WASHINGTON — Midwest Bank and Trust Co., a state-chartered bank in Elmwood Park, Ill., is undercapitalized, according to an order the Federal Reserve released Wednesday.
In the order, formally known as a "Prompt Corrective Action Directive," the Fed laid out several actions, as outlined in the Federal Deposit Insurance Act, that the bank must take promptly to address its financial challenges.
The bank, for instance, must increase its equity through the sale of shares or contributions to surplus in an amount sufficient to ensure the bank can meet capital requirements. Meanwhile, the bank faces dividend restrictions as well as restrictions on bonuses to senior executive officers.
The Fed also announced an enforcement action against Florida-based Atlantic Bancgroup, a move taken to help maintain financial soundness at the firm, according to the Fed agreement.
Under the written agreement, Atlantic Bancgroup cannot declare or pay any dividends without prior approval from the Fed.
The bank holding firm also cannot directly or indirectly take dividends or any other form of payment representing a reduction in capital from its state-chartered Oceanside Bank.
The bank holding firm also cannot incur, increase or guarantee any debt without prior written approval from the Fed and it must submit written progress reports 30 days after each quarter ends.