##### Table of Contents

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended September 30, 2005



Commission file number 013393



LOGO



AMCORE Financial, Inc.



|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|NEVADA                                                        |  | 363183870                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)



501 Seventh Street,
Rockford, Illinois 61104

Telephone Number (815) 9682241



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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



x Yes ̈No



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



 ̈Yes x No



The number of shares
outstanding of the registrants common stock, par value $0.22 per share, at October 31, 2005 was 24,827,368 shares.



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##### Table of Contents

AMCORE Financial, Inc.



Form 10Q
Table of Contents



|              |  |                                                                                                       |  |           
|------------- |  | ----------------------------------------------------------------------------------------------------- |  | ----------
|              |  |                                                                                                       |  | PageNumber
|PART I        |  |                                                                                                       |  |           
|              |  |                                                                                                      
|Item 1        |  | Financial Statements (unaudited)                                                                      |  |           
|              |  |                                                                                                      
|              |  | Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004                            |  | 3         
|              |  |                                                                                                      
|              |  | Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2005 and 2004     |  | 4         
|              |  |                                                                                                      
|              |  | Consolidated Statements of Stockholders Equity for the Nine Months Ended September 30, 2005 and 2004 |  | 5         
|              |  |                                                                                                      
|              |  | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004           |  | 6         
|              |  |                                                                                                      
|              |  | Notes to Consolidated Financial Statements                                                            |  | 7         
|              |  |                                                                                                      
|Item 2        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 20        
|              |  |                                                                                                      
|Item 3        |  | Quantitative and Qualitative Disclosures About Market Risk                                            |  | 48        
|              |  |                                                                                                      
|Item 4        |  | Controls and Procedures                                                                               |  | 49        
|              |  |                                                                                                      
|PART II       |  |                                                                                                       |  |           
|              |  |                                                                                                      
|Item 1        |  | Legal Proceedings                                                                                     |  | 49        
|              |  |                                                                                                      
|Item 2        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                           |  | 49        
|              |  |                                                                                                      
|Item 6        |  | Exhibits                                                                                              |  | 50        
|              | 
|Signatures    |  | 51                                                                                                   
|              | 
|Exhibit Index |  | 52                                                                                                   



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##### Table of Contents

PART I. ITEM 1: Financial Statements



AMCORE Financial, Inc. and Subsidiaries



CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|------------------------------------------------------------------------ |  | ----------------- | --------- | ---------------- |  | -------------------------------- | --------- | - | ---------------- | - | --------- | -
|                                                                         |  |                   |           |                  |  | September 30,2005                |           |   | December 31,2004 |  
|                                                                         |  |                   |           |                  |  | (in thousands,except share data) |          
|ASSETS                                                                   |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|Cash and cash equivalents                                                |  | $                 | 141,996   |                  |  | $                                | 117,072   |  
|Interest earning deposits in banks and fed funds sold                    |  |                   | 5,393     |                  |  |                                  | 361       |  
|Loans held for sale                                                      |  |                   | 38,612    |                  |  |                                  | 30,634    |  
|Securities available for sale, at fair value                             |  |                   | 1,194,922 |                  |  |                                  | 1,249,250 |  
|Gross loans                                                              |  |                   | 3,598,866 |                  |  |                                  | 3,278,800 |  
|Allowance for loan losses                                                |  |                   | (39,975   | )                |  |                                  | (40,945   | )
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|Net loans                                                                |  | $                 | 3,558,891 |                  |  | $                                | 3,237,855 |  
|Company owned life insurance                                             |  |                   | 131,004   |                  |  |                                  | 123,743   |  
|Premises and equipment, net                                              |  |                   | 84,740    |                  |  |                                  | 85,320    |  
|Goodwill                                                                 |  |                   | 15,575    |                  |  |                                  | 15,575    |  
|Foreclosed real estate, net                                              |  |                   | 1,879     |                  |  |                                  | 4,940     |  
|Other assets                                                             |  |                   | 80,105    |                  |  |                                  | 75,738    |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|TOTAL ASSETS                                                             |  |                   |           |                  |  | $                                | 5,253,117 |   |                  | $ | 4,940,488 |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|LIABILITIES                                                              |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|Deposits:                                                                |  |                   |           |                  |  |                                  |           |  
|Noninterest bearing deposits                                             |  | $                 | 501,915   |                  |  | $                                | 479,079   |  
|Interest bearing demand deposits                                         |  |                   | 1,818,467 |                  |  |                                  | 1,520,382 |  
|Time deposits                                                            |  |                   | 1,186,582 |                  |  |                                  | 1,113,933 |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|Total bank issued deposits                                               |  | $                 | 3,506,964 |                  |  | $                                | 3,113,394 |  
|Wholesale deposits                                                       |  |                   | 589,112   |                  |  |                                  | 621,297   |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|Total deposits                                                           |  | $                 | 4,096,076 |                  |  | $                                | 3,734,691 |  
|Short-term borrowings                                                    |  |                   | 516,765   |                  |  |                                  | 589,158   |  
|Long-term borrowings                                                     |  |                   | 169,963   |                  |  |                                  | 165,018   |  
|Other liabilities                                                        |  |                   | 70,775    |                  |  |                                  | 65,043    |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|TOTAL LIABILITIES                                                        |  | $                 | 4,853,579 |                  |  | $                                | 4,553,910 |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|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 30,2005 |           | December 31,2004 |  |                                  |           |   |                  |  
|Issued                                                                   |  | 29,929,344        |           | 29,904,068       |  |                                  |           |   |                  |   |           |  
|Outstanding                                                              |  | 24,829,836        |           | 24,820,745       |  |                                  | 6,649     |   |                  |   | 6,643     |  
|Treasury stock                                                           |  | 5,099,508         |           | 5,083,323        |  |                                  | (103,287  | ) |                  |   | (102,832  | )
|Additional paid-in capital                                               |  |                   | 73,973    |                  |  |                                  | 74,102    |  
|Retained earnings                                                        |  |                   | 431,183   |                  |  |                                  | 407,045   |  
|Deferred compensation                                                    |  |                   | (336      | )                |  |                                  | (273      | )
|Accumulated other comprehensive (loss) income                            |  |                   | (8,644    | )                |  |                                  | 1,893     |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|TOTAL STOCKHOLDERS EQUITY                                               |  | $                 | 399,538   |                  |  | $                                | 386,578   |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                               |  | $                 | 5,253,117 |                  |  | $                                | 4,940,488 |  
|                                                                         |  |                   |           |                  |  |                                  |           |   |                  |   |           |  



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)



|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|--------------------------------------------------------------- |  | ---------------------------------------- | ------ | --------------------------------------- | ---- | - | ------ |  | ---- | ------- |  | - | -------
|                                                                |  | For the Three Months Ended September 30, |        | For the Nine Months Ended September 30,
|                                                                |  | 2005                                     |        |                                         | 2004 |   | 2005   |  | 2004
|                                                                |  | (in thousands, except per share data)   
|INTEREST INCOME                                                 |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Interest and fees on loans                                      |  | $                                        | 59,273 |                                         |      | $ | 45,550 |  | $    | 163,313 |  | $ | 131,992
|Interest on securities:                                         |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Taxable                                                         |  | $                                        | 10,903 |                                         |      | $ | 11,070 |  | $    | 33,358  |  | $ | 32,479 
|Tax-exempt                                                      |  |                                          | 1,821  |                                         |      |   | 1,803  |  |      | 5,679   |  |   | 5,173  
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Total Income on Securities                                      |  | $                                        | 12,724 |                                         |      | $ | 12,873 |  | $    | 39,037  |  | $ | 37,652 
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Interest on federal funds sold and other short-term investments |  | $                                        | 82     |                                         |      | $ | 16     |  | $    | 164     |  | $ | 47     
|Interest and fees on loans held for sale                        |  |                                          | 746    |                                         |      |   | 706    |  |      | 1,797   |  |   | 2,185  
|Interest on deposits in banks                                   |  |                                          | 8      |                                         |      |   | 1      |  |      | 26      |  |   | 2      
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Total Interest Income                                           |  | $                                        | 72,833 |                                         |      | $ | 59,146 |  | $    | 204,337 |  | $ | 171,878
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|INTEREST EXPENSE                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Interest on deposits                                            |  | $                                        | 24,581 |                                         |      | $ | 14,865 |  | $    | 64,115  |  | $ | 42,285 
|Interest on short-term borrowings                               |  |                                          | 4,553  |                                         |      |   | 3,537  |  |      | 11,926  |  |   | 9,242  
|Interest on long-term borrowings                                |  |                                          | 2,595  |                                         |      |   | 2,313  |  |      | 7,491   |  |   | 6,992  
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Total Interest Expense                                          |  | $                                        | 31,729 |                                         |      | $ | 20,715 |  | $    | 83,532  |  | $ | 58,519 
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Net Interest Income                                             |  | $                                        | 41,104 |                                         |      | $ | 38,431 |  | $    | 120,805 |  | $ | 113,359
|Provision for loan losses                                       |  |                                          | 4,462  |                                         |      |   | 2,830  |  |      | 10,464  |  |   | 10,787 
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Net Interest Income After Provision for Loan Losses             |  | $                                        | 36,642 |                                         |      | $ | 35,601 |  | $    | 110,341 |  | $ | 102,572
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|NON-INTEREST INCOME                                             |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Trust and asset management income                               |  | $                                        | 4,853  |                                         |      | $ | 5,017  |  | $    | 14,933  |  | $ | 15,908 
|Service charges on deposits                                     |  |                                          | 6,410  |                                         |      |   | 5,388  |  |      | 17,444  |  |   | 14,757 
|Mortgage banking income                                         |  |                                          | 1,588  |                                         |      |   | 321    |  |      | 3,180   |  |   | 2,771  
|Company owned life insurance income                             |  |                                          | 1,479  |                                         |      |   | 1,346  |  |      | 3,947   |  |   | 4,055  
|Brokerage commission income                                     |  |                                          | 575    |                                         |      |   | 721    |  |      | 2,052   |  |   | 2,363  
|Bankcard fee income                                             |  |                                          | 1,261  |                                         |      |   | 1,111  |  |      | 3,597   |  |   | 3,020  
|Gain on sale of loans                                           |  |                                          | 162    |                                         |      |   | 1,214  |  |      | 458     |  |   | 1,826  
|Other                                                           |  |                                          | 2,968  |                                         |      |   | 1,550  |  |      | 6,775   |  |   | 4,420  
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Non-Interest Income, Excluding Net Security (Losses) Gains      |  | $                                        | 19,296 |                                         |      | $ | 16,668 |  | $    | 52,386  |  | $ | 49,120 
|Net security (losses) gains                                     |  |                                          | (1     | )                                       |      |   | 250    |  |      | 403     |  |   | 2,164  
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Total Non-Interest Income                                       |  | $                                        | 19,295 |                                         |      | $ | 16,918 |  | $    | 52,789  |  | $ | 51,284 
|                                                                |  |                                          |        |                                        
|OPERATING EXPENSES                                              |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Compensation expense                                            |  | $                                        | 18,115 |                                         |      | $ | 17,250 |  | $    | 53,023  |  | $ | 51,559 
|Employee benefits                                               |  |                                          | 4,500  |                                         |      |   | 3,876  |  |      | 13,626  |  |   | 13,410 
|Net occupancy expense                                           |  |                                          | 2,657  |                                         |      |   | 2,408  |  |      | 7,960   |  |   | 7,300  
|Equipment expense                                               |  |                                          | 3,012  |                                         |      |   | 2,237  |  |      | 7,921   |  |   | 7,056  
|Data processing expense                                         |  |                                          | 718    |                                         |      |   | 580    |  |      | 2,043   |  |   | 1,731  
|Professional fees                                               |  |                                          | 1,071  |                                         |      |   | 1,102  |  |      | 3,149   |  |   | 3,128  
|Communication expense                                           |  |                                          | 1,230  |                                         |      |   | 1,155  |  |      | 3,519   |  |   | 3,405  
|Advertising and business development                            |  |                                          | 1,624  |                                         |      |   | 1,634  |  |      | 5,011   |  |   | 4,554  
|Other                                                           |  |                                          | 5,182  |                                         |      |   | 4,707  |  |      | 14,893  |  |   | 15,561 
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Total Operating Expenses                                        |  | $                                        | 38,109 |                                         |      | $ | 34,949 |  | $    | 111,145 |  | $ | 107,704
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Income Before Income Taxes                                      |  | $                                        | 17,828 |                                         |      | $ | 17,570 |  | $    | 51,985  |  | $ | 46,152 
|Income taxes                                                    |  |                                          | 5,245  |                                         |      |   | 5,230  |  |      | 15,195  |  |   | 13,379 
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Net Income                                                      |  | $                                        | 12,583 |                                         |      | $ | 12,340 |  | $    | 36,790  |  | $ | 32,773 
|                                                                |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|EARNINGS PER COMMON SHARE                                       |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Basic                                                           |  | $                                        | 0.51   |                                         |      | $ | 0.50   |  | $    | 1.48    |  | $ | 1.31   
|Diluted                                                         |  | $                                        | 0.50   |                                         |      | $ | 0.49   |  | $    | 1.47    |  | $ | 1.30   
|DIVIDENDS PER COMMON SHARE                                      |  | $                                        | 0.17   |                                         |      | $ | 0.17   |  | $    | 0.51    |  | $ | 0.51   
|AVERAGE COMMON SHARES OUTSTANDING                               |  |                                          |        |                                         |      |   |        |  |      |         |  |   |        
|Basic                                                           |  |                                          | 24,823 |                                         |      |   | 24,809 |  |      | 24,811  |  |   | 25,002 
|Diluted                                                         |  |                                          | 25,138 |                                         |      |   | 25,078 |  |      | 25,079  |  |   | 25,294 



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, 2003                                                             |  | $                                 | 6,625 |               | $ | (91,812  | )                        |  | $ | 73,862           |   |  | $                    | 378,305 |   |                                            | $ | (353 | )                        |  | $ | 8,957   |   |  | $ | 375,584 |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Comprehensive Income (Loss):                                                             |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Net Income                                                                               |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      | 32,773  |   |                                            |   |     |                          |  |   |        |   |  |   | 32,773  |  
|Reclassification of gains on hedging activities to earnings                              |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (909    | ) |  |   | (909    | )
|Income tax effect related to items of other comprehensive income                         |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | 354     |   |  |   | 354     |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Net effect of hedging activities                                                         |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (555    | ) |  |   | (555    | )
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Net unrealized holding losses on securities available for sale arising during the period |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (209    | ) |  |   | (209    | )
|Less reclassification adjustment for net security gains included in net income           |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (2,164  | ) |  |   | (2,164  | )
|Income tax effect related to items of other comprehensive income                         |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | 900     |   |  |   | 900     |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Net unrealized losses on securities available for sale                                   |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   | (1,473  | ) |  |   | (1,473  | )
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Comprehensive Income (Loss)                                                              |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      | 32,773  |   |                                            |   |     |                          |  |   | (2,028  | ) |  |   | 30,745  |  
|                                                                                         |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Cash dividends on common stock - $0.51 per share                                         |  |                                   |      |               |   |         |                          |  |   |                 |   |  |                      | (12,737 | ) |                                            |   |     |                          |  |   |        |   |  |   | (12,737 | )
|Purchase of 816,747 shares for the treasury                                              |  |                                   |      |               |   | (23,418  | )                        |  |   |                 |   |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | (23,418 | )
|Deferred compensation expense and other                                                  |  |                                   | 3     |               |   |         |                          |  |   | 106              |   |  |                      |        |   |                                            |   | 136  |                          |  |   |        |   |  |   | 245     |  
|Reissuance of 494,455 treasury shares for incentive plans                                |  |                                   |      |               |   | 12,756   |                          |  |   | (1,113           | ) |  |                      |        |   |                                            |   | (60  | )                        |  |   |        |   |  |   | 11,583  |  
|Issuance of 57,598 common shares for Employee Stock Plan                                 |  |                                   | 13    |               |   |         |                          |  |   | 1,169            |   |  |                      |        |   |                                            |   |     |                          |  |   |        |   |  |   | 1,182   |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|Balance at September 30, 2004                                                            |  | $                                 | 6,641 |               | $ | (102,474 | )                        |  | $ | 74,024           |   |  | $                    | 398,341 |   |                                            | $ | (277 | )                        |  | $ | 6,929   |   |  | $ | 383,184 |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  
|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 |  
|                                                                                         |  |                                   |       |               |   |          |                          |  |   |                  |   |  |                      |         |   |                                            |   |      |                          |  |   |         |   |  |   |         |  



See accompanying
notes to consolidated financial statements.



5



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##### Table of Contents

AMCORE Financial, Inc. and Subsidiaries



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                  |  |                                |          |   |      |   |          |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                                                  |  | Nine Months EndedSeptember 30, |         
|                                                                                                  |  | 2005                           |          |   | 2004 |  
|                                                                                                  |  | (in thousands)                 |         
|Cash Flows From Operating Activities                                                              |  |                                |          |   |      |   |          |  
|Net income                                                                                        |  | $                              | 36,790   |   |      | $ | 32,773   |  
|Adjustments to reconcile net income from operations to net cash provided by operating activities: |  |                                |          |   |      |   |          |  
|Depreciation and amortization of premises and equipment                                           |  |                                | 6,460    |   |      |   | 5,762    |  
|Amortization and accretion of securities, net                                                     |  |                                | 1,341    |   |      |   | 3,038    |  
|Provision for loan losses                                                                         |  |                                | 10,464   |   |      |   | 10,787   |  
|Company owned life insurance income, net of death benefits                                        |  |                                | (3,947   | ) |      |   | (3,318   | )
|Net securities gains                                                                              |  |                                | (403     | ) |      |   | (2,164   | )
|Net gain on sale of loans                                                                         |  |                                | (458     | ) |      |   | (1,826   | )
|Net gain on sale of mortgage loans held for sale                                                  |  |                                | (1,323   | ) |      |   | (1,612   | )
|Originations of mortgage loans held for sale                                                      |  |                                | (287,138 | ) |      |   | (303,934 | )
|Proceeds from sales of mortgage loans held for sale                                               |  |                                | 271,372  |   |      |   | 306,441  |  
|Deferred income tax expense (benefit)                                                             |  |                                | 254      |   |      |   | (1,678   | )
|Tax benefit on exercise of stock options                                                          |  |                                | 610      |   |      |   | 1,324    |  
|Decrease in other assets                                                                          |  |                                | 12,150   |   |      |   | 3,639    |  
|Increase in other liabilities                                                                     |  |                                | 5,265    |   |      |   | 11,778   |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Net cash provided by operating activities                                                         |  | $                              | 51,437   |   |      | $ | 61,010   |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Cash Flows From Investing Activities                                                              |  |                                |          |   |      |   |          |  
|Proceeds from maturities of securities available for sale                                         |  | $                              | 166,088  |   |      | $ | 168,976  |  
|Proceeds from sales of securities available for sale                                              |  |                                | 34,994   |   |      |   | 58,865   |  
|Purchase of securities available for sale                                                         |  |                                | (164,705 | ) |      |   | (274,112 | )
|Net increase in federal funds sold and other short-term investments                               |  |                                | (5,025   | ) |      |   | (9,000   | )
|Net (increase) decrease in interest earning deposits in banks                                     |  |                                | (7       | ) |      |   | 1,633    |  
|Net increase in loans                                                                             |  |                                | (342,150 | ) |      |   | (334,773 | )
|Proceeds from the sale of loans                                                                   |  |                                | 8,359    |   |      |   | 78,947   |  
|Investment in company owned life insurance                                                        |  |                                | (3,314   | ) |      |   | (2,266   | )
|Premises and equipment expenditures, net                                                          |  |                                | (5,896   | ) |      |   | (16,543  | )
|Proceeds from the sale of foreclosed real estate                                                  |  |                                | 4,642    |   |      |   | 3,040    |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Net cash used for investing activities                                                            |  | $                              | (307,014 | ) |      | $ | (325,233 | )
|                                                                                                  |  |                                |          |   |      |   |          |  
|Cash Flows From Financing Activities                                                              |  |                                |          |   |      |   |          |  
|Net increase in noninterest bearing demand deposits                                               |  | $                              | 22,836   |   |      | $ | 6,731    |  
|Net increase in interest bearing demand deposits                                                  |  |                                | 298,085  |   |      |   | 66,934   |  
|Net increase in time deposits                                                                     |  |                                | 72,649   |   |      |   | 49,344   |  
|Net (decrease) increase in wholesale deposits                                                     |  |                                | (32,185  | ) |      |   | 192,894  |  
|Net decrease in short-term borrowings                                                             |  |                                | (89,108  | ) |      |   | (19,430  | )
|Proceeds from long-term borrowings                                                                |  |                                | 22,800   |   |      |   |         |  
|Payment of long-term borrowings                                                                   |  |                                |         |   |      |   | (9       | )
|Dividends paid                                                                                    |  |                                | (12,652  | ) |      |   | (12,737  | )
|Issuance of common shares for employee stock plan                                                 |  |                                | 606      |   |      |   | 1,182    |  
|Reissuance of treasury shares for incentive plans                                                 |  |                                | 3,053    |   |      |   | 10,259   |  
|Purchase of shares for treasury                                                                   |  |                                | (5,583   | ) |      |   | (23,418  | )
|                                                                                                  |  |                                |          |   |      |   |          |  
|Net cash provided by financing activities                                                         |  | $                              | 280,501  |   |      | $ | 271,750  |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Net change in cash and cash equivalents                                                           |  | $                              | 24,924   |   |      | $ | 7,527    |  
|Cash and cash equivalents:                                                                        |  |                                |          |   |      |   |          |  
|Beginning of year                                                                                 |  |                                | 117,072  |   |      |   | 107,965  |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|End of period                                                                                     |  | $                              | 141,996  |   |      | $ | 115,492  |  
|                                                                                                  |  |                                |          |   |      |   |          |  
|Supplemental Disclosures of Cash Flow Information                                                 |  |                                |          |   |      |   |          |  
|Cash payments for:                                                                                |  |                                |          |   |      |   |          |  
|Interest paid to depositors                                                                       |  | $                              | 63,517   |   |      | $ | 42,368   |  
|Interest paid on borrowings                                                                       |  |                                | 18,430   |   |      |   | 15,966   |  
|Income tax payments                                                                               |  |                                | 12,008   |   |      |   | 4,650    |  
|                                                                                                  |  |                               
|Non-Cash Investing and Financing                                                                  |  |                                |          |   |      |   |          |  
|Foreclosed real estate - acquired in settlement of loans                                          |  |                                | 2,054    |   |      |   | 2,573    |  
|Transfer current portion of long-term borrowings to short-term borrowings                         |  |                                | 16,715   |   |      |   | 35,000   |  
|Capitalized interest                                                                              |  |                                | 46       |   |      |   | 120      |  
|De-consolidation of AMCORE Capital Trust I - increases in assets and liabilities                  |  |                                |         |   |      |   | 16,238   |  
|Transfer of loans to held for sale loans                                                          |  |                                |         |   |      |   | 75,000   |  



See accompanying
notes to consolidated financial statements.



6



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##### Table of Contents

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.



Operating results for the three and nine month periods ended September 30, 2005 are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Form 10K Annual Report of AMCORE Financial, Inc. and
Subsidiaries (the Company) for the year ended December 31, 2004.



New Accounting Standards



In November 2003, the Emerging Issues Task Force (EITF) reached a consensus on certain disclosure requirements under EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments. The new disclosure requirements apply to investment in debt and marketable equity securities that are accounted for under Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in
Debt and Equity Securities. Effective for fiscal years ending after December 15, 2003, companies were required to disclose information about debt or marketable equity securities with market values below carrying values. The Company
previously implemented the disclosure requirements of EITF Issue No. 03-1. In March 2004, the EITF came to a consensus regarding EITF 03-1. Securities in scope are those subject to SFAS 115. The EITF adopted a three-step model that requires
management to determine if impairment exists, decide whether it is other-than-temporary, and record other-than-temporary losses in earnings. In November 2005, the Financial Accounting Standards Board (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 will apply 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.



SFAS No. 123 (Revised 2004) (123R), Share-Based Payment was issued in December 2004 and will require
compensation cost relating to share-based payment transactions be recognized in the Consolidated Financial Statements. SFAS No. 123R is effective for periods beginning after December 15, 2005. The Company has not yet completed its
evaluation of the standard, but preliminary estimates based upon historical grant levels indicate that implementation will result in a reduction in earnings and a decline in diluted earnings per share of approximately $0.07-$0.09 in 2006.



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 Company does not expect it to have a material impact.



7



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##### Table of Contents

Stock-Based Employee Compensation Plans



At September 30, 2005, the Company had various stock-based compensation
plans that are described more fully in Note 13 of the Notes to Consolidated Financial Statements included in the Form 10K Annual Report of the Company for the year ended December 31, 2004. The Company accounts for these plans under the
recognition and measurement principles of the Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based compensation cost for option grants under these plans is
reflected in net income, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. During the first nine months of 2005 and 2004, 430,000 and 282,000 stock options
were granted, respectively.



The Companys Stock Option
Advantage Plan, an employee stock purchase plan (ESPP) within the meaning of Section 423 of the Internal Revenue Code of 1986, allows participating employees to purchase the Companys common stock at an exercise price of 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. No charge to earnings is recorded with respect to the ESPP. Accordingly, the pro forma table below
includes compensation expense in the amount of the 15% discount between the stock price and the option exercise price. In 2004, stockholders approved the adoption of the Amended and Restated AMCORE Stock Option Advantage Plan that reserved 350,000
additional shares of common stock for issuance under the ESPP. All remaining shares reserved under the original plan were issued during the first quarter of 2004.



The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to all stock-based compensation. The fair values were calculated using a Black-Scholes option pricing model.



|                                                                                                                                            |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | --------------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                                                                            |  | For the Three MonthsEnded September 30, |        |   | For the Nine Months Ended September 30, |  
|                                                                                                                                            |  | 2005                                    |        |   | 2004                                    |   |        | 2005 |  |   | 2004   |  
|                                                                                                                                            |  | (in thousands, except per share data)   |       
|Net Income:                                                                                                                                 |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|As reported                                                                                                                                 |  | $                                       | 12,583 |   |                                         | $ | 12,340 |      |  | $ | 36,790 |   |  | $ | 32,773 |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of
related tax effects |  |                                         | (433   | ) |                                         |   | (364   | )    |  |   | (1,331 | ) |  |   | (1,474 | )
|                                                                                                                                            |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|Pro forma                                                                                                                                   |  | $                                       | 12,150 |   |                                         | $ | 11,976 |      |  | $ | 35,459 |   |  | $ | 31,299 |  
|                                                                                                                                            |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|Diluted Shares:                                                                                                                             |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|As reported                                                                                                                                 |  |                                         | 25,138 |   |                                         |   | 25,078 |      |  |   | 25,079 |   |  |   | 25,294 |  
|Deduct: Shares due to average unrecognized compensation cost related to future services                                                     |  |                                         | (109   | ) |                                         |   | (105   | )    |  |   | (87    | ) |  |   | (94    | )
|                                                                                                                                            |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|Pro forma                                                                                                                                   |  |                                         | 25,029 |   |                                         |   | 24,973 |      |  |   | 24,992 |   |  |   | 25,200 |  
|                                                                                                                                            |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|Basic earnings per share:                                                                                                                   |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|As reported                                                                                                                                 |  | $                                       | 0.51   |   |                                         | $ | 0.50   |      |  | $ | 1.48   |   |  | $ | 1.31   |  
|Pro forma                                                                                                                                   |  |                                         | 0.49   |   |                                         |   | 0.48   |      |  |   | 1.43   |   |  |   | 1.25   |  
|Diluted earnings per share:                                                                                                                 |  |                                         |        |   |                                         |   |        |      |  |   |        |   |  |   |        |  
|As reported                                                                                                                                 |  | $                                       | 0.50   |   |                                         | $ | 0.49   |      |  | $ | 1.47   |   |  | $ | 1.30   |  
|Pro forma                                                                                                                                   |  |                                         | 0.49   |   |                                         |   | 0.48   |      |  |   | 1.42   |   |  |   | 1.24   |  



8



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##### Table of Contents

NOTE 2 - SECURITIES



A summary of information for investment securities, categorized by security type, at September 30, 2005 and
December 31, 2004 is as follows. Fair values are based upon available quoted market prices or are based on quoted prices for similar financial instruments.



|                                     |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|------------------------------------ |  | -------------- | --------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | ---------
|                                     |  | AmortizedCost  |           | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | Fair Value
|                                     |  | (in thousands)
|At September 30, 2005                |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|Securities Available for Sale:       |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|U.S. Treasury                        |  | $              | 5,009     |                      | $ |                      |  | $ | (81        | ) |  | $ | 4,928    
|U.S. Government agencies(1)          |  |                | 81,072    |                      |   |                      |  |   | (921       | ) |  |   | 80,151   
|Agency mortgage-backed securities(1) |  |                | 883,493   |                      |   | 1,246                 |  |   | (16,902    | ) |  |   | 867,837  
|State and political subdivisions     |  |                | 172,780   |                      |   | 3,534                 |  |   | (587       | ) |  |   | 175,727  
|Corporate and other debt obligations |  |                | 26,547    |                      |   | 120                   |  |   | (383       | ) |  |   | 26,284   
|Equity investments(2)                |  |                | 39,959    |                      |   | 36                    |  |   |           |   |  |   | 39,995   
|                                     |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|Total Securities Available for Sale  |  | $              | 1,208,860 |                      | $ | 4,936                 |  | $ | (18,874    | ) |  | $ | 1,194,922
|                                     |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|At December 31, 2004                 |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|Securities Available for Sale:       |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|U.S. Treasury                        |  | $              | 5,013     |                      | $ |                      |  | $ | (17        | ) |  | $ | 4,996    
|U.S. Government agencies(1)          |  |                | 92,523    |                      |   | 109                   |  |   | (390       | ) |  |   | 92,242   
|Agency mortgage-backed securities(1) |  |                | 892,344   |                      |   | 3,750                 |  |   | (7,366     | ) |  |   | 888,728  
|State and political subdivisions     |  |                | 169,658   |                      |   | 6,390                 |  |   | (60        | ) |  |   | 175,988  
|Corporate and other debt obligations |  |                | 33,797    |                      |   | 489                   |  |   | (106       | ) |  |   | 34,180   
|Equity investments(2)                |  |                | 52,841    |                      |   | 275                   |  |   |           |   |  |   | 53,116   
|                                     |  |                |           |                      |   |                       |  |   |            |   |  |   |          
|Total Securities Available for Sale  |  | $              | 1,246,176 |                      | $ | 11,013                |  | $ | (7,939     | ) |  | $ | 1,249,250
|                                     |  |                |           |                      |   |                       |  |   |            |   |  |   |          



A summary of
unrealized loss information for investment securities, categorized by security type, at September 30, 2005 is as follows:



|                                                          |  |                     |         |                  |                     |        |            |       |                      |         |  |            |        |                  |  |   |         |  |   |         |  
|--------------------------------------------------------- |  | ------------------- | ------- | ---------------- | ------------------- | ------ | ---------- | ----- | -------------------- | ------- |  | ---------- | ------ | ---------------- |  | - | ------- |  | - | ------- | -
|                                                          |  | Less Than 12 Months |         |                  | 12 Months or Longer |        |            | Total |                     
|                                                          |  | Fair Value          |         | UnrealizedLosses |                     |        | Fair Value |       | UnrealizedLosses (3) |         |  | Fair Value |        | UnrealizedLosses | 
|                                                          |  | (in thousands)      |        
|Description of Securities                                 |  |                     |         |                  |                     |        |            |       |                      |         |  |            |        |                  |  |   |         |  |   |         |  
|Securities Available for Sale:                            |  |                     |         |                  |                     |        |            |       |                      |         |  |            |        |                  |  |   |         |  |   |         |  
|U.S. Treasury                                             |  | $                   | 4,928   |                  | $                   | (81    | )          |       | $                    |        |  | $          |       |                  |  | $ | 4,928   |  | $ | (81     | )
|U.S. Government agencies(1)                               |  |                     | 75,226  |                  |                     | (832   | )          |       |                      | 4,925   |  |            | (89    | )                |  |   | 80,151  |  |   | (921    | )
|Agency mortgage-backed securities(1)                      |  |                     | 506,281 |                  |                     | (7,224 | )          |       |                      | 324,809 |  |            | (9,678 | )                |  |   | 831,090 |  |   | (16,902 | )
|State and political subdivisions                          |  |                     | 40,090  |                  |                     | (531   | )          |       |                      | 1,541   |  |            | (56    | )                |  |   | 41,631  |  |   | (587    | )
|Corporate and other debt obligations                      |  |                     | 9,869   |                  |                     | (328   | )          |       |                      | 1,836   |  |            | (55    | )                |  |   | 11,705  |  |   | (383    | )
|                                                          |  |                     |         |                  |                     |        |            |       |                      |         |  |            |        |                  |  |   |         |  |   |         |  
|Total Unrealized Losses on Securities Available for Sale: |  | $                   | 636,394 |                  | $                   | (8,996 | )          |       | $                    | 333,111 |  | $          | (9,878 | )                |  | $ | 969,505 |  | $ | (18,874 | )
|                                                          |  |                     |         |                  |                     |        |            |       |                      |         |  |            |        |                  |  |   |         |  |   |         |  



|(1) | Primarily Government Sponsored Enterprises (GSE).
|--- | -------------------------------------------------



|(2) | At September 30, 2005, includes investments of $4 million, $20 million, and $0, respectively, in stock of the Federal Reserve Bank (FRB),
the Federal Home Loan Bank (FHLB) and preferred stock of Freddie Mac. At December 31, 2004, these amounts were $4 million, $24 million, and $9 million, respectively. These investments are recorded at amortized historical cost or fair value, as
applicable. The FRB and FHLB are held to satisfy membership requirements and investment objectives.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | The Company has the ability to hold and has no present intent to dispose of these securities as of September 30, 2005. Of the $10 million
total unrealized losses 12 months or longer, all except $200,000 was related to 51 mortgage-backed securities issued by GSEs with an S&P quality rating of AAA. Of the $200,000 in unrealized loss, $55,000 is related to a single
asset-backed bond collateralized by owner occupied first lien, conforming mortgage loans. At September 30, 2005, the S&P quality rating for this bond was AAA, the security was sufficiently collateralized such that credit loss
was considered remote, and the security has a average remaining life of 1.6 years. In the event of prepayment, it is expected that the Company would recover substantially all of its recorded investment. The remaining $145,000 includes $89,000 of a
single AAA rated government sponsored enterprise that matures in 2008 and $56,000 of a single AAA rated municipal obligation that matures in 2009.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A summary of realized gain and loss information is as follows:



|                            |  |                |       |                 |   |      |                    |  |   |       |  
|--------------------------- |  | -------------- | ----- | --------------- | - | ---- | ------------------ |  | - | ----- | -
|                            |  | Realized Gains |       | Realized Losses |   |      | Net Gains/(Losses) | 
|                            |  | (in thousands) |      
|For the three months ended: |  |                |       |                 |   |      |                    |  |   |       |  
|September 30, 2005          |  | $              |      |                 | $ | (1   | )                  |  | $ | (1    | )
|September 30, 2004          |  |                | 335   |                 |   | (85  | )                  |  |   | 250   |  
|For the nine months ended:  |  |                |       |                 |   |      |                    |  |   |       |  
|September 30, 2005          |  | $              | 460   |                 | $ | (57  | )                  |  | $ | 403   |  
|September 30, 2004          |  |                | 2,269 |                 |   | (105 | )                  |  |   | 2,164 |  



At September 30,
2005 and December 31, 2004, securities with a fair value of approximately $898 million and $905 million, respectively, were pledged to secure public deposits, securities under agreeements to repurchase, derivative credit exposure and for other
purposes required by law.



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NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES



The composition of the loan portfolio at September 30, 2005 and
December 31, 2004 was as follows:



|                                       |  |                   |           |   |                  |   |           |  
|-------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                       |  | September 30,2005 |           |   | December 31,2004 |  
|                                       |  | (in thousands)    |          
|Commercial, financial and agricultural |  | $                 | 810,963   |   |                  | $ | 764,339   |  
|Real estate-commercial                 |  |                   | 1,776,151 |   |                  |   | 1,533,917 |  
|Real estate-residential                |  |                   | 436,972   |   |                  |   | 412,753   |  
|Real estate-construction               |  |                   | 260,607   |   |                  |   | 250,855   |  
|Installment and consumer               |  |                   | 314,144   |   |                  |   | 316,838   |  
|Direct lease financing                 |  |                   | 29        |   |                  |   | 98        |  
|                                       |  |                   |           |   |                  |   |           |  
|Gross loans                            |  | $                 | 3,598,866 |   |                  | $ | 3,278,800 |  
|Allowance for loan losses              |  |                   | (39,975   | ) |                  |   | (40,945   | )
|                                       |  |                   |           |   |                  |   |           |  
|Net Loans                              |  | $                 | 3,558,891 |   |                  | $ | 3,237,855 |  
|                                       |  |                   |           |   |                  |   |           |  



An analysis of the
allowance for loan losses for the periods ended September 30, 2005 and September 30, 2004 is presented below:



|                                             |  |                                        |         |   |      |   |         |  
|-------------------------------------------- |  | -------------------------------------- | ------- | - | ---- | - | ------- | -
|                                             |  | For the Nine Months EndedSeptember 30, |        
|                                             |  | 2005                                   |         |   | 2004 |  
|                                             |  | (in thousands)                         |        
|Balance at beginning of year                 |  | $                                      | 40,945  |   |      | $ | 42,115  |  
|Provision charged to expense                 |  |                                        | 10,464  |   |      |   | 10,787  |  
|Loans charged off                            |  |                                        | (12,664 | ) |      |   | (12,988 | )
|Recoveries on loans previously charged off   |  |                                        | 1,944   |   |      |   | 3,088   |  
|Reductions due to sale of loans and other(1) |  |                                        | (714    | ) |      |   | (1,022  | )
|                                             |  |                                        |         |   |      |   |         |  
|Balance at end of period                     |  | $                                      | 39,975  |   |      | $ | 41,980  |  
|                                             |  |                                        |         |   |      |   |         |  



|(1) | Includes estimated loss on unfunded commitments. See Note 9 for further information.
|--- | ------------------------------------------------------------------------------------



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NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS



The Companys goodwill by segment at September 30, 2005 is as
follows (in thousands):



|                           |  |   |       
|-------------------------- |  | - | ------
|Retail Banking             |  | $ | 3,572 
|Commercial Banking         |  |   | 2,381 
|Trust and Asset Management |  |   | 9,622 
|                           |  |   |       
|Total Goodwill             |  | $ | 15,575
|                           |  |   |       



There were no changes
in the carrying amount of goodwill for the nine months ended September 30, 2005.



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 30,2005 |         |   | December 31,2004 |  
|                                                                 |  | (in thousands)    |        
|Unamortized Cost of Mortgage Servicing Rights                    |  |                   |         |   |                  |   |         |  
|Gross Carrying Amount                                            |  | $                 | 38,930  |   |                  | $ | 35,872  |  
|Less: Accumulated Amortization                                   |  |                   | (25,755 | ) |                  |   | (23,341 | )
|Less: OMSR Valuation Allowance                                   |  |                   |        |   |                  |   | (53     | )
|                                                                 |  |                   |         |   |                  |   |         |  
|Net OMSR at end of period                                        |  | $                 | 13,175  |   |                  | $ | 12,478  |  
|                                                                 |  |                   |         |   |                  |   |         |  
|OMSR Valuation Allowance                                         |  |                   |         |   |                  |   |         |  
|Balance at beginning of year                                     |  | $                 | 53      |   |                  | $ |        |  
|Net impairment valuation (credited to income) charged to expense |  |                   | (53     | ) |                  |   | 53      |  
|                                                                 |  |                   |         |   |                  |   |         |  
|Balance at end of period                                         |  | $                 |        |   |                  | $ | 53      |  
|                                                                 |  |                   |         |   |                  |   |         |  



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



|                                      |  |   |       
|------------------------------------- |  | - | ------
|Aggregate Amortization Expense        |  |   |       
|For Quarter Ended 9/30/05             |  | $ | 1,053 
|For Nine Months Ended 9/30/05         |  |   | 2,414 
|Estimated Amortization Expense        |  |   |       
|For Remainder of Year Ending 12/31/05 |  | $ | 692   
|For Year Ending 12/31/06              |  |   | 2,762 
|For Year Ending 12/31/07              |  |   | 2,285 
|For Year Ending 12/31/08              |  |   | 1,859 
|For Year Ending 12/31/09              |  |   | 1,478 
|For Year Ending 12/31/10              |  |   | 1,158 
|Thereafter                            |  |   | 2,941 
|                                      |  |   |       
|Total                                 |  | $ | 13,175
|                                      |  |   |       



The weighted-average
amortization period for OMSR retained during the third quarter of 2005 was 11.5 years. The unpaid principal balance of mortgage loans serviced for others, plus mortgage loans held for sale, was $1.3 billion as of September 30, 2005, $1.3
billion as of December 31, 2004 and $1.3 billion as of September 30, 2004.



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NOTE 5 - SALE OF RECEIVABLES



The Company periodically sells certain indirect automobile loans in securitization transactions. During the third quarter
2004, the Company sold $78.5 million of indirect automible loans, reporting a pre-tax gain of $1.2 million. There were no sales of indirect automobile loans during the third quarter 2005. Upon the sale, the net carring amount of the loans is removed
from the Consolidated Balance Sheet in exchange for cash and certain retained residual interests. The retained interest includes 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). These
retained interests were allocated a carrying value at the time of sale of $5.9 million on the 2004 sale.



The Company receives monthly servicing fees equal to 0.75 percent 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 investors 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 attribuable 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
considered remote as of September 30, 2005.



Key economic
assumptions used in measuring the retained interests at the date of the securitization and as of September 30, 2005, including the sensitivity of the current fair value of residual cash flows to immediate 10 percent and 20 percent adverse
changes in those assumptions, are as follows:



|                                             |  |                       |        |   |                          |                   |       |   |                   |   |       |   |  |   |       |  
|-------------------------------------------- |  | --------------------- | ------ | - | ------------------------ | ----------------- | ----- | - | ----------------- | - | ----- | - |  | - | ----- | -
|                                             |  | Loans SoldDuring 2004 |        |   | As of September 30, 2005 |                  
|                                             |  |                       | Actual |   |                          | 10% AdverseChange |       |   | 20% AdverseChange |  
|                                             |  | (in thousands)        |       
|Prepayment speed assumptions                 |  |                       |        |   |                          |                   |       |   |                   |   |       |   |  |   |       |  
|Prepayment speed                             |  |                       | 1.8    | % |                          |                   | 2.2   | % |                   |   | 2.4   | % |  |   | 2.6   | %
|Weighted average life (in months)            |  |                       | 18.9   |   |                          |                   | 14.6  |   |                   |   | 14.1  |   |  |   | 13.5  |  
|Fair value of retained interests             |  | $                     | 11,495 |   |                          | $                 | 8,184 |   |                   | $ | 8,164 |   |  | $ | 8,160 |  
|Change in fair value                         |  | $                     |       |   |                          | $                 |      |   |                   | $ | (20   | ) |  | $ | (24   | )
|Expected credit loss assumptions             |  |                       |        |   |                          |                   |       |   |                   |   |       |   |  |   |       |  
|Expected credit losses (loss to liquidation) |  |                       | 1.9    | % |                          |                   | 1.9   | % |                   |   | 2.0   | % |  |   | 2.2   | %
|Fair value of retained interests             |  | $                     | 11,495 |   |                          | $                 | 8,184 |   |                   | $ | 7,963 |   |  | $ | 7,747 |  
|Change in fair value                         |  | $                     |       |   |                          | $                 |      |   |                   | $ | (221  | ) |  | $ | (437  | )
|Residual cash flow discount rate assumptions |  |                       |        |   |                          |                   |       |   |                   |   |       |   |  |   |       |  
|Residual cash flow discount rate (annual)    |  |                       | 22     | % |                          |                   | 18.0  | % |                   |   | 19.8  | % |  |   | 21.6  | %
|Fair value of retained interests             |  | $                     | 11,495 |   |                          | $                 | 8,184 |   |                   | $ | 7,984 |   |  | $ | 7,793 |  
|Change in fair value                         |  | $                     |       |   |                          | $                 |      |   |                   | $ | (200  | ) |  |   | ($391 | )



These sensitivities
are hypothetical and should be used with caution. Changes in fair value based on a 10 percent 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 assumptions; in reality, changes in one factor may result in changes in another (for example,
increases in market interest rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.



Total cash flows attributable to the indirect automobile loan securitization transactions was an inflow of $2.2 million and $74.8 million for the third
quarters of 2005 and 2004, respectively. The following table summarizes the various cash flows received from and paid to the securitization trust:



|                                                     |  |                              |        |                         |   |                 |  |   |      
|---------------------------------------------------- |  | ---------------------------- | ------ | ----------------------- | - | --------------- |  | - | -----
|                                                     |  | Proceeds FromSecuritizations |        | Servicing FeesCollected |   | OtherCash Flows
|                                                     |  | (in thousands)              
|Cash flows received from trust in third quarter 2005 |  | $                            |       |                         | $ | 285             |  | $ | 1,927
|Cash flows received from trust in third quarter 2004 |  | $                            | 72,976 |                         | $ | 131             |  | $ | 1,656



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



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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. Loan amounts represent only the principal amount of the loan. Retained interests held for securitized assets are
excluded from this table because they are recognized separately.



|                  |  |                                |         |                                     |   |                                |  |      |       |      |   |       |  |   |       |  |   |      
|----------------- |  | ------------------------------ | ------- | ----------------------------------- | - | ------------------------------ |  | ---- | ----- | ---- | - | ----- |  | - | ----- |  | - | -----
|                  |  | Total Principal Amountof Loans |         | Principal Amount ofDelinquent Loans |   | Net Credit Losses Year-to-Date
|                  |  | As of September 30,            |        
|                  |  | 2005                           |         | 2004                                |   | 2005                           |  | 2004 |       | 2005 |   | 2004 
|                  |  | (in thousands)                
|Held in portfolio |  | $                              | 249,510 |                                     | $ | 345,285                        |  | $    | 3,174 |      | $ | 5,072 |  | $ | 1,229 |  | $ | 2,678
|Securitized       |  |                                | 127,541 |                                     |   | 135,266                        |  |      | 2,979 |      |   | 1,515 |  |   | 1,517 |  |   | 701  
|                  |  |                                |         |                                     |   |                                |  |      |       |      |   |       |  |   |       |  |   |      
|Total             |  | $                              | 377,051 |                                     | $ | 480,551                        |  | $    | 6,153 |      | $ | 6,587 |  | $ | 2,746 |  | $ | 3,379
|                  |  |                                |         |                                     |   |                                |  |      |       |      |   |       |  |   |       |  |   |      



Actual and projected
static pool credit losses, as a percentage of indirect automobile loans securitized are 1.43%, 1.73% and 1.98% as of the quarters ended September 30, 2005, 2006, and 2007, 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.



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NOTE 6 - SHORT-TERM BORROWINGS



Short-term borrowings consisted of the following at September 30, 2005 and December 31, 2004:



|                                                 |  |                   |         |                  |   |        
|------------------------------------------------ |  | ----------------- | ------- | ---------------- | - | -------
|                                                 |  | September 30,2005 |         | December 31,2004
|                                                 |  | (in thousands)   
|Securities sold under agreements to repurchase   |  | $                 | 448,489 |                  | $ | 465,446
|Federal Home Loan Bank borrowings                |  |                   | 16,884  |                  |   | 35,184 
|Federal funds purchased                          |  |                   | 46,900  |                  |   | 78,990 
|U.S. Treasury tax and loan note accounts         |  |                   | 4,484   |                  |   | 9,535  
|Commercial paper and other short-term borrowings |  |                   | 8       |                  |   | 3      
|                                                 |  |                   |         |                  |   |        
|Total Short-Term Borrowings                      |  | $                 | 516,765 |                  | $ | 589,158
|                                                 |  |                   |         |                  |   |        



NOTE 7 - LONG-TERM
BORROWINGS



Long-term borrowings consisted of the
following at September 30, 2005 and December 31, 2004:



|                                  |  |                   |         |                  |   |        
|--------------------------------- |  | ----------------- | ------- | ---------------- | - | -------
|                                  |  | September 30,2005 |         | December 31,2004
|                                  |  | (in thousands)   
|Federal Home Loan Bank borrowings |  | $                 | 127,673 |                  | $ | 122,721
|AMCORE Capital Trust I borrowings |  |                   | 41,238  |                  |   | 41,238 
|Capitalized Lease Obligation      |  |                   | 1,052   |                  |   | 1,059  
|                                  |  |                   |         |                  |   |        
|Total Long-Term Borrowings        |  | $                 | 169,963 |                  | $ | 165,018
|                                  |  |                   |         |                  |   |        



The Company
periodically borrows additional funds from the Federal Home Loan Bank (FHLB) in connection with the purchase of mortgage-backed securities and the financing of eligible family real estate loans. The average stated maturity of these borrowings at
September 30, 2005 is 3.1 years, with a weighted average borrowing rate of 4.78%. Mortgage-related assets are required to be held as collateral for FHLB borrowings according to specific collateral guidelines established by the FHLB. Certain
FHLB borrowings have prepayment penalties and call features associated with them. FHLB borrowings with call features, assuming they are called at the earliest call date, total $77.0 million in 2005.



Other long-term borrowings includes a capital lease with a net carrying
amount of $1.1 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-cancelable 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)
|2006                       |  | $              | 7      
|2007                       |  |                | 7,528  
|2008                       |  |                | 93,174 
|2009                       |  |                | 35     
|2010                       |  |                | 443    
|Thereafter                 |  |                | 68,776 
|                           |  |                |        
|Total Long-Term Borrowings |  | $              | 169,963
|                           |  |                |        



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NOTE 8 - DERIVATIVE INSTRUMENTS



The Company uses derivatives to hedge 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 in the Consolidated Statements of Income:



|                                         |  |                                         |     |   |                                        |   |     |      |  |   |      |   |  |   |     |  
|---------------------------------------- |  | --------------------------------------- | --- | - | -------------------------------------- | - | --- | ---- |  | - | ---- | - |  | - | --- | -
|                                         |  | For the Three MonthsEnded September 30, |     |   | For the Nine MonthsEnded September 30, |  
|                                         |  | 2005                                    |     |   | 2004                                   |   |     | 2005 |  |   | 2004 |  
|                                         |  | (in thousands)                          |    
|Changes in Value:                        |  |                                         |     |   |                                        |   |     |      |  |   |      |   |  |   |     |  
|Free-standing derivatives                |  | $                                       | (12 | ) |                                        | $ | 2   |      |  | $ | (18  | ) |  | $ | (1  | )
|Ineffective portion of fair value Hedges |  |                                         | 15  |   |                                        |   | (50 | )    |  |   | 14   |   |  |   | 110 |  
|Mortgage banking derivatives             |  |                                         | (46 | ) |                                        |   | 170 |      |  |   | (21  | ) |  |   | 136 |  
|                                         |  |                                         |     |   |                                        |   |     |      |  |   |      |   |  |   |     |  
|Total                                    |  | $                                       | (43 | ) |                                        | $ | 122 |      |  | $ | (25  | ) |  | $ | 245 |  
|                                         |  |                                         |     |   |                                        |   |     |      |  |   |      |   |  |   |     |  



During 2002, swaps
that were Hedging loan cash flows were sold, for which the Company received $3.3 million plus accrued interest. The gain continued to be classified in Other Comprehensive Income (OCI) and amortized into income over the remaining term of the swap.
For the three and nine-month periods ended September 30, 2004, $104,000 and $909,000, respectively, of this pre-tax gain was amortized (reclassified) from OCI into income. The pre-tax gain was fully amortized at December 31, 2004 and there
were no cash flow Hedges included in OCI during the nine months ended September 30, 2005. In first quarter 2004, the Company terminated two fair value Hedges of FHLB borrowings with a combined notional amount of $74 million, which resulted in a
gain of $690,000. The gain continued to be classified as long-term debt and is being amortized over the remaining terms of the swaps. The unrealized gain was $417,000 and $596,000 as of September 30, 2005 and 2004, respectively. The
longest-term fair value Hedge expires in December 2019.



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:



The Company, as a provider of financial services, routinely enters into
commitments to extend credit to its BANK customers, including financial and performance standby letters of credit. Financial and performance standby letters of credit are a conditional but irrevocable form of guarantee. Under a financial standby
letter of credit, the Company guarantees payment to a third party obligee upon the default of payment by the BANK customer, and upon receipt of complying documentation from the obligee. Under a performance standby letter of credit, the Company
guarantees payment to a third party obligee upon nonperformance by the BANK customer and upon receipt of complying documentation from the obligee.



Both financial and performance standby 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, 2005, the maximum remaining term for any outstanding standby letters of credit expires on October 15, 2011.



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A fee is normally charged to compensate the BANK for the value of the guarantees that are granted to the
customer. The fees are deferred and recognized as income over the term of the guarantee. As of September 30, 2005, the carrying value of these deferrals was a deferred credit of $1,838,000. This amount included a $671,000 guarantee liability
for financial and performance standby letters of credit recorded in accordance with FIN 45. The remaining $1,167,000 represented deferred fees charged for letters of credit exempted from the scope of FIN 45.



At September 30, 2005, the contractual amount of all financial and
performance standby letters of credit, including those exempted from FIN 45, was $150.9 million and $54.5 million, respectively. These represent the maximum potential amount of future payments that the Company would be obligated to pay under the
guarantees.



The issuance of either a financial or performance
standby 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 standby letter of credit.



In addition to the guarantee liability and deferred fees described above, the Company has recorded a $714,000 contingent
liability for probable losses on unfunded loan commitments and letters of credit outstanding as of September 30, 2005. Prior to the third quarter 2005, this liability was included as part of the Companys Allowance for Loan Losses. See
Note 3.



NOTE 10 - EARNINGS PER SHARE



Earnings per share (EPS) calculations are as follows:



|                                    |  |                                         |        |                                        |   |        |  |      |        |  |   |       
|----------------------------------- |  | --------------------------------------- | ------ | -------------------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                                    |  | For the Three MonthsEnded September 30, |        | For the Nine MonthsEnded September 30,
|                                    |  | 2005                                    |        | 2004                                   |   | 2005   |  | 2004
|                                    |  | (in thousands, except per share data)  
|Net Income                          |  | $                                       | 12,583 |                                        | $ | 12,340 |  | $    | 36,790 |  | $ | 32,773
|Basic EPS:                          |  |                                         |        |                                        |   |        |  |      |        |  |   |       
|Average basic shares outstanding    |  |                                         | 24,823 |                                        |   | 24,809 |  |      | 24,811 |  |   | 25,002
|                                    |  |                                         |        |                                        |   |        |  |      |        |  |   |       
|Basic EPS                           |  | $                                       | 0.51   |                                        | $ | 0.50   |  | $    | 1.48   |  | $ | 1.31  
|                                    |  |                                         |        |                                        |   |        |  |      |        |  |   |       
|Diluted EPS:                        |  |                                         |        |                                        |   |        |  |      |        |  |   |       
|Weighted average shares outstanding |  |                                         | 24,823 |                                        |   | 24,809 |  |      | 24,811 |  |   | 25,002
|Dilutive shares                     |  |                                         | 273    |                                        |   | 220    |  |      | 226    |  |   | 243   
|Contingently issuable shares        |  |                                         | 42     |                                        |   | 49     |  |      | 42     |  |   | 49    
|                                    |  |                                         |        |                                        |   |        |  |      |        |  |   |       
|Average diluted shares outstanding  |  |                                         | 25,138 |                                        |   | 25,078 |  |      | 25,079 |  |   | 25,294
|                                    |  |                                         |        |                                        |   |        |  |      |        |  |   |       
|Diluted EPS                         |  | $                                       | 0.50   |                                        | $ | 0.49   |  | $    | 1.47   |  | $ | 1.30  
|                                    |  |                                         |        |                                        |   |        |  |      |        |  |   |       



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 meaning that, for the purposes of this calculation, all outstanding options are
assumed to have been exercised during the period and the resulting proceeds used to repurchase Company stock at the average market price during the period. 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, Trust and Asset Management, 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, 2004.



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 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.



The Commercial Banking Segment provides commercial banking services including
lending, business checking and deposits, treasury management and other traditional as well as electronic banking services to large and small business customers. 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 banking services to individual customers. The Trust and Asset Management
segment provides trust, investment management, employee benefit recordkeeping and administration and brokerage services. It also acts as advisor and provides fund administration to the Vintage Mutual Funds and various public fund programs. These
products are distributed nationally, regionally to institutional investors and corporations, and locally through AMCOREs BANK locations. 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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|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|--------------------------------------------- |  | ---------------------- | --------- | - | ------------- | - | ------- | ------------------------- |  | - | --------------- | - |  | ----- | ------- | - | ------------ | - | --------- | - |  | - | --------- | -
|For the three months ended September 30, 2005 | 
|                                              |  | Operating Segments     |           |   |               |   |         |                           | 
|                                              |  | CommercialBanking      |           |   | RetailBanking |   |         | Trust and AssetManagement |  |   | MortgageBanking |   |  | Other |         |   | Consolidated |  
|                                              |  | (dollars in thousands) |          
|Net interest income                           |  | $                      | 24,441    |   |               | $ | 12,132  |                           |  | $ | 29              |   |  | $     | 1,512   |   |              | $ | 2,990     |   |  | $ | 41,104    |  
|Non-interest income                           |  |                        | 2,204     |   |               |   | 5,233   |                           |  |   | 6,971           |   |  |       | 1,518   |   |              |   | 3,369     |   |  |   | 19,295    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Total revenue                                 |  |                        | 26,645    |   |               |   | 17,365  |                           |  |   | 7,000           |   |  |       | 3,030   |   |              |   | 6,359     |   |  |   | 60,399    |  
|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  |                           |  |   | 5,066           |   |  |       | 2,215   |   |              |   | 5,161     |   |  |   | 35,782    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Pretax earnings (loss)                        |  |                        | 12,185    |   |               |   | 3,271   |                           |  |   | 1,868           |   |  |       | 645     |   |              |   | (141      | ) |  |   | 17,828    |  
|Income taxes (benefit)                        |  |                        | 4,752     |   |               |   | 1,275   |                           |  |   | 779             |   |  |       | 252     |   |              |   | (1,813    | ) |  |   | 5,245     |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Earnings                                      |  | $                      | 7,433     |   |               | $ | 1,996   |                           |  | $ | 1,089           |   |  | $     | 393     |   |              | $ | 1,672     |   |  | $ | 12,583    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Segment profit percentage                     |  |                        | 68        | % |               |   | 18      | %                         |  |   | 10              | % |  |       | 4       | % |              |   | N/A       |   |  |   | 100       | %
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|                                             
|For the three months ended September 30, 2004 | 
|Net interest income                           |  | $                      | 21,387    |   |               | $ | 11,141  |                           |  | $ | 11              |   |  | $     | 1,937   |   |              | $ | 3,955     |   |  | $ | 38,431    |  
|Non-interest income                           |  |                        | 2,082     |   |               |   | 5,409   |                           |  |   | 5,937           |   |  |       | 522     |   |              |   | 2,968     |   |  |   | 16,918    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Total revenue                                 |  |                        | 23,469    |   |               |   | 16,550  |                           |  |   | 5,948           |   |  |       | 2,459   |   |              |   | 6,923     |   |  |   | 55,349    |  
|Provision for loan losses                     |  |                        | 2,257     |   |               |   | 547     |                           |  |   |                |   |  |       | 26      |   |              |   |          |   |  |   | 2,830     |  
|Depreciation and amortization                 |  |                        | 144       |   |               |   | 567     |                           |  |   | 96              |   |  |       | 55      |   |              |   | 1,004     |   |  |   | 1,866     |  
|Other non-interest expense                    |  |                        | 9,792     |   |               |   | 10,132  |                           |  |   | 5,257           |   |  |       | 1,937   |   |              |   | 5,965     |   |  |   | 33,083    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Pretax earnings (loss)                        |  |                        | 11,276    |   |               |   | 5,304   |                           |  |   | 595             |   |  |       | 441     |   |              |   | (46       | ) |  |   | 17,570    |  
|Income taxes (benefit)                        |  |                        | 4,398     |   |               |   | 2,069   |                           |  |   | 233             |   |  |       | 172     |   |              |   | (1,642    | ) |  |   | 5,230     |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Earnings                                      |  | $                      | 6,878     |   |               | $ | 3,235   |                           |  | $ | 362             |   |  | $     | 269     |   |              | $ | 1,596     |   |  | $ | 12,340    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Segment profit percentage                     |  |                        | 64        | % |               |   | 30      | %                         |  |   | 3               | % |  |       | 3       | % |              |   | N/A       |   |  |   | 100       | %
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|                                             
|For the nine months ended September 30, 2005  | 
|                                              |  | Operating Segments     |           |   |               |   |         |                           | 
|                                              |  | CommercialBanking      |           |   | RetailBanking |   |         | Trust and AssetManagement |  |   | MortgageBanking |   |  | Other |         |   | Consolidated |  
|                                              |  | (dollars in thousands) |          
|Net interest income                           |  | $                      | 71,194    |   |               | $ | 34,865  |                           |  | $ | 66              |   |  | $     | 4,372   |   |              | $ | 10,308    |   |  | $ | 120,805   |  
|Non-interest income                           |  |                        | 6,275     |   |               |   | 14,178  |                           |  |   | 18,945          |   |  |       | 3,161   |   |              |   | 10,230    |   |  |   | 52,789    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Total revenue                                 |  |                        | 77,469    |   |               |   | 49,043  |                           |  |   | 19,011          |   |  |       | 7,533   |   |              |   | 20,538    |   |  |   | 173,594   |  
|Provision for loan losses                     |  |                        | 6,920     |   |               |   | 2,952   |                           |  |   |                |   |  |       | 592     |   |              |   |          |   |  |   | 10,464    |  
|Depreciation and amortization                 |  |                        | 503       |   |               |   | 2,111   |                           |  |   | 218             |   |  |       | 202     |   |              |   | 3,426     |   |  |   | 6,460     |  
|Other non-interest expense                    |  |                        | 34,886    |   |               |   | 33,531  |                           |  |   | 15,679          |   |  |       | 6,753   |   |              |   | 13,836    |   |  |   | 104,685   |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Pretax earnings (loss)                        |  |                        | 35,160    |   |               |   | 10,449  |                           |  |   | 3,114           |   |  |       | (14     | ) |              |   | 3,276     |   |  |   | 51,985    |  
|Income taxes (benefit)                        |  |                        | 13,712    |   |               |   | 4,074   |                           |  |   | 1,323           |   |  |       | (5      | ) |              |   | (3,909    | ) |  |   | 15,195    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Earnings (loss)                               |  | $                      | 21,448    |   |               | $ | 6,375   |                           |  | $ | 1,791           |   |  | $     | (9      | ) |              | $ | 7,185     |   |  | $ | 36,790    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Segment profit percentage                     |  |                        | 72        | % |               |   | 22      | %                         |  |   | 6               | % |  |       | 0       | % |              |   | N/A       |   |  |   | 100       | %
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Assets                                        |  | $                      | 2,815,282 |   |               | $ | 657,347 |                           |  | $ | 18,696          |   |  | $     | 261,734 |   |              | $ | 1,500,058 |   |  | $ | 5,253,117 |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|                                             
|For the nine months ended September 30, 2004  | 
|Net interest income                           |  | $                      | 61,596    |   |               | $ | 32,576  |                           |  | $ | 26              |   |  | $     | 6,624   |   |              | $ | 12,537    |   |  | $ | 113,359   |  
|Non-interest income                           |  |                        | 6,353     |   |               |   | 12,713  |                           |  |   | 18,851          |   |  |       | 2,965   |   |              |   | 10,402    |   |  |   | 51,284    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Total revenue                                 |  |                        | 67,949    |   |               |   | 45,289  |                           |  |   | 18,877          |   |  |       | 9,589   |   |              |   | 22,939    |   |  |   | 164,643   |  
|Provision for loan losses                     |  |                        | 6,760     |   |               |   | 4,099   |                           |  |   |                |   |  |       | (72     | ) |              |   |          |   |  |   | 10,787    |  
|Depreciation and amortization                 |  |                        | 439       |   |               |   | 1,739   |                           |  |   | 291             |   |  |       | 133     |   |              |   | 3,160     |   |  |   | 5,762     |  
|Other non-interest expense                    |  |                        | 29,747    |   |               |   | 30,500  |                           |  |   | 16,041          |   |  |       | 6,966   |   |              |   | 18,688    |   |  |   | 101,942   |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Pretax earnings                               |  |                        | 31,003    |   |               |   | 8,951   |                           |  |   | 2,545           |   |  |       | 2,562   |   |              |   | 1,091     |   |  |   | 46,152    |  
|Income taxes (benefit)                        |  |                        | 12,091    |   |               |   | 3,491   |                           |  |   | 1,038           |   |  |       | 999     |   |              |   | (4,240    | ) |  |   | 13,379    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Earnings                                      |  | $                      | 18,912    |   |               | $ | 5,460   |                           |  | $ | 1,507           |   |  | $     | 1,563   |   |              | $ | 5,331     |   |  | $ | 32,773    |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Segment profit percentage                     |  |                        | 69        | % |               |   | 20      | %                         |  |   | 5               | % |  |       | 6       | % |              |   | N/A       |   |  |   | 100       | %
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  
|Assets                                        |  | $                      | 2,313,484 |   |               | $ | 822,514 |                           |  | $ | 18,015          |   |  | $     | 243,647 |   |              | $ | 1,478,801 |   |  | $ | 4,876,461 |  
|                                              |  |                        |           |   |               |   |         |                           |  |   |                 |   |  |       |         |   |              |   |           |   |  |   |           |  



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NOTE 12 - BENEFIT PLANS



Employee Benefit Plans. All subsidiaries 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, a cash profit sharing payment and a personal savings account 401(k). The expense
related to the Security Plan for the three months ended September 30, 2005 and 2004 was $1.0 million and $1.1 million, respectively, and was $3.7 million for the nine months ended both September 30, 2005, and 2004.



In addition to the Security Plan, certain health care and life insurance
benefits are made available to active employees. The Companys share of cost of these benefits is expensed as incurred. Group health benefits are offered to retirees with 100% of the premium cost borne by the retiree.



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 incentive compensation. 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 $14.3 million and $13.6
million at September 30, 2005 and 2004, respectively. Expense related to the deferred compensation plan was $283,000 and $118,000 for the three month periods ended September 30, 2005 and 2004, respectively, and was $516,000 and $511,000
for the nine month periods ended September 30, 2005, and 2004, 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 $46,000
and $50,000 for the three month periods ended September 30, 2005 and 2004, respectively, and was $199,000 and $150,000 for the nine month periods ended September 30, 2005, and 2004, 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 social
security and other employer retirement plan contributions. The measurement date for obligations for this plan is as of December 1st. The following table summarizes the net periodic benefit cost recognized for the three and nine-month periods
ended September 30, 2005 and 2004:



|                                         |  |                                         |    |                                         |   |      |  |   |      |   |  |   |      |  
|---------------------------------------- |  | --------------------------------------- | -- | --------------------------------------- | - | ---- |  | - | ---- | - |  | - | ---- | -
|                                         |  | For the Three MonthsEnded September 30, |    | For the Nine Months Ended September 30, |  
|                                         |  | 2005                                    |    | 2004                                    |   | 2005 |  |   | 2004 |  
|                                         |  | (in thousands)                          |   
|Components of net periodic benefit cost: |  |                                         |    |                                         |   |      |  |   |      |   |  |   |      |  
|Service cost                             |  | $                                       | 3  |                                         | $ | 4    |  | $ | 8    |   |  | $ | 11   |  
|Interest cost                            |  |                                         | 22 |                                         |   | 23   |  |   | 67   |   |  |   | 70   |  
|Actuarial losses and decrease in offsets |  |                                         |   |                                         |   | 29   |  |   |     |   |  |   | 86   |  
|                                         |  |                                         |    |                                         |   |      |  |   |      |   |  |   |      |  
|Net periodic cost                        |  | $                                       | 25 |                                         | $ | 56   |  | $ | 75   |   |  | $ | 167  |  
|                                         |  |                                         |    |                                         |   |      |  |   |      |   |  |   |      |  
|                                         |  |                                         |    |                                        
|                                         |  |                                         |    |                                         |   | 2005 |  |   | 2004 |  
|Weighted-average assumptions:            |  |                                         |    |                                         |   |      |  |   |      |   |  |   |      |  
|Discount rate                            |  |                                         |    |                                         |   |      |  |   | 5.75 | % |  |   | 5.75 | %
|Rate of compensation increase            |  |                                         |    |                                         |   |      |  |   | 3.00 | % |  |   | 3.00 | %



During the first
quarter of 2005, $134,109 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.



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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, 2005 compared to December 31, 2004, and the consolidated results of operations for the three and nine month periods ended September 30, 2005 compared to the
same periods in 2004. 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 media, 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; (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 upgrades 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 of $12.6 million or $0.50 per diluted share for the three months ended September 30, 2005. This compares to $12.3 million or $0.49 per diluted share for the same period in 2004. This represents a $243,000 or 2% increase in the third
quarter of 2005 over the same period a year ago.



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Diluted earnings per share increased 2% or $0.01. AMCOREs annualized return on average equity and on average assets for the third quarter of 2005 was
12.51% and 0.96%, respectively, compared to 13.22% and 1.02% for the comparable period in 2004.



The most significant factors affecting third quarter of 2005 net income, compared to the same period in 2004, were:



Net interest income - Increased $2.7 million primarily due to increased loan volumes. Net interest margin was 3.50%
in 2005 compared to 3.53% in 2004.



Provision for loan
losses - Increased $1.6 million reflecting higher net charge-offs, an increase in non-accrual loans and increased loan balances.



Non-interest income - Increased $2.4 million. The most significant increases were $1.3 million in mortgage banking income, a $1.3 million gain on
the transition of the Vintage Equity Funds, and $1.0 million in service charges on deposits. Partially offsetting these increases was a $1.1 million decrease in gains on the sale of loans.



Operating expenses - Increased $3.2 million, due to higher personnel
costs and net occupancy and equipment expenses.



Income
taxes - Increased $15,000, due to higher pre-tax income. The effective tax rate was 29.4% in 2005 compared to 29.8% in 2004.



Year-to-Date Results



AMCORE reported net income of $36.8 million or $1.47 per diluted share for the nine months ended September 30, 2005. This compares to $32.8 million
or $1.30 per diluted share for the same period in 2004. This represents a $4.0 million or 12% increase year-over-year.



Diluted earnings per share increased 13% or $0.17. AMCOREs annualized return on average equity and on average assets for the year-to-date period of
2005 was 12.54% and 0.97%, respectively, compared to 11.63% and 0.93% for the comparable period in 2004.



The most significant factors affecting 2005 year-to-date net income, compared to the same period in 2004, were:



Net interest income - Increased $7.4 million primarily due to increased loan volumes. Net interest margin was 3.54%
in 2005 compared to 3.59% in 2004.



Non-interest income
- Increased $1.5 million. The most significant increases were attributable to a $2.7 million increase in service charges on deposits, and the $1.3 million gain on the transition of the Vintage Equity Funds. These were partially offset by declines of
$1.8 million in net security gains and $1.4 million in gains on the sale of loans.



Operating expenses - Increased $3.4 million, primarily due to higher personnel costs and net occupancy and equipment expenses.



Income taxes - Increased $1.8 million, due to higher earnings before income taxes and partially offset by the impact
of an increase in tax-exempt investments and bank and Company owned life insurance (COLI) income. The effective tax rate was 29.2% in 2005 compared to 29.0% in 2004.



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KEY INITIATIVES AND OTHER SIGNIFICANT EVENTS



Key Initiatives



Branch Expansion - During 2001, the Companys banking operations
(BANK) launched a branch expansion initiative targeting the area 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 is expected to accelerate the Companys ability to generate 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, 23 new
branches, net of closed offices, have opened. The new locations have contributed $1.36 billion in loans and $640 million in deposits outstanding as of September 30, 2005. Same store contributions, which include new branches that have been open
at least one year, were $1.29 billion in loans and $625 million in deposits outstanding at September 30, 2005. During the first nine months of 2005, the Company opened three limited branch offices in Libertyville and Orland Park, Illinois and
Wauwatosa, Wisconsin. As of the end of third quarter of 2005, more than two-thirds of the Companys 73 branch locations were concentrated in Rockford and Chicago, Illinois, Milwaukee suburbs and Madison, Wisconsin.



During 2004, the Company announced that its Board of Directors had authorized
an incremental capital investment of $55 million to enhance the Companys Branch Expansion program raising the total commitment to $120 million. As of September 30, 2005, $68 million of the total $120 million capital commitment remained to
be spent.



The Company plans to add a total of five branch
offices including one full service and four LBOs in 2005. By the end of 2009, AMCORE expects to have added 34 new offices, net of those closed, since the beginning of the Branch Expansion initiative in 2001. Total offices by the end of 2009 are
expected to be 84, two-thirds of which will be located in markets that the Company believes to exhibit strong growth characteristics.



The Branch Expansion activity was accretive to earnings by $0.10 per diluted share during the third quarter of 2005, compared to accretion during the same
period last year of $.01 per diluted share. For year-to-date 2005, the Branch Expansion was accretive to earnings by $0.24 per diluted share compared to dilution of $0.03 for the same period in 2004. Branch Expansion earnings in 2005 continue to be
positive due to favorable performance of maturing branches.



As
a complement to its Branch Expansion, the BANK has also expanded its automated teller machine system (ATMs) in Illinois, which includes both owned and third party operated, to 132 in Illinois and 34 in Wisconsin, or 166 overall at
September 30, 2005 from 130 in Illinois and 37 in Wisconsin, or 167 overall, at September 30, 2004.



The BANK announced on October 5, 2005 that it will be adding access to 100 additional ATMs in communities throughout Wisconsin. The placement of additional ATMs is an important part of
AMCOREs commitment to provide quality customer service as the additional ATMs will provide AMCORE customers greater ease and convenience in completing banking transactions.



Deposit Growth - Average bank-issued deposits grew to $3.5 billion in the third quarter of 2005, an increase of 16%,
or $482 million, compared to the third quarter of 2004. AMCOREs focus is to grow transactional deposits, such as checking accounts, which help lower funding costs, as well attracting new households. Handling a customers checking account
enables the BANK to cross-sell other products and increases the likelihood of retaining the customers business over time. The Companys goal is to become the customers primary bank, meeting all of the customers banking,
mortgage and investment needs. AMCORE is focusing



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on continued 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 its reliance on wholesale funding sources.



Quality Loan Growth - Improving credit quality is part of AMCOREs Quality Loan Growth initiative. As part of this initiative, the Company has expanded its commercial collection team, allowing it to intervene at a much earlier
stage of the credit process as individual credits begin to show signs of stress. Taking early action is intended to help the Company limit erosion in value. Average loans rose $363 million to $3.6 billion during the third quarter of 2005, an 11%
increase over the third quarter of 2004. Over the same period of time, total non-accrual loans increased 37% or $6.4 million to $23.8 million. Loans ninety-days past due and still accruing decreased 29% or $864,000 to $2.2 million. On a
linked-quarter basis, these categories decreased a combined $713,000 or 3%.



Increasing Trust and Asset Management Income - Trust and asset management income declined $164,000 or 3%, from $5.0 million in the third quarter of 2004 to $4.9 million in the third quarter of 2005. Assets
under administration totaled $4.6 billion at September 30, 2005 compared to $4.2 billion at September 30, 2004. Challenges facing this segment over the last several years include below benchmark equity funds investment performance, changes
in the mix of administered assets, and the loss of two large retirement plans in 2004.



Efforts to provide long-term solutions to these challenges include migration to an open architecture sales platform that allows greater customer access to non-proprietary products, the transition of $142 million in
assets of three Vintage equity funds into two Federated mutual funds completed in September 2005 and the recently announced definitive agreement to sell Investors Management Group (IMG) to West Bancorporation, Inc.



The Federated transaction resulted in a gain of $1.3 million recorded in the
third quarter of 2005. The sale of IMG to West Bancorporation, Inc. is subject to customary conditions, including approvals or consents from a requisite percentage of IMGs clients, and is expected to close late in fourth quarter of 2005.
AMCORE is committed to expanding the value-added wealth management services and options it offers its clients and customers. The sale of IMG supports the strategy of being a provider of high quality investment products, rather than a developer of
proprietary investment products.



After the IMG sale closes,
AMCOREs trust and retirement plan services assets under administration will remain unchanged at $2.8 billion. Institutional and public fund assets, which will continue to be managed and administered by IMG, total $1.8 billion.



Including both the Federated transaction and the sale of IMG, management
estimates that the annual reduction in gross revenues for trust and asset management will be approximately $4.1 million and the reduction in operating expenses will be approximately $2.8 million. This equates to a $1.3 million pre-tax reduction to
earnings or approximately $0.03 per diluted share.



Other
Significant Events



Key Personnel and Board Changes
- In August 2005, the Company announced the resignation of Mrs. Karen Branding from its Board of Directors citing personal reasons and family commitments. A search is currently underway to find a new director to serve the remainder of her term.



In October 2005, the Company announced that John Hecht,
Executive Vice President and Chief Financial Officer (CFO), will immediately assume new operating responsibilities as Executive Vice President and Chief Commercial Officer. In this capacity, Mr. Hecht will oversee the BANKs commercial
division, which includes the BANKs regional operations. He will retain his CFO responsibilities until a new CFO is named.



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Accounting Changes - Following is a discussion of accounting standards that materially affected
the Companys Consolidated Financial Statements for the periods and dates presented, along with recently issued accounting standards that may impact future periods.



In the first quarter 2004, the Company adopted Financial Accounting Standards Board (FASB) Financial Interpretation
No. 46 Revised (FIN 46R) Consolidation of Variable Interest Entities. Upon adoption of FIN 46R, the Company de-consolidated its investment in AMCORE Capital Trust I (Trust), a statutory business trust. See Note 7 of the Notes to the
Consolidated Financial Statements.



In November 2003, the
Emerging Issues Task Force (EITF) reached a consensus on certain disclosure requirements under EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. The new disclosure
requirements apply to investment in debt and marketable equity securities that are accounted for under Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities.
Effective for fiscal years ending after December 15, 2003, companies were required to disclose information about debt or marketable equity securities with market values below carrying values. The Company previously implemented the disclosure
requirements of EITF Issue No. 03-1. In March 2004, the EITF came to a consensus regarding EITF 03-1. Securities in scope are those subject to SFAS 115. The EITF adopted a three-step model that requires management to determine if impairment
exists, decide whether it is other-than-temporary, and record other-than-temporary losses in earnings. In November 2005, the Financial Accounting Standards Board (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 will apply 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.



SFAS No. 123 (Revised 2004) (123R), Share-Based Payment was issued in December 2004 and will require compensation cost relating to
share-based payment transactions be recognized in Consolidated Financial Statements. SFAS No. 123R is effective for periods beginning after December 15, 2005. The Company has not yet completed its evaluation of the standard, but
preliminary estimates, using a Black-Scholes model, indicate that implementation will result in a reduction in earnings and a decline in diluted earnings per share of approximately $0.07-$0.09 per year.



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.



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 Company's regulatory consumer compliance program. The BANK has implemented procedures to address the matters
identified by the OCC. These procedures 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. The agreement with the OCC does not in any way limit the
BANKs ability to continue the Branch Expansion.



Loan
Securitization - During the third quarter of 2004, the Bank sold $78 million of indirect automobile loans in a securitization transaction (the Auto Loan Sale(s)) resulting in a pre-tax gain of $1.2 million (the Auto Loan
Gain). Upon securitization the BANK retained certain residual interests. The BANKs retained interests are subordinate to investors interests and are subject to pre-payment risk, interest rate risk and credit risk on



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the transferred auto loans. The investors and securitization trust have no other recourse to the BANKs other assets for failure of debtors to pay when
due. See note 5 of the Notes to Consolidated Financial Statements.



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, 2005 and 2004.



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):



|                              |  |                                         |        |                                         |   |        |  |      |         |  |   |        
|----------------------------- |  | --------------------------------------- | ------ | --------------------------------------- | - | ------ |  | ---- | ------- |  | - | -------
|                              |  | For the Three MonthsEnded September 30, |        | For the Nine Months Ended September 30,
|                              |  | 2005                                    |        | 2004                                    |   | 2005   |  | 2004
|Interest Income Book Basis    |  | $                                       | 72,833 |                                         | $ | 59,146 |  | $    | 204,337 |  | $ | 171,878
|FTE Adjustment                |  |                                         | 1,166  |                                         |   | 1,107  |  |      | 3,593   |  |   | 3,157  
|                              |  |                                         |        |                                         |   |        |  |      |         |  |   |        
|Interest Income FTE Basis     |  | $                                       | 73,999 |                                         | $ | 60,253 |  | $    | 207,930 |  | $ | 175,035
|Interest Expense              |  |                                         | 31,729 |                                         |   | 20,715 |  |      | 83,532  |  |   | 58,519 
|                              |  |                                         |        |                                         |   |        |  |      |         |  |   |        
|Net Interest Income FTE Basis |  | $                                       | 42,270 |                                         | $ | 39,538 |  | $    | 124,398 |  | $ | 116,516
|                              |  |                                         |        |                                         |   |        |  |      |         |  |   |        



Net interest income on
an FTE basis increased $2.7 million or 7% in the third quarter of 2005 compared to the same period in 2004. On a year-to-date basis, net interest income on an FTE basis was also up 7% or $7.9 million. The increases for both the three and nine month
periods were driven by increases in average loan volumes of 11%, and were partially offset by increases in interest expense of 53% and 43%, 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 15 basis points to 3.14% in the third quarter of 2005 from 3.29% in
the third quarter of 2004. The net interest margin was 3.50% in the third quarter of 2005, a decrease of three basis points from 3.53% in the third quarter of 2004.



As Table 2 indicates, the interest rate spread for the nine months ended September 30, 2005 declined 12 basis points
from 3.35% in the prior year period to 3.23%. The net interest margin decreased five basis points to 3.54% from 3.59% for the year-to-date periods ended September 30, 2005 and 2004, respectively.



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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. 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. 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 2005, net interest income (FTE) increased due to average volume by $3.4 million when compared to
the third quarter of 2004. This increase was comprised of a $5.0 million increase in interest income that was partially offset by a $1.6 million increase in interest expense.



The $5.0 million increase in interest income was driven by a $363 million or 11% increase in average loans. The growth in
average loans came from an increase of $506 million in commercial lending driven mostly by the Branch Expansion. Average consumer loan balances declined $182 million compared to the prior year quarter, due to lower volumes of indirect automobile
lending and the $159 million Auto Loan Sales in the second half of 2004, while 1-to-4 family real estate loans increased $39 million.



The increase in average loans was funded by a $482 million, or 16%, increase in average bank-issued deposits. The increase in average bank-issued deposits
was attributable to the Companys Deposit Growth and Branch Expansion initiatives. Average wholesale funding decreased $160 million or 11%.



For the first nine months of 2005, net interest income increased due to average volume by $10.0 million when compared to the same period in 2004. This was
comprised of an increase of $15.1 million in interest income that was partially offset by a $5.1 million increase in interest expense. Average loans over this period increased $329 million or 11% while average securities increased $36 million or 3%.
The growth in average loans occurred despite the $159 million Auto Loan Sales during the last half of 2004. Average bank-issued deposits increased $365 million or 12% while average wholesale funding decreased $13 million or 1%.



Changes due to rate - During the third quarter of 2005, net interest
income (FTE) declined due to average rates by $635,000 when compared with the same quarter in 2004. This was comprised of a $9.4 million increase in interest expense that was reduced by a $8.8 million increase in interest income.



The yields for third quarter of 2005 on interest earning assets increased 74
basis points compared to the third quarter of 2004 due to a 94 basis point increase in the yield on average loans. The improved yields on loans were the result of increases in the prime rate as well as a higher proportion of variable rate loans in
the portfolio compared to third quarter 2004. Fixed rate asset repricing, however, was negatively impacted by the flatter yield curve.



The rate paid for the third quarter of 2005 on average interest bearing liabilities increased 89 basis points, compared to third quarter of 2004, in
response to increases in the federal funds rate (FED Funds). All categories of liabilities experienced increased rates, the largest being interest-bearing demand and savings accounts due to promotional deposit pricing as part of the Deposit Growth
initiative.



For the first nine months of 2005, net interest
income declined due to average rates by $2.1 million. This was comprised of a $19.9 million increase in interest expense that was partially offset by a $17.8 million increase in interest income. The average rates paid on interest bearing liabilities
increased by 65 basis points while the yield on earning assets increased by 53 basis points.



The Company expects its net interest margin to experience some modest compression in the near term. 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



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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. The Company is liability sensitive over a one-year horizon,
meaning that interest-earning assets are expected to re-price less quickly than interest-bearing liabilities.



Provision for Loan Losses



The provision for loan losses (Provision) is an amount added to the allowance for loan losses (Allowance) for loan losses that are probable as of the respective reporting date. Actual loan losses are charged against
and reduce the Allowance when management believes that the collection of principal will not occur. Subsequent recoveries of amounts previously charged to the Allowance, if any, are credited to and increase the Allowance.



Loans, the Companys largest income earning asset category, are
periodically evaluated by management in order to establish an estimated Allowance that is considered adequate to absorb probable losses. 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 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. 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 $4.5 million in the third quarter of
2005, an increase of $1.6 million or 58% from $2.8 million in the third quarter of 2004. Contributing to the increase were higher net charge-offs and changes in statistical loss estimates for loan pools. Net charge-offs in the third quarter of 2005
were $4.2 million or 47 basis points of average loans on an annualized basis, compared to $3.1 million or 38 basis points of average loans during the same period in 2004. The increase was primarily related to charge-offs on one large construction
industry credit.



For the nine-month period ending
September 30, 2005, the Provision declined $323,000 when compared to the first nine months of 2004, reflecting lower specific loss estimates on individually reviewed credits and net of increased allocations for loan concentrations, increases in
statistical loss estimates for loan pools offset by higher net charge-offs. Net charge-offs were $10.7 million or 42 basis points of average loans on an annualized basis, for the nine-month period ending September 30, 2005, compared to $9.9
million or 43 basis points of average loans during the same period in 2004.



Non-Interest Income



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



Overview - Non-interest income, including net security gains, totaled $19.3 million in the third quarter of 2005, an increase of $2.4 million or
14% from $16.9 million in the third quarter of 2004. The increase was attributable to a $1.3 million increase in mortgage banking income, a $1.0 increase in service charges on deposits, and a $1.3 million gain on the transition of the Vintage Equity
Funds. These increases were mostly offset by a decrease of $1.1 million in gains on loan sales.



On a year-to-date basis, non-interest income increased $1.5 million to $52.8 million in 2005 compared to $51.3 million in 2004. Increases of $2.7 million, $1.3 million, $577,000 and $409,000
occurred in service charges on deposits, other non-interest income for the gain on the transition of the Vintage Equity Funds, bankcard fee income and mortgage banking income. These increases were partially offset by declines of $1.8 million in
security gains, $1.4 million in gains on loan sales and $975,000 in trust and asset management income.



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Trust and asset management income - Trust and asset management income includes trust, investment
management, and employee benefit recordkeeping and administration services. It also includes advisory and fund administration fees from the Vintage Mutual Funds and various public fund programs. Trust and asset management income, totaled $4.9
million in the third quarter of 2005, a decrease of $164,000 or 3%, from $5.0 million in the third quarter of 2004. For the nine-month period ended September 30, 2005, trust and asset management income declined $975,000 from $15.9 million in
2004 to $14.9 million. The declines, for both the quarter and year-to-date periods, were primarily attributable to changes in the mix of administered assets associated with the below benchmark investment performance of the Vintage equity funds, and
migration to an open architecture platform.



As noted above,
increasing Trust and Asset Management Income is a key initiative of the Company that is directed at reversing the declines. AMCORE has moved toward a more open sales environment for investments referred to as open architecture. Through open
architecture, clients have access to a full array of high quality investment options from preferred investment sources. This is being accomplished in two steps. First, during the third quarter of 2005, the Company completed the transaction with
Federated Investors, Inc. for the transition of $142 million in assets of three Vintage equity funds into two Federated mutual funds. Second, in October 2005, the Company announced a definitive agreement with West Bancorporation, Inc. for the sale
of IMG, its Des Moines investment subsidiary. This transaction is expected to close during the fourth quarter 2005.



As of September 30, 2005, total assets under administration were $4.6 billion, which includes $490 million in the Vintage mutual funds, compared to
$4.2 billion and $734 million, respectively, as of September 30, 2004. The reduction in the Vintage mutual funds includes the transition of Vintage equity funds. In addition to overall market performance, trust and asset management revenues are
dependent upon the Companys ability to attract and retain accounts, specific investment performance and other economic factors.



Service charges on deposits - Service charges on deposits totaled $6.4 million in the third quarter of 2005, a $1.0 million or 19% increase
over $5.4 million in the third quarter of 2004. For the first nine months of 2005, service charges on deposits were $17.4 million, an increase of $2.7 million or 18% over the $14.8 million in the prior year period. Service charges on personal
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.



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 $1.6 million in the third quarter of 2005, an
increase of $1.3 million from the third quarter of 2004. The increase included a $702,000 mortgage servicing rights impairment valuation reversal in the third quarter of 2005, compared to a $737,000 mortgage servicing impairment charge for the same
period in 2004, a difference of $1.4 million. Mortgage loan closings increased $43 million to $146 million during the third quarter of 2005 compared to $103 million in the prior year period.



For the first nine months of 2005, mortgage banking income was $3.2 million
on closings of $353 million, compared to $2.8 million on closings of $356 million for the first nine months of 2004. Year-to-date 2004 included a $737,000 mortgage servicing rights impairment charge, compared to none in the 2005 year-to-date period.
Adjusted for the 2004 impairment charge, mortgage banking income declined $328,000 over the comparable nine-month periods.



Declines in closings were expected, as rising mortgage interest rates led to decreased refinancing activity. However, the Company continues to focus on
growth of new purchase mortgages with additional mortgage originators, primarily in the Branch Expansion markets. New purchase mortgages showed a 20% increase in the third quarter of 2005 from the same period a year ago. New purchase mortgage growth
could be negatively affected by a number of factors beyond the Companys control, including heightened competition,



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higher mortgage interest rates, declines in new housing construction and adverse regulatory developments. New purchase mortgage closings were $213 million or
60% of total closings for the first nine months of 2005, compared to $195 million or 55% of total closings in the same period a year ago.



As of September 30, 2005, the carrying value of AMCOREs capitalized mortgage servicing rights was $13.2 million, with no impairment valuation
allowance. This compares to $11.6 million at September 30, 2004, net of the $737,000 impairment valuation. The unpaid principal balance of mortgage loans serviced for others was $1.3 billion as of both September 30, 2005, and
September 30, 2004. 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% and 0.92% as of September 30, 2005 and
2004, respectively.



COLI income - COLI income totaled
$1.5 million in the third quarter of 2005, a $133,000 increase from $1.3 million in the third quarter of 2004. The increase was primarily due to increases in the value of underlying variable return investments. Year-to-date in 2005, COLI income
declined $108,000 or 3% to $3.9 million from $4.1 million in the prior year period. The decline was due to $737,000 received in death benefit payouts in the 2004 period partly offset by a $350,000 downward adjustment in the second quarter of 2004
from a change in the carriers estimate of one policys CSV. 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, 2005, the CSV of COLI was $131 million, compared to $122 million at September 30, 2004.



Other non-interest income - Brokerage commission income, bankcard fee income, customer service fees, gain on sale of loans, net security gains and
other non-interest income totaled $5.0 million in the third quarter of 2005, a $119,000 million or 2% increase from the third quarter of 2004. The increase was attributable to higher deposit-related fees, which includes bankcard fees and other
customer service fees, and a gain of $1.3 million related to the transition of the Vintage equity funds, reduced by lower gains on the sale of loans and lower brokerage commissions. The combined totals for the year-to-date periods ended
September 30, 2005 and 2004 were $13.3 million and $13.8 million, respectively, a decline of $508,000 or 4%. The decline was primarily related to lower net security gains of $1.8 million and gains on the sale of loans of $1.4 million. These
declines were partially offset by increases as noted above.



Since January 1, 2004, merchants have been permitted to refuse signature-based debit card transactions with the potential for reduced bankcard fee income for card issuers. The change has not resulted in reduced bankcard fee income for
the BANK as a larger cardholder base, a benefit of both the Branch Expansion and Deposit Growth initiatives, and greater card utilization have more than offset reductions in signature-based debit card transaction rates. For third quarter 2005, the
Companys bankcard fee income increased $150,000 to $1.3 million from $1.1 million in third quarter 2004. For the nine-month period ended September 30, 2005, bankcard fee income increased $577,000 to $3.6 million from $3.0 million for the
same period in 2004.



Operating Expenses



Overview - Total operating expense was $38.1 million in the third
quarter of 2005, an increase of $3.2 million or 9%, from $34.9 million in the third quarter of 2004. For the first nine months of 2005, operating expense was $111.1 million, an increase of $3.4 million or 3%, from $107.7 million in the same period
in 2004. The quarter and year-to-date periods of 2005 include increases in personnel costs, net occupancy and equipment, data processing and other real estate owned expense. Loan processing expenses also increased in the third quarter of 2005
compared to the prior year due to increased mortgage volumes, while advertising costs were higher on a year-to-date basis.



The efficiency ratio was 63.10% in the third quarter of 2005, compared to 63.14% for the same period in 2004. On a year-to-date basis, the efficiency
ratio was 64.03% and 65.42% in 2005 and 2004, 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.



Personnel expense - Personnel expense, which includes compensation
expense and employee benefits and is the largest component of operating expenses, was $22.6 million in the third quarter of 2005, an increase of



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$1.5 million or 7% from $21.1 million in the third quarter of 2004. For the nine month periods ending September 30, 2005 and 2004, personnel expense
totaled $66.6 million and $65.0 million, respectively, an increase of $1.7 million. The increase for both the quarter and year-to-date periods was primarily due to the Branch Expansion and annual cost-of-living increases, partly offset by lower
incentive and commission expenses. Employee health care costs, while higher for the quarter, were lower on a year-to-date basis compared to 2004.



Facilities expense - Facilities expense, which includes net occupancy expense and equipment expense, was $5.7 million in the third quarter of 2005,
an increase of $1.0 or 22% compared to $4.6 million in the third quarter of 2004. For the nine-month periods ending September 30, 2005 and 2004, facilities expense totaled $15.9 million and $14.4 million, respectively, an increase of $1.5
million or 11%. Increases for the quarter and year-to-date were affected by Branch Expansion, accelerated depreciation for equipment and software to be replaced or upgraded during the fourth quarter and personal computer replacements.



Data processing expense - Data processing expenses include costs
related to core bank data processing, trust and other external processing systems. Data processing expense was $718,000 in the third quarter of 2005 compared to $580,000 in the third quarter of 2004, an increase of $138,000 or 24%. For the
nine-month periods ending September 30, 2005 and 2004, data processing expense totaled $2.0 million and $1.7 million, respectively, an increase of $312,000 or 18%. The increase was due to higher external processing costs for systems used by the
trust and asset management segment and growth in internet banking.



Other operating expenses - Other operating expenses include professional fees, communication expense, advertising and business development expenses and other costs, and were a combined total of $9.1 million in the third quarter of
2005, an increase of $509,000 or 6% from $8.6 million the third quarter of 2004. The increase was primarily due to higher loan processing expenses and other real estate owned (OREO) expenses. For the nine-month periods ending September 30, 2005
and 2004, other operating expenses were essentially flat at $26.6 million; declining $76,000 from the prior year. The decline was primarily due to lower loan processing and collection costs and private equity investment impairment charges recorded
in 2004, partly offset by higher advertising expenses for the Deposit Growth initiative and higher OREO expenses.



Income Taxes - Income tax expense was essentially flat at $5.2 million in the third quarters of 2005 and 2004. While there was an small increase in income before taxes in the third quarter
of 2005, an increase in tax-exempt COLI and securities income helped to reduce income tax expense for the period. For the nine month period ended September 30, 2005, income tax expense totaled $15.2 million, a $1.8 million increase over the
$13.4 million in the same period of 2004. Income taxes were higher for the nine-month period of 2005 over the same period of 2004 due to an increase in earnings before income tax, partially offset by the impact of an increase in tax-exempt
investments and COLI income.



The effective tax rates were
29.4% and 29.8% in the third quarters of 2005 and 2004, respectively, and were 29.2% and 29.0% for the nine months ended September 30, 2005 and 2004, 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 death benefits on COLI that are tax exempt.



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, Trust and Asset Management, 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



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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, 2004.



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 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 large 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 banking services.



Overview - The
Commercial Segment represented 68% and 64% of total Segment earnings in the third quarter of 2005 and 2004, respectively. For the nine-month periods ended September 30, 2005 and 2004, the Commercial Segment represented 72% and 69%,
respectively, of total Segment earnings. Commercial Segment total assets were $2.8 billion at September 30, 2005 and represented 54% of total consolidated assets. This compares to $2.3 billion and 47%, respectively, at September 30, 2004.



Commercial earnings for the third quarter of 2005 and 2004
were $7.4 million and $6.9 million, respectively, an increase of $555,000 or 8%. Year-to-date earnings in 2005 were $21.4 million, compared to $18.9 million in the same period in 2004, an increase of $2.5 million or 13%. Higher net interest income
reduced by higher operating expenses and income taxes were the primary reasons for the increases for both the quarter and year-to-date periods.



Net interest income increased $3.1 million and $9.6 million for the three and nine-month periods ended September 30, 2005, respectively, compared to
the same periods in 2004. 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 loan volumes,
primarily commercial real estate loans and higher yields on loans. The increased volumes are due in large part to the Branch Expansion. 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 higher yields on loans and increased rates on deposits were both attributable to higher short-term interest rates, which have impacted new product
(loans and deposits) pricing as well as the re-pricing of variable rate products.



Non-interest income increased $122,000 in the third quarter of 2005 when compared to the same period a year ago. On a year-to-date basis, non-interest income declined $78,000. Both the increase for third quarter 2005
and the decrease for 2005 year-to-date, compared to the respective periods in 2004, are primarily due to gains on the sale of SBA guaranteed loans.



The Provision was relatively flat at $2.3 million for the third quarters of 2005 and 2004, and increased $160,000 for the year-over-year periods. The
increase in the year-to-date Provision was primarily due to



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increased net charge-offs, reduced allocations made in 2004 for loan concentrations and higher statistical loss estimates on loan pools. Partially offsetting
the increases were lower specific loss estimates.



Non-interest
expense increased $2.2 million in the third quarter of 2005 compared to the third quarter of 2004. On a year-to-date basis, the increase was $5.2 million. The increases were largely due to increased Branch Expansion expenses and annual
cost-of-living increases, particularly higher personnel costs, net occupancy expense and other real estate owned expenses.



Income taxes increased $354,000 and $1.6 million for the three and nine-month periods of 2005, respectively, compared to the same periods in 2004 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 south central 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 banking services.



Overview - The Retail Segment represented 18% and 30% of total Segment earnings in the third quarter of 2005 and 2004, respectively. For the nine-month periods ended September 30, 2005 and 2004, the Retail
Segment represented 22% and 20%, respectively, of total Segment earnings. Retail Segment total assets were $657 million at September 30, 2005 and represented 13% of total consolidated assets. This compares to $823 million and 17% at
September 30, 2004. The decline from the prior year is due to the $159 million Auto Loan Sales in the second half of 2004.



Retail earnings for the third quarter of 2005 were $2.0 million, a decrease of $1.2 million or 38% from the third quarter of 2004. The decline was due to
higher provision and non-interest expense partly offset by higher net interest income and lower income tax expense. Year-to-date earnings in 2005 were $6.4 million, compared to $5.5 million in the same period in 2004, an increase of $915,000 or 17%.
The increase for the year-to-date period was due to increased net interest income, higher non-interest income and lower Provision expense and was reduced by higher operating and income tax expenses.



Net interest income increased by $991,000 and $2.3 million for the three and
nine-month periods ended September 30, 2005, compared to the same periods in 2004. Both periods experienced increased funding credits on deposits generated due to Deposit Growth. These were partially offset by lower loan volumes and higher
interest expense. Lower loan volumes were due to declines in indirect automobile lending and the $159 million Auto Loan Sales in the second half of 2004. The increase in interest expense was due to rising short-term interest rates and promotional
deposit pricing as part of the Deposit Growth initiative.



Non-interest income declined by $176,000 in the third quarter of 2005 compared to the same period a year ago due to lower gains on Auto Loan Sales mostly offset by higher service charges on deposits. Increased deposit service charges, net
of lower gains on Auto Loan Sales, contributed to the increase of $1.5 million for the year-to-date period of 2005 compared to the prior year period.



The Provision increased $1.5 million during the third quarter of 2005 compared to a year ago, and decreased $1.1 million for the nine months ended
September 30, 2005 compared to the same period in 2004. For the quarter, the increase was due to the reduction to loan loss allocations in 2004 associated with the Auto Loan Sales. For the nine-month period, the decline was primarily due to a
decrease in net charge-offs, and reduced loan loss allocations associated with indirect automobile lending and the securitization of $159 million of indirect automobile loans in the second half of 2004.



Non-interest expense increased $1.3 million in the third quarter of 2005
compared to the third quarter of 2004. On a year-to-date basis, the increase was $3.4 million. The increases were largely due to increased Branch Expansion expenses and annual cost-of-living increases, particularly increased personnel costs and
occupancy and equipment expenses.



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Income taxes decreased $794,000 in third quarter of 2005 compared to the same period in 2004 due to lower
pre-tax income. Year-to-date in 2005, income taxes were $583,000 higher than the prior year period, due to increased pre-tax earnings.



Trust and Asset Management



The Trust and Asset Management Segment (TAM) provides trust, investment management, employee benefit recordkeeping and administration and
brokerage services. It also acts as an advisor and provides fund administration to the Vintage Mutual Funds and various public fund programs.



Overview - The TAM Segment represented 10% and 3% of total segment earnings in the third quarter of 2005 and 2004, respectively. For the
year-to-date periods in 2005 and 2004, total segment earnings were 6% and 5%, respectively. TAM Segment total assets were $19 million at September 30, 2005 and represented less than 1% of total consolidated assets. At September 30, 2004,
TAM total assets were $18 million, also less than 1% of total consolidated assets.



TAM earnings for the third quarter of 2005 were $1.1 million, an increase of $727,000 from the third quarter of 2004. Year-to-date earnings in 2005 were $1.8 million, compared to $1.5 million in the same period in
2004, an increase of $284,000 or 19%. The increases for both the three and nine-month periods were due to a $1.3 million gain related to the transition of $142 million of the three Vintage equity funds to two Federated mutual funds during the
quarter.



Non-interest income increased $1.0 million and
$94,000 for the three and nine-month periods ended September 30, 2005, respectively, when compared to the same periods in 2004. Both the three and nine-month increases were due to the gain noted above offset by lower trust and asset management
revenues, attributable to changes in the mix of administered assets associated with the below benchmark investment performance of the Vintage equity funds, migration to an open architecture platform and lower brokerage commission income, primarily
the result of lower annuity sales.



Non-interest expense
decreased $221,000 in the third quarter of 2005 compared to the third quarter of 2004. On a year-to-date basis, the decrease was $435,000. The decreases were primarily due to lower personnel costs.



Income taxes increased $546,000 and $285,000 for the three and nine-month
periods of 2005, respectively, compared to the same periods in 2004 due to higher pre-tax earnings.



It is expected that the transition of the Vintage Equity funds to the Federated mutual funds and the previously discussed sale of IMG will result in an annual reduction in TAM earnings of
approximately $0.03 per diluted share.



Mortgage Banking



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



Overview - The Mortgage Segment represented 4% and 3% of total segment
earnings in the third quarter and year-to-date periods of 2005, respectively, compared to none and 6% in the same periods of 2004. Mortgage Segment total assets were $262 million at September 30, 2005 and represented 5% of total consolidated
assets. This compares to $244 million and 5% at September 30, 2004.



Mortgage earnings increased $124,000 for the three-month period ended September 30, 2005, compared to the prior year period, but declined $1.6 million for the nine-month period ended September 30, 2005
compared to the prior year period. Earnings for the quarter increased due to higher non-interest income offset by lower net interest income, increased operating costs and higher income tax expense. The year-to-



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date decline was primarily due to lower net interest income and increased Provision, which were partially offset by lower income tax expense.



Net interest income declined by $425,000 and $2.3 million for the three and
nine-month periods ended September 30, 2005, compared to the same periods in 2004. The decline for both periods was due to increased net cost of funds allocations associated with rising short-term interest rates.



Non-interest 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. Non-interest income increased $996,000 in the third quarter of 2005 when
compared to the same period a year ago. The increase was primarily due to a $702,000 mortgage servicing rights impairment reversal in the third quarter of 2005, compared to a $737,000 impairment charge in the comparable prior year period. Loan
closings increased $43 million or 42% for the third quarter compared to the same period in the prior year. On a year-to-date basis, non-interest income increased $196,000 compared to the prior year. Year-to-date 2004 included a $737,000 mortgage
servicing rights impairment charge, compared to a $53,000 mortgage servicing rights impairment reversal in the 2005 year-to-date period.



The Provision increased $76,000 and $664,000 for the third quarter and year-to-date periods of 2005, respectively, when compared to the prior year
periods. The increase in the year-to-date Provision was primarily attributable to higher net charge-offs and higher specific loss estimates on certain individually reviewed loans.



Non-interest expense increased $291,000 in the third quarter of 2005 compared to the third quarter of 2004 due to higher
loan processing expenses resulting from increased loan volumes. On a year-to-date basis, non-interest expense decreased $144,000. The decrease for the nine-month period was primarily due to lower loan processing and collection expenses and
commissions, due to lower mortgage volumes.



Income taxes
increased $80,000 and declined $1.0 million for the three and nine-month periods ended September 30, 2005, respectively, compared to the prior year periods due to a respective increase and decline in pre-tax earnings.



BALANCE SHEET REVIEW



Total assets were $5.3 billion at September 30, 2005, an increase of
$313 million or 6% from December 31, 2004. Total liabilities increased $300 million over the same period and stockholders equity increased $13 million. The following discusses changes in the major components of the Consolidated Balance
Sheet since December 31, 2004.



Cash and Cash
Equivalents - Cash and cash equivalents increased $25 million from December 31, 2004 to September 30, 2005, as the cash provided by financing activities of $281 million and by operating activities of $51 million exceeded the cash used
for investing activities of $307 million.



Securities
Available for Sale - Total securities available for sale as of September 30, 2005 were $1.2 billion, a decrease of $54 million or 4% from December 31, 2004. The decline was primarily attributable to agencies and mortgage-backed
securities.At September 30, 2005 and December 31, 2004, the total securities available for sale portfolio comprised 24% and 27%, 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.



Mortgage and asset backed securities, as of September 30, 2005, totaled
$868 million and represent 73% of total available for sale securities. The distribution of mortgage and asset backed securities includes $415 million of U.S. government-sponsored enterprise (GSE) mortgage-backed pass through securities, $453



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million of GSE collateralized mortgage obligations and $17 million of private issue collateral mortgage obligations, all of which are rated AAA except for
$10 million of securities rated B2.



The $1.2 billion of total
securities available for sale includes gross unrealized gains of $5 million and gross unrealized losses of $19 million, of which the combined effect, net of tax, is included as accumulated other comprehensive income (OCI) in stockholders
equity. At December 31, 2004, gross unrealized gains of $11 million and gross unrealized losses of $8 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, 2005, mortgage origination fundings awaiting delivery to the secondary market were $39 million, compared to $31 million at December 31, 2004. Residential
mortgage loans are originated by the Mortgage Banking Segment, of which non-conforming adjustable rate, fixed-rate and balloon residential mortgages are normally retained by the BANK. The conforming adjustable rate, fixed-rate and balloon
residential mortgage loans are sold in the secondary market to eliminate interest rate risk, as well as to generate gains on the sale of these loans and servicing income. 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, 2005, total loans were $3.6 billion, an increase of $321 million or 10% from December 31, 2004, and represented 72% 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 $252 million or 14%, commercial, financial and agricultural loans increased $47 million, or 6%, and 1-4 family real estate loans increased $24 million or 6%. The increases were driven
primarily by the Branch Expansion.



Deposits - Total
deposits at September 30, 2005 were $4.1 billion, an increase of $361 million or 10% when compared to December 31, 2004, due to an increase of $394 million in bank-issued deposits which totaled $3.5 billion at the end of the third quarter
of 2005. The increase in bank-issued deposits is attributable to the Deposit Growth initiative and Branch Expansion. Bank-issued deposits represent 86% and 83% of total deposits at September 30, 2005 and December 31, 2004, respectively.



Borrowings - Borrowings totaled $687 million at
September 30, 2005 and were comprised of $517 million of short-term and $170 million of long-term borrowings. Comparable amounts at December 31, 2004 were $589 million and $165 million, for a combined decrease in borrowings of $67 million
or 9%. See Notes 6 and 7 of the Notes to Consolidated Financial Statements.



AMCORE has $40 million of Trust Preferred securities outstanding through the Trust, of which $15 million are held by the BANK. 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 100.0% of the principal amount. After March 25, 2017, they are redeemable at par until June 15, 2027, when redemption is
mandatory. The $25 million net securities qualify as Tier 1 capital for regulatory purposes.



The parent company has a commercial paper placement agreement with an unrelated financial institution that provides for the issuance of non-rated short-term unsecured debt obligations at negotiated rates and terms,
not to exceed $50 million. In the event the agent is unable to place the parent companys commercial paper on a particular day, the proceeds are provided by overnight borrowings on a reciprocal line of credit with the same financial
institution. At September 30, 2005 and December 31, 2004, there were no outstanding balances of commercial paper or overnight borrowings.



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Stockholders Equity - Total stockholders equity at September 30, 2005 was $400
million, an increase of $13 million or 3% from December 31, 2004. The increase in stockholders equity was primarily due to a $24 million increase in retained earnings partly offset by an $11 million decline in accumulated other
comprehensive income (OCI). The decline in OCI relates to changes in net unrealized gains and losses on the investment securities available for sale portfolio.



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 obligations in the markets
that it serves.



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 FIN
No. 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 carrying value of the retained interests. Neither the investors nor the VIE have any further recourse to the Companys other assets for failure of the automobile debtors to pay when due. Interest rate risk could
exceed the carrying value of the retained interests, but such a possibility is considered remote as of September 30, 2005. The Company also retains the rights to service the loans that are sold.



As of September 30, 2005, the balance of automobile loans serviced and
not included on the Companys Consolidated Balance Sheets was $128 million and the carrying value of retained interests was $8.2 million. See Note 5 of the Notes to Consolidated Financial Statements.



Mortgage loan sales - The Company also 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, 2005, the unpaid principal balance of mortgage loans serviced for others was $1.3 billion. These loans are not
recorded on the Companys Consolidated Balance Sheets. The Company, as of September 30, 2005 and in accordance with SFAS No 140, had recorded $13.2 million of capitalized mortgage servicing rights. There was no impairment valuation as of
September 30, 2005 compared to $53,000 at December 31, 2004. See Note 4 of the Notes to Consolidated Financial Statements.



Notional Amount of 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 caps (collectively Interest Rate Derivatives), mortgage loan commitments and forward contracts. Interest Rate Derivatives are contracts
with a third-party (the Counter-party) to exchange interest payment streams based upon an assumed principal amount (the Notional Principal Amount). The Notional Principal Amount is not advanced from the Counter-party. It is
used only as a reference point to calculate the exchange of interest payment streams and is not recorded on the Companys



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Consolidated Balance Sheets. AMCORE does not have any derivatives that are held or issued for trading
purposes. The only credit risk exposure AMCORE has in connection with the interest rate derivatives is in relation to the credit of the Counter-parties, which all have investment grade credit ratings. All Counter-parties are expected to meet any
outstanding interest payment obligations.



The total notional
amount of swap contracts outstanding was $238 million as of September 30, 2005 compared to $219 million at December 31, 2004. As of September 30, 2005, swap contracts had an aggregate negative carrying and fair value of $3.5 million.
This compares to a positive $286,000 carrying and fair value at December 31, 2004. For further discussion of derivative contracts, see Note 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 performance and standby letters of credit. While these represent a potential outlay by the Company, a significant amount of the commitments 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, 2005, liabilities in the amount of $671,000 representing the value of the guarantee obligations
associated with certain of the financial and standby 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 $206 million at September 30, 2005. See Note 9 of the Notes to Consolidated Financial Statements.



The carrying value of mortgage loan commitments recorded as an asset totaled $186,000 at September 30, 2005 compared to
$222,000 at December 31, 2004. This amount represents the fair value of those commitments marked-to-market in accordance with SFAS 138, Accounting for Derivative Instruments and Hedging Activities and in accordance with Staff
Accounting Bulletin No. 105. The total notional amount of mortgage loan commitments was $34 million at September 30, 2005. This compares to $28 million at December 31, 2004. See Note 8 of the Notes to Consolidated Financial
Statements.



At September 30, 2005, the Company had
extended $911 million in loan commitments other than the mortgage loan commitments and letters of credit described above, compared to $817 million at December 31, 2004. This amount represented the notional amount of the commitment. A contingent
liability of $714,000 has been recorded for probable losses on unfunded commitments and letters of credit outstanding at September 30, 2005.



Equity investments - The Company has a number of equity investments that are not readily marketable and that have not been consolidated in its
financial statements. At September 30, 2005, these investments included $5 million 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 $700,000 at some future date. The Company also has recorded investments of $4 million, $20 million and $92,000 respectively, in stock of the Federal Reserve Bank, the Federal Home Loan Bank
(FHLB) and the Federal Agricultural Mortgage Corporation. These investments are recorded at amortized historical cost or fair value, as applicable, with income recorded when dividends are declared. During the first quarter of 2005, the Company sold
its holdings of Freddie Mac preferred stock, recording a loss of $51,000.



Other investments, comprised of various affordable housing tax credit projects (AHTCP) and other community reinvestment act investments, totaled approximately $330,000 at September 30, 2005. Losses are limited to
the remaining investment and there are no additional funding commitments on the AHTCPs. 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.



Other investments - The Company also holds $1 million in a common security investment in the Trust, to which the Company has $41 million in
long-term debt outstanding. The Trust, in addition to the $1 million in



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common securities issued to the Company, issued $40 million in preferred securities. The $40 million in preferred securities were issued to non-affiliated
investors in 1997 and are redeemable beginning in 2007. The BANK acquired $15 million in preferred securities from one of the investors in 2002. The net $25 million in preferred securities qualifies as Tier 1 capital for regulatory purposes.



Effective April 11, 2005, the Board of Governors of the
Federal Reserve System amended the risk-based capital standards for bank holding companies to allow the continued inclusion of outstanding and prospective issuances of trust preferred securities in the Tier 1 capital of bank holding companies,
subject to stricter standards. The new regulations limit the amount of trust preferred securities (combined with all other restricted core capital elements) that a bank holding company may include as Tier 1 capital to 25% of the sum of all core
capital elements, net of goodwill less any associated deferred tax liability. Amounts in excess of the limits described above generally may be included in Tier 2 capital. The regulations also provide a transition period for bank holding companies to
conform their capital structures to the revised quantitative limits. These limits will first become applicable to bank holding companies beginning on March 31, 2009. These rules issued by the Federal Reserve are not expected to have a material
impact on the Companys regulatory capital ratios.



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 managed
or administered by the Company at September 30, 2005 were $4.6 billion and at December 31, 2004 were $4.4 billion.



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 2005, the Company entered into five operating lease agreements. There are no residual value guarantees on these leases and no lease termination penalties or
acceleration clauses. Other than these transactions, there were no material changes in the Companys contractual obligations since the end of 2004. Amounts as of December 31, 2004 are listed in the following table:



|                             |  |                        |           |                |   |          |  |          |         |                 |   |         |  |   |        
|---------------------------- |  | ---------------------- | --------- | -------------- | - | -------- |  | -------- | ------- | --------------- | - | ------- |  | - | -------
|                             |  | Payments due by period
|Contractual Obligations      |  | Total                  |           | LessThan 1Year |   | 1-3Years |  | 3-5Years |         | MoreThan 5Years
|                             |  | (in thousands)        
|Time Deposits                |  | $                      | 1,671,902 |                | $ | 852,438  |  | $        | 724,342 |                 | $ | 63,603  |  | $ | 31,519 
|Long-Term Debt(1)            |  |                        | 163,959   |                |   |         |  |          | 16,723  |                 |   | 79,009  |  |   | 68,227 
|Capital Lease Obligations(2) |  |                        | 2,958     |                |   | 163      |  |          | 342     |                 |   | 346     |  |   | 2,107  
|Operating Leases             |  |                        | 17,871    |                |   | 2,489    |  |          | 4,180   |                 |   | 3,555   |  |   | 7,647  
|Purchase Obligations(3)      |  |                        | 1,600     |                |   | 1,600    |  |          |        |                 |   |        |  |   |       
|                             |  |                        |           |                |   |          |  |          |         |                 |   |         |  |   |        
|Total                        |  | $                      | 1,858,290 |                | $ | 856,690  |  | $        | 745,587 |                 | $ | 146,513 |  | $ | 109,500
|                             |  |                        |           |                |   |          |  |          |         |                 |   |         |  |   |        

---

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



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



|(3) | Branch office for which a purchase contract was signed during 2004; the closing on the property took place in 2005.
|--- | -------------------------------------------------------------------------------------------------------------------



See Notes 6 and 7 of the Notes to the Consolidated Financial Statements
and Note 5 of the Notes to the Consolidated Financial Statements included in the Form 10-K Annual Report for the year ended December 31, 2004.



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ASSET QUALITY REVIEW AND CREDIT RISK MANAGEMENT



AMCOREs credit risk is centered in its loan portfolio, which totaled
$3.6 billion, or 72% of earning assets, including COLI on September 30, 2005. 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 credit risk with respect to its $131
million investment in COLI. AMCORE manages this risk by diversifying its holdings among various 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 $40.0 million at September 30, 2005, compared to $40.9 million at December 31, 2004. Decreases of $2.1 million for other loss estimates, and $2.0 million for specific loss estimates on certain
individually reviewed loans were partially offset by increases of $2.1 million in statistical loss estimates on loan pools based upon historical loss experience and $1.1 million in unallocated 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. The decrease in other loss estimates was primarily
attributable to improvement in the overall and local economies and reduced loan concentration concerns primarily related to improved credit quality and industry outlook for loans concentrated in the nonresidential building operators, building
contractors and developers, truck operators, general farm portfolios, and health services industry.



At September 30, 2005, the Allowance as a percent of total loans and of non-accrual loans was 1.11% and 168%, respectively. These compare to the same ratios at December 31, 2004 of
1.25% and 136%. Net charge-offs were $10.7 million for the first nine months of 2005, an increase of $820,000 from $9.9 million for the same period in 2004. This was 0.42% and 0.43% of annualized average loans for the year-to-date periods of 2005
and 2004, respectively. Increases in commercial loan net charge-offs of $1.6 million and residential real estate net charge-offs of $228,000 were partially offset by a decline in consumer/installment net charge-offs of $1.0 million.



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 $27.9 million as of September 30, 2005, a decline of $10.0 million or 26% from $37.9 million at
December 31, 2004 and increased $2.5 million or 10% from $25.3 million at September 30, 2004. The $10.0 million decrease since December 31, 2004 consisted of a $6.1 million decrease in non-performing loans, a $3.1 million decrease in
foreclosed real estate, and a $869,000 decrease in other foreclosed assets. The decrease in non-performing loans consisted of a $6.4 million decrease in non-accrual loans partially offset by a $316,000 increase in loans 90 days past due. The $2.5
million increase since September 30, 2004 consisted of a $5.6 million increase in non-performing loans partially offset by a $3.1 decline in foreclosed assets. Total non-performing assets represented 0.53%, 0.77% and 0.52% of total assets at
September 30, 2005, December 31, 2004 and September 30, 2004, respectively.



Non-accrual loan totals include a $4.3 million construction industry related credit that was added to non-accrual loans during the fourth quarter of 2004. The credit is in the process of workout
and the Company has assigned a specific allocation to reflect an estimated impairment loss as of September 30, 2005. 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



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calendar year 2005. 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, 2004, 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, 2005 and December 31, 2004, there were $2.0 million and $11.4 million, respectively, in this risk category that were 60 to 89 days
delinquent and $1.9 million and $2.1 million, respectively, that were 30 to 59 days past due. In addition, as of September 30, 2005 and December 31, 2004, respectively, there were $36.0 million and $18.2 million of loans that were current,
but had loss allocations of $4.5 million and $6.3 million.



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 $811 million at September 30, 2005, and comprised 23% of gross loans, of which 1.28% were non-performing. Annualized net charge-offs of commercial loans during the first nine months of 2005 represented 0.38% 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 $2.0 billion at September 30, 2005, comprising 57% of gross loans, of which 0.55% were classified as non-performing. Annualized net
charge-offs of construction and commercial real estate loans during the first nine months of 2005 represented 0.39% of the average balance of the category. This category included $562 million of loans to nonresidential building operators, which was
16% of total loans. There were no other loan concentrations within this category that exceeded 10% of total loans.



Residential real estate loans, which include home equity and permanent residential financing, totaled $437 million at September 30, 2005, and represented 12% of gross loans, of which 0.80%
were non-performing. Annualized net charge-offs of residential real estate in the first nine months of 2005 loans represented 0.20% of the average balance in this category.



Installment and consumer loans were $314 million at September 30, 2005, and comprised 9% of gross loans, of which 0.30%
were non-performing. Annualized net charge-offs of consumer loans in the first nine months of 2005 represented 1.00% 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, 2005. 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.



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,



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repurchase agreements, commercial paper and back-up lines of credit, the sale or securitization of loans, balances maintained at correspondent banks and
access to other capital markets. Bank-issued deposits, which exclude brokered CDs, 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 CDs as a source of mid to long-term funds. The percentage of brokered deposits declined to 14% at September 30, 2005, from 17% at December 31, 2005.



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.



Overall liquidity increased during the third quarter of 2005, as non-core funding declined $20.2 million, which includes a decrease of $21.5 million in wholesale deposits, partially offset by an increase in borrowings
of $1.3 million. Non-core funding represented 24% of total assets as of September 30, 2005 compared to 28% at December 31, 2004. 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 $4 million, or less than one percent, of the securities portfolio will
contractually mature during the remainder of 2005. 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 69% of total assets as of September 30, 2005. Since December 31, 2004, loans increased $321 million. Loans held for sale, which represents mortgage origination funding awaiting delivery to
the secondary market, increased $8 million since December 31, 2004. 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.



Bank-issued deposits -
Bank-issued deposits typically are the most cost-effective and reliable source of liquidity for the Company. Since December 31, 2004, bank-issued deposits increased $394 million. The increase in bank-issued deposits was primarily due to the
Deposit Growth Initiative and Branch Expansion.



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 $68 million of capital investment. Through September 30, 2005, Branch Expansion has required the funding of $1.36 billion in loans while generating $640 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 and pay stockholder dividends. Liquidity is primarily provided to the parent through the BANK and other subsidiaries in the form of
dividends and through commercial paper borrowings. In the first nine months of 2005, dividends from subsidiaries amounted to $19 million, compared to $28 million in the same period a year ago.



Other sources of liquidity - As of September 30, 2005, other
sources of readily available liquidity totaled $970 million and included $204 million of FED Funds lines, unused collateral sufficient to support $399 million in Federal Reserve Bank discount window advances, $216 million of unpledged debt
investment securities, $50 million of unused commercial paper and backup line of credit borrowings and $101 million of FHLB advances. The Company also has capacity, over time, to place brokered CDs as a source of mid- to long-term liquidity. The
BANKs indirect auto portfolio, which at September 30, 2005 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



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the securitization trust. The Bank also has a home equity portfolio of $221 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, 2005, other potential uses of liquidity totaled $1.2 billion and included $911 million in commitments to extend credit, $34 million in residential mortgage commitments primarily for sale to the secondary market,
and $206 million in letters of credit. At December 31, 2004, these amounts totaled $1.0 billion.



Capital Management



Total stockholders equity at September 30, 2005, was $400 million, an increase of $13 million or 3% from December 31, 2004. The increase in stockholders equity was primarily due to $24 million in
retained earnings partially offset by an $11 million decline in OCI. The decline in OCI relates to changes in net unrealized gains and losses on the investment securities available for sale portfolio.



AMCORE paid $12.7 million of cash dividends during the first nine months of
2005, which represent $0.51 per share, or a dividend payout ratio of 34%. The book value per share increased $0.52 per share to $16.09 at September 30, 2005 from $15.57 at December 31, 2004.



The Company does not have a formally announced Repurchase Program in place at
this time, however, the Company does repurchase shares in open-market transactions in accordance with Exchange Act Rule 10b-18 through a limited group of brokers. These repurchases are used to replenish the Companys Treasury Stock for
re-issuances related to stock options and other employee benefit plans. Also included in the repurchased shares 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 2005, the Company purchased 114,300 shares in open-market transactions at an average price of $30.65 per share.



AMCORE has outstanding $41 million of capital securities through the Trust. Of the $41 million, $25 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 and the $15 million of preferred securities that were acquired by the BANK in 2002. Pursuant to regulations recently issued by the
Federal Reserve Board, the capital securities are expected to continue to qualify as Tier 1 Capital.



AMCOREs total risk-based capital at 11.04%, its Tier 1 capital at 10.07% and its leverage ratio at 8.04%; all significantly exceed the regulatory minimums (as the following table
indicates), as of September 30, 2005. The BANK, whose ratios are not presented below, is considered a well-capitalized institution based on regulatory guidelines.



|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  
|---------------------------------------- |  | ---------------------- | --------- | ----- | ----------------- | - | ------ | ------------------ | --------- |  | ----- | ------ |  | ----- | --------- |  | ----- | -
|                                         |  | September 30, 2005     |           |       | December 31, 2004 |   |        | September 30, 2004 |          
|                                         |  | Amount                 |           | Ratio |                   |   | Amount |                    | Ratio     |  |       | Amount |  | Ratio |          
|                                         |  | (dollars in thousands) |          
|Total Capital (to Risk Weighted Assets)  |  | $                      | 457,143   |       | 11.04             | % |        | $                  | 434,207   |  | 11.39 | %      |  | $     | 427,766   |  | 11.42 | %
|Total Capital Minimum                    |  | $                      | 331,267   |       | 8.00              | % |        |                    | 305,058   |  | 8.00  | %      |  |       | 299,760   |  | 8.00  | %
|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  
|Amount in Excess of Regulatory Minimum   |  | $                      | 125,876   |       | 3.04              | % |        | $                  | 129,149   |  | 3.39  | %      |  | $     | 128,006   |  | 3.42  | %
|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  
|Tier 1 Capital (to Risk Weighted Assets) |  | $                      | 417,152   |       | 10.07             | % |        | $                  | 393,138   |  | 10.31 | %      |  | $     | 385,732   |  | 10.29 | %
|Tier 1 Capital Minimum                   |  | $                      | 165,633   |       | 4.00              | % |        |                    | 152,529   |  | 4.00  | %      |  |       | 149,880   |  | 4.00  | %
|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  
|Amount in Excess of Regulatory Minimum   |  | $                      | 251,519   |       | 6.07              | % |        | $                  | 240,609   |  | 6.31  | %      |  | $     | 235,853   |  | 6.29  | %
|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  
|Tier 1 Capital (to Average Assets)       |  | $                      | 417,152   |       | 8.04              | % |        | $                  | 393,138   |  | 8.03  | %      |  | $     | 385,732   |  | 8.01  | %
|Tier 1 Capital Minimum                   |  | $                      | 207,424   |       | 4.00              | % |        |                    | 195,908   |  | 4.00  | %      |  |       | 192,687   |  | 4.00  | %
|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  
|Amount in Excess of Regulatory Minimum   |  | $                      | 209,728   |       | 4.04              | % |        | $                  | 197,230   |  | 4.03  | %      |  | $     | 193,045   |  | 4.01  | %
|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  
|Risk adjusted assets                     |  | $                      | 4,140,834 |       |                   |   |        | $                  | 3,813,223 |  |       |        |  | $     | 3,746,996 |  |       |  
|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  
|Average assets                           |  | $                      | 5,185,607 |       |                   |   |        | $                  | 4,897,693 |  |       |        |  | $     | 4,817,177 |  |       |  
|                                         |  |                        |           |       |                   |   |        |                    |           |  |       |        |  |       |           |  |       |  



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TABLE 1

ANALYSIS OF NET INTEREST INCOME AND AVERAGE BALANCE SHEET



|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|------------------------------------------- |  | ---------------------------------------- | --------- | - | -------- | - | ----------- |  | ---- | -------------- |  | - | --------- | - | ----------- | - | ------ |  | ---- | -
|                                            |  | For the Three Months ended September 30, |          
|                                            |  | 2005                                     |           |   | 2004     |  
|                                            |  | AverageBalance                           |           |   | Interest |   | AverageRate |  |      | AverageBalance |  |   | Interest  |   | AverageRate |  
|                                            |  | (dollars in thousands)                   |          
|Assets:                                     |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Investment securities(1) (2)                |  | $                                        | 1,207,262 |   |          | $ | 13,705      |  | 4.54 | %              |  | $ | 1,233,926 |   |             | $ | 13,844 |  | 4.49 | %
|Short-term investments                      |  |                                          | 10,411    |   |          |   | 90          |  | 3.43 | %              |  |   | 5,249     |   |             |   | 16     |  | 1.23 | %
|Loans held for sale(3)                      |  |                                          | 35,833    |   |          |   | 746         |  | 8.33 | %              |  |   | 32,609    |   |             |   | 707    |  | 8.66 | %
|Commercial                                  |  |                                          | 804,314   |   |          |   | 13,653      |  | 6.73 | %              |  |   | 735,864   |   |             |   | 9,935  |  | 5.37 | %
|Commercial real estate                      |  |                                          | 1,986,672 |   |          |   | 33,645      |  | 6.72 | %              |  |   | 1,548,689 |   |             |   | 21,783 |  | 5.60 | %
|Residential real estate                     |  |                                          | 445,192   |   |          |   | 6,955       |  | 6.22 | %              |  |   | 405,784   |   |             |   | 5,711  |  | 5.62 | %
|Consumer                                    |  |                                          | 316,777   |   |          |   | 5,205       |  | 6.52 | %              |  |   | 499,241   |   |             |   | 8,257  |  | 6.58 | %
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total loans(1) (4)                          |  | $                                        | 3,552,955 |   |          | $ | 59,458      |  | 6.64 | %              |  | $ | 3,189,578 |   |             | $ | 45,686 |  | 5.70 | %
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total interest-earning assets               |  | $                                        | 4,806,461 |   |          | $ | 73,999      |  | 6.12 | %              |  | $ | 4,461,362 |   |             | $ | 60,253 |  | 5.38 | %
|Allowance for loan losses                   |  |                                          | (42,598   | ) |          |   |             |  |      |                |  |   | (44,006   | ) |             |   |        |  |      |  
|Non-interest-earning assets                 |  |                                          | 427,874   |   |          |   |             |  |      |                |  |   | 412,202   |   |             |   |        |  |      |  
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total assets                                |  | $                                        | 5,191,737 |   |          |   |             |  |      |                |  | $ | 4,829,558 |   |             |   |        |  |      |  
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Liabilities and Stockholders Equity:       |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Interest-bearing demand & savings deposits  |  | $                                        | 1,814,734 |   |          | $ | 9,753       |  | 2.13 | %              |  | $ | 1,382,348 |   |             | $ | 3,119  |  | 0.90 | %
|Time deposits                               |  |                                          | 1,140,835 |   |          |   | 8,979       |  | 3.12 | %              |  |   | 1,129,726 |   |             |   | 7,085  |  | 2.49 | %
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total Bank issued interest-bearing deposits |  | $                                        | 2,955,569 |   |          | $ | 18,732      |  | 2.51 | %              |  | $ | 2,512,074 |   |             | $ | 10,204 |  | 1.62 | %
|Wholesale deposits                          |  |                                          | 593,889   |   |          |   | 5,849       |  | 3.91 | %              |  |   | 647,561   |   |             |   | 4,661  |  | 2.86 | %
|Short-term borrowings                       |  |                                          | 516,470   |   |          |   | 4,553       |  | 3.50 | %              |  |   | 606,686   |   |             |   | 3,537  |  | 2.32 | %
|Long-term borrowings                        |  |                                          | 164,094   |   |          |   | 2,595       |  | 6.27 | %              |  |   | 180,565   |   |             |   | 2,313  |  | 5.10 | %
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total interest-bearing liabilities          |  | $                                        | 4,230,022 |   |          | $ | 31,729      |  | 2.98 | %              |  | $ | 3,946,886 |   |             | $ | 20,715 |  | 2.09 | %
|Non-interest bearing deposits               |  |                                          | 495,683   |   |          |   |             |  |      |                |  |   | 456,803   |   |             |   |        |  |      |  
|Other liabilities                           |  |                                          | 67,078    |   |          |   |             |  |      |                |  |   | 54,528    |   |             |   |        |  |      |  
|Realized Stockholders Equity               |  |                                          | 404,159   |   |          |   |             |  |      |                |  |   | 370,976   |   |             |   |        |  |      |  
|Other Comprehensive (Loss) Income           |  |                                          | (5,205    | ) |          |   |             |  |      |                |  |   | 365       |   |             |   |        |  |      |  
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Total Liabilities & Stockholders Equity    |  | $                                        | 5,191,737 |   |          |   |             |  |      |                |  | $ | 4,829,558 |   |             |   |        |  |      |  
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Net Interest Income (FTE)                   |  |                                          |           |   |          | $ | 42,270      |  |      |                |  |   |           |   |             | $ | 39,538 |  |      |  
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Net Interest Spread (FTE)                   |  |                                          |           |   |          |   |             |  | 3.14 | %              |  |   |           |   |             |   |        |  | 3.29 | %
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  
|Interest Rate Margin (FTE)                  |  |                                          |           |   |          |   |             |  | 3.50 | %              |  |   |           |   |             |   |        |  | 3.53 | %
|                                            |  |                                          |           |   |          |   |             |  |      |                |  |   |           |   |             |   |        |  |      |  



|(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 $1.2 million in 2005 and $1.1 million in 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|(3) | The yield-related fees recognized from the origination of loans held for sale are in addition to the interest earned on the loans during the
period in which they are warehoused for sale as shown above.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | The balances of nonaccrual loans are included in average loans outstanding. Interest on loans includes yield related loan fees of $633,000 and
$679,000 for 2005 and 2004, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



43



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TABLE 2

ANALYSIS OF NET INTEREST INCOME AND AVERAGE BALANCE SHEET



|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|------------------------------------------- |  | --------------------------------------- | --------- | - | -------- | - | ----------- |  | ---- | -------------- |  | - | --------- | - | ----------- | - | ------- |  | ---- | -
|                                            |  | For the Nine Months ended September 30, |          
|                                            |  | 2005                                    |           |   | 2004     |  
|                                            |  | AverageBalance                          |           |   | Interest |   | AverageRate |  |      | AverageBalance |  |   | Interest  |   | AverageRate |  
|                                            |  | (dollars in thousands)                  |          
|Assets:                                     |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Investment securities(1) (2)                |  | $                                       | 1,224,334 |   |          | $ | 42,095      |  | 4.58 | %              |  | $ | 1,188,060 |   |             | $ | 40,438  |  | 4.54 | %
|Short-term investments                      |  |                                         | 8,157     |   |          |   | 190         |  | 3.11 | %              |  |   | 6,718     |   |             |   | 49      |  | 0.96 | %
|Loans held for sale(3)                      |  |                                         | 27,174    |   |          |   | 1,797       |  | 8.82 | %              |  |   | 34,279    |   |             |   | 2,185   |  | 8.50 | %
|Loans:                                      |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Commercial                                  |  |                                         | 759,852   |   |          |   | 36,389      |  | 6.40 | %              |  |   | 736,523   |   |             |   | 30,049  |  | 5.45 | %
|Commercial real estate                      |  |                                         | 1,916,744 |   |          |   | 92,312      |  | 6.44 | %              |  |   | 1,445,657 |   |             |   | 59,330  |  | 5.48 | %
|Residential real estate                     |  |                                         | 434,043   |   |          |   | 19,608      |  | 6.03 | %              |  |   | 389,738   |   |             |   | 16,424  |  | 5.62 | %
|Consumer                                    |  |                                         | 317,680   |   |          |   | 15,539      |  | 6.54 | %              |  |   | 527,230   |   |             |   | 26,560  |  | 6.73 | %
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total loans(1) (4)                          |  | $                                       | 3,428,319 |   |          | $ | 163,848     |  | 6.39 | %              |  | $ | 3,099,148 |   |             | $ | 132,363 |  | 5.70 | %
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total interest-earning assets               |  | $                                       | 4,687,984 |   |          | $ | 207,930     |  | 5.93 | %              |  | $ | 4,328,205 |   |             | $ | 175,035 |  | 5.40 | %
|Allowance for loan losses                   |  |                                         | (42,099   | ) |          |   |             |  |      |                |  |   | (44,021   | ) |             |   |         |  |      |  
|Non-interest-earning assets                 |  |                                         | 421,343   |   |          |   |             |  |      |                |  |   | 406,634   |   |             |   |         |  |      |  
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total assets                                |  | $                                       | 5,067,228 |   |          |   |             |  |      |                |  | $ | 4,690,818 |   |             |   |         |  |      |  
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Liabilities and Stockholders Equity:       |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Interest-bearing demand and savings         |  | $                                       | 1,702,060 |   |          | $ | 22,862      |  | 1.80 | %              |  | $ | 1,378,310 |   |             | $ | 8,937   |  | 0.87 | %
|Time deposits                               |  |                                         | 1,116,645 |   |          |   | 24,376      |  | 2.92 | %              |  |   | 1,114,573 |   |             |   | 21,391  |  | 2.56 | %
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total Bank issued interest-bearing deposits |  | $                                       | 2,818,705 |   |          | $ | 47,238      |  | 2.24 | %              |  | $ | 2,492,883 |   |             | $ | 30,328  |  | 1.63 | %
|Wholesale deposits                          |  |                                         | 620,982   |   |          |   | 16,877      |  | 3.63 | %              |  |   | 571,406   |   |             |   | 11,957  |  | 2.80 | %
|Short-term borrowings                       |  |                                         | 524,904   |   |          |   | 11,926      |  | 3.04 | %              |  |   | 569,439   |   |             |   | 9,242   |  | 2.17 | %
|Long-term borrowings                        |  |                                         | 165,058   |   |          |   | 7,491       |  | 6.07 | %              |  |   | 182,784   |   |             |   | 6,992   |  | 5.11 | %
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total interest-bearing liabilities          |  | $                                       | 4,129,649 |   |          | $ | 83,532      |  | 2.70 | %              |  | $ | 3,816,512 |   |             | $ | 58,519  |  | 2.05 | %
|Non-interest bearing deposits               |  |                                         | 482,091   |   |          |   |             |  |      |                |  |   | 442,466   |   |             |   |         |  |      |  
|Other liabilities                           |  |                                         | 63,384    |   |          |   |             |  |      |                |  |   | 55,507    |   |             |   |         |  |      |  
|Realized Stockholders Equity               |  |                                         | 395,819   |   |          |   |             |  |      |                |  |   | 371,344   |   |             |   |         |  |      |  
|Other Comprehensive (Loss) Income           |  |                                         | (3,715    | ) |          |   |             |  |      |                |  |   | 4,989     |   |             |   |         |  |      |  
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Total Liabilities & Stockholders Equity    |  | $                                       | 5,067,228 |   |          |   |             |  |      |                |  | $ | 4,690,818 |   |             |   |         |  |      |  
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Net Interest Income (FTE)                   |  |                                         |           |   |          | $ | 124,398     |  |      |                |  |   |           |   |             | $ | 116,516 |  |      |  
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Net Interest Spread (FTE)                   |  |                                         |           |   |          |   |             |  | 3.23 | %              |  |   |           |   |             |   |         |  | 3.35 | %
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  
|Interest Rate Margin (FTE)                  |  |                                         |           |   |          |   |             |  | 3.54 | %              |  |   |           |   |             |   |         |  | 3.59 | %
|                                            |  |                                         |           |   |          |   |             |  |      |                |  |   |           |   |             |   |         |  |      |  



|(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 $3.6 million in 2005 and $3.2 million in 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|(3) | The yield-related fees recognized from the origination of loans held for sale are in addition to the interest earned on the loans during the
period in which they are warehoused for sale as shown above.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | The balances of nonaccrual loans are included in average loans outstanding. Interest on loans includes yield related loan fees of $1.9 million
and $2.2 million for 2005 and 2004 respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



44



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##### Table of Contents

TABLE 3

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



|                                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|-------------------------------------------- |  | ------------------------------------------------- | ------ | - | ---------------------------- | - | ----- | - |  | - | ------ | -
|                                             |  | For the Three Months endedSeptember 30, 2005/2004 |       
|                                             |  | Increase/(Decrease)Due to Change in               |        |   | Total Net Increase(Decrease) |  
|                                             |  | AverageVolume                                     |        |   | AverageRate                  |   |      
|                                             |  | (in thousands)                                    |       
|Interest Income:                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|Investment securities                        |  | $                                                 | (301   | ) |                              | $ | 162   |   |  | $ | (139   | )
|Short-term investments                       |  |                                                   | 26     |   |                              |   | 48    |   |  |   | 74     |  
|Loans held for sale                          |  |                                                   | 67     |   |                              |   | (28   | ) |  |   | 39     |  
|Commercial                                   |  |                                                   | 997    |   |                              |   | 2,721 |   |  |   | 3,718  |  
|Commercial real estate                       |  |                                                   | 6,937  |   |                              |   | 4,925 |   |  |   | 11,862 |  
|Residential real estate                      |  |                                                   | 589    |   |                              |   | 655   |   |  |   | 1,244  |  
|Consumer                                     |  |                                                   | (2,977 | ) |                              |   | (75   | ) |  |   | (3,052 | )
|                                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|Total loans                                  |  |                                                   | 5,620  |   |                              |   | 8,152 |   |  |   | 13,772 |  
|                                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|Total Interest-Earning Assets                |  | $                                                 | 4,955  |   |                              | $ | 8,791 |   |  | $ | 13,746 |  
|                                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|Interest Expense:                            |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|Interest-bearing demand and savings deposits |  | $                                                 | 1,229  |   |                              | $ | 5,405 |   |  | $ | 6,634  |  
|Time deposits                                |  |                                                   | 71     |   |                              |   | 1,823 |   |  |   | 1,894  |  
|                                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|Total Bank issued interest-bearing deposits  |  |                                                   | 2,055  |   |                              |   | 6,473 |   |  |   | 8,528  |  
|Wholesale deposits                           |  |                                                   | (411   | ) |                              |   | 1,599 |   |  |   | 1,188  |  
|Short-term borrowings                        |  |                                                   | (586   | ) |                              |   | 1,602 |   |  |   | 1,016  |  
|Long-term borrowings                         |  |                                                   | (224   | ) |                              |   | 506   |   |  |   | 282    |  
|                                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|Total Interest-Bearing Liabilities           |  | $                                                 | 1,588  |   |                              | $ | 9,426 |   |  | $ | 11,014 |  
|                                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  
|Net Interest Income (FTE)                    |  | $                                                 | 3,367  |   |                              | $ | (635  | ) |  | $ | 2,732  |  
|                                             |  |                                                   |        |   |                              |   |       |   |  |   |        |  



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 proporation to the
relationship of the absolute dollar amounts of the change in each.



45



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##### Table of Contents

TABLE 4

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



|                                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|------------------------------------------- |  | ------------------------------------------------ | ------- | - | ---------------------------- | - | ------ | - |  | - | ------- | -
|                                            |  | For the Nine Months endedSeptember 30, 2005/2004 |        
|                                            |  | Increase/(Decrease)Due to Change in              |         |   | Total Net Increase(Decrease) |  
|                                            |  | AverageVolume                                    |         |   | AverageRate                  |   |       
|                                            |  | (in thousands)                                   |        
|Interest Income:                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Investment securities                       |  | $                                                | 1,244   |   |                              | $ | 413    |   |  | $ | 1,657   |  
|Short-term investments                      |  |                                                  | 12      |   |                              |   | 129    |   |  |   | 141     |  
|Loans held for sale                         |  |                                                  | (466    | ) |                              |   | 78     |   |  |   | (388    | )
|Loans:                                      |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Commercial                                  |  |                                                  | 972     |   |                              |   | 5,368  |   |  |   | 6,340   |  
|Commercial real estate                      |  |                                                  | 21,476  |   |                              |   | 11,506 |   |  |   | 32,982  |  
|Residential real estate                     |  |                                                  | 1,943   |   |                              |   | 1,241  |   |  |   | 3,184   |  
|Consumer                                    |  |                                                  | (10,293 | ) |                              |   | (728   | ) |  |   | (11,021 | )
|                                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Total loans                                 |  |                                                  | 14,782  |   |                              |   | 16,703 |   |  |   | 31,485  |  
|                                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Total Interest-Earning Assets               |  | $                                                | 15,131  |   |                              | $ | 17,764 |   |  | $ | 32,895  |  
|                                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Interest Expense:                           |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Interest-bearing demand and savings         |  | $                                                | 2,500   |   |                              | $ | 11,425 |   |  | $ | 13,925  |  
|Time deposits                               |  |                                                  | 40      |   |                              |   | 2,945  |   |  |   | 2,985   |  
|                                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Total Bank issued interest-bearing deposits |  |                                                  | 4,338   |   |                              |   | 12,572 |   |  |   | 16,910  |  
|Wholesale deposits                          |  |                                                  | 1,103   |   |                              |   | 3,817  |   |  |   | 4,920   |  
|Short-term borrowings                       |  |                                                  | (771    | ) |                              |   | 3,455  |   |  |   | 2,684   |  
|Long-term borrowings                        |  |                                                  | (723    | ) |                              |   | 1,222  |   |  |   | 499     |  
|                                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Total Interest-Bearing Liabilities          |  | $                                                | 5,142   |   |                              | $ | 19,871 |   |  | $ | 25,013  |  
|                                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  
|Net Interest Income (FTE)                   |  | $                                                | 9,989   |   |                              | $ | (2,107 | ) |  | $ | 7,882   |  
|                                            |  |                                                  |         |   |                              |   |        |   |  |   |         |  



The above table shows
the changes in interest income on a fully tax equivalent (FTE) basis and interest expense attributable to volume and rate variances.



The change in interest income (FTE) due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the
absolute dollar amounts of the change in each.



46



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##### Table of Contents

TABLE 5

ASSET QUALITY



The
components of non-performing loans and foreclosed assets at September 30, 2005 and December 31, 2004 were as follows:



|                                                  |  |                   |        |                  |   |       
|------------------------------------------------- |  | ----------------- | ------ | ---------------- | - | ------
|                                                  |  | September 30,2005 |        | December 31,2004
|                                                  |  | (in thousands)   
|Impaired loans:                                   |  |                   |        |                  |   |       
|Non-accrual loans                                 |  |                   |        |                  |   |       
|Commercial                                        |  | $                 | 5,490  |                  | $ | 1,816 
|Real estate                                       |  |                   | 12,016 |                  |   | 20,380
|Other non-performing:                             |  |                   |        |                  |   |       
|Non-accrual loans(1)                              |  |                   | 6,251  |                  |   | 7,952 
|Loans 90 days or more past due and still accruing |  |                   | 2,164  |                  |   | 1,848 
|                                                  |  |                   |        |                  |   |       
|Total non-performing loans                        |  | $                 | 25,921 |                  | $ | 31,996
|                                                  |  |                   |        |                  |   |       
|Foreclosed assets:                                |  |                   |        |                  |   |       
|Real estate                                       |  |                   | 1,879  |                  |   | 4,940 
|Other                                             |  |                   | 54     |                  |   | 923   
|                                                  |  |                   |        |                  |   |       
|Total foreclosed assets                           |  | $                 | 1,933  |                  | $ | 5,863 
|                                                  |  |                   |        |                  |   |       
|Total non-performing assets                       |  | $                 | 27,854 |                  | $ | 37,859
|                                                  |  |                   |        |                  |   |       
|Troubled debt restructurings                      |  | $                 | 13     |                  | $ | 14    
|                                                  |  |                   |        |                  |   |       



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



An anaylsis of the allowance for loan losses for the periods ended
September 30, 2005 and 2004 is presented below:



|                                                                                             |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|-------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | -------------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                             |  | For the Three MonthsEnded September 30, |        |   | For the Nine MonthsEnded September 30, |  
|                                                                                             |  | 2005                                    |        |   | 2004                                   |   |        | 2005 |  |   | 2004   |  
|                                                                                             |  | ($ in thousands)                        |        |   | ($ in thousands)                       |  
|Balance at beginning of period                                                               |  | $                                       | 40,475 |   |                                        | $ | 43,230 |      |  | $ | 40,945 |   |  | $ | 42,115 |  
|Charge-Offs:                                                                                 |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Commercial, financial and agricultural                                                       |  |                                         | 518    |   |                                        |   | 2,093  |      |  |   | 2,619  |   |  |   | 6,460  |  
|Real estate - Commercial                                                                     |  |                                         | 2,465  |   |                                        |   | 1      |      |  |   | 5,672  |   |  |   | 1,041  |  
|Real estate - Residential                                                                    |  |                                         | 190    |   |                                        |   | 167    |      |  |   | 744    |   |  |   | 546    |  
|Installment and consumer                                                                     |  |                                         | 1,655  |   |                                        |   | 1,441  |      |  |   | 3,538  |   |  |   | 4,937  |  
|Direct leases                                                                                |  |                                         | 42     |   |                                        |   |       |      |  |   | 91     |   |  |   | 4      |  
|                                                                                             |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|                                                                                             |  |                                         | 4,870  |   |                                        |   | 3,702  |      |  |   | 12,664 |   |  |   | 12,988 |  
|Recoveries:                                                                                  |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Commercial, financial and agricultural                                                       |  |                                         | 81     |   |                                        |   | 115    |      |  |   | 546    |   |  |   | 1,366  |  
|Real estate - Commercial                                                                     |  |                                         | 11     |   |                                        |   | 4      |      |  |   | 129    |   |  |   | 67     |  
|Real estate - Residential                                                                    |  |                                         | 11     |   |                                        |   | 31     |      |  |   | 106    |   |  |   | 136    |  
|Installment and consumer                                                                     |  |                                         | 519    |   |                                        |   | 494    |      |  |   | 1,163  |   |  |   | 1,517  |  
|Direct leases                                                                                |  |                                         |       |   |                                        |   |       |      |  |   |       |   |  |   | 2      |  
|                                                                                             |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|                                                                                             |  |                                         | 622    |   |                                        |   | 644    |      |  |   | 1,944  |   |  |   | 3,088  |  
|Net Charge-Offs                                                                              |  |                                         | 4,248  |   |                                        |   | 3,058  |      |  |   | 10,720 |   |  |   | 9,900  |  
|Provision charged to expense                                                                 |  |                                         | 4,462  |   |                                        |   | 2,830  |      |  |   | 10,464 |   |  |   | 10,787 |  
|Reductions due to sale of loans and other                                                    |  |                                         | (714   | ) |                                        |   | (1,022 | )    |  |   | (714   | ) |  |   | (1,022 | )
|                                                                                             |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Balance at end of period                                                                     |  | $                                       | 39,975 |   |                                        | $ | 41,980 |      |  | $ | 39,975 |   |  | $ | 41,980 |  
|                                                                                             |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Ratio of net-charge-offs during the period to average loans outstanding during the period(1) |  |                                         | 0.47   | % |                                        |   | 0.54   | %    |  |   | 0.42   | % |  |   | 0.43   | %
|                                                                                             |  |                                         |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  



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



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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 interest income. Like most financial institutions, AMCORE has an exposure to changes in both short-term and long-term interest rates. In the near-term, AMCORE expects that its interest-rate risk will be greater if interest rates
decline.



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 the first nine months of 2005, 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 interest 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.



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 interest 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 Asset and Liability Committee (ALCO), whose actions attempt to minimize any sudden or sustained negative impact that interest rate movements may have on
net interest 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 net interest income for the twelve month period beginning October 1, 2005 would be approximately $713,000 or 0.42% of base forecasted net interest income. This analysis assumes
no growth in assets or liabilities and replacement of maturing instruments with like-kind instruments. At the end of 2004, comparable assumptions would have resulted in a potential decrease in 2005 net interest income of $934,000 or 0.55%. Thus,
AMCOREs earnings at risk for rising rates has decreased slightly since the end of 2004.



Conversely, an immediate decrease in interest rates of 100 basis points and no change in the slope of the yield curve would result in a potential decrease in net interest income for the twelve month period beginning
October 1, 2005 would be approximately $3.3 million or 1.94% of base forecasted net interest income. At the end of 2004, a similar decrease in rates would have resulted in a potential decrease in net interest income of $3.2 million or 1.91%.
AMCOREs sensitivity to declining interest rates has remained relatively stable since the end of 2004. Factors that contribute to the continued negative sensitivity to declining interest rates include the negative convexity of the
mortgage-backed products, extended guaranteed rates on special deposit promotions, and the larger volume of floating rate commercial loans.



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



| | (a) | none
| | --- | ----



| | (b) | none
| | --- | ----



| | (c) | The following table presents information relating to all Company repurchases of common stock during the third quarter of 2005:
| | --- | ------------------------------------------------------------------------------------------------------------------------------



Issuer Purchases of Equity Securities



|                       |  |                                |  |                                |       |                                                                            |   |                                                                                                   |  
|---------------------- |  | ------------------------------ |  | ------------------------------ | ----- | -------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------- | -
|Period                 |  | (a) Total # of SharesPurchased |  | (b) AveragePrice Paid perShare |       | (c) Total # ofSharesPurchased asPart of PubliclyAnnounced Plansor Programs |   | (d) Maximum # (orApprox. DollarValue) of Sharesthat May Yet BePurchased Underthe Plans orPrograms
|July 1  31, 2005      |  | 20,975                         |  | $                              | 30.89 |                                                                            | 0 |                                                                                                   | 0
|August 1  31, 2005    |  | 71,242                         |  |                                | 30.37 |                                                                            | 0 |                                                                                                   | 0
|September 1  30, 2005 |  | 36,762                         |  |                                | 30.40 |                                                                            | 0 |                                                                                                   | 0
|                       |  |                                |  |                                |       |                                                                            |   |                                                                                                   |  
|Total                  |  | 128,979                        |  | $                              | 30.47 |                                                                            | 0 |                                                                                                   | 0
|                       |  |                                |  |                                |       |                                                                            |   |                                                                                                   |  



The Company does not
have a formally announced Repurchase Program in place at this time, however, the Company does repurchase shares in open-market transactions in accordance with Exchange Act Rule 10b-18 through a limited group of brokers. These repurchases are used to
replenish the Companys Treasury Stock for re-issuances related to stock options and other employee benefit plans. Included in the repurchased shares above are direct repurchases from participants related to the administration of the Amended
and Restated AMCORE Stock Option Advantage Plan. Also included are 11,063 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).                                                                                                                                                                                                                                                                                                      
|     | 
|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, 2005 |  |  |  |                       
|                       |  |  |  |                       
|                       |  |  |  |                        |  | By: |  | LOGO                                                
|                       |  |  |  |                        |  |     |  | John R. Hecht                                       
|                       |  |  |  |                        |  |     |  | 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).                                                                                                                                                                                                                                                                                                      
|     | 
|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.                                                                                                                                                                                                                                                                                                                                                                



52