A candidate for the U.S. Senate from Illinois warned this week that his family's 30-year-old Chicago bank is likely to fail.
Alexi Giannoulias, a Democrat in a race for the Senate against five-term U.S. Rep. Mark Kirk, a Republican, warned of the possible fate of his family's Broadway Bank during a Wednesday meeting with the Chicago Sun-Times editorial board, according to local media reports. Giannoulias would not comment to American Banker.
The $1.1 billion-asset bank's financial struggles have become an issue in the Senate race.
It has been under a consent order with the Federal Deposit Insurance Corp. and the Illinois Department of Financial and Professional Regulation since late January. That order gives Broadway Bank 90 days to boost its leverage ratio to 9% and its total risk-based capital ratio to 13%.
Giannoulias, Illinois' state treasurer, has said that the bank needs about $85 million of fresh capital.
At the end of the fourth quarter it was significantly undercapitalized, with a leverage ratio of 2.86% and a total risk-based capital ratio of 4.53%. Broadway Bank's problems stem from its overexposure to construction loans, which made up 42% of its total loans at the end of the fourth quarter.
The bank's loss widened by 480% in 2009, to $75 million. Noncurrent loans made up a fifth of its total loans at the end of the year.
