Oct. 28--Midwest Banc Holdings Inc. has bought itself some time with a key lender.

Since at least last spring, the Melrose Park-based bank has been in violation of various loan covenants with its lender, identified in a filing last April as Milwaukee-based Marshall & Ilsley Bank.

Midwest missed a $5 million principal payment due July 1, and on July 8 the lender hiked the interest rate on a revolving credit line to 7.25 percent. Midwest also missed an Oct. 1 principal payment as it tried to retain cash and preserve liquidity.

But on Oct. 22, according to a Securities and Exchange Commission filing Monday, Midwest entered into a forbearance pact with its lender until March 31. On that date, principal and interest due under the revolving credit line and term note will again become due.

The forbearance should help as Midwest is trying to raise $100 million to $125 million in capital, Monday's SEC filing said.

Shares dumped: Amcore Financial Inc. of Rockford said Tuesday it's "undercapitalized or significantly undercapitalized under some regulatory capital standards." Its shares closed down 38.4 percent, to 77 cents. Also, Chicago-based PrivateBancorp Inc., whose stock closed down 37 percent on Monday after reporting disappointing financial results, saw a 19.4 percent erosion on Tuesday to close at $9.65.

Where are they now? James Giancola, hired in 2004 as Midwest Banc chief executive, in January left the parent of Midwest Bank after disagreements with the board.

As part of his employment pact, Giancola was eligible to receive a severance payment of 80 percent of his 2008 base salary, or $481,200. But a provision of the American Recovery & Reinvestment Act of 2009 restricts banks that participate in the U.S. Treasury's Troubled Asset Relief Program from making severance payments.

Said Giancola in an e-mail, "I don't think there is any disagreement over what is owed, the question is when it gets paid. The answer is when MBHI repays TARP, or when they are acquired by someone who can pay it off. This is just another example of the government's Ex Post Facto rule making. Everyone will be a lot more careful when partnering with the U.S. government in the future."

From June through September, Giancola was living at his Lake Tahoe home and giving tennis lessons to children. He himself is the father of two, a Presbyterian minister and a rock singer whose Web site is thenewaffect.com.

As for returning to banking, Giancola, who's back in Chicago, said he's keeping his options open.

Big bucks: Automatic enrollment in overdraft programs means that many older people are being charged high fees for products they don't want or need, according to a study released last week by Woodstock Institute, a Chicago-based consumer watchdog.

People age 55 and older pay $4.5 billion in overdraft fees annually, of which $513 million are levied on Social Security benefit recipients.

The most common type of overdraft product is the automated overdraft loan program, in which banks honor the overdrawn amount but charge a set fee for each overdraft as well as fees on daily overdrawn balances, the study said.

More than 75 percent of banks that offer an overdraft program automatically enroll their customers, the report said, although 75 percent of older persons would prefer to have a transaction declined than incur overdraft fees.

The report, funded in part by Charter One Foundation, can be found at www.woodstockinst.org.

byerak@tribune.com

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