Exhibit 10.23

SEVENTH AMENDMENT TO CREDIT AGREEMENT

Harris Trust and Savings Bank
Chicago, Illinois

Ladies and Gentlemen:

     Reference is hereby made to that certain Credit Agreement dated as of
January 30, 1998 (the Credit Agreement, as the same has been amended prior to
the date hereof being referred to herein as the “Credit Agreement”), between
Midwest Banc Holdings, Inc. and Harris Trust and Savings Bank. All capitalized
terms used herein without definition shall have the same meanings herein as such
terms have in the Credit Agreement.

     The Company has requested that the Bank extend the Termination Date and
make certain other amendments to the Credit Agreement, and the Bank is willing
to do so on the terms and conditions set forth in this agreement (herein, the
“Amendment”).

SECTION 1. AMENDMENTS.

     Subject to the satisfaction of the conditions precedent set forth in
Section 2 below, the Credit Agreement shall be and hereby is amended as follows:

   1.1. Section 1.3 of the Credit Agreement (Extension of Termination Date)
shall be amended and restated in its entirety to read as follows:

      1.3. Intentionally Deleted.

   1.2. The definition of “Termination Date” appearing in Section 5.1 of the
Credit Agreement shall be amended and restated in its entirety to read as
follows:

      “Termination Date” means May 1, 2004, or such earlier date on which the
Commitment is terminated in whole pursuant to Section 3.4, 3.5, 9.2 or 9.3
hereof.

   1.3. Section 9.1 (e) of the Credit Agreement (Events of Default) shall be
amended and restated in its entirety to read as follows:

      (e) any event occurs or condition exists (other than those described in
subsections (a) through (d) above) which is specified as an event of default
under any of the other Loan Documents; or any of the Loan Documents, or any
material provision thereof, shall for any reason not be or shall cease to be in
full force and effect or is declared to be null and void; or the issuance
against the Borrower or any Subsidiary (including any Banking Subsidiary) of any
informal or formal administrative agreement or court order, temporary or
permanent, by any federal

 

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or state regulatory agency or court having jurisdiction or control over the
Borrower or such Subsidiary involving activities deemed to be unsafe or unsound
or a breach of fiduciary duty under applicable law or regulation or which the
Bank considers in its sole discretion to be adverse to the condition (financial
or otherwise), assets, Property, or prospects of Borrower or any Subsidiary,
such action taking the form of, but not limited to: (i) a memorandum of
understanding, (ii) a cease and desist order, (iii) the termination of insurance
coverage of customer deposits by the FDIC, (iv) the suspension or removal of any
executive officer or director, or the prohibition of participation by any others
in the business affairs of the Borrower or such Subsidiary, or (v) a capital
maintenance agreement or any agreement limiting or prohibiting the payment of
dividends to the Company by any of its Subsidiaries;

      1.4. In consideration of the amendments set forth above, the Company
acknowledges and agrees that the aggregate amount of Loans requested by the
Company and maintained outstanding under the Credit Agreement shall not exceed
$10,000,000 until the Company’s current regulatory examinations and financial
reporting situation have been completed and corrected to the Bank’s satisfaction
(which includes, but is not limited to, the lack of issuance against the Company
or any of its subsidiaries of any formal or informal regulatory agreements or
orders of the type described in Section 9.1 (e) of the Credit Agreement).

SECTION 2. CONDITIONS PRECEDENT.

     The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:

      2.1. The Company and the Bank shall have executed and delivered this
Amendment.

      2.2. Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Bank and its counsel.

SECTION 3. REPRESENTATIONS.

     In order to induce the Bank to execute and deliver this Amendment, the
Company hereby represents to the Bank that the representations and warranties
set forth in Section 6 of the Credit Agreement are and shall be and remain true
and correct (except that the representations contained in Section 6.5 shall be
deemed to refer to the most recent consolidated financial statements of the
Company delivered to the Bank) and the Company is in compliance with the terms
and conditions of the Credit Agreement and no Default or Event of Default exists
under the Credit Agreement or shall result after giving effect to this
Amendment.

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SECTION 4. MISCELLANEOUS.

     4.1. The Company has heretofore executed and delivered to the Bank certain
Collateral Documents and the Company hereby acknowledges and agrees that,
notwithstanding the execution and delivery of this Amendment, the Collateral
Documents remain in full force and effect and the rights and remedies of the
Bank thereunder, the obligations of the Company thereunder and the liens and
security interests created and provided for thereunder remain in full force and
effect and shall not be affected, impaired or discharged hereby. Nothing herein
contained shall in any manner affect or impair the priority of the liens and
security interests created and provided for by the Collateral Documents as to
the indebtedness which would be secured thereby prior to giving effect to this
Amendment.

     4.2. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.

     4.3. The Company agrees to pay on demand all costs and expenses of or
incurred by the Bank in connection with the negotiation, preparation, execution
and delivery of this Amendment, including the fees and expenses of counsel for
the Bank.

     4.4. This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.

     This Seventh Amendment to Credit Agreement is dated as of January 5, 2004.

            MIDWEST BANC HOLDINGS, INC.
      By:   /s/ Daniel R. Kadolph         Name:   Daniel R. Kadolph       
Title:   Senior Vice President and
Chief Financial Officer     

     Accepted and agreed to in Chicago, Illinois, as of the date and year last
above written.

            HARRIS TRUST AND SAVINGS BANK
      By:   /s/ Michael S. Cameli       Name:   Michael S. Cameli       Title:  
Vice President     

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