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EXHIBIT 99.1
AREA
BANCSHARES
CORPORATION
--------------------------------------------------------------------------------
MEDIA RELEASE
FOR IMMEDIATE RELEASE
October 18, 2000
AREA BANCSHARES CORPORATION ANNOUNCES RECORD THIRD QUARTER EARNINGS
Owensboro, Kentucky - October 18, 2000 - Area Bancshares Corporation
(NASDAQ:AREA), reported record core operating earnings, net income less non-core
items (securities gains and nonrecurring items), for the third quarter of 2000
of $8.16 million or $0.50 per diluted share compared to $7.17 million or $0.42
per diluted share in 1999. These amounts reflect increases of $992 thousand, or
13.8%, and $0.08, or 19.0%, respectively. Cash based core operating earnings,
core operating earnings adjusted for amortization of intangibles, totaled $9.39
million or $0.57 per diluted share during the current quarter compared to $7.89
million or $0.46 per diluted share reported during the same period of 1999. The
increases were $1.50 million, or 19.0%, and $0.11, or 23.9%, for cash based core
operating earnings and cash based diluted earnings per share, respectively. The
details of the non-core items are presented in the table below "Core Operating
and Cash-Based Core Operating Net Income."
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 2000 CORE CASH-BASED
(Amounts in thousands except per REPORTED NON-CORE OPERATING INTANGIBLE CORE
share data and percentages) INCOME ITEMS (1) INCOME AMORTIZATION INCOME
<S> <C> <C> <C> <C> <C>
Income before taxes $9,376 $ 2,294 $11,670 $ 1,574 $13,244
Income tax expense 2,703 803 3,506 351 3,857
------ ------- ------- ------- -------
NET INCOME $6,673 $ 1,491 $ 8,164 $ 1,223 $ 9,387
====== ======= ======= ======= =======
Per diluted share $ 0.41 $ 0.09 $ 0.50 $ 0.07 $ 0.57
Return on average assets (2) 0.97% 1.19% 1.41%
Return on average equity (2) 9.71% 11.87% 18.07%
</TABLE>
(1) See Non-Core Items Detail below. (2) Percentages annualized.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1999 CORE CASH-BASED
(Amounts in thousands except per REPORTED NON-CORE OPERATING INTANGIBLE CORE
share data and percentages) INCOME ITEMS (1) INCOME AMORTIZATION INCOME
<S> <C> <C> <C> <C> <C>
Income before taxes $11,108 $ (896) $10,212 $ 868 $11,080
Income tax expense 3,354 (314) 3,040 153 3,193
------- ------ ------- ----- -------
NET INCOME $ 7,754 $ (582) $ 7,172 $ 715 $ 7,887
======= ====== ======= ===== =======
Per diluted share $ 0.45 $(0.03) $ 0.42 $0.04 $ .46
Return on average assets (2) 1.37% 1.27% 1.41%
Return on average equity (2) 11.49% 10.62% 13.37%
</TABLE>
(1) See Non-Core Items Detail below. (2) Percentages annualized.
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ABC Release
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Reported net income for the third quarter of 2000 was $6.67 million,
a decrease of $1.08 million, or 13.9%, from net income earned in the third
quarter of 1999 which totaled $7.75 million. Diluted earnings per share
decreased $0.04, or 8.9% to $0.41 from $0.45 earned in the quarter ended
September 30, 1999. The decrease in reported net income in the current quarter
compared to the third quarter of 1999 was largely the result of an after-tax
charge for the cost of the previously announced consolidation of affiliate
operations and charters of $1.49 million ($0.09 per diluted share) and a
reduction in after-tax gains on the sale of securities of $582 thousand ($0.03
per diluted share) partially offset by the growth of net interest income and all
other non-interest income.
Year-to-date core operating earnings were $22.65 million, or $1.37 per
diluted share, compared to $18.96 million, or $1.11 per diluted share, during
the first nine months of 1999. This is an increase of $3.69 million, or 19.5%,
and a per share increase of $0.26 or 23.4%. Cash based core operating earnings
for the nine months ended September 30, 2000 increased to $26.70 million, or
$1.62 per diluted share, compared to the $21.11 million or $1.23 per diluted
share reported in the same period of 1999. These amounts represent a $5.59
million or 26.5% increase in earnings and a $0.39 or 31.7% increase in diluted
earnings per share amounts.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 2000 CORE CASH-BASED
(Amounts in thousands except per REPORTED NON-CORE OPERATING INTANGIBLE CORE
share data and percentages) INCOME ITEMS (1) INCOME AMORTIZATION INCOME
<S> <C> <C> <C> <C> <C>
Income before taxes $45,583 $(13,071) $32,512 $5,047 $37,559
Income tax expense 15,604 (5,744) 9,860 998 10,858
------- -------- -------- ------ -------
NET INCOME $29,979 $ (7,327) $ 22,652 $4,049 $26,701
======= ======== ======== ====== =======
Per diluted share $ 1.82 $ (0.45) $ 1.37 $ 0.25 $ 1.62
Return on average assets (2) 1.48% 1.12% 1.35%
Return on average equity (2) 14.61% 11.04% 16.56%
</TABLE>
(1) See Non-Core Items Detail below. (2) Percentages annualized.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999 CORE CASH-BASED
(Amounts in thousands except per REPORTED NON-CORE OPERATING INTANGIBLE CORE
share data and percentages) INCOME ITEMS (1) INCOME AMORTIZATION INCOME
<S> <C> <C> <C> <C> <C>
Income before taxes $48,707 $(22,615) $26,092 $2,605 $28,697
Income tax expense 15,177 (8,047) 7,130 461 7,591
------- -------- ------- ------ -------
NET INCOME $33,530 $(14,568) $18,962 $2,144 $21,106
======= ======== ======= ====== =======
Per diluted share $ 1.96 $ (0.85) $ 1.11 $ 0.12 $ 1.23
Return on average assets (2) 2.00% 1.13% 1.28%
Return on average equity (2) 16.87% 9.54% 12.22%
</TABLE>
(1) See Non-Core Items Detail below. (2) Percentages annualized.
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ABC Release
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Reported net income for the nine months ended September 30, 2000 was
$29.98 million compared to $33.53 million earned in the same period of 1999. The
current year-to-date reported net income was $3.55 million, or 10.6% below the
first nine months of 1999. On a diluted share basis, year-to-date net income per
share declined $0.14, or 7.1% to $1.82 from $1.96 in the first nine months of
1999. The decrease in net income was largely the result of a reduction in
after-tax gains on the sales of securities from $13.83 million ($0.81 per
diluted share) during the first nine months of 1999 to $8.97 million ($0.54 per
diluted share) and an after-tax consolidation expense of $1.49 million ($0.09
per diluted share) in the current year-to-date period, partially offset by the
growth of net interest income and all other non-interest income.
Area also reported that it is restating its previously reported net
income for the three-months ended March 31, 2000. The restatement is being done
to correct the accounting for a portion of the deferred taxes associated with
the acquisition that was completed on January 31, 2000. The restatement resulted
in an increase in income tax expense of $1.28 million and a corresponding
reduction in goodwill recorded in accounting for the acquisition. The effects of
the restatement have been included in the results reported for the nine-months
ended September 30, 2000. Core operating earnings and cash-based core operating
earnings were unaffected by the restatement. For the three-month period ended
March 31, 2000, the originally reported net income of $12.88 million or $0.78
per diluted share has been restated to $11.60 million or $0.70 per diluted
share.
Results for the third quarter of 2000 and the current year-to-date
period include the acquisition of the Eifler Group, which was completed in
October 1999, and the January 31, 2000 cash purchases of Peoples Bank of Murray,
Murray, Kentucky; Dees Bank of Hazel, Hazel, Kentucky; Bank of Lyon County,
Eddyville, Kentucky; and Bank of Livingston County, Tiline, Kentucky ("Western
Kentucky Affiliated Banks"). Total assets on January 31, 2000 of the Western
Kentucky Affiliated Banks were approximately $383.35 million. Area paid a total
of $78.20 million in conjunction with these acquisitions. The Western Kentucky
Affiliated Banks acquisition was accounted for using the purchase method of
accounting, and resulted in the recording of approximately $32.95 million of
intangibles.
Net interest income, on a tax equivalent basis, was $28.78 million
during the current quarter and $82.96 million in the nine months ended September
30, 2000 compared to $23.92 million and $68.44 million during the same periods
in 1999. The increases were $4.86 million, or 20.3%, and $14.52 million, or
21.2% for the three and nine-month periods ended September 30, 2000,
respectively. Net interest margin for the third quarter of 2000 remained
essentially unchanged at 4.56% in comparison to the 4.55% reported for the same
period of 1999.
The provision for loan losses in the third quarter was $588 thousand
compared to $145 thousand in the same period of 1999 and $1.22 million for
year-to-date 2000 compared to $501 thousand during the first nine months of
1999. The increase in the provision for loan losses was due mainly to growth in
the loan portfolio. Net charge-offs in the third quarter of 2000 were $338
thousand compared to $199 thousand in the third quarter of 1999 and $896 in the
first nine months of 2000 compared to $510 thousand during the same period in
1999. Net charge-offs as a percent of average loans increased to 0.07%
(annualized) in the third quarter of 2000 compared to 0.05% (annualized) in the
third quarter of 1999 and totaled 0.06% (annualized) for the first nine months
of 2000 versus 0.05% (annualized) during the similar period in 1999. These
ratios are very low compared to Area's historical levels and there is no
assurance that these levels will not increase in the future.
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ABC Release
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During the first quarter Area announced that it would undertake a
consolidation of its operations during 2000. During the quarter, Area made
significant progress towards consolidating the operations and charters of its
affiliate banks (other than Vine Street Trust, Lexington) to gain operating
efficiencies and raise brand awareness by adopting the common name of "Area
Bank". Revised estimates of the annual savings from the consolidation are
approximately $5.04 million pre-tax. Revised estimates of the one-time costs
associated with the consolidation are approximately $4.46 million. These
one-time costs represent the pre-tax consolidation expense of $2.29 million
taken in the third quarter of 2000 and $2.17 million of capitalized
infrastructure and equipment costs that will be depreciated and amortized over
the next 3-to-10 years. Management believes there will be no significant
additional costs related to the consolidation in the future. The expected annual
savings of approximately $5.04 million will not begin to be fully realized until
the third quarter of 2001.
Area Bancshares Corporation, a $2.75 billion multi-bank holding company
headquartered in Owensboro, Kentucky, is the largest bank-holding company
headquartered in Kentucky and operates 12 banks with 75 banking facilities in 39
cities throughout Kentucky. Through its subsidiaries, Area offers a broad range
of banking and bank-related services.
The following unaudited statistical summary is provided as supplemental
information:
<TABLE>
<CAPTION>
AS OF AND FOR THE AS OF AND FOR THE
3 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
OPERATING HIGHLIGHTS (UNAUDITED) 2000 1999 2000 1999
(Amounts in thousands except per share data)
<S> <C> <C> <C> <C>
Net income $ 6,673 $ 7,754 $ 29,979 $ 33,530
Core operating net income 8,164 7,172 22,652 18,962
Cash-based core operating net income 9,387 7,887 26,701 21,106
Basic earnings per share 0.41 0.46 1.83 1.98
Core operating basic earnings per share 0.50 0.43 1.38 1.12
Cash-based core operating basic earnings per share 0.57 0.47 1.63 1.25
Diluted earnings per share 0.41 0.45 1.82 1.96
Core operating diluted earnings per share 0.50 0.42 1.37 1.11
Cash-based core operating diluted earnings per share 0.57 0.46 1.62 1.23
</TABLE>
<TABLE>
<CAPTION>
AS OF AND FOR THE AS OF AND FOR THE
3 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
SELECTED RATIOS AND DATA (UNAUDITED) 2000 1999 2000 1999
(Percentages amounts annualized)
<S> <C> <C> <C> <C>
Return on average assets 0.97% 1.37% 1.48% 2.00%
Core operating return on average assets 1.19% 1.27% 1.12% 1.13%
Cash-based core operating return on average assets 1.41% 1.41% 1.35% 1.28%
Return on average equity 9.71% 11.49% 14.61% 16.87%
Core operating return on average equity 11.87% 10.62% 11.04% 9.54%
Cash-based core operating return on average equity 18.07% 13.37% 16.56% 12.22%
Net interest margin-tax equivalent 4.56% 4.55% 4.43% 4.40%
Equity-to-assets 10.11% 11.64% 10.11% 11.64%
</TABLE>
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<TABLE>
<CAPTION>
3 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
INCOME STATEMENT (UNAUDITED) 2000 1999 2000 1999
(Amounts in thousands)
<S> <C> <C> <C> <C>
Taxable equivalent net interest income $ 28,777 $ 23,918 $ 82,959 $ 68,441
Provision for loan losses 588 145 1,224 501
Non-interest income 6,590 6,713 37,091 39,001
Non-interest expenses 24,058 18,272 69,320 54,964
Income taxes 2,703 3,354 15,604 15,177
Taxable equivalent adjustment 1,345 1,106 3,923 3,270
NET INCOME $ 6,673 $ 7,754 $ 29,979 $ 33,530
BALANCE SHEET AVERAGES (UNAUDITED)
Total assets $2,723,738 $2,245,352 $2,701,906 $2,246,619
Earning assets 2,510,651 2,085,291 2,499,552 2,078,568
Shareholders' equity 273,504 267,837 273,957 265,796
</TABLE>
<TABLE>
<CAPTION>
3 MONTHS ENDED 9 MONTHS ENDED
NON-CORE ITEMS DETAIL (UNAUDITED) SEPTEMBER 30 SEPTEMBER 30
2000 1999 2000 1999
<S> <C> <C> <C> <C>
(Amounts in thousands)
Effect on net income
Add (deduct), net of taxes:
Security (gains) losses -- $(582) $(8,973) $(13,831)
Insurance settlement -- -- -- (615)
Gain on sale of fixed assets -- -- (93) --
Consolidation costs 1,491 -- 1,491
Merger/acquisition-related adjustments -- -- 248 (122)
------ ------ ------- --------
TOTAL NET INCOME EFFECT ON NON-CORE ITEMS $1,491 $(582) $(7,327) $(14,568)
====== ====== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30
END OF PERIOD BALANCE SHEET (UNAUDITED) 2000 1999 1999
(Amounts in thousands)
<S> <C> <C> <C>
Total securities $ 546,845 $ 492,716 $ 482,098
Loans 1,929,777 1,631,396 1,588,399
Allowance for loan losses 27,706 23,055 23,499
Intangibles 65,700 32,969 33,929
Total assets 2,746,701 2,340,521 2,261,467
Deposits 2,076,351 1,711,782 1,677,242
Borrowings 367,358 338,049 297,939
Shareholders' equity 277,705 266,964 263,276
Book value per share 17.02 16.17 15.87
ASSET QUALITY (UNAUDITED)
Non-accrual loans $ 2,452 $ 1,078 $ 1,016
90 days past due and still accruing 3,047 990 2,347
OREO 797 203 1,322
---------- ---------- ----------
Total non-performing assets $ 6,296 $ 2,271 $ 4,685
========== ========== ==========
Allowance for Loan Losses-to-loans 1.44% 1.41% 1.48%
Allowance for Loan Losses coverage of nonperforming assets 440.1% 1,015.2% 501.6%
</TABLE>
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ABC Release
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This release contains forward-looking statements including statements
relating to present or future trends or factors generally affecting the banking
industry and specifically affecting Area's operations, markets and products.
Without limiting the foregoing, the words "believes," "anticipates," "intends,"
"expects" or similar expressions are intended to identify forward-looking
statements. These forward-looking statements involve risks and uncertainties.
Actual results could differ materially from those projected for many reasons,
including, without limitation, changing events and trends that have influenced
Area's assumptions, but that are beyond Area's control. Additional information
and other factors that could affect future financial results are included in
Area's filings with the Securities and Exchange Commission.
CONTACT: Edward J. Vega at (270) 688-7812 or Gary R. White (270) 688-7824.
(END)
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