 29 by the feds on a 17-count indictment, but introduced the resolution on Tuesday Nov. 27 on behalf of Covenant Bank, located in North Lawndale on the West Side, to help improve its capitalization problem.

House Resolution 1305 calls on the Secretary of Financial and Professional Regulation to grant an extension to the bank, which was purchased in 2008 by west suburban pastor, Rev. Bill Winston of the Living Word Christian Center.

Covenant, the West Side’s only black-owned bank, has been working with the Professional Regulation agency and the Federal Deposit Insurance Corporation on its extension. The bank has until Dec. 2, 2012, to “correct the capital impairment,” Ford said at a press conference. Source

It’s still a recession but we wonder was there some wheeling and dealing going on as well?

Here’s a personal letter from Pastor Bill Winston on behalf of the bank closing.