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AMCORE Financial, Inc. Reports 2nd Quarter Loss.

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ROCKFORD, Ill., July 17 /PRNewswire-FirstCall/ --



(Numbers in Thousands, Except Per Share Data) 2nd 2nd 1st quarter 2008 quarter 2007 quarter 2008 Net Revenues $55,559 $60,166 $54,583 Net Income (Loss) ($20,234) $10,603 ($27,459) Diluted Shares 22,246 23,389 22,233 Diluted EPS ($0.91) $0.46 ($1.25)

AMCORE Financial, Inc. announced today a net loss for the second quarter 2008 of ($20.2) million, compared to net income of $10.6 million in the prior-year period and a ($27.5) million loss in the previous quarter. The loss per diluted share for second quarter 2008 was ($0.91), a decrease from earnings of $0.46 per diluted share in second quarter 2007 and an improvement from the loss of ($1.25) in the previous quarter.

"While uncertainty surrounding the general economy and financial services industry has negatively affected our stock price, we remain a well-capitalized bank and have sufficient liquidity. We are confident the actions we have taken to address our credit practices and efficiency issues will help strengthen our financial position," said William R. McManaman, Chairman and CEO of AMCORE. "AMCORE has been diligent in recognizing and addressing our credit issues and our progress continued in the second quarter." The following reflects some of the key actions:

-- Tightened our credit disciplines and strengthened our commercial credit approval process to provide more consistent controls. -- Reassessed the risk grading of our commercial loan portfolio to reflect current market conditions. -- Initiated an experienced, independent third-party review of our lending policies, procedures and practices, which should be completed in the third quarter. -- Named a new Chief Credit Officer. -- Named a new manager of Loan and Appraisal Review. Headlines -- Net interest income was $36.0 million, or 3.07 percent of average earning assets in second quarter 2008, compared to $40.7 million, or 3.39 percent, in second quarter 2007, and $36.7 million, or 3.12 percent of average earning assets in first quarter 2008. -- Average loan balances decreased three percent, or $109.5 million, to $3.9 billion compared to second quarter 2007, while average investment securities increased three percent, or $25.0 million. Average bank issued deposits decreased seven percent, or $232.2 million, to $3.2 billion compared to the second quarter 2007. -- Provision for loan losses was $40 million, a $35.8 million increase from $4.2 million in second quarter 2007 and a $17.2 million decrease from $57.2 million in first quarter 2008. An additional $3.1 million expense relating to unfunded loan commitments was reported in operating expenses in first quarter 2008. -- Net charge-offs were $3.3 million, or 0.34 percent of average loans on an annualized basis, compared to $4.8 million and 0.48 percent in second quarter 2007, and $13.6 million and 1.40 percent in first quarter 2008, respectively. Provision for loan losses are accrued when losses are probable, whereas chargeoffs occur when the loss is subsequently confirmed. -- Non-performing loans were $171.8 million, compared to $37.7 million at June 30, 2007 and $114.1 million at March...

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