Federal regulators late Friday shut down Covenant Bank on the West Side, which has been losing money since its 2008 founding by megachurch pastor Bill Winston.
The Federal Deposit Insurance Corp. sold the bank’s assets to Liberty Bank and Trust Co. of New Orleans. Liberty will continue to operate Covenant’s only office at 1111 S. Homan.
The sale will protect account holders, who are insured up to the $250,000 per-account maximum. But it will wipe out the bank’s owners, including members of Winston’s Living Word Christian Center in Forest Park who provided cash for the purchase.
The FDIC estimated the closure will cost its insurance fund $21.8 million. It said that as of year-end 2012, Covenant had $58.4 million in assets.
Many of the bank’s owners, who provided Winston at least $1,000 each, are people of modest means. Winston did not return a call Friday.
He purchased the former Community Bank of Lawndale for a reported $3 million, preaching the need to put religious faith into practice by supporting revitalization of the West Side. But FDIC records show the bank’s losses have been heavy, especially in the last couple of years.
For last year through Sept. 30, the bank lost $2.2 million, compared with $1.2 million for the same nine-month period of 2011. Since June of 2011, it has operated under regulatory orders to raise at least $3 million in capital.
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article courtesy of Joy105.com
Originally seen on http://praisecleveland.com/