ShoreBank strengthens communities and promotes a healthier environment in many ways. The simplest way to quantify this is by tracking the amount ShoreBank lends that advances the mission. ShoreBank also provides advisory services, contributes to innovation in the industry, and directly supports residents and employees in their quest for success.

Community development loans are made to businesses, individuals, nonprofits, and faith-based organizations located in communities where median incomes and housing values are below the regions' medians.

Development lending increased by 26 percent over last year's record performance, and represented 78 percent of our total lending. In 2004, development loan originations were 3.6 times our capital, far exceeding our internal goal of two times capital.

In 2004, all of ShoreBank's companies increased their development loan volume over last year by at least 12 percent, some doubling and tripling their loan volume over 2003 levels. Similarly, development lending increased in all the business lines except for loans to mission-based organizations.

Most significant is the 216 percent growth in single-family lending since 2000. This growth reflects our decision to focus on single-family lending in Chicago as a way to help customers build wealth, strengthen communities through increased owner occupancy, and combat predatory lending.

Conservation loans finance activities that positively contribute to preserving natural resources, including the improvement of air, land, and water quality.

Conservation lending, a corporate emphasis for only five years, more than doubled in 2004. Thirty-five percent of our total loans contributed toward a healthier environment, a significant increase over the 18 percent level in the two prior years.

More detail on ShoreBank's lending patterns is provided in the accompanying graphs. In addition to showing ShoreBank's total new community development and conservation investment for the past five years, these graphs highlight important segments of ShoreBank's investment in the community, including business and residential real estate development lending and the development loans made by ShoreBank's international clients.

Advisory services
Assistance to development financial institutions: ShoreBank provides advisory services that help financial institutions here and abroad to increase their lending to individuals and small businesses overlooked by mainline financial institutions.

In the United States, ShoreBank continues to serve as Fund Advisor to the National Community Investment Fund, which invests equity and debt in banks, thrifts, and credit unions with a primary mission of community development. Through December 31, 2004, NCIF had committed almost $20 million in 32 such community development banking institutions. At year-end 2004, over 80 percent of NCIF resources were invested in minority-focused depositories.

Through its international consulting practice, ShoreBank assists local financial institutions in establishing loan programs targeting underserved individuals and small businesses. In 2004, ShoreBank clients made 695 loans totaling $27.6 million in six countries: Afghanistan, Azerbaijan, the Czech Republic, Mexico, Romania, and Slovakia.

ShoreCap International is a fund created and managed by ShoreBank to invest capital in financial institutions that provide loans to micro and small businesses in developing and transitional economies. In addition to ShoreBank, organizations investing in ShoreCap International include ABN Amro Bank N.V., Asian Development Bank, BIO (the Belgian Investment Company for Developing Countries), Calvert World Values Fund, CDC Group, the Evslin Family Foundation, the Finnish Fund for Industrial Cooperation Ltd., FMO (the Netherlands Development Finance Company) the Ford Foundation, the Gatsby Charitable Foundation, IFC (International Finance Corporation), and the Skoll Foundation. In 2004, ShoreCap International closed three new equity investments and completed two loan agreements with financial institutions in Asia and Africa, bringing the total funds invested or committed to $5.5 million.

Through its nonprofit affiliate, ShoreCap Exchange, ShoreBank also offers technical assistance to the institutions in which ShoreCap International invests. Donors to ShoreCap Exchange include BIO, the Evslin Family Foundation, FMO, the Ford Foundation, the Gatsby Charitable Foundation, IFC, the Levi Strauss Foundation, the Netherlands Ministry of Foreign Affairs (MOFA), and SDC (the Swiss Agency for Development and Cooperation).

Assistance to businesses: ShoreBank provides advisory services to nonprofits and small businesses, largely through its five domestic nonprofit affiliates. These services include accounting and financial assistance, management and growth planning, conservation and better environmental practices, new product design, and process improvements. ShoreBank companies provided advisory services to over 230 small businesses in 2004.

Assistance to individuals: In Chicago, 330 people completed financial management and homeownership classes offered by ShoreBank. In these training sessions, residents learned how to set financial goals, manage credit, understand credit reports, dispute credit report errors, shop for and evaluate new homes, and negotiate a home purchase.

Supported by the Ford Foundation, CFSI provides a forum for leaders from the financial services sector; develops and distributes authoritative information in the field; and provides funding to institutions and companies that create asset-building opportunities for underbanked people. In its first year of operation, CFSI awarded a total of $500,000 to four organizations that provide underserved individuals with access to financial services.

Employee development and volunteer activities
ShoreBank recognizes that its mission also includes investing in the well-being of its employees. In 2004, ShoreBank Corporation was presented with a Workforce Chicago 2.0 Award by the Council for Adult and Experiential Learning (CAEL) for its comprehensive responsiveness to employees' individual development needs.

ShoreBank's employees also support the community through their volunteer efforts, many of which center around the theme of empowerment through education.

Through an employee-managed scholarship program, the Chicago bank has invested $450,000 and awarded 11 scholarships to 64 scholars. Each student has a ShoreBank mentor and received a free computer refurbished by the bank's IT department.

Approximately 40 employees participate in the Working in the Schools (WITS) Power Lunch program, where they read one-on-one each week with third-grade students. The program has resulted in measurable improvements in test scores, reading comprehension, vocabulary, and enthusiasm for reading.

Triple Bottom Line
ShoreBank measures its success by how well it meets its triple bottom line goals of profitability, community development, and conservation. We will continue to strive to bring all three elements of our mission together, so that every ShoreBank project strengthens communities and creates a healthier environment while achieving financial success.