In August, the sign popped up unexpectedly on the North St. Louis City bank’s front door – “Gateway Bank will be closing in 90 days.”
Gateway Bank was established in 1965 on Union Blvd., near Natural Bridge, as the first black-owned and -operated bank in Missouri. In response to the 1963 civil-rights protests of Jefferson Bank & Trust Co.’s refusal to hire blacks, co-founder C. W. Gates and his family committed to providing banking services and loans indiscriminately to the community of North St. Louis.
“Over the years, Gateway took local deposits and made loans in a neighborhood where few other banks focused,” said Adolphus Pruitt, president of the NAACP St. Louis City.
In 2009, the bank failed under the recession, was taken over by the FDIC, and was sold to Central Bank of Kansas City. For the past three years, Central Bank was managing the bank’s $12 million in deposits and about $13 million in assets. Yet earlier this year, Central Bank received permission from the FDIC to permanently close the location in October 2012, arguing that they couldn’t find a buyer to keep the bank open.
About 1,300 primarily African-American and low-income residents in North St. Louis call Gateway their bank. In a climate where 28.6 percent of African-American households in St. Louis are unbanked, the NAACP was not about to see the bank close in one of the nation’s most under-banked areas.
On August 24, Pruitt walked in the bank, saw the soon-to-close sign, and immediately called Central Bank of Kansas City. Bank officials told him that it was too late in the closing process to sell the bank. Undeterred, Pruitt reached out to CEO of Stifel Bank & Trust Chris Reichert for help, though Stifel Bank does not operate any retail banking centers because it gets funding from its brokerage firm affiliate – Stifel Nicolaus. Reichert gathered information and went to work in finding a prospective buyer. By the following Wednesday, Aug. 29, Reichert had identified, met with, and began negotiations with St. Louis Community Credit Union to acquire the bank location and deposits of the former Gateway Bank. This weekend, they reached an agreement.
“The speed and responsiveness to the NAACP from Stifel was remarkable,” Pruitt said. “Without it, this deal would have never come together, and they put their money where their mouth is.”
Stifel has agreed to make a bridge loan to St. Louis Community Credit Union for the purchase of the property.
“By combining resources and expertise, we wanted to help the community preserve a sustainable and affordable way for low-to-moderate income residents to have access to banking services,” Reichert said.
The deal is about two transactions away. First, in order for the St. Louis Community Credit Union to meet the purchase price, they need a bridge line, or short-term loan. Stifel Bank is going to provide that financing.
Next, the old Gateway building does not meet current disability and environmental building codes and must be demolished and rebuilt. In order to build a new bank, the credit union needs some help filling that financial gap as well. Currently, Claude Brown, formerly of the NAACP, is acting as the liaison between the Mayor’s office and the credit union for the City of St. Louis to bridge that gap.
“St. Louis Community Credit’s willingness to invest, and commit to building a new state of the art facility to be named the ‘Gateway Branch’ is truly a commitment to North St. Louis and Gateway’s rich history,” Pruitt said.
St. Louis Community Credit Union, which is recognized as a women- and minority-owned, not-for-profit cooperative, has committed to provide banking services for the clients of the former Gateway Bank. Plans include replacing the current building with a state-of-the-art facility that will be known as the “Gateway” Branch. In the meantime, the credit union operates four branches within five miles of the former Gateway Bank location – plus an ATM inside the North Patrol Division just two blocks away.
Given that credit unions are owned by their members, the bank will technically remain a minority-owned financial institution.
“There are many neighborhoods in the St. Louis area that do not have convenient access to mainstream banking services, so we can’t afford to lose one that already exists,” said Patrick Adams, president and CEO of St. Louis Community Credit Union. “We are so pleased that Stifel Bank’s support will help us maintain a major presence in this community.”