Federal bank regulators on Aug. 20 closed down ShoreBank, the ailing South Side-based lender known for its commitment to community lending, including in Austin.
Urban Partnership Bank assumed all deposits of ShoreBank, including its 15 branches located in Chicago, Detroit and Cleveland, the Federal Deposit Insurance Corp. (FDIC) said shortly after the takeover.
ShoreBank had roughly $2.16 billion in total assets and $1.54 billion in total deposits, as of June 30, and Urban Partnership Bank will pay the FDIC a 0.50 premium to assume all ShoreBank deposits. Urban Partnership agreed to purchase all assets, except for marketable securities and fixed assets, according to the FDIC. Additionally, the FDIC and Urban Partnership Bank entered into a loss-share agreement on $1.41 billion of the South Side lender’s assets, according to federal regulatory banking agency. Depositors of ShoreBank will automatically become depositors of Urban Partnership Bank.
Once a community development lender, ShoreBank has served Chicago communities since 1973. Founders Ron Grzywinski, Mary Houghton, James Fletcher and Milton Davis set out to demonstrate that a bank could achieve positive social change by making profitable loans in an underdeveloped area of the city. ShoreBank later established a bank in Austin at Laramie and Harrison. The institution initially began to help rebuild the South Shore community. The Austin branch, known as South Shore Bank, opened in the mid-’80s. In its first 10 years in Austin, the lender invested more than $50 million in the community.
While the backlash of the nation’s financial crisis continues to weigh heavily on the nation’s banks, Illinois lenders have been in the midst of a major consolidation of their own, with a lagging Chicago economy propelling the trend.
Since 2007, the state has seen 37 of its community banks succumb to failure, ShoreBank being the latest.