EXHIBIT 99.3
Oct. 18, 2000
For media inquiries: For financial inquiries:
Katherine Taylor John Hecht
Investor Relations Manager Chief Financial Officer
815-961-7164 815-961-2787
AMCORE FINANCIAL, INC. REPORTS EARNINGS PER SHARE
OF 40 CENTS FOR 3RD QUARTER 2000
NON-PERFORMING ASSETS DECREASE 14%
ROCKFORD, IL -- AMCORE Financial, Inc. reported diluted earnings per share
of $0.40 on net income of $10.8 million for the third quarter of 2000. Loans and
deposits both increased, while operating expenses declined as a result of
expense reductions related to the streamlined organizational structure.
Non-performing assets decreased $4.8 million or 14 percent from the second
quarter of 2000 to third quarter of 2000.
"Fundamentally we have done well this quarter. The performance of our core
businesses was solid," said Robert J. Meuleman, chairman and chief executive
officer. "We are reporting an increase in earnings per share even though we are
experiencing margin pressures due to higher funding costs."
HIGHLIGHTS
----------
o Diluted earnings per share in the third quarter rose to $0.40, a 2.6
percent increase from $0.39 in the third quarter of 1999.
o Total non-performing assets declined $4.8 million or 14 percent from
June 30, 2000.
o Average loans for the third quarter were up 4.4 percent, or $115
million, from the same period last year. Excluding securitized loans,
average loans would have grown 6.7 percent.
o Average deposits were up 4.2 percent, or $123 million, from the same
period last year.
o Net interest margin contracted 5 basis points to 3.26 percent from the
second quarter of 2000, primarily the result of higher funding costs.
o Operating expenses declined $554,000 or 1.9 percent compared to the
third quarter of 1999 due to savings from the bank charter
consolidation.
o Average diluted shares outstanding decreased 1.0 percent or 255,000
shares from the second quarter of 2000 due to the stock buy-back
program.
EARNINGS SUMMARY
----------------
Net income for the third quarter was $10.8 million, a 3.9 percent decrease
from $11.2 million in the third quarter of 1999. The decrease in net income was
related to stock repurchase costs and balance sheet repositioning, which
included a $56.5 million average decrease in the investment portfolio and the
sale of $55.3 million in auto loans. This sale is expected to enhance liquidity,
diversify funding sources and reduce the dependence on wholesale deposits.
Page 1
The sale of auto loans, in addition to providing liquidity, also resulted in
non-interest income of $697,000. The provision for loan losses was increased
$300,000 over the second quarter of 2000. The net impact on earnings per share
for these third quarter items approximated $.01 per share.
"The improvements we made to our balance sheet will decrease our interest
rate risk exposure going forward," said Meuleman. "In addition, tighter pricing
and credit standards implemented during the third quarter should lower our
credit risk exposure."
Average earning assets rose 2.1 percent, which combined with a 39 basis
point increase in asset yields from the same period last year, contributed to a
$5.8 million increase in interest income. The growth in average earning assets
was led by a $115 million or 4.4 percent increase in average loans. The sale of
auto loans and the securitization of 1 - 4 family mortgage loans impacted loan
growth. Excluding these transactions totaling $106.8 million, average loans
would have risen by 6.7 percent.
These increases were impacted by an $8.3 million or 19.6% increase in
interest expense as the average rate paid on interest bearing liabilities rose
75 basis points to 5.55 percent from 4.80 percent in the third quarter of 1999.
Overall, net interest income declined $2.5 million or 7.4% as the net interest
margin declined 34 basis points to 3.26 percent from 3.60 percent in the third
quarter of 1999.
Interest-bearing demand and savings deposit rates rose 88 basis points in
the third quarter of 2000 compared to the third quarter of 1999. Time deposits
saw a 66 basis point rate increase for the same period.
"Margins continue to be pressured due to increases in funding costs," said
Meuleman. "We, like many banks, have experienced higher liability costs to fund
balance sheet activity."
Total operating expenses declined $554,000 or 1.9 percent from a year ago to
$29.3 million as a result of the streamlined organizational structure. As
previously announced, medical costs continued at elevated levels due to a high
frequency of larger claims and higher than expected inflation in the Company's
self-funded benefit trust account. Total personnel costs were up 1.3 percent due
exclusively to increased medical costs. Excluding $450,000 of increased medical
costs in the quarter, total personnel costs would have decreased 1.5 percent.
Total occupancy expenses were higher, due in part to the expansion of the
Crystal Lake, IL, facility, rental expenses associated with our new Huntley, IL,
branch and the expenses related to the centralization of loan operations.
Crystal Lake and Huntley are located in McHenry County, the sixth fastest
growing county in the nation, which is located in the high growth corridor along
Interstate 90. AMCORE is directing more of its resources along this growth
corridor, which has a high concentration of customers likely to purchase asset
management and commercial business services. AMCORE will also be looking to
expand its presence in other markets along the I-90 growth corridor.
Trust and asset management revenues were flat at $7.5 million in the third
quarter of 2000. Inadequate service provided by an unrelated third-party
administrator led to the loss of $100 million in 401(k) employee benefit
accounts. Employee benefit fees consequently decreased $175,000 between the
third quarter of 2000 and the third quarter of 1999. This situation is being
corrected by bringing administrative and record keeping in-house with AMCORE
Capital Value (formerly Wellmark Capital Value, Inc.), which was acquired in
March of 1999.
During the third quarter, 535,000 shares were repurchased at an average
price of $17.55 per share.
Page 2
ASSET QUALITY AND RESERVES
--------------------------
The allowance for loan losses to ending loans increased to 1.08 percent at
September 30, 2000 from 1.06 percent at September 30, 1999. When compared to the
previous quarter end, the ratio was flat. Reserve coverage of non-performing
loans was 119 percent at September 30, 2000, up from 103 percent at June 30,
2000. Total non-performing assets at quarter end were $28.3 million, or 0.66
percent of total assets. This was a $4.8 million, or 14 percent, decrease from
$33.1 million at June 30, 2000. Net charge-offs represented 46 basis points
annualized of average loans for the third quarter compared to 27 basis points in
the third quarter of 1999.
The majority of the increase in net charge-offs was due to a $1.2 million
charge of a grain elevator credit and a $419,000 charge of a loan to a furniture
store. "We are pleased with the decrease of non-performing assets," said
Meuleman. "This progress is reflective of a concentrated effort during the third
quarter."
AMCORE Financial, Inc. focuses on delivering high performance asset
management and tailored financial products to business customers in attractive
Midwestern markets. The Company is headquartered in Northern Illinois with
investment assets under administration of $5 billion and banking assets of $4.3
billion with 64 locations in Illinois and Wisconsin.
The company has two financial services companies: AMCORE Mortgage, Inc. and
AMCORE Investment Group. AMCORE Mortgage provides a variety of mortgage lending
products and services to individuals. AMCORE Investment Group provides the
following services: trust, brokerage, capital management, mutual fund
administration, employee benefit plan record keeping and is the investment
advisor for the Vintage family of mutual funds.
This news release contains certain 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 AMCORE. Statements that are not historical facts,
including statements about beliefs and expectations, are forward-looking
statements. These statements are based upon beliefs and assumptions of AMCORE'S
management and on information currently available to such management. The use of
the words "believe", "should," "expect", "anticipate", "plan", "estimate",
"may", "will" or similar expressions are forward looking statements.
Forward-looking statements speak only as of the date they are made, and AMCORE
undertakes no obligation to update publicly any of them in light of new
information or future events.
Contemplated, projected, forecasted or estimated results in such
forward-looking statements involve certain inherent risks and uncertainties. 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 possibilities: (I)
heightened competition, including specifically the intensification of price
competition, the entry of new competitors and the formation of new products by
new and existing competitors; (II) adverse state and federal legislation and
regulation; (III) failure to obtain new customers and retain existing customers;
(IV) inability to carry out marketing and/or expansion plans; (V) loss of key
executives or personnel; (VI) changes in interest rates including the effect of
prepayment; (VII) general economic and business conditions which are less
favorable than expected; (VIII) equity and fixed income market fluctuations;
(IX) unanticipated changes in industry trends; (X) unanticipated changes in
credit quality and risk factors; (XI) success in gaining regulatory approvals
when required; (XII) changes in Federal Reserve Board monetary policies; (XIII)
inability to fully realize cost savings from the new organizational structure
within the expected time frame or additional or unexpected costs are incurred;
(XIV) unexpected outcomes on existing or new litigation in which AMCORE, its
subsidiaries, officers, directors or employees are named defendants; (XV)
technological changes; (XVI) changes in Generally Accepted Accounting
Principles: and (XVII) inability of third-party vendors to perform critical
services to the company or its customers.
AMCORE common stock is listed on The NASDAQ Stock Market under the symbol
"AMFI." Further information about AMCORE Financial, Inc. can be found at the
company's website at http://www.AMCORE.com and at www.VintageFunds.com.
Page 3
AMCORE Financial, Inc.
CONSOLIDATED KEY FINANCIAL DATA SUMMARY
(in thousands, except share data)
Quarter Ended September 30,
----------------------------------------
Percent
Financial Highlights 2000 1999 Change
- ----------------------------------------------------------------------------------------------------
Net revenues, including security gains................. $ 46,905 $ 48,163 (2.6%)
Net interest income - FTE.............................. 33,181 35,944 (7.7%)
Operating expenses..................................... 29,258 29,812 (1.9%)
Net income from operations............................. 10,794 11,237 (3.9%)
Net income............................................. 10,804 11,237 (3.9%)
Basic earnings per share from operations............... 0.40 0.40 0.0%
Basic earnings per share............................... 0.40 0.40 0.0%
Diluted earnings per share from operations............. 0.40 0.39 2.6%
Diluted earnings per share............................. 0.40 0.39 2.6%
Cash dividends per share............................... 0.16 0.14 14.3%
Book value per share................................... 11.05 10.79 2.4%
(in thousands, except share data)
Nine Months Ended September 30,
----------------------------------------
Percent
Financial Highlights 2000 1999 Change
- ----------------------------------------------------------------------------------------------------
Net revenues, including security gains................. $ 141,457 $ 142,043 -0.4%
Net interest income - FTE.............................. 102,704 105,443 -2.6%
Operating expenses..................................... 89,042 90,161 (1.2%)
Net income from operations............................. 32,421 32,166 0.8%
Net income............................................. 32,572 28,399 14.7%
Basic earnings per share from operations............... 1.19 1.13 5.3%
Basic earnings per share............................... 1.20 1.00 20.0%
Diluted earnings per share from operations............. 1.18 1.12 5.4%
Diluted earnings per share............................. 1.19 0.99 20.2%
Cash dividends per share............................... 0.48 0.42 14.3%
Book value per share...................................
(in thousands, except share data) Trailing Twelve Months Ended
September 30,
----------------------------------------
Percent
Financial Highlights 2000 1999 Change
- ----------------------------------------------------------------------------------------------------
Net revenues, including security gains................. $190,009 $189,899 0.1%
Net interest income - FTE.............................. 138,587 139,103 (0.4%)
Operating expenses..................................... 117,575 120,274 (2.2%)
Net income from operations............................. 43,665 43,175 1.1%
Net income............................................. 44,322 39,767 11.5%
Basic earnings per share from operations............... 1.59 1.52 4.6%
Basic earnings per share............................... 1.62 1.39 16.5%
Diluted earnings per share from operations............. 1.57 1.51 4.0%
Diluted earnings per share............................. 1.60 1.38 15.9%
Cash dividends per share............................... 0.62 0.56 10.7%
Book value per share...................................
Quarter Ended September 30, Nine Months Ended September 30,
-------------------------------------------------------------------------------------
Key Financial Ratios (A) 2000 1999 Change 2000 1999 Change
- ----------------------------------------------------------------------------------------------------------------------------------
Return on average assets................ 0.99% 1.06% (0.07%) 1.00% 1.03% (0.03%)
Return on average equity................ 14.70% 14.71% (0.01%) 15.10% 13.78% 1.32%
Net interest margin (FTE)............... 3.26% 3.60% (0.34%) 3.34% 3.55% (0.21%)
Efficiency Ratio (FTE) ................ 59.31% 58.65% 0.66% 59.75% 60.10% (0.35%)
(A) All ratios have been adjusted to exclude restructuring charges.
Quarter Ended September 30, Nine Months Ended September 30,
-------------------------------------------------------------------------------------
Percent Percent
Income Statement 2000 1999 Change 2000 1999 Change
- ----------------------------------------------------------------------------------------------------------------------------------
Interest income............................ $ 81,448 $ 75,670 7.6% $ 241,203 $ 222,464 8.4%
Interest expense........................... 50,494 42,232 19.6% 145,262 124,581 16.6%
-------------------------------------------------------------------------------------
Net interest income..................... 30,954 33,438 (7.4%) 95,941 97,883 (2.0%)
Provision for loan and lease losses........ 2,640 2,613 1.0% 7,370 6,990 5.4%
Non-interest income:
Trust and asset management income....... 7,491 7,497 (0.1%) 22,666 21,793 4.0%
Service charges on deposits............. 2,932 2,606 12.5% 8,327 7,232 15.1%
Mortgage revenues....................... 1,793 1,791 0.1% 3,913 6,485 (39.7%)
Other................................... 3,696 3,172 16.5% 9,475 8,419 12.5%
-------------------------------------------------------------------------------------
Total non-interest income............ 15,912 15,066 5.6% 44,381 43,929 1.0%
Net security gains......................... 39 (341) (111.4%) 1,135 231 391.3%
Operating expenses:
Personnel costs......................... 16,722 16,513 1.3% 50,011 50,378 (0.7%)
Net occupancy expense................... 1,950 1,688 15.5% 5,502 5,039 9.2%
Equipment expense....................... 1,988 2,299 (13.5%) 6,452 6,867 (6.0%)
External data processing expense........ 1,458 1,536 (5.1%) 4,534 4,629 (2.1%)
Professional fees....................... 923 1,162 (20.6%) 3,056 3,159 (3.3%)
Advertising and business development.... 863 975 (11.5%) 3,005 2,738 9.8%
Amortization of intangible assets....... 529 498 6.2% 1,586 1,493 6.2%
Communication expense................... 951 951 0.0% 2,993 3,081 (2.9%)
Other................................... 3,874 4,190 (7.5%) 11,903 12,777 (6.8%)
-------------------------------------------------------------------------------------
Total operating expenses............. 29,258 29,812 (1.9%) 89,042 90,161 (1.2%)
-------------------------------------------------------------------------------------
Income before income taxes................. 15,007 15,738 (4.6%) 45,045 44,892 0.3%
Income taxes............................... 4,213 4,501 (6.4%) 12,624 12,726 (0.8%)
-------------------------------------------------------------------------------------
Net income from operations................. $ 10,794 $ 11,237 (3.9%) $ 32,421 $ 32,166 0.8%
Restructuring charges, net of tax.......... (10) - N/M (151) 3,767 N/M
-------------------------------------------------------------------------------------
Net income................................. $ 10,804 $ 11,237 (3.9%) $ 32,572 $ 28,399 14.7%
-------------------------------------------------------------------------------------
Average shares outstanding - basic (000)... 26,885 28,306 (5.0%) 27,153 28,344 (4.2%)
Average shares outstanding - diluted (000). 27,166 28,731 (5.4%) 27,465 28,785 (4.6%)
Ending shares outstanding (000)............ 26,590 28,318 (6.1%)
AMCORE Financial, Inc.
Quarter Ended September 30,
----------------------------------------------------------
2000 1999
--------------------------------------------------------------------------
(in thousands) Ending Average Yield/ Average Yield/
Balance Balance Rate Balance Rate
- ---------------------------------------------------------------------------------------------------------------------
Assets:
Taxable securities.................... $ 964,484 $ 969,184 6.88% $ 986,244 6.65%
Tax-exempt securities (FTE)........... 295,534 297,188 7.68% 336,608 7.80%
Other earning assets.................. 12,868 20,239 6.68% 26,535 4.63%
Loans held for sale................... 30,604 45,932 9.05% 16,116 7.00%
Loans, net of unearned income (FTE)... 2,695,999 2,740,658 8.69% 2,625,129 8.26%
--------------------------------------------------------------------------
Total Earning Assets (FTE)......... $ 3,999,489 $ 4,073,201 8.19% $ 3,990,632 7.80%
Intangible assets.................. 17,203 17,460 17,843
Other non-earning assets........... 285,025 233,609 193,334
--------------------------------------------------------------------------
Total Assets....................... $ 4,301,717 $ 4,324,270 $ 4,201,809
--------------------------------------------------------------------------
Liabilities and Stockholders' Equity:
Interest bearing deposits............. $ 2,705,624 $ 2,718,006 5.26% $ 2,594,031 4.50%
Non-interest bearing deposits......... 371,966 352,189 352,709
--------------------------------------------------------------------------
Total Deposits..................... $ 3,077,590 $ 3,070,195 $ 2,946,740
--------------------------------------------------------------------------
Short-term borrowings................. 552,342 570,567 6.45% 594,019 5.68%
Long-term borrowings.................. 320,733 330,196 6.37% 301,779 5.71%
--------------------------------------------------------------------------
Total Interest Bearing Liabilities. 3,578,699 3,618,769 5.55% 3,489,829 4.80%
Other liabilities.................. 57,123 61,256 56,216
--------------------------------------------------------------------------
Total Liabilities.................. $ 4,007,788 $ 4,032,214 $ 3,898,754
Stockholders' Equity............... 293,929 292,056 303,055
--------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity............... $ 4,301,717 $ 4,324,270 $ 4,201,809
--------------------------------------------------------------------------
Nine Months Ended September 30,
---------------------------------------------------------
2000 1999
---------------------------------------------------------
(in thousands) Average Yield/ Average Yield/
Balance Rate Balance Rate
- ----------------------------------------------------------------------------------------------------
Assets:
Taxable securities.................... $ 995,903 6.91% $ 1,022,405 6.35%
Tax-exempt securities (FTE)........... 301,030 7.68% 341,102 7.76%
Other earning assets.................. 18,000 6.33% 2,402 4.25%
Loans held for sale................... 25,130 8.71% 22,473 6.08%
Loans, net of unearned income (FTE)... 2,763,162 8.51% 2,555,331 8.33%
---------------------------------------------------------
Total Earning Assets (FTE)......... $ 4,103,225 8.07% $ 3,943,713 7.75%
Intangible assets.................. 17,778 18,305
Other non-earning assets........... 214,478 228,932
---------------------------------------------------------
Total Assets....................... $ 4,335,481 $ 4,190,950
---------------------------------------------------------
Liabilities and Stockholders' Equity:
Interest bearing deposits............. $ 2,719,350 5.04% $ 2,562,902 4.49%
Non-interest bearing deposits......... 359,552 357,221
---------------------------------------------------------
Total Deposits..................... $ 3,078,902 $ 2,920,123
---------------------------------------------------------
Short-term borrowings................. 591,436 6.21% 597,075 5.70%
Long-term borrowings.................. 320,637 6.29% 305,751 5.71%
---------------------------------------------------------
Total Interest Bearing Liabilities. 3,631,423 5.34% 3,465,728 4.81%
Other liabilities.................. 57,800 55,989
---------------------------------------------------------
Total Liabilities.................. $ 4,048,775 $ 3,878,938
Stockholders' Equity............... 286,706 312,012
---------------------------------------------------------
Total Liabilities and
Stockholders' Equity............... $ 4,335,481 $ 4,190,950
---------------------------------------------------------
------------------------------------------------------------------------------
Quarter Ended
------------------------------------------------------------------------------
September 30, Percent December 31, Percent
Asset Quality (in thousands) 2000 1999 Change 1999 Change
- -------------------------------------------------------------------------------------------------------------------------
Ending allowance for loan losses......... $ 29,013 $ 28,435 2.0% 28,377 2.2%
Net charge-offs.......................... 3,173 1,814 74.9% 3,618 (12.3%)
Net charge-offs to average loans (B)..... 0.46% 0.27% 0.19% 0.53% (0.07%)
-------------------------------------------
Nine Months Ended September 30,
-------------------------------------------
Percent
Asset Quality (in thousands) 2000 1999 Change
- --------------------------------------------------------------------------------------
Ending allowance for loan losses.........
Net charge-offs.......................... 6,148 4,958 24.0%
Net charge-offs to average loans (B)..... 0.30% 0.26% 0.04%
Non-performing assets:
Non-performing loans - nonaccrual..... $ 24,421 $ 20,397 19.7% $ 17,829 37.0%
Other real estate owned (OREO)........ 2,522 2,063 22.2% 2,675 (5.7%)
Other foreclosed assets............... 1,404 738 90.2% 958 46.6%
--------------------------------------------------------------------------
Total non-performing assets........ $ 28,347 $ 23,198 22.2% $ 21,462 32.1%
--------------------------------------------------------------------------
Loans 90 days past due and still accruing $ 11,907 $ 10,008 19.0% $ 10,197 16.8%
(B) On an annualized basis.
September 30,
Key Asset Quality Ratios 2000 1999 Change
- --------------------------------------------------------------------------------------
Allowance to ending loans............. 1.08% 1.06% 0.02%
Allowance to non-performing loans..... 118.80% 139.41% (20.61%)
Non-performing loans to loans......... 0.91% 0.76% 0.15%
Non-performing assets to loans & OREO. 1.05% 0.86% 0.19%
Non-performing assets to total assets. 0.66% 0.54% 0.12%
Capital Adequacy
- --------------------------------------------------------------------------------------
Total risk-based capital............... 12.35% 12.79% (0.44%)
Tier 1 risk-based capital.............. 11.37% 11.81% (0.44%)
Leverage ratio......................... 7.82% 8.24% (0.42%)