PRESS RELEASE
FOR IMMEDIATE RELEASE Contact:
January 29, 2004 Todd A. Gipple
Executive Vice President
Chief Financial Officer
(309)743-7745
QCR Holdings, Inc.
Announces Earnings Results For the Fourth Quarter Ended December 31, 2003
QCR Holdings, Inc. (Nasdaq SmallCap/QCRH) today announced earnings for the
fourth quarter ended December 31, 2003 of $1.1 million, or basic earnings per
share of $0.39 and diluted earnings per share of $0.38. For the same quarter one
year ago, the Company reported earnings of $2.0 million, or basic earnings per
share of $0.74 and diluted earnings per share of $0.72. In October 2002, the
Company realized a significant non-recurring gain from the sale of its
Independent Sales Organization (ISO) merchant credit card processing portfolio.
This sale resulted in a gain of $1.3 million, or $0.47 in diluted earnings per
share.
Earnings for the twelve months ended December 31, 2003 were $5.5 million, or
basic earnings per share of $1.96 and diluted earnings per share of $1.91. For
the same twelve months in 2002, the Company had earnings of $4.8 million, or
basic earnings per share of $1.75 and diluted earnings per share of $1.71. As
noted above, calendar year 2002 earnings were impacted by the October 2002 sale
of the Company's ISO portfolio. Earnings for calendar year 2003 were also
positively impacted by the Company's continued processing of these ISO volumes
through September, 2003. This ISO processing resulted in additional 2003 net
income of $900 thousand, or $0.32 per share.
Excluding both the one-time gain from the sale of the ISO portfolio in October
2002, as well as the non-recurring revenue from the continued processing through
September 2003, net income for the twelve months ended December 31, 2002 would
have been $3.5 million, or diluted earnings per share of $1.24, and net income
for the twelve months ended December 31, 2003 would have been $4.6 million, or
diluted earnings per share of $1.61. Although excluding the impact of these
events is a non-GAAP measure, management believes that it is important to
provide such information due to the non-recurring nature of this income and to
more accurately compare the results of the periods presented.
"As anticipated, earnings for the fourth quarter were impacted by significant
reductions in gains on the sale of residential real estate loans, as refinancing
volumes have dropped dramatically. Also impacting fourth quarter earnings was
$494 thousand in stock appreciation rights (SAR) expense, which was generated by
a $5.50 per share increase in the Company's stock price during the fourth
quarter," noted Doug Hultquist, President and Chief Executive Officer. He
continued, " Results for the twelve-month period demonstrated substantial
improvement, as net income increased by $640 thousand, or 13%, over the
twelve-month period ended December 31, 2002. Significant increases in net
interest income and gains on the sale of residential real estate loans fueled
these improved earnings. As we look to 2004, it appears we will be presented
with several earnings challenges resulting from the decline in gains on
residential real estate loans and the reduced processing volumes at Quad City
Bancard, as experienced during this last quarter of 2003. In addition, the
coming months will bring some large investments in technology and facilities at
our subsidiary banks."
Michael Bauer, Chairman of the Company and President and Chief Executive Officer
at Quad City Bank & Trust added, "The Company continues to experience solid
growth, with total assets increasing at a rate of 17% during 2003. In the fall
of 2003, we announced plans for a fifth Quad City Bank & Trust banking facility,
to be located in west Davenport. This facility will likely be completed in late
2004 and will aid in our efforts to continue expanding our market share in the
Quad Cities. In addition, Quad City Bank & Trust has acquired the northern
segment of its Brady Street facility in Davenport, which had previously been
owned by the developer of the property. Renovations to develop this additional
space for use by some of the Company's operational and administrative functions
are nearly completed."
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"We are quite pleased with $1.91 in diluted earnings per share in 2003, which
represents a 12% improvement over the $1.71 reported for 2002," noted Todd
Gipple, Executive Vice President and Chief Financial Officer. He added,
"Excluding the October 2002 one-time gain and the non-recurring income from
continued ISO processing through September 2003, we achieved an adjusted income
per diluted share of $1.61 in 2003, representing a 30% improvement over adjusted
diluted earnings per share of $1.24 for 2002. Strong asset growth resulted in a
significant increase in net interest income of $3.4 million for 2003, when
compared to the prior year. 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 $1.0 million for the
twelve-month period." He continued, "We are also very pleased with Cedar Rapids
Bank & Trust's outstanding progress as the bank was profitable in 2003, only its
second full year of operation."
"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 $150.1 million, net loans of $113.3 million, and deposits of $101.7 million
as of December 31, 2003. We have also achieved profitability, as the bank had
after-tax net income of $192 thousand for the year ended December 31, 2003, as
compared to after-tax losses of $753 thousand for 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 17% to $710.0 million at December 31, 2003
from $604.6 million at December 31, 2002. During the same period, net loans
increased by $70.9 million or 16% to $513.8 million from $442.9 million at
December 31, 2002. Non-performing assets remained stable at $5.0 million at both
December 31, 2002 and December 31, 2003. Total deposits increased 18% to $511.7
million at December 31, 2003 from $434.7 million at December 31, 2002.
Stockholders' equity rose to $41.8 million at December 31, 2003 as compared to
$36.6 million at December 31, 2002.
"Nonaccrual loans at December 31, 2003 were $4.2 million, of which $3.2 million,
or 76%, 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 were $756 thousand at December 31, 2003, of which
$562 thousand, or 74%, were the result of another five lending relationships at
Quad City Bank & Trust." He further added, "The bank is working closely with all
of these customers. Of the five customers 90 days or more past due at year-end,
three of them, representing $400 thousand in loan balances, became current with
their payments during the first month of 2004. Like many other financial
institutions, some of our customers experienced difficulty in the lagging
economy during 2003, which led management to increase the allowance for
estimated loan losses from December 31, 2002 to December 31, 2003. Given the
continued soft economy, management is closely monitoring the Company's loan
portfolio and the level of our allowance for loan losses. We are focusing our
efforts in an attempt to improve the overall quality of our loan portfolio."
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.
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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
------------------------------------------------------------
December 31, September 30, December 31, December 31,
2003 2003 2002 2001
------------------------------------------------------------
(dollars in thousands,
except share data)
SELECTED BALANCE SHEET DATA
Total assets ...................... $ 710,040 $ 683,500 $ 604,600 $ 462,685
Securities ........................ 128,843 104,205 81,654 66,121
Total loans ....................... 522,471 496,387 449,736 342,999
Allowance for estimated loan losses 8,643 8,795 6,879 4,939
Total deposits .................... 511,652 497,586 434,748 343,888
Total stockholders' equity ........ 41,823 40,699 36,586 30,299
Common shares outstanding ......... 2,803,844 2,789,385 2,762,915 2,742,436
Book value per common share ....... 14.92 14.59 13.24 $ 11.05
Full time equivalent employees .... 213 207 195 179
Tier 1 leverage capital ratio ..... 7.35% 7.44% 7.79% 9.06%
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As of
-----------------------------------------------------------
December 31, September 30, December 31, December 31,
2003 2003 2002 2001
-----------------------------------------------------------
(dollars in thousands)
ANALYSIS OF LOAN DATA
Nonaccrual loans ...................... $ 4,204 $ 5,613 $ 4,608 $ 1,846
Accruing loans past due 90 days or more 756 1,250 431 1,765
Other real estate owned ............... -- 209 -- 47
Total nonperforming assets ............ 4,960 7,072 5,039 3,658
Net charge-offs (calendar year-to-date) $ 1,641 $ 711 $ 1,470 $ 442
Loan mix:
Commercial .......................... $435,633 $401,791 $350,331 $255,493
Real estate ......................... 35,693 45,892 54,713 47,335
Installment and other consumer ...... 51,145 48,704 44,692 40,171
Total loans ........................... 522,471 496,387 449,736 342,999
ANALYSIS OF DEPOSIT DATA
Deposit mix:
Noninterest-bearing ................. $130,963 $117,313 $ 89,676 $ 60,603
Interest-bearing .................... 380,689 380,273 345,072 283,285
Total deposits ........................ 511,652 497,586 434,748 343,888
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For the Quarter Ended For the Twelve Months Ended
------------------------------------------- ---------------------------
December 31, September 30, December 31, December 31, December 31,
2003 2003 2002 2003 2002
-------------------------------------------------------------------------
(dollars in thousands, except per share data)
SELECTED INCOME STATEMENT DATA
Interest income ............................ $ 8,503 $ 8,622 $ 8,244 $ 33,378 $ 30,794
Interest expense ........................... 2,775 2,889 3,295 11,950 12,720
Net interest income ........................ 5,728 5,733 4,949 21,428 18,074
Provision for loan losses .................. 778 939 1,547 3,405 3,410
Noninterest income ......................... 2,170 3,260 6,371 11,168 12,714
Noninterest expense ........................ 5,495 5,356 6,642 21,035 20,190
Income tax expense ......................... 526 890 1,094 2,695 2,367
Net income ................................. 1,099 1,808 2,037 5,461 4,821
Earnings per common share (basic) .......... $ 0.39 $ 0.65 $ 0.74 $ 1.96 $ 1.75
Earnings per common share (diluted) ........ $ 0.38 $ 0.63 $ 0.72 $ 1.91 $ 1.71
AVERAGE BALANCES
Assets ..................................... $707,066 $683,787 $589,546 $660,052 $531,480
Deposits ................................... 516,979 493,042 414,043 473,257 380,070
Loans ...................................... 499,174 501,385 437,833 480,314 387,936
Stockholders' equity ....................... 41,217 39,988 35,830 39,213 32,939
KEY RATIOS
Return on average assets (annualized) ...... 0.62% 1.06% 1.38% 0.83% 0.91%
Return on average common equity (annualized) 10.67% 18.09% 22.74% 13.93% 14.64%
Net interest margin (TEY) .................. 3.57% 3.66% 3.61% 3.55% 3.72%
Efficiency ratio ........................... 69.58% 59.56% 58.62% 64.53% 65.53%
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For the Quarter Ended For the Twelve Months Ended
------------------------------------------- ---------------------------
December 31, September 30, December 31, December 31, December 31,
2003 2003 2002 2003 2002
-------------------------------------------------------------------------
(dollars in thousands, except share data)
ANALYSIS OF NONINTEREST INCOME
Merchant credit card fees, net of processing costs $ 416 $ 784 $ 604 $ 2,195 $ 2,367
Trust department fees ............................ 551 550 531 2,243 2,209
Deposit service fees ............................. 425 386 313 1,505 1,128
Gain on sales of loans, net ...................... 336 1,162 1,152 3,668 2,624
Securities gains (losses), net ................... -- 1 62 -- 69
Gain on sale of merchant credit card portfolio ... -- -- 3,460 -- 3,460
Other ............................................ 442 377 249 1,557 857
Total noninterest income ...................... 2,170 3,260 6,371 11,168 12,714
ANALYSIS OF NONINTEREST EXPENSE
Salaries and employee benefits ................... $ 3,330 $ 3,294 $ 3,209 $ 12,711 $ 11,379
Compensation and other expenses related to
sale of merchant credit card portfolio ...... $ -- -- 1,414 -- 1,414
Professional and data processing fees ............ 496 506 477 1,962 1,499
Advertising and marketing ........................ 254 179 201 786 658
Occupancy and equipment expense .................. 676 656 621 2,641 2,517
Stationery and supplies .......................... 125 111 112 460 469
Postage and telephone ............................ 157 157 147 632 548
Other ............................................ 457 453 461 1,843 1,706
Total noninterest expenses .................... 5,495 5,356 6,642 21,035 20,190
WEIGHTED AVERAGE SHARES
Common shares outstanding (a) .................... 2,797,014 2,786,889 2,755,917 2,782,042 2,748,859
Incremental shares from assumed conversion:
Options and Employee Stock Purchase Plan ..... 83,922 80,963 68,370 73,013 65,714
Adjusted weighted average shares (b) ............. 2,880,936 2,867,852 2,824,287 2,855,055 2,814,573
<FN>
(a) Denominator for Basic Earnings Per Share
(b) Denominator for Diluted Earnings Per Share
</FN>
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