Amcore Financial Inc. in Rockford, Ill., said Tuesday that it is significantly undercapitalized after a massive third-quarter loss.
In reporting the loss of $156.4 million — by far the largest of its seven consecutive quarterly losses — William R. McManaman, Amcore's chairman and chief executive officer, said in a press release that a stock offering would be unlikely to succeed but that it continues to pursue other options for raising capital.
He also said the $4.7 billion-asset company would seek help from new government programs. He did not specify the programs, and it was unclear what he might have in mind.
"Currently … capital markets remain largely inaccessible to small and midsize banks with our profile," McManaman said in the release. "Nevertheless, we will continue to pursue all capital-raising activities, including exploring additional government programs recently announced targeting small and midsize banks."
Amcore, which classified 13.7% of its loans as in nonaccrual status at Sept. 30, said it is significantly undercapitalized in all three regulatory capital ratios. Its bank also is low on capital by all three measures but significantly undercapitalized only in its leverage ratio.
The company said regulators have not formally responded to a capital plan it submitted but that it would continue to work on boosting the ratios. It expects to sell several branches next month.
Amcore attributed the loss of $6.81 a share mostly to a $118 million valuation allowance for deferred tax assets. It also took a $60 million provision for loan losses, up 12% from the year earlier and 254% from the second quarter, because chargeoffs spiked to $59.4 million. A drop in collateral values forced the chargeoffs.
But the company stressed that the pace of the rise in its loan trouble is decelerating. Nonperforming loans rose 126% from the year earlier and 3.6% from the second quarter, to $431 million. Delinquencies fell by 8% from June 30, to $57 million, their lowest level in two years.
In the third quarter of 2008, Amcore lost $18 million, or 79 cents a share.
