Despite management's best efforts to clean up the loan portfolio, credit problems accelerated in the fourth quarter at Amcore Financial Inc. of Rockford, Ill.

The $5 billion-asset company reported Thursday that it lost $32.1 million, or $1.42 a share, in the quarter, compared with a profit of $7.5 million, or 33 cents a share, a year earlier, and said its loan-loss provision soared nearly 800% from a year earlier, to $57.5 million. Analysts had expected a per-share loss of 38 cents.

Nonperforming loans as a percentage of total loans rose dramatically, from 1.04% at Dec. 31, 2007, to 8.03% at the end of 2008.

"This is painful, but we are doing everything we can to manage through this process," Donald H. Wilson, Amcore's president and chief operating officer, said in an interview Thursday.

Management has been aggressive in addressing weaknesses in a loan portfolio that Mr. Wilson described as "grossly and excessively concentrated" in residential and commercial real estate.

It has beefed up its workout division; rerouted key staff from revenue production to asset management; shrunk its total loans by 3.3% year over year; sold off a pool of loans in the third quarter; and is still looking for ways to divest itself from "nonstrategic, nonrelationship" accounts, Mr. Wilson said. It also said it conducted a new appraisal on nearly $1.6 billion of its real estate-secured loans in 2008, with values dropping 30% to 40% on residential real estate and 10% on commercial real estate.

Nevertheless, the company said the number of borrowers struggling with repayment rose considerably in the fourth quarter. Judith Carre Sutfin, Amcore's chief financial officer, said in a Thursday conference call that the company can no longer use delinquencies of 30 to 89 days as a reliable measure of problems coming down the pike. Several developers who had been using personal money to repay company debt were tapped out in the fourth quarter, she said.

During the call, however, analysts and investors seemed most concerned about Amcore's capital position. At the end of the quarter, both the company and Amcore Bank were well capitalized, the management team said, with the bank having total risk-based capital of 10.14%, down from 10.91% a year earlier.

A private investor asked during the call if the company expected to receive a capital infusion from the Treasury Department's Troubled Asset Relief Program. William R. McManaman, Amcore's chairman and chief executive, would not say if it had applied, but he said the cost of the government capital is attractive in the current environment.

"We have been actively and extensively pursue all capital-raising activities," Mr. McManaman said in the call.

Mr. McManaman was named CEO in early 2008 after longtime CEO Kenneth E. Edge resigned.

Brian Martin, an analyst with Howe Barnes Hoefer & Arnett Inc. in Chicago, said the new management team has "been trying to put out fires all year and they've really tried to get out in front of things. But credit seems to have fallen off a cliff in the last quarter."

With Amcore's nonperforming loans approaching 9% and its capital cushion shrinking, Mr. Martin said, "I think it is fair to question the survivability of the company."

Kenneth S. James, an analyst with Robert W. Baird & Co. Inc., has also said that Amcore needs a capital infusion, but he wrote in a November research note that one from the Treasury is unlikely and one from the private sector might be hard to get.

"Our inclination" is that if Amcore has applied for Tarp funds, it "has a good chance of not being approved by the Treasury due to the overall health of the institution," Mr. James wrote. "Given the current state of credit quality and capital markets, we are unsure how such capital would be raised." Without Tarp funds, Amcore might be forced to sell itself, he wrote.

Mr. Wilson said in the interview that the company will continue to take steps to preserve its capital, such as suspending its dividend and shrinking its balance sheet. It also trimmed its staff by 11% in 2008.

"We are doing everything we can," he said.

Amcore's shares closed at $1.49 Thursday, down 40.4%.

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