FDIC is seeking bidders for ShoreBank

Posted May 4, 2010 at 4:32 p.m.

By Becky Yerak | The Federal Deposit Insurance Corp. began seeking potential bidders late last week for ShoreBank, in case the ailing South Side lender is unable to raise capital on its own, according to sources familiar with the FDIC process.

The FDIC also is seeking a healthy bidder for the assets and deposits of troubled Midwest Bank, a midsized lender based in Melrose Park. It is allowing potential bidders for that more desirable franchise to link bids to ShoreBank, which has lent heavily in more hard-hit areas, sources say.

Chase, Citibank and Bank of America are among the current investors in ShoreBank, which has been trying to tap them for more capital.

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

“ShoreBank is expeditiously engaged in its capital raising efforts,” company spokesman Brian Berg said. “ShoreBank is committed to fulfilling its role as the leading community development bank and taking the appropriate measures to position itself and its communities for the long term.”  

Both ShoreBank and Midwest Bank are under orders by regulators to raise capital.

ShoreBank’s capital deficiency worsened in the first quarter, and it now needs to raise at least $179 million to meet targets set out in March by state and U.S. banking regulators.
In March, ShoreBank was effectively ordered to raise $158.7 million, but in light of newly released first-quarter financial results, it finds itself in an even bigger capital hole and now must raise more. It has been trying to raise more than $200 million.
It’s hoping to receive about $70 million from the U.S. Treasury Department, but must raise private capital first. It has received tentative commitments for about $70 million from private investors, a source recently told the Tribune.

Midwest Bank, which has been hurt by both the downturn in the real estate market as well as bad investments, has about two dozen branches, and has made strides in cutting costs under Chief Executive Roberto Herencia, who joined Midwest Bank about a year ago. It received about $85 million in the U.S. Treasury’s Troubled Asset Relief Program.

Read more about the topics in this post: , , , ,

One comment:

  1. Dr Kilovolt May 6, 2010 at 2:29 pm

    I wonder if Mark Kirk will try to pin this one on Alexi Giannoulias, too.