Loss-making lender Amcore Financial Inc said its unit will sell two branches to First National Bank and Trust Co of Beloit, Wisconsin to improve liquidity and return to profitability, sending its shares up more than 16 percent.
These were solid community branches in the rural community market in Wisconsin. We are selling them because they are attractive to another rural community bank, Amcore spokeswoman Katherine Taylor told Reuters.
Rockford, Illinois-based Amcore said the sale of the branches located in Wisconsin communities of Monroe and Argyle will include about $70 million loans, $140 million in deposits and about $50 million in related trust accounts.
Amcore, which has assets worth $4.9 billion, did not disclose the terms of the sale, but said it expects the deal to close in the fourth quarter.
However, the brokerage and 401(k) plan business are not part of the sale and will remain with Amcore, it said.
A 401(k) plan allows a worker to save for retirement and have the savings invested while deferring current income taxes on the saved money and earnings until withdrawal.
Last week, Amcore said its lender JPMorgan Chase gave it a waiver and an extension of maturity on a $20 million credit facility. Amcore was in technical default under the credit agreement but was current in its payments due.
Amcore, which reported a sixth straight quarterly loss last month, said in June that agreed with regulators to develop capital-raising plans and to revise and maintain a liquidity risk management program.
First National Bank and Trust Co operates 11 banking locations in Southern Wisconsin and Northern Illinois.
Amcore shares were up 13 cents at $1.47 in late morning trade on Nasdaq. They touched a high of $1.56 in early trade.
The shares have gained about 144 percent from their year-low of 55 cents on July 8.
(Reporting by Archana Shankar in Bangalore; Editing by Gopakumar Warrier)