Anchor BanCorp Wisconsin Inc.'s primary regulator has approved, with conditions, its recapitalization plan after it aggressively sold branches and reduced assets to raise capital levels.

The Madison company is the parent of a federal savings bank, AnchorBank, which is regulated by the Office of Thrift Supervision. In conjunction with the approval, Anchor said its board consented to a prompt corrective action directive with the OTS.

AnchorBank had been operating under a cease-and-desist order since June 2009.

Anchor has sold 15 branches to two financial institutions since June as part of the recapitalization plan, which also included closing unprofitable offices and reducing expenses. Anchor said at this time it chose to cut assets in order to raise capital levels rather than to embark on a capital-raising effort.

Anchor's total assets declined 9.4%, to nearly $4 billion, from March 31 to June 30.

The bank returned to adequately capitalized status, with an 8.05% total risk-based capital ratio as of July 31. By so doing, it met the deadline for the OTS to approve the plan, Anchor said.

The prompt corrective action directive requires the bank to continue implementing its plan, which includes a second option under which the bank would raise capital via outside investors.

"We continue to be engaged, along with our advisors Sandler O'Neill & Partners, in active discussions with potential investors as well as taking aggressive actions to improve the bank's overall capital position prior to concluding an agreement for additional investment into AnchorBank," the bank's chief executive, Chris Bauer, said in a press release Tuesday.

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