SPRINGFIELD, Ill. (CN) - Two former top bosses of Mercantile Bancorp will pay $100,000 each for reporting the bank earned $1.8 million in net income for three quarters though it actually lost $3.5 million in that time, the SEC said Tuesday.
The SEC sued Mercantile Bancorp, a Delaware corporation based in Quincy, Ill., and its former CEO Ted Awerkamp and former CFO Michael McGrath, in Federal Court.
The bank executives knew that one of their bank's largest debtors was "unwilling or unable" to complete a big residential real estate project in Colorado Springs, and should have, but did not, declare a $5.3 million loss on the loan, the SEC said.
"Because it did not do so, Mercantile was able to (i) falsely state that its main subsidiary bank had met certain capital ratio thresholds required by the Federal Deposit Insurance Corporation ('FDIC'); (ii) understate its net loss for the quarter and the nine months ending September 30, 2010 as $7.5 million and $11 million (instead of at least $12.78 million and at least $16.28 million); and (iii) falsely state that its main subsidiary bank had net income of $1.8 million for first nine months of 2010 when it actually had a net loss of at least $3.48 million during that period," according to the SEC lawsuit.
The SEC said in a statement that Awerkamp, 55, of Amarillo, Texas, and McGrath, 59, of Quincy, agreed to pay $100,000 each to settle the charges, and to be barred from acting as officers or directors of any publicly traded company.
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