PRESS RELEASE
FOR IMMEDIATE RELEASE Contact:
July 23, 2003 Todd A. Gipple
Executive Vice President
Chief Financial Officer
(309)743-7745
QCR Holdings, Inc.
Announces Earnings Results For the Second Quarter Ended June 30, 2003
QCR Holdings, Inc. (NASDAQ SmallCap/QCRH) today announced earnings for
the second quarter ended June 30, 2003 of $1.7 million, or basic earnings per
share of $0.62 and diluted earnings per share of $0.61. For the same quarter one
year ago, the Company reported earnings of $1.0 million, or basic earnings per
share of $0.37 and diluted earnings per share of $0.36.
Earnings for the six months ended June 30, 2003 were $2.6 million, or
basic earnings per share of $0.92 and diluted earnings per share of $0.90. For
the same six months in 2002, the Company had earnings of $1.6 million, or basic
earnings per share of $0.59 and diluted earnings per share of $0.58.
"We are very pleased with operating results for the second quarter.
Earnings improved from the first quarter by $900 thousand, or 109%, and improved
by $716 thousand, or 71%, from the same quarter one year ago. Operating results
for the six-month period demonstrated similar improvements as earnings increased
by $929 thousand, or 57%, over the six-month period ended June 30, 2002," noted
Doug Hultquist, President and Chief Executive Officer. He continued,
"Significant increases in net interest income and gains on the sale of
residential real estate loans have fueled these improved earnings."
Michael Bauer, Chairman of the Company and President and Chief
Executive Officer at Quad City Bank & Trust added, "The Company experienced
tremendous growth this quarter, as total assets increased at an annualized rate
of 27% during the period. Another positive development during the second quarter
was the sale of the real estate and other assets associated with the large,
troubled credit at Quad City Bank & Trust that was charged down in the prior two
quarters. The sale resulted in recoveries of $120 thousand in the second
quarter, with additional recoveries expected in future periods as gain from the
sale of the other real estate is recognized."
"While six-month earnings results were impacted by significant
provision expense at Quad City Bank & Trust in the first quarter, basic earnings
per share of $0.92 still represent a 56% improvement over the $0.59 reported for
the same period in 2002," noted Todd Gipple, Executive Vice President and Chief
Financial Officer. He added, "Strong asset growth resulted in a significant
increase in net interest income of $1.5 million for the six-month period
compared to a year ago. This growth offset a compressed net interest margin
percentage created by the prolonged low rate environment. Increased gains on the
sale of residential real estate loans were another significant contributor to
the improved earnings, as these gains increased by $1.4 million for the
six-month period." He continued, "We are also very pleased with Cedar Rapids
Bank & Trust's outstanding progress as the bank reached profitability on a
year-to-date basis in May 2003."
"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 continued to experience rapid growth, as we reached total
assets of $128.5 million, net loans of $97.7 million, and deposits of $90.7
million as of June 30, 2003. We have also achieved profitability on a monthly
basis as the bank had after-tax operating income of $15 thousand for the six
months ended June 30, 2003, as compared to after-tax losses of $478 thousand for
the same period in 2002," 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."
The Company's total assets increased 10% to $664.9 million at June 30,
2003 from $604.6 million at December 31, 2002. During the same period, net loans
increased by $39.0 million or 9% to $481.8 million from $442.9 million at
December 31, 2002. Non-performing assets increased to $5.7 million at June 30,
2003 from $5.0 million at December 31, 2002. Total deposits increased 11% to
$483.1 million at June 30, 2003 from $434.7 million at December 31, 2002.
Stockholders' equity rose to $39.5 million at June 30, 2003 as compared to $36.6
million at December 31, 2002.
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"Nonaccrual loans at June 30, 2003 were $5.2 million, of which $3.7
million, or 72%, resulted from four large commercial lending relationships at
Quad City Bank & Trust," explained Chief Financial Officer Gipple. He added,
"Accruing loans past due 90 days or more decreased to $551 thousand at June 30,
2003 from $883 thousand at March 31, 2003." He further added, "The bank is
working closely with all of 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."
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, for the six months ended
June 30, 2003 remained significant at $995 thousand, as compared to $1.1 million
for the same period in 2002. The Company currently anticipates that the ISO
processing will be moved to another provider during calendar 2003. At that time,
the Company anticipates that quarterly merchant credit card fees, net of
processing costs, will likely be in a range of $250 thousand to $300 thousand
from the Company's local merchant, cardholder, and agent bank portfolios. As a
result, Quad City Bancard's quarterly after tax net income will likely be
approximately $50 thousand to $100 thousand initially, after the iPayment
processing is moved to another provider, as compared to after tax net income of
$385 thousand for the first six months of 2003.
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.
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As of
----------------------------------------------------
June 30, March 31, December 31, June 30,
2003 2003 2002 2002
----------------------------------------------------
(dollars in thousands, except
share data)
SELECTED BALANCE SHEET DATA
Total assets ...................... $ 664,943 $ 623,017 $ 604,600 $ 518,828
Securities ........................ 94,034 87,868 81,654 76,231
Total loans ....................... 489,753 472,139 449,736 390,594
Allowance for estimated loan losses 7,908 7,441 6,879 6,111
Total deposits .................... 483,051 447,555 434,748 376,317
Total stockholders' equity ........ 39,543 37,531 36,586 32,578
Common shares outstanding ......... 2,779,206 2,773,212 2,762,915 2,749,447
Book value per common share ....... 14.23 13.53 13.24 11.85
Full time equivalent employees .... 203 198 195 190
Tier 1 leverage capital ratio ..... 7.63% 7.74% 7.79% 8.25%
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As of
---------------------------------------------
June 30, March 31, December 31, June 30,
2003 2003 2002 2002
---------------------------------------------
(dollars in thousands)
ANALYSIS OF LOAN DATA
Nonaccrual loans ...................... $ 5,198 $ 4,740 $ 4,608 $ 1,560
Accruing loans past due 90 days or more 551 883 431 708
Other real estate owned ............... -- -- -- --
Total nonperforming assets ............ 5,749 5,623 5,039 2,268
Net charge-offs (calendar year-to-date) $ 659 $ 769 $ 1,469 $ 53
Loan mix:
Commercial .......................... $391,089 $375,724 $350,331 $305,043
Real estate ......................... 52,389 50,726 54,713 45,418
Installment and other consumer ...... 46,275 45,689 44,692 40,133
Total loans ........................... 489,753 472,139 449,736 390,594
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For the
For the Quarter Ended Six Months Ended
-------------------------------- --------------------
June 30, March 31, June 30, June 30, June 30,
2003 2003 2002 2003 2002
--------------------------------------------------------
(dollars in thousands, except per share data)
SELECTED INCOME STATEMENT DATA
Interest income ............................ $ 8,346 $ 7,906 $ 7,592 $ 16,252 $ 14,675
Interest expense ........................... 3,227 3,058 3,106 6,285 6,237
Net interest income ........................ 5,119 4,848 4,486 9,967 8,438
Provision for loan losses .................. 358 1,330 728 1,688 1,225
Noninterest income ......................... 3,249 2,489 2,046 5,737 3,874
Noninterest expense ........................ 5,400 4,784 4,382 10,183 8,777
Income tax expense ......................... 883 396 411 1,279 685
Net income ................................. 1,727 827 1,011 2,554 1,625
Earnings per common share (basic) .......... $ 0.62 $ 0.30 $ 0.37 $ 0.92 $ 0.59
Earnings per common share (diluted) ........ $ 0.61 $ 0.29 $ 0.36 $ 0.90 $ 0.58
AVERAGE BALANCES
Assets ..................................... $641,507 $607,848 $510,796 $624,678 $495,715
Deposits ................................... 447,766 432,435 369,955 440,101 360,726
Loans ...................................... 465,679 451,251 371,120 458,465 357,047
Stockholders' equity ....................... 38,548 37,100 31,620 37,824 31,189
KEY RATIOS
Return on average assets (annualized) ...... 1.08% 0.54% 0.79% 0.82% 0.66%
Return on average common equity (annualized) 17.92% 8.92% 12.79% 13.50% 10.42%
Net interest margin (TEY) .................. 3.57% 3.47% 3.87% 3.52% 3.77%
Efficiency ratio ........................... 64.53% 65.20% 67.06% 64.84% 71.26%
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For the Quarter Ended For the Six Months Ended
---------------------------------------- --------------------------
June 30, March 31, June 30, June 30, June 30,
2003 2003 2002 2003 2002
---------------------------------------------------------------------
(dollars in thousands, except share data)
ANALYSIS OF NONINTEREST INCOME
Merchant credit card fees, net of processing costs $ 658 $ 338 $ 660 $ 995 $ 1,075
Trust department fees ............................ 581 561 571 1,142 1,164
Deposit service fees ............................. 363 331 276 694 531
Gain on sales of loans, net ...................... 1,214 955 341 2,169 759
Securities gains (losses), net ................... (1) -- 7 (1) 7
Other ............................................ 434 304 191 738 338
Total noninterest income ...................... 3,249 2,489 2,046 5,737 3,874
ANALYSIS OF NONINTEREST EXPENSE
Salaries and employee benefits ................... $ 3,201 $ 2,885 2,765 $ 6,086 $ 5,303
Professional and data processing fees ............ 530 429 299 959 626
Advertising and marketing ........................ 205 149 169 354 317
Occupancy and equipment expense .................. 657 652 589 1,308 1,194
Stationery and supplies .......................... 114 110 115 225 240
Postage and telephone ............................ 165 153 130 318 257
Other ............................................ 528 406 315 933 840
Total noninterest expenses .................... 5,400 4,784 4,382 10,183 8,777
WEIGHTED AVERAGE SHARES
Common shares outstanding (a) .................... 2,777,252 2,767,013 2,746,289 2,772,133 2,744,986
Incremental shares from assumed conversion:
Options and Employee Stock Purchase Plan ..... 66,454 60,714 68,620 63,584 64,931
Adjusted weighted average shares (b) ............. 2,843,706 2,827,727 2,814,909 2,835,717 2,809,917
<FN>
(a) Denominator for Basic Earnings Per Share
(b) Denominator for Diluted Earnings Per Share
</FN>
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