Exhibit 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE Contact:
October 20, 2006 Todd A.Gipple
Executive Vice President
Chief Financial Officer
(309) 743-7745
QCR Holdings, Inc.
Announces Earnings Results For the Third Quarter of 2006
QCR Holdings, Inc. (Nasdaq /QCRH) today announced that earnings for the third
quarter ended September 30, 2006 were $520 thousand, or basic and diluted
earnings per share of $0.11. For the same quarter one year ago, the Company
reported earnings of $956 thousand, or basic and diluted earnings per share of
$0.21. Earnings for the second quarter of 2006 were $1.2 million, or basic and
diluted earnings per share of $0.26.
Earnings for the nine months ended September 30, 2006 were $2.6 million, or
basic and diluted earnings per share of $0.55. For the comparable period in
2005, the Company had earnings of $3.5 million, or basic earnings per share of
$0.78 and diluted earnings per share of $0.77.
During the first nine months of 2006, the Company's total assets increased by
19%, or $198.6 million, to $1.24 billion from $1.04 billion at December 31,
2005. During this same period, net loans/leases increased by 25%, or $185.1
million, to $932.5 million from $747.4 million at December 31, 2005. Total
deposits increased by 25% to $873.3 million at September 30, 2006 when compared
to $698.5 million at December 31, 2005. Stockholders' equity rose to $57.6
million at September 30, 2006 as compared to $54.5 million at December 31, 2005.
The Company's net income for the quarter ended September 30, 2006 was $520
thousand, which was a decline of 57%, or $684 thousand from the previous
quarter. Quarter-to-quarter total revenue increased by $1.3 million, or 7%,
while total expense increased by $2.4 million, or 13%. In a comparison of the
third quarter of 2006 to the second quarter of 2006, an increase in net interest
income of $432 thousand was essentially erased by an increase in the provision
for loan/lease losses of $377 thousand. The gain on sale of a foreclosed asset
at Quad City Bank & Trust contributed $745 thousand to second quarter earnings,
while third quarter earnings reflected a $100 thousand loss in this same
category. Quarter-to-quarter, a $325 thousand increase in total noninterest
expenses was primarily the result of a combination of increased salaries and
employee benefits expense and professional fees expense at Quad City Bank &
Trust, the Company's largest subsidiary bank.
"During the third quarter, our net interest margin continued to experience
stress created by the combination of a flat yield curve and significant
competition", stated Mr. Douglas M. Hultquist, President and CEO. "However,
despite the narrowing of our net interest spread for the fifth consecutive
quarter, the Company's net interest income grew $432 thousand, or 6%, from the
second quarter due primarily to our increased loan/lease volumes. The positive
effects of the strong loan/lease growth at our subsidiary banks were not enough
to neutralize the negative effects from both rate and volume increases in our
interest bearing liabilities, resulting in disappointing earnings for the
quarter."
"Quad City Bank & Trust has shown strong loan growth during 2006, providing 58%
of our Company's consolidated loan/lease growth of more than $185 million,"
stated Michael A. Bauer, Chairman of the Company and President and Chief
Executive Officer at Quad City Bank & Trust. "However, we have struggled with
earnings throughout 2006 at Quad City Bank & Trust," he continued. "Net interest
income has shown the effects of a very competitive market where increases in our
lending rates have not been able to keep pace with increases in our deposit
rates. As our original and largest bank, Quad City Bank & Trust is depended upon
to provide the core earnings necessary for the Company to grow and expand into
the other markets. These core earnings have been weak during 2006 and have
contributed significantly to the depressed earnings of the Company."
Mr. Hultquist concluded, "Previously, we announced our hiring of a team of
bankers in the Milwaukee market, who since June have operated as a branch of
Rockford Bank & Trust. During 2006, this new operation has experienced after-tax
start-up losses of $514 thousand. We firmly believe that the negative impact on
earnings created by the expenditures necessary to establish our Wisconsin
operation represents our contribution to a long-term investment, which should
provide the Company and its stockholders with significant benefits in the
future."
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Quad City Bank & Trust, the Company's first subsidiary bank, had total
consolidated assets of $820.3 million at September 30, 2006, which was an
increase of $96.7 million from December 31, 2005. At the close of the third
quarter of 2006, Quad City Bank & Trust had net loans/leases of $626.5 million
and deposits of $550.3 million, which were increases from December 31, 2005 of
21% and 15%, respectively. The bank realized after-tax net income of $1.3
million for the third quarter of 2006, which was a decrease of $790 thousand
from $2.1 million for the second quarter of 2006. The second quarter gain on
sale of a foreclosed asset, in combination with the negative provisions to the
allowance for estimated losses on loan/leases that quarter, contributed
significantly to the quarter-to-quarter decrease in net income. At September 30,
year-to-date earnings for the bank were $4.8 million, which is a decrease of
$205 thousand, or 4%, from one year ago.
Cedar Rapids Bank & Trust, which opened in 2001, reached total assets of $326.5
million at September 30, 2006, for an increase of $36.7 million from December
31, 2005. At the end of the third quarter of 2006, Cedar Rapids Bank & Trust had
net loans of $228.9 million and deposits of $234.0 million, which were increases
from December 31, 2005 of 13% and 18%, respectively. After-tax net income for
Cedar Rapids Bank & Trust for the second quarter of 2006 was $415 thousand,
which was an increase of $49 thousand from $366 thousand for the second quarter.
At September 30, year-to-date earnings for the bank were $1.2 million, which is
an increase of $431 thousand, or 58%, from one year ago.
The Company's newest banking subsidiary, Rockford Bank & Trust, surpassed the
threshold of $100 million in total assets during the third quarter. The bank
reached total assets of $109.3 million, net loans of $77.1 million, and deposits
of $90.9 million at September 30, 2006. This represents growth from December 31,
2005 of $68.0 million, $51.6 million and $65.3 million, respectively. During
2006, the Wisconsin operation has contributed $15.6 million to net loan growth
and $15.0 million to deposit growth. Rockford Bank & Trust, which opened January
3, 2005, experienced a net operating loss of $471 thousand for the third quarter
of 2006 compared to a loss of $556 thousand for the second quarter. The
Wisconsin operation accounted for $239 thousand of the third quarter loss. At
September 30, year-to-date losses for the bank were $1.3 million compared to
losses of $972 thousand for the first nine months of 2005. At September 30,
year-to-date losses for the Wisconsin operation were $514 thousand. The results
of operations in both Rockford and Milwaukee are consistent with the Company's
expectations for this de novo charter and beginning operations in Milwaukee. In
December 2005, Rockford Bank & Trust opened a second location in a temporary
facility on Guilford Road at Alpine Road in Rockford. Construction of the
permanent facility is nearing completion with an expected opening in November
2006.
In August 2005, the Company acquired M2 Lease Funds, LLC. Since that time, the
growth and earnings at this subsidiary have been consistent with the Company's
expectations. At September 30, 2006, M2 Lease Funds had total assets of $51.1
million and pretax net income of $850 thousand year-to-date and $258 thousand
for the third quarter.
"Nonperforming assets at September 30, 2006 were $8.4 million, which were up
from $7.8 million at June 30," stated Mr. Bauer. "A single commercial
relationship at Quad City Bank & Trust contributed $4.3 million to nonperforming
assets, when the related loans were placed into nonaccrual status in June. At
the close of the third quarter of 2006, nonaccrual loans increased to $7.8
million, from $7.3 million at June 30, 2006, and accruing loans past due 90 days
or more increased $80 thousand from the end of the second quarter. Also, during
the first nine months of 2006, two properties were sold, which had been held in
other real estate owned (OREO) at December 31, 2005." Mr. Bauer continued, "The
maintenance of our credit quality always remains a strong focus. Management is
continually monitoring the Company's loan/lease portfolio and the level of
allowance for loan/lease losses. The Company's allowance for loan/lease losses
to total loans/leases was 1.11% at September 30, 2006. Despite the increase in
nonperforming assets during the third quarter, the Company's exposure to loss on
several loans at Quad City Bank & Trust has been reduced, and in turn, reduced
the level of provisions for loan/lease losses required at September 30, 2006
from that required at the close of 2005."
QCR Holdings, Inc., headquartered in Moline, Illinois, is a multi-bank holding
company, which serves the Quad City, Cedar Rapids, Rockford and Milwaukee
communities through 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 and
commercial leasing through its 80% owned subsidiary, M2 Lease Funds, LLC, based
in Milwaukee, Wisconsin.
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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," "annualize," "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 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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QCR Holdings, Inc.
Consolidated Financial Highlights
(unaudited)
As of
------------------------------------------------------
September 30, June 30, December 31, September 30,
2006 2006 2005 2005
------------------------------------------------------
(dollars in thousands, except share data)
SELECTED BALANCE SHEET DATA
Total assets .................................... $1,241,258 $1,156,572 $1,042,614 $ 986,518
Securities ...................................... $ 188,304 $ 184,503 $ 182,365 $ 172,956
Total loans/leases .............................. $ 942,968 $ 867,085 $ 756,254 $ 722,097
Allowance for estimated loan/lease losses ....... $ 10,435 $ 9,744 $ 8,884 $ 8,972
Total deposits .................................. $ 873,253 $ 804,103 $ 698,504 $ 691,087
Total stockholders' equity ...................... $ 57,629 $ 56,175 $ 54,467 $ 53,700
Common shares outstanding ....................... 4,554,054 4,548,256 4,531,224 4,526,332
Book value per common share ..................... $ 12.65 $ 12.35 $ 12.02 $ 11.86
Closing stock price ............................. $ 17.30 $ 17.24 $ 19.70 $ 20.51
Market capitalization ........................... $ 78,785 $ 78,412 $ 89,265 $ 92,835
Market price/book value ......................... 136.71% 139.59% 163.89% 172.88%
Full time equivalent employees .................. 338 333 305 294
Tier 1 leverage capital ratio ................... 6.10% 6.53% 6.87% 7.14%
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QCR Holdings, Inc.
Consolidated Financial Highlights
(unaudited)
As of
--------------------------------------------------------------
September 30, June 30, December 31, September 30,
2006 2006 2005 2005
--------------------------------------------------------------
(dollars in thousands)
ANALYSIS OF LOAN DATA
Nonaccrual loans/leases ......................... $ 7,834 $ 7,316 $ 2,579 $ 5,259
Accruing loans/leases past due 90 days or more .. 230 150 604 582
Other real estate owned ......................... 306 318 545 976
----------------------------------------------------------
Total nonperforming assets ...................... $ 8,370 $ 7,784 $ 3,728 $ 6,817
Net charge-offs (calendar year-to-date) ......... $ 73 $ 35 $ 1,689 $ 1,260
Loan/lease mix:
Commercial loans .............................. $ 738,542 $ 676,579 $ 593,741 $ 564,984
Direct financing leases ....................... 48,275 43,656 35,700 32,253
Real estate loans ............................. 79,454 75,456 59,536 61,294
Installment and other consumer loans .......... 76,697 71,394 67,277 63,566
----------------------------------------------------------
Total loans/leases .............................. $ 942,968 $ 867,085 $ 756,254 $ 722,097
ANALYSIS OF DEPOSIT DATA
Deposit mix:
Noninterest-bearing ........................... $ 114,921 $ 126,018 $ 114,176 $ 111,387
Interest-bearing .............................. 758,332 678,085 584,328 579,700
----------------------------------------------------------
Total deposits .................................. $ 873,253 $ 804,103 $ 698,504 $ 691,087
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QCR Holdings, Inc.
Consolidated Financial Highlights
(unaudited)
For the Quarter Ended For the Nine Months Ended
---------------------------------------------------------------------
September 30, June 30, September 30, September 30, September 30,
2006 2006 2005 2006 2005
---------------------------------------------------------------------
(dollars in thousands, except per share data)
SELECTED INCOME STATEMENT DATA
Interest income ......................................... $ 18,373 $ 16,223 $ 12,503 $ 49,464 $ 34,721
Interest expense ........................................ 10,689 8,970 5,642 27,411 14,616
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Net interest income ..................................... 7,684 7,253 6,861 22,053 20,105
Provision for loan/lease losses ......................... 729 352 383 1,624 536
-------------------------------------------------------------------
Net interest income after provision for loan/lease
losses ................................................ 6,955 6,901 6,478 20,429 19,569
Noninterest income ...................................... 2,742 3,596 2,509 9,135 7,460
Noninterest expense ..................................... 9,007 8,682 7,590 25,883 21,786
-------------------------------------------------------------------
Income before taxes ..................................... 690 1,815 1,397 3,681 5,243
Minority interest in income of consolidated subsidiary .. 45 48 21 147 21
Income tax expense ...................................... 125 564 420 978 1,680
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Net income .............................................. $ 520 $ 1,203 $ 956 $ 2,556 $ 3,542
Earnings per common share (basic) ....................... $ 0.11 $ 0.26 $ 0.21 $ 0.55 $ 0.78
Earnings per common share (diluted) ..................... $ 0.11 $ 0.26 $ 0.21 $ 0.55 $ 0.77
Earnings per common share (basic) LTM * ................. $ 0.83 $ 0.94 $ 1.08
AVERAGE BALANCES
Assets .................................................. $1,197,906 $1,105,624 $ 946,868 $1,120,047 $ 909,022
Deposits ................................................ $ 848,205 $ 759,828 $ 641,641 $ 782,265 $ 608,245
Loans/leases ............................................ $ 899,621 $ 817,612 $ 692,539 $ 827,091 $ 667,113
Stockholders' equity .................................... $ 56,790 $ 55,971 $ 53,308 $ 55,896 $ 52,225
KEY RATIOS
Return on average assets (annualized) ................... 0.17% 0.44% 0.40% 0.30% 0.52%
Return on average common equity (annualized) ............ 3.66% 8.60% 7.17% 6.10% 9.04%
Price earnings ratio LTM * .............................. 20.84 x 18.34 x 18.99 x 20.84 x 18.99 x
Net interest margin (TEY) ............................... 2.84% 2.90% 3.22% 2.90% 3.27%
Nonperforming assets / total assets ..................... 0.67% 0.67% 0.69% 0.67% 0.69%
Net charge-offs / average loans/leases .................. 0.00% 0.00% 0.07% 0.01% 0.19%
Allowance / total loans/leases .......................... 1.11% 1.12% 1.24% 1.11% 1.24%
Efficiency ratio ........................................ 86.39% 80.03% 81.01% 82.99% 79.03%
<FN>
* LTM: Last twelve months
</FN>
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QCR Holdings, Inc.
Consolidated Financial Highlights
(unaudited)
For the Quarter Ended For the Nine Months Ended
------------------------------------------------------------------------
September 30, June 30, September 30, September 30, September 30,
2006 2006 2005 2006 2005
------------------------------------------------------------------------
(dollars in thousands, except share data)
ANALYSIS OF NONINTEREST INCOME
Merchant credit card fees, net of processing costs $ 477 $ 492 $ 517 $ 1,464 $ 1,319
Trust department fees ............................ 788 741 676 2,311 2,131
Deposit service fees ............................. 478 479 387 1,422 1,165
Gain on sales of loans, net ...................... 219 287 275 712 880
Securities gains (losses), net ................... 71 (71) -- (143) --
Gains (losses) on sale of foreclosed assets ...... (100) 745 41 650 42
Earnings on cash surrender value of life insurance 152 163 174 565 493
Investment advisory and management fees .......... 286 363 176 950 516
Other ............................................ 371 397 263 1,204 914
----------------------------------------------------------------------
Total noninterest income ...................... $ 2,742 $ 3,596 $ 2,509 $ 9,135 $ 7,460
ANALYSIS OF NONINTEREST EXPENSE
Salaries and employee benefits ................... $ 5,722 $ 5,483 $ 4,219 $ 16,253 $ 12,236
Professional and data processing fees ............ 880 768 619 2,439 2,056
Advertising and marketing ........................ 390 384 330 1,017 898
Occupancy and equipment expense .................. 1,304 1,275 1,163 3,829 3,161
Stationery and supplies .......................... 160 168 163 497 476
Postage and telephone ............................ 242 248 223 715 617
Bank service charges ............................. 151 143 129 430 386
Insurance ........................................ 161 153 146 448 453
Loss on disposal of fixed assets ................. -- -- 332 -- 332
Other ............................................ (3) 60 266 255 1,171
----------------------------------------------------------------------
Total noninterest expenses .................... $ 9,007 $ 8,682 $ 7,590 $ 25,883 $ 21,786
WEIGHTED AVERAGE SHARES
Common shares outstanding (a) .................... 4,553,589 4,543,169 4,524,543 4,605,776 4,514,105
Incremental shares from assumed conversion:
Options and Employee Stock Purchase Plan ..... 37,240 45,215 98,636 44,212 102,140
----------------------------------------------------------------------
Adjusted weighted average shares (b) ............. 4,590,829 4,588,384 4,623,179 4,649,988 4,616,245
<FN>
(a) Denominator for Basic Earnings Per Share
(b) Denominator for Diluted Earnings Per Share
</FN>
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