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.
Said a ShoreBank spokesman: “We’re expeditiously engaged in capital raising efforts, and we are committed to fulfilling our role as the leading community banking organization and taking all appropriate (steps) to position the bank and its communities for the long term.”
He had no other comment.
ShoreBank has been in talks with a group of giant banks, including J. P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc., on a financial rescue. Several large foundations also are participating, as well as Bloomington-based State Farm Insurance Cos.
But none of the would-be investors has made firm commitments yet, waiting for all the tentative offers to reach the bank’s needed threshold.
News that the FDIC had begun the bidding process for ShoreBank was first reported on the Chicago Tribune’s Web site.