Hit hard by defaults on construction loans, Old Second National Bank in Aurora, Ill., has agreed to an enforcement order with its regulator that requires it to boost a key capital ratio by the end of the third quarter.

The order from the Office of the Comptroller of the Currency, dated May 16, expands on an informal memorandum of understanding from late 2009 that ordered Old Second to maintain a Tier 1 leverage ratio of 8.75% and a total risk-based capital ratio of 11.25%. The bank's leverage ratio is still a bit shy of the level set by the OCC and under the most recent enforcement agreement the bank has until Sept. 30 to reach the 8.75% threshold.

The order also requires the $2.1 billion-asset Old Second to obtain fresh appraisals on properties collateralizing certain troubled real estate loans. Though the bank's credit quality has improved somewhat of late, its nonperforming assets remain elevated. The bank lost $4.3 million in the first quarter.

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