More than two years after its controversial acquisition of a black-owned bank, South Shore Bank says it is using its lending power to make peace in the community.

South Shore, the nation's oldest and best-known community redevelopment bank, is aggressively making construction loans in a historic South Side area once served by Indecorp. Since the acquisition, $650 million-asset South Shore has boosted loan-to-deposit ratios at former Indecorp branches to 70% from about 30%.

"South Shore has done what it said it was going to do," said William Michael Cunningham, president of Creative Investment Research in Washington, a group that monitors black-owned banks' lending habits. "For all of that controversy, minority individuals are better off than they were before the merger."

Shorebank Corp., South Shore's parent, purchased $275 million-asset Indecorp in December 1995 amid complaints from community activists that Indecorp should remain African-American owned. Though some black leaders remain critical of South Shore, Margaret Cheap, its president and chief executive officer, said its actions speak for themselves.

"I give the merger an A-plus," she said.

South Shore has tried to appease its critics by making real estate loans in Chicago's historic Bronzeville area, a neighborhood once served by Indecorp's Drexel National Bank.

Bronzeville has been impoverished and neglected since its heyday in the 1930s and 1940s, when it was known as the cultural hub of Chicago's African-American community. Many stately homes, some of which were owned by entertainment greats such as Duke Ellington, were destroyed or divided into single-room apartments by absentee landlords.

Today, South Shore is lending to civic-minded black contractors who want to preserve Bronzeville's history. Richard Thomas, one of the contractors, said he could not get a loan to restore a six-flat greystone building until South Shore moved into the neighborhood.

"Bank financing wasn't available," he said. "I used credit cards, anything I could find. I put my whole future on the line."

But not everyone is giving the merger high marks. The Rev. Al Sampson, president of the Metropolitan Area Council of Black Churches, said South Shore "is just as dangerous today as they were a few years ago."

Mr. Sampson, whose group had filed objections with the Securities and Exchange Commission about the merger, said South Shore presents itself as a black-owned bank and hides its corporate ownership. South Shore is owned by a group of corporations and large banks, including BankAmerica Corp. and First Chicago NBD Corp.

He said South Shore's construction loans are aimed at upper- and middle- class residents in the Bronzeville neighborhood and do not aid the low- income residents. He added that South Shore has made no noticeable improvements in the area surrounding Indecorp's other former subsidiary, Independence Bank.

Ms. Cheap agreed that the bank still has work to do in the former Independence Bank neighborhood. Except for South Shore's branch building, the area is "pretty bleak," she said.

However, South Shore has begun meeting with Chicago-area supermarket companies to encourage them to build a store in the neighborhood. The bank is also urging African-American restaurant franchise owners to expand into the area.

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