Feds to Amcore: Raise capital or sell

Comments (...)

E-mail this story

Print this story

Comments

Share

Amcore Bank has a little less than a month to demonstrate to federal regulators that it can survive or they will be forced to sell.

The Rockford-based Amcore, which operates branches locally in St. Charles, South Elgin and Aurora, disclosed the ultimatum from the federal government in a quarterly filing to the federal Securities and Exchange Commission Monday.

According to the filing, Amcore in June agreed to a consent order from the U.S. Office of the Comptroller of the Currency, a federal agency responsible for chartering and regulating national banks. The order required Amcore to develop and submit a plan to increase its capital to a level sought by the OCC.

However, after Amcore submitted the plan, the bank was notified by the OCC Nov. 4 that the capital plan was not acceptable and did not demonstrate that the plan would be "likely to succeed in restoring the bank's capital."

As a result, the bank is now considered "significantly undercapitalized," the OCC said, and has now become subject to the OCC's "prompt corrective action" guidelines. Banks falling under the PCA category can be ordered to be sold or seized by federal regulators.

To avoid being sold, Amcore must craft another capital plan and submit it to the OCC by Dec. 4, the filing said.

At that time, the bank must also submit a plan to govern how Amcore could be sold or merged with another financial institution.

Amcore indicated it will submit both plans.

The bank also said it intends to seek ways to obtain outside capital.

"But there can be no assurance that these actions will be successful," Amcore said in its filing.

Comments