Exhibit 10.77
UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.

       
 
     
 
    Docket No. 10-055-PCA-SM
In the Matter of
     
 
    Prompt Corrective Action
MIDWEST BANK AND TRUST COMPANY
    Directive Issued Upon Consent
Elmwood Park, Illinois
    Pursuant to Section 38 of the
 
    Federal Deposit Insurance Act, as
 
    Amended
 
     

     WHEREAS, the Board of Governors of the Federal Reserve System (the “Board
of Governors”) determined that, as of February 23 , 2010, Midwest Bank and Trust
Company, Elmwood Park, Illinois (the “Bank”), a state chartered bank that is a
member of the Federal Reserve System, was significantly undercapitalized, as
defined in section 208.43(b)(4) of Regulation H of the Board of Governors (12
C.F.R. § 208.43(b)(4)), for purposes of section 38 of the Federal Deposit
Insurance Act, as amended (the “FDI Act”) (12 U.S.C. § 1831o);
     WHEREAS, the actions in this Prompt Corrective Action Directive (the
“Directive”) are necessary to carry out the purposes of section 38 of the FDI
Act; and
     WHEREAS, on March 29, 2010, the board of directors of the Bank, at a duly
constituted meeting, adopted a resolution authorizing and directing Roberto R
Herencia to enter into this Directive on behalf of the Bank, and consenting to
compliance with each and every provision of this Directive by the Bank and its
institution-affiliated parties, as defined in section 3(u) of the FDI Act (12
U.S.C. § 1813 (u)).

 

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     NOW THEREFORE, pursuant to section 38 of the FDI Act and section 208.45 of
Regulation H of the Board of Governors, the Board of Governors immediately
directs that:
     1. The Bank shall no later than 45 days of the date of this Directive (or
such additional time as the Board of Governors may permit), in conjunction with
the Bank’s parent bank holding company, Midwest Bank Holdings, Inc., Melrose
Park, Illinois:
          (a) Increase the Bank’s equity through the sale of shares or
contributions to surplus in an amount sufficient to make the Bank adequately
capitalized as defined in section 208.43(b)(2) of Regulation H of the Board of
Governors (12 C.F.R. § 208.43(b)(2));
          (b) enter into and close a contract to be acquired by a depository
institution holding company or combine with another insured depository
institution, closing under which contract is conditioned only on the receipt of
necessary regulatory approvals, the continued accuracy of customary
representations and warranties, and the performance of customary pre-closing
covenants; or
          (c) take other necessary measures to make the Bank adequately
capitalized.
     2. The Bank shall comply fully with the provisions of section 38(d)(1) of
the FDI Act (12 U.S.C. § 1831o(d)(1)) restricting the making of any capital
distributions, including, but not limited to, the payment of dividends.
     3. (a) The Bank shall not, without the prior written approval of the
Federal Reserve Bank of Chicago (the “Reserve Bank”) and the fulfillment of one
of the requirements set forth in paragraph 1, solicit and accept new deposit
accounts or renew any time deposit bearing an interest rate that exceeds the
prevailing effective rates on deposits of comparable amounts and maturities in

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the Bank’s market area.
          (b) Within 30 days of this Directive, the Bank shall submit an
acceptable plan and timetable to the Reserve Bank for conforming the rates of
interest paid on all existing non-time deposit accounts to the prevailing
effective rates on deposits of comparable amounts in the Bank’s market area. The
plan shall detail the current composition of the applicable deposits by rate and
provide a specific date for conforming all deposit rates to the statutory
restriction.
     4. (a) The Bank shall comply fully with the provisions of section
38(f)(2)(B)(i) of the FDI Act (12 U.S.C. § 1831o(f)(2)(B)(i)) requiring that all
transactions between the Bank and any affiliate comply with section 23A of the
Federal Reserve Act (12 U.S.C. § 371c).
          (b) For the purposes of this Directive, the terms (i) “transaction”
shall include, but not be limited to, the transfer, sale or purchase of any
asset, including cash, or the direct or indirect payment of any expense or
obligation of, the payment of a management or service fee of any nature to, or
any extension of credit to an affiliate; (ii) “extension of credit” shall be
defined as set forth in section 215.3 of Regulation O of the Board of Governors
(12 C.F.R. § 215.3); and (iii) “affiliate” shall be defined as set forth in
subparagraph (b)(1) of section 23A of the Federal Reserve Act (12 U.S.C. §
371c(b)(1)) and section 223.2 of Regulation W of the Board of Governors (12
C.F.R. § 223.2).
     5. The Bank shall comply fully with the provisions of sections
38(f)(4)(A)(i) and (ii) of the FDI Act (12 U.S.C. §§ 1831o(f)(4)(A)(i) and (ii))
restricting the payment of bonuses to senior executive officers and increases in
compensation of such officers.
     6. The Bank shall comply fully with the provisions of sections 38(e)(3) and
(4) of

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The FDIC Act (12 U.S.C. §§ 1831o(e)(3) and (4)) restricting asset growth,
acquisitions, branching, and new lines of business.
     7. All communications regarding this Directive shall be sent to:

  (a)   Mr. Charles F. Luse
Assistant Vice President
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, Illinois 60604     (b)   Mr. Roberto R. Herencia
President and Chief Executive Officer
Midwest Bank and Trust Company
501 W. North Avenue
Melrose Park, Illinois 60160

     8. Notwithstanding any provision of this Directive, the Reserve Bank may,
in its sole discretion, grant written extensions of time to the Bank to comply
with any provision of this Directive.
     9. The provisions of this Directive shall be binding upon the Bank and its
institution-affiliated parties, in their capacities as such, and their
successors and assigns.
     10. Each provision of this Directive shall remain effective and enforceable
until stayed, modified, terminated or suspended in writing by the Board of
Governors.
     11. The provisions of this Directive shall not bar, estop or otherwise
prevent the Board of Governors, the Reserve Bank, or any other federal or state
department or agency from taking any other action affecting the Bank or any of
its current or former institution-affiliated parties and their successors or
assigns.

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     12. (a) The Directive does not supersede the Written Agreement by and among
the Bank, the Reserve Bank, and the Illinois Department of Financial and
Professional Regulation, Division of Banking (the “Department”), dated
December 18 , 2009.
          (b) Notwithstanding any provision of this Directive, the Bank shall
comply with any other supervisory action issued by the Board of Governors, the
Reserve Bank, or the Department.
     13. As set forth in section 263.205 of the Board of Governors’ Rules of
Practice for Hearings (12 C.F.R. § 263.205), this Directive is enforceable by
the Board of Governors under section 8 of the FDI Act (12 U.S.C. § 1818).
     By order of the Board of Governors of the Federal Reserve System, effective
this 30th day of March, 2010.

                      MIDWEST BANK AND TRUST COMPANY       BOARD OF GOVERNORS OF
THE
FEDERAL RESERVE SYSTEM    
 
                   
By:
   /s/ Roberto R. Herencia       By:    /s/ Robert de V. Frierson    
 
                   
 
  Roberto R. Herencia           Robert de V. Frierson    
 
  President and CEO           Deputy Secretary of the Board    

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