MOLINE, Ill., Jan. 28, 2009 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (Nasdaq:QCRH) today announced earnings for the year ended December 31, 2008 of $6.7 million, and diluted earnings per share for common shareholders of $1.06, compared to earnings of $5.8 million or $1.02 in diluted earnings per share for 2007. These results reflect an increase in earnings of $932 thousand over 2007, or 16%, and an increase in diluted earnings per share of $0.04.
For the fourth quarter of 2008, the Company reported breakeven earnings with a slight net loss of $55 thousand which translated into diluted earnings per share after preferred stock dividends of ($0.11). This was a decrease from the same quarter last year when the Company's earnings totaled $1.6 million and diluted earnings per share of $0.29. Earnings for the fourth quarter of 2008 were significantly impacted by additional loan/lease loss provisions as the Company increased its qualitative reserves due to the continued uncertainty in the national economy and made increased provisions regarding two specific commercial credits.
During the third quarter, the Company's wholly owned subsidiary, Quad City Bancard, Inc., sold its merchant credit card acquiring business. The resulting gain on sale, net of taxes and related expenses, was approximately $3.0 million and $0.65 per share, which was a significant contributor to 2008 earnings. The current and comparative financial results associated with the merchant credit card acquiring business have been reflected as discontinued operations within the accompanying tables as appropriate.
On December 31, 2008, the Company finalized the sale of its Milwaukee subsidiary, First Wisconsin Bank & Trust, for approximately $13.7 million which resulted in a gain, net of taxes and related expenses, of approximately $400 thousand and $0.08 per share. The current and comparative financial results associated with First Wisconsin Bank & Trust have also been reflected as discontinued operations within the accompanying tables as appropriate.
The Company's earnings from continuing operations were $5.0 million and $6.5 million for the years ended December 31, 2008 and 2007, respectively. Diluted earnings per share from continuing operations decreased from $1.18 to $0.69. The reduction in 2008 earnings from continuing operations was due to the significant increase in provision for loan/leases losses of $6.9 million. Helping to offset this increased provision expense was a dramatic increase in net interest income of $9.9 million, or 28%, from $35.0 million for the year ending December 31, 2007 to $44.9 million for the year ending December 31, 2008. Additionally, net interest margin improved significantly as it increased a total of 40 basis points from 2.92% to 3.32%.
"We are pleased with the sustained improvement in our net interest margin," stated Douglas M. Hultquist, President and CEO. "With the unprecedented and continued volatility in the interest rate environment, the pressure on margin has been experienced across our industry. Our management teams and talented bankers have worked very hard to successfully grow and strengthen our balance sheets and customer base to drive improved margins and growth in net interest income."
Mr. Hultquist added, "Despite the economic recession and its impact on our provision expense, we were able to achieve solid core earnings for the year. Earnings from continuing operations before provision and taxes totaled $15.9 million for 2008, which was an increase of $4.2 million, or 36%, from $11.7 million for 2007. This continued success in core earnings is a direct result of our bankers' strong focus on customer relationships."
During 2008, the Company's total assets increased nearly 9%, or $129.1 million, to $1.61 billion from $1.48 billion at December 31, 2007. During this same period, loans/leases increased at a rate of 15%, or $157.7 million, to $1.21 billion from $1.06 billion at December 31, 2007. Total deposits increased by $175.0 million to $1.06 billion at December 31, 2008 from $884.0 million at December 31, 2007, or 20%. Short-term and other borrowings totaled $431.8 million as of December 31, 2008, which was an increase of $9.0 million from $422.8 million as of December 31, 2007. Stockholders' equity increased $4.6 million to $90.6 million as of December 31, 2008, as compared to $86.1 million at December 31, 2007.
"We are pleased with the continued growth in market share that we've experienced in the Quad Cities, Cedar Rapids, and Rockford communities," stated Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer. "Strategic employee additions and enhancement in our systems over the years have helped to support this growth." He continued, "A concerted effort by our talented employees to continue to perform on our relationship-based banking model has been a key to our success."
Mr. Gipple added, "The Company, and all three subsidiary banks, continue to be well capitalized as of December 31, 2008 and we have adequate access to liquidity. While many banks experienced losses and reductions in their regulatory capital during 2008, we were profitable and actually added nearly $5 million, or 5%, to our stockholders' equity. Recently, we applied for and received preliminary approval for an investment of up to $38.24 million in capital under the Treasury Capital Purchase Program. We anticipate funding in mid-February pending shareholder approval. While our current capital position remains strong, given the uncertainty that our entire country faces over the severity and duration of the current economic recession, we believe it is prudent to maintain higher levels of capital during these challenging times. Our board of directors has concluded that the additional capital that can be raised through Treasury's capital program is cost effective and will be beneficial to our Company, as well as our clients, stockholders, and employees. Consistent with the intent of the Treasury Capital Purchase Program, we believe the additional capital will enhance our capacity to support the communities we serve through additional lending opportunities."
Nonperforming assets at December 31, 2008 were $23.8 million, which was an increase of $10.2 million from $13.6 million at September 30, 2008, resulting in an increase in the level of non-performing assets at the end of the fourth quarter to 1.48% of total assets, as compared to 0.83% of total assets at September 30, 2008. Of this increase, $9.2 million was attributable to two specific commercial credits. Management has thoroughly reviewed these loans and has provided specific reserves as appropriate. The Company's allowance for loan/lease losses to total loans/leases increased to 1.47% at December 31, 2008 from 1.23% at September 30, 2008, and from 1.07% at December 31, 2007. Furthermore, the Company's provision for loan/lease losses totaled $9.2 million for 2008 which was an increase of $6.9 million from 2007.
"The significant increase in provision expense was the primary reason for our reduced earnings from continuing operations year-over-year and quarter-over-quarter," stated Mr. Gipple. "There are three specific factors driving this increase. First, we grew our loan portfolio 15% during 2008. Second, due to the economic recession and the related uncertainty, management increased the qualitative factors impacting the allowance for loan/lease losses as we continue to carefully review these factors to insure the economic risk within our loan portfolio is appropriately quantified and reserved. Throughout the year, we've increased the qualitative factors for the local and national economy as needed. Third, we have experienced some degradation on specific commercial credits within our portfolio that required specific reserves. Maintaining credit quality during this economic downturn is our top priority and management frequently monitors the Company's loan/lease portfolio and the level of allowance for loan/lease losses."
2008 results for the Company's primary subsidiaries were as follows:
* Quad City Bank & Trust, the Company's first subsidiary bank, had total consolidated assets of $908.6 million at December 31, 2008, which was an increase of $47.9 million from $860.7 million at December 31, 2007. At December 31, 2008, Quad City Bank & Trust had net loans/leases of $661.8 million, which was an increase of $28.3 million from $633.5 million as of December 31, 2007. During this same period, deposits increased $65.5 million to $572.6 million. With this increase in deposits, the bank's reliance on short-term and other borrowings continued to decrease as it moved from $267.1 million as of December 31, 2007 down to $249.1 million as of December 31, 2008. The bank realized earnings for the year of $8.2 million which is a slight decrease of $346 thousand, or 4%, from one year ago. * Cedar Rapids Bank & Trust, which opened in 2001, had total assets of $468.3 million at December 31, 2008, which was an increase of $84.3 million, or 22%, from $384.0 million at December 31, 2007. At December 31, 2008, Cedar Rapids Bank & Trust had net loans of $349.6 million, which was an increase of $63.5 million, or 22%, from December 31, 2007; while deposits of $309.8 million reflected an increase of $50.8 million, or 20%, for the year. Short-term and other borrowings were $116.8 million as of December 31, 2008, which was an increase of $25.1 million from $91.7 million as of December 31, 2007. The bank realized earnings for 2008 of $3.1 million for an improvement of approximately $728 thousand, or nearly 31%, from one year ago. * Rockford Bank & Trust, which opened in 2005, had total assets of $228.0 million at December 31, 2008, which was an increase of $70.2 million, or 44%, from December 31, 2007. At December 31, 2008, Rockford Bank & Trust had net loans of $187.9 million and deposits of $180.2 million, which represent increases from December 31, 2007 of 46% and 50%, respectively. The bank realized after-tax net losses for 2008 in the amount of $1.6 million, which was an increase of $757 thousand from the losses of $850 thousand for the same period in 2007. The 2008 loss was dramatically impacted by a large provision made on a single commercial credit in the fourth quarter. Rockford Bank & Trust continued to make significant progress in reaching break-even, as the bank had positive net income before provision expense and taxes of $520 thousand for 2008 as compared to a $614 thousand net loss before provision expense and taxes for 2007.
QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company, which serves the Quad City, Cedar Rapids, and Rockford 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.
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 States 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.
QCR HOLDINGS, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) As of --------------------------------------- December 31, September 30, December 31, 2008 2008 2007 ------------ ------------- ------------ (dollars in thousands, except share data) SELECTED BALANCE SHEET DATA * Total assets $ 1,605,629 $ 1,641,416 $ 1,476,564 Securities $ 256,076 $ 231,973 $ 220,557 Total loans/leases $ 1,214,690 $ 1,177,748 $ 1,056,988 Allowance for estimated loan/lease losses $ 17,809 $ 14,496 $ 11,315 Assets related to discontinued operations, held for sale $ - $ 106,332 $ 68,223 Total deposits $ 1,058,959 $ 980,400 $ 884,005 Liabilities related to discontinued operations, held for sale $ - $ 94,789 $ 59,062 Total stockholders' equity $ 90,637 $ 89,438 $ 86,066 Common stockholders' equity $ 70,485 $ 69,286 $ 65,908 Common shares outstanding 4,509,637 4,625,088 4,597,744 Book value per common share $ 15.63 $ 14.98 $ 14.33 Closing stock price $ 10.00 $ 13.30 $ 14.25 Market capitalization $ 45,096 $ 61,514 $ 65,518 Market price/book value 63.98% 88.78% 99.41% Full time equivalent employees 345 349 326 Tier 1 leverage capital ratio 7.10% 7.08% 7.40% * First Wisconsin Bank & Trust was sold on December 31, 2008 and is reported as discontinued operations for all periods reported. Immediately prior to the sale, First Wisconsin Bank & Trust had total assets of $122.9 million, gross loans of $80.2 million, deposits of $98.0 million, and 24 full-time equivalent employees. These amounts and the accompanying 2008 income statement results have been removed from all financial schedules.
QCR HOLDINGS, INC CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) As of --------------------------------------- December 31, September 30, December 31, 2008 2008 2007 ------------ ----------- ----------- (dollars in thousands) ANALYSIS OF LOAN DATA * Nonaccrual loans/leases $ 19,711 $ 9,443 $ 6,488 Accruing loans/leases past due 90 days or more 222 2,218 500 Other real estate owned 3,857 1,960 496 ------------ ----------- ----------- Total nonperforming assets $ 23,790 $ 13,621 $ 7,484 Net charge-offs (calendar year-to-date) $ 2,728 $ 1,186 $ 1,452 Loan/lease mix: Commercial loans $ 438,425 $ 475,439 $ 353,424 Commercial real estate loans 529,087 465,002 472,284 Direct financing leases 79,408 72,910 68,732 Residential real estate loans 79,229 78,875 83,328 Installment and other consumer loans 88,541 85,522 79,220 ------------ ----------- ----------- Total loans/leases $1,214,690 $1,177,748 $1,056,988 ANALYSIS OF DEPOSIT DATA * Deposit mix: Noninterest-bearing $ 161,126 $ 143,071 $ 160,533 Interest-bearing 897,833 837,329 723,472 ------------ ----------- ----------- Total deposits $1,058,959 $ 980,400 $ 884,005 Interest-bearing deposit mix: Nonmaturity deposits $ 387,746 $ 331,009 $ 334,018 Certificates of deposit 386,097 404,773 341,581 Brokered certificates of deposit 123,990 101,547 47,873 ------------ ----------- ----------- Total interest-bearing deposits $ 897,833 $ 837,329 $ 723,472 * First Wisconsin Bank & Trust was sold on December 31, 2008 and is reported as discontinued operations for all periods reported
QCR HOLDINGS, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) For the Quarter Ended -------------------------------------- December 31, September 30, December 31, 2008 2008 2007 ------------ ------------ ----------- (dollars in thousands, except per share data) SELECTED INCOME STATEMENT DATA * Interest income $ 21,664 $ 21,541 $ 21,611 Interest expense 9,790 9,800 12,274 ----------- ----------- ----------- Net interest income 11,874 11,741 9,337 Provision for loan/lease losses 4,728 2,154 252 ----------- ----------- ----------- Net interest income after provision for loan/lease losses 7,146 9,587 9,085 Noninterest income 3,231 3,311 3,097 Noninterest expense 11,201 10,577 9,387 ----------- ----------- ----------- Income from continuing operations before taxes and minority interest (824) 2,321 2,795 Minority interest in income of consolidated subsidiary (74) 93 137 Income tax expense (benefit) from continuing operations (419) 613 863 ----------- ----------- ----------- Income (loss) from continuing operations $ (331) $ 1,615 $ 1,795 Discontinued operations: Gain on sale of merchant credit card acquiring business -- 4,645 -- Operating income from merchant credit card acquiring business -- 119 104 Gain on sale of First Wisconsin Bank & Trust 495 -- -- Operating loss from First Wisconsin Bank & Trust (131) (582) (447) ----------- ---------- ----------- Income (loss) from discontinued operations before taxes 364 4,182 (343) Income tax expense (benefit) from discontinued operations 88 1,492 (158) ----------- ----------- ----------- Income (loss) from discontinued operations $ 276 $ 2,690 $ (185) Net income $ (55) $ 4,305 $ 1,610 Preferred stock dividends 446 446 268 ----------- ----------- ----------- Net income available to common stockholders $ (501) $ 3,859 $ 1,342 Earnings per share from continuing operations: Basic $ (0.17) $ 0.25 $ 0.33 Diluted $ (0.17) $ 0.25 $ 0.33 Earnings per share from discontinued operations: Basic $ 0.06 $ 0.58 $ (0.04) Diluted $ 0.06 $ 0.58 $ (0.04) Earnings per share: Basic $ (0.11) $ 0.83 $ 0.29 Diluted $ (0.11) $ 0.83 $ 0.29 Earnings per common share (basic) LTM ** $ 1.07 $ 1.47 $ 1.03 AVERAGE BALANCES * Assets $ 1,571,570 $ 1,600,218 $ 1,426,079 Deposits $ 1,015,873 $ 1,008,107 $ 877,523 Loans/leases $ 1,179,925 $ 1,219,876 $ 1,024,669 Total stockholders' equity $ 91,024 $ 88,904 $ 79,782 Common stockholders' equity $ 70,872 $ 68,752 $ 66,592 KEY RATIOS * Return on average assets (annualized) -0.01% 1.08% 0.45% Return on average common equity (annualized) -0.31% 25.05% 9.67% Price earnings ratio LTM ** 9.35x 9.05x 13.83x Net interest margin (TEY) 3.34% 3.40% 3.02% Nonperforming assets / total assets 1.48% 0.83% 0.51% Net charge-offs / average loans/leases 0.13% 0.06% 0.14% Allowance / total loans/leases 1.47% 1.23% 1.07% Efficiency ratio 74.15% 70.27% 75.49% For the Year Ended ------------------------- December 31, December 31, 2008 2007 ------------ ----------- (dollars in thousands, except per share data) SELECTED INCOME STATEMENT DATA * Interest income $ 85,467 $ 83,140 Interest expense 40,524 48,139 ----------- ----------- Net interest income 44,943 35,001 Provision for loan/lease losses 9,221 2,336 ----------- ----------- Net interest income after provision for loan/lease losses 35,722 32,665 Noninterest income 13,611 12,850 Noninterest expense 42,334 35,734 ----------- ----------- Income from continuing operations before taxes and minority inter 6,999 9,781 Minority interest in income of consolidated subsidiary 288 388 Income tax expense (benefit) from continuing operations 1,736 2,893 ----------- ----------- Income (loss) from continuing operations $ 4,975 $ 6,500 Discontinued operations: Gain on sale of merchant credit card acquiring business 4,645 -- Operating income from merchant credit card acquiring business 361 409 Gain on sale of First Wisconsin Bank & Trust 495 -- Operating loss from First Wisconsin Bank & Trust (2,921) (1,630) ----------- ----------- Income (loss) from discontinued operations before taxes 2,580 (1,221) Income tax expense (benefit) from discontinued operations 846 (498) ----------- ----------- Income (loss) from discontinued operations $ 1,734 $ (723) Net income $ 6,709 $ 5,777 Preferred stock dividends 1,785 1,072 ----------- ----------- Net income available to common stockholders $ 4,924 $ 4,705 Earnings per share from continuing operations: Basic $ 0.69 $ 1.18 Diluted $ 0.69 $ 1.18 Earnings per share from discontinued operations: Basic $ 0.38 $ (0.16) Diluted $ 0.37 $ (0.16) Earnings per share: Basic $ 1.07 $ 1.03 Diluted $ 1.06 $ 1.02 Earnings per common share (basic) LTM ** AVERAGE BALANCES * Assets $ 1,552,747 $ 1,351,482 Deposits $ 936,354 $ 866,660 Loans/leases $ 1,124,255 $ 1,001,633 Total stockholders' equity $ 87,952 $ 75,018 Common stockholders' equity $ 67,800 $ 62,064 KEY RATIOS * Return on average assets (annualized) 0.43% 0.43% Return on average common equity (annualized) 9.90% 9.31% Price earnings ratio LTM ** 9.35x 13.83x Net interest margin (TEY) 3.32% 2.92% Nonperforming assets / total assets 1.48% 0.51% Net charge-offs / average loans/leases 0.24% 0.14% Allowance / total loans/leases 1.47% 1.07% Efficiency ratio 72.30% 74.68% * First Wisconsin Bank & Trust was sold on December 31, 2008 and is reported as discontinued operations for all periods reported ** LTM: Last twelve months
QCR HOLDINGS, INC CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) For the Quarter Ended -------------------------------------- December 31, September 30, December 31, 2008 2008 2007 ------------ ----------- ----------- (dollars in thousands, except share data) ANALYSIS OF NONINTEREST INCOME * Credit card fees, net of processing costs $ 252 $ 229 $ 237 Trust department fees 784 781 889 Deposit service fees 815 816 688 Gain on sales of loans, net 205 201 254 Gains on sales of securities 200 -- -- Gains on sale of foreclosed assets 328 61 -- Gains on sales of other assets 14 -- -- Earnings on cash surrender value of life insurance 230 241 204 Investment advisory and management fees 408 481 442 Other (5) 501 383 ------------ ----------- ----------- Total noninterest income $ 3,231 $ 3,311 $ 3,097 ANALYSIS OF NONINTEREST EXPENSE * Salaries and employee benefits $ 6,823 $ 6,467 $ 5,862 Professional and data processing fees 1,391 1,143 955 Advertising and marketing 316 386 346 Occupancy and equipment expense 1,300 1,326 1,194 Stationery and supplies 149 117 132 Postage and telephone 239 223 233 Bank service charges 129 160 146 FDIC and Other Insurance 346 338 299 (Gains) losses on disposal of fixed assets -- -- (16) Other 508 417 236 ------------ ----------- ----------- Total noninterest expenses $ 11,201 $ 10,577 $ 9,387 WEIGHTED AVERAGE SHARES Common shares outstanding (a) 4,630,253 4,624,056 4,596,788 Incremental shares from assumed conversion: Options and Employee Stock Purchase Plan 16,847 22,443 11,239 ------------ ----------- ----------- Adjusted weighted average shares (b) 4,647,100 4,646,499 4,608,027 For the Year Ended -------------------------- December 31, December 31, 2008 2007 ----------- ----------- (dollars in thousands, except share data) ANALYSIS OF NONINTEREST INCOME * Credit card fees, net of processing costs $ 988 $ 747 Trust department fees 3,334 3,672 Deposit service fees 3,135 2,607 Gain on sales of loans, net 1,069 1,220 Gains on sales of securities 200 -- Gains on sale of foreclosed assets 394 1 Gains on sales of other assets 14 436 Earnings on cash surrender value of life insurance 1,017 846 Investment advisory and management fees 1,975 1,576 Other 1,485 1,745 ----------- ---------- Total noninterest income $ 13,611 $ 12,850 ANALYSIS OF NONINTEREST EXPENSE * Salaries and employee benefits $ 26,124 $ 21,977 Professional and data processing fees 4,801 3,469 Advertising and marketing 1,297 1,116 Occupancy and equipment expense 5,091 4,717 Stationery and supplies 519 513 Postage and telephone 933 936 Bank service charges 560 565 FDIC and Other Insurance 1,317 996 (Gains) losses on disposal of fixed assets -- 223 Other 1,692 1,222 ----------- ----------- Total noninterest expenses $ 42,334 $ 35,734 WEIGHTED AVERAGE SHARES Common shares outstanding (a) 4,617,057 4,581,919 Incremental shares from assumed conversion: Options and Employee Stock Purchase Plan 17,480 17,649 ----------- ----------- Adjusted weighted average shares (b) 4,634,537 4,599,568 * First Wisconsin Bank & Trust was sold on December 31, 2008 and is reported as discontinued operations for all periods reported (a) Denominator for Basic Earnings Per Share (b) Denominator for Diluted Earnings Per Share