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Christopher "Kit" Menkin is of editor (, an internet trade publication for the finance/leasing industry. He has 41 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on... More
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  • Alleged First Legal "Benefit" Corp. Bank Fails In Chicago 0 comments
    Jul 28, 2014 2:14 PM

    14th FDIC insured bank to fail this year, 4th in Illinois.

    "A benefit corporation or B corporation is a corporate form available in certain US States, designed for for-profit entities that wish to consider society and the environment in addition to profit in their decision making process. Benefit corporations differ from traditional corporations in regards to their purpose, accountability and transparency. The purpose of a benefit corporation includes creating general public benefit, which is defined as a material positive impact on society and the environment."

    The three branches of GreenChoice Bank, FSB, Chicago, Illinois were closed with Providence Bank, LLC, South Holland, Illinois, to assume all of the deposits. Established January 1, 1920, the bank
    had 22 full time employees as of March 31, 2014, at its offices in Chicago, Cicero, and Lockport.

    At March 31, 2013, the bank had 40 full time employees.

    The bank was originally founded as Family Federal Savings of Illinois, Cicero. It was purchased and became GreenChoice Bank, FSB, Chicago, on February 1, 2011. (December 31, 2006, 16 full time employees.)

    "GreenChoice obtained a thrift charter from the U.S. Office of Thrift Supervision in June 2009...Chief Operating Officer Steve Sherman, 37, declined to disclose how much capital GreenChoice is pumping into Family Federal, which is operating under a Nov. 20 "cease and desist" order from the OTS that requires it, among other things, to boost its capital levels.

    "The CEO of GreenChoice is Mr. Sherman's father, Harold, 78, a community banker in Chicago in the 1980s.

    "Family Federal, founded 110 years ago, had assets of $61 million as of Dec. 31. It's primarily a mortgage lender, but Steve Sherman said GreenChoice will make loans to apartment-building owners and small businesses in addition to continuing home lending."

    "GreenChoice Bank FSB, claims to be the first bank in the U.S. to operate as a legal "benefit corporation."

    "GreenChoice is a federal savings bank, and is wholly-owned by GreenChoice Holding Co. Inc., an Illinois-chartered benefit corporation. A benefit corporation, a new legal entity, is defined by state law as a business that, among other public purposes, is committed to "preserving the environment" or "increasing the flow of capital to entities with a public benefit purpose."

    "'We measure everything we do not only by how much it impacts our profit and losses, but also how it impacts the community and environment,' Jon Levey, executive vice-president and chief lending officer, said in an interview."

    "Among its environmentally sustainable business practices, GreenChoice encourages customers to use e-statements, prints its reports on renewable sugar cane pulp, and designed its main office at 2545 W. Diversey Ave. so that sunlight can hit 90 percent of space inside the bank, according to Levey.

    "GreenChoice provides loans to small business owners, ones Levey describes as "having been shut out of the credit system, largely." as part of its business philosophy. In addition, GreenChoice bankers work to maximize return on investments for non-profits and foundations, because of common values, according to Levey."

    "We invested most of 2010 re-engineering the business to GreenChoice's standards. This involved retrofitting its two branch locations and applying for LEED certification, introducing online and other electronic banking capabilities and launching a cultural change to incorporate sustainability initiatives throughout the business.

    "We strive to create a small physical footprint to reduce our environmental impact, instead using technology and service to bring the bank to you."
    GreenChoice Web Site (now down)

    The population of Cicero, Illinois in 2012 was 84,137, with an estimated median income of $39,680 compared to Illinois of $55,137. Estimated per capita income in 2012: $13,418.

    • Hispanic - 72,609 (86.6%)
    • White alone - 7,696 (9.2%)
    • Black alone - 2,690 (3.2%)
    • Asian alone - 467 (0.6%)
    • Two or more races - 257 (0.3%)
    • Other race alone - 90 (0.1%)
    • American Indian alone - 56 (0.07%)
    • Native Hawaiian and Other Pacific Islander alone - 26 (0.03%)

    Single-family new house construction building permits:

    • 1997: 2 buildings, average cost: $58,200
    • 1998: 2 buildings, average cost: $58,200
    • 1999: 0 buildings
    • 2000: 1 building, cost: $58,200
    • 2001: 1 building, cost: $58,200
    • 2002: 0 buildings
    • 2003: 0 buildings
    • 2004: 0 buildings
    • 2005: 0 buildings
    • 2006: 0 buildings
    • 2007: 0 buildings
    • 2008: 0 buildings
    • 2009: 0 buildings
    • 2010: 0 buildings
    • 2011: 0 buildings
    • 2012: 0 buildings

    March 31, 2014: Tier 1 risk-based capital ratio 2.73%;

    It does not appear this was the location for a Legal "Benefit" Corp.,
    especially based on energy savings.

    Non-Current Loans, mostly real estate, took the bank down.

    (in millions, unless otherwise)

    Non-Current Loans


    Net Equity 

    Charge Offs

    2006 -$1,000 (-$1,000 loans to individuals)
    2007 0
    2008 $2,000 ($2,000 loans to individuals)
    2009 $2.2 ($1.3 1-4 family residential properties, $657,000 construct/land, $174,000 nonfarm/nonresidential, $-$1,000 loans to individuals)
    2010 $121,000 ($74,000 nonfarm/nonresidential, $47,000 construction & land development)
    2011 $246,000 ($209,000 construction/land, $23,000 1-4 family, $15,000 nonfarm/nonres/ -$1,000 individual loans)
    2012 $417,000 ($188,000 1-4 family, $178,000 nonfarm/nonres, $38,000 multifamily, $2,000 commercial/industrial, -$2,000 individual loans)
    2013 $935,000 ( $410,000 1-4 family, $284,000 nonfarm/nonres., $2,000 loans to individuals)
    3/31 $90,000 ($39,000 nonfarm/nonres., $24,000 individuals, $22,000 1-4 family, $5,000 construction/land)

    Construction and Land, 1-4 family multiple residential, Multiple Family Residential, Non-Farm Non-Residential loans.

    As of March 31, 2014, GreenChoice Bank, fsb had approximately $72.9 million in total assets and $71.0 million in total deposits. In addition to assuming all of the deposits of the failed bank, Providence Bank, LLC agreed to purchase approximately $67.7 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition.

    The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $14.2 million.

    List of Bank Failures:
    Leasing News Bank Beat:

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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