By Becky Yerak | Many banks that were struggling at the end of
the third quarter were even more stressed out by year-end.

The number of Chicago-area banks with Texas ratios above 100 remained
unchanged from Sept. 30 to Dec. 31. But those exceeding 200 grew from 12
– of which three have since failed — to 15 as of yearend.

A Texas ratio tallies up a bank’s severely past-due loans and foreclosed real estate and then compares them with the levels of a bank’s core capital, typically shareholders’ equity, and the money set aside for potential loan losses. When the result exceeds 100, the bank is in serious trouble and needs to take action.

As of Dec. 31, 32 Chicago-area banks had Texas ratios of at least 100, according to a new report from Loan Workout Advisers. That’s the same number as of Sept. 30. But the ranks that were above 200 grew.

“While the number of banks with Texas ratios in the danger zone remained unchanged at year-end, compared to the end of the third quarter, the difference is that the FDIC is just about ready to do something about it,” said Justin Barr, Loan Workout managing principal.

The FDIC is opening a satellite office in Schaumburg that will accommodate up to 500 temporary staffers and contractors who will help manage receiverships and liquidate assets from failed Midwest banks. Once the office is fully staffed, they’ll “make their first big move,” Barr said.

“That will likely come soon and they’ll get real serious real fast,” he said.

The four banks with the highest ratios are all undercapitalized and are among the seven put up for bid by the Federal Deposit Insurance Corp. Unless they can raise capital on their own, they’ll be seized by regulators and their assets and deposits will be acquired by healthy institutions.

They are: Wheatland Bank, 535 percent, up from 252 percent; Citizens Bank & Trust Co. of Chicago, 493 percent, up from 292 percent; Broadway Bank, 425 percent, up from 188 percent; and Lincoln Park Savings Bank, 406 percent, up from 250 percent.

“We’ve been working at this since last May, with private equity firms and even several larger banks that have come in to do due diligence so it’s an ongoing process,” said George Laarveld, Lincoln Park chief financial officer. He’s hopeful that the Chicago-based lender can find new capital sources before regulators seize it. “There’s a small light at the end of the tunnel.”

Fifth is Family Federal Savings of Illinois, at 387 percent, up from 245 percent. It didn’t return an immediate call for comment.

Sixth is George Washington Savings Bank, at 373 percent, up from 184. The Orland Park-based institution failed Feb. 19, and most of its assets and deposits were acquired by Akron, Ohio-based FirstMerit Bank.

Seventh is Builders Bank, at 355 percent, up from 340 percent at the end of the third quarter. It said in December it expected its level of nonperforming loans to begin dropping in the first quarter.

“The level of nonperforming loans has dropped,” Builders President Charles Hall said Tuesday. “Through mid-March, since Dec 31, a total of about $10 million in nonperforming loans have been sold, and we expect that to continue,” Hall said, also noting that more units in Builders-financed projects are also selling. It currently has about $120 million in nonperforming loans.

Eighth is New Century Bank, at 299 percent, up from 196 percent. It’s also being shopped by the FDIC. It declined to comment.

Ninth, at 297 percent, up from 222 percent, is First Suburban National Bank. Last September, the Maywood-based institution was ordered to raise capital.

Tenth is American Metro Bank, at 243 percent, up from 119 percent. Last October it was ordered to raise capital.

Eleventh is Valley Community Bank, at 240 percent, up from 204 percent. The St. Charles-based bank couldn’t be reached for immediate comment.

Twelfth is Peotone Bank & Trust, which is also being shopped by the FDIC. Its Texas ratio rose from 137 percent to 238 percent. It’s controlled by the Lyle Campbell family, which saw six of its Illinois banks fail last July 2.

Thirteenth is Lake Forest-based Baytree National Bank & Trust, which since has been acquired by an investor group.

Fourteenth is Ravenswood Bank, whose Texas ratio has dipped slightly to 218 percent. Last July it was ordered to raise capital. The Chicago-based bank couldn’t be reached for immediate comment.

And fifteenth, at 216 percent, up from 195 percent, is First National Bank of Brookfield. It couldn’t be reached for immediate comment.

Banks below 200 but above 100 are:  Bank of Commerce, 190; CenTrust Bank, 180; First Bank & Trust Co. of Illinois, 166; Western Springs National Bank & Trust, 162; ShoreBank, 150; Palos Bank & Trust Co., 139; Community First Bank of Chicago, 134; Second Federal Savings & Loan Association of Chicago, 122; Oxford Bank & Trust, 117; Midwest Bank & Trust Co., 116; Allegiance Community Bank, 116; First Commercial Bank, 116; Brickyard Bank, 111; First Security Trust & Savings Bank, 111; State Bank of Countryside, 105; American Enterprise Bank, 102; FirstSecure Bank & Trust Co., 101.

Amcore Bank, also being put out for bid by the FDIC, isn’t on Loan Workout’s list as its headquarters city of Rockford is in a separate metropolitan statistical area.

The standard deposit insurance at FDIC-insured banks is $250,000 per depositor.