##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10Q



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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended September 30, 2006

Commission file number 013393



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AMCORE Financial, Inc.



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|NEVADA                                                         |  | 363183870                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

501 Seventh Street, Rockford, Illinois 61104

Telephone Number (815) 9682241



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    x  Yes ̈No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer
and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

Indicate by check mark whether the
registrant is a shell company (as defined in Exchange Act Rule 12b-2). ̈Yes    x  No

The number of shares outstanding of the registrants common stock, par value $0.22 per share, at
November 1, 2006 was 23,942,000.



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##### Table of Contents

AMCORE Financial, Inc.

Form 10Q Table of Contents



|              |  |                                                                                                       |  |           
|------------- |  | ----------------------------------------------------------------------------------------------------- |  | ----------
|              |  |                                                                                                       |  | PageNumber
|PART I        |  | FINANCIAL INFORMATION                                                                                 |  | 3         
|              |  |                                                                                                      
|Item 1        |  | Financial Statements (unaudited)                                                                      |  | 3         
|              |  |                                                                                                      
|              |  | Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005                            |  | 3         
|              |  |                                                                                                      
|              |  | Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2006 and 2005     |  | 4         
|              |  |                                                                                                      
|              |  | Consolidated Statements of Stockholders Equity for the Nine Months Ended September 30, 2006 and 2005 |  | 5         
|              |  |                                                                                                      
|              |  | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006 and 2005           |  | 6         
|              |  |                                                                                                      
|              |  | Notes to Consolidated Financial Statements                                                            |  | 7         
|              |  |                                                                                                      
|Item 2        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 25        
|              |  |                                                                                                      
|Item 3        |  | Quantitative and Qualitative Disclosures About Market Risk                                            |  | 52        
|              |  |                                                                                                      
|Item 4        |  | Controls and Procedures                                                                               |  | 53        
|              |  |                                                                                                      
|PART II       |  | OTHER INFORMATION                                                                                     |  | 53        
|              |  |                                                                                                      
|Item 1        |  | Legal Proceedings                                                                                     |  | 53        
|              |  |                                                                                                      
|Item 1A.      |  | Risk Factors                                                                                          |  | 53        
|              |  |                                                                                                      
|Item 2        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                           |  | 53        
|              |  |                                                                                                      
|Item 6        |  | Exhibits                                                                                              |  | 54        
|              | 
|Signatures    |  | 55                                                                                                   
|              | 
|Exhibit Index |  | 56                                                                                                   



2



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##### Table of Contents

PART 1. ITEM 1. FINANCIAL STATEMENTS

AMCORE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | - | ---------------- | ----- | ---------------------------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                      |  |                   |   |                  |       | September 30,2006                  |           |   | December 31,2005 |  
|                                                                                                                                      |  |                   |   |                  |       | ( in thousands, except share data) |          
|ASSETS                                                                                                                                |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Cash and cash equivalents                                                                                                             |  |                   |   |                  |       | $                                  | 121,599   |   |                  | $ | 144,350   |  
|Interest earning deposits in banks and fed funds sold                                                                                 |  |                   |   |                  | 6,238 |                                    |           |   | 5,713            |  
|Loans held for sale                                                                                                                   |  |                   |   |                  |       |                                    | 19,258    |   |                  |   | 24,138    |  
|Securities available for sale, at fair value                                                                                          |  |                   |   |                  |       |                                    | 1,066,973 |   |                  |   | 1,183,384 |  
|Gross loans                                                                                                                           |  |                   |   |                  |       |                                    | 3,952,724 |   |                  |   | 3,721,864 |  
|Allowance for loan losses                                                                                                             |  |                   |   |                  |       |                                    | (40,626   | ) |                  |   | (40,756   | )
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Net loans                                                                                                                             |  |                   |   |                  |       | $                                  | 3,912,098 |   |                  | $ | 3,681,108 |  
|Company owned life insurance                                                                                                          |  |                   |   |                  |       |                                    | 134,951   |   |                  |   | 132,472   |  
|Premises and equipment, net                                                                                                           |  |                   |   |                  |       |                                    | 89,338    |   |                  |   | 84,818    |  
|Goodwill                                                                                                                              |  |                   |   |                  |       |                                    | 6,148     |   |                  |   | 6,148     |  
|Foreclosed real estate, net                                                                                                           |  |                   |   |                  |       |                                    | 1,540     |   |                  |   | 621       |  
|Other assets                                                                                                                          |  |                   |   |                  |       |                                    | 89,024    |   |                  |   | 82,150    |  
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Total Assets                                                                                                                          |  |                   |   |                  |       | $                                  | 5,447,167 |   |                  | $ | 5,344,902 |  
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|LIABILITIES                                                                                                                           |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Deposits:                                                                                                                             |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Non-interest bearing deposits                                                                                                         |  |                   |   |                  |       | $                                  | 514,845   |   |                  | $ | 524,875   |  
|Interest bearing deposits                                                                                                             |  |                   |   |                  |       |                                    | 1,769,100 |   |                  |   | 1,873,274 |  
|Time deposits                                                                                                                         |  |                   |   |                  |       |                                    | 1,228,787 |   |                  |   | 1,188,337 |  
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Total bank issued deposits                                                                                                            |  |                   |   |                  |       | $                                  | 3,512,732 |   |                  | $ | 3,586,486 |  
|Wholesale deposits                                                                                                                    |  |                   |   |                  |       |                                    | 783,630   |   |                  |   | 626,730   |  
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Total deposits                                                                                                                        |  |                   |   |                  |       | $                                  | 4,296,362 |   |                  | $ | 4,213,216 |  
|Short-term borrowings                                                                                                                 |  |                   |   |                  |       |                                    | 352,003   |   |                  |   | 489,334   |  
|Long-term borrowings                                                                                                                  |  |                   |   |                  |       |                                    | 326,904   |   |                  |   | 169,730   |  
|Other liabilities                                                                                                                     |  |                   |   |                  |       |                                    | 65,797    |   |                  |   | 74,105    |  
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Total Liabilities                                                                                                                     |  |                   |   |                  |       | $                                  | 5,041,066 |   |                  | $ | 4,946,385 |  
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|STOCKHOLDERS EQUITY                                                                                                                  |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Preferred stock, $1 par value; authorized 10,000,000 shares; none issued Common stock, $0.22 par value; authorized 45,000,000
shares; |  | $                 |  |                  |       | $                                  |          |  
|                                                                                                                                      |  |                   |   |                 
|                                                                                                                                      |  | September 30,2006 |   | December 31,2005 |       |                                    |           |   |                  |  
|Issued                                                                                                                                |  | 29,963,739        |   | 29,938,942       |       |                                    |           |   |                  |   |           |  
|Outstanding                                                                                                                           |  | 24,276,980        |   | 24,810,703       |       |                                    | 6,658     |   |                  |   | 6,652     |  
|Treasury stock                                                                                                                        |  | 5,686,759         |   | 5,128,239        |       |                                    | (121,014  | ) |                  |   | (104,240  | )
|Additional paid-in capital                                                                                                            |  |                   |   |                  |       |                                    | 76,120    |   |                  |   | 74,110    |  
|Retained earnings                                                                                                                     |  |                   |   |                  |       |                                    | 455,770   |   |                  |   | 435,113   |  
|Deferred compensation                                                                                                                 |  |                   |   |                  |       |                                    |          |   |                  |   | (294      | )
|Accumulated other comprehensive loss                                                                                                  |  |                   |   |                  |       |                                    | (11,433   | ) |                  |   | (12,824   | )
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Total Stockholders Equity                                                                                                            |  |                   |   |                  |       | $                                  | 406,101   |   |                  | $ | 398,517   |  
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  
|Total Liabilities and Stockholders Equity                                                                                            |  |                   |   |                  |       | $                                  | 5,447,167 |   |                  | $ | 5,344,902 |  
|                                                                                                                                      |  |                   |   |                  |       |                                    |           |   |                  |   |           |  

See accompanying notes to consolidated financial statements.



3



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##### Table of Contents

AMCORE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|--------------------------------------------------------------- |  | -------------------------------------- | ------ | ---- | ------------------------------ | ------ | ---- |  | - | ------- | - |  | - | -------
|                                                                |  | Three Months EndedSeptember 30,        |        |      | Nine Months EndedSeptember 30,
|                                                                |  | 2006                                   |        | 2005 |                                |        | 2006 |  |   | 2005   
|                                                                |  | ( in thousands, except per share data)
|INTEREST INCOME                                                 |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Interest and fees on loans                                      |  | $                                      | 75,364 |      | $                              | 59,273 |      |  | $ | 213,347 |   |  | $ | 163,313
|Interest on securities:                                         |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Taxable                                                         |  |                                        | 10,057 |      |                                | 10,903 |      |  |   | 31,459  |   |  |   | 33,358 
|Tax-exempt                                                      |  |                                        | 1,632  |      |                                | 1,821  |      |  |   | 5,000   |   |  |   | 5,679  
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Total Income on Securities                                      |  | $                                      | 11,689 |      | $                              | 12,724 |      |  | $ | 36,459  |   |  | $ | 39,037 
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Interest on federal funds sold and other short-term investments |  |                                        | 34     |      |                                | 82     |      |  |   | 192     |   |  |   | 164    
|Interest and fees on loans held for sale                        |  |                                        | 385    |      |                                | 451    |      |  |   | 1,009   |   |  |   | 1,008  
|Interest on deposits in banks                                   |  |                                        | 53     |      |                                | 8      |      |  |   | 79      |   |  |   | 26     
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Total Interest Income                                           |  | $                                      | 87,525 |      | $                              | 72,538 |      |  | $ | 251,086 |   |  | $ | 203,548
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|INTEREST EXPENSE                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Interest on deposits                                            |  | $                                      | 36,650 |      | $                              | 24,581 |      |  | $ | 99,506  |   |  | $ | 64,115 
|Interest on short-term borrowings                               |  |                                        | 4,055  |      |                                | 4,553  |      |  |   | 14,008  |   |  |   | 11,926 
|Interest on long-term borrowings                                |  |                                        | 5,670  |      |                                | 2,595  |      |  |   | 13,672  |   |  |   | 7,491  
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Total Interest Expense                                          |  | $                                      | 46,375 |      | $                              | 31,729 |      |  | $ | 127,186 |   |  | $ | 83,532 
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Net Interest Income                                             |  |                                        | 41,150 |      |                                | 40,809 |      |  |   | 123,900 |   |  |   | 120,016
|Provision for loan losses                                       |  |                                        | 2,863  |      |                                | 4,462  |      |  |   | 7,113   |   |  |   | 10,464 
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Net Interest Income After Provision for Loan Losses             |  | $                                      | 38,287 |      | $                              | 36,347 |      |  | $ | 116,787 |   |  | $ | 109,552
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|NON-INTEREST INCOME                                             |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Investment management and trust income                          |  | $                                      | 4,182  |      | $                              | 3,638  |      |  | $ | 11,817  |   |  | $ | 11,345 
|Service charges on deposits                                     |  |                                        | 6,931  |      |                                | 6,410  |      |  |   | 19,086  |   |  |   | 17,444 
|Mortgage banking income                                         |  |                                        | 762    |      |                                | 1,683  |      |  |   | 3,055   |   |  |   | 3,411  
|Company owned life insurance income                             |  |                                        | 2,870  |      |                                | 1,479  |      |  |   | 4,948   |   |  |   | 3,947  
|Brokerage commission income                                     |  |                                        | 700    |      |                                | 575    |      |  |   | 2,325   |   |  |   | 2,052  
|Bankcard fee income                                             |  |                                        | 1,690  |      |                                | 1,261  |      |  |   | 4,562   |   |  |   | 3,597  
|Gain on sale of loans                                           |  |                                        | 116    |      |                                | 162    |      |  |   | 426     |   |  |   | 458    
|Other                                                           |  |                                        | 3,909  |      |                                | 1,639  |      |  |   | 7,881   |   |  |   | 5,444  
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Non-Interest Income, Excluding Net Security (Losses) Gains      |  | $                                      | 21,160 |      | $                              | 16,847 |      |  | $ | 54,100  |   |  | $ | 47,698 
|Net security (losses) gains                                     |  |                                        |       |      |                                | (1     | )    |  |   | 225     |   |  |   | 403    
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Total Non-Interest Income                                       |  | $                                      | 21,160 |      | $                              | 16,846 |      |  | $ | 54,325  |   |  | $ | 48,101 
|OPERATING EXPENSES                                              |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Compensation expense                                            |  | $                                      | 19,127 |      | $                              | 17,415 |      |  | $ | 59,145  |   |  | $ | 50,607 
|Employee benefits                                               |  |                                        | 4,147  |      |                                | 4,438  |      |  |   | 13,500  |   |  |   | 13,453 
|Net occupancy expense                                           |  |                                        | 3,183  |      |                                | 2,658  |      |  |   | 8,404   |   |  |   | 7,961  
|Equipment expense                                               |  |                                        | 2,350  |      |                                | 2,946  |      |  |   | 6,906   |   |  |   | 7,734  
|Data processing expense                                         |  |                                        | 674    |      |                                | 587    |      |  |   | 2,219   |   |  |   | 1,700  
|Professional fees                                               |  |                                        | 2,743  |      |                                | 1,040  |      |  |   | 7,103   |   |  |   | 3,070  
|Communication expense                                           |  |                                        | 1,379  |      |                                | 1,218  |      |  |   | 3,857   |   |  |   | 3,481  
|Advertising and business development                            |  |                                        | 1,789  |      |                                | 1,614  |      |  |   | 5,350   |   |  |   | 4,892  
|Other                                                           |  |                                        | 7,076  |      |                                | 4,925  |      |  |   | 16,632  |   |  |   | 14,154 
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Total Operating Expenses                                        |  | $                                      | 42,468 |      | $                              | 36,841 |      |  | $ | 123,116 |   |  | $ | 107,052
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Income from continuing operations before income taxes           |  | $                                      | 16,979 |      | $                              | 16,352 |      |  | $ | 47,996  |   |  | $ | 50,601 
|Income taxes                                                    |  |                                        | 4,474  |      |                                | 4,646  |      |  |   | 13,598  |   |  |   | 14,604 
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Income from continuing operations                               |  | $                                      | 12,505 |      | $                              | 11,706 |      |  | $ | 34,398  |   |  | $ | 35,997 
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Discontinued operations:                                        |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Income (loss) from discontinued operations                      |  | $                                      |       |      | $                              | 1,476  |      |  | $ | (131    | ) |  |   | 1,384  
|Income tax expense (benefit)                                    |  |                                        |       |      |                                | 599    |      |  |   | (51     | ) |  |   | 591    
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Income (loss) from discontinued operations                      |  | $                                      |       |      | $                              | 877    |      |  | $ | (80     | ) |  | $ | 793    
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Net Income                                                      |  | $                                      | 12,505 |      | $                              | 12,583 |      |  | $ | 34,318  |   |  | $ | 36,790 
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|EARNINGS PER COMMON SHARE                                       |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Basic:  Income from continuing operations                       |  | $                                      | 0.51   |      | $                              | 0.47   |      |  | $ | 1.39    |   |  | $ | 1.45   
|Income from discontinued operations                             |  |                                        |       |      |                                | 0.04   |      |  |   |        |   |  |   | 0.03   
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Net Income                                                      |  | $                                      | 0.51   |      | $                              | 0.51   |      |  | $ | 1.39    |   |  | $ | 1.48   
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Diluted: Income from continuing operations                      |  | $                                      | 0.51   |      | $                              | 0.47   |      |  | $ | 1.39    |   |  | $ | 1.44   
|Income from discontinued operations                             |  |                                        |       |      |                                | 0.03   |      |  |   |        |   |  |   | 0.03   
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Net Income                                                      |  | $                                      | 0.51   |      | $                              | 0.50   |      |  | $ | 1.39    |   |  | $ | 1.47   
|                                                                |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|DIVIDENDS PER COMMON SHARE                                      |  | $                                      | 0.185  |      | $                              | 0.17   |      |  | $ | 0.555   |   |  | $ | 0.51   
|AVERAGE COMMON SHARES OUTSTANDING                               |  |                                        |        |      |                                |        |      |  |   |         |   |  |   |        
|Basic                                                           |  |                                        | 24,463 |      |                                | 24,823 |      |  |   | 24,646  |   |  |   | 24,811 
|Diluted                                                         |  |                                        | 24,498 |      |                                | 25,138 |      |  |   | 24,738  |   |  |   | 25,079 

See accompanying notes to consolidated financial statements.



4



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##### Table of Contents

AMCORE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(Unaudited)



|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------------- |  | --------------------------------- | ----- | ------------- | - | -------- | ------------------------ |  | - | ---------------- | - |  | -------------------- | ------- | - | ------------------------------------------ | - | ---- | ------------------------ |  | - | ------- | - |  | - | ------- | -
|                                                                                         |  | CommonStock                       |       | TreasuryStock |   |          | AdditionalPaid-inCapital |  |   | RetainedEarnings |   |  | DeferredCompensation |         |   | AccumulatedOtherComprehensiveIncome (Loss) |   |      | TotalStockholdersEquity | 
|                                                                                         |  | (in thousands, except share data) |       |               |   |         
|Balance at December 31, 2004                                                             |  | $                                 | 6,643 |               | $ | (102,832 | )                        |  | $ | 74,102           |   |  | $                    | 407,045 |   |                                            | $ | (273 | )                        |  | $ | 1,893   |   |  | $ | 386,578 |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Comprehensive Income (Loss):                                                             |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Net Income                                                                               |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      | 36,790  |   |                                            |   |     |                          |  |   |         |   |  |   | 36,790  |  
|                                                                                         |  |                                   |       |               |   |          |                         
|Net unrealized holding losses on securities available for sale arising during the period |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (16,609 | ) |  |   | (16,609 | )
|Less reclassification adjustment for net security gains included in net income           |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (403    | ) |  |   | (403    | )
|Income tax effect related to items of other comprehensive income                         |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | 6,475   |   |  |   | 6,475   |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Net unrealized losses on securities available for sale                                   |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (10,537 | ) |  |   | (10,537 | )
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Comprehensive Income (Loss)                                                              |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      | 36,790  |   |                                            |   |     |                          |  |   | (10,537 | ) |  |   | 26,253  |  
|Cash dividends on common stock - $0.51 per share                                         |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      | (12,652 | ) |                                            |   |     |                          |  |   |        |   |  |   | (12,652 | )
|Purchase of 188,728 shares for the treasury                                              |  |                                   |      |               |   | (5,583   | )                        |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | (5,583  | )
|Deferred compensation expense and other                                                  |  |                                   |      |               |   |         |                          |  |   | 516              |   |  |                      |        |   |                                            |   | 157  |                          |  |   |        |   |  |   | 673     |  
|Reissuance of 172,543 treasury shares for incentive plans                                |  |                                   |      |               |   | 5,128    |                          |  |   | (1,245           | ) |  |                      |        |   |                                            |   | (220 | )                        |  |   |        |   |  |   | 3,663   |  
|Issuance of 25,276 common shares for Employee Stock Plan                                 |  |                                   | 6     |               |   |         |                          |  |   | 600              |   |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | 606     |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Balance at September 30, 2005                                                            |  | $                                 | 6,649 |               | $ | (103,287 | )                        |  | $ | 73,973           |   |  | $                    | 431,183 |   |                                            | $ | (336 | )                        |  | $ | (8,644  | ) |  | $ | 399,538 |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Balance at December 31, 2005                                                             |  | $                                 | 6,652 |               | $ | (104,240 | )                        |  | $ | 74,110           |   |  | $                    | 435,113 |   |                                            | $ | (294 | )                        |  | $ | (12,824 | ) |  | $ | 398,517 |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Comprehensive Income (Loss):                                                             |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Net Income                                                                               |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      | 34,318  |   |                                            |   |     |                          |  |   |        |   |  |   | 34,318  |  
|                                                                                         |  |                                   |       |               |   |          |                         
|Net unrealized holding gains on securities available for sale arising during the period  |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | 2,483   |   |  |   | 2,483   |  
|Less reclassification adjustment for net security gains included in net income           |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (225    | ) |  |   | (225    | )
|Income tax effect related to items of other comprehensive income                         |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (867    | ) |  |   | (867    | )
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Net unrealized gains on securities available for sale                                    |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | 1,391   |   |  |   | 1,391   |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Comprehensive Income                                                                     |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      | 34,318  |   |                                            |   |     |                          |  |   | 1,391   |   |  |   | 35,709  |  
|                                                                                         |  |                                   |       |               |   |          |                         
|Cash dividends on common stock - $0.555 per share                                        |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      | (13,661 | ) |                                            |   |     |                          |  |   |        |   |  |   | (13,661 | )
|Purchase of 740,546 shares for the treasury                                              |  |                                   |      |               |   | (22,265  | )                        |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | (22,265 | )
|Deferred compensation expense and other                                                  |  |                                   |      |               |   |         |                          |  |   | 136              |   |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | 136     |  
|Stock-based compensation                                                                 |  |                                   |      |               |   |         |                          |  |   | 2,362            |   |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | 2,362   |  
|Reclassification upon adoption of SFAS No. 123R                                          |  |                                   |       |               |   |          |                          |  |   | 342              |   |  |                      |         |   |                                            |   | 294  |                          |  |   |        |   |  |   | 636     |  
|Reissuance of 182,026 treasury shares for incentive plans                                |  |                                   |      |               |   | 5,491    |                          |  |   | (1,435           | ) |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | 4,056   |  
|Issuance of 24,797 common shares for Employee Stock Plan                                 |  |                                   | 6     |               |   |         |                          |  |   | 605              |   |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | 611     |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Balance at September 30, 2006                                                            |  | $                                 | 6,658 |               | $ | (121,014 | )                        |  | $ | 76,120           |   |  | $                    | 455,770 |   |                                            | $ |     |                          |  | $ | (11,433 | ) |  | $ | 406,101 |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  

See accompanying notes to consolidated financial statements.



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AMCORE FINANICAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                  |  |                                |          |   |      |   |          |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                                                  |  | Nine Months EndedSeptember 30, |         
|                                                                                                  |  | 2006                           |          |   | 2005 |  
|                                                                                                  |  | (in thousands)                 |         
|Cash Flows From Operating Activities                                                              |  |                                |          |   |      |   |          |  
|Net income                                                                                        |  | $                              | 34,318   |   |      | $ | 36,790   |  
|Adjustments to reconcile net income from operations to net cash provided by operating activities: |  |                                |          |   |      |   |          |  
|Depreciation and amortization of premises and equipment                                           |  |                                | 5,315    |   |      |   | 6,460    |  
|Amortization and accretion of securities, net                                                     |  |                                | 1,214    |   |      |   | 1,341    |  
|Stock-based compensation expense                                                                  |  |                                | 2,362    |   |      |   |         |  
|Tax benefit on exercise of stock options                                                          |  |                                | 535      |   |      |   | 610      |  
|Excess tax benefits from stock-based compensation                                                 |  |                                | (137     | ) |      |   |         |  
|Provision for loan losses                                                                         |  |                                | 7,113    |   |      |   | 10,464   |  
|Company owned life insurance income, net of death claims                                          |  |                                | (3,645   | ) |      |   | (3,947   | )
|Net securities gains                                                                              |  |                                | (225     | ) |      |   | (403     | )
|Net gains on sale of loans                                                                        |  |                                | (426     | ) |      |   | (458     | )
|Net gains on sale of mortgage loans held for sale                                                 |  |                                | (1,306   | ) |      |   | (2,055   | )
|Originations of mortgage loans held for sale                                                      |  |                                | (237,909 | ) |      |   | (287,138 | )
|Proceeds from sales of mortgage loans held for sale                                               |  |                                | 244,095  |   |      |   | 271,372  |  
|Deferred income tax (benefit) expense                                                             |  |                                | (115     | ) |      |   | 254      |  
|Net (increase) decrease in other assets                                                           |  |                                | (3,612   | ) |      |   | 12,882   |  
|Net (decrease) increase in other liabilities                                                      |  |                                | (6,241   | ) |      |   | 5,265    |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Net cash provided by operating activities                                                         |  | $                              | 41,336   |   |      | $ | 51,437   |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Cash Flows From Investing Activities                                                              |  |                                |          |   |      |   |          |  
|Proceeds from maturities of securities available for sale                                         |  | $                              | 156,372  |   |      | $ | 166,088  |  
|Proceeds from sales of securities available for sale                                              |  |                                | 40,488   |   |      |   | 34,994   |  
|Purchase of securities available for sale                                                         |  |                                | (79,179  | ) |      |   | (164,705 | )
|Net increase in interest earning deposits in banks and fed funds sold                             |  |                                | (525     | ) |      |   | (5,032   | )
|Net increase in loans                                                                             |  |                                | (250,512 | ) |      |   | (342,150 | )
|Proceeds from the sale of loans                                                                   |  |                                | 6,780    |   |      |   | 8,359    |  
|Net death claim (investment) in company owned life insurance                                      |  |                                | 1,166    |   |      |   | (3,314   | )
|Premises and equipment expenditures, net                                                          |  |                                | (9,815   | ) |      |   | (5,896   | )
|Proceeds from the sale of foreclosed real estate                                                  |  |                                | 1,101    |   |      |   | 4,642    |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Net cash used for investing activities                                                            |  | $                              | (134,124 | ) |      | $ | (307,014 | )
|                                                                                                  |  |                                |          |   |      |   |          |  
|Cash Flows From Financing Activities                                                              |  |                                |          |   |      |   |          |  
|Net (decrease) increase in non-interest-bearing demand deposits                                   |  | $                              | (10,030  | ) |      | $ | 22,836   |  
|Net (decrease) increase in interest-bearing demand deposits                                       |  |                                | (104,174 | ) |      |   | 298,085  |  
|Net increase in time deposits                                                                     |  |                                | 40,450   |   |      |   | 72,649   |  
|Net increase (decrease) in wholesale deposits                                                     |  |                                | 156,900  |   |      |   | (32,185  | )
|Net decrease in short-term borrowings                                                             |  |                                | (144,852 | ) |      |   | (89,108  | )
|Proceeds from long-term borrowings                                                                |  |                                | 279,400  |   |      |   | 22,800   |  
|Payment of long-term borrowings                                                                   |  |                                | (116,000 | ) |      |   |         |  
|Dividends paid                                                                                    |  |                                | (13,661  | ) |      |   | (12,652  | )
|Issuance of common shares for employee stock plan                                                 |  |                                | 611      |   |      |   | 606      |  
|Reissuance of treasury shares for incentive plans                                                 |  |                                | 3,521    |   |      |   | 3,053    |  
|Excess tax benefits from stock-based compensation                                                 |  |                                | 137      |   |      |   |         |  
|Purchase of shares for treasury                                                                   |  |                                | (22,265  | ) |      |   | (5,583   | )
|                                                                                                  |  |                                |          |   |      |   |          |  
|Net cash provided by financing activities                                                         |  | $                              | 70,037   |   |      | $ | 280,501  |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Net change in cash and cash equivalents                                                           |  | $                              | (22,751  | ) |      | $ | 24,924   |  
|Cash and cash equivalents:                                                                        |  |                                |          |   |      |   |          |  
|Beginning of year                                                                                 |  |                                | 144,350  |   |      |   | 117,072  |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|End of period                                                                                     |  | $                              | 121,599  |   |      | $ | 141,996  |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Supplemental Disclosures of Cash Flow Information                                                 |  |                                |          |   |      |   |          |  
|Cash payments for:                                                                                |  |                                |          |   |      |   |          |  
|Interest paid to depositors                                                                       |  | $                              | 94,320   |   |      | $ | 63,517   |  
|Interest paid on borrowings                                                                       |  |                                | 25,662   |   |      |   | 18,430   |  
|Income tax payments                                                                               |  |                                | 15,897   |   |      |   | 12,008   |  
|                                                                                                  |  |                               
|Non-Cash Investing and Financing                                                                  |  |                                |          |   |      |   |          |  
|Foreclosed real estate - acquired in settlement of loans                                          |  |                                | 1,895    |   |      |   | 2,054    |  
|Transfer current portion of long-term borrowings to short-term borrowings                         |  |                                | 7,521    |   |      |   | 16,715   |  
|Capitalized interest                                                                              |  |                                | 240      |   |      |   | 46       |  

See accompanying notes to consolidated financial statements.



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AMCORE Financial, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1  BASIS OF PRESENTATION

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles for
interim financial reporting and with instructions for Form 10Q and Rule 1001 of Regulation SX. The preparation of Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ from these estimates. These financial statements include all adjustments (consisting of normal recurring accruals)
that in the opinion of management are considered necessary for the fair presentation of the financial position and results of operations for the periods shown. Certain prior year amounts may be reclassified to conform to the current year
presentation.

The accompanying unaudited Consolidated Financial Statements and related notes, including the critical accounting estimates, should be read
in conjunction with the audited Financial Statements and related notes contained in the 2005 Annual Report of AMCORE Financial, Inc. and Subsidiaries (the Company) on Form 10-K (2005 Form 10-K). Effective the first quarter of 2006, the
Company began recognizing compensation expense for stock options with the adoption of Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2004) Share-Based Payment (SFAS 123R). There have been no other significant
changes to our accounting policies from the 2005 Form 10-K.

Operating results for the three- and nine-month periods ended September 30, 2006 are not
necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2006. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the 2005 Form 10K.

Discontinued Operations

During 2005, the Company
closed on the transition of three Vintage equity funds into two mutual funds managed by Federated Investors, Inc. and sold its subsidiary Investors Management Group, Ltd. (IMG). The transition of $142 million in assets of three Vintage equity funds
to the two Federated mutual funds was completed in September 2005, resulting in a pre-tax gain of $1.3 million. On December 30, 2005, the Company completed the sale of IMG resulting in a $576,000 pre-tax loss, net of associated costs, and a
$3.2 million tax charge. The operating results for IMG have been reclassified and shown as discontinued operations on the Statements of Income and in the Notes to the Consolidated Financial Statements for all periods presented. This includes the
effect of the sale of IMG and the transition of the Vintage equity funds.

New Accounting Standards

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No. 158, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and 132(R). The standard requires companies to recognize the funded status of benefit plans in its statement of financial
position, recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost, measure defined
benefit plan assets and obligations as of the date of the employers fiscal year-end statement of financial position, and disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost
for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition assets or obligations. This standard is effective as of the end of the fiscal year ending after December 15,
2006, with the exception of the measurement date of plan assets and obligations, which is effective for fiscal years beginning after December 15, 2008. The Company has not completed its evaluation of the standard, but adoption is not expected
to have a material impact on the Companys consolidated financial position or results of operations.

In September 2006, the FASB issued SFAS
No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. The
standard applies to other accounting pronouncements that require or permit fair value measurements, but does not require any new fair value measurements. For some entities, the application of the standard may change how fair value is measured. The
standard is effective for financial statements issued for fiscal years beginning after November 15, 2007, and all interim periods within those fiscal years. The Company has not completed its evaluation of the standard, but adoption is not
expected to have a material impact on the Companys consolidated financial position or results of operations.

In September 2006, the Securities and
Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108, which provides guidance on the effects of the accumulation of prior year misstatements in quantifying current year misstatements and for assessing materiality.The
guidance is intended to eliminate diversity in practice by requiring that materiality for a current year misstatement be assessed by considering both the cumulative amount and current year resulting from the misstatement. For



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companies affected by the guidance, restatement of prior financial statements is generally not required as long as the
effect of initially applying the guidance is reflected in their annual financial statements covering the first fiscal year ending after November 15, 2006. The cumulative effect of the initial application should be reported in the carrying
amounts of assets and liabilities as of the beginning of that fiscal year, and the offsetting adjustment should be made to the opening balance of retained earnings for that year. The Company has not completed its evaluation of the guidance, but
adoption is not expected to have a material impact on the Companys consolidated financial position or results of operations.

In September 2006, the
FASB ratified Emerging Issues Task Force (EITF) Issue No. 06-4 Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. The Issue requires companies to
recognize a liability in accordance with FASB Statement No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions or Accounting Principles Board (APB) Opinion No. 12 for future benefits on split dollar
insurance arrangements if the benefit to the employee extends to postretirement periods. The issue is required to be applied to fiscal years beginning after December 15, 2007, with earlier application permitted. Recognition of the liability
should be through either (a) a change in accounting principle through a cumulative-effect adjustment to retained earnings or to other components of equity or net assets in the statement of financial position as of the beginning of the year of
adoption, or (b) a change in accounting principle through retrospective application to all prior periods. The Company has not completed its evaluation of this issue, but adoption is not expected to have a material impact on the Companys
consolidated financial position or results of operations.

In September 2006, the FASB also ratified EITF Issue No. 06-5 Accounting for
Purchases of Life Insurance-Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin (TB) No. 85-4, Accounting for Purchases of Life Insurance. The Issue discusses whether an entity should consider the
contractual ability to surrender all of the individual-life policies or (certificates under a group life policy) together when determining the amount that could be realized in accordance with TB 85-4. Under some insurance contracts, the policies
provide a surrender value greater if all individual policies are surrendered at the same time rather than if the policies were surrendered over a period of time. The EITF determined that any additional amounts included in the contractual terms
should be considered when determining the realizable amounts. This issue is effective for fiscal years beginning after December 15, 2006, with earlier application permitted, with the effects of applying this Issue being either (a) a change
in accounting principle through a cumulative-effect adjustment to retained earnings or to other components of equity or net assets in the statement of financial position as of the beginning of the year of adoption or (b) a change in accounting
principle through retrospective application to all prior periods. The Company has not completed its evaluation of this issue, but adoption is not expected to have a material impact on the Companys consolidated financial position or results of
operations.

In June 2006, the FASB issued Financial Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxesan
Interpretation of FASB Statement No. 109 that clarifies the accounting for uncertain tax positions recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income
Taxes. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides
guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This interpretation is effective for fiscal years beginning after December 15, 2006. The Company has not completed its
evaluation of the standard, but adoption of this interpretation is not expected to have a material impact on the Companys consolidated financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, which amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. SFAS No. 156 requires an entity to separately recognize servicing assets and servicing liabilities and to report these balances at fair value upon inception. Future methods of assessing values can be
performed using either the amortization or fair value measurement techniques. Adoption of SFAS No. 156 is required for transactions occurring in fiscal years beginning after September 15, 2006. The adoption of this standard is not expected
to have a material impact on the Companys consolidated financial position or results of operations.

In February 2006, the FASB issued SFAS
No. 155, Accounting for Certain Hybrid Financial Instruments, which establishes the accounting for certain derivatives embedded in other financial instruments (hybrid financial instruments). This Statement is effective
for all financial instruments acquired, issued, or subject to a remeasurement event occurring after January 1, 2007, the start of the Companys next fiscal year. The adoption of this standard is not expected to have a material impact on
the Companys consolidated financial position or results of operations.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and
Error Corrections, which provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in
accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS No. 154 also addresses the reporting of a correction of an error by restating previously issued financial
statements. This Statement is effective, on a prospective basis, for fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 on January 1, 2006 did not affect the Companys financial position or results of
operation.



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SFAS No. 123R, Share-Based Payment was issued in December 2004 and requires compensation cost relating
to share-based payment transactions be recognized in the Consolidated Financial Statements for periods beginning after December 15, 2005. Companies are no longer able to account for share-based compensation transactions using the intrinsic
value method in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees. Instead, companies are required to account for such transactions using a fair-value method and recognize the expense in the Consolidated
Statements of Income. SFAS 123R supercedes APB Opinion No. 25 and revises guidance in SFAS 123, Accounting for Stock-Based Compensation. See Note 13 of the Notes to the Consolidated Financial Statements for information on the
assumptions used to calculate the fair value of stock-based compensation and other disclosures required by SFAS 123R.

In November 2005, the FASB issued
FASB Staff Position No. FAS 123R-3 Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards that allows for a simplified method to establish the beginning balance of the additional paid-in capital pool
(APIC Pool) related to the tax effects of employee stock-based compensation, and to determine the subsequent impact on the APIC Pool and Consolidated Statements of Cash Flows of the tax effects of employee stock-based compensation awards that are
outstanding upon adoption of SFAS 123R. The Company has not yet determined if the simplified method will be elected. The election will be determined during the fourth quarter of 2006.

In November 2005, the FASB issued FASB Staff Position (FSP) Nos. FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments, which applies to
reporting periods beginning after December 15, 2005. The FSPs provide guidance on determining when investments in certain debt and equity securities are considered impaired, whether that impairment is other-than-temporary, and on measuring such
impairment loss. The FSPs also include accounting considerations subsequent to the recognition of other-than-temporary impairment and requirements for certain disclosures about unrealized losses that have not been recognized as other-than-temporary
impairments. The adoption of the FSPs on January 1, 2006 did not have a material effect on the Companys financial position or results of operation.



9



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##### Table of Contents

NOTE 2 - SECURITIES

A summary of information for investment securities, categorized by security type, at September 30, 2006 and December 31, 2005 follows. Fair values are based on quoted market prices or are based on quoted prices for similar
financial instruments.



|                                                    |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|--------------------------------------------------- |  | -------------- | --------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | ---------
|                                                    |  | AmortizedCost  |           | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|                                                    |  | (in thousands)
|September 30, 2006                                  |  |                |          
|Securities Available for Sale:                      |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|U.S. Treasury                                       |  | $              | 5,004     |                      | $ |                      |  | $ | (61        | ) |  | $ | 4,943    
|U.S. Government sponsored enterprises (GSEs)        |  |                | 58,578    |                      |   | 20                    |  |   | (992       | ) |  |   | 57,606   
|GSEs and U.S. agency mortgage-backed securities (1) |  |                | 802,853   |                      |   | 760                   |  |   | (19,199    | ) |  |   | 784,414  
|State and political subdivisions                    |  |                | 164,355   |                      |   | 1,904                 |  |   | (852       | ) |  |   | 165,407  
|Corporate obligations and other (2)                 |  |                | 54,617    |                      |   | 361                   |  |   | (375       | ) |  |   | 54,603   
|                                                    |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|Total Securities Available for Sale                 |  | $              | 1,085,407 |                      | $ | 3,045                 |  | $ | (21,479    | ) |  | $ | 1,066,973
|                                                    |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|December 31, 2005                                   |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|Securities Available for Sale:                      |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|U.S. Treasury                                       |  | $              | 5,008     |                      | $ |                      |  | $ | (91        | ) |  | $ | 4,917    
|U.S. Government sponsored enterprises (GSEs)        |  |                | 117,161   |                      |   | 43                    |  |   | (1,445     | ) |  |   | 115,759  
|GSEs and U.S. agency mortgage-backed securities (1) |  |                | 851,552   |                      |   | 788                   |  |   | (20,450    | ) |  |   | 831,890  
|State and political subdivisions                    |  |                | 166,051   |                      |   | 2,244                 |  |   | (1,114     | ) |  |   | 167,181  
|Corporate obligations and other (2)                 |  |                | 64,304    |                      |   | 56                    |  |   | (723       | ) |  |   | 63,637   
|                                                    |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|Total Securities Available for Sale                 |  | $              | 1,204,076 |                      | $ | 3,131                 |  | $ | (23,823    | ) |  | $ | 1,183,384
|                                                    |  |                |           |                      |   |                       |  |   |            |   |  |   |          

A summary of unrealized loss information for investment securities, categorized by security type, was as follows:



|                                                         |  |                     |         |                   |                     |        |            |       |                      |         |  |            |         |                   |  |   |         |  |   |         |  
|-------------------------------------------------------- |  | ------------------- | ------- | ----------------- | ------------------- | ------ | ---------- | ----- | -------------------- | ------- |  | ---------- | ------- | ----------------- |  | - | ------- |  | - | ------- | -
|                                                         |  | Less Than 12 Months |         |                   | 12 Months or Longer |        |            | Total |                     
|                                                         |  | Fair Value          |         | Unrealized Losses |                     |        | Fair Value |       | Unrealized Losses(3) |         |  | Fair Value |         | Unrealized Losses | 
|                                                         |  | (in thousands)      |        
|September 30, 2006                                       |  |                     |         |                  
|Securities Available for Sale:                           |  |                     |         |                   |                     |        |            |       |                      |         |  |            |         |                   |  |   |         |  |   |         |  
|U.S. Treasury                                            |  | $                   |        |                   | $                   |       |            |       | $                    | 4,943   |  | $          | (61     | )                 |  | $ | 4,943   |  | $ | (61     | )
|U.S. Government sponsored enterprises (GSEs)             |  |                     | 11,408  |                   |                     | (16    | )          |       |                      | 37,307  |  |            | (976    | )                 |  |   | 48,715  |  |   | (992    | )
|GSEs and U.S. agency mortgage-backed securities (1)      |  |                     | 23,019  |                   |                     | (73    | )          |       |                      | 688,224 |  |            | (19,126 | )                 |  |   | 711,243 |  |   | (19,199 | )
|State and political subdivisions                         |  |                     | 21,425  |                   |                     | (101   | )          |       |                      | 40,392  |  |            | (751    | )                 |  |   | 61,817  |  |   | (852    | )
|Corporate obligations and other                          |  |                     | 5,113   |                   |                     | (22    | )          |       |                      | 11,382  |  |            | (353    | )                 |  |   | 16,495  |  |   | (375    | )
|                                                         |  |                     |         |                   |                     |        |            |       |                      |         |  |            |         |                   |  |   |         |  |   |         |  
|Total Unrealized Losses on Securities Available for Sale |  | $                   | 60,965  |                   | $                   | (212   | )          |       | $                    | 782,248 |  | $          | (21,267 | )                 |  | $ | 843,213 |  | $ | (21,479 | )
|                                                         |  |                     |         |                   |                     |        |            |       |                      |         |  |            |         |                   |  |   |         |  |   |         |  
|December 31, 2005                                        |  |                     |         |                  
|Securities Available for Sale:                           |  |                     |         |                   |                     |        |            |       |                      |         |  |            |         |                   |  |   |         |  |   |         |  
|U.S. Treasury                                            |  | $                   |        |                   | $                   |       |            |       | $                    | 4,917   |  | $          | (91     | )                 |  | $ | 4,917   |  | $ | (91     | )
|U.S. Government sponsored enterprises (GSEs)             |  |                     | 37,357  |                   |                     | (491   | )          |       |                      | 63,773  |  |            | (954    | )                 |  |   | 101,130 |  |   | (1,445  | )
|GSEs and U.S. agency mortgage-backed securities (1)      |  |                     | 362,303 |                   |                     | (6,281 | )          |       |                      | 434,655 |  |            | (14,169 | )                 |  |   | 796,958 |  |   | (20,450 | )
|State and political subdivisions                         |  |                     | 54,991  |                   |                     | (787   | )          |       |                      | 11,218  |  |            | (327    | )                 |  |   | 66,209  |  |   | (1,114  | )
|Corporate obligations and other                          |  |                     | 11,863  |                   |                     | (269   | )          |       |                      | 11,553  |  |            | (454    | )                 |  |   | 23,416  |  |   | (723    | )
|                                                         |  |                     |         |                   |                     |        |            |       |                      |         |  |            |         |                   |  |   |         |  |   |         |  
|Total Unrealized Losses on Securities Available for Sale |  | $                   | 466,514 |                   | $                   | (7,828 | )          |       | $                    | 526,116 |  | $          | (15,995 | )                 |  | $ | 992,630 |  | $ | (23,823 | )
|                                                         |  |                     |         |                   |                     |        |            |       |                      |         |  |            |         |                   |  |   |         |  |   |         |  

---

|(1) | Includes U.S. Government agencies.
|--- | ----------------------------------

|(2) | At September 30, 2006, includes investments of $4 million and $20 million, respectively, in stock of the Federal Reserve Bank (FRB) and the Federal Home Loan Bank (FHLB). At
December 31, 2005, these amounts were $4 million and $21 million, respectively. These investments are recorded at historical cost with income recorded when dividends are declared. A portion of the FRB and FHLB investments are restricted as to
sale because they are held to satisfy membership requirements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The Company has the ability to hold, and has no present intent to dispose of, the related securities as of September 30, 2006. The total $21.3 million of unrealized losses
related to 190 securities. None of the unrealized losses were individually significant to the total and, except as discussed below, the unrealized losses were caused by interest rate increases. Of the total, $19.1 million was related to 118
mortgage-backed securities issued by GSEs with a quality rating of Aaa; $976,000 related to six Aaa rated GSEs; $61,000 related to one Aaa rated treasury note; and $751,000 related to 63 municipal obligation bonds
with quality ratings from A3 to Aaa. Corporate obligations and other included one asset-backed bond with an unrealized loss of $310,000 that had an average life of 4.4 years and was collateralized by fixed rate manufactured
housing contracts and installment loan agreements. The bond had a quality rating of B3 and was sufficiently collateralized such that credit loss was considered remote. The remaining $43,000 was an asset-backed bond with an average life
of 1.2 years and was collateralized by owner occupied first lien, conforming mortgage loans. This bond had a quality rating of Aaa and was sufficiently collateralized such that credit loss was considered remote. In the event of
prepayment, it is expected that the Company would recover substantially all of its recorded investment in both of these bonds.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A summary of
realized gain and loss information follows:



|                            |  |                |       |                |   |      |                    |  |   |     |  
|--------------------------- |  | -------------- | ----- | -------------- | - | ---- | ------------------ |  | - | --- | -
|                            |  | RealizedGains  |       | RealizedLosses |   |      | Net Gains/(Losses) | 
|                            |  | (in thousands) |      
|For the three months ended: |  |                |       |                |   |      |                    |  |   |     |  
|September 30, 2006          |  | $              |      |                | $ |     |                    |  | $ |    |  
|September 30, 2005          |  |                |      |                |   | (1   | )                  |  |   | (1  | )
|                            |  |                |      
|For the nine months ended:  |  |                |       |                |   |      |                    |  |   |     |  
|September 30, 2006          |  | $              | 1,012 |                | $ | (787 | )                  |  | $ | 225 |  
|September 30, 2005          |  |                | 460   |                |   | (57  | )                  |  |   | 403 |  

At September 30, 2006 and 2005, securities with a fair value of approximately $826 million and $898 million,
respectively, were pledged to secure public deposits, securities under agreements to repurchase, derivative credit exposure and for other purposes required by law.



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##### Table of Contents

NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES

The composition of the loan portfolio at September 30, 2006 and December 31, 2005 was as follows:



|                                       |  |                    |           |   |                   |   |           |  
|-------------------------------------- |  | ------------------ | --------- | - | ----------------- | - | --------- | -
|                                       |  | September 30, 2006 |           |   | December 31, 2005 |  
|                                       |  | (in thousands)     |          
|Commercial, financial and agricultural |  | $                  | 837,641   |   |                   | $ | 818,657   |  
|Real estate-commercial                 |  |                    | 1,912,704 |   |                   |   | 1,821,868 |  
|Real estate-residential                |  |                    | 495,660   |   |                   |   | 459,823   |  
|Real estate-construction               |  |                    | 398,677   |   |                   |   | 310,006   |  
|Installment and consumer               |  |                    | 308,042   |   |                   |   | 311,497   |  
|Direct lease financing                 |  |                    |          |   |                   |   | 13        |  
|                                       |  |                    |           |   |                   |   |           |  
|Gross loans                            |  | $                  | 3,952,724 |   |                   | $ | 3,721,864 |  
|Allowance for loan losses              |  |                    | (40,626   | ) |                   |   | (40,756   | )
|                                       |  |                    |           |   |                   |   |           |  
|Net Loans                              |  | $                  | 3,912,098 |   |                   | $ | 3,681,108 |  
|                                       |  |                    |           |   |                   |   |           |  

An analysis of the allowance for loan losses for the periods ended
September 30, 2006 and September 30, 2005 is presented below:



|                                           |  |                                 |         |   |      |   |         |  
|------------------------------------------ |  | ------------------------------- | ------- | - | ---- | - | ------- | -
|                                           |  | Nine Months Ended September 30, |        
|                                           |  | 2006                            |         |   | 2005 |  
|                                           |  | (in thousands)                  |        
|Balance at beginning of year               |  | $                               | 40,756  |   |      | $ | 40,945  |  
|Provision charged to expense               |  |                                 | 7,113   |   |      |   | 10,464  |  
|Loans charged off                          |  |                                 | (10,985 | ) |      |   | (12,664 | )
|Recoveries on loans previously charged off |  |                                 | 3,742   |   |      |   | 1,944   |  
|Estimated loss on unfunded commitments (1) |  |                                 |        |   |      |   | (714    | )
|                                           |  |                                 |         |   |      |   |         |  
|Balance at end of period                   |  | $                               | 40,626  |   |      | $ | 39,975  |  
|                                           |  |                                 |         |   |      |   |         |  

---

|(1) | Reclassified to other liabilities
|--- | ---------------------------------



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NOTE 4  GOODWILL AND OTHER INTANGIBLE ASSETS

The Companys goodwill by segment at September 30, 2006 is as follows (in thousands):



|                                |  |   |      
|------------------------------- |  | - | -----
|Retail Banking                  |  | $ | 3,572
|Commercial Banking              |  |   | 2,381
|Investment Management and Trust |  |   | 195  
|                                |  |   |      
|Total Goodwill                  |  | $ | 6,148
|                                |  |   |      

There were no changes in the carrying amount of goodwill for the nine months
ended September 30, 2006.

The Originated Mortgage Servicing Right (OMSR) asset values, which are recorded in Other Assets on the Consolidated Balance
Sheets are included in the Mortgage Banking Segment, are as follows:



|                                              |  |                   |         |   |                  |   |         |  
|--------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                              |  | September 30,2006 |         |   | December 31,2005 |  
|                                              |  | (in thousands)    |        
|Unamortized Cost of Mortgage Servicing Rights |  |                   |         |   |                  |   |         |  
|Gross Carrying Amount                         |  | $                 | 42,562  |   |                  | $ | 39,763  |  
|Less: Accumulated Amortization                |  |                   | (28,338 | ) |                  |   | (26,488 | )
|Less: OMSR Valuation Allowance                |  |                   |        |   |                  |   |        |  
|                                              |  |                   |         |   |                  |   |         |  
|Net OMSR at end of period                     |  | $                 | 14,224  |   |                  | $ | 13,275  |  
|                                              |  |                   |         |   |                  |   |         |  
|Fair value of OMSRs                           |  | $                 | 15,529  |   |                  | $ | 16,064  |  
|                                              |  |                   |         |   |                  |   |         |  
|OMSR Valuation Allowance                      |  |                   |         |   |                  |   |         |  
|Balance at beginning of year                  |  | $                 |        |   |                  | $ | 53      |  
|Net impairment valuation credited to income   |  |                   |        |   |                  |   | (53     | )
|                                              |  |                   |         |   |                  |   |         |  
|Balance at end of period                      |  | $                 |        |   |                  | $ |        |  
|                                              |  |                   |         |   |                  |   |         |  

The current and estimated OMSR amortization expense on the Companys OMSR
asset are as follows (in thousands):



|                                      |  |   |       
|------------------------------------- |  | - | ------
|Aggregate Amortization Expense        |  |   |       
|For Quarter Ended 9/30/06             |  | $ | 656   
|For Nine Months Ended 9/30/06         |  |   | 1,850 
|                                      | 
|Estimated Amortization Expense        |  |   |       
|For Remainder of Year Ending 12/31/06 |  | $ | 743   
|For Year Ending 12/31/07              |  |   | 3,000 
|For Year Ending 12/31/08              |  |   | 2,490 
|For Year Ending 12/31/09              |  |   | 2,018 
|For Year Ending 12/31/10              |  |   | 1,613 
|For Year Ending 12/31/11              |  |   | 1,265 
|Thereafter                            |  |   | 3,095 
|                                      |  |   |       
|Total                                 |  | $ | 14,224
|                                      |  |   |       

The weighted-average amortization period for OMSR retained during the third quarter of 2006 was 12 years. The
unpaid principal balance of mortgage loans serviced for others, plus mortgage loans held for sale, was $1.4 billion as of both September 30, 2006 and December 31, 2005, and $1.3 billion as of September 30, 2005.



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NOTE 5 SALE OF RECEIVABLES

The Company periodically sells certain indirect automobile loans in securitization transactions. Upon sale, the net carrying amount of the loans is removed from the Consolidated Balance Sheet in exchange for cash and
certain retained residual interests. The retained interests include rights to service the loans that were sold (the Servicing Rights) and an interest in residual cash flows (the Interest-Only Strip). The Interest-Only Strip
includes the excess of interest collected on the loans over the amount required to be paid to the investors and the securitization agent (the Excess Spread) plus an interest in sales proceeds that were not remitted by the securitization
trust at the time of the initial sale of the loans to the extent it exceeds projected credit losses (the Credit Enhancement or Overcollateralization). There were no sales of indirect automobile loans during the first three
quarters of 2006 or 2005.

The Company receives monthly servicing fees equal to 0.75% per annum of the outstanding beginning principal balance of the
loans serviced for the month and rights to future cash flows arising after the investors in the securitization trust have received the returns for which they have contracted. The Companys retained interests are subordinate to investors
interests. The value of the Interest-Only Strip is subject to prepayment risk and interest rate risk on the Excess Spread and credit risk on the transferred automobile loans on the Overcollateralization. The Companys risk of loss attributable
to prepayment and credit risk is limited to its interest in the Interest-Only Strip. Neither the investors nor the securization trust have any further recourse to the Companys other assets. Interest rate risk could exceed the Companys
interest in the Excess Spread, but such a possibility is not considered probable as of September 30, 2006.

Key economic assumptions used in measuring
the retained interests as of September 30, 2006, including the sensitivity of the current fair value of residual cash flows to immediate 10% and 20% adverse changes in those assumptions, are as follows:



|                                             |  |                          |       |   |                  |   |       |                  |  |   |       |  
|-------------------------------------------- |  | ------------------------ | ----- | - | ---------------- | - | ----- | ---------------- |  | - | ----- | -
|                                             |  | As of September 30, 2006 |      
|                                             |  | Actual                   |       |   | 10%AdverseChange |   |       | 20%AdverseChange | 
|                                             |  | (in thousands)           |      
|Prepayment speed assumptions                 |  |                          |       |   |                  |   |       |                  |  |   |       |  
|Prepayment speed                             |  |                          | 2.29  | % |                  |   | 2.52  | %                |  |   | 2.75  | %
|Weighted average life (in months)            |  |                          | 10.7  |   |                  |   | 10.2  |                  |  |   | 10.1  |  
|Fair value of retained interests             |  | $                        | 4,514 |   |                  | $ | 4,538 |                  |  | $ | 4,535 |  
|Change in fair value                         |  | $                        |      |   |                  | $ | 24    |                  |  | $ | 21    |  
|Expected credit loss assumptions             |  |                          |       |   |                  |   |       |                  |  |   |       |  
|Expected credit losses (loss to liquidation) |  |                          | 0.57  | % |                  |   | 0.63  | %                |  |   | 0.68  | %
|Fair value of retained interests             |  | $                        | 4,514 |   |                  | $ | 4,481 |                  |  | $ | 4,449 |  
|Change in fair value                         |  | $                        |      |   |                  | $ | (33   | )                |  | $ | (65   | )
|Residual cash flow discount rate assumptions |  |                          |       |   |                  |   |       |                  |  |   |       |  
|Residual cash flow discount rate (annual)    |  |                          | 14.3  | % |                  |   | 15.7  | %                |  |   | 17.2  | %
|Fair value of retained interests             |  | $                        | 4,514 |   |                  | $ | 4,428 |                  |  | $ | 4,343 |  
|Change in fair value                         |  | $                        |      |   |                  | $ | (86   | )                |  | $ | (171  | )
|Interest rate assumptions                    |  |                          |       |   |                  |   |       |                  |  |   |       |  
|Weighted average forward rate (annual)       |  |                          | 4.92  | % |                  |   | 5.38  | %                |  |   | 5.85  | %
|Fair value of retained interests             |  | $                        | 4,514 |   |                  | $ | 4,252 |                  |  | $ | 3,969 |  
|Change in fair value                         |  | $                        |      |   |                  | $ | (262  | )                |  | $ | (545  | )

These sensitivities are hypothetical and should be used with caution. Changes in fair value based on a 10%
variation should not be extrapolated because the relationship of the change in assumption to the change in fair value may not always be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the
retained interests is calculated without changing any other assumption; in reality, changes in one factor may correlate with changes in another (for example, increases in market interest rates may be concurrent with lower prepayments and increased
credit losses), and may magnify or counteract the sensitivities.

Total cash flows attributable to the indirect automobile loan securitization transactions
were inflows of $1.4 million and $2.2 million for the third quarters of 2006 and 2005, respectively. The following table summarizes the various cash flows received from and paid to the securitization trust:



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##### Table of Contents

|                                                     |  |                             |   |                         |   |                 |  |           |       |  |   |  
|---------------------------------------------------- |  | --------------------------- | - | ----------------------- | - | --------------- |  | --------- | ----- |  | - | -
|                                                     |  | Proceeds FromSecuritization |   | Servicing FeesCollected |   | Other CashFlows |  | Fees Paid
|                                                     |  | (in thousands)             
|Cash flows received from trust in third quarter 2006 |  | $                           |  |                         | $ | 152             |  | $         | 1,234 |  | $ | 
|Cash flows received from trust in third quarter 2005 |  | $                           |  |                         | $ | 285             |  | $         | 1,927 |  | $ | 

Other cash flows include, for example, gross cash flows from Interest-Only Strips, net of reductions in such cash
flows for loan defaults, including the release of excess Overcollateralization funds.

The following table presents quantitative information about
delinquencies (loans 30 or more days past due plus non-accruals), net credit losses, and components of securitized indirect automobile loans and other assets managed together with them. Loan amounts represent the principal amount of the loan only.
Retained interests held for securitized assets are excluded from this table because they are recognized separately.



|                  |  |                                 |         |                                     |   |                   |  |      |       |      |   |       |  |   |       |  |   |      
|----------------- |  | ------------------------------- | ------- | ----------------------------------- | - | ----------------- |  | ---- | ----- | ---- | - | ----- |  | - | ----- |  | - | -----
|                  |  | Total Principal Amount of Loans |         | Principal Amount ofDelinquent Loans |   | Net Credit Losses
|                  |  | As of September 30              |         | Year-to-Date                       
|                  |  | (in thousands)                 
|                  |  | 2006                            |         | 2005                                |   | 2006              |  | 2005 |       | 2006 |   | 2005 
|Held in portfolio |  | $                               | 249,136 |                                     | $ | 249,510           |  | $    | 2,698 |      | $ | 3,174 |  | $ | 766   |  | $ | 1,229
|Securitized       |  |                                 | 66,180  |                                     |   | 127,541           |  |      | 1,712 |      |   | 2,979 |  |   | 630   |  |   | 1,517
|                  |  |                                 |         |                                     |   |                   |  |      |       |      |   |       |  |   |       |  |   |      
|Total             |  | $                               | 315,316 |                                     | $ | 377,051           |  | $    | 4,410 |      | $ | 6,153 |  | $ | 1,396 |  | $ | 2,746
|                  |  |                                 |         |                                     |   |                   |  |      |       |      |   |       |  |   |       |  |   |      

Actual and projected static pool credit losses, as a percentage of indirect automobile loans securitized are
1.72%, 1.79% and 1.80% as of the quarters ended September 30, 2006, 2007, and 2008, respectively. Static pool losses are calculated by summing the actual and projected future credit losses and dividing them by the original balance of each pool
of assets. The amounts shown here for each year are a weighted average for all indirect automobile loan securitizations.



14



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##### Table of Contents

NOTE 6 - SHORT-TERM BORROWINGS

Short-term borrowings consisted of the following at September 30, 2006 and December 31, 2005:



|                                                 |  |                   |         |                  |   |        
|------------------------------------------------ |  | ----------------- | ------- | ---------------- | - | -------
|                                                 |  | September 30,2006 |         | December 31,2005
|                                                 |  | (in thousands)   
|Securities sold under agreements to repurchase   |  | $                 | 249,408 |                  | $ | 410,089
|Federal Home Loan Bank borrowings                |  |                   | 34,449  |                  |   | 16,711 
|Federal funds purchased                          |  |                   | 64,500  |                  |   | 50,278 
|U.S. Treasury tax and loan note accounts         |  |                   | 3,631   |                  |   | 10,245 
|Commercial paper and other short-term borrowings |  |                   | 15      |                  |   | 2,011  
|                                                 |  |                   |         |                  |   |        
|Total Short-Term Borrowings                      |  | $                 | 352,003 |                  | $ | 489,334
|                                                 |  |                   |         |                  |   |        

NOTE 7 - LONG-TERM BORROWINGS

Long-term borrowings consisted of the following at September 30, 2006 and December 31, 2005:



|                                  |  |                   |         |                  |   |        
|--------------------------------- |  | ----------------- | ------- | ---------------- | - | -------
|                                  |  | September 30,2006 |         | December 31,2005
|                                  |  | (in thousands)   
|Federal Home Loan Bank borrowings |  | $                 | 249,629 |                  | $ | 127,444
|AMCORE Capital Trust I borrowings |  |                   | 41,238  |                  |   | 41,238 
|Subordinated debentures           |  |                   | 35,000  |                  |   |       
|Capitalized lease obligation      |  |                   | 1,037   |                  |   | 1,048  
|                                  |  |                   |         |                  |   |        
|Total Long-Term Borrowings        |  | $                 | 326,904 |                  | $ | 169,730
|                                  |  |                   |         |                  |   |        

The Company periodically borrows from the Federal Home Loan Bank (FHLB), collateralized by mortgage-backed
securities and eligible one to four family and multi-family real estate loans. The average stated maturity of these borrowings at September 30, 2006 is 2.4 years, with a weighted average borrowing rate of 4.81%. Certain fixed-rate FHLB
borrowings have prepayment penalties and call or conversion to floating-rate features associated with them. FHLB borrowings of $1.0 million have call or conversion features, which have the potential to be exercised by FHLB between 2006 and 2008.
Mortgage-related assets with a carrying value of $517 million were held as collateral for FHLB borrowings at September 30, 2006.

During third quarter
2006, the Company issued fixed/floating rate junior subordinated debentures in the amount of $35 million, bearing an initial interest rate of 7.03% and maturing September 15, 2021. The initial interest rate is fixed and the debt is non-callable
until September 15, 2016. Beginning with the interest payment due on December 15, 2016, and successive payments due thereafter, the interest will be equal to three-month LIBOR plus 1.68%. The debt qualifies as Tier 2 Capital for regulatory
capital purposes.

Other long-term borrowings include a capital lease with a net carrying value of $1.0 million on a branch facility leased by the Company.
The Company is amortizing the capitalized lease obligation and depreciating the facility over the remaining non-cancellable term of the original lease, which expires or renews in 2021.

The Company reclassifies borrowings to short-term borrowings when the remaining maturity becomes less than one year. Scheduled reductions of long-term borrowings are as follows:



|                           |  |                |        
|-------------------------- |  | -------------- | -------
|                           |  | Total         
|                           |  | (in thousands)
|2007                       |  | $              | 7      
|2008                       |  |                | 143,726
|2009                       |  |                | 78,951 
|2010                       |  |                | 444    
|2011                       |  |                | 25,036 
|Thereafter                 |  |                | 78,740 
|                           |  |                |        
|Total Long-Term Borrowings |  | $              | 326,904
|                           |  |                |        



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NOTE 8  DERIVATIVE INSTRUMENTS

The Company uses derivatives to manage its risk or exposure to changes in interest rates and in conjunction with its mortgage banking operations. The derivatives currently used include interest rate swaps and mortgage
loan commitments and forward contracts. Interest rate swaps are used by the Company to convert fixed-rate assets or liabilities to floating-rate assets or liabilities (fair value Hedges). The Company has also used interest rate swaps to convert
assets or liabilities with variable-rate cash flows to assets or liabilities with fixed-rate cash flows (cash flow Hedges).

The following derivative
related activity is included in other non-interest income or miscellaneous other expense in the Consolidated Statements of Income, for the periods ended:



|                                                |  |                                 |      |   |                                |   |     |      |  |   |      |   |  |   |     |  
|----------------------------------------------- |  | ------------------------------- | ---- | - | ------------------------------ | - | --- | ---- |  | - | ---- | - |  | - | --- | -
|                                                |  | Three Months EndedSeptember 30, |      |   | Nine Months EndedSeptember 30, |  
|                                                |  | 2006                            |      |   | 2005                           |   |     | 2006 |  |   | 2005 |  
|                                                |  | (in thousands)                  |     
|Changes in Value:                               |  |                                 |      |   |                                |   |     |      |  |   |      |   |  |   |     |  
|Derivatives not qualifying for Hedge accounting |  | $                               | (45  | ) |                                | $ | (12 | )    |  | $ | 163  |   |  | $ | (18 | )
|Ineffective portion of fair value Hedges        |  |                                 | 14   |   |                                |   | 15  |      |  |   | 16   |   |  |   | 14  |  
|Mortgage loan derivatives                       |  |                                 | (227 | ) |                                |   | (46 | )    |  |   | (142 | ) |  |   | (21 | )
|                                                |  |                                 |      |   |                                |   |     |      |  |   |      |   |  |   |     |  
|Total                                           |  | $                               | (258 | ) |                                | $ | (43 | )    |  | $ | 37   |   |  | $ | (25 | )
|                                                |  |                                 |      |   |                                |   |     |      |  |   |      |   |  |   |     |  

Fair value Hedges on $74 million of FHLB borrowings were terminated in 2004 and 2006, resulting in a gain of
$690,000 and a loss of $2.9 million, respectively. These amounts were deferred and classified as long-term debt with amortization to earnings over the remaining terms of the FHLB borrowings, in accordance with SFAS 138, Accounting for Derivative
Instruments and Hedging Activities. During third quarter 2006, the $74 million in borrowings was extinguished and the unamortized net deferred loss of $2.1 million on the previously terminated hedges was charged to other non-interest income.

NOTE 9  CONTINGENCIES AND GUARANTEES

Contingencies:

Management believes that no litigation is threatened or pending in which the Company faces potential loss or exposure which
will materially affect the Companys consolidated financial position or consolidated results of operations. Since the Companys subsidiaries act as depositories of funds, trustee and escrow agents, they occasionally are named as defendants
in lawsuits involving claims to the ownership of funds in particular accounts. This and other litigation is incidental to the Companys business.

Guarantees and Commitments:

The Companys subsidiary AMCORE Bank, N.A. (Bank), as a provider of financial services, routinely enters
into commitments to extend credit to its customers, including a variety of letters of credit. Letters of credit are a conditional but generally irrevocable form of guarantee on the part of the Bank to make payments to a third party obligee, upon the
default of payment or performance by the Bank customer or upon consummation of the underlying transaction as intended. Letters of credit are typically issued for a period of one year to five years, but can be extended depending on the Bank
customers needs. As of September 30, 2006, the maximum remaining term for any outstanding letter of credit expires on October 15, 2011.

A
fee is normally charged to compensate the Bank for the value of the letter of credit that is issued at the request of the Bank customer. The fees are deferred and recognized as income over the term of the guarantee. As of September 30, 2006,
the carrying value of these deferrals was a deferred credit of $988,000. This amount included a $221,000 guarantee liability for letters of credit recorded in accordance with Financial Interpretation No. (FIN) 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The remaining $767,000 represented deferred fees charged for letters of credit exempted from the scope of FIN 45.

At September 30, 2006, the contractual amount of all letters of credit, including those exempted from FIN 45, was $237 million. These represent the maximum
potential amount of future payments that the Company would be obligated to pay under the guarantees.

The issuance of a letter of credit is generally
backed by collateral. The collateral can take various forms including, but not limited to, bank accounts, investments, fixed assets, inventory, accounts receivable and real estate. At the time that the letters of credit are issued, the value of the
collateral is usually in an amount that is considered sufficient to cover the contractual amount of the letter of credit.



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In addition to the guarantee liability and deferred fees described above, the Company has recorded a contingent liability
for estimated probable losses on unfunded loan commitments and letters of credit outstanding. This liability was $1.0 million as of September 30, 2006 and $732,000 as of December 31, 2005.

NOTE 10  EARNINGS PER SHARE



|Earnings | per share (EPS) calculations are as follows:
|-------- | --------------------------------------------



|                                                       |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|------------------------------------------------------ |  | ------------------------------------- | ------ | ------------------------------- | - | ------ |  | - | ------ | - |  | - | ------
|                                                       |  | Three Months Ended September 30,      |        | Nine Months Ended September 30,
|                                                       |  | 2006                                  |        | 2005                            |   | 2006   |  |   | 2005  
|                                                       |  | (in thousands, except per share data)
|Numerator                                              |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Income from continuing operations                      |  | $                                     | 12,505 |                                 | $ | 11,706 |  | $ | 34,398 |   |  | $ | 35,997
|Income (loss) from discontinued operations, net of tax |  |                                       |       |                                 |   | 877    |  |   | (80    | ) |  |   | 793   
|                                                       |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Net income                                             |  | $                                     | 12,505 |                                 | $ | 12,583 |  | $ | 34,318 |   |  | $ | 36,790
|                                                       |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Denominator                                            |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Average number of shares outstanding  basic           |  |                                       | 24,463 |                                 |   | 24,823 |  |   | 24,646 |   |  |   | 24,811
|Plus: Diluted potential common shares                  |  |                                       |       |                                 |   | 273    |  |   | 57     |   |  |   | 226   
|Contingently issuable shares                           |  |                                       | 35     |                                 |   | 42     |  |   | 35     |   |  |   | 42    
|                                                       |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Average number of shares outstanding  diluted         |  |                                       | 24,498 |                                 |   | 25,138 |  |   | 24,738 |   |  |   | 25,079
|                                                       |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Earnings per share from continuing operations          |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Basic                                                  |  | $                                     | 0.51   |                                 | $ | 0.47   |  | $ | 1.40   |   |  | $ | 1.45  
|Diluted                                                |  |                                       | 0.51   |                                 |   | 0.47   |  |   | 1.39   |   |  |   | 1.44  
|                                                       |  |                                       |        |                                
|Earnings (loss) per share from discontinued operations |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Basic                                                  |  |                                       |       |                                 |   | 0.04   |  |   | (0.01  | ) |  |   | 0.03  
|Diluted                                                |  |                                       |       |                                 |   | 0.03   |  |   |       |   |  |   | 0.03  
|                                                       |  |                                       |        |                                
|Earnings per share                                     |  |                                       |        |                                 |   |        |  |   |        |   |  |   |       
|Basic                                                  |  |                                       | 0.51   |                                 |   | 0.51   |  |   | 1.39   |   |  |   | 1.48  
|Diluted                                                |  |                                       | 0.51   |                                 |   | 0.50   |  |   | 1.39   |   |  |   | 1.47  

As prescribed by SFAS No. 128, Earnings Per Share, basic EPS is computed by dividing net income
available to common stockholders (numerator) by the weighted-average number of common shares outstanding (denominator) during the period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the
period they were outstanding.

The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to
include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued and to include shares contingently issuable pursuant to employee incentive plans. Securities (e.g. options) that
do not have a current right to participate fully in earnings, but that may do so in the future by virtue of their option rights, are potentially dilutive shares. The dilutive shares are calculated based on the treasury stock method. In computing
diluted EPS, only potential common shares that are dilutivethose that reduce earnings per share or increase loss per shareare included. Exercise of options is not assumed if the result would be antidilutive.



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NOTE 11 - SEGMENT INFORMATION

AMCOREs internal reporting and planning process focuses on its four primary lines of business (Segment(s)): Commercial Banking, Retail Banking, Investment Management and Trust, and Mortgage Banking. The financial information presented
was derived from the Companys internal profitability reporting system that is used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting policies which have
been developed to reflect the underlying economics of the Segments and, to the extent practicable, to portray each Segment as if it operated on a stand-alone basis. Thus, each Segment, in addition to its direct revenues, expenses, assets and
liabilities, includes an appropriate allocation of shared support function expenses. The Commercial, Retail and Mortgage Banking Segments also include fund transfer adjustments to appropriately reflect the cost of funds on loans made and funding
credits on deposits generated. Apart from these adjustments, the accounting policies used are similar to those described in Note 1 of the Notes to Consolidated Financial Statements in the Companys Form 10-K for the year ended December 31,
2005.

Since there are no comprehensive authorities for management accounting equivalent to U.S. generally accepted accounting principles, the information
presented may not necessarily be comparable with similar information from other financial institutions. In addition, methodologies used to measure, assign and allocate certain items may change from time-to-time to reflect, among other things,
accounting estimate refinements, changes in risk profiles, changes in estimates of product repricing characteristics, changes in customers or product lines, and changes in management structure.

Total Segment results differ from consolidated results primarily due to inter-segment eliminations, certain corporate administration costs, items not otherwise allocated
in the management accounting process and treasury and investment activities. The impact of these items is aggregated to reconcile the amounts presented for the Segments to the consolidated results and is included in the Other column. On
December 30, 2005, the Company completed the sale of Investors Management Group, Ltd, (IMG). The results of IMG for the current and prior periods have been presented in discontinued operations.

The Commercial Banking Segment provides commercial banking services including lending, business checking and deposits, treasury management and other traditional as well
as electronic commerce services to middle market and small business customers through the Banks full-service and limited branch office (LBO) locations. The Retail Banking Segment provides retail banking services including direct and indirect
lending, checking, savings, money market and certificate of deposit (CD) accounts, safe deposit rental, automated teller machines and other traditional and electronic commerce services to individual customers through the Banks branch
locations. The Investment Management and Trust segment provides its clients with wealth management services, which include trust services, investment management, estate administration, financial planning, and employee benefit plan administration and
recordkeeping services. The Mortgage Banking segment provides a variety of mortgage lending products to meet its customer needs. It sells a majority of the long-term fixed-rate loans to the secondary market and continues to service most of the loans
sold.



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|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|------------------------------------------------------------ |  | ---------------------- | ------ | - | ------------- | - | ------ | ----------------------------- |  | - | --------------- | - |  | ----- | ----- | - | ------------ | - | ------ | - |  | - | ------ | -
|                                                             |  | Operating Segments     |        |   |               |   |        |                               | 
|                                                             |  | CommercialBanking      |        |   | RetailBanking |   |        | InvestmentManagementand Trust |  |   | MortgageBanking |   |  | Other |       |   | Consolidated |  
|                                                             |  | (dollars in thousands) |       
|Three months ended September 30, 2006                        |  |                        |        |  
|Net interest income                                          |  | $                      | 27,493 |   |               | $ | 13,569 |                               |  | $ | 112             |   |  | $     | 1,181 |   |              | $ | (1,205 | ) |  | $ | 41,150 |  
|Non-interest income                                          |  |                        | 2,036  |   |               |   | 6,179  |                               |  |   | 4,999           |   |  |       | 481   |   |              |   | 7,465  |   |  |   | 21,160 |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Total revenue                                                |  |                        | 29,529 |   |               |   | 19,748 |                               |  |   | 5,111           |   |  |       | 1,662 |   |              |   | 6,260  |   |  |   | 62,310 |  
|Provision for loan losses                                    |  |                        | (490   | ) |               |   | 3,503  |                               |  |   |                |   |  |       | (150  | ) |              |   |       |   |  |   | 2,863  |  
|Depreciation and amortization                                |  |                        | 245    |   |               |   | 697    |                               |  |   | 24              |   |  |       | 81    |   |              |   | 765    |   |  |   | 1,812  |  
|Other non-interest expense                                   |  |                        | 13,372 |   |               |   | 12,806 |                               |  |   | 4,106           |   |  |       | 2,047 |   |              |   | 8,325  |   |  |   | 40,656 |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Income (loss) from continuing operations before income taxes |  | $                      | 16,402 |   |               | $ | 2,742  |                               |  | $ | 981             |   |  | $     | (316  | ) |              | $ | (2,830 | ) |  | $ | 16,979 |  
|Income taxes (benefit)                                       |  |                        | 6,397  |   |               |   | 1,069  |                               |  |   | 404             |   |  |       | (123  | ) |              |   | (3,273 | ) |  |   | 4,474  |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Income (loss) from continuing operations                     |  | $                      | 10,005 |   |               | $ | 1,673  |                               |  | $ | 577             |   |  | $     | (193  | ) |              | $ | 443    |   |  | $ | 12,505 |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Discontinued operations:                                     |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Income from discontinued operations                          |  |                        |       |   |               |   |       |                               |  |   |                |   |  |       |      |   |              |   |       |   |  |   |       |  
|Income tax expense                                           |  |                        |       |   |               |   |       |                               |  |   |                |   |  |       |      |   |              |   |       |   |  |   |       |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Income from discontinued operations                          |  | $                      |       |   |               | $ |       |                               |  | $ |                |   |  | $     |      |   |              | $ |       |   |  | $ |       |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Net Income (Loss)                                            |  | $                      | 10,005 |   |               | $ | 1,673  |                               |  | $ | 577             |   |  | $     | (193  | ) |              | $ | 443    |   |  | $ | 12,505 |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Segment profit percentage (continuing operations)            |  |                        | 83     | % |               |   | 14     | %                             |  |   | 5               | % |  |       | -2    | % |              |   | N/A    |   |  |   | 100    | %
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Three months ended September 30, 2005                        |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Net interest income                                          |  | $                      | 25,771 |   |               | $ | 12,173 |                               |  | $ | 29              |   |  | $     | 1,217 |   |              | $ | 1,619  |   |  | $ | 40,809 |  
|Non-interest income                                          |  |                        | 2,204  |   |               |   | 5,233  |                               |  |   | 4,427           |   |  |       | 1,613 |   |              |   | 3,369  |   |  |   | 16,846 |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Total revenue                                                |  |                        | 27,975 |   |               |   | 17,406 |                               |  |   | 4,456           |   |  |       | 2,830 |   |              |   | 4,988  |   |  |   | 57,655 |  
|Provision for loan losses                                    |  |                        | 2,291  |   |               |   | 2,069  |                               |  |   |                |   |  |       | 102   |   |              |   |       |   |  |   | 4,462  |  
|Depreciation and amortization                                |  |                        | 170    |   |               |   | 684    |                               |  |   | 66              |   |  |       | 68    |   |              |   | 1,339  |   |  |   | 2,327  |  
|Other non-interest expense                                   |  |                        | 11,999 |   |               |   | 11,341 |                               |  |   | 3,998           |   |  |       | 2,015 |   |              |   | 5,161  |   |  |   | 34,514 |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Income (loss) from continuing operations before income taxes |  |                        | 13,515 |   |               |   | 3,312  |                               |  |   | 392             |   |  |       | 645   |   |              |   | (1,512 | ) |  |   | 16,352 |  
|Income taxes (benefit)                                       |  |                        | 5,271  |   |               |   | 1,291  |                               |  |   | 180             |   |  |       | 252   |   |              |   | (2,348 | ) |  |   | 4,646  |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Income from continuing operations                            |  | $                      | 8,244  |   |               | $ | 2,021  |                               |  | $ | 212             |   |  | $     | 393   |   |              | $ | 836    |   |  | $ | 11,706 |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Discontinued operations:                                     |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Income from discontinued operations                          |  |                        |       |   |               |   |       |                               |  |   | 1,476           |   |  |       |      |   |              |   |       |   |  |   | 1,476  |  
|Income tax expense                                           |  |                        |       |   |               |   |       |                               |  |   | 599             |   |  |       |      |   |              |   |       |   |  |   | 599    |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Income from discontinued operations                          |  | $                      |       |   |               | $ |       |                               |  | $ | 877             |   |  | $     |      |   |              | $ |       |   |  | $ | 877    |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Net Income                                                   |  | $                      | 8,244  |   |               | $ | 2,021  |                               |  | $ | 1,089           |   |  | $     | 393   |   |              | $ | 836    |   |  | $ | 12,583 |  
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  
|Segment profit percentage (continuing operations)            |  |                        | 76     | % |               |   | 18     | %                             |  |   | 2               | % |  |       | 4     | % |              |   | N/A    |   |  |   | 100    | %
|                                                             |  |                        |        |   |               |   |        |                               |  |   |                 |   |  |       |       |   |              |   |        |   |  |   |        |  



|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|------------------------------------------------------------ |  | ---------------------- | --------- | - | ------------- | - | ------- | ----------------------------- |  | - | --------------- | - |  | ----- | ------- | - | ------------ | - | --------- | - |  | - | --------- | -
|                                                             |  | Operating Segments     |           |   |               |   |         |                               | 
|                                                             |  | CommercialBanking      |           |   | RetailBanking |   |         | InvestmentManagementand Trust |  |   | MortgageBanking |   |  | Other |         |   | Consolidated |  
|                                                             |  | (dollars in thousands) |          
|Nine months ended September 30, 2006                         |  |                        |           |  
|Net interest income                                          |  | $                      | 80,212    |   |               | $ | 40,011  |                               |  | $ | 313             |   |  | $     | 3,130   |   |              | $ | 234       |   |  | $ | 123,900   |  
|Non-interest income                                          |  |                        | 6,156     |   |               |   | 16,529  |                               |  |   | 14,512          |   |  |       | 2,625   |   |              |   | 14,503    |   |  |   | 54,325    |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Total revenue                                                |  |                        | 86,368    |   |               |   | 56,540  |                               |  |   | 14,825          |   |  |       | 5,755   |   |              |   | 14,737    |   |  |   | 178,225   |  
|Provision for loan losses                                    |  |                        | 2,388     |   |               |   | 4,853   |                               |  |   |                |   |  |       | (128    | ) |              |   |          |   |  |   | 7,113     |  
|Depreciation and amortization                                |  |                        | 650       |   |               |   | 1,985   |                               |  |   | 64              |   |  |       | 238     |   |              |   | 2,378     |   |  |   | 5,315     |  
|Other non-interest expense                                   |  |                        | 41,054    |   |               |   | 38,391  |                               |  |   | 13,162          |   |  |       | 6,115   |   |              |   | 19,079    |   |  |   | 117,801   |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Income (loss) from continuing operations before income taxes |  |                        | 42,276    |   |               |   | 11,311  |                               |  |   | 1,599           |   |  |       | (470    | ) |              |   | (6,720    | ) |  |   | 47,996    |  
|Income taxes (benefit)                                       |  |                        | 16,488    |   |               |   | 4,411   |                               |  |   | 676             |   |  |       | (183    | ) |              |   | (7,794    | ) |  |   | 13,598    |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Income (loss) from continuing operations                     |  | $                      | 25,788    |   |               | $ | 6,900   |                               |  | $ | 923             |   |  | $     | (287    | ) |              | $ | 1,074     |   |  | $ | 34,398    |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Discontinued operations:                                     |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Loss from discontinued operations                            |  |                        |          |   |               |   |        |                               |  |   | (131            | ) |  |       |        |   |              |   |          |   |  |   | (131      | )
|Income tax benefit                                           |  |                        |          |   |               |   |        |                               |  |   | (51             | ) |  |       |        |   |              |   |          |   |  |   | (51       | )
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Loss from discontinued operations                            |  | $                      |          |   |               | $ |        |                               |  | $ | (80             | ) |  | $     |        |   |              | $ |          |   |  | $ | (80       | )
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Net Income (loss)                                            |  | $                      | 25,788    |   |               | $ | 6,900   |                               |  | $ | 843             |   |  | $     | (287    | ) |              | $ | 1,074     |   |  | $ | 34,318    |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Segment profit percentage (continuing operations)            |  |                        | 77        | % |               |   | 21      | %                             |  |   | 3               | % |  |       | -1      | % |              |   | N/A       |   |  |   | 100       | %
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Assets                                                       |  | $                      | 3,118,310 |   |               | $ | 654,234 |                               |  | $ | 14,146          |   |  | $     | 314,640 |   |              | $ | 1,345,837 |   |  | $ | 5,447,167 |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Nine months ended September 30, 2005                         |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Net interest income                                          |  | $                      | 74,317    |   |               | $ | 34,950  |                               |  | $ | 66              |   |  | $     | 3,583   |   |              | $ | 7,100     |   |  | $ | 120,016   |  
|Non-interest income                                          |  |                        | 6,275     |   |               |   | 14,178  |                               |  |   | 14,026          |   |  |       | 3,392   |   |              |   | 10,230    |   |  |   | 48,101    |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Total revenue                                                |  |                        | 80,592    |   |               |   | 49,128  |                               |  |   | 14,092          |   |  |       | 6,975   |   |              |   | 17,330    |   |  |   | 168,117   |  
|Provision for loan losses                                    |  |                        | 6,920     |   |               |   | 2,952   |                               |  |   |                |   |  |       | 592     |   |              |   |          |   |  |   | 10,464    |  
|Depreciation and amortization                                |  |                        | 503       |   |               |   | 2,111   |                               |  |   | 160             |   |  |       | 202     |   |              |   | 3,426     |   |  |   | 6,402     |  
|Other non-interest expense                                   |  |                        | 34,886    |   |               |   | 33,531  |                               |  |   | 12,202          |   |  |       | 6,195   |   |              |   | 13,836    |   |  |   | 100,650   |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Income (loss) from continuing operations before income taxes |  |                        | 38,283    |   |               |   | 10,534  |                               |  |   | 1,730           |   |  |       | (14     | ) |              |   | 68        |   |  |   | 50,601    |  
|Income taxes (benefit)                                       |  |                        | 14,931    |   |               |   | 4,107   |                               |  |   | 732             |   |  |       | (5      | ) |              |   | (5,161    | ) |  |   | 14,604    |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Income (loss) from continuing operations                     |  | $                      | 23,352    |   |               | $ | 6,427   |                               |  | $ | 998             |   |  | $     | (9      | ) |              | $ | 5,229     |   |  | $ | 35,997    |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Discontinued operations:                                     |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Income from discontinued operations                          |  |                        |          |   |               |   |        |                               |  |   | 1,384           |   |  |       |        |   |              |   |          |   |  |   | 1,384     |  
|Income tax expense                                           |  |                        |          |   |               |   |        |                               |  |   | 591             |   |  |       |        |   |              |   |          |   |  |   | 591       |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Income from discontinued operations                          |  | $                      |          |   |               | $ |        |                               |  | $ | 793             |   |  | $     |        |   |              | $ |          |   |  | $ | 793       |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Net Income (loss)                                            |  | $                      | 23,352    |   |               | $ | 6,427   |                               |  | $ | 1,791           |   |  | $     | (9      | ) |              | $ | 5,229     |   |  | $ | 36,790    |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Segment profit percentage (continuing operations)            |  |                        | 76        | % |               |   | 21      | %                             |  |   | 3               | % |  |       | 0       | % |              |   | N/A       |   |  |   | 100       | %
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Assets                                                       |  | $                      | 2,815,282 |   |               | $ | 657,347 |                               |  | $ | 18,696          |   |  | $     | 261,734 |   |              | $ | 1,500,058 |   |  | $ | 5,253,117 |  
|                                                             |  |                        |           |   |               |   |         |                               |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  



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NOTE 12- EMPLOYEE BENEFIT PLANS

All eligible employees of the Company participate in the AMCORE Financial Security Plan (Security Plan), a qualified profit sharing plan under Section 401(a) of the Internal Revenue Code. The Security Plan offers
participants a personal retirement account funded by Company contributions and a personal savings account 401(k) funded by employee contributions and Company matching amounts. The expense related to the Security Plan was $890,000 and $883,000 for
the three-month periods ended September 30, 2006 and 2005, respectively, and was $3.0 million for each of the nine-month periods ended September 30, 2006 and 2005. The Company also has a non-qualified profit sharing plan that provides a
cash profit sharing payment based upon achievement of corporate performance goals, to all employees who have met service requirements. The expense related to the profit sharing plan was $246,000 and $160,000 for the three-month periods ended
September 30, 2006 and 2005, respectively, and was $606,000 and $749,000 for the nine-month periods ended September 30, 2006 and 2005, respectively.

The AMCORE Financial, Inc. Employee Health Benefit Plan (Health Plan) provides group medical, pharmacy, dental and vision benefits to eligible participating employees of the Company and their dependents. Employees, retirees, and COBRA
beneficiaries contribute specific amounts determined annually by the Health Plans administrator. The Companys share of the cost of these benefits is expensed as incurred. Expense related to the Health Plan was $1.3 million for each of
the three-month periods ended September 30, 2006 and 2005, and was $3.8 million for each of the nine-month periods ended September 30, 2006 and 2005. Life insurance benefits are provided to eligible active employees.

The Company provides a deferred compensation plan (entitled AMCORE Financial, Inc. Deferred Compensation Plan) for certain key employees and directors. This
plan provides the opportunity to defer salary, bonuses and non-employee director fees. Participants may defer up to 90% of base compensation and up to 100% of bonus. The deferred compensation liability to participants is recorded in other
liabilities in the Consolidated Balance Sheets. The deferrals and earnings grow tax deferred until withdrawn from the plan. The amount and method of payment are pre-defined by participants each year of deferral. Earnings to individual accounts are
recorded as compensation expense when earned. The total non-qualified deferred compensation plan liability totaled $14.1 million and $14.3 million at September 30, 2006 and 2005, respectively. Expense related to the deferred compensation plan
was $184,000 and $283,000 for the three-month periods ended September 30, 2006 and 2005, respectively, and was $625,000 and $516,000 for the nine-month periods ended September 30, 2006 and 2005, respectively.

The Company provides additional retirement benefits to certain senior officers through plans that are non-qualified, non-contributory and unfunded. Under one such
arrangement, the additional retirement benefits replace what would have been provided under the Companys defined contribution qualified plan in the absence of limits placed on qualified plan benefits by the Internal Revenue Code of 1986. The
expense related to this arrangement was $57,000 and $46,000 for the three-month periods ended September 30, 2006 and 2005, respectively, and was $171,000 and $199,000 for the nine-month periods ended September 30, 2006 and 2005,
respectively.

Another arrangement, which is a defined benefit plan, provides supplemental retirement benefits that are based upon three percent of final
base salary, times the number of years of service. Benefits under this plan may not exceed 70% or be less than 45% of a participants final base salary less offsets for employer retirement plan benefits attributable to employer contributions
and 50% of a participants Social Security benefit. The measurement date for obligations for this plan is as of December 31. The following table summarizes the costs and obligations to participants for the three-month periods ended
September 30, 2006 and 2005:



|                                         |  |                                  |    |                                 |   |      |  |   |      |   |  |   |      |  
|---------------------------------------- |  | -------------------------------- | -- | ------------------------------- | - | ---- |  | - | ---- | - |  | - | ---- | -
|                                         |  | Three Months Ended September 30, |    | Nine Months Ended September 30, |  
|                                         |  | 2006                             |    | 2005                            |   | 2006 |  |   | 2005 |  
|                                         |  | (in thousands)                   |   
|Components of net periodic benefit cost: |  |                                  |    |                                
|Service cost                             |  | $                                | 7  |                                 | $ | 3    |  | $ | 21   |   |  | $ | 8    |  
|Interest cost                            |  |                                  | 29 |                                 |   | 22   |  |   | 87   |   |  |   | 67   |  
|Actuarial losses and changes in offsets  |  |                                  |   |                                 |   |     |  |   | 189  |   |  |   |     |  
|                                         |  |                                  |    |                                 |   |      |  |   |      |   |  |   |      |  
|Net periodic cost                        |  | $                                | 36 |                                 | $ | 25   |  | $ | 297  |   |  | $ | 75   |  
|                                         |  |                                  |    |                                 |   |      |  |   |      |   |  |   |      |  
|                                         |  |                                  |    |                                
|                                         |  |                                  |    |                                 |   | 2006 |  |   | 2005 |  
|Weighted-average assumptions:            |  |                                  |    |                                 |   |      |  |   |      |   |  |   |      |  
|Discount rate                            |  |                                  |    |                                 |   |      |  |   | 5.75 | % |  |   | 5.75 | %
|Rate of compensation increase            |  |                                  |    |                                 |   |      |  |   | 3.00 | % |  |   | 3.00 | %

During the first quarter of 2006, $134,000 was contributed to the plan to fund distributions to plan participants.
No contributions or distributions were made during the second or third quarters and none are expected to be made during the remainder of the year. The plan has no assets at September 30, 2006.



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NOTE 13 - STOCK-BASED COMPENSATION

The Company has several stock-based compensation plans. The Company provides an employee stock purchase plan and makes awards of stock options, restricted stock and performance share units (PSUs). Effective
January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R, Share-Based Payment, using the modified prospective transition method as permitted by SFAS 123R. Accordingly, the Company
has not restated prior period results to reflect the impact of SFAS 123R. Under this transition method, compensation cost is recognized for all share-based payments granted subsequent to the effective date and for all awards granted, but not yet
vested, prior to the effective date.

Prior to January 1, 2006, the Company accounted for awards granted under those plans using the recognition and
measurement principles of Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, and related interpretations. Stock options were granted at an exercise price equal to the market value on the date
of grant and as a result no expense was recorded. Proforma expense was estimated using a Black-Scholes valuation model. Restricted stock was recorded at the market value on the date of issuance and performance share units were revalued each period
based upon actual performance and current market value and recognized over the period during which they were earned.

The Companys actual expense
related to stock-based compensation for the quarters and year-to-date periods ended September 30, 2006 and 2005 were as follows:



|                                                              |  |                                  |     |                                |   |      |  |      |       |  |   |    
|------------------------------------------------------------- |  | -------------------------------- | --- | ------------------------------ | - | ---- |  | ---- | ----- |  | - | ---
|                                                              |  | Three Months Ended September 30, |     | Nine Months EndedSeptember 30,
|                                                              |  | 2006                             |     | 2005                           |   | 2006 |  | 2005
|                                                              |  | (in thousands)                  
|Compensation expense included in reported operating expenses: |  |                                  |     |                                |   |      |  |      |       |  |   |    
|Stock options                                                 |  | $                                | 305 |                                |   | N/A  |  | $    | 1,846 |  |   | N/A
|Employee stock purchase plan                                  |  |                                  | 14  |                                |   | N/A  |  |      | 31    |  |   | N/A
|Performance share units                                       |  |                                  | 113 |                                | $ | 142  |  |      | 373   |  | $ | 515
|Restricted stock                                              |  |                                  | 28  |                                |   | 28   |  |      | 112   |  |   | 103
|                                                              |  |                                  |     |                                |   |      |  |      |       |  |   |    
|Total stock-based compensation expense                        |  | $                                | 460 |                                | $ | 170  |  | $    | 2,362 |  | $ | 618
|                                                              |  |                                  |     |                                |   |      |  |      |       |  |   |    
|Income tax benefits                                           |  | $                                | 169 |                                | $ | 64   |  | $    | 885   |  | $ | 233

At September 30, 2006, total unrecognized stock-based compensation expense was $5.5 million, net of estimated
forfeitures, which will be recognized over a weighted average amortization period of 2.8 years. Prior to adopting SFAS 123R, the Company presented tax benefits resulting from the exercise of stock options as operating cash flows in the Statement of
Cash Flows. SFAS 123R requires cash flows resulting from the tax benefits from tax deductions in excess of the compensation cost recognized (excess tax benefits) to be classified as financing cash flows. For the three and nine months ended
September 30, 2006, $16,000 and $137,000, respectively, of excess tax benefits have been classified as an operating cash outflow and financing cash inflow.

The Company estimates the fair value of stock options using a Black-Scholes valuation model. The fair value of restricted stock, PSUs and employee stock purchase plan grants generally equals their intrinsic value on the date of grant. The
fair value of stock-based grants is amortized to operating expense on a straight-line basis over the required vesting period of the grant. Stock option grants made to retirement eligible employees are fully expensed during the period in which the
options are granted.

In anticipation of adoption of SFAS 123R, the Company evaluated the assumptions used in the Black-Scholes model. As a result, the
Company changed its methodology for computing expected volatility and expected term. Calculation of expected volatility was changed from being based solely on historical volatility to a combination of both historical volatility and implied
volatility derived from an analysis of relevant indices volatility trends. The Company believes that the combination of historical and implied volatility provides a better estimate of expected stock price volatility and will continue to
monitor these and other relevant factors to estimate expected volatility for future option grants. The Company utilized the simplified method for estimating the expected term of options granted during the period as provided for in Staff
Accounting Bulletin 107.

The Company continues to base the estimate of risk-free rate on the U.S. Treasury yield curve in effect at the time of grant.
Dividend yield is the Companys annual dividend rate expressed as a percentage of the closing stock price on grant date. Estimated forfeitures are based on historical employee termination experience. The estimate of forfeitures is adjusted to
the extent that actual forfeitures differ from such estimates. Changes in estimated forfeitures are recognized in subsequent periods as they occur.



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The fair value of the Companys employee and director stock options granted during the third quarters of 2006 and
2005 was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions.



|                                                |  |               |       |   |      |   |       |  
|----------------------------------------------- |  | ------------- | ----- | - | ---- | - | ----- | -
|                                                |  | Third Quarter |      
|                                                |  | 2006          |       |   | 2005 |  
|Expected dividend yield                         |  |               | 2.62  | % |      |   | 2.18  | %
|Expected price volatility                       |  |               | 19.08 | % |      |   | 27.96 | %
|Expected term in years                          |  |               | 6.25  |   |      |   | 5.5   |  
|Expected risk-free interest rate                |  |               | 4.93  | % |      |   | 3.76  | %
|Estimated forfeiture rate                       |  |               | 1.88  | % |      |   | 1.77  | %
|Estimated average fair value of options granted |  | $             | 6.01  |   |      | $ | 6.82  |  

Employee Stock Award and Incentive Plans.The 2005 Stock Award and Incentive Plan (SAIP) allows for awards
to key employees of stock options, restricted shares, PSUs and other forms of stock-based awards. The maximum number of shares to be granted under the plan is 2,125,000. The Company will not reprice any awards under the SAIP unless such repricing is
approved by a majority vote of the Companys stockholders. Awards issued pursuant to the SAIP that expire, are forfeited or terminated for any reason shall again be available to grant.

Stock Options.Non-qualified stock options are issued at an exercise price equal to the fair market value of the shares on the grant date and generally
vest within three to five years and expire from seven to ten years from the date of grant. Options issued are valued using the Black-Scholes model with assumptions as previously described. The activity during the first nine months of 2006 and the
total options outstanding and exercisable as of September 30, 2006 pursuant to the SAIP and previous incentive plans are as follows:



|                                          |  |           |   |  |                                 |       |                                            |           |                                   |   |      
|----------------------------------------- |  | --------- | - |  | ------------------------------- | ----- | ------------------------------------------ | --------- | --------------------------------- | - | -----
|                                          |  | Shares    |   |  | Weighted Average Exercise Price |       | Weighted AverageRemaining Contractual Life |           | Aggregate Intrinsic Value (000s)
|Options outstanding at beginning of year  |  | 1,815,566 |   |  | $                               | 24.43 |                                            |           |                                   |   |      
|Options granted                           |  | 475,283   |   |  |                                 | 30.06 |                                            |           |                                   |   |      
|Option reloads                            |  | 8,054     |   |  |                                 | 30.31 |                                            |           |                                   |   |      
|Options exercised                         |  | (188,240  | ) |  |                                 | 22.80 |                                            |           |                                   |   |      
|Options cancelled                         |  | (15,362   | ) |  |                                 | 31.25 |                                            |           |                                   |   |      
|Options forfeited                         |  | (58,623   | ) |  |                                 | 28.46 |                                            |           |                                   |   |      
|                                          |  |           |   |  |                                 |       |                                            |           |                                   |   |      
|Options outstanding at September 30, 2006 |  | 2,036,678 |   |  | $                               | 25.75 |                                            | 5.5 years |                                   | $ | 9,280
|                                          |  |           |   |  |                                 |       |                                            |           |                                   |   |      
|Options exercisable at September 30, 2006 |  | 1,181,582 |   |  | $                               | 23.67 |                                            | 3.5 years |                                   | $ | 7,819

Performance Share Units (PSUs).The Company grants PSUs pursuant to the terms and conditions of the SAIP
under various sub-plans as provided for in Section 8(e) of the SAIP. The sub-plans establish performance periods that are generally one to three-year periods during which PSUs may be earned. Specific performance goals and target PSUs granted
are approved by the Compensation Committee of the AMCORE Financial, Inc. Board of Directors. The number of PSUs earned can range from 0% to 200% of the target PSUs granted. Each PSU represents the right to receive a share of the Companys
common stock at the end of the performance period, some of which may be issued as restricted shares. One sub-plan allows for PSUs to be converted to common shares and issued at the end of the three-year performance. Two additional sub-plans allow
for PSUs to be converted to restricted common shares after the performance period and vest over five years.

Compensation expense is calculated based upon
the expected number of PSUs earned during the performance period and is recorded over the service period. The fair value is calculated equal to market value on the date of grant less the present value of dividends that are not earned during the
performance period. As of September 30, 2006, 119,961 PSUs were expected to be earned and the weighted average grant date fair value per PSU was $28.38. Expense is adjusted for forfeitures as they occur.



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|                                        |  |                        |   |  |                                      |       |                                        |          
|--------------------------------------- |  | ---------------------- | - |  | ------------------------------------ | ----- | -------------------------------------- | ---------
|                                        |  | PerformanceShare Units |   |  | Weighted Average Fair Value Per
Unit |       | Weighted AverageRemaining Vesting Term
|Units outstanding at beginning of year  |  | 63,146                 |   |  | $                                    | 30.72 |                                        |          
|Units estimated to be granted           |  | 76,115                 |   |  |                                      | 27.65 |                                        |          
|Units forfeited                         |  | (10,010                | ) |  |                                      | 29.83 |                                        |          
|Adjustment to estimated grants          |  | (9,290                 | ) |  |                                      | 28.71 |                                        |          
|                                        |  |                        |   |  |                                      |       |                                        |          
|Units outstanding at September 30, 2006 |  | 119,961                |   |  | $                                    | 28.38 |                                        | 3.9 years
|                                        |  |                        |   |  |                                      |       |                                        |          

Restricted Stock Awards.The Company granted restricted stock awards to certain key employees in 2000. The
shares are restricted as to transfer, but are not restricted as to dividend payment and voting rights. Transfer restrictions lapse at the end of three or nine years contingent upon performance goals being met and continued employment. Restricted
stock grants are valued at market value on the date of grant and are expensed over the service period. As of September 30, 2006, non-vested shares totaled 8,976 with a weighted average fair value of $22.84 per share. No awards were granted,
1,095 restricted shares were forfeited and returned to treasury, and no restrictions were released during the first nine months of 2006.

Directors Stock Plans. The Restricted Stock Plan for Non-Employee Directors provides that each current eligible non-employee director and each subsequently elected non-employee director receive, in lieu of a cash retainer,
shares of common stock of the Company, the value of which is equal to three times the annual retainer. Restricted stock grants are valued at market value on the date of grant and are expensed over the required service period. The shares vest
annually over a three-year period based upon the anniversary date of the election and continued service as a director. As of September 30, 2006, restricted shares totaled 15,429 with a weighted average fair value of $27.26 per share.
Restrictions were released on 5,161 shares during the first nine months of 2006.

The 2001 Stock Option Plan for Non-Employee Directors provides that each
current eligible non-employee director and each subsequently elected non-employee director receive options to purchase common stock of the Company. Options granted have an exercise price equal to the market value on the date of grant and generally
vest within one to three years and expire in seven to ten years from the date of grant. Stock options granted pursuant to this plan are valued using a Black-Scholes model with assumptions as previously described. The activity during the first nine
months of 2006 and the total options outstanding and exercisable as of September 30, 2006 pursuant to the director option plan and previous director option plans are as follows:



|                                          |  |         |   |  |                                 |       |                                            |           |                                   |   |    
|----------------------------------------- |  | ------- | - |  | ------------------------------- | ----- | ------------------------------------------ | --------- | --------------------------------- | - | ---
|                                          |  | Shares  |   |  | Weighted Average Exercise Price |       | Weighted AverageRemaining Contractual Life |           | Aggregate Intrinsic Value (000s)
|Options outstanding at beginning of year  |  | 101,000 |   |  | $                               | 22.90 |                                            |           |                                   |   |    
|Options granted                           |  | 20,000  |   |  |                                 | 29.45 |                                            |           |                                   |   |    
|Options exercised                         |  | (3,750  | ) |  |                                 | 13.33 |                                            |           |                                   |   |    
|                                          |  |         |   |  |                                 |       |                                            |           |                                   |   |    
|Options outstanding at September 30, 2006 |  | 117,250 |   |  | $                               | 24.33 |                                            | 4.9 years |                                   | $ | 699
|                                          |  |         |   |  |                                 |       |                                            |           |                                   |   |    
|Options exercisable at September 30, 2006 |  | 97,250  |   |  | $                               | 23.27 |                                            | 3.9 years |                                   | $ | 682

Non-vested options and exercise proceeds. A summary of the Companys non-vested stock options for the
nine months ended September 30, 2006 is presented below.



|                                         |  |                  |   |                  |               |       |        |         |   |               |   |      
|---------------------------------------- |  | ---------------- | - | ---------------- | ------------- | ----- | ------ | ------- | - | ------------- | - | -----
|                                         |  | Employee options |   | Director options
|                                         |  | Shares           |   |                  | Average Price |       | Shares |         |   | Average Price
|Options outstanding at beginning of year |  | 686,458          |   |                  | $             | 26.84 |        | 20,000  |   |               | $ | 25.88
|Options granted                          |  | 483,337          |   |                  |               | 30.07 |        | 20,000  |   |               |   | 29.45
|Options forfeited                        |  | (58,623          | ) |                  |               | 28.46 |        |        |   |               |   |     
|Options vested                           |  | (256,076         | ) |                  |               | 26.56 |        | (20,000 | ) |               |   | 25.88
|                                         |  |                  |   |                  |               |       |        |         |   |               |   |      
|Non-vested options at September 30, 2006 |  | 855,096          |   |                  | $             | 28.63 |        | 20,000  |   |               | $ | 29.45
|                                         |  |                  |   |                  |               |       |        |         |   |               |   |      

The total fair value of stock options that vested during the first nine months of 2006 was $1.9 million, or $6.96
per option. Stock options exercised by employees and directors in the first nine months of 2006 totaled 191,990 shares with an intrinsic value of $1.4 million. The Company received cash or stock equivalent to the exercise price of $4.3 million and a
tax benefit of $535,000 was recognized. The total fair value of stock options that vested during the first nine months of 2005 was $2.3 million, or $7.15 per option. Stock options exercised by employees and directors in the first nine months of 2005
totaled 200,343 shares with an intrinsic value of $1.9 million. Shares are issued from treasury stock to fulfill exercises. The Company repurchases shares in open market and private transactions in accordance with Exchange Act Rule 10b-18 to
replenish treasury stock for issuances related to stock option exercises and other employee benefit plans.



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##### Table of Contents

Employee Stock Purchase Plan. The AMCORE Stock Option Advantage Plan permits eligible employees to purchase from
the Company shares of its common stock. The Company intends that the plan be an employee stock purchase plan (ESPP) within the meaning of Section 423 of the Internal Revenue Code of 1986. Reserved for issuance under the ESPP is a
total of 600,000 shares of unissued common stock. The exercise or purchase price is 85% of the lower of the closing price of the Companys common stock on the Nasdaq National Market on the first or last day of each offering period.

Shares issued pursuant to the ESPP are prohibited from sale by a participant for two years after the date of purchase. Dividends earned are credited to a
participants account and used to purchase shares from the Companys treasury stock at the same discounted price on the next purchase date. The Company has the option to purchase all, or any portion of, the shares owned by such participant
that, at the time of termination of employment, are subject to the restriction on transfer. The 15% discount is recorded as compensation expense and is amortized on a straight-line basis over the two-year service period. As of September 30,
2006, $79,000 remains unrecognized related to shares issued during 2006.

Prior Period Proforma Presentation.Prior to January 1, 2006 the
Company accounted for stock-based compensation plans pursuant to APB 25. The following table sets forth proforma information as if compensation expense had been determined consistent with the requirements of SFAS 123.



|                                                                                                                                           |  |                                       |        |   |                                      |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------- | ------ | - | ------------------------------------ | - | ------ | -
|                                                                                                                                           |  | Three Months Ended September 30, 2005 |        |   | Nine Months Ended September 30, 2005 |  
|                                                                                                                                           |  | (000s, except per share data)        |       
|Net Income:                                                                                                                                |  |                                       |        |   |                                      |   |        |  
|Income from continuing operations                                                                                                          |  | $                                     | 12,583 |   |                                      | $ | 36,790 |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effect |  |                                       | (433   | ) |                                      |   | (1,331 | )
|                                                                                                                                           |  |                                       |        |   |                                      |   |        |  
|Pro forma                                                                                                                                  |  | $                                     | 12,150 |   |                                      | $ | 35,459 |  
|                                                                                                                                           |  |                                       |        |   |                                      |   |        |  
|Diluted Shares:                                                                                                                            |  |                                       |        |   |                                      |   |        |  
|As reported                                                                                                                                |  |                                       | 25,138 |   |                                      |   | 25,079 |  
|Deduct: Shares due to average unrecognized compensation cost related to future services                                                    |  |                                       | (109   | ) |                                      |   | (87    | )
|                                                                                                                                           |  |                                       |        |   |                                      |   |        |  
|Pro forma                                                                                                                                  |  |                                       | 25,029 |   |                                      |   | 24,992 |  
|                                                                                                                                           |  |                                       |        |   |                                      |   |        |  
|Basic Earnings per share from continuing operations                                                                                        |  |                                       |        |   |                                      |   |        |  
|As reported                                                                                                                                |  | $                                     | 0.51   |   |                                      | $ | 1.48   |  
|Pro forma                                                                                                                                  |  |                                       | 0.49   |   |                                      |   | 1.43   |  
|Diluted Earnings per share from continuing operations                                                                                      |  |                                       |        |   |                                      |   |        |  
|As reported                                                                                                                                |  | $                                     | 0.50   |   |                                      | $ | 1.47   |  
|Pro forma                                                                                                                                  |  |                                       | 0.49   |   |                                      |   | 1.42   |  



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##### Table of Contents

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following
discussion highlights the significant factors affecting AMCORE Financial, Inc. and Subsidiaries (AMCORE or the Company) consolidated financial condition as of September 30, 2006 compared to December 31, 2005, and
the consolidated results of operations for the three and nine month periods ended September 30, 2006 compared to the same periods in 2005. The discussion should be read in conjunction with the Consolidated Financial Statements, accompanying
Notes to the Consolidated Financial Statements, and selected financial data appearing elsewhere within this report.

FACTORS INFLUENCING
FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains, and periodic filings with the Securities and Exchange Commission and written
or oral statements made by the Companys officers and directors to the press, potential investors, securities analysts and others will contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934, and the Company intends that such forward-looking statements be subject to the safe harbors created thereby with respect to, among other things, the financial condition, results of operations, plans,
objectives, future performance and business of AMCORE. Statements that are not historical facts, including statements about beliefs and expectations, are forward-looking statements. These statements are based upon beliefs and assumptions of
AMCOREs management and on information currently available to such management. The use of the words believe, expect, anticipate, plan, estimate, should, may,
will or similar expressions identify forward-looking statements. Forward-looking statements speak only as of the date they are made, and AMCORE undertakes no obligation to update publicly any forward-looking statements in light of new
information or future events.

Contemplated, projected, forecasted or estimated results in such forward-looking statements involve certain inherent risks
and uncertainties. A number of factors  many of which are beyond the ability of the Company to control or predict  could cause actual results to differ materially from those in its forward-looking statements. These factors include, among
others, the following possibilities: (I) heightened competition, including specifically the intensification of price competition, the entry of new competitors and the formation of new products by new or existing competitors; (II) adverse state,
local and federal legislation and regulation or adverse findings or rulings made by local, state or federal regulators or agencies regarding AMCORE and its operations; (III) failure to obtain new customers and retain existing customers; (IV)
inability to carry out marketing and/or expansion plans; (V) ability to attract and retain key executives or personnel; (VI) changes in interest rates including the effect of prepayments; (VII) general economic and business conditions which are
less favorable than expected; (VIII) equity and fixed income market fluctuations; (IX) unanticipated changes in industry trends; (X) unanticipated changes in credit quality and risk factors; (XI) success in gaining regulatory approvals when
required; (XII) changes in Federal Reserve Board monetary policies; (XIII) unexpected outcomes on existing or new litigation in which AMCORE, its subsidiaries, officers, directors or employees are named defendants; (XIV) technological changes; (XV)
changes in U.S. generally accepted accounting principles; (XVI) changes in assumptions or conditions affecting the application of critical accounting estimates; (XVII) inability of third-party vendors to perform critical services for the
Company or its customers; (XVIII) disruption of operations caused by the conversion and installation of data processing systems; and (XIX) zoning restrictions or other limitations at the local level, which could prevent limited branches from
transitioning to full-service facilities.

OVERVIEW OF OPERATIONS

Quarter Only Results

AMCORE reported net income from continuing operations of $12.5 million or $0.51 per diluted
share for the three months ended September 30, 2006. This compares to $11.7 million or $0.47 per diluted share for the same period in 2005 and represents a $799,000 or 7% increase in the third quarter of 2006 over the same period a year ago.

Diluted earnings per share from continuing operations increased 9% or $0.04. The 9% increase on a diluted per share basis, versus the 7% increase in net
income, was attributable to purchases of treasury stock during 2006 as part of the Companys previously announced stock repurchase program. AMCOREs annualized return on average equity and on average assets from continuing operations for
the third quarter of 2006 was 12.38% and 0.92%, respectively, compared to 11.64% and 0.89% for the comparable period in 2005.



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##### Table of Contents

The most significant factors affecting the third quarter of 2006 net income from continuing operations, compared to the
same period in 2005, were:

Net interest income - Increased $341,000 primarily due to increased loan yields and volumes, reduced by increased funding
costs. Net interest margin was 3.33% in the third quarter of 2006 compared to 3.48% in the third quarter 2005. The reduction in net interest margin was primarily due to increased funding costs associated with a rising interest rate environment and
tightening product spreads resulting from improved credit conditions and increased competitive pressures.

Provision
for loan losses - Declined $1.6 million primarily due to lower net charge-offs.

Non-interest income - Increased $4.3 million. The increase
included $2.2 million in dividends from private equity investments and a $1.3 million non-taxable net death claim on company-owned life insurance. Service charges on deposits and bankcard fee income increased a combined $950,000, while investment
management and trust income increased $544,000. These increases were partially offset by a $921,000 decline in mortgage banking income, largely due to a $702,000 mortgage servicing rights impairment valuation reversal in third quarter 2005.

Operating expenses  Increased $5.6 million. The increase included a $2.1 million expense related to debt extinguishment. Other increases
included a $1.7 million increase in professional fees, $1.4 million in personnel costs and $525,000 in net occupancy costs.

Income taxes -
Decreased $172,000, due to a higher proportion of tax-advantaged income. The effective tax rate was 26.4% in the third quarter of 2006 compared to 28.4% in the same period of 2005.

Year-to-Date Results

AMCORE reported net income of $34.4 million, or $1.39 per diluted share from continuing
operations, for the nine months ended September 30, 2006 compared to $36.0 million or $1.44 per diluted share for the same period in 2005. This represents a $1.6 million or 4% decline year-over-year.

Diluted earnings per share from continuing operations decreased 3% or $0.05. The 3% decrease on a diluted per share basis, versus 4% on a dollar basis, was attributable
to the Companys previously announced stock repurchase program. AMCOREs annualized return on average equity and on average assets from continuing operations for the year-to-date period of 2006 was 11.50% and 0.86%, respectively, compared
to 12.27% and 0.95% for the comparable period in 2005.

The most significant factors affecting 2006 year-to-date net income from continuing operations,
compared to the same period in 2005, were:

Net interest income - Increased $3.9 million primarily due to increased loan yields and volumes, which
were reduced by increased funding costs. Net interest margin was 3.39% in 2006 compared to 3.52% in 2005. The reduction in net interest margin was primarily due to increased funding costs associated with a rising interest rate environment and
deposit attraction strategies.

Provision for loan losses - Declined $3.4 million as a result of lower net charge
offs.

Non-interest income - Increased $6.2 million. In addition to $2.2 million in dividends from private equity investments and a $1.3 million
non-taxable net death claim on company-owned life insurance, the most significant increases were a combined $2.6 million increase in service charges on deposits and bankcard income, and a $472,000 increase in investment management and trust income.
The increases were partly offset by a $356,000 decline in mortgage banking income.



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##### Table of Contents

Operating expenses Increased $16.1 million. In addition to a $2.1 million expense related to debt
extinguishment, other increases included $8.6 million in personnel costs and $4.0 million in professional fees.

Income taxes - Decreased $1.0
million due to lower earnings before income taxes and a higher proportion of tax-advantaged income. The effective tax rate was 28.3% in 2006 compared to 28.9% in 2005.

Discontinued Operations

Income from discontinued operations was zero and a loss of $80,000 for the three and nine
month periods ended September 30, 2006, respectively, compared to income of $877,000 and $793,000 for the respective periods in 2005. The declines for both periods were due to a gain on the transition of the Vintage equity funds advisory
rights reported in the third quarter of 2005.

KEY INITIATIVES AND OTHER SIGNIFICANT EVENTS

Key Initiatives

Branch Expansion - The Companys banking
operations (Bank) launched a branch expansion initiative during 2001 targeting the area generally bounded by Interstates 94 in the north, 294 and 94 in the east, 80 in the south and 90 and 39 in the west (the Branch
Expansion). The Branch Expansion strategy initially targets markets where there are high concentrations of mid-size businesses, with a seasoned commercial lending and treasury management sales staff in a leased facility (limited branch office
or LBO). Once a book of business is developed and the LBO becomes profitable, plans to develop a permanent site for a full service facility in a nearby area that is surrounded by a high concentration of homeowners with strong population
and household income growth are initiated. Increased capabilities in the markets served by these facilities, in addition to better brand recognition, are expected to accelerate the Companys ability to generate bank-issued deposits, which will
better support loan growth and decrease the use of wholesale funding.

Since the inception of the Branch Expansion strategy in April 2001, 28 new branches,
net of closed offices, have opened. The new locations have contributed $1.73 billion in loans and $712 million in deposits outstanding as of September 30, 2006. Same store contributions, which include new branches that have been open at least
one year, were $1.69 billion in loans and $695 million in deposits outstanding at September 30, 2006. During the first nine months of 2006, the Company opened four LBOs in the Chicago suburbs of Joliet, Wheaton, Northbrook and Woodridge and
three full-service branches in Belvidere and Lombard, in Illinois, and Wauwatosa in Wisconsin.

The Company has regulatory approval to open 12 additional
branches, two of which are expected to open during the remainder of 2006. By the end of 2009 the Company expects to have two-thirds of its branches located in markets that the Company believes exhibit strong growth characteristics.

To date, the Companys Board of Directors has authorized $120 million of capital expenditures for new facilities in connection with the Companys Branch
Expansion. As of September 30, 2006, $54 million of the $120 million capital authorization remained to be spent.

As a complement to its Branch
Expansion, the Bank has also expanded its automated teller machine system (ATMs), which includes both owned and third party operated machines, to 143 in Illinois and 149 in Wisconsin, or 292 overall, at September 30, 2006 from 132 in Illinois
and 34 in Wisconsin, or 166 overall, at September 30, 2005. These amounts include 110 ATMs located in Walgreens drug stores throughout Wisconsin as part of a co-branding relationship, which began in the third quarter of 2005. The
placement of additional ATMs is an important part of AMCOREs commitment to provide quality customer service as additional ATMs provide AMCORE customers with greater ease and convenience in completing banking transactions.

Quality Loan Growth  Improving credit quality is part of AMCOREs Quality Loan Growth initiative. For the third quarter of 2006, average loans rose
$351 million to $3.9 billion, a 10% increase over the same period in 2005. Over the same period of time, total non-performing loans increased 16% or $4.2 million to $30.1 million. The increase was due to one commercial real-estate relationship
totaling $11.6 million with a specific loss allocation of $3.4 million at September 30, 2006. As pricing spreads continue to narrow, maintaining credit and pricing discipline is likely to exert downward pressure on future loan growth.



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##### Table of Contents

Deposit Growth - Average bank-issued deposits were $3.4 billion in the third quarter of 2006, a decline of $4
million from the third quarter of 2005. The decline reflects the Companys efforts to ensure that its deposit attraction strategies are priced at competitive, but profitable levels. This has led to some modest attrition in average balances
year-over-year, as some customers, including correspondent banks, moved balances to other institutions. AMCORE continues to focus on transactional deposit growth, such as checking accounts, which helps lower funding costs, as well as increasing the
number of households served by the Company. Handling a customers checking account enables the Bank to offer other products and increases the likelihood of retaining the customer relationship over time. The Companys goal is to become the
customers primary bank, meeting all of their banking, mortgage and investment needs. On the commercial side, the Companys main emphasis is on cash management products, including deposit capture at customer locations, as it focuses on its
core niche of mid-size commercial customers.

AMCOREs focus is on competitive yet profitably priced bank-issued deposit growth because it provides a
source of funding for the Branch Expansion and the Quality Loan Growth initiatives, and is also a means of reducing reliance on wholesale funding sources that may be at a higher cost. Customer attraction strategies during 2005, especially in the
newer markets, included a market segment of high initial rates for transaction and savings account balances. While this strategy did initially bring in balances, as rates rose these customers migrated to CDs and other high rate products within the
bank or to other institutions once the high initial rates expired. This strategy is being phased out in 2006, and a more market-oriented, spread-based deposit sales strategy that focuses on pricing at competitive but profitable levels is being
emphasized.

Increasing Fee Income Increasing fee income, specifically from the Investment Management and Trust segment (IMT) and Mortgage
Banking segment, is an area of increased management attention. As of the end of 2005, IMT completed its migration to an open architecture sales platform, which allows greater customer access to non-proprietary products. This included the transition
of $142 million in assets of three Company-managed Vintage equity funds into two mutual funds managed by Federated Investors, Inc. (Federated) in September 2005 and the sale of the asset management subsidiary, Investors Management Group, Ltd. (IMG),
to West Bancorporation, Inc. (West Banc) on December 30, 2005. With these transactions, AMCORE has transitioned from being a developer of proprietary investment products to being a provider that can offer its customers a wider array of
investment product choices. The results of IMG for prior periods and the related sale are reported as discontinued operations.

The changes in the business
due to the combined impact of the Federated and West Banc transactions resulted in slower income growth initially, however IMT income for third quarter 2006 was up 15% over the same period in 2005 and was the second consecutive quarter reflecting an
increase on a linked quarter basis.

Capital Efficiency and Deployment  The Companys priorities with respect to effectively deploying
capital include a more structured pricing discipline that targets profitable growth on both sides of the balance sheet, matching of repricing characteristics of assets and liabilities, migration of the balance sheet away from lower spread
investments to higher spread loans and buying back its common shares.

On May 4, 2006, the Company announced that its Board of Directors authorized a
stock repurchase program (Repurchase Program) of up to three million common shares, or approximately 12% of diluted shares outstanding. The repurchase authorization is for a twelve-month period. The repurchased shares will become treasury shares. As
of September 30, 2006, 597,000 shares had been repurchased pursuant to the Repurchase Program at an average price of $30.21 per share. During the first quarter of 2006, the Company increased its dividend from $0.17 to $0.185 per share, an
increase of $0.015 per share, or 9%.

Since the beginning of 2006, the Company has liquidated $25 million of callable Agency debentures, and used the
proceeds to pay down short-term debt. In addition, it resold $15 million of the Companys issuance of a trust preferred security that it had repurchased a few years ago. At September 30, 2006, securities available for sale were $1.1
billion or 20% of total assets compared to $1.2 billion or 22% at December 31, 2005. By not reinvesting cash flows from maturities and prepayments of investment securities, the Company expects to continue to gradually migrate its balance sheet
to a lower proportion of investment securities, while using the proceeds to fund the Quality Loan Growth initiative and reduce higher-cost wholesale funding.



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##### Table of Contents

During the third quarter of 2006, the Bank extinguished $74 million of high-cost debt and issued $35 million of long-term
subordinated debentures that qualifies as Tier 2 capital for regulatory purposes. The issuance of the subordinated debentures was undertaken to improve the mix of the Banks total risk-based capital position and to allow the Company, through
increased dividends from the Bank, to improve its short-term liquidity and fund the Repurchase Program.

Other Significant Events

Accounting Changes Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2005) (123R), Share-Based Payment requiring
compensation cost relating to share-based payment transactions was effective for periods beginning after December 15, 2005. The Companys implementation of SFAS No. 123R resulted in an increase in stock-based expense of $290,000 in
the third quarter of 2006 and a year-to-date increase of $1.7 million, compared to the same periods in 2005. Total stock-based compensation expense in the third quarter of 2006 was $460,000 and was $2.4 million for the first nine months of 2006.

Key Personnel Changes On July 11, 2006, the Company announced the resignation of Joseph B. McGougan, President of AMCORE Mortgage, a
division of the Bank, effective June 30, 2006. In connection with the resignation, the Company entered into a severance agreement with Mr. McGougan providing for payment of one years base salary and certain other benefits, which were
accrued during the second quarter of 2006. The AMCORE Mortgage President position will not be replaced.

In October 2006, the Company announced the
retirement of Patricia M. Bonavia, Executive Vice President and Chief Operating Officer of AMCORE Investment Group, N. A. In connection with the retirement, the Company entered into an agreement with Ms. Bonavia providing for payment of one
years base salary and certain other benefits, which will be accrued in a future period. Ms. Bonavia is expected to remain with the Company through March 31, 2007 or until her successor is named, if earlier.

Regulatory Developments On May 31, 2005, the Bank entered into a written agreement with the Office of the Comptroller of the Currency (OCC). The
agreement describes commitments made by the Bank and outlines a series of steps to address and strengthen the Banks regulatory consumer compliance program. The Bank has continued to implement enhancements to its consumer compliance program to
address the matters identified by the OCC. These enhancements are subject to review by the OCC to determine if they comply with the commitment made in the agreement or whether additional steps are necessary.

On August 10, 2006, the Bank entered into a Consent Order with the OCC. This order primarily imposes requirements on the Bank to take certain actions to strengthen
its compliance monitoring policies, procedures, training and overall program relating to the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations. The Consent Order did not impose any fine or civil money penalty on the Bank, but does make
the Bank ineligible for certain expedited approvals. AMCORE has been working diligently to strengthen and enhance its compliance programs, including its consumer compliance and BSA/AML programs, by, among other things, hiring a General Counsel and
Chief Compliance Officer, upgrading staff and technology, and making use of outside consulting resources.

EARNINGS REVIEW OF
CONSOLIDATED STATEMENTS OF INCOME

The following highlights a comparative discussion of the major components of net income and their impact for the
three and nine months ended September 30, 2006 and 2005.



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##### Table of Contents

Net Interest Income

Net interest income is the difference between income earned on interest-earning assets and the interest expense incurred on interest-bearing liabilities. The interest income on certain loans and investment securities is not subject to
federal income tax. For analytical purposes, the interest income and rates on these types of assets are adjusted to a fully taxable equivalent, or FTE basis. The FTE adjustment was calculated using AMCOREs statutory federal income
tax rate of 35%.

Overview - FTE adjusted interest income is as follows (in thousands):



|                              |  |                                 |        |                                |   |        |  |      |         |  |   |        
|----------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | -------
|                              |  | Three Months EndedSeptember 30, |        | Nine months EndedSeptember 30,
|                              |  | 2006                            |        | 2005                           |   | 2006   |  | 2005
|Interest Income Book Basis    |  | $                               | 87,525 |                                | $ | 72,538 |  | $    | 251,086 |  | $ | 203,548
|FTE Adjustment                |  |                                 | 1,055  |                                |   | 1,166  |  |      | 3,218   |  |   | 3,593  
|                              |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Interest Income FTE Basis     |  | $                               | 88,580 |                                | $ | 73,704 |  | $    | 254,304 |  | $ | 207,141
|Interest Expense              |  |                                 | 46,375 |                                |   | 31,729 |  |      | 127,186 |  |   | 83,532 
|                              |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Net Interest Income FTE Basis |  | $                               | 42,205 |                                | $ | 41,975 |  | $    | 127,118 |  | $ | 123,609
|                              |  |                                 |        |                                |   |        |  |      |         |  |   |        

Net interest income on an FTE basis increased $230,000 or less than 1% in the third quarter of 2006 compared to
the same period in 2005. On a year-to-date basis, net interest income on an FTE basis was up 3% or $3.5 million. The increases for the three and nine month periods were driven by increases in average loan volumes of 10% and 12%, respectively, and
were partially offset by increases in interest expense of 46% and 52%, respectively.

Net interest spread is the difference between the average rates on
interest-earning assets and the average rates on interest-bearing liabilities. Net interest margin represents net interest income divided by average earning assets. These ratios can also be used to analyze net interest income. Since a portion of the
Companys funding is derived from interest-free sources, primarily demand deposits, other liabilities and stockholders equity, the effective rate paid for all funding sources is lower than the rate paid on interest-bearing liabilities
alone.

As Table 1 indicates, the net interest spread declined 27 basis points to 2.85% in the third quarter of 2006 from 3.12% in the third quarter of
2005. The net interest margin was 3.33% in the third quarter of 2006, a decrease of 15 basis points from 3.48% in the third quarter of 2005. As Table 2 indicates, the interest rate spread for the nine months ended September 30, 2006 declined 27
basis points from 3.20% in the prior year period to 2.93%. The net interest margin decreased 13 basis points to 3.39% from 3.52% for the year-to-date periods ended September 30, 2006 and 2005, respectively. The declines in spread and margin for
both periods were driven by higher funding costs, the result of continued increases in short-term interest rates, deposit attraction strategies and tightening product spreads resulting from improved credit conditions and increased competitive
pressures.

The level of net interest income is the result of the relationship between the total volume and mix of interest-earning assets and the rates
earned and the total volume and mix of interest-bearing liabilities and the rates paid. The rate and volume components associated with interest-earning assets and interest-bearing liabilities can be segregated to analyze the period-to-period changes
in net interest income. Changes due to rate/volume variances have been allocated between changes due to average volume and changes due to average rate based on the absolute value of each to the total change of both categories. Tables 3 and 4 analyze
the changes attributable to the volume and rate components of net interest income.

Changes due to volume - In the third quarter of 2006, net
interest income (FTE) increased due to average volume by $2.0 million when compared to the third quarter of 2005. This increase was comprised of a $3.8 million increase in interest income that was partially offset by a $1.7 million increase in
interest expense.

The $3.8 million increase in interest income was driven by a $351 million or 10% increase in average loans. The growth in average loans
came from an increase of $299 million in commercial real estate loans and other commercial lending. Average consumer loan balances increased $678,000 compared to the prior year quarter, and average residential real estate loans increased $51
million.



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The increase in average loans was partially funded by a $216 million, or 17%, increase in average wholesale funding and a
$101 million decrease in average investment securities. Average bank-issued deposits were essentially flat quarter-over-quarter.

For the first nine months
of 2006, net interest income increased by $8.6 million due to average volume when compared to the same period in 2005. This was comprised of an increase of $14.9 million in interest income that was partially offset by a $6.2 million increase in
interest expense. Average loans over this period increased $400 million or 12%. The increase in average loans was funded by a $184 million increase average bank issued deposits, a $107 million increase in average wholesale fundings and a $75 million
decline in average investment securities.

Changes due to rate - During the third quarter of 2006, net interest income (FTE) declined due to average
rates by $1.8 million when compared with the same quarter in 2005. This decline was comprised of a $12.9 million increase in interest expense that was partly offset by an $11.1 million increase in interest income. Both loan yields and funding costs
were affected by six 25 basis point increases in the federal funds (Fed Funds) rate that occurred since September 30, 2005.

The yield for the third
quarter of 2006 on average earning assets increased 88 basis points to 6.98% compared to 6.10% in the third quarter of 2005. This was primarily attributable to a 104 basis point increase in the yield on average loans due to increasing loan volumes
and repricing of variable rate loans in the rising rate environment.

The rate paid for the third quarter of 2006 on average interest bearing liabilities
increased 115 basis points, compared to the third quarter of 2005, as a result of increases in short term rates, lengthening of the repricing term of the liabilities and promotional deposit pricing as part of the Deposit Growth initiative. Average
rates paid on wholesale deposits and short-term borrowings increased 107 basis points and 142 basis points, respectively. Average rates paid on long term debt declined 23 basis points.

For the first nine months of 2006, net interest income declined by $5.1 million due to average rates. This decline was comprised of a $37.4 million increase in interest expense that was partly offset by a $32.3
million increase in interest income. The average rates paid on interest bearing liabilities increased by 115 basis points while the yield on earning assets increased by 88 basis points.

Like most financial institutions, AMCORE has an exposure to changes in both short-term and long-term interest rates. The Company expects modest compression in the margin during the next quarter, especially if the
recent inversion of the yield curve persists. Among those factors that could cause margin and spread not to perform as anticipated by the Company include: greater and more frequent than anticipated changes in interest rates, including the impact of
basis risk between various interest rate indices, changes in the shape of the yield curve, the effect of prepayments or renegotiated rates, increased price competition on both deposits and loans, promotional pricing on deposits, changes in the mix
of earning assets and the mix of liabilities, including greater than anticipated use of wholesale sources to fund the Branch Expansion, and greater than expected loan delinquencies resulting in non-accrual status. Over a one-year horizon, AMCORE
expects that its interest-rate risk will be greater during a period of declining interest rates than it will be during a period of rising interest rates.

Provision for Loan Losses

Loans, the Companys largest income earning asset category, are periodically evaluated by management in
order to establish an estimated allowance (Allowance) for loan losses that are probable as of the respective reporting date and considered adequate to absorb probable losses. This evaluation includes specific loss estimates on certain individually
reviewed loans where it is probable that the Company will be unable to collect all of the amounts due (principal or interest) according to the contractual terms of the loan agreement (impaired loans) and statistical loss estimates for loan groups or
pools that are based on historical loss experience, as adjusted for other loss estimates that are based upon the size, quality, and concentration characteristics of the various loan portfolios, adverse situations that may affect a borrowers
ability to repay, and current economic and industry conditions, among other things. Additions to the Allowance are charged against earnings for the period as a provision for loan losses (Provision). Conversely, this evaluation could result in a
decrease in the Allowance and Provision.



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Actual loan losses are charged against and reduce the Allowance when management believes that the collection of principal
will not occur. Unpaid interest attributable to prior years for loans that are placed on non-accrual status is also charged against and reduces the Allowance. Unpaid interest for the current year for loans that are placed on non-accrual status is
charged against and reduces the interest income previously recognized. Subsequent recoveries of amounts previously charged to the Allowance, if any, are credited to and increase the Allowance. The Allowance is also subject to periodic examination by
regulators whose review includes a determination as to its adequacy to absorb probable losses.

The Provision was $2.9 million in the third quarter of
2006, a decrease of $1.6 million or 36% from $4.5 million in the third quarter of 2005. The decline was primarily due to lower net charge-offs. Net charge-offs in the third quarter of 2006 were $2.8 million or 28 basis points of average loans on an
annualized basis, compared to $4.2 million or 47 basis points of average loans during the same period in 2005.

For the nine month period ending
September 30, 2006, the Provision declined $3.4 million when compared to the first nine months of 2005, also reflecting lower net charge-offs, which declined $3.5 million period-to-period. Net charge-offs were $7.2 million, or 25 basis points
of average loans on an annualized basis, for the nine month period ending September 30, 2006, compared to $10.7 million or 42 basis points of average loans during the same period in 2005.

Non-Interest Income

Total non-interest income is comprised primarily
of fee-based revenues from investment management and trust, bank-related service charges on deposits and mortgage banking income. Net security gains or losses, gains on loan sales, increases in cash surrender value (CSV) and death claims on Bank and
Company owned life insurance (COLI), brokerage commission income and bankcard fee income are also included in this category.

Overview
Non-interest income totaled $21.2 million in the third quarter of 2006, an increase of $4.3 million or 26% from $16.8 million in the third quarter of 2005. The increase included $2.2 million in dividends from private equity investments and a $1.3
million non-taxable net death claim on COLI. Service charges on deposits and bankcard fee income increased a combined $950,000, while investment management and trust income increased $544,000. These increases were partially offset by a $921,000
decline in mortgage banking income, largely due to a $702,000 mortgage servicing rights impairment valuation reversal in the third quarter of 2005.

On a
year-to-date basis, non-interest income increased $6.2 million to $54.3 million in 2006 compared to $48.1 million in 2005. In addition to $2.2 million in dividends from private equity investments and a $1.3 million non-taxable net death claim on
company-owned life insurance, the most significant increases were a combined $2.6 million increase in service charges on deposits and bankcard income, and a $472,000 increase in investment management and trust income. The increases were partly
offset by a $356,000 decline in mortgage banking income.

Investment management and trust income - Investment management and trust income includes
trust services, investment management, estate administration, financial planning, and employee benefit plan recordkeeping and administration services. Investment management and trust income totaled $4.2 million in the third quarter of 2006, an
increase of $544,000 or 15%, from $3.6 million in the third quarter of 2005. The increase for the quarter was primarily due to an increase in wealth management fees. For the nine month period ended September 30, 2006, investment management and
trust income increased $472,000 from $11.3 million in 2005 to $11.8 million in 2006.

As of September 30, 2006, total assets under administration were
$2.6 billion, compared to $2.6 billion at December 31, 2005 and $4.6 billion at September 30, 2005. The decline from September 30, 2005 reflects the combined impact of the Federated and West Banc transactions.

Service charges on deposits and bankcard fee income - Service charges on deposits, currently the Companys largest source of non-interest income, and
bankcard fee income totaled a combined $8.6 million in the third quarter of 2006, a $950,000 or 12% increase over $7.7 million in the third quarter of 2005. Totals for the first nine months of 2006 were $23.6 million, an increase of $2.6 million or
12% over the $21.0 million in the prior year period. Service charges on consumer deposit accounts were the primary driver of the increases for both the quarter and year-to-date periods and were impacted by higher deposit balances resulting from the
Companys Deposit Growth initiative. Enhancements to the Companys fee structure and waiver policies led to additional increases



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beginning late in the second quarter of 2006 and are expected to continue. A larger cardholder base, a benefit of both the Branch Expansion and Deposit
Growth initiatives, greater card utilization and an expanded ATM network contributed to the increase in bankcard fee income.

Mortgage banking
income - Mortgage banking income includes fees generated from the underwriting, originating and servicing of mortgage loans along with gains realized from the sale of these loans, net of origination costs, servicing rights amortization and
impairment.

Mortgage banking income was $762,000 in the third quarter of 2006, a decline of $921,000 from the third quarter of 2005. The prior year
quarter included a mortgage servicing rights impairment charge reversal of $702,000. The remaining change was due to lower gains on loans sold into the secondary market that were nearly offset by lower amortization due to slower run-off of loans
serviced. Mortgage loan closings were $111 million during the third quarter of 2006 compared to $146 million in the prior year period. New purchase mortgage closings were 69% of total closings in the third quarter of 2006, compared to 59% in the
prior year quarter.

For the first nine months of 2006, mortgage banking income was $3.1 million on closings of $311 million, compared to $3.4 million on
closings of $353 million for the first nine months of 2005, a decline of $356,000. The decline was due to lower gains on loans sold into the secondary market that were nearly offset by lower amortization due to slower run-off of loans serviced. New
purchase mortgage closings were 68% of total closings for the 2006 year-to-date period compared to 60% for the prior year period.

The Company expects
continued growth of new purchase mortgages with additional mortgage originators, primarily in the Branch Expansion markets. New purchase mortgage growth could be negatively affected by a number of factors beyond the Companys control, including
heightened competition, higher mortgage interest rates, declines in new housing construction and adverse regulatory developments.

As of September 30,
2006, the carrying value of AMCOREs capitalized mortgage servicing rights was $14.2 million, with no impairment valuation allowance. This compares to $13.3 million at September 30, 2005, with no impairment valuation. The unpaid principal
balance of mortgage loans serviced for others was $1.4 billion and $1.3 billion as of September 30, 2006, and 2005, respectively. The net carrying value of the Companys capitalized mortgage servicing rights, as a percentage of the unpaid
principal balance of mortgage loans serviced for others, was 0.98% as of September 30, 2006 and 2005.

COLI income  COLI income totaled
$2.9 million in the third quarter of 2006, a $1.4 million increase from $1.5 million in the third quarter of 2005. The increase was primarily due to a $1.3 million non-taxable net death claim. Year-to-date in 2006, COLI income increased $1.0 million
to $4.9 million from $3.9 million in the prior year period. The increase was due to the net death claim, partially offset by higher annual policy charges and the decline in value of underlying equity-related investments. AMCORE uses COLI as a
tax-advantaged means of financing its future obligations with respect to certain non-qualified retirement and deferred compensation plans in addition to other employee benefit programs. As of September 30, 2006, the CSV of COLI was $135
million, compared to $131 million at September 30, 2005 and $132 million at December 31, 2005.

Other non-interest income Brokerage
commission income, customer service fees, gain on sale of loans, net security gains and other non-interest income totaled $4.7 million in the third quarter of 2006, a $2.3 million increase from the third quarter of 2005. The increase was primarily
attributable to $2.2 million in dividends from private equity investments. The combined totals for the year-to-date periods ended September 30, 2006 and 2005 were $10.9 million and $8.4 million, respectively, an increase of $2.5 million. The
increase was primarily related to the private equity investment dividends. Increased customer service fees and brokerage commissions, offset by lower net security gains, accounted for the remaining increase.

Operating Expenses

Overview Total operating expense was
$42.5 million in the third quarter of 2006, an increase of $5.6 million or 15%, from $36.8 million in the third quarter of 2005. For the first nine months of 2006, operating expense was $123.1 million, an increase of $16.1 million or 15%, from
$107.1 million in the same period in 2005. The increases in both the quarter and year-to-date periods of 2006



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included a $2.1 million expense related to debt extinguishment incurred in the third quarter of 2006. The remaining
increases were primarily attributable to higher personnel costs and professional fees.

The efficiency ratio was 68.16% in the third quarter of 2006,
compared to 63.90% for the same period in 2005. On a year-to-date basis, the efficiency ratio was 69.08% and 63.68% in 2006 and 2005, respectively. The efficiency ratio is calculated by dividing total operating expenses by revenues. Revenues are the
sum of net interest income and non-interest income. The primary reasons for the increase in operating expenses are discussed below.

Personnel
expense - Personnel expense, which includes compensation expense and employee benefits and is the largest component of operating expenses, was $23.3 million in the third quarter of 2006, an increase of $1.4 million or 7% from $21.9 million in
the third quarter of 2005. For the nine month periods ending September 30, 2006 and 2005, personnel expense totaled $72.6 million and $64.1 million, respectively, an increase of $8.6 million or 13%. The increase for both the quarter and
year-to-date periods include the effects of the Branch Expansion, additional staff hired in connection with Regulatory Developments, severance costs and stock based compensation expense. Due to the adoption of SFAS 123R, stock based compensation
expense increased $290,000 in the third quarter of 2006 and $1.7 million for the first nine months of 2006 compared to the respective prior year periods.

Professional fees  Professional fees include legal, consulting, auditing and external portfolio management fees and totaled $2.7 million in the third quarter of 2006 compared to $1.0 million in the same period a year ago. For
2006 year-to-date, professional fees were $7.1 million compared to $3.1 million for the same period in 2005. The increases of $1.7 million and $4.0 million, respectively, were primarily attributable to increased costs for external assistance with
regulatory compliance matters of $1.0 million and $2.0 million for the respective periods, and for external investment management expenses associated with the transition to an open platform. Subsequent to its sale, IMG also continues to provide
certain investment management services for the Bank for a limited time. These services were also provided prior to the sale and were previously categorized as a component of personnel expense. IMG results for prior year periods have been
re-categorized as discontinued operations. The costs of outside assistance for compliance matters should decline over the next several quarters, while the expenses related to IMG investment management services, which were $185,000 and $577,000 for
the three and nine month periods ending September 30, 2006, respectively, should be stable or slightly declining from this point forward. Costs associated with the transition to an open platform, $248,000 and $664,000 for the three and nine
month periods ending September 30, 2006, respectively, are expected to grow in relationship to revenue growth.

Other operating expenseOther operating expenses include net occupancy expense, equipment expense, data processing expense, communication expense, advertising and business development expenses and other costs. These were a combined $16.5 million and $13.9
million, respectively, in the third quarters of 2006 and 2005, an increase of $2.5 million. For the nine month periods ending September 30, 2006 and 2005, other operating expenses were $43.4 million and $39.9 million, respectively, an increase
of $3.4 million. The most significant increase, for both the quarter and year-to-date was the $2.1 million expense related to debt extinguishment incurred in the third quarter of 2006. The expense was primarily a non-cash cost and included the
recognition of unamortized market adjustments associated with previously terminated hedges. Both the quarter and year-to-date periods reflected increases in occupancy, data processing, communications and advertising and development costs that were
partially offset by lower equipment expense.

Income taxes  Income tax expense was $4.5 million and $4.6 million in the third quarters of 2006
and 2005, respectively. Income taxes declined despite an increase in pre-tax earnings due to a higher proportion of tax-exempt earnings, which included the COLI death claim. For the nine month period ended September 30, 2006, income tax expense
totaled $13.6 million, a $1.0 million decrease from the $14.6 million in the same period of 2005. The decrease was due to lower income before taxes and a higher proportion of tax-exempt earnings.

The effective tax rates were 26.4% and 28.4% in the third quarters of 2006 and 2005, respectively, and were 28.3% and 28.9% for the nine months ended September 30,
2006 and 2005, respectively. Effective tax rates are lower than the statutory tax rates due primarily to investments in tax-exempt municipal bonds and increases in CSV and net death claims on COLI that are tax exempt.



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Discontinued Operations

As a result of the Federated and West Banc transactions (see Increasing Fee Income discussion) the Company has reclassified the results of IMG for the current and prior periods to discontinued operations. Income from discontinued operations
was zero and a loss of $80,000 for the three and nine month periods ended September 30, 2006, respectively, compared to income of $877,000 and $793,000 for the respective periods in 2005. The declines for both periods were due to a gain on the
transition of the Vintage equity funds advisory rights reported in the third quarter of 2005.

EARNINGS REVIEW BY BUSINESS SEGMENT

AMCOREs internal reporting and planning process focuses on four primary lines of business (Segment(s)): Commercial Banking, Retail Banking,
Investment Management and Trust, and Mortgage Banking. Note 11 of the Notes to Consolidated Financial Statements presents a condensed income statement and total assets for each Segment.

The financial information presented was derived from the Companys internal profitability reporting system that is used by management to monitor and manage the financial performance of the Company. This
information is based on internal management accounting policies which have been developed to reflect the underlying economics of the Segments and, to the extent practicable, to portray each Segment as if it operated on a stand-alone basis. Thus,
each Segment, in addition to its direct revenues, expenses, assets and liabilities, includes an allocation of shared support function expenses. The Commercial, Retail and Mortgage Banking Segments also include funds transfer adjustments to
appropriately reflect the cost of funds on loans made and funding credits on deposits generated. Apart from these adjustments, the accounting policies used are similar to those described in Note 1 of the Notes to Consolidated Financial Statements
included in the Form 10-K Annual Report for the year ended December 31, 2005.

Since there are no comprehensive authorities for management accounting
equivalent to U.S. generally accepted accounting principles, the information presented is not necessarily comparable with similar information from other financial institutions. In addition, methodologies used to measure, assign and allocate certain
items may change from time-to-time to reflect, among other things, accounting estimate refinements, changes in risk profiles, changes in estimates of product repricing characteristics, changes in customers or product lines, and changes in management
structure.

Total Segment results differ from consolidated results primarily due to inter-segment eliminations, certain corporate administration costs, and
items not otherwise allocated in the management accounting process and treasury and investment activities. The impact of these items is aggregated to reconcile the amounts presented for the Segments to the consolidated results and is included in the
Other column of Note 11 of the Notes to Consolidated Financial Statements.

Commercial Banking

The Commercial Banking Segment (Commercial) provides commercial banking services to middle market and small business customers through the Banks full service branch
and LBO locations. The services provided by this Segment include lending, business checking and deposits, treasury management and other traditional as well as electronic commerce services.

Overview - Commercial represented 83% and 76% of total Segment earnings in the third quarter of 2006 and 2005, respectively. For the nine month
periods ended September 30, 2006 and 2005, Commercial represented 77% and 76%, respectively, of total Segment earnings. Commercial total assets were $3.1 billion at September 30, 2006 and represented 57% of total consolidated assets. This
compares to $2.8 billion and 54%, respectively, at September 30, 2005.

Commercial earnings for the third quarter of 2006 and 2005 were $10.0 million
and $8.2 million, respectively, an increase of $1.8 million or 21%. Year-to-date earnings in 2006 were $25.8 million, compared to $23.4 million in the same period in 2005, an increase of $2.4 million or 10%. Higher net interest income and lower
provision for loan losses, partially reduced by higher non-interest expenses and income taxes, were the primary reasons for the increases for both the quarter and year-to-date periods.



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Net interest income increased $1.7 million and $5.9 million for the three and nine month periods ended September 30,
2006, respectively, compared to the same periods in 2005. Both periods experienced increased interest income reduced by increased interest expense adjusted for net cost of fund allocations. The increase in interest income was attributable to higher
average commercial real estate and commercial loan volumes, and increased yields. The increase in interest expense, as adjusted for net cost of fund allocations, was primarily due to the increased funding needs associated with the loan growth
combined with rising interest rates.

The Provision declined $2.8 million in the third quarter of 2006 compared to the same period of 2005, and declined
$4.5 million for the year-over-year periods. The decrease in the quarter and year-to-date Provision was primarily due to the reassignment of loss allocations on a large real estate credit to the Retail Banking segment for management reporting and
lower net charge-offs.

Non-interest expense increased $1.4 million in the third quarter of 2006 compared to the third quarter of 2005. On a year-to-date
basis, the increase was $6.2 million. The increases were largely due to higher personnel costs associated with Branch Expansion, annual increases, and stock based compensation expense, increased occupancy costs, also associated with Branch
Expansion, and higher loan processing and collection expenses.

Income taxes increased $1.1 million and $1.6 million for the three and nine month periods
of 2006, respectively, compared to the same periods in 2005 due to higher pre-tax earnings.

Retail Banking

The Retail Banking Segment (Retail) provides retail-banking services to individual customers through the Banks branch locations in northern Illinois and southern
Wisconsin. The services provided by this Segment include direct and indirect lending, checking, savings, money market and CD accounts, safe deposit rental, ATMs, and other traditional and electronic commerce services.

Overview - Retail represented 14% and 18% of total Segment earnings in the third quarter of 2006 and 2005, respectively. For both nine month periods ended
September 30, 2006 and 2005, Retail represented 21% of total Segment earnings. Retail total assets were $654 million at September 30, 2006 and represented 12% of total consolidated assets. This compares to $657 million and 13% at
September 30, 2005.

Retail earnings for the third quarter of 2006 were $1.7 million, a decline of $348,000 or 17% from the third quarter of 2005.
Year-to-date earnings in 2006 were $6.9 million, compared to $6.4 million in the same period in 2005, an increase of $473,000 or 7%. For the quarter, increases in non-interest expense and Provision more than offset increases in net interest income
and non-interest income and a decline in income taxes. Year-to-date, increases in net interest income and non-interest income more than offset higher non-interest expense, Provision and income taxes.

Net interest income increased by $1.4 million and $5.1 million for the three and nine month periods ended September 30, 2006, compared to the same periods in 2005.
Both periods experienced increased funding credits on deposits generated due to Deposit Growth and higher interest income. These were partially offset by higher interest expense due to increasing short-term interest rates.

Non-interest income increased by $946,000 in the third quarter of 2006 compared to the same period a year ago and increased $2.4 million for the year-to-date period,
both the result of increased deposit service charges.

The Provision increased $1.4 million in the third quarter of 2006 compared to the same period of
2005, and $1.9 million for the year-over-year periods. The increase in the quarter and year-to-date Provision was primarily due to the reassignment of loss allocations on a large real estate credit from Commercial for management reporting net of
lower net charge-offs.

Non-interest expense increased $1.5 million in the third quarter of 2006 compared to the third quarter of 2005. On a year-to-date
basis, the increase was $4.9 million. The increases were largely due to increased personnel costs associated with Branch Expansion, annual increases, and stock based compensation expenses, as well as higher loan processing expenses.



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Income taxes decreased $222,000 in the third quarter of 2006 compared to the same period in 2005 while year-to-date 2006
income tax expense was $304,000 higher than the prior year period, both due to changes in pre-tax earnings.

Investment Management and Trust

The Investment Management and Trust Segment (IMT) provides wealth management services which include trust services, investment management, estate
administration, financial planning, employee benefit plan recordkeeping and administration and brokerage services.

Overview - IMT represented 5%
and 2% of total segment earnings in the third quarter of 2006 and 2005, respectively, and 3% for both year-to-date periods. IMT total assets were $14 million at September 30, 2006 and represented less than 1% of total consolidated assets. At
September 30, 2005, IMT total assets were $19 million, also less than 1% of total consolidated assets.

IMT reported income from continuing operations
of $577,000 in the third quarter of 2006, a $365,000 increase from the third quarter of 2005 earnings from continuing operations of $212,000. On a year-to-date basis, income from continuing operations declined $75,000 from the prior year period. For
the quarter, the increase was primarily due to higher non-interest income, net of increased income tax expense. On a year-to-date basis, increases in non-interest income were essentially offset by higher non-interest expense.

Increases in non-interest income were primarily the result of higher wealth management fees. The increases in non-interest expenses were due to higher personnel costs
and professional fees. Higher personnel costs included stock-based compensation expense. Higher professional fees included third party costs associated with the transition to an open platform. The increase in income taxes for the third quarter of
2006, compared to third quarter 2005, was due to higher earnings on continuing operations before taxes.

The loss from discontinued operations in the
current year-to-date period of $80,000 included additional expenses incurred related to the sale of IMG. Income from discontinued operations in the prior quarter and year-to-date periods of $877,000 and $793,000, respectively, were due to a gain on
the transition of the Vintage equity funds advisory rights.

Mortgage Banking

The Mortgage Banking Segment (Mortgage) provides a variety of mortgage lending products to meet its customers needs. It sells most of the long-term, fixed-rate loans which it originates to the secondary market
and continues to service most of the loans sold.

Overview - Mortgage net loss of $193,000 reduced total Segment earnings by 2% in the third quarter
of 2006 compared to a contribution of 4% in the third quarter of 2005. Year-to-date of 2006 Mortgage loss of $287,000 reduced total Segment earnings by 1% compared to 0% in 2005. Mortgage total assets were $315 million at September 30, 2006 and
represented 6% of total consolidated assets. This compares to $262 million and 5% at September 30, 2005.

Mortgage results for the third quarter of
2006 reflected a loss of $193,000, a decline of $586,000 over the third quarter of 2005 income of $393,000. For the first nine months of 2006, mortgage results reflected a loss of $287,000 compared to a loss of $9,000 in the same period of 2005, a
decline of $278,000. For the quarter only, lower non-interest income was partially offset by lower Provision and income taxes. On a year-to-date basis, lower non-interest income and net interest income were partially offset by lower Provision and
income taxes.

The decline in net interest income for the year-to-date period was primarily due to increased net cost of funds allocations and declining
volumes that were partially offset by higher yields on mortgage loans. The increase in funds allocations and mortgage loan yields were attributable to increasing short-term interest rates. The decrease in Provision was due to lower net charge-off
experience. The decrease in non-interest income for both quarter and year-to-date periods was due to lower gains on loans sold into the secondary market that were nearly offset by lower amortization due to slower run-off of loans serviced. In
addition, the decline for the current quarter was also impacted by a $702,000 mortgage servicing rights impairment charge reversal in the third quarter of 2005. The decline in income taxes was due to lower pre-tax results.



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BALANCE SHEET REVIEW

Total assets were $5.4 billion at September 30, 2006, an increase of $102 million or 2% from December 31, 2005. Total liabilities increased $95 million over the same period and stockholders equity
increased $7 million. The following discusses changes in the major components of the Consolidated Balance Sheet since December 31, 2005.

Cash and
Cash Equivalents - Cash and cash equivalents declined $23 million from December 31, 2005 to September 30, 2006, as cash used for investing activities of $134 million exceeded the cash provided by financing activities of $70 million and
by operating activities of $41 million.

Securities Available for Sale - Total securities available for sale as of September 30, 2006 were $1.1
billion, a decrease of $116 million or 10% from December 31, 2005. The decline was primarily attributable to lower U.S. Government sponsored enterprise (GSE) balances and the resale of $15 million of the Companys own issuance of a Trust
Preferred security that it had repurchased a few years ago. As a result of the sale, the Company realized an improvement in its regulatory capital, paid down short-term wholesale borrowings, and reduced the level of required capital. At
September 30, 2006 and December 31, 2005, the total securities available for sale portfolio comprised 21% and 23%, respectively, of total earning assets, including COLI. Among the factors affecting the decision to purchase or sell
securities are the current assessment of economic and financial conditions, including the interest rate environment, the liquidity needs of the Company and its pledging obligations. By not reinvesting cash flows from maturities and prepayments of
investment securities, the Company expects to gradually migrate its balance sheet to a lower proportion of investment securities.

Mortgage and asset
backed securities, as of September 30, 2006, totaled $810 million and represented 76% of total available for sale securities. The distribution of mortgage and asset backed securities includes $360 million of GSE mortgage-backed pass through
securities, $425 million of GSE collateralized mortgage obligations and $25 million of private issue collateral mortgage obligations, all of which are rated Aaa except for $10 million of securities rated B3.

The $1.1 billion of total securities available for sale includes gross unrealized gains of $3 million and gross unrealized losses of $21 million. Unrealized gains and
unrealized losses is the difference between a securitys fair value and carrying value. The fair value of a security is generally impacted by two factors, market risk and credit risk. Market risk is the exposure of the security to changes in
interest rate. There is an inverse relationship to changes in the fair value of the security with changes in interest rates, meaning that when rates increase the value of the security will decrease. Conversely, when rates decline the value of the
security will increase. Credit risk arises from the extension of credit to a counterparty, for example a purchase of corporate debt in security form, and the possibility that the counterparty may not meet its contractual obligations. The
Companys policy is to primarily invest in securities with low credit risk, such as U.S. Treasuries, U.S. government agencies (such as the Government National Mortgage Association or GNMA), government-sponsored enterprises
(GSEs such as the Federal Home Loan Mortgage Corporation or FHLMC), state and political obligations, and mortgage-backed securities. Unlike agency debt, GSE debt is not secured by the full faith and credit of the United
States.

The combined effect of the Companys gross unrealized gains and gross unrealized losses, net of tax, is included as accumulated other
comprehensive income (OCI) in stockholders equity, as none of the securities with gross unrealized losses is considered other-than-temporarily impaired. If it were to be determined that an investment is impaired and the impairment is
other-than-temporary, an impairment loss is reclassified from OCI as a charge to earnings and a new carrying basis for the investment established.

For
comparative purposes, at December 31, 2005, gross unrealized gains of $3 million and gross unrealized losses of $24 million were included in the securities available for sale portfolio. For further analysis of the securities available
for sale portfolio, see Note 2 of the Notes to Consolidated Financial Statements.

Loans Held for Sale - At September 30, 2006,
mortgages originated but awaiting delivery to the secondary market were $19 million, compared to $24 million at December 31, 2005. These include conforming adjustable rate, fixed-rate and balloon residential mortgage loans, but are primarily
comprised of 15 and 30 year fixed rate loans. Non-conforming adjustable rate, fixed-rate and balloon



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residential mortgages are normally retained by the Bank. Mortgage loans are sold in the secondary market to eliminate interest rate risk and generate gains
on the sale of these loans including the value of retained servicing rights. Loans held for sale are recorded at the lower of cost or market value.

Loans - Loans represent the largest component of AMCOREs earning asset base. At September 30, 2006, total loans were $4.0 billion, an increase of $231 million or 8% on an annualized basis from December 31, 2005, and
represented 76% of total earning assets, including COLI. See Note 3 of the Notes to Consolidated Financial Statements.

Total commercial real estate loans,
including real estate construction loans, increased $180 million or 11% annualized, commercial, financial and agricultural loans increased $19 million, or 3% annualized, and residential real estate loans increased $36 million or 10% on an annualized
basis. The increases were driven primarily by the Branch Expansion.

Goodwill Total goodwill at
September 30, 2006 was $6.1 million, unchanged from December 31, 2005.

Deposits - Total deposits at September 30, 2006 were $4.3
billion, an increase of $83 million when compared to December 31, 2005, comprised of a $157 million increase in wholesale deposits, net of a $74 million decrease in bank-issued deposits which totaled $3.5 billion at the end of the third quarter
of 2006. The decline in bank-issued deposits reflects the Companys efforts to ensure that its deposit attraction strategies are priced at competitive, but profitable levels. This has led to some attrition in balances, as some customers,
including correspondent banks, moved balances to other institutions. Bank-issued deposits represented 82% and 85% of total deposits at September 30, 2006 and December 31, 2005, respectively.

Borrowings - Borrowings totaled $679 million at September 30, 2006 and were comprised of $352 million of short-term and $327 million of long-term borrowings.
Comparable amounts at December 31, 2005 were $489 million and $170 million. While this represented a net increase of $20 million, it also reflected a strategic repositioning of funding, as the $137 million decline in short-term borrowings was
replaced with $157 million in long-term borrowings. Included in the repositioning were a $74 million extinguishment of high-cost shorter-term Federal Home Loan Bank (FHLB) advances and a $35 million placement of long-term subordinated debentures
that qualifies as Tier 2 capital for regulatory purposes. These actions, coupled with the first quarter 2006 sale of the longer-maturity investment securities discussed above, allowed the Company to mitigate a funding mismatch and reduce its
interest rate risk sensitivity. See Notes 6 and 7 of the Notes to Consolidated Financial Statements.

AMCORE has $40 million of Trust Preferred
securities outstanding through AMCORE Capital Trust I (Capital Trust). In the first quarter of 2006, $15 million, previously held by the Bank and disallowed as Tier 1 Capital, were sold. Following the sale, the entire $40 million qualified as Tier 1
capital for regulatory purposes. These securities pay cumulative cash distributions semiannually at an annual rate of 9.35% and are redeemable from March 25, 2007 until March 25, 2017, at a declining premium of 104.675% to 100.00% of the
principal amount. After March 25, 2017, they are redeemable at par until June 15, 2027, when redemption is mandatory.

Stockholders
Equity  Total stockholders equity at September 30, 2006 was $406 million, an increase of $8 million or 2% from December 31, 2005. The increase in stockholders equity was primarily due to a $21 million increase in
retained earnings net of a $17 million increase in treasury stock. The $17 million increase in treasury stock was due to the Repurchase Program and the redemption of shares under a pre-existing redemption agreement. See discussion below under
Liquidity and Capital Management  Other uses of liquidity.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

Off-Balance Sheet Arrangements

During the
ordinary course of its business, the Company engages in financial transactions that are not recorded on its Consolidated Balance Sheets, are recorded in amounts that are different than their full principal or notional amount, or are recorded on an
equity or cost basis rather than being consolidated. Such transactions serve a variety of purposes including management of the Companys interest rate risk, liquidity and credit concentration risks, optimization of capital utilization, meeting
the financial needs of its customers and fulfilling Community Reinvestment Act (CRA) obligations in the markets that it serves.



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Auto loan sales - Structured as sales pursuant to SFAS 140 Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities, the Auto Loan Sales are a component of the Companys liquidity and credit concentration risk management strategy. The Auto Loan Sales are also helpful as a capital management tool.

In the Auto Loan Sales, indirect automobile loan receivables are transferred to a multi-seller variable-interest entity (VIE). Since the Company is not
the primary beneficiary of the VIE, consolidation is not required under the terms of Financial Interpretation No. (FIN) 46R, Consolidation of Variable Interest Entities. As a result, the net carrying amount of the loans is removed from
the Companys Consolidated Balance Sheets and certain retained residual interests are recorded. The Companys retained interests are subordinate to the interests of investors in the VIE and are subject to prepayment risk, interest-rate
risk and credit risk on the transferred auto loans. The Companys risk of loss attributable to credit and prepayment is limited to its interest in the Interest Only Strip. Neither the investors nor the securitization trust have any further
recourse to the Companys other assets. Interest rate risk could exceed the Companys interest in the Excess Spread, but such a possibility is not considered probable as of September 30, 2006. The Company also retains the rights to
service the loans that are sold.

As of September 30, 2006, the balance of automobile loans serviced and not included on the Companys
Consolidated Balance Sheets was $66 million compared to $111 million at December 31, 2005. The carrying value of retained interests was $5 million at September 30, 2006 and $7 million at December 31, 2005. See Note 5 of the Notes to
Consolidated Financial Statements.

Mortgage loan sales - The Company originates mortgage loans that it sells to the secondary market. The Company
typically retains the right to service the loans that are sold. As of September 30, 2006 and December 31, 2005, the unpaid principal balance of mortgage loans serviced for others was $1.4 billion. These loans are not recorded on the
Companys Consolidated Balance Sheets. The Company, as of September 30, 2006 and December 31, 2005 and in accordance with SFAS No 140, had recorded $14 million and $13 million, respectively, of capitalized mortgage servicing rights.
As of September 30, 2006 and December 31, 2005, there was no impairment valuation. See Note 4 of the Notes to Consolidated Financial Statements.

Derivatives - The Company uses derivative contracts to help manage its exposure to changes in interest rates and in conjunction with its mortgage banking operations. The derivatives used most often are interest rate swaps, and on
occasion caps, collars and floors (collectively Interest Rate Derivatives), mortgage loan commitments and forward contracts. As of September 30, 2006 and December 31, 2005, there were no caps, collars or floors outstanding.
Interest Rate Derivatives are contracts with a third-party (the Counterparty) to exchange interest payment streams based upon an assumed principal amount (the Notional Principal Amount). The Notional Principal Amount is not
advanced to/from the Counterparty. It is used only as a reference point to calculate the exchange of interest payment streams and is not recorded on the Consolidated Balance Sheets. Derivatives are marked-to-market in accordance with SFAS
No. 138, Accounting for Derivatives Instruments and Hedging Activities. AMCORE does not have any derivatives that are held or issued for trading purposes but it does have some derivatives that do not qualify for hedge accounting.
AMCORE monitors credit risk exposure to the Counterparties. All Counterparties, or their parent company, have investment grade credit ratings and are expected to meet any outstanding interest payment obligations.

The total notional amount of Interest Rate Derivatives outstanding was $173 million and $240 million as of September 30, 2006 and December 31, 2005,
respectively. As of September 30, 2006, Interest Rate Derivatives had a net negative carrying and fair value of $1.3 million, compared to a net negative carrying and fair value of $4.1 million at December 31, 2005. The decline in notional
amounts, carrying amounts and fair value included the termination of two fair value hedges in first quarter 2006. The total notional amount of forward contracts outstanding for mortgage loans to be sold in the secondary market was $34 million and
$39 million as of September 30, 2006 and December 31, 2005, respectively. As of September 30, 2006, the forward contracts had a net negative carrying and fair value of $357,000, compared to a net negative carrying and fair value of
$332,000 at December 31, 2005. For further discussion of derivative contracts, see Notes 8 of the Notes to Consolidated Financial Statements.

Loan
commitments and letters of credit - The Company, as a provider of financial services, routinely enters into commitments to extend credit to its Bank customers, including a variety of letters of credit. While these represent a potential outlay by
the Company, a



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significant amount of the commitments and letters of credit may expire without being drawn upon. Commitments and letters of credit are subject to the same
credit policies, underwriting standards and approval process as loans made by the Company.

At September 30, 2006, and December 31, 2005,
liabilities in the amount of $221,000 and $183,000, respectively, representing the value of the guarantee obligations associated with certain of the letters of credit, had been recorded in accordance with FIN 45. These amounts are expected to be
amortized into income over the lives of the commitments. The contractual amount of all letters of credit, including those exempted from the scope of FIN 45, was $237 million and $204 million at September 30, 2006 and December 31, 2005,
respectively. See Note 9 of the Notes to Consolidated Financial Statements.

The carrying value of mortgage loan commitments recorded as an asset totaled
$205,000 at September 30, 2006 compared to an asset of $150,000 at December 31, 2005. These amounts represent the fair value of those commitments marked-to-market in accordance with SFAS 138 and in accordance with Staff Accounting Bulletin
No. 105. The total notional amount of mortgage loan commitments was $23 million at September 30, 2006 and $22 million at December 31, 2005. See Note 8 of the Notes to Consolidated Financial Statements.

At September 30, 2006 and December 31, 2005, the Company had extended $960 million and $955 million, respectively, in loan commitments other than the mortgage
loan commitments and letters of credit described above. This amount represented the notional amount of the commitment. A liability of $1.0 million has been recorded for estimated probable losses on unfunded commitments outstanding at
September 30, 2006 compared to $732,000 at December 31, 2005. Prior to the third quarter of 2005, this liability was included as part of the Companys Allowance.

Equity investments - The Company has a number of non-marketable equity investments that have not been consolidated in its financial statements but rather are recorded in accordance with either the cost or
equity method of accounting. At September 30, 2006 and December 31, 2005, these investments included $4 million and $5 million, respectively, in private equity fund investments that were reported under either the cost or equity method,
depending on the percentage of ownership. Not included in the carrying amount were commitments to fund an additional $1.1 million and $1.3 million, respectively, at some future date. At September 30, 2006, the Company also has recorded
investments of $4 million, $20 million, and $93,000 respectively, in stock of the Federal Reserve Bank, the FHLB and the Federal Agricultural Mortgage Corporation. At December 31, 2005, these amounts were $4 million, $21 million and $112,000,
respectively. These investments are recorded at amortized historical cost or fair value, as applicable, with income recorded when dividends are declared.

Other investments, comprised of various affordable housing tax credit projects (AHTCP) and other Community Reinvestment Act (CRA) investments, totaled approximately $796,000 and $407,000 at September 30, 2006 and December 31,
2005, respectively. Losses are limited to the remaining investment and there are no additional funding commitments on the AHTCPs or CRA investments by the Company. Those investments without guaranteed yields were reported on the equity method, while
those with guaranteed yields were reported using the effective yield method. The maximum exposure to loss for all non-marketable equity investments is the sum of the carrying amounts plus additional commitments, if any.

Other investments - The Company also holds $1 million in a common security investment in the Capital Trust, to which the Company has $41 million in long-term debt
outstanding. The Capital Trust, in addition to the $1 million in common securities issued to the Company, has $40 million in preferred securities outstanding. The $40 million in preferred securities were issued to non-affiliated investors in 1997
and are redeemable beginning in 2007. The $15 million in preferred securities previously acquired by the Bank were sold in the first quarter of 2006. In its Consolidated Balance Sheets, the Company reflects its $1 million common security investment
on the equity method and reports the entire $41 million as outstanding long-term debt. For regulatory purposes, however, the $40 million in preferred securities qualifies as Tier 1 capital.

Fiduciary and agency - The Companys subsidiaries also hold assets in a fiduciary or agency capacity that are not included in the Consolidated Financial
Statements because they are not assets of the Company. Total assets administered by the Company at September 30, 2006 and December 31, 2005 were $2.6 billion.



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Contractual Obligations

In the ordinary course of its business, the Company enters into certain contractual arrangements. These obligations include issuance of debt to fund operations, property leases and derivative transactions. During the first nine months of
2006, the Company entered into seven operating lease agreements. There are no residual value guarantees on these leases and no lease termination penalties or acceleration clauses. A purchase contract in the amount of $1.6 million for a land purchase
was entered into during second quarter 2006 and is scheduled to close in 2007. With the predominant portion of it business being banking, the Company routinely enters into and exits various funding relationships including the issuance and
extinguishment of long-term debt. See the discussion of Borrowings, above, and Note 7 of the Notes to Consolidated Financial Statements. Other than these transactions, there were no material changes in the Companys contractual obligations
since the end of 2005. Amounts as of December 31, 2005 are listed in the following table:



|                              |  |                        |           |                  |   |           |  |           |         |                   |   |         |  |   |        
|----------------------------- |  | ---------------------- | --------- | ---------------- | - | --------- |  | --------- | ------- | ----------------- | - | ------- |  | - | -------
|                              |  | Payments due by period
|Contractual Obligations       |  | Total                  |           | Less Than 1 Year |   | 1-3 Years |  | 3-5 Years |         | More Than 5 Years
|                              |  | (in thousands)        
|Time Deposits                 |  | $                      | 1,740,115 |                  | $ | 1,069,140 |  | $         | 501,382 |                   | $ | 138,387 |  | $ | 31,206 
|Long-Term Debt (1)            |  |                        | 168,862   |                  |   |          |  |           | 100,441 |                   |   | 432     |  |   | 67,809 
|Capital Lease Obligations (2) |  |                        | 2,795     |                  |   | 169       |  |           | 346     |                   |   | 345     |  |   | 1,935  
|Operating Leases              |  |                        | 29,792    |                  |   | 2,398     |  |           | 4,996   |                   |   | 3,809   |  |   | 18,589 
|Service Contracts (3)         |  |                        | 2,388     |                  |   | 597       |  |           | 1,194   |                   |   | 597     |  |   |       
|                              |  |                        |           |                  |   |           |  |           |         |                   |   |         |  |   |        
|Total                         |  | $                      | 1,943,772 |                  | $ | 1,072,304 |  | $         | 608,359 |                   | $ | 143,570 |  | $ | 119,539
|                              |  |                        |           |                  |   |           |  |           |         |                   |   |         |  |   |        

---

|(1) | Excludes Capital Lease Obligations.
|--- | -----------------------------------

|(2) | Includes related interest.
|--- | --------------------------

|(3) | Minimum payments on Bank investment portfolio management contract.
|--- | ------------------------------------------------------------------

ASSET QUALITY REVIEW AND CREDIT RISK MANAGEMENT

AMCOREs credit risk is centered in its loan portfolio, which totaled $4.0 billion,
or 76% of earning assets, including COLI on September 30, 2006. The objective in managing loan portfolio risk is to quantify and manage credit risk on a portfolio basis as well as reduce the risk of a loss resulting from a customers
failure to perform according to the terms of a transaction. To achieve this objective, AMCORE strives to maintain a loan portfolio that is diverse in terms of loan type, industry concentration and borrower concentration.

The Company is also exposed to carrier credit risk with respect to the majority of its $135 million investment in COLI. AMCORE manages this risk by diversifying its
holdings among multiple carriers and by periodic internal credit reviews. All carriers have Secure ratings from A. M. Best that range from a low of A (Excellent) to A++ (Superior).

Allowance for Loan Losses - The Allowance is a significant estimate that is regularly reviewed by management to determine whether or not the amount is considered
adequate to absorb probable losses. If not, an additional Provision is made to increase the Allowance. Conversely, this review could result in a decrease in the Allowance. This evaluation includes specific loss estimates on certain individually
reviewed loans, statistical loss estimates for loan groups or pools that are based on historical loss experience, and loss estimates that are based upon the size, quality and concentration characteristics of the various loan portfolios, adverse
situations that may affect the borrowers ability to repay, and current economic and industry conditions.

The determination by management of the
appropriate level of the Allowance amounted to $40.6 million at September 30, 2006, compared to $40.8 million at December 31, 2005. Decreases of $2.8 million for specific loss estimates on certain loans that are individually reviewed for
impairment were partially offset by increases of $1.2 million in statistical loss estimates on loan pools based upon historical loss experience and $1.4 million for other loss estimates. Other loss estimates are based upon the size, quality and
concentration characteristics of the various loan portfolios, adverse situations that may affect the borrowers ability to repay, and current economic and industry conditions.



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At September 30, 2006, the Allowance as a percent of total loans and of non-accrual loans was 1.03% and 140%,
respectively. These compare to the same ratios at December 31, 2005 of 1.10% and 188%. Net charge-offs were $7.2 million for the first nine months of 2006, a decrease of $3.5 million from $10.7 million for the same period in 2005. This was
0.25% and 0.42% of annualized average loans for the year-to-date periods of 2006 and 2005, respectively. Decreases included commercial loan net charge-offs of $3.1 million, residential real estate net charge-offs of $259,000 and consumer/installment
net charge-offs of $100,000.

Non-performing Assets - Non-performing assets consist of non-accrual loans, loans 90 days past due and still accruing,
foreclosed real estate and other repossessed assets. Non-performing assets totaled $32.1 million as of September 30, 2006, an increase of $1.1 million or 4% from $31.0 million at December 31, 2005 and $4.3 million or 15% from $27.9 million
at September 30, 2005. The increase since December 31, 2005 consisted of a $1.3 million increase in foreclosed assets, partly offset by a $104,000 decrease in non-performing loans. The decrease in non-performing loans consisted of $7.4
million decrease in loans 90 days past due partially offset by a $7.3 million increase in non-accrual loans. The $4.3 million increase since September 30, 2005 consisted of a $4.2 million increase in non-performing loans and a $90,000 increase
in foreclosed assets. Total non-performing assets represented 0.59%, 0.58% and 0.53% of total assets at September 30, 2006, December 31, 2005 and September 30, 2005, respectively.

Non-accrual loan totals include a $9.8 million commercial real estate relationship credit that was added to non-accrual loans during the second quarter of 2006. The
credit is in the process of workout and the Company has assigned a specific allocation of $3.4 million at September 30, 2006 to reflect an estimated impairment loss as of September 30, 2006. While the Company strives to reflect all known
risk factors in its evaluation, the ultimate loss could differ materially from the current estimate. The Company expects the workout process to continue for the remainder of the calendar year 2006. See Item 7, Managements Discussion And
Analysis of Financial Condition And Results Of Operation, Critical Accounting Estimates, included in the Companys Form 10-K Annual Report for the year ended December 31, 2005, for a discussion of the judgments and assumptions
that are most critical in determining the adequacy of the Allowance.

In addition to the amount of non-accruing and delinquent loans over 90 days past due,
management is aware that other possible credit problems of borrowers may exist. Credits are considered substandard assets due to either less than satisfactory performance history, lack of borrowers sound worth or paying capacity, or inadequate
collateral. Loans classified as substandard are monitored accordingly. As of September 30, 2006 and December 31, 2005, there were $86,000 and $1.1 million, respectively, in this risk category that were 60 to 89 days delinquent and $1.8
million and $3.7 million, respectively, that were 30 to 59 days past due. In addition, as of September 30, 2006 and December 31, 2005, respectively, there were $1.1 million and $12.4 million of loans that were current, but had loss
allocations of $318,000 and $2.3 million. Included in the December 31, 2005 total of $12.4 million of loans that were current was the $9.8 million commercial real estate loan that was placed on non-accrual during the second quarter 2006.

Concentration of Credit Risks  As previously discussed, AMCORE strives to maintain a diverse loan portfolio in an effort to minimize the
effect of credit risk. Summarized below are the characteristics of classifications that exceed 10% of total loans.

Commercial, financial, and agricultural
loans were $838 million at September 30, 2006, and comprised 21% of gross loans, of which 0.39% were non-performing. Annualized net charge-offs of commercial loans during the first nine months of 2006 and 2005 were 0.43% and 0.38%,
respectively, of the average balance of the category. There were no loan concentrations within this category in excess of 10% of total loans.

Commercial
real estate and construction loans were $2.3 billion at September 30, 2006, comprising 58% of gross loans, of which 0.98% were classified as non-performing. Annualized net charge-offs of construction and commercial real estate loans during the
first nine months of 2006 and 2005 were 0.12% and 0.39%, respectively, of the average balance of the category. This category included $545 million of loans to nonresidential building operators and $412 million of loans to building contractors, which
were 14% and 10% of total loans, respectively. There were no other loan concentrations within this category that exceeded 10% of total loans.



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Residential real estate loans, which include home equity and permanent residential financing, totaled $496 million at
September 30, 2006, and represented 13% of gross loans, of which 0.72% were non-performing. Annualized net charge-offs of residential real estate in the first nine months of 2006 and 2005 were 0.11% and 0.20%, respectively, of the average
balance in this category.

Installment and consumer loans were $308 million at September 30, 2006, and comprised 8% of gross loans, of which 0.24%
were non-performing. Annualized net charge-offs of consumer loans in the first nine months of 2006 and 2005 were 0.96% and 1.00%, respectively, of the average balance of the category. Consumer loans are comprised primarily of in-market indirect auto
loans and direct installment loans. Indirect auto loans totaled $249 million at September 30, 2006. Both direct loans and indirect auto loans are approved and funded through a centralized department utilizing the same credit scoring system to
provide a standard methodology for the extension of consumer credit.

Contained within the concentrations described above, the Company has $1.5 billion of
interest only loans, of which $936 million are included in the construction and commercial real estate loan category and $433 million are included in the commercial, financial, and agricultural loan category and $151 million are home equity lines of
credit. In general, these loans are well-secured with a range of maturities of two to five years. The Company does not have significant concentrations of negative amortization loans, high loan-to-value loans, option adjustable-rate mortgage loans or
loans that initially have below market rates that significantly increase after the initial period.

LIQUIDITY AND CAPITAL MANAGEMENT

Liquidity Management

Overview - Liquidity
management is the process by which the Company, through its Asset and Liability Committee (ALCO) and treasury function, ensures that adequate liquid funds are available to meet its financial commitments on a timely basis, at a reasonable cost and
within acceptable risk tolerances.

Liquidity is derived primarily from bank-issued deposit growth and retention; principal and interest payments on loans;
principal and interest payments, sale, maturity and prepayment of investment securities; net cash provided from operations; and access to other funding sources. Other funding sources include brokered CDs, Fed Funds purchased lines, Federal Reserve
Bank discount window advances, FHLB advances, repurchase agreements, the sale or securitization of loans, balances maintained at correspondent banks and access to other capital markets. Bank-issued deposits, which exclude wholesale deposits, are
considered by management to be the primary, most stable and most cost-effective source of funding and liquidity. The Bank also has capacity, over time, to place additional brokered CDs as a source of mid-to long-term funds.

Uses of liquidity include funding credit obligations to borrowers, funding of mortgage originations pending delivery to the secondary market, withdrawals by depositors,
repayment of debt when due or called, maintaining adequate collateral for public deposits, paying dividends to shareholders, payment of operating expenses, funding capital expenditures and maintaining deposit reserve requirements.

During the first nine months of 2006, wholesale funding, which includes borrowings and brokered deposits, increased $177 million. Wholesale funding represented 27% of
total assets as of September 30, 2006 compared to 24% at December 31, 2005. The Company remains confident of its ability to meet and manage its short and long-term liquidity needs.

Investment securities portfolio  Scheduled maturities of the Companys investment securities portfolio and the prepayment of mortgage and asset backed
securities represent a significant source of liquidity. Approximately $8 million, or less than 1%, of the securities portfolio will contractually mature during the remainder of 2006. This does not include mortgage and asset backed securities since
their payment streams may differ from contractual maturities because borrowers may have the right to prepay obligations, typically without penalty.

Loans - Funding of loans is the most significant liquidity need, representing 73% of total assets as of September 30, 2006. Since December 31, 2005, loans increased $231 million. Loans held for sale, which represents
mortgage origination funding awaiting delivery to the secondary market, declined $5 million since December 31, 2005. The scheduled repayments and maturities of loans represent a substantial source of liquidity. Loan growth from same-store and
Branch Expansion continue to be the greatest liquidity need of the Company.



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Bank-issued deposits  Bank-issued deposits typically are the most cost-effective and reliable source of
liquidity for the Company. Since December 31, 2005, bank-issued deposits decreased $74 million. The decline in bank-issued deposits reflects the Companys efforts to ensure that its deposit attraction strategies are priced at competitive,
but profitable levels. This has led to some attrition in balances, as some customers, including correspondent banks, moved balances to other institutions.

Branch expansion - The Companys Branch Expansion strategy poses the greatest challenge to short and long-term liquidity. The Branch Expansion has required, and will continue to require, other sources of liquidity to fund the
expected loan growth net of expected deposit growth and the remaining $54 million authorized capital investment. Since inception, the Branch Expansion has required the funding of $1.73 billion in loans while generating $712 million in deposits.

Parent company In addition to the overall liquidity needs of the consolidated Company, the parent company requires adequate liquidity to pay
its expenses, repay debt when due, pay stockholder dividends and execute the Repurchase Program. Liquidity is primarily provided to the parent through the Bank and other subsidiaries in the form of dividends. In the first nine months of 2006,
dividends from subsidiaries amounted to $55 million, compared to $19 million in the same period a year ago.

Other sources of liquidity - As of
September 30, 2006, other sources of readily available liquidity totaled $1.1 billion and included $262 million of Fed Funds lines, unused collateral sufficient to support $399 million in Federal Reserve Bank discount window advances, $193
million of unpledged debt investment securities, and $207 million of FHLB advances. These amounts totaled $1.1 billion at December 31, 2005 and also included $48 million available under a prior commercial paper and back-up line-of-credit
arrangement. The Company also has capacity, over time, to place sufficient amounts of brokered CDs as a source of mid- to long-term liquidity. The Banks indirect auto portfolio, which at September 30, 2006 was $249 million, is a potential
source of liquidity through additional Auto Loan Sales, but declining volumes and aging of the portfolio decreases the likelihood that the remaining portfolio would meet the eligibility criteria established by the securitization trust. The Bank also
has a home equity portfolio of $238 million. Certain of these loans could also be packaged and securitized but the Bank has no current plans to do so.

Other uses of liquidity At September 30, 2006, other potential uses of liquidity totaled $1.2 billion and included $960 million in commitments to extend credit, $23 million in residential mortgage commitments primarily
for sale to the secondary market, and $237 million in letters of credit. At December 31, 2005, these amounts also totaled $1.2 billion.

The Company
entered into a stock redemption agreement (Redemption Agreement) on October 16, 1989, as amended June 30, 1993, pursuant to Section 303 of the Internal Revenue Code to pay death taxes and other related expenses of certain
stockholders. Such redemptions may be subject to bank regulatory agency approvals or limited by debt covenant restrictions. During the second quarter of 2006, the Company redeemed 86,000 shares, at a cost of $2.6 million pursuant to the Redemption
Agreement. At this level, regulatory approvals were not required and debt covenant limitations did not apply.

Capital Management

Total stockholders equity at September 30, 2006, was $406 million, an increase of $8 million or 2% from December 31, 2005. The increase in
stockholders equity was primarily due to a $21 million increase in retained earnings net of a $17 million increase in treasury stock. The $17 million increase in treasury stock was due to the Repurchase Program and the Redemption Agreement.

AMCORE paid $14 million of cash dividends during the first nine months of 2006, which represented $0.555 per share, or a dividend payout ratio of 40%.
This compares to $0.51 per share paid during the first nine months of 2005, which represented a payout ratio of 34%. The book value per share was $16.73 at September 30, 2006 compared to $16.06 at December 31, 2005.



45



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##### Table of Contents

In addition to the recently announced Repurchase Program and the Redemption Agreement, the Company does repurchase shares
in open-market and private transactions in accordance with Exchange Act Rule 10b-18. These repurchases are used to replenish the Companys treasury stock for re-issuances related to stock options and other employee benefit plans. Also
repurchased are direct repurchases from participants related to the administration of the Amended and Restated AMCORE Stock Option Advantage Plan. During the first nine months of 2006, the Company purchased 784,101 shares in open-market and private
transactions at an average price of $30.09 per share.

AMCORE has outstanding $41 million of capital securities through the Capital Trust. Of the $41
million, $40 million qualifies as Tier 1 capital for regulatory capital purposes, which is the $41 million reduced by the $1 million of common equity securities owned by the Company. Pursuant to regulations issued by the Federal Reserve Board, the
capital securities are expected to continue to qualify as Tier 1 Capital. The Company has the capacity to issue, under regulatory guidelines, additional trust preferred securities that would qualify as Tier 1 Capital.

During third quarter 2006, the Company issued fixed/floating rate junior subordinated debentures in the amount of $35 million. The debt qualifies as Tier 2 Capital for
regulatory capital purposes. The Company has the capacity to issue, under regulatory guidelines, additional subordinated debt that would qualify as Tier 2 Capital.

As the following table indicates, AMCOREs total risk-based capital, Tier 1 capital and leverage ratio all significantly exceed the regulatory minimums, as of September 30, 2006. As of the most recent
notification from the Companys regulators, the Bank is considered well capitalized under the regulatory framework for prompt corrective action.



|                                         |  |        |           |       |                         |   |        |   |         |  |      |  
|---------------------------------------- |  | ------ | --------- | ----- | ----------------------- | - | ------ | - | ------- |  | ---- | -
|                                         |  | Actual |           |       | Minimum CapitalAdequacy |  
|                                         |  | Amount |           | Ratio |                         |   | Amount |   | Ratio   | 
|Total Capital (to Risk Weighted Assets)  |  | $      | 526,507   |       | 11.27                   | % |        | $ | 373,670 |  | 8.00 | %
|Tier 1 Capital (to Risk Weighted Assets) |  | $      | 450,864   |       | 9.65                    | % |        | $ | 186,835 |  | 4.00 | %
|Tier 1 Capital (to Average Assets)       |  | $      | 450,864   |       | 8.30                    | % |        | $ | 217,224 |  | 4.00 | %
|Risk Weighted Assets                     |  | $      | 4,670,870 |       |                         |   |        |   |         |  |      |  
|                                         |  |        |           |       |                         |   |        |   |         |  |      |  
|Average Assets                           |  | $      | 5,430,603 |       |                         |   |        |   |         |  |      |  
|                                         |  |        |           |       |                         |   |        |   |         |  |      |  



46



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TABLE 1

ANALYSIS OF NET INTEREST INCOME AND AVERAGE BALANCE SHEET



|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|------------------------------------------- |  | -------------------------------- | --------- | - | -------- | - | ----------- |  | ---- | -------------- |  | - | --------- | - | ----------- | - | ------ |  | ---- | -
|                                            |  | Three Months Ended September 30, |          
|                                            |  | 2006                             |           |   | 2005     |  
|                                            |  | AverageBalance                   |           |   | Interest |   | AverageRate |  |      | AverageBalance |  |   | Interest  |   | AverageRate |  
|                                            |  | (dollars in thousands)           |          
|Assets:                                     |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Investment securities (1) (2)               |  | $                                | 1,105,999 |   |          | $ | 12,568      |  | 4.55 | %              |  | $ | 1,207,262 |   |             | $ | 13,705 |  | 4.54 | %
|Short-term investments                      |  |                                  | 6,005     |   |          |   | 87          |  | 5.73 | %              |  |   | 10,411    |   |             |   | 90     |  | 3.43 | %
|Loans held for sale                         |  |                                  | 27,036    |   |          |   | 385         |  | 5.70 | %              |  |   | 35,833    |   |             |   | 451    |  | 5.03 | %
|                                            |  |                                  |           |   |          |  
|Loans:                                      |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Commercial                                  |  |                                  | 820,647   |   |          |   | 16,805      |  | 8.12 | %              |  |   | 804,314   |   |             |   | 13,653 |  | 6.73 | %
|Commercial real estate                      |  |                                  | 2,269,703 |   |          |   | 44,331      |  | 7.75 | %              |  |   | 1,986,672 |   |             |   | 33,645 |  | 6.72 | %
|Residential real estate                     |  |                                  | 495,917   |   |          |   | 8,675       |  | 6.97 | %              |  |   | 445,192   |   |             |   | 6,955  |  | 6.22 | %
|Consumer                                    |  |                                  | 317,455   |   |          |   | 5,729       |  | 7.16 | %              |  |   | 316,777   |   |             |   | 5,205  |  | 6.52 | %
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total loans (1) (3)                         |  | $                                | 3,903,722 |   |          | $ | 75,540      |  | 7.68 | %              |  | $ | 3,552,955 |   |             | $ | 59,458 |  | 6.64 | %
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total interest-earning assets               |  | $                                | 5,042,762 |   |          | $ | 88,580      |  | 6.98 | %              |  | $ | 4,806,461 |   |             | $ | 73,704 |  | 6.10 | %
|Allowance for loan losses                   |  |                                  | (41,503   | ) |          |   |             |  |      |                |  |   | (42,598   | ) |             |   |        |  |      |  
|Non-interest-earning assets                 |  |                                  | 403,450   |   |          |   |             |  |      |                |  |   | 427,874   |   |             |   |        |  |      |  
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total assets                                |  | $                                | 5,404,709 |   |          |   |             |  |      |                |  | $ | 5,191,737 |   |             |   |        |  |      |  
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Liabilities and Stockholders Equity:       |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Interest-bearing deposits                   |  | $                                | 1,716,174 |   |          | $ | 13,180      |  | 3.05 | %              |  | $ | 1,814,734 |   |             | $ | 9,753  |  | 2.13 | %
|Time deposits                               |  |                                  | 1,246,157 |   |          |   | 13,538      |  | 4.31 | %              |  |   | 1,140,835 |   |             |   | 8,979  |  | 3.12 | %
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total bank issued interest-bearing deposits |  | $                                | 2,962,331 |   |          | $ | 26,718      |  | 3.58 | %              |  | $ | 2,955,569 |   |             | $ | 18,732 |  | 2.51 | %
|Wholesale deposits                          |  |                                  | 790,629   |   |          |   | 9,932       |  | 4.98 | %              |  |   | 593,889   |   |             |   | 5,849  |  | 3.91 | %
|Short-term borrowings                       |  |                                  | 327,337   |   |          |   | 4,055       |  | 4.92 | %              |  |   | 516,470   |   |             |   | 4,553  |  | 3.50 | %
|Long-term borrowings                        |  |                                  | 372,472   |   |          |   | 5,670       |  | 6.04 | %              |  |   | 164,094   |   |             |   | 2,595  |  | 6.27 | %
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total interest-bearing liabilities          |  | $                                | 4,452,769 |   |          | $ | 46,375      |  | 4.13 | %              |  | $ | 4,230,022 |   |             | $ | 31,729 |  | 2.98 | %
|Non-interest bearing deposits               |  |                                  | 484,502   |   |          |   |             |  |      |                |  |   | 495,683   |   |             |   |        |  |      |  
|Other liabilities                           |  |                                  | 66,608    |   |          |   |             |  |      |                |  |   | 67,078    |   |             |   |        |  |      |  
|Realized Stockholders Equity               |  |                                  | 420,177   |   |          |   |             |  |      |                |  |   | 404,159   |   |             |   |        |  |      |  
|Other Comprehensive Loss                    |  |                                  | (19,347   | ) |          |   |             |  |      |                |  |   | (5,205    | ) |             |   |        |  |      |  
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total Liabilities & Stockholders Equity    |  | $                                | 5,404,709 |   |          |   |             |  |      |                |  | $ | 5,191,737 |   |             |   |        |  |      |  
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Net Interest Income (FTE)                   |  |                                  |           |   |          | $ | 42,205      |  |      |                |  |   |           |   |             | $ | 41,975 |  |      |  
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Net Interest Spread (FTE)                   |  |                                  |           |   |          |   |             |  | 2.85 | %              |  |   |           |   |             |   |        |  | 3.12 | %
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Interest Rate Margin (FTE)                  |  |                                  |           |   |          |   |             |  | 3.33 | %              |  |   |           |   |             |   |        |  | 3.48 | %
|                                            |  |                                  |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  

---

|(1) | The interest on tax-exempt securities and tax-exempt loans is calculated on a tax equivalent basis (FTE) assuming a federal tax rate of 35%. FTE adjustments totaled $1.1 million in
2006 and $1.2 million in 2005.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The average balances of the securities are based on amortized historical cost.
|--- | ------------------------------------------------------------------------------

|(3) | The balances of nonaccrual loans are included in average loans outstanding. Interest on loans includes yield related loan fees of $695,000 and $633,000 for 2006 and 2005,
respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



47



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##### Table of Contents

TABLE 2

ANALYSIS OF NET INTEREST INCOME AND AVERAGE BALANCE SHEET



|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|------------------------------------------- |  | ------------------------------- | --------- | - | -------- | - | ----------- |  | ---- | -------------- |  | - | --------- | - | ----------- | - | ------- |  | ---- | -
|                                            |  | Nine Months Ended September 30, |          
|                                            |  | 2006                            |           |   | 2005     |  
|                                            |  | AverageBalance                  |           |   | Interest |   | AverageRate |  |      | AverageBalance |  |   | Interest  |   | AverageRate |  
|                                            |  | (dollars in thousands)          |          
|Assets:                                     |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Investment securities (1) (2)               |  | $                               | 1,148,958 |   |          | $ | 39,151      |  | 4.54 | %              |  | $ | 1,224,334 |   |             | $ | 42,095  |  | 4.58 | %
|Short-term investments                      |  |                                 | 6,869     |   |          |   | 271         |  | 5.27 | %              |  |   | 8,157     |   |             |   | 190     |  | 3.11 | %
|Loans held for sale                         |  |                                 | 25,490    |   |          |   | 1,009       |  | 5.28 | %              |  |   | 27,174    |   |             |   | 1,008   |  | 4.94 | %
|                                            |  |                                 |           |   |          |  
|Loans:                                      |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Commercial                                  |  |                                 | 821,658   |   |          |   | 48,320      |  | 7.86 | %              |  |   | 759,852   |   |             |   | 36,389  |  | 6.40 | %
|Commercial real estate                      |  |                                 | 2,207,473 |   |          |   | 124,562     |  | 7.54 | %              |  |   | 1,916,744 |   |             |   | 92,312  |  | 6.44 | %
|Residential real estate                     |  |                                 | 483,245   |   |          |   | 24,522      |  | 6.78 | %              |  |   | 434,043   |   |             |   | 19,608  |  | 6.03 | %
|Consumer                                    |  |                                 | 315,889   |   |          |   | 16,469      |  | 6.97 | %              |  |   | 317,680   |   |             |   | 15,539  |  | 6.54 | %
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total loans (1) (3)                         |  | $                               | 3,828,265 |   |          | $ | 213,873     |  | 7.47 | %              |  | $ | 3,428,319 |   |             | $ | 163,848 |  | 6.39 | %
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total interest-earning assets               |  | $                               | 5,009,582 |   |          | $ | 254,304     |  | 6.78 | %              |  | $ | 4,687,984 |   |             | $ | 207,141 |  | 5.90 | %
|Allowance for loan losses                   |  |                                 | (41,911   | ) |          |   |             |  |      |                |  |   | (42,099   | ) |             |   |         |  |      |  
|Non-interest-earning assets                 |  |                                 | 399,744   |   |          |   |             |  |      |                |  |   | 421,343   |   |             |   |         |  |      |  
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total assets                                |  | $                               | 5,367,415 |   |          |   |             |  |      |                |  | $ | 5,067,228 |   |             |   |         |  |      |  
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Liabilities and Stockholders Equity:       |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Interest-bearing deposits                   |  | $                               | 1,775,027 |   |          | $ | 37,611      |  | 2.83 | %              |  | $ | 1,702,060 |   |             | $ | 22,862  |  | 1.80 | %
|Time deposits                               |  |                                 | 1,228,053 |   |          |   | 36,523      |  | 3.98 | %              |  |   | 1,116,645 |   |             |   | 24,376  |  | 2.92 | %
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total bank issued interest-bearing deposits |  | $                               | 3,003,080 |   |          | $ | 74,134      |  | 3.30 | %              |  | $ | 2,818,705 |   |             | $ | 47,238  |  | 2.24 | %
|Wholesale deposits                          |  |                                 | 718,462   |   |          |   | 25,372      |  | 4.72 | %              |  |   | 620,982   |   |             |   | 16,877  |  | 3.63 | %
|Short-term borrowings                       |  |                                 | 401,834   |   |          |   | 14,008      |  | 4.66 | %              |  |   | 524,904   |   |             |   | 11,926  |  | 3.04 | %
|Long-term borrowings                        |  |                                 | 297,154   |   |          |   | 13,672      |  | 6.15 | %              |  |   | 165,058   |   |             |   | 7,491   |  | 6.07 | %
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total interest-bearing liabilities          |  | $                               | 4,420,530 |   |          | $ | 127,186     |  | 3.85 | %              |  | $ | 4,129,649 |   |             | $ | 83,532  |  | 2.70 | %
|Non-interest bearing deposits               |  |                                 | 481,301   |   |          |   |             |  |      |                |  |   | 482,091   |   |             |   |         |  |      |  
|Other liabilities                           |  |                                 | 65,834    |   |          |   |             |  |      |                |  |   | 63,384    |   |             |   |         |  |      |  
|Realized Stockholders Equity               |  |                                 | 417,676   |   |          |   |             |  |      |                |  |   | 395,819   |   |             |   |         |  |      |  
|Other Comprehensive Loss                    |  |                                 | (17,926   | ) |          |   |             |  |      |                |  |   | (3,715    | ) |             |   |         |  |      |  
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total Liabilities & Stockholders Equity    |  | $                               | 5,367,415 |   |          |   |             |  |      |                |  | $ | 5,067,228 |   |             |   |         |  |      |  
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Net Interest Income (FTE)                   |  |                                 |           |   |          | $ | 127,118     |  |      |                |  |   |           |   |             | $ | 123,609 |  |      |  
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Net Interest Spread (FTE)                   |  |                                 |           |   |          |   |             |  | 2.93 | %              |  |   |           |   |             |   |         |  | 3.20 | %
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Interest Rate Margin (FTE)                  |  |                                 |           |   |          |   |             |  | 3.39 | %              |  |   |           |   |             |   |         |  | 3.52 | %
|                                            |  |                                 |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  

---

|(1) | The interest on tax-exempt securities and tax-exempt loans is calculated on a tax equivalent basis (FTE) assuming a federal tax rate of 35%. FTE adjustments totaled $3.2 million in
2006 and $3.6 million in 2005.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The average balances of the securities are based on amortized historical cost.
|--- | ------------------------------------------------------------------------------

|(3) | The balances of nonaccrual loans are included in average loans outstanding. Interest on loans includes yield related loan fees of $2.3 million and $1.9 million for 2006 and 2005,
respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



48



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##### Table of Contents

TABLE 3

ANALYSIS OF QUARTER-TO-QUARTER CHANGES IN NET INTEREST INCOME



|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|------------------------------------------- |  | ----------------------------------------- | ------ | - | --------------------------- | - | ------ | - |  | - | ------ | -
|                                            |  | Three Months EndedSeptember 30, 2006/2005 |       
|                                            |  | Increase/(Decrease)Due to Change in       |        |   | Total
NetIncrease(Decrease) |  
|                                            |  | AverageVolume                             |        |   | AverageRate                 |   |       
|                                            |  | (in thousands)                            |       
|Interest Income:                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Investment securities                       |  | $                                         | (1,151 | ) |                             | $ | 14     |   |  | $ | (1,137 | )
|Short-term investments                      |  |                                           | (46    | ) |                             |   | 43     |   |  |   | (3     | )
|Loans held for sale                         |  |                                           | (121   | ) |                             |   | 55     |   |  |   | (66    | )
|                                            |  |                                           |       
|Loans:                                      |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Commercial                                  |  |                                           | 282    |   |                             |   | 2,870  |   |  |   | 3,152  |  
|Commercial real estate                      |  |                                           | 5,147  |   |                             |   | 5,539  |   |  |   | 10,686 |  
|Residential real estate                     |  |                                           | 839    |   |                             |   | 881    |   |  |   | 1,720  |  
|Consumer                                    |  |                                           | 11     |   |                             |   | 513    |   |  |   | 524    |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Total loans                                 |  |                                           | 6,226  |   |                             |   | 9,856  |   |  |   | 16,082 |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Total Interest-Earning Assets               |  | $                                         | 3,765  |   |                             | $ | 11,111 |   |  | $ | 14,876 |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Interest Expense:                           |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Interest-bearing deposits                   |  | $                                         | (555   | ) |                             | $ | 3,982  |   |  | $ | 3,427  |  
|Time deposits                               |  |                                           | 891    |   |                             |   | 3,668  |   |  |   | 4,559  |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Total bank issued interest-bearing deposits |  |                                           | 43     |   |                             |   | 7,943  |   |  |   | 7,986  |  
|Wholesale deposits                          |  |                                           | 2,228  |   |                             |   | 1,855  |   |  |   | 4,083  |  
|Short-term borrowings                       |  |                                           | (1,989 | ) |                             |   | 1,491  |   |  |   | (498   | )
|Long-term borrowings                        |  |                                           | 3,175  |   |                             |   | (100   | ) |  |   | 3,075  |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Total Interest-Bearing Liabilities          |  | $                                         | 1,748  |   |                             | $ | 12,898 |   |  | $ | 14,646 |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Net Interest Income (FTE)                   |  | $                                         | 2,017  |   |                             | $ | (1,787 | ) |  | $ | 230    |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  

The above analysis shows the changes in interest income (tax equivalent FTE) and interest expense
attributable to volume and rate variances. The change in interest income (tax equivalent) due to both volume and rate have been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in
each. Because of changes in the mix of the components of interest-earning assets and interest-bearing liabilities, the computations for each of the components do not equal the calculation for interest-earning assets as a total or interest-bearing
liabilities as a total.



49



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TABLE 4

ANALYSIS OF YEAR-TO-DATE CHANGES IN NET INTEREST INCOME



|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|------------------------------------------- |  | ----------------------------------------- | ------ | - | --------------------------- | - | ------ | - |  | - | ------ | -
|                                            |  | Nine Months Ended September 30, 2006/2005 |       
|                                            |  | Increase/(Decrease)Due to Change in       |        |   | Total
NetIncrease(Decrease) |  
|                                            |  | AverageVolume                             |        |   | AverageRate                 |   |       
|                                            |  | (in thousands)                            |       
|Interest Income:                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Investment securities                       |  | $                                         | (2,572 | ) |                             | $ | (372   | ) |  | $ | (2,944 | )
|Short-term investments                      |  |                                           | (34    | ) |                             |   | 115    |   |  |   | 81     |  
|Loans held for sale                         |  |                                           | (64    | ) |                             |   | 65     |   |  |   | 1      |  
|                                            |  |                                           |       
|Loans:                                      |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Commercial                                  |  |                                           | 3,137  |   |                             |   | 8,794  |   |  |   | 11,931 |  
|Commercial real estate                      |  |                                           | 15,129 |   |                             |   | 17,121 |   |  |   | 32,250 |  
|Residential real estate                     |  |                                           | 2,354  |   |                             |   | 2,560  |   |  |   | 4,914  |  
|Consumer                                    |  |                                           | (88    | ) |                             |   | 1,018  |   |  |   | 930    |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Total loans                                 |  |                                           | 20,433 |   |                             |   | 29,592 |   |  |   | 50,025 |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Total Interest-Earning Assets               |  | $                                         | 14,866 |   |                             | $ | 32,297 |   |  | $ | 47,163 |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Interest Expense:                           |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Interest-bearing deposits                   |  | $                                         | 1,019  |   |                             | $ | 13,730 |   |  | $ | 14,749 |  
|Time deposits                               |  |                                           | 2,622  |   |                             |   | 9,525  |   |  |   | 12,147 |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Total bank issued interest-bearing deposits |  |                                           | 3,267  |   |                             |   | 23,629 |   |  |   | 26,896 |  
|Wholesale deposits                          |  |                                           | 2,922  |   |                             |   | 5,573  |   |  |   | 8,495  |  
|Short-term borrowings                       |  |                                           | (3,252 | ) |                             |   | 5,334  |   |  |   | 2,082  |  
|Long-term borrowings                        |  |                                           | 6,076  |   |                             |   | 105    |   |  |   | 6,181  |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Total Interest-Bearing Liabilities          |  | $                                         | 6,239  |   |                             | $ | 37,415 |   |  | $ | 43,654 |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  
|Net Interest Income (FTE)                   |  | $                                         | 8,627  |   |                             | $ | (5,118 | ) |  | $ | 3,509  |  
|                                            |  |                                           |        |   |                             |   |        |   |  |   |        |  

The above analysis shows the changes in interest income (tax equivalent FTE) and interest expense
attributable to volume and rate variances. The change in interest income (tax equivalent) due to both volume and rate have been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in
each. Because of changes in the mix of the components of interest-earning assets and interest-bearing liabilities, the computations for each of the components do not equal the calculation for interest-earning assets as a total or interest-bearing
liabilities as a total.



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TABLE 5

ASSET QUALITY

The components of non-performing loans and foreclosed assets at September 30, 2006 and
December 31, 2005 were as follows:



|                                                  |  |                   |        |                  |   |       
|------------------------------------------------- |  | ----------------- | ------ | ---------------- | - | ------
|                                                  |  | September 30,2006 |        | December 31,2005
|                                                  |  | (in thousands)   
|Impaired loans:                                   |  |                   |        |                  |   |       
|Non-accrual loans                                 |  |                   |        |                  |   |       
|Commercial                                        |  | $                 | 4,075  |                  | $ | 4,483 
|Real estate                                       |  |                   | 15,338 |                  |   | 13,083
|Other non-performing:                             |  |                   |        |                  |   |       
|Non-accrual loans (1)                             |  |                   | 9,532  |                  |   | 4,114 
|Loans 90 days or more past due and still accruing |  |                   | 1,164  |                  |   | 8,533 
|                                                  |  |                   |        |                  |   |       
|Total non-performing loans                        |  | $                 | 30,109 |                  | $ | 30,213
|                                                  |  |                   |        |                  |   |       
|Foreclosed assets:                                |  |                   |        |                  |   |       
|Real estate                                       |  |                   | 1,540  |                  |   | 621   
|Other                                             |  |                   | 483    |                  |   | 151   
|                                                  |  |                   |        |                  |   |       
|Total foreclosed assets                           |  | $                 | 2,023  |                  | $ | 772   
|                                                  |  |                   |        |                  |   |       
|Total non-performing assets                       |  | $                 | 32,132 |                  | $ | 30,985
|                                                  |  |                   |        |                  |   |       
|Troubled debt restructurings                      |  | $                 | 12     |                  | $ | 13    
|                                                  |  |                   |        |                  |   |       

---

|(1) | These loans are not considered impaired since they are part of a small balance homogeneous portfolio.
|--- | -----------------------------------------------------------------------------------------------------

An analysis of the allowance for loan losses for the periods ended September 30, 2006 and 2005 is presented below:



|                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                              |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                                                              |  | 2006                            |        |   | 2005                           |   |        | 2006 |  |   | 2005   |  
|                                                                                              |  | ($ in thousands)                |        |   | ($ in thousands)               |  
|Balance at beginning of period                                                                |  | $                               | 40,560 |   |                                | $ | 40,475 |      |  | $ | 40,756 |   |  | $ | 40,945 |  
|Charge-Offs:                                                                                  |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Commercial, financial and agricultural                                                        |  |                                 | 2,035  |   |                                |   | 518    |      |  |   | 3,477  |   |  |   | 2,619  |  
|Real estate - Commercial                                                                      |  |                                 | 447    |   |                                |   | 2,465  |      |  |   | 2,441  |   |  |   | 5,672  |  
|Real estate - Residential                                                                     |  |                                 | 405    |   |                                |   | 190    |      |  |   | 812    |   |  |   | 744    |  
|Installment and consumer                                                                      |  |                                 | 1,703  |   |                                |   | 1,655  |      |  |   | 4,249  |   |  |   | 3,538  |  
|Direct leases                                                                                 |  |                                 | 6      |   |                                |   | 42     |      |  |   | 6      |   |  |   | 91     |  
|                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|                                                                                              |  |                                 | 4,596  |   |                                |   | 4,870  |      |  |   | 10,985 |   |  |   | 12,664 |  
|                                                                                              |  |                                 |        |  
|Recoveries:                                                                                   |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Commercial, financial and agricultural                                                        |  |                                 | 725    |   |                                |   | 81     |      |  |   | 864    |   |  |   | 546    |  
|Real estate - Commercial                                                                      |  |                                 | 286    |   |                                |   | 11     |      |  |   | 471    |   |  |   | 129    |  
|Real estate - Residential                                                                     |  |                                 | 255    |   |                                |   | 11     |      |  |   | 433    |   |  |   | 106    |  
|Installment and consumer                                                                      |  |                                 | 533    |   |                                |   | 519    |      |  |   | 1,974  |   |  |   | 1,163  |  
|Direct leases                                                                                 |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|                                                                                              |  |                                 | 1,799  |   |                                |   | 622    |      |  |   | 3,742  |   |  |   | 1,944  |  
|                                                                                              |  |                                 |        |  
|Net Charge-Offs                                                                               |  |                                 | 2,797  |   |                                |   | 4,248  |      |  |   | 7,243  |   |  |   | 10,720 |  
|Provision charged to expense                                                                  |  |                                 | 2,863  |   |                                |   | 4,462  |      |  |   | 7,113  |   |  |   | 10,464 |  
|Estimated loss on unfunded commitments (2)                                                    |  |                                 |       |   |                                |   | (714   | )    |  |   |       |   |  |   | (714   | )
|                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Balance at end of period                                                                      |  | $                               | 40,626 |   |                                | $ | 39,975 |      |  | $ | 40,626 |   |  | $ | 39,975 |  
|                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Ratio of net-charge-offs during the period to average loans outstanding during the period (1) |  |                                 | 0.28   | % |                                |   | 0.47   | %    |  |   | 0.25   | % |  |   | 0.42   | %
|                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  

---

|(1) | On an annualized basis.
|--- | -----------------------



|(2) | Reclassified to other liabilities.
|--- | ----------------------------------



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As part of its normal operations, AMCORE is subject to
interest-rate risk on the interest-earning assets it invests in (primarily loans and securities) and the interest-bearing liabilities it funds with (primarily customer deposits, brokered deposits and borrowed funds), as well as its ability to manage
such risk. Fluctuations in interest rates may result in changes in the fair market values of AMCOREs financial instruments, cash flows and net income. Like most financial institutions, AMCORE has an exposure to changes in both short-term and
long-term interest rates.

While AMCORE manages other risks in its normal course of operations, such as credit and liquidity risk, it considers
interest-rate risk to be its most significant market risk. Other types of market risk, such as foreign currency exchange risk and commodity price risk, do not arise in the normal course of AMCOREs business activities and operations. In
addition, since AMCORE does not hold a trading portfolio, it is not exposed to significant market risk from trading activities. During third quarter 2006, there were no material changes in AMCOREs primary market risk exposures. Based upon
current expectations, no material changes are anticipated in the future in the types of market risks facing AMCORE.

Like most financial institutions,
AMCOREs net income can be significantly impacted by external factors. These factors include, but are not limited to: overall economic conditions, policies and actions of regulatory authorities, the amounts of and rates at which assets and
liabilities re-price, variances in prepayment of loans and securities other than those that are assumed, early withdrawal of deposits, exercise of call options on borrowings or securities, competition, a general rise or decline in interest rates,
changes in the slope of the yield-curve, changes in historical relationships between indices and balance sheet growth. ALCO regularly reviews the assumptions being utilized in light of market conditions.

AMCOREs asset and liability management process is utilized to manage market and interest rate risk through structuring the balance sheet and off-balance sheet
positions to maximize net income while maintaining acceptable levels of risk to changes in market interest rates. While achievement of this goal requires a balance between earnings, liquidity and interest rate risk, there are opportunities to
enhance revenues through managed risk. Interest rate sensitivity analysis is performed monthly using various simulations with an asset/liability modeling system. These analyses are reviewed by the ALCO, whose actions attempt to minimize any sudden
or sustained negative impact that interest rate movements may have on net income. ALCO reviews the impact of liquidity, capital adequacy and rate sensitivity, among other things, and determines appropriate policy direction to maintain or meet
established ALCO guidelines.

Based upon an immediate increase in interest rates of 100 basis points and no change in the slope of the yield curve, the
potential decrease in pre-tax income for the twelve-month period beginning October 1, 2006 would be approximately 2.0% of base forecasted pre-tax income. Conversely, an immediate decrease in interest rates of 100 basis points, no change in the
slope of the yield curve, and incorporating the potential impairment of mortgage servicing rights would result in a potential decrease in pre-tax income for the twelve-month period beginning October 1, 2006 of 6.3% of base forecasted pre-tax
income. These analyses assume no growth in assets or liabilities and replacement of maturing instruments with like-kind instruments. During the second quarter, AMCORE changed its benchmark of net interest income to pre-tax income. At
December 31, 2005, the potential decrease in pre-tax income for the 100 basis points immediate increase would have been 3.7% and the potential decrease in pre-tax income for the 100 basis points immediate decrease in rates would have been 1.9%.

The amounts and assumptions used in the rising and falling rate scenarios should not be viewed as indicative of expected actual results. In addition to
rising or falling interest rates, AMCOREs net income can be significantly impacted by a variety of external factors, such as those previously noted. In addition, as interest rates move, the ALCO is likely to adjust interest rate risk
management strategies to limit, to the extent possible, the adverse impact that such changes in interest rates might otherwise have on AMCOREs net income, as well as maximize potential positive impacts such movements might have.



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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the
Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report.
Based on such evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Companys disclosure controls and procedures are effective.

Changes in Internal Controls

There have not been any changes in the
Companys internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonable likely
to materially affect, the Companys internal control over financial reporting.

PART II Other Information

ITEM 1.Legal Proceedings

Management believes that no litigation is threatened or pending in which the Company faces
potential loss or exposure which will materially affect the Companys financial position or results of operations. For a discussion of the Banks entry into a Consent Order with the OCC, see Item 2, Managements Discussion and
Analysis of Financial Condition and Results of Operations  Regulatory Developments. Since the Companys subsidiaries act as depositories of funds, trustee and escrow agents, they occasionally are named as defendants in lawsuits involving
claims to the ownership of funds in particular accounts. This and other litigation is incidental to the Companys business.

ITEM 1A. Risk Factors

There has not been any material change in the risk factors disclosure from that contained in the
Companys 2005 10-K for the fiscal year ended December 31, 2005.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table presents information relating
to all Company repurchases of common stock during the third quarter of 2006:



|                                      |  |                                |  |                                 |       |                                                                              |         |                                                                                                     |          
|------------------------------------- |  | ------------------------------ |  | ------------------------------- | ----- | ---------------------------------------------------------------------------- | ------- | --------------------------------------------------------------------------------------------------- | ---------
|Issuer Purchases of Equity
Securities
|Period                                |  | (a) Total # of SharesPurchased |  | (b) Average PricePaid per Share |       | (c) Total # of SharesPurchased as Part ofPublicly AnnouncedPlans or
Programs |         | (d) Maximum # (orApprox. Dollar Value) ofShares that May Yet BePurchased Under thePlans
or Programs
|Beginning Balance                     |  |                                |  |                                 |       |                                                                              |         |                                                                                                     | 2,800,000
|July 1  31, 2006                     |  | 21,460                         |  | $                               | 27.66 |                                                                              | 16,800  |                                                                                                     | 2,783,200
|August 1  31, 2006                   |  | 235,053                        |  |                                 | 29.05 |                                                                              | 210,000 |                                                                                                     | 2,573,200
|September 1  30, 2006                |  | 170,210                        |  |                                 | 30.56 |                                                                              | 170,210 |                                                                                                     | 2,402,990
|                                      |  |                                |  |                                 |       |                                                                              |         |                                                                                                     |          
|Total                                 |  | 426,723                        |  | $                               | 29.58 |                                                                              | 397,010 |                                                                                                     | 2,402,990
|                                      |  |                                |  |                                 |       |                                                                              |         |                                                                                                     |          

The Companys Board of Directors authorized a share repurchase program on May 3, 2006. The repurchase
program allows the repurchase of up to three million shares for a 12-month period and will be executed through open market or privately negotiated purchases. The Company regularly repurchases shares in open-market transactions in accordance with
Exchange Act Rule 10b-18 through a limited group of brokers to replenish the Companys treasury stock for re-issuances related to stock option exercises and other employee benefit plans. Included in the repurchased shares above are direct
repurchases from participants, at their discounted price, related to the administration of the Amended and Restated AMCORE Stock Option Advantage Plan. Also included are 23,973 shares tendered to effect stock option exercise transactions.



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|ITEM 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3    |  | Amended and Restated Articles of Incorporation of AMCORE Financial, Inc., dated April 8, 1986 (Incorporated by reference to Exhibit 3 of AMCOREs Quarterly Report on Form 10-Q for
the quarter ended March 31, 1986); as amended May 3, 1988 to Article 8 (Incorporated by reference to AMCOREs definitive 1988 Proxy Statement dated March 18, 1988); and as amended May 1, 1990 to Article 5 (Incorporated by
reference to AMCOREs definitive 1990 Proxy Statement dated March 21, 1990).
|     | 
|3.1  |  | By-laws of AMCORE Financial, Inc., as amended February 11, 2004. (Incorporated by reference to Exhibit 3.2 of AMCOREs Annual Report on Form 10-K for the year ended
December 31, 2003).                                                                                                                                                                                                                                                                                                      
|     | 
|10.1 |  | Retirement Agreement, Release and Waiver, dated October 18, 2006, between AMCORE Investment Group, N.A., its parent, subsidiaries and affiliates and Patricia M. Bonavia (Incorporated by
reference to AMCOREs Form 8-K as filed with the Commission on October 23, 2006).                                                                                                                                                                                                                   
|     | 
|31.1 |  | Certification of CEO pursuant to Rule 13a-14 and Rule 15d-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                       
|     | 
|31.2 |  | Certification of CFO pursuant to Rule 13a-14 and Rule 15d-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                       
|     | 
|32.1 |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                
|     | 
|32.2 |  | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.



|                       |  |                        |  |                             
|---------------------- |  | ---------------------- |  | ----------------------------
|                       |  | AMCORE Financial, Inc.
|Date: November 9, 2006 |  |                        |  |                             
|                       |  | By:                    |  | /s/ Donald H. Wilson        
|                       |  |                        |  | Donald H. Wilson            
|                       |  |                        |  | Executive Vice President and
|                       |  |                        |  | Chief Financial Officer     



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EXHIBIT INDEX



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3    |  | Amended and Restated Articles of Incorporation of AMCORE Financial, Inc., dated April 8, 1986 (Incorporated by reference to Exhibit 3 of AMCOREs Quarterly Report on Form 10-Q for
the quarter ended March 31, 1986); as amended May 3, 1988 to Article 8 (Incorporated by reference to AMCOREs definitive 1988 Proxy Statement dated March 18, 1988); and as amended May 1, 1990 to Article 5 (Incorporated by
reference to AMCOREs definitive 1990 Proxy Statement dated March 21, 1990).
|     | 
|3.1  |  | By-laws of AMCORE Financial, Inc., as amended February 11, 2004. (Incorporated by reference to Exhibit 3.2 of AMCOREs Annual Report on Form 10-K for the year ended December 31,
2003).                                                                                                                                                                                                                                                                                                      
|     | 
|10.1 |  | Retirement Agreement, Release and Waiver, dated October 18, 2006, between AMCORE Investment Group, N.A., its parent, subsidiaries and affiliates and Patricia M. Bonavia (Incorporated by
reference to AMCOREs Form 8-K as filed with the Commission on October 23, 2006).                                                                                                                                                                                                                   
|     | 
|31.1 |  | Certification of CEO pursuant to Rule 13a-14 and Rule 15d-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                       
|     | 
|31.2 |  | Certification of CFO pursuant to Rule 13a-14 and Rule 15d-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                       
|     | 
|32.1 |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                
|     | 
|32.2 |  | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                



56