Midwest Bank closed, acquired by FirstMerit

The long-faltering Midwest Banc Holdings Inc., parent of Midwest Bank and Trust, was seized by government officials late Friday with FirstMerit Corp. waiting in the wings to acquire it within minutes.

The bank was closed by the Illinois Department of Financial Professional Regulation/Division of Banking, which appointed the Federal Deposit Insurance Corp. (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with FirstMerit Bank, National Association, Akron, Ohio, to assume all of the deposits of Midwest Bank, the FDIC said in a statement late Friday.

"We received 18 bids on Midwest. That's very high," said FDIC spokesman David Barr.

The 23 branches of Midwest Bank will reopen on Saturday as branches of FirstMerit Bank, National Association. Depositors of Midwest will automatically become depositors of Firstmerit Bank, he said.

Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until they receive notice from FirstMerit on any future changes, according to the FDIC.

On Friday and over the weekend, depositors of Midwest can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual, the FDIC said.

As of March 31, Midwest had about $3.17 billion in total assets and $2.42 billion in total deposits. Customers who have questions can call the FDIC: 800-894-3219.

Midwest became the 71st bank to fail this year, according to the FDIC. On Friday, the Satilla Community Bank in Marys, Ga., and New Liberty Bank in Plymouth, Mich., also were seized and sold to other banks.

The real estate and foreclosure crisis, along with bad construction loans, and even stock in Freddie Mac and Fannie Mae took its toll on the Melrose Park-based holding company. The bank still faltered even after it had received about $85 million in Tarp funds to stay afloat. But it still needed $250 million to be adequately capitalized, which it couldn't do by the government's deadline on Thursday, the bank said in a filing with the U.S. Securities and Exchange Commission.

A Midwest spokesman declined to comment.

Midwest Banc said in a filing with the U.S. Securities and Exchange Commission that "an equity raise of approximately $250 million together with an agreement by its primary lender to convert the amount outstanding under its credit agreements to equity capital is now required for the company and bank to become and remain well capitalized and continue to operate as a going concern."

Thursday's filing said Midwest was examined by the Federal Reserve Bank and the Illinois Department of Financial and Professional Regulation's Division of Banking, and had signed an agreement last December to take steps to improve its operations and capitalization. While it accomplished many of its goals, it couldn't overcome debts related to the real estate.

By March, the bank agreed to work on capitalizing its system of 24 branches through a directive from the Board of Governors of the Federal Reserve System. The directive ordered the bank to meet a May 13 deadline. The document also gave the bank the option that if cannot meet its capitalization goal and deadline, then it could agree to be sold.

Midwest branches are in Algonquin, Bensenville, Bloomingdale, Buffalo Grove, Des Plaines, Elgin, Inverness, Long Grove, McHenry, Mount Prospect, Naperville, Roselle and North Barrington and elsewhere.

Midwest Bank is not affiliated with Itasca-based First Midwest Bancorp.

In other news, U.S. Bank said Friday that all the branches of banks that it acquired last October from FBOP Corp. of Oak Park will take the U.S. Bank name started Friday and will continue through Sunday.

The former banks in Illinois, California and Arizona are BankUSA, California National Bank, Community Bank of Lemont, Pacific National Bank, Park National Bank and San Diego National Bank.

U.S. Bank now has 150 branches in Illinois, including 80 in the Chicago area.