FDIC Seeks Bids on Chicago Bank: Report

Updated to include FDIC spokesperson comment.

CHICAGO (TheStreet) -- The Federal Deposit Insurance Corp. is soliciting offers for a troubled Chicago-area bank, according to a published report.

According to a story published Tuesday in Crain's Chicago Business, Midwest Bank & Trust of Elmwood Park, Ill., is expected to be shut down by regulators in mid-May, and the FDIC is accepting bids from other banks to acquire the bank in a government-assisted transaction. Bids must be submitted by May 10.

FDIC spokesman Greg Hernandez told TheStreet the agency never comments on operating institutions. He also said that the marketing process for a failing institution usually takes about 90 days and that "all bidders sign confidentiality agreements."

Midwest Bank & Trust was included in TheStreet.com's listing of undercapitalized banks, which was published in February. The bank had $3.4 billion in total assets as of Dec. 31 and is the main subsidiary of Midwest Banc Holdings(MBHI).

Shares of Midwest Banc were down 11.4% to 70 cents in midday trades. Volume of 5.1 million was more than triple the issue's trailing three-month daily average of 1.6 million. The stock has been extremely volatile this month, running between a low of 19 cents on April 1 and a high of $1.34 this past Monday on an intraday basis.

On March 29, Midwest Bank & Trust was ordered by the Federal Reserve to raise sufficient capital to become adequately capitalized per regulatory guidelines or merge with another institution within 45 days. Most banks need to maintain a Tier 1 leverage ratio of 4% and a total risk-based capital ratio of at least 8% to be considered adequately capitalized. For Midwest Bank & Trust, these ratios were 3.41% and 6.41% as of Dec. 31.

On the holding company front, things looked even worse, as the Tier 1 leverage ratio was just 0.15% and the total risk-based capital ratio was 0.43% as of the end of December, after Midwest Banc Holdings reported a fourth-quarter loss of $119.7 million, mainly reflecting a $98 million provision for loan loss reserves.

Possible bidders for Midwest Bank & Trust mentioned in the Crain's report include MB Financial(MBFI), Wintrust Financial(WTFC), FirstMerit(FMER) and U.S. Bancorp(USB).

The Windy City saw a rash of failures last Friday as seven banks went bust in the Chicago area.

Two of potential suitors listed above for Midwest Bank & Trust were able to make deals last week. MB Financial took over Broadway Bank and New Century Bank, both headquartered in Chicago, while Wintrust scooped-up Lincoln Park Savings of Chicago and Wheatland Bank of Naperville, Ill.

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