DOW JONES NEWSWIRES
Amcore Financial Inc. (AMFI) said it agreed with its lender,
JPMorgan Chase & Co. (JPM), to amend a covenant that corrects a
previously disclosed technical default under its $12.5 million
credit facility.
The regional bank's shares jumped 26% to 87 cents in recent
trading. The stock has lost 76% this year as the company has
reported five straight quarters of red ink amid surging credit
losses.
The amendment modifies the covenant relating to capitalization
at the parent and bank level so Amcore is in full compliance with
the terms of its credit agreement.
Amcore, which has 73 branches in Illinois and Wisconsin, also
paid all accrued interest through the date of the amendment and put
about $1.1 million in a cash interest reserve account at JPMorgan
to cover anticipated interest payments through the maturity of the
facility, which was extended to April 2011. The company will make
monthly interest payments from now on.
Chairman and Chief Executive William McManaman said the bank
recently improved its capital position with the sale of $135
million in loans, the sale of four rural Wisconsin branches in
November and recent tax legislation that will result in a federal
income tax refund of $25 million to $30 million. After those
actions, "we would expect that the bank will no longer be deemed
significantly undercapitalized for regulatory purposes," he
added.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357;
Kathy.Shwiff@dowjones.com