PRESS RELEASE
FOR IMMEDIATE RELEASE Contact: Todd A. Gipple
May 1, 2003 Executive Vice President
Chief Financial Officer
(309)743-7745
QCR Holdings, Inc.
Announces Earnings Results For the First Quarter Ended March 31, 2003
QCR Holdings, Inc. (NASDAQ SmallCap/ QCRH) today announced earnings for the
first quarter ended March 31, 2003 of $827 thousand, or basic earnings per share
of $0.30 and diluted earnings per share of $0.29. For the same quarter one year
ago, the Company reported earnings of $614 thousand, or both basic and diluted
earnings per share of $0.22.
From the Company's formation in 1993 through June 30, 2002, its fiscal year end
had been June 30th. In 2002, the Company changed it's fiscal year end to
December 31st. To effect this change, the Company filed a Form 10-K with the
Securities and Exchange Commission for the transition period July 1, 2002
through December 31, 2002. The quarter ended March 31, 2003 therefore represents
the operating results for the Company's first quarter of 2003.
Doug Hultquist, President and Chief Executive Officer noted, "Operating results
for the period improved, as the Company demonstrated a significant increase in
net interest income of $896 thousand over the same period in 2002. Gains on
sales of residential real estate loans also contributed significantly to our
earnings results for the period, as the Company realized an increase in these
gains of $537 thousand over the previous year." He added, "We are disappointed
that much of these improvements were offset by an increased provision for loan
losses this quarter. Quad City Bank & Trust made a provision and subsequent
charge-off of $758 thousand this quarter related to one large lending
relationship."
Michael Bauer, Chairman of the Company and President and Chief Executive Officer
at Quad City Bank & Trust added, "The significant charge-off at Quad City Bank &
Trust is related to the same lending relationship that required a charge-off of
$1.2 million for the quarter ended December 31, 2002. The additional losses are
a result of environmental issues associated with the collateral for the loan,
which were identified during the quarter ended March 31, 2003. The Bank believes
that these environmental issues have negatively impacted the value and
salability of the business. The Bank has determined that it is appropriate to
take a conservative approach and write-down the loan balance to reflect no value
in the real estate and equipment collateral. Quad City Bank & Trust will proceed
with efforts to liquidate all other collateral, and is pursuing a sale of the
real estate and equipment, as well as all available legal remedies against the
borrower."
"While earnings were impacted by the large provision, diluted earnings per share
for the quarter ended March 31, 2003 of $0.29 still represent a 32% improvement
over the $0.22 in diluted earnings per share reported for the same period in
2002," noted Todd Gipple, Executive Vice President and Chief Financial Officer.
He added, "During the past three months, Cedar Rapids Bank & Trust continued to
make outstanding progress toward profitability. The new bank's after-tax
operating losses were only $54 thousand for the three months ended March 31,
2003, as compared to after-tax losses of $268 thousand for the same quarter in
2002."
"Cedar Rapids Bank & Trust continues to be a significant contributor to the
Company's growth in assets, loans, and deposits since opening in September of
2001. We have experienced rapid growth in our first eighteen months of
operations and surpassed the $100 million in total assets milestone in February,
while reaching total assets of $111.3 million, net loans of $87.1 million, and
deposits of $76.5 million as of March 31, 2003," noted Cedar Rapids Bank & Trust
President and Chief Executive Officer, Larry Helling. He added, "The market's
positive reaction to our strategy of providing personalized banking
relationships with the highest levels of service has continued to provide us
with new commercial and retail banking relationships at a steady pace."
The Company's total assets increased 3% to $623.0 million at March 31, 2003 from
$604.6 million at December 31, 2002. During the same period, net loans increased
by $21.8 million or 5% to $464.7 million from $442.9 million at December 31,
2002. Non-performing assets increased to $5.6 million at March 31, 2003 from
$5.0 million at December 31, 2002. Total deposits increased 3% to $447.6 million
at March 31, 2003 from $434.7 million at December 31, 2002. Stockholders' equity
rose to $37.5 million at March 31, 2003 as compared to $36.6 million at December
31, 2002.
"Nonaccrual loans at March 31, 2003 were $4.7 million, of which $3.5 million, or
73%, resulted from three large commercial lending relationships at Quad City
Bank & Trust," explained Chief Financial Officer Gipple. He added, "The bank is
working closely with these customers. Like many other financial institutions,
some of our customers are experiencing difficulty in the lagging economy, which
could lead to further increases in nonperforming assets and the need for an
increased allowance for loan losses. Given the continued soft economy,
management is closely monitoring the Company's loan portfolio and the need for
increased provisions for possible loan losses." He further added, "Accruing
loans past due 90 days or more increased to $883 thousand at March 31, 2003,
however, payments were received on a number of these loans just subsequent to
quarter end and the balance of loans in this category had been reduced to less
than $300 thousand by mid-April 2003."
In October of 2002, the Company announced the sale of our Independent Sales
Organization portion of our merchant credit card operations to iPayment, Inc. As
part of the sales agreement, our subsidiary, Quad City Bancard, Inc., continues
to temporarily process the ISO volumes for iPayment for a fixed monthly fee
rather than a percentage of the volume. As a result, the Company's merchant
credit card fees, net of processing costs, remained significant at $338
thousand, as compared to $414 thousand for the same period in 2002. The Company
currently anticipates that the ISO processing will be moved to another provider
in the second calendar quarter of 2003. At that time, the Company anticipates
that merchant credit card fees, net of processing costs, will be in a range of
$50 thousand to $90 thousand a month from the Company's local merchant,
cardholder, and agent bank portfolios. As a result, Quad City Bancard's net
income will likely be approximately break even for a period after the iPayment
processing is moved to another provider.
QCR Holdings, Inc., headquartered in Moline, Illinois, is a multi-bank holding
company, which serves the Quad City and Cedar Rapids communities via its wholly
owned subsidiary banks. Quad City Bank and Trust Company, which is based in
Bettendorf, Iowa and commenced operations in 1994, and Cedar Rapids Bank and
Trust Company, which is based in Cedar Rapids, Iowa and commenced operations in
2001, provide full-service commercial and consumer banking and trust and asset
management services. The Company also engages in credit card processing through
its wholly owned subsidiary, Quad City Bancard, Inc., based in Moline, Illinois.
Special Note Concerning Forward-Looking Statements. This document (including
information incorporated by reference) contains, and future oral and written
statements of the Company and its management may contain, forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 with respect to the financial condition, results of operations, plans,
objectives, future performance and business of the Company. Forward-looking
statements, which may be based upon beliefs, expectations and assumptions of the
Company's management and on information currently available to management, are
generally identifiable by the use of words such as "believe," "expect,"
"anticipate," "predict," "suggest," "appear," "plan," "intend," "estimate,"
"may," "will," "would," "could," "should" or other similar expressions.
Additionally, all statements in this document, including forward-looking
statements, speak only as of the date they are made, and the Company undertakes
no obligation to update any statement in light of new information or future
events.
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: (i) the strength of the local and national economy; (ii) the economic
impact of September 11th; (iii) changes in state and federal laws, regulations
and governmental policies concerning the Company's general business; (iv)
changes in interest rates and prepayment rates of the Company's assets; (v)
increased competition in the financial services sector and the inability to
attract new customers; (vi) changes in technology and the ability to develop and
maintain secure and reliable electronic systems; (vii) the loss of key
executives or employees; (viii) changes in consumer spending; (ix) unexpected
results of acquisitions; (x) unexpected outcomes of existing or new litigation
involving the Company; and (xi) changes in accounting policies and practices.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements.
Additional information concerning the Company and its business, including
additional factors that could materially affect the Company's financial results,
is included in the Company's filings with the Securities and Exchange
Commission.
As of
---------------------------------------
March 31, December 31, March 31,
2003 2002 2002
---------------------------------------
(dollars in thousands, except
share data)
SELECTED BALANCE SHEET DATA
Total assets ......................... $ 623,017 $ 604,600 $ 495,505
Securities ........................... 87,868 81,654 72,947
Total loans .......................... 472,139 449,736 360,155
Allowance for estimated loan losses .. 7,441 6,879 5,405
Total deposits ....................... 447,555 434,748 364,002
Total stockholders' equity ........... 37,531 36,586 30,724
Common shares outstanding ............ 2,773,212 2,762,915 2,744,896
Book value per common share .......... 13.53 13.24 11.19
Full time equivalent employees ....... 198 195 186
Tier 1 leverage capital ratio ........ 7.74% 7.79% 8.42%
As of
-----------------------------------
March 31, December 31, March 31,
2003 2002 2002
-----------------------------------
(dollars in thousands)
ANALYSIS OF LOAN DATA
Nonaccrual loans ........................... $ 4,740 $ 4,608 $ 1,608
Accruing loans past due 90 days or more .... 883 431 754
Other real estate owned .................... -- -- --
Total nonperforming assets ................. 5,623 5,039 2,362
Net charge-offs (For the quarter ended) .... $ 769 $ 1,150 $ 32
Loan mix:
Commercial ............................... $375,724 $350,331 $282,008
Real estate .............................. 50,726 54,713 38,114
Installment and other consumer ........... 45,689 44,692 40,033
Total loans ................................ 472,139 449,736 360,155
For the Quarter Ended
March 31,
-----------------------
2003 2002
-----------------------
(dollars in thousands, except per share data)
SELECTED INCOME STATEMENT DATA
Interest income .................................... $ 7,906 $ 7,082
Interest expense ................................... 3,058 3,130
Net interest income ................................ 4,848 3,952
Provision for loan losses .......................... 1,330 498
Noninterest income ................................. 2,489 1,829
Noninterest expense ................................ 4,784 4,395
Income tax expense ................................. 396 274
Net income ......................................... 827 614
Earnings per common share (basic) .................. $ 0.30 $ 0.22
Earnings per common share (diluted) ................ $ 0.29 $ 0.22
AVERAGE BALANCES
Assets ............................................. $607,848 $480,634
Deposits ........................................... 432,435 351,498
Loans .............................................. 451,251 342,974
Stockholders' equity ............................... 37,100 30,757
KEY RATIOS
Return on average assets (annualized) .............. 0.54% 0.51%
Return on average common equity (annualized) ....... 8.92% 7.99%
Net interest margin (TEY) .......................... 3.47% 3.66%
Efficiency ratio ................................... 65.20% 76.00%
For the Quarter Ended
March 31,
-----------------------
2003 2002
-----------------------
(dollars in thousands, except share data)
ANALYSIS OF NONINTEREST INCOME
Merchant credit card fees, net of processing costs ... $ 338 $ 414
Trust department fees ................................ 561 594
Deposit service fees ................................. 331 256
Gain on sales of loans, net .......................... 955 418
Other ................................................ 304 147
Total noninterest income .......................... 2,489 1,829
ANALYSIS OF NONINTEREST EXPENSE
Salaries and employee benefits ....................... $ 2,885 $ 2,538
Professional and data processing fees ................ 429 327
Advertising and marketing ............................ 149 148
Occupancy and equipment expense ...................... 652 606
Stationery and supplies .............................. 110 125
Postage and telephone ................................ 153 127
Other ................................................ 406 524
Total noninterest expenses ........................ 4,784 4,395
WEIGHTED AVERAGE SHARES
Common shares outstanding (a) ........................ 2,767,013 2,743,668
Incremental shares from assumed conversion:
Options .......................................... 60,714 61,241
Adjusted weighted average shares (b) ................. 2,827,727 2,804,909
(a) Denominator for Basic Earnings Per Share
(b) Denominator for Diluted Earnings Per Share