|Community Development Bank|
|Successor||Urban Partnership Bank|
Mary Houghton, George Surgeon
|Products||Financial services, microfinance|
|Total assets||$2.6B USD (2008)|
ShoreBank was a community development bank founded and headquartered in Chicago. At the time of its closing it was the oldest and largest such institution, and in 2008 had $2.6 billion in assets. It was owned by ShoreBank Corporation, a regulated bank holding company.
ShoreBank had branches in Chicago’s South and West sides, Cleveland, and Detroit. Between 2000 and 2006, ShoreBank issued nearly $900 million in loans to citizens in Chicago, Detroit, and Cleveland. ShoreBank and its affiliated companies have projects in 30 countries.
ShoreBank incorporated environmental conservation into its mission during the 1990s, helping develop a triple bottom line approach to banking, equally prioritizing profits, impact on people, and the impact of a project on the environment.
ShoreBank accepted mission-based deposits from across the country through its Development Deposits program, launched in 1982, and its online savings account ShoreBank Direct, launched in 2007.
Although mission-based, the bank's financial performance historically matched or exceeded that of its peer banks. However, the bank faced significant losses in 2009, and as of May 2010 was seeking $200 million in additional capital from major investors and the U.S. government. The bank's losses were related to the recession, though it was not engaged in subprime lending.
ShoreBank corporation was the first bank holding company to combine commercial banking, real estate development, nonprofit loan funds, and international advisory services aimed at community development. Originally developed as a neighborhood development bank for low-income African-American communities, ShoreBank eventually expanded nationally and internationally.
It exceeded its goal of private capital commitments but did not receive requested government support, a condition of the private investors. In August 2010, the bank faced possible insolvency and risked having its deposits taken over by the Federal Deposit Insurance Corporation, which insured its deposits. On August 20, 2010, the bank was declared insolvent, closed by regulators and most its assets were acquired by Urban Partnership Bank. Some of the more recent management hirees of ShoreBank, in an unprecedented move by the FDIC, have been allowed to continue to run the restructured bank, now a part of Urban Partnership Bank. According to the FDIC, the recent hirees "did not contribute to the bank's problems." Sheila Bair, head of the U.S. Federal Deposit Insurance Corporation, devoted several pages to the lack of federal support in her 2012 book and commented that the FDIC sought approval of the injection of federal funds several times, to no avail.
|This section requires expansion. (May 2010)|
In 1973 the South Shore Bank attempted to relocate from 71st Street and Jeffery Boulevard in the economically declining South Shore to the Loop. At the time, one third of all apartment buildings in South Shore were tax-delinquent and in danger of abandonment by landlords. Angered by the bank's racist lending practices, community banker-activists Milton Davis, James Fletcher, Mary Houghton, and Ron Grzywinski purchased the bank after successfully petitioning the federal Comptroller of the Currency to stop the move after creating the Illinois Neighborhood Development Corporation. Urban planner Stanley Hallett was a founding board member and was vice president of the bank's holding company its first five years.
Renamed ShoreBank in 2000, it was the nation's first community development bank. During its 37 years of operation, ShoreBank played a critical role in stabilizing and rebuilding many of Chicago's low-income neighborhoods and eventually expanded globally, setting the standard for the development finance industry.
As its range of financial products grew, so did its geographic reach and influence in the banking industry. ShoreBank expanded into low-income communities in Detroit, Cleveland, Michigan's Upper Peninsula, Arkansas, and the Pacific Northwest. Its influence in Arkansas influenced Bill Clinton, then governor to propose the Community Development Financial Institutions Act, which he signed in 1994. In addition, ShoreBank executives assisted in the development of the international microfinance industry. After the collapse of the Berlin Wall, the corporation's international affiliate ShoreBank advisory services assisted banks in Central Europe with small business lending.
ShoreBank Corporation is the holding company for and with ShoreBank. Its other subsidiaries provided banking, equity investing, consulting, and environmental banking services:
- ShoreBank Pacific in Oregon and Washington state. On August 21, 2010, it was announced that ShoreBank Corporation had entered into an agreement to sell ShoreBank Pacific to OneCalifornia Bank of Oakland, CA. The acquisition completed in December 2011 and the resulting entity was rebranded One Pacific Coast Bank.
- ShoreBank International, with offices in Chicago, Washington, D.C., and London
- ShoreCap Management
ShoreBank established a number of affiliated nonprofits to provide related financing, technical assistance, and consulting services:
- Center for Financial Services Innovation
- National Community Investment Fund (NCIF)
- Northern Initiatives, in Michigan’s Upper Peninsula. On August 20, 2010, Northern Initiatives announced that it had amended its by-laws to end appointment of board members by ShoreBank and that it would continue its operations independently of the Chicago-based bank.
- ShoreBank Enterprise Cascadia in Oregon and Washington state announced it would change its name to Enterprise Cascadia on August 20, 2010, and would continue its operations independently of the Chicago-based bank. In 2013 Enterprise Cascadia rebranded as Craft3. Their new name reflects their focus on the "'three bottom lines' of economic, environmental and social equity."
- ShoreBank Enterprise Cleveland. On August 20, 2010, it was announced that ShoreBank Enterprise Cleveland was changing its name to Enterprise Cleveland (EC) and would continue its operations independently of the Chicago-based bank.
- ShoreBank Enterprise Detroit. It was announced that ShoreBank Enterprise Detroit would be changing its name to Enterprise Detroit and would continue its operations independently of the Chicago-based bank.
- ShoreBank Neighborhood Institute
- ShoreCap Exchange
ShoreBank, its co-founders, and its affiliates have received numerous awards and honors, including from the magazines Fast Company, Business Ethics, and U.S. News & World Report, University of Notre Dame's Mendoza College of Business, the Independent Community Bankers of America, Mayor Richard M. Daley of Chicago, the Chicagoland Chamber of Commerce, and Governor Ted Kulongoski of Oregon.
Former President and Arkansas Governor Bill Clinton is a prominent supporter of the bank. In 1985, ShoreBank worked closely with Clinton to set up the Southern Development Bancorporation, a community development bank serving rural Arkansans. Clinton described ShoreBank as "the most important bank in America" and credited ShoreBank’s success with inspiring a movement of community development financial institutions (CDFIs).
Under a grant from the Ford Foundation in the 1980s, ShoreBank worked with Muhammad Yunus to help him incorporate Grameen Bank in Bangladesh. Yunus and Grameen Bank were awarded the Nobel Peace Prize in 2006. Later, it worked with BRAC, a second large Bangladeshi organization.
In 2010 ShoreBank had a troubled asset ratio of 300% compared to a national average for all banks of 15%. The scandal revolves around the banks close ties to President Obama and the unusual circumstances surrounding its rescue effort. In which the bank was recapitalized through loss-share guarantees from the FDIC and a $367.7 million loss taken by the FDIC insurance fund, and nearly $140 million was invested by Goldman Sachs, Citigroup, JP Morgan Chase, Morgan Stanley and Bank of America in the failing bank, there were no other cases in which large banks have lined up to recapitalize a failing bank.  The bank faced continued scandal due to the highly unusual nature of the FDIC lawsuit against the bank in which no co-founders, top executives or board members were named. The management team of the former ShoreBank was then allowed by the FDIC to remain in place and maintain ownership of ShoreBank by allowing them to purchase ShoreBank through the newly chartered Urban Partnership Bank. Although ShoreBank’s President William Farrow was brought on after regulators ordered ShoreBank to raise additional capital, it is not standard practice for the FDIC to resell a bank to the managers who ran the failed bank.
- Annual Reports. ShoreBank.
- Rafter, Dan. "Uncommon Vision", "Motto". Retrieved on January 9, 2007
- Developing International Economies. ShoreBank Corporation.
- Iowa State University. "Investing for Triple Bottom Line Returns", 2006-6-1. Retrieved on January 8, 2007
- Carpenter, Dave. 'Bank with a heart' thrives despite predictions of failure. Savannah Morning News. 11 June 2007.
- Marshall, Katherine. "ShoreBank gauges success by profit and community impact", Medill News Service, Northwestern University, May 17, 2005, retrieved September 19, 2007
- Daniels, Steve (April 2, 2010), "ShoreBank sees another $101M loss just ahead", Crain's Chicago Business
- Williamson, Elizabeth & John D. McKinnon (May 15, 2010), "Bank Rescue Down to Wire", The Wall Street Journal
- Roeder, David (2010-08-06). "ShoreBank on the brink". Chicago Sun-Times. Retrieved 2010-08-06.
- Selyukh, Alina (2010-08-20). "Regulators Close Chicago's ShoreBank". ABC News. Retrieved 2010-08-20.
- Guy, Sandra (August 21, 2010). "Feds seize ShoreBank, new management named". Chicago Sun-Times. Archived from the original on August 22, 2010.
- Gordon, Marcy (August 20, 2010). "Regulators shut down big Chicago bank, 7 others". Yahoo! News (The Associated Press). Archived from the original on August 22, 2010. Retrieved 21 August 2010.
- J.E. Post and Fiona Wilson, Too Good To Fail, Stanford Social Innovation Review, Fall, 2011, 
- "Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself," by Sheila Bair, Free Press, 2012.
- Douthwaite, Richard. ""How a Bank can Transform a Neighborhood", "Short Circuit". Retrieved on January 8, 2007
- "Our History - One Pacific Coast Bank"
- "News about ShoreBank"
- "Message from the President"
- "About Craft3"
- "News on ShoreBank"/
- Henderson, Tom, (August 23, 2010) "ShoreBank Enterprise Detroit unaffected by namesake bank's closure, will get new name″, Crain's Detroit Business Retrieved on September 6, 2010.
- Profits with Purpose: ShoreBank. Fast Company.
- First Sustainable. "Business Ethics Announces Six Social Investment Award Winners", "SRI News", 2000-4-2. Retrieved on January 8, 2007
- Schulte, Bret. Ron Grzywinski and Mary Houghton: Community Bankers. U.S. News & World Report. 12 November 2007.
- Cook, Tim. "ICBA Announces National Community Bank Service Award Winners", "ICBA", 2005-4-29. Retrieved on January 8, 2007
- Clutter, Charles. "Mayor Daley Awards Local Companies Employee Development Achievements" (pdf), "workforceChicago2.0", 2004-6-2. Retrieved on January 8, 2007
- Chicagoland Chamber of Commerce. "Four Chicagoland Businesses Recognized for Workplace Innovations", "www.chicagolandchamber.org". Retrieved on January 8, 2007
- Douthwaite, Richard. How a Bank Can Transform a Neighbourhood., "Short Circuit". Retrieved on January 8, 2007
- Clinton, William. "Remarks by the President in Announcement of Community Lending Initiative." White House South Lawn, 1993-7-15. Retrieved on January 8, 2007
- Glenn, Brandon. "ShoreBank leaders had hand in Nobel Prize", Crain's Chicago Business, 2006-10-16. Retrieved on January 8, 2007
- "Over Two Decades and Eight Thousand Miles: The Cross-continental Collaboration on Development Finance of Two Social Enterprises, ShoreBank Corporation and BRAC" by Mary Houghton and Fiona Wilson, Journal on Corporate Citizenship, Autumn 2012, page 75-99.
- Taub, Richard. Doing Development in Arkansas: Using credit to create opportunity for and with entrepreneurs outside the mainstream. Fayetteville AR: University of Arkansas, 2004.
- Taub, Richard. Community Capitalism. Boston, MA: Harvard Business School Press, 1988.
- Carpenter, Dave (June 12, 2007). "'Bank with a heart' thrives; Expanding ShoreBank pumps loans into inner-city projects". Spokesman-Review (Associated Press).
- "Democracy's Edge: Choosing to Save Our Country by Bringing Democracy to Life" by Frances Moore Lappe, Jossey-Bass Publishers, 2005 (ISBN 0787943118)
- Johnston, Chris. "ShoreBank: A self-sustaining institution", Center for Business as an Agent of World Benefit, 2004. Retrieved on January 8, 2007.
- Marcus, Craig: "Beyond the Boundaries of the Community Reinvestment Act and the Fair Lending Laws: Developing a Market-Based Framework for Generating Low- and Moderate-Income Lending", Columbia Law Review Vol. 96, No. 3 (Apr., 1996), pp. 710–758
- Sachdev, Ameet: "Nobel winner's bank has Chicago interest", Chicago Tribune, 11/22/2006
- Srivastva, Alka. In Search of Noble Organizing: A Study in Social Entrepreneurship. Diss. Doctor of Philosophy, Case Western Reserve University, Organizational Behavior, 2004.
- Thomsen, Mark (January 11, 2001). "ShoreBank Surpasses $1 Billion in Community Development Investment". Social Funds.
- "Uncommon Vision", Motto, premier issue, 2006
- Wisniewski, Mary. "Milton Davis, community banking pioneer", Chicago Sun-Times, 2005-16-12. Retrieved on January 9, 2007.
- ShoreBank SBA and All About Kids Learning Academy. First Business.
- Schütte, Arjun (August 30, 2010). "ShoreBank's Demise: Death of a Brand and Shot in the Arm of Social Capitalism". FastCompany. Retrieved September 6, 2010.
- Suttmeier, Richard Henry (August 23, 2010). "Cleaning Up From Recent Bank Failures". Forbes blogs. Retrieved September 6, 2010.
- Chesser, Paul (August 27, 2010). "Did Green ShoreBank Escape Bankruptcy?". National Legal and Policy Center. Retrieved September 6, 2010.
- Hernandez, Will (August 24, 2010). "ShoreBank Affiliate — and Prepaid Advocate — Will Continue Despite Bank's Failure". American Banker. Retrieved September 6, 2010.
- "Eight Banks Collapse Last Week As Questions Arise On FDIC’s Unique Handling Of A Chicago Bank Failure". REJournal online. August 24, 2010. Retrieved September 6, 2010.
- "ShoreBank: Small Enough to Fail - The Sorry End to a Bold Banking Experiment". Economist. August 26, 2010. Retrieved June 23, 2011.