EXHIBIT 99.1
July 18, 2002
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 11 PERCENT INCREASE
IN EARNINGS PER SHARE FOR SECOND QUARTER; ASSET QUALITY IMPROVES
ROCKFORD, IL -- AMCORE Financial, Inc. (Nasdaq: AMFI) reported diluted
earnings per share for second quarter 2002 of $0.42, an 11 percent increase,
compared to $0.38 per diluted share in the second quarter of 2001. Net income
for the second quarter was $10.6 million, an increase of 8 percent from the $9.8
million in the prior-year period. Asset quality also improved compared to both
the same period a year ago and the previous quarter.
Commenting on AMCORE's results, Kenneth E. Edge, president and chief
executive officer, said: "This was a good quarter for AMCORE. Second quarter
results demonstrate the positive impact of our efforts to increase core
deposits, grow loan volume, improve asset quality and expand along the I-90
corridor. Each of these initiatives is an important contributor to AMCORE's
long-term success. Strong commercial opportunities in the I-90 corridor are
driving loan growth. In addition, AMCORE's indirect automobile lending operation
grew 14 percent during the quarter. Net interest margin showed significant
improvement as we continued to lower our cost of funds."
Highlights
----------
o Net interest income increased 10 percent to $32.2 million from $29.2
million a year ago.
o The net interest margin improved 19 basis points to 3.51 percent from
3.32 percent during the same period in 2001.
o Loan balances grew 7 percent from a year ago and were up 20 percent on
an annualized basis from the first quarter.
o Non-interest income, excluding the 2001 $8.7 million gain on branch
sales, declined $648,000.
o Operating expenses rose $226,000, or less than 1 percent.
o Total non-performing loans declined $2.7 million, or 8 percent, from
June 30, 2001 and $3.3 million, or 10 percent, from March 31, 2002.
o Net charge-offs decreased to $2.4 million in the second quarter, or
0.37 percent annualized, compared to $3.5 million or .56 percent
annualized during the same period a year ago and $2.9 million or 0.46
percent annualized from the first quarter of this year.
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Second Quarter Results
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Key performance ratios showed improvement during the second quarter compared
to a year ago. Return on average assets increased to 1.01 percent from 0.96
percent in second quarter 2001. Return on average equity increased to 13.29
percent from 12.50 percent in second quarter 2001. Net interest margin increased
19 basis points to 3.51 percent from 3.32 percent in second quarter 2001.
Net interest income in second quarter 2002 was up 10 percent from a year
ago, or $3.0 million, driven by a 27 percent reduction in total interest
expense. The reduction in interest expense was a reflection of declining
short-term interest rates where deposits and other funding sources repriced more
rapidly than loans and investment securities.
Provisions for loan losses declined $4.9 million, or 65 percent, compared to
second quarter 2001. During second quarter 2001, increased non-performing loans,
higher charge-offs and delinquencies and concerns over the economy's impact,
particularly on commercial borrowers, led to a strengthening of reserves.
Comparable additions to the reserve were not necessary during second quarter
2002 as asset quality and reserve coverage of non-performing loans showed
improvement.
Loan balances increased 7 percent, or $168.9 million, to $2.7 billion from a
year ago. This increase was due to strong commercial real estate and indirect
automobile loan growth. Partially offsetting this growth was a $95.3 million, or
22 percent, decline in 1-to-4 family real estate loans. These loans declined due
to the impact of refinancing in this historically low interest rate environment.
Total core deposits increased 5 percent, or $142.1 million, compared to a
year ago and 3 percent, or $87.3 million, since March 31, 2002. This growth
reflects aggressive company wide efforts to attract additional core deposits,
with an emphasis on primary transaction account business.
Total non-interest income was down 38 percent, or $9.3 million, compared to
the same period a year ago. The decrease was mainly due to the gain on branch
sales in second quarter 2001. Excluding the gain on branch sales, non-interest
income declined only $648,000 due to lower trust and asset management revenues
and mortgage revenues.
Trust and asset management revenues decreased $646,000, or 10 percent, to
$6.2 million in second quarter 2002. Declines in the equity markets, especially
the S&P 500 companies, impacted the value of AMCORE-managed assets, which in
turn, caused a reduction in fee revenue. Mortgage revenues decreased 73 percent,
or $1.4 million, compared to the prior-year period and were primarily due to a
$1.3 million charge for impairment of mortgage servicing rights from higher than
expected prepayments.
Security gains were $625,000 for the second quarter compared to a loss of
$2.3 million during the same period a year ago. The losses in 2001 were due to a
restructuring of the investment portfolio that reduced interest rate risk,
particularly in mortgage-related securities and securities with low yields
and/or longer durations.
Total operating expenses increased 0.7 percent, or $226,000, to $31.5
million in second quarter 2002 from a year ago. The second quarter of 2002
includes increased operating costs attributable to the Company's branch
expansion efforts. The second quarter of 2001 included $509,000, or
approximately $0.02 per share of goodwill amortization. Amortization of goodwill
was discontinued pursuant to SFAS No. 142, a new accounting standard effective
January 1, 2002. No transition impairment charge was required. Compared to the
previous quarter, expenses were essentially flat. "AMCORE's branch expansion
program will continue to result in higher operating costs as new branches open
along the I-90 corridor. The magnitude of the increases will be driven by the
pace of new branch openings as we move into these higher growth markets," Edge
said.
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Asset Quality & Reserves
------------------------
Total non-performing loans decreased 8 percent, or $2.7 million, from June
30, 2001 and $3.3 million, or 10 percent, from March 31, 2002. Loans 90 days
past due and still accruing decreased $9.6 million, or 59 percent, from the same
period a year ago and $1.5 million, or 18 percent, from March 31, 2002.
Net charge-offs were $2.4 million, a decrease of $1.2 million and $493,000
from second quarter 2001 and first quarter 2002, respectively. Net charge-offs
were 37 basis points of average loans on an annualized basis during second
quarter 2002. This compares to 56 basis points and 46 basis points,
respectively, for second quarter 2001 and first quarter 2002.
The ending allowance for loan losses in second quarter 2002 rose to $34.0
million from $33.0 million during the same period a year ago and from $33.7
million at March 31, 2002. The allowance for loan losses, as a percentage of
ending loans, decreased to 1.27 percent from 1.32 percent at June 30, 2001 and
1.33 percent at March 31, 2002. The allowance to non-performing loans improved
to 115 percent up from 103 percent both at June 30, 2001 and at March 31, 2002.
AMCORE Financial, Inc. focuses on delivering high performance asset
management and tailored financial business products to customers in selected
high growth Midwestern markets. The Company is headquartered in Northern
Illinois with investment assets under administration of nearly $5.8 billion and
banking assets of $4.3 billion with 63 locations in Illinois, Wisconsin and
Iowa. In addition to its banking subsidiary, 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", "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) unexpected outcomes on existing or new
litigation in which AMCORE, its subsidiaries, officers, directors or employees
are named defendants; (XIV) technological changes; (XV) changes in accounting
principles generally accepted in the United States of America (XVI) changes in
assumptions or conditions affecting the application of "critical accounting
policies": (XVII) inability of third-party vendors to perform critical services
to the company or its customer.; and, (XVIII) the economic impact of the
terrorist attacks on the U.S. on September 11 and the U.S. response to those
attacks.
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.
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AMCORE Financial, Inc.
CONSOLIDATED KEY FINANCIAL DATA SUMMARY
(dollars in thousands, except per share data)
Quarter Ended Six Months Ended Trailing Twelve Months Ended
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June 30, Percent March 31, June 30, Percent June 30, Percent
Key Financial Highlights & Ratios (A) 2002 2001 Change 2002 2002 2001 Change 2002 2001 Change
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Net revenues (B) ................ $ 48,207 $ 51,695 (6.7%) $ 47,287 $ 95,494 $ 97,214 (1.8%) $195,219 $189,296 3.1%
Net interest income (FTE) ....... 33,952 31,333 8.4% 31,993 65,945 62,676 5.2% 131,201 127,161 3.2%
Operating expenses .............. 31,493 31,267 0.7% 31,431 62,924 61,189 2.8% 125,370 119,124 5.2%
Net income ...................... 10,583 9,762 8.4% 9,926 20,509 19,956 2.8% 42,796 41,271 3.7%
Diluted earnings per share ...... 0.42 0.38 10.5% 0.40 0.82 0.76 7.9% 1.70 1.56 9.0%
Cash dividends per share ........ 0.16 0.16 0.0% 0.16 0.32 0.32 0.0% 0.64 0.64 0.0%
Book value per share ............ 13.39 12.24 9.4% 12.51
Shares outstanding (in thousands)
Average diluted .............. 24,926 25,967 (4.0%) 24,851 24,890 26,138 (4.8%)
Ending ....................... 24,699 25,610 (3.6%) 24,646
Return on average assets ........ 1.01% 0.96% 0.05% 1.01% 1.01% 0.96% 0.05%
Return on average equity ........ 13.29% 12.50% 0.79% 13.02% 13.16% 12.74% 0.42%
Net interest margin (FTE) ....... 3.51% 3.32% 0.19% 3.50% 3.51% 3.27% 0.24%
Efficiency Ratio (FTE) (C) ...... 62.73% 63.17% (0.44%) 63.74% 63.23% 62.66% 0.57%
(A) 2001 Ratios are calculated using net income before accounting change.
(B) Includes net security gains (losses).
(C) 2001 Ratios also exclude branch gains, portfolio restructuring and severance
expense.
Quarter Ended Six Months Ended
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June 30, Percent March 31, June 30, Percent
Income Statement 2002 2001 Change 2002 2002 2001 Change
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Interest income ...................... $ 63,565 $ 72,107 (11.8%) $ 60,711 $ 124,276 $ 147,733 (15.9%)
Interest expense ..................... 31,372 42,872 (26.8%) 30,532 61,904 89,272 (30.7%)
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Net interest income ............... 32,193 29,235 10.1% 30,179 62,372 58,461 6.7%
Provision for loan losses ............ 2,653 7,557 (64.9%) 2,640 5,293 9,713 (45.5%)
Non-interest income:
Trust & asset management income ... 6,189 6,835 (9.5%) 6,690 12,879 13,617 (5.4%)
Service charges on deposits ....... 4,113 3,734 10.1% 3,867 7,980 6,808 17.2%
Mortgage revenues ................. 499 1,855 (73.1%) 1,845 2,344 3,296 (28.9%)
Company owned life insurance income 1,469 1,386 6.0% 1,257 2,726 2,430 12.2%
Gain on branch sales .............. -- 8,695 N/M -- -- 8,695 N/M
Other ............................. 3,119 2,227 40.1% 2,715 5,834 5,436 7.3%
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Total non-interest income ...... 15,389 24,732 (37.8%) 16,374 31,763 40,282 (21.1%)
Net security gains (losses) .......... 625 (2,272) 127.5% 734 1,359 (1,529) 188.9%
Operating expenses:
Personnel costs ................... 18,257 17,457 4.6% 18,212 36,469 34,129 6.9%
Net occupancy expense ............. 1,948 1,798 8.3% 1,901 3,849 3,860 (0.3%)
Equipment expense ................. 1,932 2,014 (4.1%) 1,852 3,784 4,174 (9.3%)
Data processing expense ........... 1,616 1,486 8.7% 1,645 3,261 3,002 8.6%
Professional fees ................. 1,074 1,036 3.7% 1,021 2,095 2,152 (2.6%)
Advertising & business development 1,145 1,289 (11.2%) 1,246 2,391 2,125 12.5%
Amortization of intangible assets . 36 534 (93.3%) 35 71 1,085 (93.5%)
Communication expense ............. 1,027 1,003 2.4% 1,032 2,059 2,047 0.6%
Other ............................. 4,458 4,650 (4.1%) 4,487 8,945 8,615 3.8%
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Total operating expenses ....... 31,493 31,267 0.7% 31,431 62,924 61,189 2.8%
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Income before income taxes ........... 14,061 12,871 9.2% 13,216 27,277 26,312 3.7%
Income taxes ......................... 3,478 3,109 11.9% 3,290 6,768 6,581 2.8%
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Net income before accounting change .. $ 10,583 $ 9,762 8.4% $ 9,926 $ 20,509 $ 19,731 3.9%
Accounting change, net of tax ........ -- -- N/M -- -- 225 N/M
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Net income ........................... $ 10,583 $ 9,762 8.4% $ 9,926 $ 20,509 $ 19,956 2.8%
=============================================== ===================================
Segment Earnings
- ------------------------------------------
Commercial Banking................. $ 5,573 $ 3,025 84.2% $ 4,897 $ 10,470 $ 8,054 30.0%
Retail Banking.................... 2,558 1,350 89.5% 2,828 5,386 4,070 32.3%
Trust & Asset Management........... 927 978 (5 2%) 971 1,898 1,827 3.9%
Mortgage Banking................... (180) 493 (136 5%) 544 364 1,023 (64.4%)
Other.............................. 1,705 3,916 (56.5%) 686 2,391 4,982 (52.0%)
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Total Segments....................... $ 10,583 $ 9,762 8.4% $ 9,926 $ 20,509 $ 19,956 2.8%
=============================================== ===================================
AMCORE Financial, Inc.
Quarter Ended June 30, Six Months Ended June 30,
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2002 2001 2002 2001
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(dollars in thousands) Ending Average Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Balance Rate Balance Rate Balance Rate Balance Rate
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Assets:
Taxable securities .................. $1,009,643 $ 982,459 5.76% $ 892,018 6.68% $ 913,937 5.73% $ 913,538 6.77%
Tax-exempt securities (FTE) ......... 240,954 236,433 7.52% 281,810 7.68% 239,355 7.57% 283,446 7.68%
Other earning assets ................ 11,287 21,319 1.66% 23,538 4.40% 18,494 1.57% 27,481 5.20%
Loans held for sale ................. 28,759 26,944 7.10% 40,399 5.89% 39,487 6.50% 38,289 6.84%
Gross loans (FTE) ................... 2,670,647 2,602,993 7.09% 2,531,096 8.34% 2,556,837 7.15% 2,561,457 8.45%
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Total Earning Assets (FTE) ....... $3,961,290 $3,870,148 6.79% $3,768,861 7.89% $3,768,110 6.83% $3,824,211 7.98%
Intangible assets ................... 15,857 15,874 17,328 15,894 17,403
Other non-earning assets ............ 309,779 316,688 303,983 310,387 288,874
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Total Assets ........................... $4,286,926 $4,202,710 $4,090,172 $4,094,391 $4,130,488
==========================================================================================
Liabilities & Stockholders' Equity:
Interest bearing deposits ........... $2,748,731 $2,712,361 3.41% $2,591,569 4.90% $2,618,182 3.46% $2,650,849 5.09%
Non-interest bearing deposits ....... 369,395 356,195 345,543 353,150 345,358
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Total Deposits ................... 3,118,126 3,068,556 2,937,112 2,971,332 2,996,207
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Short-term borrowings ............... 548,348 533,888 4.04% 455,285 5.85% 515,577 4.13% 449,558 6.01%
Long-term borrowings ................ 217,752 217,766 5.92% 308,757 5.96% 228,173 5.94% 297,654 6.11%
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Total Interest Bearing Liabilities $3,514,831 $3,464,015 3.66% $3,355,611 5.12% $3,361,932 3.73% $3,398,061 5.30%
Other liabilities ................... 71,983 63,169 75,700 64,997 74,827
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Total Liabilities ................ $3,956,209 $3,883,379 $3,776,854 $3,780,079 $3,818,246
Stockholders' Equity ............. 330,717 319,331 313,318 314,312 312,242
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Total Liabilities & Stockholders' Equity $4,286,926 $4,202,710 $4,090,172 $4,094,391 $4,130,488
==========================================================================================
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Quarter Ended Six Months Ended
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June 30, Percent March 31, Percent June 30, Percent
Asset Quality 2002 2001 Change 2002 Change 2002 2001 Change
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Ending allowance for loan losses.............. $ 33,986 $ 33,006 3.0% $ 33,710 0.8%
Net charge-offs............................... 2,377 3,547 (33.0%) 2,870 (17.2%) $ 5,247 $ 5,105 2.8%
Net charge-offs to average loans (D).......... 0 37% 0 56% (0.19%) 0.46% (0.09%) 0.41% 0.40% 0.01%
Non-performing assets:
Non-performing loans - nonaccrual.......... $ 29,457 $ 32,116 (8.3%) $ 32,796 (10.2%)
Foreclosed real estate (OREO).............. 3,844 1,960 96.1% 6,583 (41.6%)
Other foreclosed assets.................... 1,270 736 72.6% 1,311 (3.1%)
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Total non-performing assets............. $ 34,571 $ 34,812 (0.7%) $ 40,690 (15.0%)
================================================
Loans 90 days past due & still accruing....... $ 6,579 $ 16,182 (59.3%) $ 8,046 (18.2%)
(D) On an annualized basis.
June 30, March 31,
Key Asset Quality Ratios 2002 2001 Change 2002
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Allowance to ending loans............... 1.27% 1.32% (0.05%) 1.33%
Allowance to non-performing loans....... 115.37% 102.77% 12.60% 102.79%
Non-performing loans to loans........... 1.10% 1.28% (0.18%) 1.29%
Non-performing assets to loans & OREO... 1.29% 1.39% (0.10%) 1.60%
Non-performing assets to total assets... 0.81% 0.86% (0.05%) 0.99%
Capital Adequacy
Total risk-based capital................ 11.25% 12.51% (1.26%)
Tier 1 risk-based capital............... 10.18% 11.38% (1.20%)
Leverage ratio.......................... 7.79% 8.18% (0.39%)