"The sale of these branches, when completed, demonstrate that our rebuilding efforts continue to move forward and remain on track," says Amcore CEO William McManaman, in a statement.

In addition to the branch locations, the deal includes $480 million in loans, $540 million in deposits and sweep accounts, roughly $400 million in trust and brokerage account relationships.

The Midland deal, as well as a number of other smaller transactions, should significantly improve Amcore's capital.

"As the result of those combined actions to improve capital, we would expect that the bank will no longer be deemed significantly undercapitalized for regulatory purposes at the end of 2009," McManaman says. "Assuming economic conditions in our markets stabilize, and that the transaction with Midland States Bank closes at the end of the first quarter 2010 and its benefits are fully realized, we expect that the bank would be adequately capitalized and approaching well-capitalized."

Recently Amcore sold $135 million of non-strategic, non-relationship loans. It also disposed of four Wisconsin branches in November.

The 12 branches Midland will now own are located throughout Illinois, in the cities of Dixon, Freeport, Mendota, Oregon, Peru, Princeton, Rock Falls and Sterling.

"We are excited to be establishing a banking presence in Northern Illinois markets that I've worked in and have intimate knowledge of," says Leon Holschbach, CEO of Midland. "These are good, strong community banks with a deep seated commitment to providing financial strength and stability to their communities in order for them to thrive and prosper."