GreenChoice Bank, an eco-minded financial institution, is carving out a niche as one of the first green community banks in Chicago.
After two years of behind-the-scenes work, a small group of veteran Chicago bankers announced the bank’s formation when it acquired Family Federal Savings of Illinois last month. Family Federal had $60 million in assets, and though it was a troubled mutual savings bank, GreenChoice executives say they now have the capital to open their doors and begin offering credit to small-business owners and other consumers.
The Green Exchange at 2545 W. Diversey Ave.
GreenChoice will set up its headquarters at the Green Exchange building in Logan Square at Diversey and the Kennedy Expressway in early 2011 when the LEED Platinum rehab of the old Frederick Cooper Lamp Factory is expected to be completed. In the meantime, Family Federal has two branches in suburban Lockport and Cicero, which will be rebranded as GreenChoice after some energy-efficient retrofits are incorporated into the buildings and other paperless systems and online banking updates are installed.
The bank’s senior management includes Harold Sherman, president and CEO; his son Steve Sherman, chief operating officer; Jon Levey, chief lending officer, and Kenneth Kline, chief financial officer. Some executives among the team are Leadership in Energy & Environmental Design Accredited Professionals, which helps them pursue the bank’s mission of adopting sustainable practices in its own operations and develop a strategy for attracting businesses and consumers who want to finance eco-friendly projects.
Steve Sherman brings a decade of banking experience to GreenChoice from his years of working at LaSalle Bank before it was acquired by Bank of America in 2007. Crain’s met up with him to discuss why the group decided to open a green community bank and how they intend to stand out as an environmentally focused institution.
Crain’s: Is there really a need in the local financial marketplace for a community bank with a green focus?
Mr. Sherman: Yes. Lots of community banks were being swallowed up by large national players, and we saw a need for a back-to-basics community bank. We also recognized pretty quickly the sustainable business community in Chicago was growing fast, that there were banking opportunities there, but there weren’t really any banks catering to them. We saw the opportunity to put a twist on it and operate ourselves as a sustainably minded business and cater to the sustainable business community and its consumers.
Crain’s: What type of services or products will your bank offer that will make you more attractive to green-minded businesses and consumers compared to a regular community bank?
Steve Sherman
Mr. Sherman: We’re developing new products that reward customers for their green choices, such as higher interest rates on savings accounts if you choose paperless options. If you’re a property owner and you’re retrofitting your building or home to incorporate energy efficiency and green technology with the things that really have an impact on your carbon footprint, we will give better terms on those loans because we recognize it as being more environmentally responsible. Sometimes those technologies involve higher upfront costs, and we might be able to come up with a unique amortization schedule or a business customer might have more favorable covenants.
Crain’s: With only three locations, how does the bank intend to serve businesses and consumers throughout the city? Are there plans for opening more branches?
Mr. Sherman: The Green Exchange location will be a full-service branch, but we’re going after the entire Chicagoland area. We’ll have those three locations initially and hope to add more over time. When we have the online banking, we will do remote deposit captures and we’ll have a more complete ATM network so people will have free ATM access everywhere.
We don’t believe that a bank needs to set up an enormous footprint around the city to serve its customers. We can be efficient and mindful of what we’re building new. It’s an emphasis on bringing the bank to the customer instead of building a lot of bricks and mortar.
Crain’s: Why did it take two years for GreenChoice to gain regulatory approval and complete the process of officially becoming a bank?
Mr. Sherman: We set out to launch a new bank in June 2008 and went through a long and difficult regulatory process to get our board and team in place. That process got longer when the economy tanked. As other banks were being shut down, we got our approval from federal regulators in June 2009. That was still a terrible time to raise capital, but by the beginning of 2010, we came across an opportunity to acquire a troubled, local existing bank — Family Federal Savings. We finished the process recently by raising our capital with the bank acquisition and getting final approval from the (Federal Deposit Insurance Corp.) for insurance on deposits.
Crain’s: Were you worried about acquiring a beleaguered bank that wasn’t green as the means to jump-start your own eco-friendly venture?
Sherman: Family Federal had loans on the books that were troubled, but we saw a lot of value in them beyond that. It’s a hidden gem, a local community bank that took good care of its customers. It’s small enough that we can go in and green the business and re-engineer the way this bank operates. There may be a certain elegance in starting clean and brand new, but by going through this process ourselves, we’ll be a more knowledgeable partner about what it takes to be green.
