ROCKFORD, Ill., Jan. 22, 2009 (GLOBE NEWSWIRE) -- AMCORE Financial, Inc. (Nasdaq:AMFI) today announced financial results for the fourth quarter and the year ended December 31, 2008.
(Numbers in Thousands, Except Per Share Data) 4th quarter YTD 4th quarter YTD 2008 2008 2007 2007 Net Revenues $43,873 $206,487 $57,243 $231,581 Net (Loss) Income $(32,119) $(97,799) $7,530 $28,241 Diluted Shares 22,652 22,629 22,834 23,556 Diluted EPS $(1.42) $(4.32) $0.33 $1.20
AMCORE reported a net loss of ($32.1) million for fourth quarter 2008, compared to net income of $7.5 million in the prior-year period and a net loss of ($18.0) million in the previous quarter. Loss per diluted share was ($1.42) for fourth quarter 2008, compared to earnings of $0.33 per diluted share in fourth quarter 2007, and a loss of ($0.79) in the previous quarter.
Full year 2008 loss per diluted share was ($4.32) compared to earnings of $1.20 per diluted share in 2007. AMCORE's net loss for the full year 2008 was ($97.8) million compared to earnings of $28.2 million in 2007, and includes substantial reserves for potential loan losses for the year.
"We are committed to meeting the financial needs of our customers during this unprecedented economic period," said William R. McManaman, Chairman and CEO of AMCORE. "We all recognize this is a very difficult and weak economy, especially for banks. Our fourth quarter results reflect the continued deterioration of the economic environment. In light of these conditions during the quarter, we took aggressive steps including reducing our exposure to construction, land development and vacant land loans by 10 percent from the previous quarter and also laid plans to manage through further market uncertainty."
The following occurred during the quarter:
* AMCORE remained well capitalized with nearly $411 million in regulatory bank capital as of December 31, 2008. Activities to manage the Bank's capital and liquidity included: - Suspending the quarterly dividend in November to preserve capital. - Merging the non-depository trust charter into the bank's charter to strengthen capital resources. - Extensively exploring capital raising activities to provide further strength and stability. * Added to reserves as the economy weakened. Loan loss reserves and capital provide the cushion against which losses are charged. * Enhanced the credit administration and underwriting functions by adding expertise and resources including the redeployment of personnel to asset protection from revenue production. * Increased focus on strategic relationship-based assets to improve risk profile and business opportunities and lowering our exposure to non-strategic, non-relationship based accounts. * Reduced staff positions by 11 percent compared to a year ago.
Revenues
* Net revenues decreased $13.4 million to $43.9 million in fourth quarter 2008 from $57.2 million during the same quarter a year ago and decreased $8.6 million from $52.5 million in the previous quarter due to lower net interest income and non-interest income. * Net interest income was $26.9 million, or 2.37 percent of average earning assets in fourth quarter 2008, compared to $39.1 million or 3.28 percent of average earning assets in fourth quarter 2007, and $32.3 million, or 2.76 percent of average earning assets in third quarter 2008. The decreases from both periods were primarily due to interest income reversals of $2.4 million in the fourth quarter 2008 as well as increased funding costs on higher levels of non-accrual loans, a continued decline in interest rates, pricing pressure on funding sources and lower loan balances. * Average loan balances were essentially flat at $3.8 billion compared to third quarter 2008, while average investment securities decreased four percent, or $35.9 million. Average bank issued deposits decreased five percent, or $158.9 million, to $2.8 billion compared to third quarter 2008. The decline in bank issued deposits is due to fluctuations in certain public fund accounts and institutional clients moving from unsecured to secured sweep accounts, which are classified as borrowings. Investment securities declined due to a $49 million sale of securities in fourth quarter 2008. * Non-interest income was $16.9 million in the fourth quarter 2008 compared to $18.1 million in the fourth quarter 2007 and was $20.2 million in the third quarter 2008, with declines of $1.2 million and $3.3 million, respectively. The decrease for both periods included lower customer service fees and higher negative derivative mark-to market adjustments, which are included in other non-interest income. Fourth quarter 2008 included a $1.0 million gain on the sale of the investment securities.
Asset Quality and Operating Expenses
* Provision for loan losses was $57.5 million, a $51.1 million increase from $6.4 million in fourth quarter 2007 and a $9.5 million increase from $48.0 million in third quarter 2008. - Net charge-offs were $55.9 million compared to $4.8 million in fourth quarter 2007, and $26.8 million in third quarter 2008. Provision for loan losses are accrued when losses are probable, whereas chargeoffs are taken when the loss is subsequently confirmed. - Non-performing loans were $313 million at December 31, 2008, compared to $71 million at December 31, 2007 and $191 million at September 30, 2008. The economy has been particularly challenging for commercial real estate loans to builders and developers. Many of these builders and developers carry extended housing inventories in a weak market, which has strained their liquidity and as a result increased our non-performing loans. * The percentage of total non-performing loans to total loans was 8.27 percent at December 31, 2008, up from 1.80 percent at December 31, 2007 and 5.03 percent at September 30, 2008. * Operating expenses were flat compared to fourth quarter 2007, but increased seven percent compared to third quarter 2008, primarily due to credit related costs. These costs included higher loan processing and collection expenses of $1.1 million compared to the same quarter a year ago and $888,000 compared to the previous quarter; increased reserves for unfunded loan commitments of $1.4 million compared to the same quarter a year ago and $1.2 million compared to the previous quarter and increased FDIC premiums of $1.0 million compared to the same quarter a year ago and $154,000 compared to the previous quarter.
Additional financial data for the Company's earnings call will be available in the presentation section of the Investor Relations page on the Company's website at www.AMCORE.com.
ABOUT AMCORE
AMCORE Financial, Inc. is headquartered in Northern Illinois and has banking assets of $5.0 billion with 74 locations in Illinois and Wisconsin. AMCORE provides a full range of consumer and commercial banking services, a variety of mortgage lending products and wealth management services including trust, brokerage, private banking, financial planning, investment management, insurance and comprehensive retirement plan services.
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.
FORWARD LOOKING STATEMENTS
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 the 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 or adverse findings or rulings made by local, state or federal regulators or agencies regarding AMCORE and its operations; (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 prepayments; (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 estimates"; (XVII) inability of third-party vendors to perform critical services for the Company or its customers; (XVIII) disruption of operations caused by the conversion and installation of data processing systems; (XIX) adverse economic or business conditions affecting specific loan portfolio types in which the Company has a concentration, such as construction, land development and other land loans; (XX) zoning restrictions or other limitations at the local level, which could prevent limited branch offices from transitioning to full-service facilities; (XXI) possible changes in the creditworthiness of customers and the possible impairment of collectibility of loans; and, (XXII) the recently enacted Emergency Economic Stabilization Act of 2008, and the various programs the U.S. Treasury and the banking regulators are implementing to address capital and liquidity issues in the banking system, all of which may have significant effects on the Company and the financial services industry, the exact nature and extent of which cannot be determined at this time.
AMCORE Financial, Inc. CONSOLIDATED FINANCIAL SUMMARY (Unaudited) ($ in 000's except ------------------------------------------------ per share data) 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. SHARE DATA 2008 2008 2008 2008 2007 ---------- ------------------------------------------------ Diluted earnings per share $ (1.42) $ (0.79) $ (0.89) $ (1.21) $ 0.33 Cash dividends $ -- $ 0.049 $ 0.049 $ 0.180 $ 0.180 Book value $ 11.55 $ 12.74 $ 13.85 $ 15.21 $ 16.31 Average diluted shares outstanding 22,652 22,647 22,614 22,601 22,834 Ending shares outstanding 22,682 22,655 22,647 22,612 22,600 INCOME STATEMENT ---------------- Total Interest Income $ 61,415 $ 66,452 $ 69,088 $ 75,801 $ 83,865 Total Interest Expense 34,467 34,190 33,079 39,135 44,766 ------------------------------------------------ Net interest income 26,948 32,262 36,009 36,666 39,099 Provision for loan losses 57,487 48,000 40,000 57,229 6,400 Non-interest income: Investment management & trust 3,661 3,907 4,394 4,307 4,495 Service charges on deposits 8,075 9,152 8,680 7,334 8,001 Net mortgage revenues 98 203 (5) 345 202 Company owned life insurance 997 1,227 1,106 1,236 1,481 Brokerage commission 739 963 1,258 1,313 1,013 Bankcard fee income 2,062 2,241 2,286 2,005 2,060 Net security (losses) gains 1,008 -- -- 1,010 (346) Other 285 2,552 1,814 349 1,238 ------------------------------------------------ Total non-interest income 16,925 20,245 19,533 17,899 18,144 Operating expenses: Personnel costs 21,171 21,328 22,039 24,374 22,278 Net occupancy & equipment 6,677 6,469 6,469 6,842 6,280 Data processing 733 715 763 751 884 Professional fees 2,141 1,981 1,955 2,547 2,061 Communication 1,176 1,318 1,301 1,259 1,280 Advertising & business development 718 796 616 708 1,400 Other 8,318 5,757 15,157 8,400 6,566 ------------------------------------------------ Total operating expenses 40,934 38,364 48,300 44,881 40,749 ------------------------------------------------ Income before income taxes (54,548) (33,857) (32,758) (47,545) 10,094 Income tax (benefit) expense (22,429) (15,870) (12,524) (20,086) 2,564 ------------------------------------------------ Net Income $(32,119) $(17,987) $(20,234) $(27,459) $ 7,530 ================================================ ------------------------------------------------ 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. KEY RATIOS AND DATA 2008 2008 2008 2008 2007 ------------------- ------------------------------------------------ Net interest margin (FTE) 2.37% 2.76% 3.07% 3.12% 3.28% Return on average assets -2.54% -1.40% -1.58% -2.13% 0.58% Return on average equity -44.78% -22.77% -23.54% -29.44% 7.94% Efficiency ratio 93.30% 73.06% 86.97% 82.26% 71.19% Equity/assets (end of period) 5.21% 5.76% 6.06% 6.64% 7.10% Allowance to loans (end of period) 3.60% 3.54% 3.44% 2.48% 1.35% Allowance to non-accrual loans 45% 71% 78% 86% 130% Allowance to non-performing loans 44% 70% 78% 85% 75% Non-accrual loans to loans 8.03% 4.99% 4.40% 2.89% 1.04% Non-performing assets to total assets 6.56% 4.03% 3.50% 2.25% 1.45% ($ in millions) Total assets under administration $ 1,999 $ 2,247 $ 2,458 $ 2,712 $ 2,728 Mortgage loans closed $ 27 $ 38 $ 72 $ 74 $ 51 Mortgage servicing rights, net $ 0.1 $ 0.1 $ 0.1 $ 0.1 $ 0.1 ($ in 000's except ------------------------------------------------- per share data) 4Q/3Q 4Q 08/07 Year-to-Date 08/07 SHARE DATA Inc(Dec) Inc(Dec) 2008 2007 Inc(Dec) ---------- ------------------------------------------------- Diluted earnings per share 79% N/M $ (4.32) $ 1.20 N/M Cash dividends (100%) (100%) $ 0.278 $ 0.720 (61%) Book value (9%) (29%) $ 11.55 $ 16.31 (29%) Average diluted shares outstanding 0% (1%) 22,629 23,556 (4%) Ending shares outstanding 0% 0% 22,682 22,600 0% INCOME STATEMENT ---------------- Total Interest Income (8%) (27%) $ 272,756 $344,016 (21%) Total Interest Expense 1% (23%) 140,871 183,432 (23%) ------------------------------------------------- Net interest income (16%) (31%) 131,885 160,584 (18%) Provision for loan losses 20% N/M 202,716 29,087 N/M Non-interest income: Investment management & trust (6%) (19%) 16,269 16,765 (3%) Service charges on deposits (12%) 1% 33,241 29,618 12% Net mortgage revenues (52%) (51%) 641 1,793 (64%) Company owned life insurance (19%) (33%) 4,566 5,429 (16%) Brokerage commission (23%) (27%) 4,273 4,174 2% Bankcard fee income (8%) 0% 8,594 7,862 9% Net security (losses) gains 0% N/M 2,018 (5,920) (134%) Other (89%) (77%) 5,000 11,276 (56%) ------------------------------------------------- Total non-interest income (16%) (7%) 74,602 70,997 5% Operating expenses: Personnel costs (1%) (5%) 88,912 94,924 (6%) Net occupancy & equipment 3% 6% 26,457 24,615 7% Data processing 3% (17%) 2,962 3,369 (12%) Professional fees 8% 4% 8,624 8,397 3% Communication (11%) (8%) 5,054 5,258 (4%) Advertising & business development (10%) (49%) 2,838 4,166 (32%) Other 44% 27% 37,632 24,610 53% ------------------------------------------------- Total operating expenses 7% 0% 172,479 165,339 4% ------------------------------------------------- Income before income taxes 61% N/M (168,708) 37,155 N/M Income tax (benefit) expense 41% N/M (70,909) 8,914 N/M ------------------------------------------------- Net Income 79% N/M $ (97,799) $ 28,241 N/M ================================================= ------------------------------------------------- Basis Basis Basis Point Point Year-to-Date Point KEY RATIOS AND DATA Change Change 2008 2007 Change ------------------- ------------------------------------------------- Net interest margin (FTE) (39) (91) 2.84% 3.35% (51) Return on average assets (114) (312) -1.91% 0.54% (245) Return on average equity N/M N/M -29.64% 7.32% N/M Efficiency ratio N/M N/M 83.53% 70.98% N/M Equity/assets (end of period) (55) (189) Allowance to loans (end of period) 6 225 Allowance to non-accrual loans N/M N/M Allowance to non-performing loans N/M N/M Non-accrual loans to loans 304 N/M Non-performing assets to total assets 253 N/M ($ in millions) Total assets under administration (11%) (27%) Mortgage loans closed (29%) (47%) Mortgage servicing rights, net 0% 0% N/M = not meaningful AMCORE Financial, Inc. CONSOLIDATED FINANCIAL SUMMARY (cont.) (Unaudited) ($ in 000's) AVERAGE ------------------------------------------------------ BALANCE 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. SHEET 2008 2008 2008 2008 2007 -------- ------------------------------------------------------ Assets: Investment securities, at cost $ 846,415 $ 882,289 $ 893,769 $ 874,672 $ 871,626 Short-term investments 29,590 96,027 18,992 5,472 6,856 Loans held for sale 2,862 4,523 7,811 8,565 6,653 Loans: Commercial 773,736 765,776 785,912 774,482 776,557 Commercial real estate 2,222,806 2,234,286 2,310,215 2,346,154 2,358,906 Residential real estate 445,372 445,837 455,929 473,545 488,532 Consumer 369,654 361,107 344,787 335,272 319,808 ------------------------------------------------------ Total loans $3,811,568 $3,807,006 $3,896,843 $3,929,453 $3,943,803 ------------------------------------------------------ Total earning assets $4,690,435 $4,789,845 $4,817,415 $4,818,162 $4,828,938 Allowance for loan losses (133,968) (123,693) (99,197) (53,982) (52,499) Goodwill -- -- 6,081 6,148 6,148 Other non-earning assets 470,556 438,972 424,046 404,324 412,641 ------------------------------------------------------ Total assets $5,027,023 $5,105,124 $5,148,345 $5,174,652 $5,195,228 ====================================================== Liabilities and Stockholders' Equity: Non-interest bearing deposits $ 453,717 $ 476,378 $ 492,882 $ 479,571 $ 496,301 Interest bearing deposits 1,223,287 1,462,149 1,781,361 1,824,232 1,873,883 Time deposits 1,151,156 1,048,560 944,914 994,795 1,067,981 ------------------------------------------------------ Total bank issued deposits $2,828,160 $2,987,087 $3,219,157 $3,298,598 $3,438,165 ------------------------------------------------------ Wholesale deposits 1,018,975 887,366 683,246 593,083 620,500 Short-term borrowings 446,041 370,946 355,916 435,708 327,678 Long-term borrowings 403,632 490,034 488,453 417,492 368,657 ------------------------------------------------------ Total wholesale funding $1,868,648 $1,748,346 $1,527,615 $1,446,283 $1,316,835 ------------------------------------------------------ Total interest bearing liabilities 4,243,091 4,259,055 4,253,890 4,265,310 4,258,699 ------------------------------------------------------ Other liabilities 44,843 55,456 55,914 54,695 64,144 ------------------------------------------------------ Total liabilities $4,741,651 $4,790,889 $4,802,686 $4,799,576 $4,819,144 ------------------------------------------------------ Stockholders' equity 297,392 320,549 345,498 373,870 377,775 Other comprehensive (loss) gain (12,020) (6,314) 161 1,206 (1,691) ------------------------------------------------------ Total stockholders' equity 285,372 314,235 345,659 375,076 376,084 ------------------------------------------------------ Total liabilities & stockholders' equity $5,027,023 $5,105,124 $5,148,345 $5,174,652 $5,195,228 ====================================================== CREDIT QUALITY -------------- Ending allowance for loan losses $ 136,412 $ 134,833 $ 133,393 $ 96,732 $ 53,140 Net charge-offs 55,908 26,757 3,339 13,637 4,760 Net charge-offs to avg loans (annualized) 5.84% 2.80% 0.34% 1.40% 0.48% Non-performing assets: Non-accrual loans $ 304,176 $ 190,135 $ 170,910 $ 112,945 $ 40,972 Loans 90 days past due & still accruing 8,889 1,267 894 1,107 29,826 ------------------------------------------------------ Total non- performing loans 313,065 191,402 171,804 114,052 70,798 Foreclosed real estate 16,899 10,224 8,906 2,422 4,108 Other foreclosed assets 224 393 257 246 201 ------------------------------------------------------ Total non- performing assets $ 330,188 $ 202,019 $ 180,967 $ 116,720 $ 75,107 ====================================================== YIELD AND RATE ANALYSIS -------------- Assets: Investment securities (FTE) 4.80% 4.65% 4.70% 4.71% 4.61% Short-term investments 1.83% 1.95% 2.16% 4.04% 5.31% Loans held for sale 7.59% 6.85% 5.96% 6.54% 7.61% Loans: Commercial 5.01% 5.64% 5.92% 6.78% 7.80% Commercial real estate 5.13% 5.70% 5.94% 6.66% 7.42% Residential real estate 5.48% 5.79% 5.94% 6.40% 6.94% Consumer 7.92% 7.87% 7.90% 7.93% 7.96% ------------------------------------------------------- Total loans (FTE) 5.42% 5.90% 6.11% 6.76% 7.48% ------------------------------------------------------- Total interest earning assets (FTE) 5.29% 5.60% 5.83% 6.38% 6.96% ======================================================= Liabilities: Interest bearing deposits 1.03% 1.42% 1.63% 2.42% 3.23% Time deposits 3.68% 3.79% 3.98% 4.36% 4.58% ------------------------------------------------------- Total bank issued deposits 2.31% 2.41% 2.45% 3.11% 3.72% ------------------------------------------------------- Wholesale deposits 4.58% 4.61% 4.66% 5.02% 5.11% Short-term borrowings 3.18% 3.29% 3.37% 3.69% 4.80% Long-term borrowings 5.21% 4.49% 4.53% 5.63% 5.63% ------------------------------------------------------- Total wholesale funding 4.38% 4.30% 4.32% 4.82% 5.18% ------------------------------------------------------- Total interest bearing liabilities 3.22% 3.19% 3.12% 3.69% 4.17% ======================================================= Net interest spread 2.07% 2.41% 2.71% 2.69% 2.79% Net interest margin (FTE) 2.37% 2.76% 3.07% 3.12% 3.28% ======================================================= FTE adjustment (000's) $ 834 $ 844 $ 803 $ 746 $ 701 -------------------------------- ($ in 000's) 4Q/3Q 4Q 08/07 Ending AVERAGE BALANCE SHEET Inc(Dec) Inc(Dec) Balances --------------------- -------------------------------- Assets: Investment securities, at cost (4%) (3%) $ 871,149 Short-term investments (69%) N/M 1,665 Loans held for sale (37%) (57%) 6,749 Loans: Commercial 1% (0%) 771,669 Commercial real estate (1%) (6%) 2,199,033 Residential real estate (0%) (9%) 437,877 Consumer 2% 16% 377,450 -------------------------------- Total loans 0% (3%) $3,786,029 -------------------------------- Total earning assets (2%) (3%) $4,665,592 Allowance for loan losses 8% 155% (136,412) Goodwill 0% (100%) -- Other non-earning assets 7% 14% 502,058 -------------------------------- Total assets (2%) (3%) $5,031,238 ================================ Liabilities and Stockholders' Equity: Non-interest bearing deposits (5%) (9%) $ 465,382 Interest bearing deposits (16%) (35%) 1,224,166 Time deposits 10% 8% 1,147,856 -------------------------------- Total bank issued deposits (5%) (18%) $2,837,404 -------------------------------- Wholesale deposits 15% 64% 1,081,634 Short-term borrowings 20% 36% 435,783 Long-term borrowings (18%) 9% 379,667 -------------------------------- Total wholesale funding 7% 42% $1,897,084 -------------------------------- Total interest bearing liabilities (0%) (0%) 4,269,106 -------------------------------- Other liabilities (19%) (30%) 34,752 -------------------------------- Total liabilities (1%) (2%) $4,769,240 -------------------------------- Stockholders' equity (7%) (21%) 269,913 Other comprehensive (loss) gain 90% N/M (7,915) -------------------------------- Total stockholders' equity (9%) (24%) 261,998 -------------------------------- Total liabilities & stockholders' equity (2%) (3%) $5,031,238 ================================ CREDIT QUALITY -------------- Ending allowance for loan losses 1% 157% Net charge-offs 109% N/M Net charge-offs to avg loans (annualized) 109% N/M Non-performing assets: Non-accrual loans 60% N/M Loans 90 days past due & still accruing N/M (70%) -------------------- Total non-performing loans 64% N/M Foreclosed real estate 65% N/M Other foreclosed assets (43%) 11% -------------------- Total non-performing assets 63% N/M ==================== N/M = not meaningful