ShoreBank just might make it after all.

A recapitalization plan for the embattled lender is coming together, with some of the country's largest banks — such as Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. — along with insurance companies and foundations working to try to prevent its failure, sources said.

Those familiar with the plan said the others involved are 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 contributing, sources said.

Such last-ditch lifeline efforts tend to be wobbly and speculative, turnaround experts said, and often do not succeed. Yet given ShoreBank's legacy, its political ties and its mission of serving some of Chicago's neediest neighborhoods, the community development bank might beat the odds.

"Deals that come together at the eleventh hour have a high level of uncertainty. There is the intensity of the time pressure, they have to get regulatory approval. A lot has to come together very quickly," said Justin A. Barr, managing principal at Loan Workout Advisers, a troubled-bank advisory firm in Chicago. "But of anyone, ShoreBank has the best chance of pulling it off."

The companies and foundations said to be involved in the plan did not return calls for comment or declined to comment. ShoreBank referred to a statement released earlier in the week to American Banker.

"ShoreBank is expeditiously engaged in its capital-raising efforts," Brian J. Berg, a spokesman, said in an e-mail statement Tuesday. "ShoreBank is committed to fulfilling its role as the leading community development bank and taking the appropriate measures to position itself and its communities for the long term."

The bank must receive $125 million of capital commitments. Sources familiar with the capital-raising efforts said Thursday morning that ShoreBank was very close to that target.

If ShoreBank comes up with $125 million, it would be eligible for a $75 million infusion 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.

Such public-private contingencies have been a staple of Tarp, as neither investment would be enough to fill the capital hole individually.

ShoreBank's portfolio has been hurt by credit problems, with it reporting a Texas Ratio, a measure that compares problem loans to reserves plus capital, of 306% at March 31. Typically, a ratio above 100% indicates that the institution is at risk of failing.

The goal of raising $200 million is in line with analysts' estimates of what it needs to return to solid footing and comply with regulators' requirements.

The Federal Deposit Insurance Corp. and the state of Illinois in March amended a consent order for ShoreBank, giving it 60 days to boost its leverage ratio to 9% and its total risk-based capital ratio to 12%. At March 31, the bank was critically undercapitalized with a leverage ratio of 1.16% and a total risk-based capital ratio of 3.36%.

Observers said saving ShoreBank is important as it is widely considered to be the prototype for institutions that provide banking services to disenfranchised neighborhoods. Supporters worry that if ShoreBank fails, it would result in a dearth of banking services in neighborhoods on Chicago's South and West sides.

ShoreBank developed close ties with President Clinton in the 1990s and more recently with President Obama. "The current administration has shown a great deal of interest in this kind of lender," said Chip MacDonald, a partner at Jones Day in Atlanta. "So there is a policy direction that would be supportive of ShoreBank."

ShoreBank's plight has gained the notice of some big names in the banking world. Eugene A. Ludwig, a former comptroller of the currency, has been heading up the capital-raising efforts. And the bank has recruited David Vitale, former vice chairman and director of Bank One Corp., to the cause. Vitale is set to succeed ShoreBank's founder, Ronald Grzywinski, as executive chairman if the capital-raising efforts succeed.

Investing in ShoreBank could garner positive attention for the big banks involved as well as help them satisfy requirements of the Community Reinvestment Act.

Yet ShoreBank's mission is not enough to guarantee its survival. Jeannine Jacokes, chief executive and policy adviser for the Community Development Bankers Association, said earlier this week that at least two community development banks have failed during the current cycle. Also, the $13 million-asset Dwelling House Savings and Loan, a minority-owned mutual in Pittsburgh, failed in August, after a last-minute recapitalization plan fell through.

Experts said such deals often fall apart because capital commitments do not necessarily signify cash on hand. Yet they sometimes work. MacDonald said a client narrowly escaped failure when it received a $4 million investment, prompting the FDIC to remove the bank from its bid list.

"They can work. That's the good news," MacDonald said. "And it helps a lot that the players that are being mentioned with ShoreBank all clearly have the money."

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