2 months, 1 week ago from wsj.com
From from wsj.com:
The Securities and Exchange Commission said two former executives at Mercantile Bancorp have agreed to pay penalties to settle charges that alleged financial misstatements.
Former Chief Executive Ted Awerkamp of Amarillo, Texas, and former Chief Financial Officer Michael McGrath of Quincy, Ill., agreed to settle the agency's charges by paying penalties of $100,000 each and being barred from acting as an officer or director of a publicly traded company.
The SEC had alleged that prior to the end of the third quarter of 2010, Mr. Awerkamp knew that the borrower in a shared national credit loan for a large residential real estate development to be built in Colorado Springs, Colo., was unwilling or unable to complete the project.
Mr. Awerkamp also allegedly knew the collateral for that loan had "declined significantly in value," the SEC said.
After the third quarter but still weeks before the bank's quarterly report was filed, Mr. Awerkamp and Mr. McGrath also learned that the borrower missed a loan payment and declared bankruptcy, the SEC said.
The SEC said U.S. accounting rules required Mercantile to recognize a $5.28 million loan loss in its third quarter financial statements, yet the bank allegedly failed to do so.
Mercantile, Mr. Awerkamp, and Mr. McGrath consented to the entry of final judgments without admitting or denying the SEC's allegations.
The SEC's disclosure comes as United Community Bancorp of Illinois, which recently won the bankruptcy auction for Mercantile, is poised to take control of the Illinois bank after Mercantile's parent reached a deal with a group of investors that had opposed the sale.
Mercantile, which had owned six banks in 2009, suffered during the collapse of the nation's housing market, which gutted the subsidiary banks' loan and mortgage portfolios. Mercantile had been shopping its remaining assets for more than a year, but its efforts have been hindered by the debt at bank-holding company level.
STATEMENT FROM MERCANTILE BANCORP:Mercantile Bancorp, Inc. (OTCQB: MBCR) today announced that it has reached an agreement with the United States Securities and Exchange Commission (the "SEC") in a civil proceeding relating to certain public disclosures in the Company’s SEC filings in 2010. This settlement concludes the SEC’s action involvingMercantile Bancorp, Inc.The Company fully cooperated throughout the proceeding, and in the settlement, neither admitted nor denied the SEC's allegations.“We are glad to see this issue resolved,” stated Lee R. Keith, President and CEO. “We are especially pleasedto report the settlement does not include any fines or monetary penalties against the Company, its subsidiary Mercantile Bank, or any of our respective current directors, officers, or employees.”Mercantile Bank was not a direct party to the investigation or settlement.