May 27--Community Bank of Lemont, which in February was ordered by regulators to raise more capital, is seeking permission to merge with Chicago-based Park National Bank, according to a notice filed with the U.S. Office of the Comptroller of the Currency.

Both institutions are at least partly owned by Oak Park-based FBOP Corp., a $17.1 billion-asset institution that also owns banks in Texas, Arizona and California.

The Lemont bank has $93.6 million in assets, and Park National has $4.9 billion in assets.

Lemont has been among the local banks with the highest levels of bad loans and is currently undercapitalized.

Its leverage ratio, which reflects the equity support for a bank's assets, has fallen from 5.5 percent as of Dec. 31 to 1.2 percent as of March 31, figures filed with the Federal Deposit Insurance Corp. show. A bank needs a leverage ratio of at least 5 percent to be considered well capitalized.

Its Tier 1 risk-based ratio, has dropped from 6.1 percent to 1.4 percent in the same period. A bank needs 4 percent to be considered adequately capitalized. Tier 1 capital includes common and preferred stock and excludes certain intangible assets and is expressed as a percentage of averaged adjusted assets, which strip out such items as goodwill.

FBOP is scheduled to convert $3 million in subordinated debt in Lemont to common stock, which will increase its ownership in Lemont from about 25 percent to more than 50 percent, said a person familiar with the matter. The conversion to common stock will help boost Lemont's capital levels. Tier 1 capital doesn't include subordinated debt.

"The merger, if it goes through, it will be a good thing" for Lemont, the source said. No branch closings would occur, the notice said.

But such issues as the bank's name are unresolved.

"There are a lot of details that haven't yet been worked out," the source said.

Lemont has topped recent lists of local banks with the high Texas ratio, which tallies up a bank's past-due loans and bank-owned real estate and compares them with the levels of a bank's core capital, typically shareholders' equity, and the money set aside for potential loan losses. The higher the ratio the more cause for concern.

FBOP itself has also been on the hunt for new capital.

Deposits at institutions insured by the FDIC are now covered up to at least $250,000 per depositor.

byerak@tribune.com

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