South Shore Bank, the country's first community development bank, bega
n in 1973 with the dual objectives of making a profit and improving co
nditions in the community of South Shore, Chicago. Although the bank h
as been hailed as a success, there has been little work on defining or
measuring its performance against either objective. This article comp
ares the bank's financial performance against comparable banks (holdin
g companies) and the demographic changes in the South Shore community
against changes in the contiguous communities. The results suggest tha
t both the bank and the community exhibit worse relative performance.
Additional research is needed to verify these results and to determine
how to improve the effectiveness and efficiency of community developm
ent banks. (C) 1995 John Wiley & Sons, Inc.