Exhibit 99.2
NEWS RELEASE
Date: July 20, 1999
Contact:
For media inquiries:
Katherine Taylor
Investor Relations Manager
815-961-7164
For financial inquiries:
John Hecht
Chief Financial Officer
815-961-2787
AMCORE FINANCIAL, INC., ANNOUNCES SECOND QUARTER EARNINGS
NON-PERFORMING LOANS DOWN 20 PERCENT
ROCKFORD, IL -- AMCORE Financial, Inc., a $4.2 billion regional financial
services company, reported diluted earnings per share from operations of $0.38
for the second quarter ending June 30, 1999.
The earnings per share from operations was flat compared to the same period
a year ago, but reflected an 8.6 percent increase when compared to the first
quarter of this year.
"We're extremely pleased to report a significant improvement in our
non-performing loans, which decreased 20 percent, or $4.5 million from March 31,
1999," said Robert J. Meuleman, president and chief executive officer.
HIGHLIGHTS
----------
o Non-performing loans were down 20 percent or $4.5 million from the first
quarter of 1999.
o Net revenues increased 6 percent or $2.6 million from a year ago.
o Average loans for the second quarter were up 16 percent, or $347 million
from the same period last year due to a strong regional economy, business
expansion and sales management initiatives.
o Total fee revenues were up 10 percent from a year ago.
o Trust and asset management fees rose 29 percent in the second quarter to
$7.7 million primarily driven by favorable investment performance and
strong sales results.
o Net interest margin rose 3 basis points from the second quarter of 1998
and is up 8 basis points from the first quarter of 1999.
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Page 1
NEW ORGANIZATIONAL STRUCTURE
----------------------------
In April, AMCORE announced its new Customer Focused Organizational plan that
is expected to improve efficiency, enhance responsiveness to local markets and
increase shareholder value. The plan calls for operating as one banking company
and centralizing or regionalizing certain corporate functions. As a result of
the new organizational structure, AMCORE took a $3.8 million after tax charge in
the second quarter. The largest component of the charge is required for employee
severance and costs to integrate systems. AMCORE expects $7.3 million in annual
pre-tax cost savings from its new structure.
Net income, which includes the charge, was $7.1 million for the second
quarter of 1999 compared to $11.2 million in the second quarter of 1998. Diluted
earnings per share, which includes the charge of $0.13 per share, were $0.25 for
the second quarter of 1999.
"We've done a good job of growing revenues and are now focusing on funding
costs and improving operational efficiency to support our sales efforts. Taking
the operational focus out of the local markets will increase the ability of our
people to serve our customers and their communities," said Meuleman. "The new
structure will preserve our super community banking philosophy, while still
offering cost-saving efficiencies achieved by operating under one charter."
EARNINGS FROM OPERATIONS
------------------------
Net income from operations for the second quarter was down slightly at $10.9
million compared to the record $11.2 million reported last year. "While we had
increases in net interest and non-interest income in the second quarter, they
were offset by increased provision for loan losses as a result of loan growth,
higher data processing expenses and investment related expenditures," said
Meuleman. "These expenditures were required for us to continue to grow our
business and to keep pace with changing technology and customer expectations."
Average loans increased 16 percent, or $347 million from the same period a
year ago, and was evenly balanced between commercial and retail lending. Average
earning assets rose 3.4 percent and the net interest margin increased 3 basis
points to 3.53 percent when compared to the second quarter of 1998. These
factors caused a $1.4 million increase in net interest income on a fully taxable
equivalent basis.
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Page 2
Trust and asset management revenues increased 29 percent to $7.7 million in
the second quarter of 1999 compared to $6 million in the second quarter of 1998.
The increase is primarily driven by strong sales efforts and favorable
investment performance. Total managed assets, which includes fee based accounts
and Vintage Fund balances, rose 11 percent during the quarter and now stands at
$4.4 billion.
Total operating expenses for the second quarter of 1999 increased 8.8
percent to $30.4 million when compared to the second quarter of 1998. The
increase in expenses includes higher data processing costs and investment
related expenditures. "We've expanded our investment group staff to continue to
growth this important fee-based business for the future. We also have been
creating an infrastructure that has the technological capabilities to deliver
our products and services when and where our customers need them most," said
Meuleman. AMCORE upgraded its internal network and out-sourced its data
processing to achieve a standard platform. The Company also has been developing
an on-line banking product which will be rolled-out to customers in the third
quarter.
ASSET QUALITY AND RESERVES
--------------------------
The allowance for loan losses to total loans was 1.07 percent at June 30,
1999, compared to 1.11 percent at March 31, 1999. The allowance for loan losses
to non-performing loans rose to 154 percent at the end of the second quarter, up
from 124 percent at March 31, 1999. Total non-performing loans at June 30, 1999
were $17.9 million compared to $20.8 million, a 14 percent reduction compared to
last year.
Provision for loan losses increased 31 percent or $500,000 during the second
quarter of 1999 compared to the same quarter last year to match the strong loan
growth AMCORE has experienced. Net charge-offs represented 38 basis points
annualized of average loans for the second quarter compared to 14 basis points
annualized last year.
AMCORE Financial, Inc., headquartered in northern Illinois, is a financial
services company with banking assets of $4.2 billion operating in 66 locations
in Illinois and Wisconsin. The company also has four financial services
companies: AMCORE Investment Group, which provides trust and brokerage services,
and through Investors Management Group, provides capital management and mutual
fund administrative services, and is the investment advisor for the Vintage
family of mutual funds; AMCORE Mortgage, Inc.; AMCORE Consumer Finance Company,
Inc. and AMCORE Insurance Group, Inc.
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Page 3
This news release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 with respect to the new
organizational structure and results of operations and businesses of AMCORE.
Forward-looking statements may include hopes, beliefs, expectations or
predictions of the future. These forward-looking statements involve certain
risks and uncertainties. Factors that may cause actual results to differ
materially from those contemplated, projected, forecasted or estimated in such
forward-looking statements 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; (VI) changes in interest rates including the effect of prepayment;
(VII) general economic and business conditions which are less favorable than
expected; (VIII) unanticipated changes in industry trends; (IX) changes in
Federal Reserve Board monetary policies; (X) inability to realize cost savings
anticipated with the new organizational structure, mergers or data processing
outsourcing; and (XI) higher than expected costs or other difficulties
associated with merger integration, data processing conversion or Year 2000
compliance solutions, (XII) changes in the final organizational structure.
AMCORE common stock is listed on The NASDAQ Stock Market under the symbol
"AMFI." Further information about AMCORE Financial Inc. can be found at our
website at http://www.AMCORE.com.
###
Page 4
AMCORE Financial, Inc.
CONSOLIDATED KEY FINANCIAL DATA SUMMARY
NOTE: AMCORE Financial, Inc. (AFI) acquired Investors Management Group, Ltd. on
February 17, 1998, which was accounted for as a purchase. AFI merged
with Midwest Federal Financial Corp. on March 27, 1998. This transaction
was accounted for as a pooling of interests, however, the size of the
transaction does not require restatement of prior year amounts. AFI
acquired Wellmark Capital Value, Inc. on March 31, 1999, which was
accounted for as a purchase.
(in thousands, except share data)
Quarter Ended June 30, Six Months Ended June 30,
----------------------------------------------------------------
Percent Percent
Financial Highlights 1999 1998 Change 1999 1998 Change
- ------------------------------------------------------------------------------------------------------------
Net revenues, including security gains..... $ 47,736 $ 45,116 5.8% $ 93,281 $ 87,008 7.2%
Net interest income - FTE.................. 35,205 33,762 4.3% 69,499 65,173 6.6%
Operating expenses......................... 30,392 27,932 8.8% 59,750 55,341 8.0%
Net income from operations................. 10,893 11,236 (3.1%) 20,929 20,642 1.4%
Net income................................. 7,126 11,236 (36.6%) 17,162 17,335 (1.0%)
Basic earnings per share from operations... 0.39 0.39 0.0% 0.74 0.74 0.0%
Basic earnings per share................... 0.25 0.39 (35.9%) 0.61 0.62 (1.6%)
Diluted earnings per share from operations. 0.38 0.38 0.0% 0.73 0.72 1.4%
Diluted earnings per share................. 0.25 0.38 (34.2%) 0.60 0.61 (1.6%)
Cash dividends per share................... 0.14 0.14 0.0% 0.28 0.26 7.7%
Book value per share....................... 10.59 10.94 (3.2%)
Trailing Twelve Months Ended
June 30,
--------------------------------
Percent
Financial Highlights 1999 1998 Change
- -----------------------------------------------------------------------------
Net revenues, including security gains..... $ 187,755 $ 169,283 10.9%
Net interest income - FTE.................. 137,092 126,378 8.5%
Operating expenses......................... 119,506 110,601 8.1%
Net income from operations................. 43,175 39,035 10.6%
Net income................................. 39,408 35,728 10.3%
Basic earnings per share from operations... 1.50 1.43 4.9%
Basic earnings per share................... 1.37 1.31 4.6%
Diluted earnings per share from operations. 1.49 1.39 7.2%
Diluted earnings per share................. 1.36 1.28 6.2%
Cash dividends per share................... 0.56 0.50 12.0%
Book value per share.......................
Quarter Ended June 30, Six Months Ended June 30,
------------------------------------------------------------------
Key Financial Ratios (A) 1999 1998 Change 1999 1998 Change
- --------------------------------------------------------------------------------------------------------------
Return on average assets................ 1.04% 1.11% (0.07%) 1.01% 1.07% (0.06%)
Return on average equity................ 13.92% 14.21% (0.29%) 13.33% 13.67% (0.34%)
Net interest margin (FTE)............... 3.53% 3.50% 0.03% 3.49% 3.52% (0.03%)
Efficiency Ratio (FTE).................. 60.45% 58.61% 1.84% 60.76% 60.15% 0.61%
(A) All ratios have been adjusted to exclude merger-related and restructuring
charges.
Quarter Ended June 30, Six Months Ended June 30,
------------------------------------------------------------------
Percent Percent
Income Statement 1999 1998 Change 1999 1998 Change
- --------------------------------------------------------------------------------------------------------------
Interest income............................ $ 73,902 $ 74,520 (0.8%) $ 146,794 $ 142,835 2.8%
Interest expense........................... 41,240 43,302 (4.8%) 82,349 82,664 (0.4%)
------------------------------------------------------------------
Net interest income..................... 32,662 31,218 4.6% 64,445 60,171 7.1%
Provision for loan losses.................. 2,151 1,642 31.0% 4,377 3,787 15.6%
Non-interest income:
Trust and asset management income....... 7,709 5,993 28.6% 14,296 11,254 27.0%
Service charges on deposits............. 2,408 2,185 10.2% 4,626 4,049 14.3%
Mortgage revenues....................... 1,957 2,437 (19.7%) 4,095 5,075 (19.3%)
Other................................... 2,621 2,742 (4.4%) 5,247 5,376 (2.4%)
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Total non-interest income............ 14,695 13,357 10.0% 28,264 25,754 9.7%
Net security gains......................... 379 541 (29.9%) 572 1,083 (47.2%)
Operating expenses:
Personnel costs......................... 17,140 16,106 6.4% 33,865 31,776 6.6%
Net occupancy expense................... 1,622 1,644 (1.3%) 3,351 3,357 (0.2%)
Equipment expense....................... 2,463 1,978 24.5% 4,568 3,799 20.2%
External data processing expense........ 1,492 441 238.3% 3,093 739 318.5%
Professional fees....................... 866 740 17.0% 1,997 1,635 22.1%
Advertising and business development.... 1,017 912 11.5% 1,763 1,678 5.1%
Amortization of intangible assets....... 498 685 (27.3%) 995 1,271 (21.7%)
Other................................... 5,294 5,426 (2.4%) 10,118 11,086 (8.7%)
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Total operating expenses............. 30,392 27,932 8.8% 59,750 55,341 8.0%
------------------------------------------------------------------
Income before income taxes................. 15,193 15,542 (2.2%) 29,154 27,880 4.6%
Income taxes............................... 4,300 4,306 (0.1%) 8,225 7,238 13.6%
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Net income from operations................. $ 10,893 $ 11,236 (3.05%) $ 20,929 $ 20,642 1.4%
Restructuring/merger related charges,
net of tax ............................ 3,767 - N/M 3,767 3,307 13.9%
------------------------------------------------------------------
Net income................................. $ 7,126 $ 11,236 (36.6%) $ 17,162 $ 17,335 (1.0%)
==================================================================
Average shares outstanding - basic (000)... 28,252 29,047 (2.7%) 28,363 28,078 1.0%
Average shares outstanding - diluted (000). 28,659 29,635 (3.3%) 28,800 28,608 0.7%
Ending shares outstanding (000)............ 28,289 29,050 (2.6%)
AMCORE Financial, Inc.
Quarter Ended June 30,
---------------------------------------------------------
(in thousands) 1999 1998
- ---------------------------------------------------------------------------------------------------
Ending Average Yield/ Average Yield/
Balance Balance Rate Balance Rate
- ---------------------------------------------------------------------------------------------------
Assets:
Taxable securities.................... $ 958,954 $1,012,840 6.28% $ 1,242,204 6.66%
Tax-exempt securities (FTE)........... 341,463 348,253 7.66% 341,110 8.04%
Other earning assets.................. 32,427 23,538 4.08% 9,429 6.00%
Loans held for sale................... 18,687 19,449 6.60% 27,996 5.66%
Loans, net of unearned income (FTE)... 2,590,655 2,556,142 8.27% 2,209,607 8.78%
---------------------------------------------------------
Total Earning Assets (FTE)......... $3,942,186 $3,960,222 7.69% $ 3,830,346 8.02%
Intangible assets.................. 18,099 18,328 19,061
Other non-earning assets........... 248,075 221,950 200,887
---------------------------------------------------------
Total Assets....................... $4,208,360 $4,200,500 $ 4,050,294
=========================================================
Liabilities and Stockholders' Equity:
Interest bearing deposits............. $2,529,099 $2,552,137 4.48% $ 2,398,702 4.91%
Non-interest bearing deposits......... 395,539 366,461 325,461
---------------------------------------------------------
Total Deposits..................... $2,924,638 $2,918,598 $ 2,724,163
---------------------------------------------------------
Short-term borrowings................. 631,636 615,877 5.23% 688,135 5.68%
Long-term borrowings.................. 297,779 297,421 6.23% 267,211 6.08%
---------------------------------------------------------
Total Interest Bearing Liabilities. 3,458,514 3,465,435 4.76% 3,354,048 5.16%
Other liabilities.................. 54,806 54,688 53,529
---------------------------------------------------------
Total Liabilities.................. $3,908,859 $3,886,584 $ 3,733,038
Stockholders' Equity............... 299,501 313,916 317,256
---------------------------------------------------------
Total Liabilities and
Stockholders' Equity............... $4,208,360 $4,200,500 $ 4,050,294
=========================================================
Six Months Ended June 30,
-----------------------------------------
(in thousands) 1999 1998
- -----------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
- -----------------------------------------------------------------------------------
Assets:
Taxable securities.................... $1,040,783 6.20% $1,203,739 6.78%
Tax-exempt securities (FTE)........... 343,387 7.74% 333,767 8.08%
Other earning assets.................. 20,301 3.94% 9,817 5.61%
Loans held for sale................... 25,705 5.78% 28,272 6.62%
Loans, net of unearned income (FTE)... 2,519,854 8.30% 2,091,246 8.77%
-----------------------------------------
Total Earning Assets (FTE)......... $3,950,030 7.68% $3,666,841 8.06%
Intangible assets.................. 18,540 17,174
Other non-earning assets........... 216,860 201,164
-----------------------------------------
Total Assets....................... $4,185,430 $3,885,179
=========================================
Liabilities and Stockholders' Equity:
Interest bearing deposits............. $2,547,081 4.52% $2,310,411 4.93%
Non-interest bearing deposits......... 359,514 320,882
-----------------------------------------
Total Deposits..................... $2,906,595 $2,631,293
-----------------------------------------
Short-term borrowings................. 598,628 5.26% 660,690 5.71%
Long-term borrowings.................. 307,769 6.20% 236,024 6.17%
-----------------------------------------
Total Interest Bearing Liabilities. 3,453,478 4.80% 3,207,125 5.18%
Other liabilities.................. 55,873 52,704
-----------------------------------------
Total Liabilities.................. $3,868,865 $3,580,711
Stockholders' Equity............... 316,565 304,468
-----------------------------------------
Total Liabilities and
Stockholders' Equity............... $4,185,430 $3,885,179
=========================================
---------------------------------------------------------------------------------
Quarter Ended Six Months Ended June 30,
---------------------------------------------------------------------------------
June 30, Percent December 31, Percent Percent
Asset Quality (in thousands) 1999 1998 Change 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
<C
Ending allowance for loan losses......... $ 27,636 $ 24,588 12.4% $ 26,403 4.7%
Net charge-offs.......................... 2,434 800 204.3% 1,513 60.9% 3,144 1,254 150.7%
Net charge-offs to average loans (B)..... 0.38% 0.14% 0.2% 0.25% 0.1% 0.25% 0.12% 0.1%
Non-performing assets:
Non-performing loans - nonaccrual..... $ 17,888 $ 20,825 (14.1%) $ 18,179 (1.6%)
Other real estate owned (OREO)........ 3,090 1,880 64.4% 2,321 33.1%
------------------------------------------------------
Total non-performing assets........ $ 20,978 $ 22,705 (7.6%) $ 20,500 2.3%
======================================================
Loans 90 days past due and still accruing $ 7,042 $ 5,751 22.4% $ 7,272 (3.2%)
(B) On an annualized basis.
Key Asset Quality Ratios Change Change
- --------------------------------------------------------------------------------------------
Allowance to ending loans............... 1.07% 1.09% (0.02%) 1.08% (0.01%)
Allowance to non-performing loans....... 154.49% 118.07% 36.42% 145.24% 9.25%
Non-performing loans to loans........... 0.69% 0.92% (0.23%) 0.74% (0.05%)
Non-performing assets to loans & OREO... 0.81% 1.01% (0.20%) 0.84% (0.03%)
Non-performing assets to total assets... 0.50% 0.55% (0.05%) 0.50% 0.00%
Capital Adequacy
- --------------------------------------------------------------------------------------------
Total risk-based capital................. 12.85% 14.08% (1.23%) 13.46% (0.61%)
Tier 1 risk-based capital................ 11.88% 13.12% (1.24%) 12.49% (0.61%)
Leverage ratio........................... 8.05% 8.28% (0.23%) 8.31% (0.26%)