Magazine article American Banker

CoVest Postpones a Vote on Sale to Ill.'s Midwest

Magazine article American Banker

CoVest Postpones a Vote on Sale to Ill.'s Midwest

Article excerpt

CoVest Bancshares Inc. of Des Plaines, Ill., has delayed a shareholder vote on its proposed sale to Midwest Banc Holdings Inc. while the would-be buyer sorts out problems in its loan portfolio.

Officials at Midwest, of Melrose Park, insist that the setback is temporary and that it expects the $105 million deal to close in the second quarter. The sale, announced in November, was originally scheduled to close by the end of this month.

"We started our integration processes several months ago, and it is still going on as we speak," said Daniel R. Kadolph, Midwest's chief financial officer

Late Friday the $2 billion-asset company announced that it had received a letter dated March 5 from the Federal Reserve Bank of Chicago and the Illinois Office of Banks and Real Estate, requiring it to add up to $11.5 million to its loan-loss reserves.

The provision relates to a series of loans to one borrower and its affiliates. The former principal owner of the borrower was charged last week with money laundering. Mr. Kadolph would not reveal any further details, except to say that the loans are secured by the borrower's assets.

Midwest also reported that state and federal regulators have said that they would not act on the CoVest application until the exam that uncovered the problems is completed. As a result, the $606 million-asset CoVest announced that it was canceling its March 17 meeting in which shareholders were scheduled to vote on the deal. In a press release, it said that it would reschedule the shareholder vote when Midwest receives regulatory approval. …

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