Metropolitan Bank in Chicago Hit with Fed Order

The troubled Metropolitan Bank Group in Chicago has been ordered by the Federal Reserve not to boost the pay of its directors or officers without the Fed's permission.

The Fed also directed the $2.5 billion-asset company to hire a consultant who lacks ties to management to review its spending since January 2011, and to detail in writing plans to maintain sufficient capital, according to an order dated April 12 and released Thursday.

Moreover, Metropolitan was told to refrain from paying dividends, issuing debt or redeeming stock without the Fed's permission, and to detail in writing the company's sources and uses of cash.

The Fed found that Metropolitan has failed to comply fully with a May 2011 order that requires it to detail its capital plans and practices for managing risk.

Metropolitan has five banks in the Chicago area: Oswego Community, Plaza, Archer and North Community banks as well as Metrobank.

In February a group of investors led by Roberto Herencia, a former executive with Banco Popular, agreed to invest $200 million in Metropolitan in return for control of the company. The deal remains subject to regulatory approval.

Separately, the Fed terminated a 2009 enforcement action that required IT & S of Oskaloosa, Iowa, to refrain from paying dividends, incurring debt or otherwise reducing its capital without the Fed's consent.