Midwest Banc Holdings Inc. has won another round in its battle for recapitalization, as a result of an unusual move by the Treasury Department.

Midwest, of Melrose Park, Ill., announced late Tuesday that the Treasury had agreed to convert $84.8 million of preferred shares it bought in December 2008 under the Troubled Asset Relief Program, along with $4.5 million of unpaid dividends, into $89.3 million in shares that would become common equity. But first the Treasury is requiring the $3.4 billion-asset Midwest to raise an additional $125 million from private investors.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.