Wednesday, May 5, 2010

Feds start failure clock on ShoreBank

Federal banking regulators have begun the process of accepting bids for ShoreBank Corp. in the event the community lender can’t raise the $200 million it needs to avoid failing.

In addition, regulators have encouraged bidders interested in Midwest Bank & Trust, the $3.4-billion-asset Elmwood Park bank, to offer bids for $2.3-billion-asset ShoreBank at the same time, according to people familiar with the matter.

Interest in Midwest Bank, which has a valuable branch and deposit franchise in the city and suburbs, as well as some respected commercial bankers, is said to be intense.

On the other hand, losses at ShoreBank — the high-profile community lender specializing in low-income, urban neighborhoods — are worse than most other floundering banks, and its franchise is in far less desirable areas. Linking bids to Midwest Bank could boost interest in buying ShoreBank if it fails.

The FDIC has a May 10 deadline for bids for Midwest Bank. If ShoreBank is on the same timetable, that would mean it could fail as early as May 14 or perhaps May 21.

Under an amended regulatory order with the Federal Deposit Insurance Corp. and the Illinois Division of Banking, ShoreBank has until May 21 to raise the needed equity. But regulators have been known to seize banks before their capital-raising deadlines.

No comments:

Post a Comment

PLEASE READ FIRST!!!! Comment Moderating and Anonymous Comment Policy

While anonymous comments are not prohibited we do encourage you to help readers identify you so that other commenters may respond to you. Either read the moderating policy for how or leave an identifier (which could be a nickname for example) at the end of the comment.

Also note that this blog is NOT associated with any public or political officials including Alderman Roderick T. Sawyer!