Despite last week's announcement of a major branch sale, the future of Amcore Financial Inc.'s bank remains in jeopardy.
The $4 billion-asset company in Rockford, Ill., announced in a Securities and Exchange Commission filing Wednesday that the Office of the Comptroller of the Currency rejected the company's Dec. 4 capital plan for its Amcore Bank unit, saying it was not based on realistic assumptions.
In November, the OCC rejected a capital plan Amcore submitted in July.
Amcore also announced that the Federal Reserve has found its capital plan unacceptable in addressing the capital erosion.
Amcore Bank was significantly undercapitalized at the end of the third quarter. The company announced last week that the sale of four branches along with the sale of $135 million of loans, had improved the bank's capital position to merely undercapitalized. A 12-branch sale announced last week would move the bank's position to adequately capitalized, if the deal closes this quarter.
Amcore said in the filing that the OCC has indicated it views "recently announced asset sales" as increasing the overall risk to the bank's capital, while Amcore views it as critical step to improvement.