Stung by large losses on its investments in Fannie Mae and Freddie Mac, Midwest Banc Holdings Inc. of Melrose Park, Ill., announced Tuesday that it intends to raise up to $125 million through a preferred stock offering.
The $3.7 billion-asset company plans to offer 4.4 million depositary shares, each representing one one-hundredth of a share of Series B noncumulative convertible perpetual preferred stock. An overallotment of 600,000 shares could raise an additional $15 million, bringing the company's regulatory capital to 11.5%. It also plans to suspend its third-quarter dividend to strengthen its capital. Midwest also announced it would write down its $67 million exposure to Fannie Mae and Freddie Mac preferred securities to zero in the third quarter. It will also take an $80 million noncash goodwill impairment charge in the third quarter and increase the allowance for loan losses to approximately 1.6% of loans as of Sept 30, 2008, from 0.9% at June 30, 2008. It did not disclose the amount.
