Midwest Banc Holdings Inc. in Melrose Park, Ill., reported lower-than-expected earnings after it boosting its loan-loss provision to account for the sudden deterioration of a commercial credit.
The $2.4 billion-asset company said late Tuesday that it earned $2.9 million in the second quarter. That is an improvement over the second quarter of 2005 - when Midwest recorded a $16.4 million loss after as the result of a balance-sheet repositioning - but net income was down 51% from the first quarter, when it earned $5.9 million, or 27 cents a share.
Midwest notified investors last week that it had downgraded $15.3 million of loans to a single customer and that earnings would fall short of expectations as a result. Its loan-loss provision for the quarter was $5 million; it was zero in the first quarter and $813,000 in the second quarter of 2005.
The company's shares were trading at $21.40 late Wednesday, down 2.2% from Tuesday's close.
On July 1, Midwest completed its $133 million acquisition of the $507 million-asset Royal American Bancshares in Inverness, Ill. It is expected to complete converting Royal's six branches to Midwest Bank branches by the end of this month.
