Superior Bank of Chicago
| Company type | Joint venture |
|---|---|
| Industry | Banking, Savings and Loan |
| Founded | 1988 |
| Defunct | July 2001 |
| Headquarters | Hinsdale , United States |
Area served | United States |
Key people | Alvin Dworman (operator after 1997), Jay Pritzker (co-owner, deceased 1997), Penny Pritzker (co-owner, former board chairwoman), Thomas Pritzker (co-owner) |
| Products | Savings and loan services |
| Owner | Pritzker family (50%), Alvin Dworman (50%) |
| Parent | Coast-to-Coast Financial Corporation (holding entity) |
The Superior Bank FSB was a Hinsdale, Illinois-based savings and loan institution that failed in July 2001, holding assets valued at roughly $2.3 billion. The bank was jointly owned by the Chicago-based Pritzker family.
Synopsis
Founded in 1988 under advantageous regulations established by the Federal Home Loan Bank Board, Superior operated as a 50-50 joint venture between the Pritzker siblings (Jay, Penny, and Thomas) and real estate investor Alvin Dworman. Following Jay Pritzker's passing in 1997, Dworman took charge of the bank’s operations from New York. The partners acquired the insolvent Lyons Federal for $42.5 million, each maintaining equal control over Coast-to-Coast Financial Corporation (CCFC), which served as Superior’s holding entity.
Federal authorities took control of Superior in July 2001 after the Pritzker family failed to implement an agreed-upon recapitalization strategy. To preserve their reputation and avoid legal disputes, the Pritzkers consented to a $460 million settlement structured over 15 years without interest in December 2001. At the time, Superior Bank marked the largest bank failure in more than ten years. As of March 2012, outstanding obligations to former depositors exceeded $10 million.
July 2001 collapse
The Office of Thrift Supervision reported on the circumstances surrounding the collapse.
George Kaufman, a finance professor at Loyola University Chicago, characterized Superior’s downfall as "a story of severe mismanagement," highlighting unethical behavior and precarious accounting methods. He condemned the actions of executives, board members, auditors, and regulators alike but expressed skepticism about why the wealthy and influential Pritzkers permitted such high-risk conduct.
Settlement by the Pritzkers
In December 2001, to avoid regulatory sanctions tied to Superior Bank FSB’s failure, the Pritzker family agreed to pay a landmark $460 million settlement to federal authorities. This arrangement spanned 15 years and bore no interest, including proceeds recovered from the bank’s former auditors. In June 2012, it emerged that the Pritzkers had negotiated a reduction on their remaining settlement balance in 2011.
The Washington Times reported that after remitting $316 million, the family reached an agreement with the FDIC in June 2011 to lessen their outstanding debt in return for early repayment. Approximately 1,400 depositors were still owed $10.3 million at that point. The FDIC Insurance Fund had absorbed a loss of $296 million after reimbursing insured depositors of Superior. Given that most settlement funds have been allocated, further recoveries for depositors or the FDIC appear unlikely.
“'The depositors suffered losses at every stage,'” stated Clinton Krislov, legal representative for depositors holding uninsured accounts beyond FDIC limits. “'They have received all possible compensation from the Pritzkers.'”
RICO lawsuit
In 2002, uninsured depositors initiated a federal class-action suit invoking the RICO Act against Penny Pritzker (former board chairwoman), her cousin Thomas Pritzker, other key bank officials, and Ernst & Young. The plaintiffs accused Superior’s leadership of persuading depositors to invest while misappropriating funds for illicit gains benefiting the owners.
The case titled Courtney v. Hallerin was initially dismissed at the district court level; however, upon appeal to the Seventh Circuit Court of Appeals in 2006, Judge Diane Pamela Wood upheld this dismissal in her ruling issued in 2007.
External links
- Information on Failed Bank: Superior Bank, FSB, Hinsdale, IL provided by the FDIC