ShoreBank in Chicago succeeded Monday night in pulling together the necessary private investment commitments to secure a lifeline from the Treasury Department.
The $2.3 billion-asset community development bank that serves the neediest areas of Chicago succeeded in getting as much as $140 million in capital commitments from a consortium of several of the biggest names in financial services, a source familiar with capital raising efforts said just after midnight on Tuesday.
The consortium of investors include Citigroup Inc., Goldman Sachs Group Inc., Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., U.S. Bancorp, Northern Trust Corp. and PNC Financial Services Group Inc. Also, State Farm, the Ford Foundation and the John D. and Catherine T. MacArthur Foundation are on board. Those investors had committed as much as roughly $115 million as of Friday, short of the $125 million it needed to raise from private investors in order to get public money and stave off failure. Over the weekend ShoreBank, along with Eugene Ludwig, a former comptroller of the currency, worked to convince the existing players to increase their planned investments. GE Capital also joined the group with a $20 million investment, bringing the bank well above its required raise.
Now that ShoreBank has hit its $125 million goal, sources said it is now eligible for a $75 million investment from the Treasury Department's Community Development Capital Initiative, part of the Troubled Asset Relief Program earmarked earlier this year for community development financial institutions.
The combined $200 million of fresh capital is said to be enough to recapitalize the struggling bank, which had a total risk-based capital ratio of 3.36% at the end of the first quarter, and provide it with enough of a buffer to deal with its high level of nonperforming assets.