AMCORE reports third straight quarterly loss

By Alex Gary

BusinessRockford.com

AMCORE Financial Inc., the largest publicly traded company headquartered in Winnebago County, reported its third straight quarterly loss as its loan portfolio continues to crumble in the weakening economy.

AMCORE, which released its third quarter earnings early this morning, had $52.5 million in revenue compared with $54.4 million in third quarter 2007. The company lost $18 million for the quarter in large part because it shifted $48 million to its loan-loss reserves to guard against failing loans.

That means the company, which has $5 billion in assets and 78 locations in Illinois and Wisconsin, has shifted more than $145 million to its loan-loss reserves so far this year and now has lost $65.7 million.

“Unprecedented marketplace events this year have caused global financial confidence to drop sharply, which has negatively affected the entire U.S. financial services industry, including AMCORE,” Chairman and CEO William McManaman said in the news release. “We are confronting these economic challenges by setting aside adequate reserves for potential loan losses and actively managing capital to enhance our stability.”

Many of AMCORE’s struggles are tied to the slumping real estate and home construction market, which is in its steepest decline since perhaps the early 1980s. AMCORE’s loan portfolio has been heavily concentrated in commercial real estate, specifically construction, land development and vacant-land loans.

The losses on those loans piled up in the third quarter. The company’s net charge offs increased from $3.3 million in the second quarter to $26.8 million in the third quarter.

Judy Carre Sutfin, AMCORE CFO, believes the loan losses may be reaching the bottom of the downward cycle.

“A positive indicator is the fact that delinquencies, which include loans more than 30 days past due, are down 13 percent, or $12.3 million, quarter over quarter. This is the second quarterly decline,” she said.

Assistant Business Editor Alex Gary may be reached at agary@rrstar.com or at 815-987-1339.