PRESS RELEASE
FOR IMMEDIATE RELEASE Contact:
January 27, 2005 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, 2004
QCR Holdings, Inc. (Nasdaq SmallCap/QCRH) today announced earnings for the
fourth quarter ended December 31, 2004 of $1.3 million, 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 $1.1 million, or basic earnings per
share of $0.26 and diluted earnings per share of $0.25. All share and per share
data in this press release and accompanying schedules has been retroactively
adjusted to reflect a 3-for-2 common stock split, which occurred on May 28,
2004, as if it had occurred on January 1, 2003.
Earnings for the twelve months ended December 31, 2004 were $5.2 million, or
basic earnings per share of $1.23 and diluted earnings per share of $1.20. For
2003, the Company had earnings of $5.5 million, or basic earnings per share of
$1.31 and diluted earnings per share of $1.28. Earnings for 2003 were positively
impacted by the Company's continued merchant credit card processing through
September 2003 for an ISO portfolio, which had been sold in October 2002. This
ISO processing contributed $864 thousand, or $0.20 in diluted earnings per
share, to the Company's net income during 2003.
In February 2004, the Company issued $8.0 million in floating rate and $12.0
million in fixed rate trust preferred securities. In connection with this
issuance, the Company redeemed, on June 30, 2004, $12.0 million of trust
preferred securities originally issued in 1999. Prior to this redemption, the
Company had expensed $747 thousand of unamortized issuance costs associated with
the 1999 trust preferred securities in March 2004. The write-off of these costs,
combined with the additional interest costs of supporting both the original and
the new securities from February through June, resulted in an after-tax
reduction to net income during 2004 of $729 thousand, or $0.17 in diluted
earnings per share. Management believes that this refinancing strategy will
provide significant long-term benefits to the Company as the new fixed rate
securities were issued at a rate of 6.93% for the first seven years and the
floating rate securities currently carry a rate of 5.41%, as compared to a rate
of 9.2% on the 1999 fixed rate securities.
"Excluding the one-time write-off of these unamortized issuance costs and the
additional interest costs incurred for approximately four months, net income for
2004 would have been $5.9 million, or diluted earnings per share of $1.37, a 9%
improvement over earnings for 2003," stated Doug Hultquist, President and Chief
Executive Officer. He continued, "Although excluding the impact of this event is
a non-GAAP measure, we believe that it is important to provide such information
due to the non-recurring nature of this expense and to more accurately compare
the results of the periods presented."
President Hultquist added, "Despite the anticipated declines in both gains on
the sale of residential real estate loans and in net merchant credit card fees,
earnings for the fourth quarter surpassed earnings for the same quarter of 2003
by $188 thousand. During the fourth quarter of 2004, earnings were positively
impacted by a $1.1 million reduction in the provision for loan losses, when
compared to the previous year. The successful resolution of several large
credits in Quad City Bank's loan portfolio, through foreclosure, payoff, or
restructuring, resulted in reductions to both provision expense and the level of
allowance for loan losses." He continued, "We are very pleased by the $3.3
million increase in net interest income that we experienced in 2004, which was
primarily the result of a 24% increase in our loan portfolio from one year ago.
We also, reported improvements this year in non-interest income, as trust
department fees increased by 13% and deposit service fees increased by 8%. In
summary, our significant increases in net interest income and certain areas of
non-interest income have virtually offset the expected reductions in gains on
loan sales and merchant credit card fees, as well as the one-time cost of our
trust preferred securities refinancing."
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Michael Bauer, Chairman of the Company and President and Chief Executive Officer
at Quad City Bank & Trust stated, "The Company continued to experience
outstanding growth during 2004, as total assets increased by 23% for the year.
In June, the Company announced plans to expand to Rockford, Illinois with its
third bank charter, Rockford Bank and Trust Company. In mid September, Quad City
Bank & Trust opened a temporary branch facility in Rockford, and on January 3,
2005 Rockford Bank & Trust began operations under its own charter in its
permanent location at 127 North Wyman Street. We previously announced plans for
a fifth Quad City Bank & Trust banking facility, to be located in the Five
Points area of west Davenport. Construction of the new facility, which is
expected to be complete late in the first quarter of 2005, will help to promote
the growth of our market share in the Quad Cities."
Cedar Rapids Bank & Trust has continued to experience rapid growth, reaching
total assets of $233.4 million, net loans of $169.7 million, and deposits of
$174.5 million as of December 31, 2004, and improved profitability, as the bank
had after-tax net income of $205 thousand for the fourth quarter of 2004, as
compared to $44 thousand for the same quarter one year ago. Cedar Rapids Bank &
Trust is also growing its physical presence in the market with the construction
of both a new main office in downtown Cedar Rapids, which is scheduled for
completion in mid 2005, and a branch facility located in northern Cedar Rapids
on Council Street, which is anticipated to open in late spring 2005.
The Company's total assets increased $160.1 million, or 23%, to $870.1 million
at December 31, 2004 from $710.0 million at December 31, 2003. During the same
period, net loans increased by $125.3 million or 24% to $639.1 million from
$513.8 million at December 31, 2003. Non-performing assets increased to $10.7
million at December 31, 2004 from $5.0 million at December 31, 2003. Total
deposits increased to $588.0 million at December 31, 2004 when compared to
$511.7 million at December 31, 2003. Stockholders' equity rose to $50.8 million
at December 31, 2004 as compared to $41.8 million at December 31, 2003,
primarily as the result of net income and the net increase in shares of common
stock, partially offset by the declaration of a cash dividend and a decrease in
fair value of securities classified as available for sale. A private placement
of common stock, which closed on December 24, 2004, contributed $4.9 million to
stockholders equity.
"Nonaccrual loans at December 31, 2004 were $7.6 million, of which $6.4 million,
or 85%, resulted from four large commercial lending relationships at Quad City
Bank & Trust. At year end, accruing loans past due 90 days or more were $1.1
million, of which $739 thousand, or 65%, were the result of three additional
lending relationships at Quad City Bank & Trust." stated Chairman Bauer. He
explained, "Despite the increase in non-performing assets since one year ago,
management believes that the current level of allowance to total loans of 1.43%
is adequate. The existence of a strong collateral position, a governmental
guarantee, or an improved payment status on several of these nonperformers has
significantly reduced the Company's exposure to loss." He continued, "Quad City
Bank & Trust is working closely with all of these customers in efforts to reach
equitable solutions for all concerned. Management is continually monitoring the
Company's loan portfolio and the level of our allowance for loan losses. Our
efforts are ongoing 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, Cedar Rapids, and Rockford communities via
its wholly owned subsidiary banks. Quad City Bank and Trust Company, which is
based in Bettendorf, Iowa and commenced operations in 1994, Cedar Rapids Bank
and Trust Company, which is based in Cedar Rapids, Iowa and commenced operations
in 2001, and Rockford Bank and Trust Company, which is based in Rockford,
Illinois and commenced operations in 2005, 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 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 any future terrorist threats and attacks, and the response of the
United Sates to any such threats and attacks; (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 our strategy to establish denovo banks in new markets; (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,
2004 2004 2003 2002
-------------------------------------------------------
(dollars in thousands, except share data)
SELECTED BALANCE SHEET DATA
Total assets ...................... $ 870,084 $ 836,367 $ 710,040 $ 604,600
Securities ........................ $ 149,561 $ 138,234 $ 128,843 $ 81,654
Total loans ....................... $ 648,351 $ 626,107 $ 522,471 $ 449,736
Allowance for estimated loan losses $ 9,262 $ 10,134 $ 8,643 $ 6,879
Total deposits .................... $ 588,016 $ 529,373 $ 511,652 $ 434,748
Total stockholders' equity ........ $ 50,774 $ 45,266 $ 41,823 $ 36,586
Common shares outstanding * ....... 4,496,730 4,240,407 4,205,766 4,144,373
Book value per common share * ..... $ 11.29 $ 10.67 $ 9.94 $ 8.83
Full time equivalent employees .... 243 238 213 195
Tier 1 leverage capital ratio ..... 7.81% 7.19% 7.35% 7.79%
<FN>
* Share data has been retroactively adjusted to effect a 3:2 common stock
split, which occurred on May 28, 2004, as if it had occurred on January 1,
2003.
</FN>
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As of
----------------------------------------------------------
December 31, September 30, December 31, December 31,
2004 2004 2003 2002
----------------------------------------------------------
(dollars in thousands)
ANALYSIS OF LOAN DATA
Nonaccrual loans ...................... $ 7,608 $ 4,407 $ 4,204 $ 4,608
Accruing loans past due 90 days or more 1,133 2,045 756 431
Other real estate owned ............... 1,925 245 -- --
-----------------------------------------------------
Total nonperforming assets ............ $ 10,666 $ 6,697 $ 4,960 $ 5,039
Net charge-offs (calendar year-to-date) $ 753 $ 245 $ 1,641 $ 1,470
Loan mix:
Commercial .......................... $532,830 $512,040 $435,633 $350,331
Real estate ......................... 59,611 57,288 35,693 54,713
Installment and other consumer ...... 55,910 56,779 51,145 44,692
-----------------------------------------------------
Total loans ........................... $648,351 $626,107 $522,471 $449,736
ANALYSIS OF DEPOSIT DATA
Deposit mix:
Noninterest-bearing ................. $109,362 $106,760 $130,963 $ 89,676
Interest-bearing .................... 478,654 422,613 380,689 345,072
-----------------------------------------------------
Total deposits ........................ $588,016 $529,373 $511,652 $434,748
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For the Quarter Ended For the Twelve Months Ended
----------------------------------------- ---------------------------
December 31, September 30, December 31, December 31, December 31,
2004 2004 2003 2004 2003
----------------------------------------------------------------------
(dollars in thousands, except per share data)
SELECTED INCOME STATEMENT DATA
Interest income ...................................... $ 10,313 $ 9,799 $ 8,503 $ 38,017 $ 33,378
Interest expense ..................................... 3,847 3,368 2,775 13,325 11,950
------------------------------------------------------------------
Net interest income .................................. 6,466 6,431 5,728 24,692 21,428
Provision for loan losses ............................ (364) 411 778 1,372 3,405
------------------------------------------------------------------
Net interest income after provision for loan loss6,830 6,020 4,950 23,320 18,023
Noninterest income ................................... 1,925 2,019 2,170 8,682 11,168
Noninterest expense .................................. 6,842 5,913 5,495 24,281 21,035
------------------------------------------------------------------
Income before taxes .................................. 1,913 2,126 1,625 7,721 8,156
Income tax expense ................................... 626 703 526 2,504 2,695
------------------------------------------------------------------
Net income ........................................... $ 1,287 $ 1,423 $ 1,099 $ 5,217 $ 5,461
Earnings per common share (basic) * .................. $ 0.30 $ 0.33 $ 0.27 $ 1.23 $ 1.31
Earnings per common share (diluted) * ................ $ 0.29 $ 0.33 $ 0.26 $ 1.20 $ 1.28
AVERAGE BALANCES
Assets ............................................... $ 855,227 $ 818,784 $ 707,066 $ 799,527 $ 660,052
Deposits ............................................. $ 562,496 $ 526,737 $ 516,979 $ 526,416 $ 473,257
Loans ................................................ $ 636,515 $ 602,739 $ 499,174 $ 587,450 $ 480,314
Stockholders' equity ................................. $ 46,905 $ 44,237 $ 41,217 $ 43,890 $ 39,213
KEY RATIOS
Return on average assets (annualized) ................ 0.60% 0.70% 0.62% 0.65% 0.83%
Return on average common equity (annualized) ......... 10.98% 12.87% 10.67% 11.89% 13.93%
Net interest margin (TEY) ............................ 3.32% 3.46% 3.57% 3.41% 3.55%
Nonperforming assets / total assets .................. 1.23% 0.80% 0.70% 1.23% 0.70%
Net charge-offs / average loans ...................... 0.08% 0.00% 0.19% 0.13% 0.34%
Allowance / total loans .............................. 1.43% 1.62% 1.69% 1.43% 1.69%
Efficiency ratio ..................................... 81.53% 69.97% 69.58% 72.75% 64.53%
<FN>
* Per share data has been retroactively adjusted to effect a 3:2 common stock
split, which occurred on May 28, 2004, as if it had occurred on January 1,
2003.
</FN>
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For the Quarter Ended For the Twelve Months Ended
----------------------------------------- ---------------------------
December 31, September 30, December 31, December 31, December 31,
2004 2004 2003 2004 2003
----------------------------------------------------------------------
(dollars in thousands, except share data)
ANALYSIS OF NONINTEREST INCOME
Merchant credit card fees, net of processing costs . $ 315 $ 253 $ 416 $ 1,409 $ 2,195
Trust department fees .............................. 626 616 551 2,531 2,243
Deposit service fees ............................... 394 421 425 1,632 1,505
Gain on sales of loans, net ........................ 239 243 336 1,150 3,668
Securities gains (losses), net ..................... (72) -- -- (45) --
Other .............................................. 423 486 442 2,005 1,557
---------------------------------------------------------------------
Total noninterest income ........................ $ 1,925 $ 2,019 $ 2,170 $ 8,682 $ 11,168
ANALYSIS OF NONINTEREST EXPENSE
Salaries and employee benefits ..................... $ 4,044 $ 3,458 $ 3,330 $ 13,773 $ 12,711
Professional and data processing fees .............. 584 620 496 2,200 1,962
Advertising and marketing .......................... 281 233 254 1,015 786
Occupancy and equipment expense .................... 900 842 676 3,264 2,641
Stationery and supplies ............................ 150 125 125 544 460
Postage and telephone .............................. 186 170 157 685 632
Bank service charges ............................... 139 146 118 570 454
Insurance .......................................... 69 126 115 420 445
Loss on redemption of junior subordinated debentures -- -- 748 --
Other .............................................. 489 193 224 1,062 944
---------------------------------------------------------------------
Total noninterest expenses ...................... $ 6,842 $ 5,913 $ 5,495 $ 24,281 $ 21,035
WEIGHTED AVERAGE SHARES *
Common shares outstanding (a) ...................... 4,263,369 4,246,741 4,145,521 4,234,345 4,173,063
Incremental shares from assumed conversion:
Options and Employee Stock Purchase Plan ....... 105,310 102,576 125,883 110,420 109,520
---------------------------------------------------------------------
Adjusted weighted average shares (b) ............... 4,368,679 4,349,317 4,271,404 4,344,765 4,282,583
<FN>
(a) Denominator for Basic Earnings Per Share
(b) Denominator for Diluted Earnings Per Share
* Share data has been retroactively adjusted to effect a 3:2 common stock
split, which occurred on May 28, 2004, as if it had occurred on January 1,
2003.
</FN>
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