CHICAGO (CBS/ProPublica) – It’s a small bank located on a tree-lined street on the south side of Chicago.
GN Bank stands alone in Illinois as the last black-owned bank in the state. It also stands out for other reasons. Customers complain about the problems they have with the bank. Some even fear losing their homes due to the bank’s Stone Age registration system. Additionally, the bank is under a federal consent order that noted several deficiencies that need to be corrected quickly.
HOW GN BANK CAME ABOUT
GN Bank used to be called Illinois Service Federal Savings and Loan (ISF). It opened in 1934 and offered mortgages, homeowner assistance, and access to banking services for underserved black neighborhoods in Chicago.
But when the 2008 recession hit, many banks, including ISF, began to run into trouble.
As of April 16, 2015, ISF was under a federal consent order issued by the Office of the Comptroller of the Currency (OCC), one of the agencies charged with regulating banks and financial institutions.
The order required the bank to come up with a plan to get out of financial trouble and hire competent management.
A year later, the ISF thought it had found its savior in Dr. Papa Kwesi Nduom.
Dr. Nduom was a wealthy West African who owned many businesses, including a large bank in Ghana. He agreed to take control of ISF and pump $9 million into it. You can read more about the behind-the-scenes negotiations from our research partner, ProPublica.
THE STORY OF SHARON STEWART
For more than 30 years, Sharon Stewart said her late mother, Dorothy, had a mortgage with ISF because she wanted to support the bank’s commitment to the community.
“It was a feeling of pride,” he said, “they invested in the community and helped African-Americans get mortgages.”
Stewart says her mother also enjoyed the friendly, intimate customer service at ISF.
“She could go in there and talk to them personally,” Stewart said. “She loved it. Absolutely.”
Eventually, Stewart added his name to the mortgage and kept that commitment to back what eventually became GN Bank, eventually becoming the last black bank in Chicago.
She has a different feeling about the bench today.
“I’m very disappointed. I’m very disappointed in them,” Stewart said. “They take your money. They do nothing for you.”
Stewart told CBS 2 that since GN took over, customer service has gone downhill.
“There’s no one to talk to,” he said. You can’t talk to anyone.”
He also said that normal banking procedures are not followed.
“I don’t even get bank statements,” Stewart said.
Worst of all, he said, is the moment he thought he might lose his mother’s house.
“The last bank statement we received was in December 2017. And that’s when Yorke Properties came into being,” Stewart said.
And she said that’s when all the trouble started with that loan.
Stewart met with the then vice president of the loan department.
“He told me the property had been in foreclosure since June 2018,” he said.
Stewart said her mother had automatic loan payments set up with ISF/GN Bank.
But Stewart discovered that GN Bank had sold the mortgage to Yorke Properties, LLC. Dr. Nduom is Chairman of GN Bank. He is also listed on state LLC records as a manager of Yorke Properties.
Stewart received a collection notice in 2021. The notice informed her that she was delinquent on her mother’s Yorke Properties mortgage loan.
He had to prove that the loan was current to avoid foreclosure.
Stewart started going to GN Bank every month to make loan payments after that. She described her monthly routine: “I presented the check with the loan numbers because there are no payment coupons, nothing. So I always write [on] a piece of paper the address, my mother’s name, my name, the check number, how much I’m paying, the loan numbers they told me are the loan numbers, and I always write a statement that GN Bank does not provide states annual or monthly bills, or payment coupons.
After making the payment, Stewart explained, “I’ll get a handwritten receipt. From a financial institution, that’s my receipt. It’s like the Flintstones. That’s what I call it.”
Let’s go back to the fear of foreclosure. Stewart kept all those handwritten receipts and canceled checks totaling $60,000 to prove to GN Bank that the loan was not in default.
She blames the bank’s president, Dr. Nduom, for all this mortgage confusion, missing statements, and outdated receipts.
“They don’t run it like a financial institution in the United States at all,” Stewart said.
MORE CUSTOMER COMPLAINTS
Stewart isn’t the only customer complaining. Robert Jansen drives 110 miles each way from his home in Marseilles to GN Bank in Bronzeville every month to make his mortgage payments as well. He is a real estate investor, so he has a lot of them.
“Through ISF at one point, I had 18 mortgages,” Jansen said. “I’m down to 10 now.”
Jansen pays in person at the bank because he has heard stories like Stewart’s and is afraid something similar will happen to him.
“I’m afraid he will sell these mortgages to Yorke Properties, he won’t notify me,” Jansen said. “I don’t want to be sold to Yorke, because Yorke doesn’t file returns either. They just come in and foreclose.”
Jansen keeps all the receipts he receives from the teller to show that “my mortgages are paid.” And like Stewart, he questions the kind of receipts he hands out to GN Bank, comparing them to something that might come from a fast food place.
“Since they changed the system to a new system that gives you these Burger King coupons, that’s your payment history,” Jansen said.
Stewart reported his problems with GN Bank to the OCC. A public records request from ProPublica revealed that many other customers filed complaints between 2016 and 2021.
We received over 20 cases in which dissatisfied customers complained to various federal bank regulatory agencies about problems with GN Bank including, but not limited to, the bank’s handling of mortgages, handling of other accounts, and poor customer service. deficient.
In some cases, the OCC responded by saying that it “does not have the judicial power to interpret or enforce private contractual agreements.” In other cases, the OCC advised customers to take their concerns to other state or federal agencies or to take GN Bank to court.
GN Bank, while not particularly responsive to its own customers, more often than not responded when the OCC followed up on customer complaints and asked the bank to respond.
The OCC has another interest in GN Bank. This refers to the last consent order you issued on September 17, 2020.
Jeremy Kress is an assistant professor of business law at the University of Michigan. He is also co-director of the faculty of the school’s Center for Finance, Law and Policy and a former regulator of the Federal Reserve.
Per the 2015 consent order and now this new one, Kress said: “This suggests that GN Bank is quite far from having very significant problems that its senior supervisor has been encouraging the bank to fix for quite some time.”
The 2020 consent order cites some long-standing concerns “about the quality of the loans on their books,” said Kress, who reviewed the documents at our request.
The 2020 consent order specifically calls out the leadership of the GN bank since taking over the ISF. It states: “The Board and management have not corrected previously identified unsafe or unsound practices.”
The order also cites some new requirements, including that the Board adopt and implement a Conflict of Interest Policy and adhere to it.
CBS 2 investigators met with OCC regulators when they arrived at the GN bank for a scheduled registration session earlier this year. They wouldn’t talk to us.
“Regulators are concerned that the bank is not as well managed as they would hope,” Kress said.
He added that it is rare for a consent order to be publicly available, and even rarer for a bank to have consecutive orders issued against it.
THE FUTURE OF THE GN BANK
“To satisfy the regulator’s concerns that are identified in the consent order, GN Bank needs to improve its management,” Kress said. “That could mean current management improving the systems they have in place. It could mean hiring new managers to come in, managers who have been successful at other minority deposit takers or more traditional deposit takers.”
Kress examined publicly available financial asset data for GN Bank. He said it appears to be on solid footing at the moment, despite the consent order.
“There is a certain level of supervisory discretion that the OCC may have used here to try to help GN Bank rehabilitate itself and return to operating in a safe and sound manner,” he said.
GN Bank is the last black-owned bank in Chicago. It is also the last black-owned bank in the state and one of only 19 black-owned banks in the entire United States.
Jansen and Stewart may be unhappy with the bank’s practices, but the last thing they want is for GN Bank to go out of business.
“I want the bank to be successful,” Jansen said.
“Sure, we want this to be a successful bank,” Stewart said. “It’s historic.”
The CBS 2 investigators asked to sit down with Dr. Nduom to discuss the clients’ concerns and the consent order. GN Bank’s attorney submitted the following statement instead:
As the only remaining Black-owned bank in Illinois, we are proud to have invested resources to serve the community and that is and will continue to be our priority at GN Bank.
Dr. Papa Kwesi Nduom
Previously, the bank had sent a longer response to ProPublica in November 2021: