Tuesday, January 22, 2013
This is an old story I just discovered. ShoreBank, the nations largest community development bank(community development financial institution[CDFI]), was declared insolvent by the FDIC on August 20, 2010. The bank was well known for making loans on south side of Chicago.
The bank had a dual mission to serve the community as well as make a profit.
To quote the FDIC press release: "Shorebank experienced asset quality problems that centered on residential rehabilitation loans (single and multi-family) and condominium conversion loans. Loan and operational losses depleted capital to the point where the bank was no longer viable."
Here is the FDIC press release.
The FDIC Information is here.
Crain's Chicago Business is here. Crain's story is about $100 million loss in 2010 and 2011 after $100 million dollar loss in 2009. Crain's also had a link to and FDIC audit in 2007 warning the bank about deteriorating loans. Here.
ShoreBank was acquired by Urban Partnership Bank.
And if you are really losing sleep, here is the purchase and asset assumption document, "the deal", between the FDIC and Urban Partnership Bank. Basically, the FDIC take 80% of the loss on the bad loans. The agreement is here.
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