(Reuters) - Troubled lender Amcore Financial Inc. said regulators disapproved of its bank unit's capital restoration plan citing that the plan did not meet the statutory requirements.
In early trading, shares of the Rockford-based bank dropped 17.6% to $1.08.
The Office of the Comptroller of the Currency (OCC) notified, through a response letter on Jan. 8, that Amcore Bank's Capital Restoration Plan (CRP) submitted on Dec. 4 is not acceptable, Amcore said in a regulatory filing.
The OCC said the capital plan did not meet the statutory requirements that the plan be based on "realistic assumptions" and be likely to succeed in restoring the bank's capital.
"Even if the bank's capital ratios improve to the undercapitalized category, the bank will continue to be subject to operational restrictions applicable to significantly undercapitalized institutions until such time as the bank has submitted to the OCC an acceptable CRP," Amcore quoted the OCC letter as saying.
The regulator also said recently announced asset sales by the bank have increased the overall risk to its capital base.
Amcore said last week it would sell 12 branches and two stand-alone drive-ups in Illinois following the sale of four rural Wisconsin branches in November.
Additionally, the Federal Reserve Bank of Chicago (FRB) notified Amcore that its capital plan previously submitted to FRB continues to be unacceptable, the company said.
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