EXHIBIT 99.1
April 16, 2003
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 1ST QUARTER EARNINGS GROWTH
Flash Results
(Numbers in Thousands, Except Per Share Data)
1st quarter 2003 1st quarter 2002 4th quarter 2002
Net Revenues $63,947 $47,287 $54,328
Net Income $10,721 $9,926 $12,279
Diluted Shares 24,936 24,851 24,945
Diluted EPS $0.43 $0.40 $0.49
ROCKFORD, IL -- AMCORE Financial, Inc. (Nasdaq: AMFI) reported earnings per
share of $0.43 for first quarter 2003, an 8 percent increase, compared to $0.40
per diluted share in first quarter 2002. Net income in the first quarter of 2003
was $10.7 million, also an 8 percent increase from the $9.9 million in the
prior-year period. Return on average equity was 12.01 percent for first quarter
2003 compared to 13.02 percent for first quarter 2002.
"We have achieved earnings growth even with the expenses associated with
our branch expansion activity," said Kenneth E. Edge, Chairman, President and
CEO of AMCORE. "We continue to reshape our franchise, increasing our presence in
the more rapidly growing areas of the Chicago suburbs, Rockford and Madison,
Wisconsin. Since 2001, AMCORE has added nine new branches and currently plans to
add six more during the remainder of 2003. And equally important, we have exited
markets that no longer fit our strategic growth profiles. By year-end, we expect
to have nearly two-thirds of our branches located in rapidly growing markets.
This shift in the make-up of our market footprint is expected to help us
increase revenues at a higher rate than historical averages."
Highlights
----------
o Net interest income increased 14 percent to $34.5 million from $30.2
million a year ago. The net interest margin increased six basis points to
3.56 percent in first quarter 2003 from 3.50 percent during the same period
in 2002.
o Non-interest income increased $12.3 million from first quarter 2002. First
quarter 2003 included an $8.2 million gain on the sale of six Wisconsin
branches and a $2.5 million gain on the sale of $106 million of indirect
automobile loans.
o Average loan balances grew 16 percent from a year ago, despite the sale of
indirect automobile loans and the sale of six Wisconsin branches that
included the transfer of $48 million in loans in March 2003.
o Provision for loan losses increased $9.9 million due to increases in
non-performing loans, higher net charge-offs and increasing loan balances
compared to first quarter 2002 and fourth quarter 2002. Total
non-performing loans increased $6.2 million compared to fourth quarter 2002
and increased $1.4 million when compared to first quarter 2002.
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o Non-accrual loans as a percentage of total loans increased to 1.27 percent,
up from 1.13 percent at December 31, 2002. Total non-performing loans,
which include 90 days past due and non-accrual loans, rose 17 percent, or
$6.2 million, compared to December 31, 2002.
o Operating expenses increased $5.6 million over first quarter 2002. The
increase included costs associated with the branch expansion strategy and a
$1.6 million charge for the early extinguishment of debt that occurred
during the first quarter of 2003.
o The total earnings impact of the branching strategy was a decrease of two
cents per share for the quarter, compared to a one-cent decrease in first
quarter 2002.
First Quarter Results
---------------------
Net interest income in first quarter 2003 grew 14 percent from a year ago,
or $4.3 million, due to strong loan growth and a 17 percent decrease in funding
costs. The net interest margin increased to 3.56 percent, a six basis point
increase from 3.50 percent during the same quarter a year ago and increased one
basis point from fourth quarter 2002. "Net interest margin improved modestly in
a period of lower interest rates and higher refinance activity," said Edge.
Provision for loan losses increased $9.9 million due to increases in
non-performing loans, higher net charge-offs and increasing loan balances
compared to first quarter 2002. Total non-performing loans increased $6.2
million compared to fourth quarter 2002 and increased $1.4 million when compared
to first quarter 2002.
Average loans rose $392 million to $2.9 billion, a 16 percent increase from
first quarter 2002. The growth came from increases of $327 million in commercial
lending driven by AMCORE's expansion in Chicago suburban and Madison area
markets and $124 million in consumer loans. The growth in loan balances occurred
even with the sale of $106 million in indirect automobile loans and the transfer
of $48 million in loans associated with the sale of six Wisconsin branches in
early March 2003. "AMCORE's new branches have been very successful in generating
strong loan growth," said Edge. "Our expertise and services appeal to mid-size
businesses, which value personal attention and the depth of business products
and personal financial services we provide."
Partially offsetting AMCORE's commercial loan growth was a $59 million, or
12 percent, decline in 1-to-4 family real estate loans as mortgage interest
rates reached 40-year lows. The high level of refinancing activity during the
first quarter is expected to continue into second quarter 2003, further reducing
the 1-to-4 family loan portfolio.
Average bank-issued deposits grew to $2.7 billion, an increase of 6
percent, or $150 million, compared to a year ago. "Company-wide efforts to
attract additional deposits, and our focus on primary transaction accounts,
enabled us to achieve this growth despite the transfer of $113 million in
deposits with the Wisconsin branch sales," said Edge. "We are continuing to
focus on deposit growth in 2003 because we believe it is the most economical
means to support our branch expansion."
Total non-interest income increased $12.3 million, compared to the same
period a year ago. The increase was primarily related to the $8.2 million gain
on the sale of six Wisconsin branches and a $2.5 million gain on the sale of
$106 million in indirect automobile loans.
Trust and asset management revenues decreased $952,000, or 14 percent, to
$5.7 million in first quarter 2003. Volatility in the equity markets, especially
the S&P 500 index, lowered the value of AMCORE-managed assets, which, in turn,
caused a reduction in fee revenue. Assets under administration totaled $5.4
billion as of the end of the quarter, including $845 million in the Vintage
Mutual Funds and $1.1 billion of the bank's investment portfolio.
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While trust and asset management operations continue to be challenged by
market conditions, mortgage activity more than offset the decline in trust and
asset fees. Mortgage revenues increased 117 percent, or $2.2 million, compared
to the prior-year period. During the first quarter, mortgage applications grew
to $313 million compared to $124 million during the same quarter a year ago.
Mortgage closings totaled $205 million in first quarter 2003, a 92 percent
increase compared to the $107 million in the same period a year ago. Of total
first quarter closings, 82 percent were due to refinancing. "We continue to
focus on increasing new home mortgages, which have also increased due to
expansion in our growth markets," said Edge.
Total operating expenses increased $5.6 million in first quarter 2003 from
a year ago. The increase was the result of higher personnel and occupancy costs,
due in part to the Company's branch expansion initiative as well as $1.6 million
in prepayment penalties related to restructuring Federal Home Loan Bank
advances.
Asset Quality & Reserves
------------------------
Total non-performing loans, including loans 90 days past due and still
accruing interest, rose $6.2 million from December 31, 2002 and increased $1.4
million from the same period a year ago. The increase from year end 2002
included one automobile dealership credit totaling $4.2 million that was placed
on nonaccrual late in the first quarter 2003. Total non-performing assets, which
include non-performing loans, foreclosed real estate and other repossessed
assets, increased $5.7 million, or 14 percent, from December 31, 2002, but
decreased 3 percent, or $1.5 million, from March 31, 2002. Total non-performing
assets to total assets was 1.08 percent at March 31, 2003, up from 0.92 percent
at December 31, 2002, but down from 1.18 percent at March 31, 2002.
Total non-accrual loans as a percentage of loans increased from 1.13
percent at December 31, 2002 to 1.27 percent and was down modestly from 1.29
percent at March 31, 2002. The allowance for loan losses, as a percentage of
ending loans, increased to 1.40 percent from 1.22 percent at December 31, 2002
and 1.33 percent at March 31, 2002. The allowance to non-accrual loans was 110
percent compared to 108 percent at December 31, 2002 and 103 percent at March
31, 2002.
Net-charge-offs in the first quarter 2003 more than doubled compared to the
year-earlier period due to higher auto losses from lower used car values and a
weaker manufacturing environment. Net charge-offs were $6.8 million in the first
quarter 2003, an increase of $3.9 million from both the fourth quarter 2002 and
the first quarter of 2002. Net charge-offs were 95 basis points of average loans
on an annualized basis during the first quarter 2003 compared to 41 basis points
in the fourth quarter 2002 and 46 basis points for the year ago period.
"By increasing reserves, the Company addressed the increase in
non-performing loans and probable losses in the portfolio and is positioned to
withstand the current economic weakness. We also have expanded our workout and
collection staffs enabling us to address deteriorating credits more quickly,
before further erosion of value," said Edge.
Branching Update
----------------
During first quarter 2003, AMCORE continued to increase its presence in key
cities where AMCORE believes opportunities to increase revenues are greatest. At
the same time, AMCORE exited markets that no longer fit its growth objectives.
New branches opened since April 2001 have contributed total loans of $296.9
million and total deposits of $88.9 million at March 31, 2003.
The impact of the branching strategy was a decrease of two cents per share
for the first quarter. In 2003, AMCORE's branch expansion program is expected to
result in an earnings dilution of $0.10 to
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$0.15 per share as start-up costs initially outpace net revenues. "We will
continue to monitor and manage the level of this decrease as we plan the pace of
new branch openings in 2003," Edge said.
AMCORE Financial, Inc. focuses on delivering tailored financial business
products and asset management services to customers in selected Midwestern
markets. The Company is headquartered in Northern Illinois with investment
assets under administration of $5.4 billion, including $1.1 billion of the
bank's investment portfolio, and banking assets of $4.4 billion with 59
locations in Illinois, Wisconsin and Iowa.
AMCORE provides a full range of consumer and commercial banking services, a
variety of mortgage lending products and investment services including 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, and our periodic filings with the Securities
and Exchange Commission and written or oral statements made by the Company's
officers and directors to press, potential investors, securities analysts and
others will contain, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934,
and the Company intends that such forward-looking statements be subject to the
safe harbors created thereby with respect to, among other things, 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", "should", "may", "will"
or similar expressions identify forward-looking statements. Forward-looking
statements speak only as of the date they are made, and AMCORE undertakes no
obligation to update publicly any forward-looking statements 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 or existing competitors; (II) adverse state,
local 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) ability to attract and retain 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"; and (XVII) inability of third-party vendors to
perform critical services for 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 www.AMCORE.com and at www.VintageFunds.com.
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AMCORE Financial, Inc.
CONSOLIDATED FINANCIAL SUMMARY
(Unaudited)
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($ in 000's, except per share data) 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 1Q 03/02
SHARE DATA 2002 2002 2002 2002 2003 Incr (Decr)
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Diluted earnings $ 0.40 $ 0.42 $ 0.43 $ 0.49 $ 0.43 7.5%
Cash dividends $ 0.16 $ 0.16 $ 0.16 $ 0.16 $ 0.16 0.0%
Book value $ 12.51 $ 13.39 $ 14.15 $ 14.40 $ 14.56 16.4%
Average diluted shares outstanding 24,851 24,926 24,923 24,945 24,936 0.3%
INCOME STATEMENT
Net interest income $ 30,179 $ 32,193 $ 33,858 $ 34,538 $ 34,516 14.4%
Provision for loan losses 2,640 2,653 3,360 3,921 12,575 376.3%
Non-interest income:
Trust & asset management 6,690 6,189 5,929 5,899 5,738 (14.2%)
Service charges on deposits 3,867 4,113 4,882 5,007 4,398 13.7%
Mortgage revenues 1,845 494 1,049 4,552 3,998 116.7%
Company owned life insurance 1,257 1,469 1,458 1,500 1,783 41.8%
Gain on sale of loans/branches -- -- -- -- 10,723 N/A
Net security gains 734 625 1,144 -- 273 (62.8%)
Other 2,715 3,119 2,943 2,832 2,518 (7.3%)
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Total non-interest income 17,108 16,009 17,405 19,790 29,431 72.0%
Operating expenses:
Personnel costs 18,212 18,257 19,963 20,269 20,491 12.5%
Net occupancy and equipment 3,753 3,880 4,070 3,958 4,588 22.2%
Data processing 1,645 1,616 1,624 1,898 1,790 8.8%
Professional fees 1,021 1,074 1,112 1,055 1,062 4.0%
Advertising & business development 1,246 1,145 1,095 1,228 1,045 (16.1%)
Communication expense 1,032 1,027 999 1,070 1,201 16.4%
Other 4,522 4,489 5,095 4,660 6,826 51.0%
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Total operating expenses 31,431 31,488 33,958 34,138 37,003 17.7%
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Income before income taxes 13,216 14,061 13,945 16,269 14,369 8.7%
Income taxes 3,290 3,478 3,262 3,990 3,648 10.9%
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Net income $ 9,926 $ 10,583 $ 10,683 $ 12,279 $ 10,721 8.0%
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KEY RATIOS AND DATA
Net interest margin (FTE) 3.50% 3.51% 3.55% 3.55% 3.56%
Return on average assets 1.01% 1.01% 0.97% 1.10% 0.98%
Return on average equity 13.02% 13.29% 12.53% 13.89% 12.01%
Efficiency Ratio 63.74% 62.72% 63.07% 60.80% 64.04%
Equity/assets (end of period) 7.49% 7.71% 7.92% 7.87% 8.27%
Tangible equity/assets (end of period) 7.13% 7.37% 7.59% 7.55% 7.94%
Allowance to ending loans 1.33% 1.27% 1.24% 1.22% 1.40%
Allowance to non-accrual loans 102.79% 115.37% 124.28% 108.24% 110.37%
Non-accrual loans to loans 1.29% 1.10% 0.99% 1.13% 1.27%
Non-performing assets to total assets 1.18% 0.93% 0.89% 0.92% 1.08%
Total assets under administration $4,828,679 $4,610,108 $4,427,569 $4,621,876 $4,385,686
Mortgage loans closed $ 106,633 $ 104,313 $ 206,277 $ 300,731 $ 205,126
NOTE: The efficiency ratio is calculated by dividing total operating expenses
excluding expenses on foreclosed real estate, by the sum of tax equivalent net
interest income and non-interest income excluding gain on sale of branches.
AMCORE Financial, Inc.
(Unaudited)
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($ in 000's) 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 1Q 03/02
AVERAGE BALANCE SHEET 2002 2002 2002 2002 2003 Incr (Decr)
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Assets:
Investment securities $1,086,962 $1,218,892 $1,214,179 $1,145,761 $1,108,334 2.0%
Short-term investments 15,639 21,319 10,506 12,865 8,415 (46.2%)
Loans held for sale 52,171 26,944 46,728 80,476 53,843 3.2%
Commercial loans 714,297 731,775 734,247 734,378 759,934 6.4%
Commercial real estate 834,512 865,012 951,786 1,026,771 1,115,425 33.7%
Residential real estate 498,873 492,400 484,122 464,713 440,192 (11.8%)
Consumer loans 462,487 513,806 557,683 592,569 586,261 26.8%
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Total loans 2,510,169 2,602,993 2,727,838 2,818,431 2,901,812 15.6%
Allowance for loan losses (34,037) (34,096) (34,643) (34,928) (35,001) 2.8%
Other non-earning assets 353,965 366,658 384,138 405,032 403,172 13.9%
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Total assets $3,984,869 $4,202,710 $4,348,746 $4,427,637 $4,440,575 11.4%
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Liabilities and Stockholders' Equity:
Non-interest bearing deposits $ 350,070 $ 356,195 $ 360,049 $ 378,694 $ 370,132 5.7%
Interest-bearing transaction accounts 1,029,517 1,071,847 1,126,334 1,117,782 1,124,422 9.2%
Time deposits 1,211,031 1,259,189 1,267,353 1,274,451 1,246,212 2.9%
--------------------------------------------------------------------------------------
Total Bank issued deposits 2,590,618 2,687,231 2,753,736 2,770,927 2,740,766 5.8%
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Wholesale deposits 282,408 381,325 419,206 451,083 553,767 96.1%
Short-term borrowings 497,063 533,888 546,622 583,602 514,470 3.5%
Long-term borrowings 238,696 217,766 210,996 185,139 184,835 (22.6%)
Other liabilities 66,845 63,169 79,926 86,075 84,715 26.7%
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Total liabilities 3,675,630 3,883,379 4,010,486 4,076,826 4,078,553 11.0%
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Realized Stockholders' Equity 305,062 312,574 322,254 328,100 340,073 11.5%
Other Comprehensive Income 4,177 6,757 16,006 22,711 21,949 425.5%
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Total Stockholders' Equity 309,239 319,331 338,260 350,811 362,022 17.1%
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Total Liabilities & Stockholders' Equity $3,984,869 $4,202,710 $4,348,746 $4,427,637 $4,440,575 11.4%
======================================================================================
CREDIT QUALITY
Ending allowance for loan losses $ 33,710 $ 33,986 $ 34,177 $ 35,214 $ 39,600 17.5%
Net charge-offs 2,870 2,377 3,169 2,884 6,782 136.3%
Net charge-offs to avg loans (annualized) 0.46% 0.37% 0.46% 0.41% 0.95%
Non-accrual assets:
Non-accrual loans $ 32,796 $ 28,369 $ 27,501 $ 32,535 $ 35,879 9.4%
Loans 90 days past due & still accruing 8,046 5,479 7,337 3,555 6,362 (20.9%)
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Total non-performing loans 40,842 33,848 34,838 36,090 42,241 3.4%
Foreclosed real estate 6,583 3,844 3,118 3,415 3,248 (50.7%)
Other foreclosed assets 1,311 2,358 1,362 2,024 1,698 29.5%
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Total non-performing assets $ 48,736 $ 40,050 $ 39,318 $ 41,529 $ 47,187 (3.2%)
======================================================================================
YIELD AND RATE ANALYSIS
Assets:
Investment securities (FTE) 6.12% 6.10% 5.92% 5.59% 5.27%
Short-term investments 1.45% 1.66% 1.47% 1.42% 1.06%
Loans held for sale 6.17% 7.10% 5.42% 5.20% 4.96%
Commercial loans 6.35% 6.36% 6.36% 6.05% 5.78%
Commercial real estate 6.99% 6.73% 6.56% 6.31% 5.97%
Residential real estate 7.49% 7.29% 7.19% 6.71% 6.45%
Consumer loans 8.08% 7.89% 7.72% 7.48% 7.27%
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Total loans (FTE) 7.21% 7.09% 6.95% 6.67% 6.35%
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Total interest-earning assets (FTE) 6.88% 6.79% 6.67% 6.36% 6.07%
=========================================================================
Liabilities:
Interest-bearing transaction accounts 1.73% 1.72% 1.65% 1.27% 0.87%
Time deposits 4.74% 4.49% 4.33% 4.12% 3.82%
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Total Bank issued deposits 3.35% 3.22% 3.07% 2.79% 2.42%
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Wholesale deposits 6.30% 5.48% 5.08% 4.34% 3.76%
Short-term borrowings 3.35% 3.39% 3.19% 2.76% 2.50%
Long-term borrowings 5.96% 5.92% 5.94% 6.41% 6.10%
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Total interest-bearing liabilities 3.80% 3.66% 3.49% 3.16% 2.82%
=========================================================================
Net interest spread 3.08% 3.13% 3.18% 3.20% 3.25%
Net interest margin (FTE) 3.50% 3.51% 3.55% 3.55% 3.56%
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