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On Shorebank

Ailing ShoreBank Seeks the Aid of an Ailing State

American Banker | Wednesday, January 27, 2010

By Robert Barba

With dwindling capital and mounting losses, ShoreBank Corp. in Chicago is seeking a bailout from the state of Illinois.

Executives of the $2.5 billion-asset community development bank met with the Illinois Finance Authority and regulators earlier this month to discuss raising as much as $50 million through a bond deal, according to local media reports. ShoreBank executives are playing up its history of community service in trying to secure a lifeline from the state.

Banking experts say such help is conceivable, as ShoreBank's inception stems from the civil rights movement in the 1960s and it has supported struggling Chicago neighborhoods. Yet state assistance could have unintended consequences - especially given Illinois' own troubled fiscal picture.

"It deserves a look, because from a historical standpoint, it is part of the legacy of Martin Luther King Jr.'s C…