DURHAM, N.C. – Self-Help FCU, which agreed earlier this month to buy 1,100 mortgages originated by the Second Federal Savings and Loan, said yesterday it is also buying the deposits and remaining banking operations of the failed bank.
Self-Help, the California-based community development credit union affiliate of the Center for Community Self Help, teamed earlier this month with Chicago’s The Resurrection Project to buy the mortgages mostly held by Hispanic borrowers from the FDIC that were made by the failed Second Federal for $59 million. With yesterday’s transaction, also in partnership with Resurrection, Self-Help is buying the deposits and operations of Second Federal from Wintrust Financial Corp, effectively completely a deal for all of the operations of the failed bank. As a result, Self-Help FCU will be operating the three legacy Second Federal branches in Little Village, Cicero and Brighton Park.
Wintrust Financial’s Hinsdale Bank & Trust had acquired the deposits and facilities, but not the mortgages, from the FDIC when the federal regulator took over Second Federal last July 20. Second Federal had $161 million in deposits at Sept. 30.
This is the fourth troubled bank to be acquired by a credit union over the past 18 months.
"We came into Second Federal's neighborhoods with the intention of serving all the financial needs of the community,” said Edward Wehmer, president of Wintrust. “After working with a number of community leaders, we came to the conclusion that, for now, those needs are best served by the venture that The Resurrection Project has developed.”
"Self-Help's involvement in Chicago -- and expanding beyond our current operations in California and North Carolina -- would not be possible without The Resurrection Project's strong community leadership," said Martin Eakes, president and co-founder of Center for Community Self-Help and Self-Help FCU.
Terms of the transaction are not being disclosed at this time. The transaction is subject to approval by banking regulators and certain closing conditions. The transaction is expected to close in the first quarter of 2013.
Self-Help FCU is the second credit union formed by the Center for Community Self Help, which includes a state chartered Self-Help CU based in Durham, and the three-year-old California CDCU that is a conglomeration of eight troubled smaller CDCUs. But this deal is its first outside of California.
The Resurrection has revitalized predominantly low-income Latino communities on Chicago's southwest side since 1990 through a variety of community development strategies.
Self-Help and Resurrection were unsuccessful bidders for Second Federal when the FDIC shut down the failed bank last summer but the two-step deal effectively won them the bank afterall.
The failed bank was unique because of its focus on the low-income Hispanic market. It was one of the pioneers in making home loans to undocumented immigrants who possessed taxpayer-identification cards. Many of those customers made their monthly payments in cash, which most mortgage providers aren't equipped to deal with. The new operation will continue to make home loans to undocumented immigrants with taxpayer IDs.