SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
AMCORE FINANCIAL SECURITY PLAN
(Full title of the plan)
AMCORE FINANCIAL, INC.
(Name of issuer of the securities held pursuant to the plan)
501 Seventh Street, P.O. Box 1537
Rockford, Illinois 61110-0037
(address of principal executive office)
Index of Exhibits on Page 3 Page 1 of 23
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
ITEM 1. CHANGES IN THE PLAN
Forms S-8 Registration Statement under the Securities Act of 1933 filed with the
Securities and Exchange Commission on November 26, 1986, contained detailed
information concerning the AMCORE Financial Security Plan (Plan). On November
16, 1994, the Plan was amended to comply with certain provisions of the
Unemployment Compensation Act of 1992 and the Revenue Reconciliation Act of
1993. The Plan was also amended to eliminate the minimum hour requirement
necessary to share in employer contributions, update the hardship loan
provisions, and add the option for participants to invest their contributions in
AMCORE Financial, Inc. Common Stock, among other things. On August 23, 1996, the
Plan was amended to provide for: (a) the daily valuation of account balances
therein, and (b) full and immediate vesting for all participants terminating
employment on or after January 2, 1996.
ITEM 2. CHANGES IN INVESTMENT POLICY
There has been no change in the investment policy during 1998.
ITEM 3. CONTRIBUTIONS UNDER THE PLAN
Employer contributions made from 1994 through 1998 were $2,030,820, $2,232,782,
$3,234,114, $2,482,430, and $1,153,839, respectively.
ITEM 4. PARTICIPATING EMPLOYEES
There was a total of 1,335 employees participating in the Plan at December 31,
1998.
ITEM 5. ADMINISTRATION OF THE PLAN
(a) The Plan is administered by AMCORE Financial, Inc. (Company). The Company's
duties as Plan Administrator are overseen by the Plan Administrative
Committee (Committee), which reports annually to the Company's Board of
Directors.
(b) Members of the Committee receive no compensation from the Plan.
ITEM 6. CUSTODIAN OF INVESTMENTS
(a) The amounts deposited by participants and contributed by the Company are
invested by AMCORE Investment Group, N.A. (AIG), f/k/a AMCORE Trust
Company, as Trustee of the Plan and, in that capacity, AIG has custody of
the Plan assets. AIG, a non-depository banking institution, is located at
501 Seventh Street, P.O. Box 1537, Rockford, Illinois 61110-0037.
(b) There was no compensation paid by the Plan to AIG as trustee during 1998.
(c) AIG is named insured under the Company's Financial Institution Bond in the
amount of $30,000,000, which covers, among other things, loss through
dishonest or fraudulent acts of employees and loss of property through
robbery, theft or forgery. It also maintains a Fiduciary Responsibility
Insurance Policy in the amount of $3,000,000, which specifically covers
AIG's fiduciary responsibility as Trustee and Custodian of the Plan.
2
<PAGE>
ITEM 7. REPORTS TO PARTICIPATING EMPLOYEES
Each of the Plan's participants receive a written report of the amount of their
deposit account and their respective company's contribution account as of the
close of each quarterly valuation period. These reports show the participant's
opening balance, their deposits, the Company's contribution on their behalf,
changes in value resulting from income, investment gains and losses, transfers,
withdrawls, and the balance as of the end of the period with respect to their
interest in each of the investment funds.
ITEM 8. INVESTMENT OF FUNDS
(a) All of the securities and mutual fund units purchased by AIG, as trustee of
the Plan, are traded net of commissions. Consequently, total brokerage
commissions attributable to the Plan are not determinable.
(b) The Plan's trustee from time to time selects brokers and dealers to execute
transactions because of research services provided. Other factors, such as
obtaining the best price for a particular transaction and the overall
quality and reliability of the brokerage services made available, also
affect the selection of brokers and dealers. Since commissions paid by the
Plan trustee are individually negotiated in accordance with these several
variables, with only an indeterminate portion allocable to Plan securities,
the amount of transactions and related commissions attributable to research
services on behalf of the Plan are not determinable.
ITEM 9. FINANCIAL STATEMENTS AND EXHIBITS
Page
----
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 6
Notes to Financial Statement 8
SCHEDULES
Schedule of Investments Owned - Combined Funds 15
ACCOUNTANT'S CONSENT
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
trustee (or other persons who administer the plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
AMCORE FINANCIAL SECURITY PLAN
/s/ John R. Hecht
--------------------------------
John R. Hecht
Executive Vice President and Chief
Financial Officer for AMCORE
Financial, Inc. Plan Administrator
Date: June 29, 1999
4
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Financial Statements
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 6
Notes to Financial Statements 8
SCHEDULES
1 Line 27(a) - Schedule of Assets Held for Investment Purposes 15
2 Line 27(d) - Schedule of Reportable Transactions 16
<PAGE>
[KPMG LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Trustee and Participants
AMCORE Financial Security Plan:
We have audited the accompanying statement of net assets available for
benefits of the AMCORE Financial Security Plan (the Plan) as of December
31, 1998, and the related statement of changes in net assets available for
benefits for the year then ended. These financial statements are the
responsibility of the Plan's trustees. Our responsibility is to express an
opinion on these financial statements based on our audit. The accompanying
statement of net assets available for benefits of AMCORE Financial Security
Plan as of December 31, 1997, and the related statement of changes in net
assets available for benefits for the year then ended were audited by other
auditors whose report thereon dated June 2, 1998 expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan
as of December 31, 1998, and the changes in net assets available for
benefits for the year then ended in conformity with generally accepted
accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental
schedules of assets held for investment purposes as of December 31, 1998
and reportable transactions for the year then ended are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan's trustees. The
fund information in the 1998 statement of net assets available for benefits
and the 1998 statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the
net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and fund information have
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
June 7, 1999
Chicago, Illinois
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Statement of Net Assets Available for Benefits
December 31, 1998
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED FUNDS
-----------------------------------------------------------
VINTAGE
VINTAGE U.S. LIMITED
GOVERNMENT TERM VINTAGE VINTAGE
OBLIGATION BOND EQUITY BALANCED
FUND FUND FUND FUND
---------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Assets:
Investments, at fair value:
Common stock of AMCORE Financial, Inc. $ -- -- -- --
AMCORE Bank N.A., Rockford
Common Trust Fund -- -- -- --
Money market deposits 5,856,420 -- -- --
Shares of registered investment
companies -- 7,746,217 39,232,377 5,980,233
Participants' notes -- -- -- --
---------------- ------------ ------------- ------------
Total investments 5,856,420 7,746,217 39,232,377 5,980,233
---------------- ------------ ------------- ------------
Receivables:
Employer contributions -- -- -- --
Participant contributions -- -- -- --
---------------- ------------ ------------- ------------
Total receivables -- -- -- --
---------------- ------------ ------------- ------------
Total assets 5,856,420 7,746,217 39,232,377 5,980,233
Liabilities - accrued expenses -- -- -- --
---------------- ------------ ------------- ------------
Net assets available for benefits $ 5,856,420 7,746,217 39,232,377 5,980,233
================ ============ ============= ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
NON-PARTICIPANT
DIRECTED FUNDS
- ----------------------------------------------------------------------------- -------------------
VINTAGE EMPLOYER
AMCORE AMCORE AGGRESSIVE MATCHING
STABLE COMMON GROWTH CONTRIBUTION
ASSET STOCK LOAN STOCK CONTRIBUTION STOCK
FUND FUND FUND FUND FUND FUND TOTAL
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
-- 3,075,913 -- -- -- 12,910,019 15,985,932
8,185,921 -- -- -- -- -- 8,185,921
-- 121,998 -- -- 170,868 520,096 6,669,382
-- -- -- 5,593,002 -- -- 58,551,829
-- -- 133,827 -- -- -- 133,827
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
8,185,921 3,197,911 133,827 5,593,002 170,868 13,430,115 89,526,891
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
-- -- -- -- 100,932 -- 100,932
-- -- -- -- 66,506 -- 66,506
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
-- -- -- -- 167,438 -- 167,438
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
8,185,921 3,197,911 133,827 5,593,002 338,306 13,430,115 89,694,329
-- -- -- -- -- -- --
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
8,185,921 3,197,911 133,827 5,593,002 338,306 13,430,115 89,694,329
============= ============ ========== ============== ================ =================== =============
</TABLE>
3
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Statement of Net Assets Available for Benefits
December 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED FUNDS
-----------------------------------------------------------
VINTAGE
VINTAGE U.S. LIMITED
GOVERNMENT TERM VINTAGE VINTAGE
OBLIGATION BOND EQUITY BALANCED
FUND FUND FUND FUND
---------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Assets:
Investments, at fair value:
Common stock of AMCORE Financial, Inc. $ -- -- -- --
AMCORE Bank N.A., Rockford
Common Trust Fund -- -- -- --
Money market deposits 4,891,083 -- -- --
Shares of registered investment
companies -- 7,478,590 31,417,778 3,319,907
Participants' notes -- -- -- --
---------------- ------------ ------------- ------------
Total investments 4,891,083 7,478,590 31,417,778 3,319,907
---------------- ------------ ------------- ------------
Receivables:
Employer contributions -- -- -- --
Participant contributions -- -- -- --
---------------- ------------ ------------- ------------
Total receivables -- -- -- --
---------------- ------------ ------------- ------------
Total assets 4,891,083 7,478,590 31,417,778 3,319,907
Liabilities - accrued expenses -- -- -- --
---------------- ------------ ------------- ------------
Net assets available for benefits $ 4,891,083 7,478,590 31,417,778 3,319,907
================ ============ ============= ============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
NON-PARTICIPANT
DIRECTED FUNDS
- ---------------------------------------------------------------------------- ------------------
VINTAGE EMPLOYER
AMCORE AMCORE AGGRESSIVE MATCHING
STABLE COMMON GROWTH CONTRIBUTION
ASSET STOCK LOAN STOCK CONTRIBUTION STOCK
FUND FUND FUND FUND FUND FUND TOTAL
- ------------- ------------ ---------- -------------- ---------------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
-- 3,173,395 -- -- -- 13,531,640 16,705,035
6,549,283 -- -- -- -- -- 6,549,283
-- 108,957 -- -- 80,344 414,930 5,495,314
-- -- -- 3,853,414 -- -- 46,069,689
-- -- 165,804 -- -- -- 165,804
- ------------- ------------ ---------- -------------- ---------------- ------------------ ------------
6,549,283 3,282,352 165,804 3,853,414 80,344 13,946,570 74,985,125
- ------------- ------------ ---------- -------------- ---------------- ------------------ ------------
-- -- -- -- 1,559,017 -- 1,559,017
-- -- -- -- 38,488 -- 38,488
- ------------- ------------ ---------- -------------- ---------------- ------------------ ------------
-- -- -- -- 1,597,505 -- 1,597,505
- ------------- ------------ ---------- -------------- ---------------- ------------------ ------------
6,549,283 3,282,352 165,804 3,853,414 1,677,849 13,946,570 76,582,630
-- 14,318 -- -- -- -- 14,318
- ------------- ------------ ---------- -------------- ---------------- ------------------ ------------
6,549,283 3,268,034 165,804 3,853,414 1,677,849 13,946,570 76,568,312
============= ============ ========== ============== ================ ================== ============
</TABLE>
5
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1998
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED FUNDS
------------------------------------------------------------
VINTAGE
VINTAGE U.S. LIMITED
GOVERNMENT TERM VINTAGE VINTAGE
OBLIGATION BOND EQUITY BALANCED
FUND FUND FUND FUND
---------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation) in
fair value of investments $ -- 83,650 5,100,936 454,850
Interest 241,049 -- -- --
Dividend -- 367,132 3,080,442 350,557
Contributions:
Employer -- -- -- --
Participants:
Payroll withholding -- -- -- --
Rollovers -- -- -- --
---------------- ------------- ------------- ------------
Total additions 241,049 450,782 8,181,378 805,407
---------------- ------------- ------------- ------------
Benefits paid 405,888 424,212 3,247,172 36,573
Administrative expenses 1,205 1,810 8,220 889
---------------- ------------- ------------- ------------
Total deductions 407,093 426,022 3,255,392 37,462
---------------- ------------- ------------- ------------
Net increase (decrease) prior
to interfund transfers (166,044) 24,760 4,925,986 767,945
Net interfund transfers 1,127,540 214,916 753,564 335,086
Transfer of assets from merged plan 3,841 27,951 2,135,049 1,557,295
---------------- ------------- ------------- ------------
Net increase (decrease) 965,337 267,627 7,814,599 2,660,326
Net assets available for benefits:
Beginning of year 4,891,083 7,478,590 31,417,778 3,319,907
---------------- ------------- ------------- ------------
End of year $ 5,856,420 7,746,217 39,232,377 5,980,233
================ ============= ============= ============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
NON-PARTICIPANT
DIRECTED FUNDS
- ----------------------------------------------------------------------------- -------------------
VINTAGE EMPLOYER
AMCORE AMCORE AGGRESSIVE MATCHING
STABLE COMMON GROWTH CONTRIBUTION
ASSET STOCK LOAN STOCK CONTRIBUTION STOCK
FUND FUND FUND FUND FUND FUND TOTAL
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
371,191 (339,867) -- 665,995 -- (1,448,908) 4,887,847
-- 6,790 11,972 -- 8,888 28,948 297,647
-- 69,133 -- 335,062 -- 294,724 4,497,050
-- -- -- -- 1,153,839 -- 1,153,839
-- -- -- -- 3,422,038 -- 3,422,038
-- -- -- -- 161,870 -- 161,870
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
371,191 (263,944) 11,972 1,001,057 4,746,635 (1,125,236) 14,420,291
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
378,866 325,576 25,771 657,123 -- 846,786 6,347,967
1,583 852 -- 987 -- 3,632 19,178
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
380,449 326,428 25,771 658,110 -- 850,418 6,367,145
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
(9,258) (590,372) (13,799) 342,947 4,746,635 (1,975,654) 8,053,146
1,290,626 466,416 (18,178) 686,505 (6,086,178) 1,229,703 --
355,270 53,833 -- 710,136 -- 229,496 5,072,871
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
1,636,638 (70,123) (31,977) 1,739,588 (1,339,543) (516,455) 13,126,017
6,549,283 3,268,034 165,804 3,853,414 1,677,849 13,946,570 76,568,312
- ------------- ------------ ---------- -------------- ---------------- ------------------- -------------
8,185,921 3,197,911 133,827 5,593,002 338,306 13,430,115 89,694,329
============= ============ ========== ============== ================ =================== =============
</TABLE>
7
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED FUNDS
---------------------------------------------------------------
AMCORE
VINTAGE U.S. AMCORE AMCORE AMCORE
GOVERNMENT VINTAGE FIXED VINTAGE VINTAGE
OBLIGATION TOTAL RETURN EQUITY BALANCED
FUND FUND FUND FUND
--------------- --------------- ---------- ------------
<S> <C> <C> <C> <C>
Investment income:
Net appreciation in fair
value of investments $ -- 103,149 4,199,667 482,093
Interest 206,417 9,626 20,898 1,347
Dividend 2,872 378,764 3,252,728 76,825
Contributions:
Employer -- -- -- --
Participants:
Payroll withholding 21,651 35,239 129,789 10,911
Rollovers 902 1,353 5,895 --
--------------- --------------- ---------- ------------
Total additions 231,842 528,131 7,608,977 571,176
--------------- --------------- ---------- ------------
Benefits paid 541,664 316,794 994,626 56,272
Administrative expenses 4,731 6,809 28,465 2,905
--------------- --------------- ---------- ------------
Total deductions 546,395 323,603 1,023,091 59,177
--------------- --------------- ---------- ------------
Net increase (decrease) prior
to interfund transfers (314,553) 204,528 6,585,886 511,999
Interfund transfers 367,662 (1,575,232) (973,875) 2,807,908
--------------- --------------- ---------- ------------
Net increase (decrease) 53,109 (1,370,704) 5,612,011 3,319,907
Net assets available for benefits:
Beginning of year 4,837,974 8,849,294 25,805,767 --
--------------- --------------- ---------- ------------
End of year $ 4,891,083 7,478,590 31,417,778 3,319,907
=============== =============== ========== ============
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
NON-PARTICIPANT
Directed Funds
- ---------------------------------------------------------------------------- ------------------
Amcore Employer
Amcore Amcore Vintage Matching
Stable Common Aggressive Contribution
Asset Stock Loan Growth Stock Contribution Stock
Fund Fund Fund Fund Fund Fund Total
------------- -------------- ---------- --------------- -------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
350,329 946,587 -- 703,038 -- 3,879,495 10,664,358
9,817 2,179 10,136 1,898 24,602 8,309 295,229
42 56,814 4 61,212 -- 241,480 4,070,741
-- -- -- -- 1,601,288 881,142 2,482,430
33,116 13,541 -- 28,240 689,415 -- 961,902
1,353 1,711 -- 5,895 260,504 -- 277,613
- ------------- ------------- --------- ---------------- --------------- ------------------- -------------
394,657 1,020,832 10,140 800,283 2,575,809 5,010,426 18,752,273
- ------------- ------------- --------- ---------------- --------------- ------------------- -------------
130,707 98,644 21,090 59,320 -- 337,371 2,556,488
5,956 2,763 -- 3,450 -- 11,419 66,498
- ------------- ------------- --------- ---------------- --------------- ------------------- -------------
136,663 101,407 21,090 62,770 -- 348,790 2,622,986
- ------------- ------------- --------- ---------------- --------------- ------------------- -------------
257,994 919,425 (10,950) 737,513 2,575,809 4,661,636 16,129,287
(757,881) 3,634 49,248 976,496 (897,960) -- --
- ------------- ------------- --------- ---------------- --------------- ------------------- -------------
(499,887) 923,059 38,298 1,714,009 1,677,849 4,661,636 16,129,287
7,049,170 2,344,975 127,506 2,139,405 -- 9,284,934 60,439,025
- ------------- ------------- --------- ---------------- --------------- ------------------- -------------
============= ============= ========= ================ =============== =================== =============
6,549,283 3,268,034 165,804 3,853,414 1,677,849 13,946,570 76,568,312
============= ============= ========= ================ =============== =================== =============
</TABLE>
9
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(1) SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION
Since the AMCORE Financial Security Plan (the Plan) is subject to
the Employee Retirement Income Security Act of 1974 (ERISA), the
Plan prepared its financial statements and schedules in accordance
with the financial reporting requirements of ERISA rather than in
accordance with Regulation S-X.
VALUATION OF INVESTMENTS
If available, quoted market prices are used to value investments.
The Vintage funds are valued at quoted net asset values.
Participants' notes are valued at face value. Investment in AMCORE
Stable Asset Fund is valued at net asset value which is determined
based on the fair value of the underlying investments.
Security transactions are accounted for on a trade-date basis.
Dividend income is recorded on the ex-dividend date. Interest
income is accounted for on the accrual basis.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and the accompanying notes. Actual
results could differ from those estimates.
(2) PLAN DESCRIPTION
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering substantially all
employees of AMCORE Financial, Inc. (AFI) and participating
subsidiaries, who have completed one year of service and have
reached the age of 18. It is subject to the provisions of ERISA.
CONTRIBUTIONS
Participants may contribute up to five percent of their annual
wages on a pretax basis. The employer will match the participants'
contributions up to 5% of their annual wages with cash which is
used to purchase AFI common stock. The maximum amount that an
employee could contribute in 1998 and 1997 was $10,000 and $9,500,
respectively.
10 (Continued)
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 1998 and 1997
The employer contributes three percent of the participants' annual
wages each year to a basic retirement account; these funds are set
aside for retirement and, therefore, are not available for
participant loans. At the discretion of the Board of Directors,
the employer may make additional contributions to the Plan; this
contribution may not exceed six percent of the participants'
annual wages.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions and an allocation of the Employer's contribution and
Plan earnings. Allocations are based on participant earnings, as
defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested
account. The Plan provides for a maximum contribution to a
participant's account in any plan year of the lesser of $30,000 or
25% of the participant's compensation.
PAYMENT OF BENEFITS
On termination of service, a participant may select one of several
payment options. Withdrawals by a participant are fully taxable,
except for the return of after tax contributions, if any.
VESTING
Participants are immediately vested in their accounts.
INVESTMENT FUNDS
The assets of the Plan are segregated and maintained in ten
separate fund accounts consisting of the Vintage U.S. Government
Obligation Fund, Vintage Limited Term Bond Fund, Vintage Equity
Fund, Vintage Balanced Fund, AMCORE Stable Asset Fund, Common
Stock Fund, Loan Fund, Vintage Aggressive Growth Stock Fund,
Employer Matching Contribution Stock Fund, and Contribution Fund.
Participants have the option to invest their account balance and
contributions to their respective account in all of these funds
except the Loan Fund, Employer Matching Contribution Stock Fund,
and Contribution Fund in increments of five percent of their
participating balance. Participants are limited to a maximum
contribution of ten percent to the Common Stock Fund. Participants
also have the option to change the allocation of their individual
participant's balance daily.
The Plan provides that fund assets be invested as follows:
Vintage U.S. Government Obligation Fund investments consist of
U.S. government obligations, a money market mutual fund that
invests in U.S. government obligations, bonds, debentures,
commercial paper, bankers' acceptances, bank certificates of
deposit, and savings instruments.
Vintage Limited Term Bond Fund (formerly known as AMCORE
Vintage Total Return Fund) investments consist of a mutual
fund that invests in U.S. government obligations, bonds,
debentures, commercial paper, bankers' acceptances, mortgages,
and savings instruments which mature beyond one year.
11 (Continued)
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 1998 and 1997
Vintage Equity Fund investments consist of a mutual fund that
invests primarily in large capitalization equity securities.
Vintage Balanced Fund invests in a mutual fund that invests in
a blend of large capitalization equity and debt securities.
AMCORE Stable Asset Fund investments consist primarily of high
quality fixed and variable rate insurance company contracts
and common trust funds, as well as short-term investments. The
Plan provides that a minimum of 50% of assets of this fund can
be liquidated in 30 days and the remainder within 12 months.
AMCORE Common Stock Fund consists solely of AFI common stock.
The employees have voting rights in all shares. Temporarily,
assets are held in a money market fund until the AFI stock is
purchased.
Loan Fund consists solely of loans made to participants for
hardship reasons only such as: prevent foreclosure, pay
college tuition, medical expenses not covered by insurance,
and other unforeseeable hardships as approved by the
Committee.
Vintage Aggressive Growth Stock Fund consists of a mutual fund
that invests in relatively volatile small and
mid-capitalization equity securities that are poised for
above-average growth over the long term.
Employer Matching Contribution Stock Fund consists solely of
AFI common stock. The employees have voting rights in all
shares. Temporarily, assets are held in a money market fund
until the AFI stock is purchased. The employer contributes to
this fund in an amount equal to the pretax contributions made
each pay period since the preceding accounting date by
participants in the Plan.
Contribution Fund serves as a temporary account to accumulate
contributions to be allocated to the other funds. This fund
invests in money market instruments.
12 (Continued)
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(3) INVESTMENTS
The Plan's investments are stated at fair value at December 31, 1998 and
1997. Individual investments that represent five percent or more of the
Plan's net assets at the beginning of the Plan year are separately
identified.
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Investments at fair value as determined by quoted market price or net
asset values:
AMCORE Financial, Inc. common stock $ 15,985,932 16,705,035
Registered investment companies:
Vintage Limited Term Bond Fund 7,746,217 7,478,590
Vintage Equity Fund 39,232,377 31,417,778
Vintage Aggressive Growth Stock Fund 5,593,002 3,853,414
Vintage Balanced Fund 5,980,233 3,319,907
Money Market deposits:
Vintage United States Government Obligations Fund 6,027,288 4,971,427
Other 642,094 523,887
--------------- ---------------
81,207,143 68,270,038
--------------- ---------------
Investments at estimated fair value:
Common Trust Fund of AMCORE Bank N.A., Rockford -
AMCORE Stable Asset Fund 8,185,921 6,549,283
Participants' notes at outstanding principal amount 133,827 165,804
--------------- ---------------
8,319,748 6,715,087
--------------- ---------------
Total investments $ 89,526,891 74,985,125
=============== ===============
</TABLE>
During the year ended December 31, 1998, the Plan's investments
(including investments bought, sold, and held during the year)
appreciated (depreciated) in value by $4,887,847 as follows:
<TABLE>
<CAPTION>
<S> <C>
Investments at fair value as determined by quoted market price:
AMCORE Financial, Inc. common stock $ (1,788,775)
Shares of registered investment companies 6,305,431
---------------
4,516,656
Investments at estimated fair value - common trust fund 371,191
---------------
$ 4,887,847
===============
</TABLE>
13 (Continued)
<PAGE>
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(4) TRANSACTIONS WITH RELATED PARTY
All Plan investments are shares of registered investment companies, a
common trust fund, and money market deposits which are managed by AMCORE
Investment Group N.A., Rockford, which is the trustee as defined by the
Plan, and, therefore, these transactions qualify as party-in-interest.
(5) PLAN TERMINATION
Although it has not expressed any intent to do so, the employer has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, the net income or loss to the date of termination,
less any distribution expenses and liquidation costs, shall be
distributed proportionately to the participants' accounts and
participants will be entitled to receive the value of their accounts.
(6) PARTICIPANT LOANS
Participants are eligible to obtain loans from the Plan in the event of
financial hardship as defined by the Plan. The loans are limited to the
lesser of $50,000 or 50% of the accrued benefit of the participant under
the Plan, excluding the participant's accrued benefit attributable to
the basic retirement account. Participants' loans in the Loan Fund are
charged interest at a rate which is based on prime at the date of the
loan and is fixed for the life of the loan. The loans are collateralized
by the participants' vested interest in the Plan. All loans to
participants are accounted for in the Loan Fund.
(7) INCOME TAX STATUS
The Internal Revenue Service has determined and informed the employer by
letter dated April 28, 1995 that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code
(IRC). The Plan administrator believes that the Plan is designed and
currently being operated in compliance with the applicable requirements
of the IRC.
(8) EXPENSES
During the prior years some costs of administering the Plan were paid by
the sponsor. Administrative expenses totaled $19,178 for the year ended
December 31, 1998.
(9) TRANSFER OF ASSETS FROM MERGED PLAN
On July 6, 1998 the assets of the First National Bancorp, Inc. Profit
Sharing and 401(k) plan were merged with and into the AMCORE Financial
Security Plan. The First National Bancorp, Inc. Profit Sharing and
401(k) plan was administered by First National Bancorp, Inc., a company
acquired by AFI during 1997.
(10) SUBSEQUENT EVENT
In 1999, the Company has amended the amount that participants may
contribute to the Plan from five percent to ten percent of their annual
wages or a maximum of $10,000 on a pretax basis.
14
<PAGE>
SCHEDULE 1
AMCORE FINANCIAL SECURITY PLAN
Line 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL CURRENT
AMOUNT COST VALUE
-------------- --------------- --------------
<S> <C> <C> <C>
Common stock -
AMCORE Financial, Inc. * 698,362 $ 8,669,975 15,985,932
--------------- --------------
Common trust fund -
Stable Asset Fund * 430,159 7,710,285 8,185,921
--------------- --------------
Money market deposits:
Vintage U.S. Government
Obligations Fund * 6,027,288 6,027,288 6,027,288
Fidelity Institutional Cash Portfolios U.S.
Treasury Portfolio 642,094 642,094 642,094
--------------- --------------
Total money market deposits 6,669,382 6,669,382
--------------- --------------
Shares of registered investment companies:
Vintage Limited Term Bond Fund * 767,712 7,596,784 7,746,217
Vintage Balanced Fund * 377,064 5,291,174 5,980,233
Vintage Equity Fund * 1,786,538 34,427,305 39,232,377
Vintage Aggressive Growth Stock Fund * 314,390 4,686,683 5,593,002
--------------- --------------
Total shares of registered
investment companies 52,001,946 58,551,829
Participants' notes 133,827 133,827 133,827
--------------- --------------
Total investments $75,185,415 89,526,891
=============== ==============
</TABLE>
* Asterisk denotes an investment in an entity which is a "party-in-interest"
as defined by ERISA.
See accompanying independent auditors' report.
15
<PAGE>
SCHEDULE 2
AMCORE FINANCIAL SECURITY PLAN
Line 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1998
Category (iii) - Series of transactions in the same security in excess of 5% of
the fair value of Plan assets at the beginning of the Plan year.
<TABLE>
<CAPTION>
CURRENT
VALUE OF
ASSET ON
IDENTITY OF PURCHASE SELLING COST OF TRANSACTION
PARTY INVOLVED DESCRIPTION OF ASSET PRICE COST ASSET DATE GAIN
- ---------------------- -------------------------- -------------- ----------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Vintage Equity Fund Registered Investment
Company $ 6,109,675 5,742,280 6,109,675 367,395
Vintage Equity Fund Registered Investment
Company 8,823,338 8,823,338 8,823,338 --
=========== =========== ============ ============= =========
</TABLE>
See accompanying independent auditors' report
16
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS'
--------------------------------
The Board of Directors
AMCORE Financial, Inc.
We consent to incorporation by reference in the Registration Statement (No.
33-10446) on Form S-8 of AMCORE Financial, Inc. of our report dated June 7,
1999, relating to the statement of net assets available for plan benefits of the
AMCORE Financial Security Plan as of December 31, 1998, and the related
statement of changes in net assets available for plan benefits for the year then
ended, the schedule of assets held for investment purposes as of December 31,
1998 and the schedule of reportable transactions for the year the ended, which
report appears in the December 31, 1998 annual report on Form 11-K of AMCORE
Financial, Inc.
Chicago, Illinois
June 28, 1999
