ShoreBank
Encyclopedia
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 accepts 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 has 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
.
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." ,
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. Urban planner Stanley Hallett
was a founding board member and was vice president of the bank's holding company its first five years.
In 2000 the South Shore Bank was officially renamed ShoreBank.
ShoreBank Corporation is the holding company for ShoreBank. Its other subsidiaries provide equity investing, consulting, and environmental banking services:
ShoreBank established a number of affiliated nonprofits to provide related financing, technical assistance, and consulting services:
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 institution
s (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.
Community development bank
- Community Development Banking in the United States :In the United States, community development banks are commercial banks that operate with a mission to generate economic development in low- to moderate-income geographical areas and serve residents of these communities...
founded and headquartered in Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
. 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
South Side (Chicago)
The South Side is a major part of the City of Chicago, which is located in Cook County, Illinois, United States. Much of it has evolved from the city's incorporation of independent townships, such as Hyde Park Township which voted along with several other townships to be annexed in the June 29,...
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
Triple bottom line
The triple bottom line captures an expanded spectrum of values and criteria for measuring organizational success: economic, ecological, and social...
approach to banking, equally prioritizing profits, impact on people, and the impact of a project on the environment.
ShoreBank accepts 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 has 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
Subprime lending
In finance, subprime lending means making loans to people who may have difficulty maintaining the repayment schedule...
.
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
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
, 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
Urban Partnership Bank
Urban Partnership Bank is a Federal Deposit Insurance Corporation-insured, full-service community development bank in the United States with $1.4 billion in assets...
.. 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." ,
Origin
South Shore, Chicago
South Shore is one of 77 well-defined community areas of the City of Chicago, Illinois in the United States. A predominately black neighborhood located along Chicago's southern lakefront, it is a relatively stable and gentrifying neighborhood...
to the Loop
Chicago Loop
The Loop or Chicago Loop is one of 77 officially designated Chicago community areas located in the City of Chicago, Illinois. It is the historic commercial center of downtown Chicago...
. 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
Redlining
Redlining is the practice of denying, or increasing the cost of services such as banking, insurance, access to jobs, access to health care, or even supermarkets to residents in certain, often racially determined, areas. The term "redlining" was coined in the late 1960s by John McKnight, a...
, community banker-activists Milton Davis, James Fletcher, Mary Houghton
Mary Houghton
Mary Houghton is co-founder of ShoreBank, the largest and oldest community development bank. Houghton, along with Milton Davis, James Fletcher, and Ron Grzywinski purchased what was then South Shore Bank to fight redlining in the Chicago neighborhood...
, and Ron Grzywinski
Ron Grzywinski
Ron Grzywinski is a community development banker from Chicago, and one of four founders of ShoreBank. In May 2010 he retired as chair of ShoreBank Corporation and took the position of Advisor to the Board of Directors of ShoreBank Corporation....
purchased the bank after successfully petitioning the federal Comptroller of the Currency
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...
to stop the move. Urban planner Stanley Hallett
Stanley Hallett
Stanley James Hallett was an American urban planner and specialist in urban community development who helped seed numerous innovative initiatives and organizations throughout his career...
was a founding board member and was vice president of the bank's holding company its first five years.
In 2000 the South Shore Bank was officially renamed ShoreBank.
Structure
- ShoreBank Pacific in OregonOregonOregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
and Washington state. On August 21, 2010, it was announced that ShoreBank Corporation had entered into an agreement to sell ShoreBank Pacific to OneCalifornia BankOneCalifornia BankOneCalifornia Bank is an Oakland, California-based community development bank. Founded by Tom Steyer and his wife, Kat Taylor, in June 2007, OneCalifornia Bank functions as a regulated financial institution, but provides commercial banking services to underserved small and medium-size businesses,...
of Oakland, CA, subject to regulatory approval. - ShoreBank International, with offices in Chicago, Washington, D.C.Washington, D.C.Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
, and LondonLondonLondon is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its... - 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 MichiganMichiganMichigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
’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 OregonOregonOregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
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. - 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
Recognition
Fast Company (magazine)
Fast Company is a full-color business magazine that releases 10 issues per year and reports on topics including innovation, digital media, technology, change management, leadership, design, and social responsibility...
, Business Ethics
Business ethics
Business ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.Business...
, and U.S. News & World Report
U.S. News & World Report
U.S. News & World Report is an American news magazine published from Washington, D.C. Along with Time and Newsweek it was for many years a leading news weekly, focusing more than its counterparts on political, economic, health and education stories...
, University of Notre Dame
University of Notre Dame
The University of Notre Dame du Lac is a Catholic research university located in Notre Dame, an unincorporated community north of the city of South Bend, in St. Joseph County, Indiana, United States...
's Mendoza College of Business
Mendoza College of Business
The Mendoza College of Business is one of the colleges at the University of Notre Dame, which is located in Notre Dame, Indiana, United States.- History :...
, the Independent Community Bankers of America
Independent Community Bankers of America
The Independent Community Bankers of America is the primary trade group for small U.S. banks. It represents approximately 5,000 small and mid-sized financial institutions that are commonly known as "community banks." The ICBA hosts conventions, publishes the monthly magazine ICBA Independent...
,
Mayor Richard M. Daley
Richard M. Daley
Richard Michael Daley is a United States politician, member of the national and local Democratic Party, and former Mayor of Chicago, Illinois. He was elected mayor in 1989 and reelected in 1991, 1995, 1999, 2003, and 2007. He was the longest serving Chicago mayor, surpassing the tenure of his...
of Chicago,
the Chicagoland Chamber of Commerce
Chicagoland Chamber of Commerce
The Chicagoland Chamber of Commerce is a non-profit organization promoting business in the Chicago metropolitan area of the United States. The Chamber is a voice at local, state and national levels for approximately 2,600 member companies and their 1.3 million employees...
, and Governor Ted Kulongoski
Ted Kulongoski
Theodore R. "Ted" Kulongoski is an American politician, who served as the 36th Governor of Oregon. A Democrat, he has served in both houses of the Oregon Legislative Assembly, as the state Insurance Commissioner, the Attorney General, and an Associate Justice on the Oregon Supreme Court.-Early...
of Oregon
Oregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
.
Former President and Arkansas
Arkansas
Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...
Governor Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
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 institution
Community development financial institution
Community development financial institutions are financial institutions which provide credit and financial services to underserved markets and populations, primarily in the USA but also in the UK...
s (CDFIs).
Under a grant from the Ford Foundation
Ford Foundation
The Ford Foundation is a private foundation incorporated in Michigan and based in New York City created to fund programs that were chartered in 1936 by Edsel Ford and Henry Ford....
in the 1980s, ShoreBank worked with Muhammad Yunus
Muhammad Yunus
Muhammad Yunus is a Bangladeshi economist and founder of the Grameen Bank, an institution that provides microcredit to help its clients establish creditworthiness and financial self-sufficiency. In 2006 Yunus and Grameen received the Nobel Peace Prize...
to help him incorporate Grameen Bank
Grameen Bank
The Grameen Bank is a microfinance organization and community development bank started in Bangladesh that makes small loans to the impoverished without requiring collateral...
in Bangladesh
Bangladesh
Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...
. Yunus and Grameen Bank were awarded the Nobel Peace Prize
Nobel Peace Prize
The Nobel Peace Prize is one of the five Nobel Prizes bequeathed by the Swedish industrialist and inventor Alfred Nobel.-Background:According to Nobel's will, the Peace Prize shall be awarded to the person who...
in 2006.
Further reading
- "Democracy's Edge: Choosing to Save Our Country by Bringing Democracy to Life" by Frances Moore LappeFrances Moore LappéFrances Moore Lappé is the author of 18 books including the three-million copy Diet for a Small Planet. She is the co-founder of three national organizations that explore the roots of hunger, poverty and environmental crises, as well as solutions now emerging worldwide through what she calls...
, 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.
- "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.