AMCORE Financial Inc.

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AMCORE Financial Inc.

501 7th Street
Rockford, Illinois 61104
U.S.A.
Telephone: (815) 968-2241
Fax: (815) 961-7544
Web site: http://www.amcore.com

Public Company
Incorporated: 1982 as AmeriCorp Financial Inc.
Employees: 1,400
Total Assets: $4.2 billion (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: AMFI
NAIC: 551111 Offices of Bank Holding Companies; 52211 Commercial Banking; 52221 Credit Card Issuing

AMCORE Financial Inc. is a Rockford, Illinois-based holding company that includes AMCORE Bank, N.A.; AMCORE Investment Group, N.A.; and AMCORE Mortgage, Inc. In the early 2000s, the company operated more than 60 branches in Illinois, Iowa, and Wisconsin, at which time it administered $4.2 billion in banking assets and more than $4.8 billion in investment assets. In the United States, AMCORE also was rated among the top 150 largest bank holding companies, the top 15 percent of asset management firms, and the top 100 online financial institutions.

1910-29: The Early Years

AMCORE’S roots stretch back to August 1, 1910, when the Swedish-American Bank was founded in Rockford, Illinois. It was located on Seventh Street, which at the time was the hub of Rockford’s Swedish immigrant community. The bank’s formation was a direct result of the cohesive Swedish community’s efforts to create such an institution. In 1909, Rockford had six banks, none of which were located in the Swedish area of Broadway and Seventh Street. That year, some of Rockford’s prominent Swedish businessmen decided to organize a national bank. In May, they requested an application form from the comptroller of the currency in Washington, D.C.

As Elizabeth A. Ross explained in American National Bank and Trust Co.: A History, ” Aside from the ethnocentric desire for a banking house of their own, the Swedes had other reasons for wanting a Swedish owned bank in the Seventh Street area. For one thing, it was not easy for a man who spoke little or no English to get help at a bank where few if any of the employees spoke any Swedish.” According to Ross, the ability to speak Swedish was a requirement for those wishing to work at the bank, at least for the first 25 years of its operations. In addition to the bank, the Swedish community also worked to form other noteworthy Rockford institutions, such as nearby Swedish-American Hospital on Charles Street.

After much hard work, the Swedish-American bank was granted a charter. It opened for business on August 1, 1910 in a small storefront. The bank had two teller windows, hardwood floors and, according to Ross, “carefully placed spittoons.” Its first president was G. Adolph Peterson, who held the position for two years. Peterson served the bank in many capacities over the course of 32 years, including the role of cashier, vice-president, and chairman.

Swedish-American Bank survived financial crises in 1913 and 1914. During that time, William Johnson was the bank’s president, serving from 1913 to 1916. Five years after opening, the bank had outgrown its facilities. Because of this, in 1917 operations moved from the modest one-room office to a five-story building on the corner of Seventh Street and Fourth Avenue. The new building not only met existing needs, but also would accommodate future growth for years to come.

Swedish-American Bank was doing well as the 1920s arrived. The bank’s deposits amounted to approximately $855,639 in June of 1916, a figure which climbed to about $2,415,838 four years later. In her history of the bank, Ross described the 1920s as “a period marked by curious inactivity, reflected both within the management of the bank and in the figures from condition statements.” Part of this may have been due to the bank’s conservative philosophy of “caution, community service, and restraint.” However, as it turned out, fiscal conservatism would serve the bank well as the nation fell into the Great Depression during the 1930s.

1930-45: Challenging Times

The Swedish-American Bank weathered some very difficult years during the 1930s and mid-1940s. Besides the economic woes that plagued the nation during the Great Depression from 1931 to 1933, World War II erupted, presenting numerous challenges on many fronts. During the Great Depression, many banks failed throughout the nation. The financial crisis affected the Rockford community just as it did many others. On July 15, 1931 three of the city’s banks—Manufacturer’s National, People’s National, and Security National—closed. By the end of the Depression, only two of the Rockford’s eight banks—Swedish-American and Illinois National—remained.

John A. Alden, a local businessman, was Swedish-American’s third president. He served in that capacity for 20 years, beginning in 1917, and was responsible for steering the bank successfully through some very difficult times. Although he was known to be a tough, stern individual, his conservative, level-headed, sensible approach was said to have done a great deal for the bank.

One difficult situation that resulted from the Depression was the Reconstruction Finance Corporation’s (RFC) involvement with the bank. As Ross explained in her history, the RFC “was empowered by the Emergency Banking Act of 1933 to purchase preferred stock from troubled banks or take such stock as collateral for loans in order that a failing bank might survive.” The deputy comptroller of the currency determined that Swedish-American Bank needed the RFC’s help, and in February of 1934, the RFC purchased $200,000 of the bank’s preferred stock. It thus became the bank’s main stockholder and a source of influence over bank operations. Over the years, this influence would result in tension between the bank’s administration and the RFC and chief examiner’s office. One leading area of disagreement involved the expansion of credit. Alden and the bank saw this as a contributing factor to the Depression, while the less conservative federal government viewed the approach as a tool for economic recovery. In any case, the RFC was able to help the Swedish-American survive during a difficult period in history, and the institution eventually was strong enough to regain local control, although not until May 15, 1945.

By 1936, conditions were improving for the bank. Deposits increased 46 percent over the previous year, resulting in net income of approximately $12,778. The bank began to outgrow its facilities again, and decided to expand into an adjoining building that it already owned. With this expansion also came the installation of dial telephone service.

By the late 1930s, many of the bank’s original administrators began to fade from the picture and were replaced with new individuals with equally new ideas. According to Ross’ history, “This post depression, or reconstruction, period of the bank’s history was a very vital time marked by numerous changes and improvements in both practices and policies.”

In 1937, G. Adolph Peterson replaced Alden as president and CEO. The bank’s original president, Peterson was called upon to hold the post for a second time, and he did so until 1939. In 1940, Karl K. Plambeck was named president and Harrison A. “Spike” Taylor served as CEO. John Alden died in April 1944, which in one respect signified the end of an era in the bank’s history.

1945-56: A Time of Rebirth

On January 22, 1945 the Swedish-American Bank changed its name to American National Bank and Trust Co. This change was partly attributable to the growing sense of patriotism that developed during the war, and was marked by ethnic-based organizations placing less importance on incorporating ethnicity into their names. Interestingly, the name change had been proposed years earlier, in 1915, by one of the city’s most well known Swedish residents—Pehr A. Peterson. The “dean” of Rockford furniture manufacturers, Peterson was president of Swedish-American Hospital, as well as more than a dozen firms that played instrumental roles in Rockford’s growth. Peterson had written a letter emphasizing that by dropping the word “Swedish” from the bank’s name and relying on the greatness of the word “American,” the name would have more of an all-encompassing feel.

In July 1945, World War II ended and an optimistic period of expansion and excitement spread throughout the nation. In addition to this, there was another cause for celebration at the bank itself. A few months earlier, the institution finally was able to regain local control by retiring the RFC’s stock. At the end of 1945, Plambeck resigned as president and Taylor assumed the role of both president and CEO, a role he would fill through 1956. Taylor had formerly served with Manufacturer’s National Bank until it closed in 1931. In many ways, his style of management was similar to Alden’s in that he was careful and conservative. Some attributed this to the economic conditions of the Great Depression, which left a lasting mark in the minds of many.

As the 1950s unfolded, American National Bank enjoyed a time of prosperity. Property adjacent to the bank was purchased from the Salvation Army in February 1952 that provided a parking lot for 70 cars. New bookkeeping and accounting equipment was purchased, along with a night depository, and plans for remodeling the bank were finally completed in May 1954. From the standpoint of earnings and growth, the following year turned out to be the best in the bank’s history.

Company Perspectives:

AMCORE is the bank distinguished by high performance asset management and the delivery of tailored products to business customers in high growth Midwestern markets.

1957-69: Modernization

In 1957, Leroy E. Liljedahl replaced Taylor as president and CEO of American National. Liljedahl had joined the bank in 1952 as an auditor. He immediately displayed leadership qualities and was named vice-president within two years, followed by a promotion to executive vice-president in 1956. Liljedahl came from a family of Iowa bankers, and had previously worked in Chicago in the 7th Federal Reserve District’s national banking department. He was active on the boards of many Rockford organizations and was known for his spirit of community service. Liljedahl would lead the bank through a period of modernization until his resignation on July 26, 1976.

During Liljedahl’s tenure, the bank celebrated its 50th anniversary. The bank held an open house to celebrate the occasion which was attended by more than 10,000 visitors, including representatives from banks in San Francisco, Detroit, New York, and Chicago. Several major developments unfolded under Liljedahl. One was the expansion of American National’s trust department under David Morgan Jr. Another significant development was a similar expansion of the installment loan department. The latter movement signified a new philosophy of less restrictive lending practices. In fact, under the direction of Robert E. Hitt, the installment loan business would be one of the best things that happened to the bank during the 1960s. As Ross explained in her history of the bank, loans increased by almost $38 million over ten years, compared to increasing only $6 million in the first 45 years of the bank’s existence.

Other developments during this era included the introduction and expansion of drive-through-banking services, as well as the introduction of computers into the bank’s operations. In October 1964, American National announced plans to build a one-story data processing center near the main bank. In 1965, it purchased an IBM 240 computer system to handle check deposits, and other computerization efforts would follow from that point on.

1970-80: Turbulent Times

During the 1970s, American National sought to improve the physical surroundings near its headquarters. In 1971, the bank demolished five buildings and created a park as part of a neighborhood redevelopment initiative. On July 4, 1976 it unveiled a one-ton, 24-square-foot, welded red brass and copper sculpture of an American Eagle, created by Rockford sculptor Gene Horvath. The new sculpture was part of the bank’s Bicentennial contribution to the city, and was affixed to the exterior facade of the bank building.

However, things weren’t entirely positive during the 1970s. On July 26, 1976, shortly after the sculpture was introduced, the bank lost two of its leaders when CEO Liljedahl and President Robert E. Hitt resigned. David W. Knapp assumed the role of president and CEO. He had joined the bank at the beginning of the decade as its vice-president and trust officer. An attorney, Knapp was responsible for many developments, including a motor bank at State and Ninth Street, during his tenure.

Key Dates:

1910:: Swedish-American Bank founded in Rockford, Illinois, on August first with G. Adolph Peterson as president.
1913:: William Johnson named Swedish-American Bank’s second president.
1917:: Swedish-American Bank operations move from modest one-room office to five-story building; John A. Alden named Swedish-American Bank’s third president.
1931:: Swedish-American Bank survives when three of the city’s banks close on July 15 during a national financial crises.
1934:: The RFC purchases $200,000 of the Swedish-American Bank’s preferred stock, becoming a major source of influence over operations.
1937:: G. Adolph Peterson replaces Alden as president and CEO of Swedish-American Bank.
1940:: Karl K. Plambeck named president and Harrison A. “Spike” Taylor named CEO of Swedish-American Bank.
1944:: John Alden dies.
1945:: Swedish-American Bank changes its name to American National Bank and Trust Co.; American National Bank regains local control from the RFC.
1957:: Leroy E. Liljedahl replaces Harrison Taylor as president and CEO of American National Bank.
1964:: American National Bank announces plans to build a one-story data processing center near the main bank.
1976:: American National Bank unveils a one-ton, 24-square-foot, welded red brass and copper sculpture of an American Eagle to celebrate the American Bicentennial.
1976:: CEO Liljedahl and President Robert E. Hitt resign, and David W. Knapp assumes the role of president and CEO.
1982:: Holding company AmeriCorp Financial Inc. is formed and goes public the following year.
1985:: American National Bank merges with Illinois National Bank, creating AMCORE Bank N.A.; J. Peter Jeffrey becomes president and CEO of AMCORE Bank.
1986:: AMCORE Financial is listed on the NASDAQ and assets exceeded $1 billion for the first time.
1989:: Robert J. Mueleman named president of AMCORE bank; J. Peter Jeffrey named vice-chairman and CEO.
1990:: AMCORE Trust Co. is formed.
1992:: AMCORE launches AMCORE Investment Banking and AMCORE Capital Management, and creates the Vintage Family of Mutual Funds.
1994:: AMCORE Insurance Group Inc. is formed; assets of AMCORE Bank surpass the $1 billion mark for the first time.
1998:: AMCORE rated among the largest 15 percent of asset management firms in the United States, and among the nation’s 100 largest bank holding companies.
2000:: AMCORE is rated among the nation’s leading online financial institutions.

Knapp was at the helm of American National when it was involved in a nationally publicized lawsuit against Chrysler Corp., which then owed American National $525,000. Although the suit was filed and resolved in 1980, it stemmed from a business relationship that developed during the 1970s. At the time, the auto-maker was in financial trouble and had requested assistance from the U.S. government. In order to qualify for a $1.5 billion bailout program, all of Chrysler’s creditors had to agree to a new payment schedule. Instead of joining other banks across the nation, American National instead sued Chrysler and demanded that the auto-maker repay its debt. The bank’s initial unwillingness to participate in the federal loan guarantee program meant possible bankruptcy for Chrysler. After the bank was picketed by United Auto Workers Local 1268, which represented workers at a nearby manufacturing plant, and received bomb threats, American National agreed to participate. In the June 20, 1980 issue of the “Rockford Register Star,” Knapp explained: “We sense a divisiveness taking place in the community, a community involved with Chrysler Corporation in many ways. Our decision reflects our continuing concern for the community we serve. Second, we are concerned for the safety of our employees and their families. We cannot in good conscience put them at continued risk in this manner.”

1980-99: Growth and Expansion

American National Bank began the 1980s by announcing plans for a new motor bank, scheduled to open in December on Sixth Street and Fourth Avenue. However, other developments began to unfold which caused the bank to take on a new look in many ways. On June 1, 1982, a holding company called AmeriCorp Financial Inc. was formed. It became a publicly traded company in 1983, at which time it acquired Carpentersville Savings Bank, American National Bank and Trust Co., Colonial Bank, and First National Bank of Woodstock.

Also in 1983, American National moved into a new, modern, seven-story facility on Seventh Street that replaced the one it had occupied for 67 years. The new building was constructed with technology, security, and future growth in mind. It included a 3,500-square-foot vault, a state-of-the-art fire protection system, and a computerized system that limited access to different areas of the building depending on an employee’s ID badge.

Pekin, Illinois-based First National Bank was acquired in 1984. This preceded a monumental merger with Illinois National Bank in November 1985, which was so large it warranted a few name-changes. By combining the $289.3 million assets of Illinois National with the $404.1 million assets of American National, the merger created AMCORE Bank N.A., the eighth largest bank in Illinois and the largest in Rockford. It bumped the bank into a whole new league and increased the holding company’s assets to $900 million. At that time, AmeriCorp Financial Inc. became AMCORE Financial Inc. J. Peter Jeffrey, who had served as chairman and president of Illinois National, became president and CEO of AMCORE Bank. David Knapp died shortly after the merger, on December 4, 1985. At the time, Knapp was president of AMCORE Financial, and chairman of AMCORE Bank.

In 1986, Carl J. Dargene succeeded Knapp as president and CEO of AMCORE Financial. A prominent Rockford industrialist, Dargene was a member of AMCORE’s board, which asked him to assume the role of CEO following Knapp’s death. Also in 1986, AMCORE Financial was listed on the NASDAQ. That year, its assets exceeded $1 billion for the first time. AMCORE Financial’s annual report provided a concise description of the services it was offering by this time:

“All AMCORE banks are full service, commercial banking businesses providing a wide range of banking services throughout the communities they serve. The banks accept demand, savings and time deposits; provide various personal loan services including overdraft protection, installment loans, mortgage loans, personal credit lines and credit card programs. They provide financial services to commercial and governmental organizations including loans, deposits, letters of credit, lease financing, safe deposit box rental, securities safekeeping, foreign currency exchange, as well as lock box and other cash management services. Certain banks administer estates and trusts, including employee benefit plans and estate administration. AMCORE Bank N.A., Rockford provides payroll processing to commercial customers and data processing services to correspondent banks and its subsidiaries. AMCORE Financial Life Insurance Company provides service to the financial industry by underwriting credit life and accident and health insurance.”

In 1988, AMCORE announced plans to build a $1 million full-service branch on Mulford Road in Rockford. The following year, it combined AMCORE Bank Colonial with AMCORE Bank Rockford. Robert J. Mueleman was named president and chief operating officer of AMCORE bank in 1989, and J. Peter Jeffrey was named the bank’s vice-chairman and CEO. As the company headed into the 1990s, it would experience explosive growth. During that decade, AMCORE acquired many banks and holding companies in nearby communities and expanded its geographic reach in every direction, including north into Wisconsin. Accordingly, AMCORE also opened branches in many communities surrounding Rockford, as well as within locations like supermarkets.

In addition to acquiring other financial institutions, the company formed AMCORE Trust Co. in 1990 and acquired what would become AMCORE Consumer Finance Co. In 1992, the company launched AMCORE Investment Banking and AMCORE Capital Management, and created the Vintage Family of Mutual Funds. AMCORE Insurance Group Inc. was formed in 1994. That year, AMCORE announced its highest-ever first-quarter earnings, with profits of $4.1 million, up 8.1 percent from the previous year. In addition, the assets of AMCORE Bank surpassed the $1 billion mark.

In 1996, Meuleman succeeded Dargene as president and CEO of AMCORE Financial when the latter executive reached mandatory retirement age for CEO. Dargene remained as chairman of AMCORE Financial. Meuleman had joined American National Bank in 1981 as vice-president for investments, and was named president and COO of AMCORE Bank in 1989. He then was named executive vice-president and COO, banking subsidiaries, for AMCORE Financial Inc.

It also was in 1996 that AMCORE’s Vintage Equity Fund received a five-star rating from Morningstar for the first time. The fund would continue to receive recognition from Morningstar in subsequent years, as well as from leading financial publications like the Wall Street Journal and Fortune. By 1998, AMCORE was rated among the largest 15 percent of asset management firms in the United States, and was among the nation’s 100 largest bank holding companies.

As the 1990s came to a close, AMCORE implemented a customer-focused strategy to simplify operations through consolidation. In May 1999, it announced that it would consolidate nine bank charters into one. According to Mueleman in the May 3, 1999 Rockford Register Star, ”To stay competitive, to stay independent, we have to improve the efficiency under which we operate so our shareholders get a better return.”

2000-Present: Bright Future

As the new millennium dawned, AMCORE introduced a host of e-banking services for consumers including online bill payment and investment services, as well as features for business customers. In a market where many banks had been continually acquired by larger financial institutions from other cities and states, AMCORE appeared committed to remaining independent. It announced a strategy to consolidate operations in order to geographically focus on its core market. Through fiscal conservatism, hard work, and eventually acquisitions and expansion, AMCORE Financial was able to flourish from the seeds planted by Swedish immigrants in a small storefront some 90 years earlier. The same qualities will likely serve AMCORE well into the new millennium.