EXHIBIT 10.4

                             AMCORE FINANCIAL, INC.

                              Annual Incentive Plan
Approved November 9, 2004


1.   General

     This Annual Incentive Plan (the "Plan") of AMCORE Financial, Inc. (the
"Company") authorizes the grant of annual incentive awards ("Awards") to
executives and key employees, and sets forth certain terms and conditions of
such Awards. The purpose of the Plan is to help the Company secure and retain
senior executives and key employees of outstanding ability and to motivate such
persons to exert their greatest efforts on behalf of the Company and its
subsidiaries by providing incentives directly linked to the revenue, net income,
customer satisfaction, earnings per share, strategic goals and other measures of
the financial and business success of the Company. The Plan will be administered
by the Compensation Committee of the AMCORE Financial, Inc. Board of Directors
(the "Committee"), provided that the Committee may condition any of its actions
on approval or ratification by the Board of Directors. The Committee shall have
full and final authority to take all actions hereunder, subject to and
consistent with the provisions of the Plan. The Committee may delegate to
specified officers or employees of the Company authority to perform
administrative or other functions under the Plan.

2.   Definitions

     In addition to such terms and those terms defined in Section 1 above, the
following are defined terms under this Plan:

     (a) "Annual Incentive Award" or "Award" means the amount of a Participant's
Annual Incentive Award Opportunity in respect to a specified Performance Year
determined by the Committee to have been earned and the Participant's rights to
future payments of cash in settlement thereof.

     (b) "Annual Incentive Award Opportunity" or "Award Opportunity" means the
Participant's opportunity to earn specified dollar-denominated amounts based on
performance during a Performance Year. An Annual Incentive Award Opportunity
constitutes a conditional right to receive settlement of an Annual Incentive
Award.

     (c) "Participant" means an employee participating in this Plan.

     (d) "Performance Goal" means the Company, divisional, individual, or other
accomplishment required as a condition to the earning of an Award Opportunity.

     (e) "Performance Year" means the period of one fiscal year over which an
Annual Incentive Award Opportunity may be earned, provided that the Committee
may specify a shorter or longer duration for any Performance Year.

     (f) "Termination of Employment" means the termination of a Participant's
employment by the Company or a Subsidiary immediately after which the
Participant is not employed by the Company or any Subsidiary.

3.   Eligibility

     Company officers and other employees whom the Committee determines may have
a significant impact on the performance of the Company may be selected by the
Committee to participate in this Plan.

<PAGE>

4.   Designation and Earning of Annual Incentive Award Opportunities

     (a) Designation of Award Opportunities and Performance Goals. The Committee
shall select employees to participate in the Plan for a Performance Year and
designate, for each such Participant, the Award Opportunity the Participant may
earn for such Performance Year, the Performance Goal the achievement of which
will result in the earning of the Award Opportunity or a portion thereof, and
the levels of earning of the Award Opportunity corresponding to the levels of
achievement of the Performance Goal. The Award Opportunity earnable by each
Participant shall range from 0% to not more than 200% of a specified target
Award Opportunity. The Committee shall specify a table, grid, or formula that
sets forth the amount of a Participant's Award Opportunity that will be earned
corresponding to the level of achievement of a specified Performance Goal. There
is no limitation on the timing of the Committee's determinations under this
Section 4(a).

     (b) Determination of Annual Incentive Award. Within a reasonable time after
the end of each Performance Year, the Committee will determine the extent to
which the Performance Goal for the earning of the Participant's Annual Incentive
Award Opportunity was achieved during such Performance Year and the resulting
Award to the Participant. In making this determination, the Committee may adjust
upward or downward the amount of an Award, in its sole discretion, in light of
such considerations as the Committee may deem relevant (but subject to the
applicable limitations of the Plan). The Annual Incentive Award shall not be
deemed vested, however, until such date as the Company pays and settles the
Annual Incentive Award, as determined by the Committee.

5.   Accounts and Settlement of Awards.

     (a) Elective Deferral. A Participant will be permitted to elect to defer
settlement of the Annual Incentive Award if and to the extent such deferral is
authorized by such Participant under any Company deferred compensation plan then
in effect, and if validly elected by the Participant under the terms of such
plan. Unless otherwise determined by the Committee, a Participant's deferral
election with respect to earned Annual Incentive Awards must be filed with the
Company not later than six months prior to the end of the Performance Year.

     (b) Settlement of Award. Any non-deferred Annual Incentive Award shall be
paid and settled by the Company reasonably promptly after the date of
determination by the Committee under Section 4(b) hereof. With respect to any
deferred amount of a Participant's Annual Incentive Award, such amount will be
credited to the Participant's deferral account under the applicable Company
deferred compensation plan as promptly as practicable at or after the date
designated for payment by the Committee under Section 4(b) hereof.

     (c) Tax Withholding. The Company shall deduct from any payment in
settlement of a Participant's Annual Incentive Award or other payment to the
Participant any Federal, state, or local withholding or other tax or charge
which the Company is then required to deduct under applicable law with respect
to the Award.

     (d) Non-Transferability. An Annual Incentive Award Opportunity and any
resulting Annual Incentive Award, including any deferred amount resulting from
an Award, and other rights hereunder shall be non-transferable except in
accordance with the laws of descent and distribution or, if permitted by the
Committee, pursuant to a beneficiary designation of the Participant in the event
of the Participant's death.

6.   Effect of Termination of Employment.

     Upon a Participant's Termination of Employment prior to completion of a
Performance Year or, after completion of a Performance Year but prior to the
date of determination by the Committee under Section 4(b) hereof with respect to
that Performance Year, the Participant's Annual Incentive Award Opportunity
relating to such Performance Year shall cease to be earnable and shall be
canceled, and the Participant shall have no further rights or opportunities
hereunder, unless otherwise provided in an employment agreement between the
Company and the Participant in effect at the time of Termination of Employment
or otherwise determined by the Committee.

7.   General Provisions.

     (a) Changes to this Plan. The Committee may at any time amend, alter,
suspend, discontinue, or terminate this Plan; provided, however, that any
amendment to the Plan beyond the scope of the Committee's authority shall be
subject to the approval of the Board of Directors. In addition, the Committee
may, in its discretion, accelerate the termination of any deferral period and

<PAGE>

the resulting payment and settlement of deferred amounts, with respect to an
individual Participant or all Participants, without the consent of the affected
Participants.

     (b) Unfunded Status of Participant Rights. Annual Incentive Award
Opportunities, Awards, accounts, deferred amounts, and related rights of a
Participant represent unfunded incentive and deferred compensation obligations
of the Company for ERISA and federal income tax purposes and, with respect
thereto, the Participant shall have rights no greater than those of an unsecured
creditor of the Company.

     (c) No Right to Continued Employment. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee the right to be retained in
the employ of the Company or any of its subsidiaries or affiliates, nor shall it
interfere in any way with the right of the Company or any of its subsidiaries or
affiliates to terminate any employee's employment at any time.

     (d) Nonexclusivity of the Plan. The adoption of this Plan shall not be
construed as creating any limitations on the power of the Board or Committee to
adopt such other compensation arrangements, as it may deem desirable for any
Participant.

     (e) Severability. The invalidity of any provision of the Plan or a document
hereunder shall not be deemed to render the remainder of this Plan or such
document invalid.

     (f) Successors. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise, and whether or not
the corporate existence of the Company continues) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the Company's obligations under the Plan in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place; provided, however, that such successor may replace
the Plan with a Plan substantially equivalent in opportunity and achievability,
as determined by a nationally recognized compensation consulting firm, and
covering the Participants at the time of such succession. Any successor and the
ultimate parent company of such successor shall in any event be subject to the
requirements of this Section 7(f) to the same extent as the Company. Subject to
the foregoing, the Company may transfer and assign its rights and obligations
hereunder.

     (g) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations or document hereunder shall be determined in accordance
with the laws (including those governing contracts) of the State of Illinois,
without giving effect to principles of conflicts of laws.