In 1995, California established the first conservation banking program in the United States to provide a new financial mechanism to conserve wildlife and natural communities in rapidly developing regions. Conservation banks are lands protected and managed for conservation of species of concern. Developers may purchase species credits from a conservation bank to offset adverse impacts of development at another site. Conservation banks facilitate pooling of mitigation resources from multiple development projects to protect planned habitat reserves of greater ecological value than can be achieved with project-by-project mitigation. In this study, we conducted the first ever assessment of the ecological performance of the California Conservation Banking Program. Specifically, we investigated to what extent conservation banks contribute to achieving regional conservation objectives. We hypothesized that conservation banks within a region should have similarly high ecological values if they are appropriately evaluated and prioritized based on principles of conservation planning. We created a new ecological value metric to evaluate and rank conservation banks and used it to compare potential conservation banks or reserves within a region. We found the ecological value of banks within regions varied and concluded that maximizing the ecological contribution of conservation banks requires prioritization of lands for potential bank sites and reserves. Our analysis identified circumstances where conservation banking is not an appropriate mitigation mechanism to protect rare species and natural communities. We concluded that limited funding for conservation planning should be directed toward regions where species of concern are wide-ranging, biodiversity is highly variable, threats to species of concern are highly varied, and there are many potential conservation bank sites. © 2014 The Wildlife Society.