Amcore Financial Inc. in Rockford, Ill., announced Friday that regulators have imposed higher capital requirements on its bank unit.
Under a consent order issued Thursday, the Office of the Comptroller of the Currency gave Amcore Bank 30 days to submit a capital plan that would get its leverage ratio to 8%, its Tier 1 risk-based capital ratio to 9% and its total risk-based capital ratio to 12%.
After submitting an acceptable plan, the bank would have until Sept. 30 to achieve those ratios.
At the end of the first quarter, the bank had a leverage ratio of 4.62%, a Tier 1 risk-based of 6.22% and total risk-based capital ratio of 8.84%. Those levels are short of the typical minimums required for a bank to be considered well capitalized, but qualify as adequately capitalized.
In addition to the OCC order at the bank, the $5.3 billion-asset parent company entered into a written agreement with the Federal Reserve Bank of Chicago that also requires a capital plan.
Amcore Financial said as a result of the regulatory actions it is in default on an agreement with JPMorgan Chase & Co. for a $20 million line of credit.
Still, William R. McManaman, the company’s chairman and chief executive officer, said that credit quality improved in the second quarter.
"From an operational perspective, we believe growth of nonperforming loans this quarter has decreased from recent quarters and we expect a significantly lower provision for loan loss reserves in the second quarter," McManaman said in a press release.
Because of its loan trouble, the company has posted five consecutive quarterly losses, including one for $30.4 million in the first quarter. Nonperforming loans increased 252% from the year earlier, to $402 million. Nonaccruals, which consist mostly of construction and development loans, made up 10.9% of total loans at March 31.
Its bank unit had been operating under an agreement with the OCC since May 2008.