QCR Holdings, Inc. Announces Record Earnings of $6.5 Million for the Third Quarter of 2015

MOLINE, Ill., Oct. 20, 2015 (GLOBE NEWSWIRE) — QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $6.5 million and diluted earnings per share (“EPS”) of $0.55 for the quarter ended September 30, 2015. By comparison, for the quarter ended June 30, 2015, the Company reported a net loss of $524 thousand and diluted EPS of ($0.05). During the second quarter, the Company successfully executed several planned initiatives aimed at improving the long-term profitability of the Company and strengthening its capital base. As a result, financial performance was greatly impacted by several previously announced nonrecurring income and expense items; most prominently the one-time expense related to the prepayment of certain FHLB advances and other wholesale borrowings, which totaled approximately $4.5 million (after-tax). For the third quarter of 2014, the Company reported net income of $4.1 million, and diluted EPS of $0.50. As a result of the redemption of all of the Company’s remaining outstanding shares of preferred stock in the second quarter of 2014, none of these periods included preferred stock dividends.

For the nine months ended September 30, 2015, the Company reported net income of $10.1 million and diluted EPS of $1.01. By comparison, for the first nine months ended September 30, 2014, the Company reported net income of $12.0 million, and diluted EPS of $1.35, after preferred stock dividends of $1.1 million. The Company redeemed all of the outstanding shares of preferred stock in the second quarter of 2014.

The Company reported core net income (non-GAAP) for the quarter ending September 30, 2015 of $6.2 million, with diluted core EPS of $0.52. Core net income for the quarter included a $788 thousand (after-tax) gain on the sale of other real estate. While this gain is considered core income, it is non-recurring in nature. Core net income for the quarter excluded after-tax gains on the sale of securities of $37 thousand and after-tax income from the conclusion of a favorable lawsuit of $252 thousand.

For the nine months ended September 30, 2015, the Company reported core net income (non-GAAP) of $14.6 million, with diluted core EPS of $1.45. Core net income year-to-date excludes $5.0 million of after-tax non-recurring expenses, $4.5 million of which related to the previously announced prepayment of FHLB advances and other wholesale borrowings during the second quarter of 2015.

“We are quite pleased with our operating performance in the third quarter,” commented Douglas M. Hultquist, President and Chief Executive Officer, “as net interest margin meaningfully increased, organic loan growth was strong, and asset quality metrics showed significant continued improvement. Our core return on average assets (“ROAA”) has improved significantly over the past several quarters. Core ROAA was 0.97% for the third quarter. By comparison, core ROAA was 0.71% and 0.66% for the quarters ending June 30, 2015 and September 30, 2014, respectively. We are making strides towards achieving our target ROAA of 1.00%.”

Net Interest Margin Expanded 18 Basis Points from Prior Quarter
And 36 Basis Points Compared to Third Quarter of 2014

Net interest income totaled $20.1 million for the quarter ended September 30, 2015. By comparison, net interest income totaled $18.5 million and $17.5 million for the quarters ended June 30, 2015 and September 30, 2014, respectively. Net interest income totaled $56.4 million for the nine months ended September 30, 2015, an increase of nearly 10% compared to the same period of the prior year.

“The planned balance sheet restructuring that we executed in the second quarter of 2015 continues to have a substantial impact on our net interest margin (“NIM”) percentage, as our margin expanded 18 basis points from the prior quarter to 3.51% and our cost of interest bearing liabilities declined 14 basis points from the prior quarter to 0.71%,” stated Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer. He added, “As the majority of the restructuring activity was executed mid-second quarter, we expected this significant NIM improvement in the third quarter. We were also successful in improving yields on the asset side of the balance sheet, increasing the yield on both the securities portfolio, as well as the loan and lease portfolio. These improvements resulted in a seven basis point increase in asset yield. The continued margin expansion is helping us move closer to our targeted 1.00% ROAA.”

Year-to-Date Annualized Loan and Lease Growth of 10.3%
Swap Fee Income Strong Year-to-Date and Gains on the Sale of Government Guaranteed Loans Improve in Third Quarter

During the third quarter of 2015, the Company’s total assets increased $32.9 million, or 1%, to a total of $2.58 billion, while total loans and leases grew $40.2 million. The loan and lease growth was funded primarily by deposit growth. Deposits grew $18.6 million, or 1%, during the quarter. Borrowings were flat in the third quarter. 

 “Loan and lease growth through the third quarter totaled $125.7 million, or 10.3% on an annualized basis,” commented Mr. Hultquist. “While net loan growth slowed a bit in the third quarter compared to the second quarter, we are still within our targeted annual organic growth rate of 10-12%. A majority of this growth has been in the commercial and industrial loan category. This segment of our portfolio now accounts for 37% of our total loans and leases. At the same time, we continue to reduce our reliance on commercial real estate loans, with that segment now representing 39% of our portfolio. Additionally, solid loan and lease growth has continued to help us move our loan and lease to total asset ratio upward to 68%, from 67% in the second quarter of 2015 and 64% one year ago. We intend to continue increasing this ratio as we rotate out of securities and into loans and leases, with a goal of growing loans and leases to more than 70% of total assets.”

“Swap fee income has been strong this year, totaling $1.2 million through the third quarter,” said Mr. Gipple. “The current low interest rate environment has been ideal for the execution of several interest rate swaps on select commercial loans. Additionally, gains on the sale of the government guaranteed portion of loans totaled $760 thousand for the quarter, as this activity accelerated. We plan to continue executing these types of transactions, as they both provide unique solutions for our clients’ needs.”

Nonperforming Assets Decreased $6.5 Million, or 24%, During the Third Quarter

Nonperforming loans and leases at September 30, 2015 were $12.3 million, a decrease of $2.5 million, or 17%, from June 30, 2015. In addition, the ratio of nonperforming assets (“NPAs”) to total assets was 0.80% at September 30, 2015, which was down from 1.07% at June 30, 2015. 

 “We are very pleased with the continued improvement in our asset quality this quarter. We have been heavily focused on reducing our NPAs to total assets ratio to below 1.00% and were successful in achieving this benchmark during the third quarter, with our actual ratio of 0.80%. The reduction of our NPAs was primarily due to the sale of a large other real estate property during the quarter, as well as a charge-off of a nonaccrual loan that was fully reserved in prior periods,” stated Mr. Gipple. “We plan to continue to dispose of our other real estate properties in order to further improve our asset quality ratios. Currently, we have four other real estate properties totaling $7.1 million. Additionally, the Company has two nonaccrual relationships totaling $6.9 million. In total, these six relationships make up $14.0 million, or 68%, of our Company’s nonperforming assets. We will concentrate our workout efforts on these six relationships.”

The Company’s provision for loan/lease losses totaled $1.6 million for the third quarter of 2015, which was down $714 thousand from the prior quarter, and up $572 thousand compared to the third quarter of 2014. The increased provision in the second quarter of 2015 was the result of a $971 thousand increase in a specific allowance allocated to one relationship at Quad City Bank & Trust Company, which was subsequently charged off in the third quarter of 2015.

The Company had net charge-offs of $2.2 million for the third quarter of 2015 which, when coupled with the provision of $1.6 million, decreased the Company’s allowance for loan/lease losses (“allowance”) to $25.5 million at September 30, 2015. As of September 30, 2015, the Company’s allowance to total loans/leases was 1.45%, which was down from 1.52% at June 30, 2015, and flat from 1.45% at September 30, 2014. 

The Company’s allowance to total nonperforming loans/leases was 207% at September 30, 2015, which was up from 176% at June 30, 2015, and up from 80% at September 30, 2014. 

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of Community National Bank (“CNB”) in May 2013 were recorded at market value; therefore, there was no allowance associated with CNB’s loans at acquisition. Management continues to evaluate the allowance needed on the acquired CNB loans, factoring in the net remaining discount ($805 thousand at September 30, 2015) originally established upon acquisition. 

Capital Levels Remain Strong

The Company’s total risk-based capital ratio was 13.08%, the common equity tier 1 ratio was 10.18% and the tangible common equity to tangible common assets ratio increased to 8.42%, all as of September 30, 2015. For comparison, these respective ratios were 10.30%, 7.24% and 5.88% as of March 31, 2015, which was the quarter prior to the capital issuance and debt restructuring previously discussed. Both the total risk-based capital ratio and the common equity tier 1 ratio are well above the fully phased-in requirements under Basel III. The increase in the Company’s capital ratios is primarily due to the capital raise executed in the second quarter of 2015, as well as strong earnings in the third quarter.

About Us

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 & Trust Company, which is based in Bettendorf, Iowa, and commenced operations in 1994, Cedar Rapids Bank & Trust Company, which is based in Cedar Rapids, Iowa, and commenced operations in 2001, and Rockford Bank & Trust Company, which is based in Rockford, Illinois, and commenced operations in 2005, provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company also provides correspondent banking services. In addition, Quad City Bank & Trust Company engages in commercial leasing through its wholly owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin. With the acquisition of Community National Bancorporation in 2013, the Company now serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. 

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, including the Basel III regulatory capital reforms, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued thereunder; (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 integration of acquired entities; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (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
  September 30, June 30, December 31, September 30,
  2015 2015 2014 2014
                 
  (dollars in thousands, except share data)
                 
CONDENSED BALANCE SHEET  Amount   %       Amount   %   Amount   % 
Cash, federal funds sold, and interest-bearing deposits  $ 107,659 4%  $ 110,233 4%  $ 120,350 5%  $ 106,718 4%
Securities  590,775 23%  592,368 23%  651,539 26%  652,785 27%
Net loans/leases  1,730,138 67%  1,689,238 67%  1,606,929 64%  1,550,101 63%
Core deposit intangible  1,521 0%  1,571 0%  1,671 0%  1,721 0%
Goodwill  3,223 0%  3,223 0%  3,223 0%  3,223 0%
Other assets  142,539 6%  146,336 6%  141,246 5%  136,048 6%
Total assets  $ 2,575,855 100%  $ 2,542,969 100%  $ 2,524,958 100%  $ 2,450,596 100%
                 
Total deposits  $ 1,855,319 72%  $ 1,836,767 73%  $ 1,679,668 67%  $ 1,713,867 70%
Total borrowings  456,091 18%  456,567 18%  662,558 26%  550,532 22%
Other liabilities  43,330 2%  37,938 1%  38,653 1%  48,017 2%
Total stockholders’ equity  221,115 8%  211,697 8%  144,079 6%  138,180 6%
Total liabilities and stockholders’ equity  $ 2,575,855 100%  $ 2,542,969 100%  $ 2,524,958 100%  $ 2,450,596 100%
                 
SELECTED INFORMATION FOR COMMON STOCKHOLDERS’ EQUITY                
Common stockholders’ equity (1)  $ 221,115    $ 211,697    $ 144,079    $ 138,180  
Common shares outstanding  11,728,911    11,698,578    7,953,197    7,936,813  
Book value per common share (1)  $ 18.85    $ 18.10    $ 18.12    $ 17.41  
Tangible book value per common share (2)  $ 18.45    $ 17.69    $ 17.50    $ 16.79  
Closing stock price  $ 21.87    $ 21.76    $ 17.86    $ 17.66  
Market capitalization  $ 256,511    $ 254,561    $ 142,044    $ 140,164  
Market price / book value 116.01%   120.25%   98.59%   101.44%  
Market price / tangible book value 118.55%   123.03%   102.05%   105.20%  
Tangible common equity / total tangible assets (TCE/TA) (3) 8.42%   8.15%   5.52%   5.45%  
TCE/TA excluding accumulated other comprehensive income (loss) 8.47%   8.21%   5.60%   5.64%  
                 
REGULATORY CAPITAL RATIOS:                
Total risk-based capital ratio 13.08% (4) 12.92%   10.91%   11.10%  
Tier 1 risk-based capital ratio 11.86% (4) 11.66%   9.52%   9.69%  
Tier 1 leverage capital ratio 9.73% (4) 9.62%   7.62%   7.53%  
Common equity tier 1 ratio 10.18% (4) 9.97%   N/A   N/A  
                 
  For the quarter ended September 30,   For the nine months ended September 30,  
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY 2015   2014   2015   2014  
Beginning balance  $ 211,697    $ 134,643    $ 144,079    $ 147,577  
Net income  6,489    4,063    10,143    11,960  
Other comprehensive income (loss) , net of tax  2,256    (812)    2,098    8,895  
Preferred and common cash dividends declared  —     —     (465)    (1,397)  
Proceeds from issuance of 3,680,000 shares of common stock, net of costs  —     —     63,484    —   
Redemption of 15,000 shares of Series F Preferred Stock  —     —     —     (15,000)  
Redemption of 14,867 shares of Series F Preferred Stock  —     —     —     (14,824)  
Other (5)  673    286    1,776    969  
Ending balance  $ 221,115    $ 138,180    $ 221,115    $ 138,180  
                 
                 
(1) Includes accumulated other comprehensive income (loss).  
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets.  
(3) See GAAP to non-GAAP reconciliations.  
(4) Subject to change upon final calculation for regulatory filings due after earnings release.  
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.   
 
 
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
                 
                 
  As of
  September 30, June 30, December 31, September 30,
  2015 2015 2014 2014
                 
  (dollars in thousands)
                 
ANALYSIS OF LOAN DATA Amount % Amount % Amount % Amount %
Loan/lease mix:                
Commercial and industrial loans  $ 647,398 37%  $ 606,826 35%  $ 523,927 32%  $ 479,747 31%
Commercial real estate loans  692,569 39%  696,122 41%  702,140 43%  697,728 44%
Direct financing leases  173,304 10%  170,799 10%  166,032 10%  162,476 10%
Residential real estate loans  165,061 10%  161,985 10%  158,633 10%  154,954 10%
Installment and other consumer loans  69,863 4%  72,448 4%  72,607 5%  71,760 5%
Deferred loan/lease origination costs, net of fees  7,477 0%  7,204 0%  6,664 0%  6,204 0%
Total loans/leases  $ 1,755,672 100%  $ 1,715,384 100%  $ 1,630,003 100%  $ 1,572,869 100%
Less allowance for estimated losses on loans/leases  25,534    26,146    23,074    22,768  
Net loans/leases  $ 1,730,138    $ 1,689,238    $ 1,606,929    $ 1,550,101  
                 
ANALYSIS OF SECURITIES DATA                
Securities mix:                
U.S. government sponsored agency securities  $ 247,625 42%  $ 256,444 43%  $ 307,869 47%  $ 306,005 47%
Municipal securities 265,293 45% 251,992 42% 229,230 35% 216,050 33%
Residential mortgage-backed and related securities 74,901 13% 80,844 14% 111,423 17% 127,780 20%
Other securities 2,956 0% 3,088 1% 3,017 1% 2,950 0%
Total securities  $ 590,775 100%  $ 592,368 100%  $ 651,539 100%  $ 652,785 100%
                 
                 
ANALYSIS OF DEPOSIT DATA                
Deposit mix:                
Noninterest-bearing demand deposits  $ 585,300 32%  $ 633,370 34%  $ 511,992 31%  $ 535,967 31%
Interest-bearing demand deposits  884,163 48%  785,705 43%  792,052 47%  762,954 44%
Time deposits 302,978 16% 322,826 18% 306,364 18% 319,105 19%
Brokered time deposits 82,878 4% 94,866 5% 69,260 4% 95,841 6%
Total deposits  $ 1,855,319 100%  $ 1,836,767 100%  $ 1,679,668 100%  $ 1,713,867 100%
                 
ANALYSIS OF BORROWINGS DATA                
Borrowings mix:                
FHLB advances  $ 133,000 29%  $ 132,500 29%  $ 203,500 31%  $ 196,500 36%
Wholesale structured repurchase agreements 115,000 25% 115,000 25% 130,000 19% 130,000 24%
Customer repurchase agreements 74,404 16% 118,795 26% 137,252 21% 135,697 24%
Federal funds purchased 93,160 21% 49,780 11% 131,100 20% 26,490 5%
Junior subordinated debentures 40,527 9% 40,492 9% 40,424 6% 40,390 7%
Other  — 0%  — 0% 20,282 3% 21,455 4%
Total borrowings  $ 456,091 100%  $ 456,567 100%  $ 662,558 100%  $ 550,532 100%
 
 
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
                 
                 
  As of
  September 30, June 30, December 31, September 30,
  2015 2015 2014 2014
                 
  (dollars in thousands)
                 
NONPERFORMING ASSETS Amount % Amount % Amount % Amount %
Nonaccrual loans/leases  $ 11,269 55%  $ 13,542 50%  $ 18,588 56%  $ 26,337 67%
Accruing loans/leases past due 90 days or more  3 0%  46 0%  93 0%  55 0%
Troubled debt restructures – accruing  1,040 5%  1,266 5%  1,421 5%  2,129 5%
Total nonperforming loans/leases  12,312 60%  14,854 55%  20,102 61%  28,521 72%
Other real estate owned  8,140 39%  11,952 44%  12,768 39%  10,680 27%
Other repossessed assets  194 1%  297 1%  155 0%  210 1%
Total nonperforming assets  $ 20,646 100%  $ 27,103 100%  $ 33,025 100%  $ 39,411 100%
                 
                 
                 
  For the quarter ended September 30,   For the nine months ended September 30,  
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES 2015   2014   2015   2014  
Beginning balance  $ 26,146    $ 23,067    $ 23,074    $ 21,448  
Provision charged to expense  1,635    1,063    5,694    3,159  
Loans/leases charged off  (2,476)    (1,731)    (4,119)    (2,486)  
Recoveries on loans/leases previously charged off  229    369    885    647  
Ending balance  $ 25,534    $ 22,768    $ 25,534    $ 22,768  
                 
Net charge-offs / average loans/leases 0.13%   0.09%   0.19%   0.12%  
                 
                 
  As of  
  September 30,   June 30,   December 31,   September 30,  
  2015   2015   2014   2014  
         
ASSET QUALITY RATIOS                
Nonperforming assets / total assets 0.80%   1.07%   1.31%   1.61%  
Allowance / total loans/leases (1) 1.45%   1.52%   1.42%   1.45%  
Allowance / nonperforming loans (1) 207.39%   176.02%   114.78%   79.83%  
                 
                 
(1) Upon acquisition per GAAP, the acquired loans are recorded at market value which eliminated the allowance and impacts these ratios.   
 
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
           
           
  For the Quarter Ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
  2015 2015 2014 2015 2014
           
  (dollars in thousands, except per share data)
           
CONDENSED INCOME STATEMENT          
Interest income  $ 23,141  $ 22,051  $ 21,796  $ 67,093  $ 63,937
Interest expense  3,004  3,560  4,321  10,683  12,647
Net interest income  20,137  18,491  17,475  56,410  51,290
Provision for loan/lease losses  1,635  2,349  1,063  5,694  3,159
Net interest income after provision for loan/lease losses  18,502  16,142  16,412  50,716  48,131
Noninterest income  7,649  5,652  5,162  19,626  15,342
Noninterest expense  17,193  24,292  16,482  58,793  48,818
Net income (loss) before taxes  8,958  (2,498)  5,092  11,549  14,655
Income tax expense (benefit)  2,469  (1,974)  1,029  1,406  2,695
Net income (loss)  $ 6,489  $ (524)  $ 4,063  $ 10,143  $ 11,960
Less: Preferred stock dividends  —   —   —   —   1,082
Net income (loss) attributable to QCR Holdings, Inc. common stockholders  $ 6,489  $ (524)  $ 4,063  $ 10,143  $ 10,878
           
Earnings (loss) per common share:          
Basic  $ 0.55  $ (0.05)  $ 0.51  $ 1.03  $ 1.37
Diluted  $ 0.55  $ (0.05)  $ 0.50  $ 1.01  $ 1.35
           
Earnings per common share (basic) LTM (1)  $ 1.40  $ 1.36  $ 1.88    
           
Weighted average common shares outstanding  11,713,993  9,946,744  7,931,944  9,878,882  7,919,201
Weighted average common and common equivalent shares outstanding (2)  11,875,930  9,946,744  8,053,985  10,024,441  8,040,418
           
           
AVERAGE BALANCES          
Assets  $ 2,563,739  $ 2,518,170  $ 2,467,191  $ 2,529,469  $ 2,442,338
Loans/leases  $ 1,744,043  $ 1,686,068  $ 1,572,638  $ 1,688,605  $ 1,518,867
Deposits  $ 1,881,604  $ 1,798,787  $ 1,727,115  $ 1,809,199  $ 1,695,952
Total stockholders’ equity  $ 216,453  $ 181,811  $ 136,403  $ 182,134  $ 142,999
Common stockholders’ equity  $ 216,453  $ 181,811  $ 136,403  $ 182,134  $ 129,277
           
           
KEY PERFORMANCE RATIOS AND OTHER METRICS          
Return on average assets (annualized) (4) 1.01% -0.08% 0.66% 0.53% 0.65%
Return on average common equity (annualized) (3) 11.99% -1.15% 11.91% 7.43% 11.22%
Return on average total equity (annualized) (4) 11.99% -1.15% 11.91% 7.43% 11.15%
Price earnings ratio LTM (1)  15.62 x  16.00 x  9.39 x  15.62 x  9.39 x
Net interest margin (TEY) 3.51% 3.33% 3.15% 3.37% 3.13%
Efficiency ratio 61.88% 100.62% 72.70% 115.98% 73.19%
Gross loans and leases / total assets ratio 68.16% 67.46% 64.18% 68.16% 64.18%
Full-time equivalent employees (5) 406 416 412 406 412
           
(1) LTM: Last twelve months.
(2) In accordance with GAAP, the common equivalent shares are not considered in the calculation of diluted earnings per share in periods when the numerator is a net loss.
(3) The numerator for this ratio is “Net income attributable to QCR Holdings, Inc. common stockholders”.
(4) The numerator for this ratio is “Net income”.
(5) FTEs at June 30, 2015 include eight summer interns.
 
 
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
                   
                   
ANALYSIS OF NET INTEREST INCOME AND MARGIN                
                   
  For the Quarter Ended
  September 30, 2015 June 30, 2015 September 30, 2014
   Average Balance   Interest Earned or Paid   Average Yield or Cost   Average Balance   Interest Earned or Paid   Average Yield or Cost   Average Balance   Interest Earned or Paid   Average Yield or Cost 
   
  (dollars in thousands)
                   
Securities (1)  $ 591,538  $ 4,683 3.14%  $ 608,688  $ 4,548 3.00%  $ 673,416  $ 4,644 2.74%
Loans (1)  1,744,043  19,564 4.45%  1,686,068  18,541 4.41%  1,572,638  18,003 4.54%
Other  88,039  202 0.91%  79,835  179 0.90%  85,718  202 0.93%
Total earning assets (1)  $ 2,423,620  $ 24,449 4.00%  $ 2,374,591  $ 23,268 3.93%  $ 2,331,772  $ 22,849 3.89%
                   
Deposits  $ 1,236,571  $ 1,140 0.37%  $ 1,169,043  $ 1,084 0.37%  $ 1,167,501  $ 1,168 0.40%
Borrowings  434,750  1,863 1.70%  504,498  2,476 1.97%  572,353  3,153 2.19%
Total interest-bearing liabilities  $ 1,671,321  $ 3,003 0.71%  $ 1,673,541  $ 3,560 0.85%  $ 1,739,854  4,321 0.99%
                   
Net interest income / spread (1)    $ 21,446 3.29%    $ 19,708 3.08%    $ 18,528 2.90%
Net interest margin (1)     3.51%     3.33%     3.15%
                   
                   
  For the Nine Months Ended      
  September 30, 2015 September 30, 2014  
   Average Balance   Interest Earned or Paid   Average Yield or Cost   Average Balance   Interest Earned or Paid   Average Yield or Cost       
                   
  (dollars in thousands)      
                   
Securities (1)  $ 608,687  $ 13,725 3.01%  $ 699,405  $ 14,063 2.69%      
Loans (1)  1,688,605  56,452 4.47%  1,518,867  52,063 4.58%      
Other  89,160  604 0.91%  91,570  640 0.93%      
Total earning assets (1)  $ 2,386,452  $ 70,781 3.97%  $ 2,309,842  $ 66,766 3.86%      
                   
Deposits  $ 1,189,110  $ 3,296 0.37%  $ 1,122,009  $ 3,372 0.40%      
Borrowings  505,364  7,387 1.95%  571,192  9,275 2.17%      
Total interest-bearing liabilities  $ 1,694,474  $ 10,683 0.84%  $ 1,693,201  $ 12,647 1.00%      
                   
Net interest income / spread (1)    $ 60,098 3.13%    $ 54,119 2.86%      
Net interest margin (1)     3.37%     3.13%      
                   
(1) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period presented. 
 
 
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
           
           
  For the Quarter Ended For the Nine Months Ended
   
September 30, 2015 
 
June 30, 2015 
 
September 30, 2014 
 
September 30, 2015 
 
September 30, 2014 
ANALYSIS OF NONINTEREST INCOME (dollars in thousands)
           
Trust department fees  $ 1,532  $ 1,511  $ 1,356  $ 4,676  $ 4,300
Investment advisory and management fees  782  758  727  2,251  2,087
Deposit service fees  1,187  1,101  1,169  3,405  3,307
Gain on sales of residential real estate loans  85  96  121  266  317
Gain on sales of government guaranteed portions of loans  760  69  159  900  861
Earnings on cash surrender value of life insurance  407  433  434  1,319  1,277
Swap fee income  63  394  —   1,183  62
Debit card fees  290  255  252  782  763
Correspondent banking fees  311  285  295  916  746
Participation service fees on commercial loan participations  202  224  218  648  632
Gains (losses) on other real estate owned, net  1,134  99  31  1,204  (114)
Securities gains, net  57  —   19  473  41
Gain on disposal of leased assets  89  76  89  251  108
Income on other real estate owned  146  109  146  371  377
Lawsuit settlement  387  —   —   387  — 
Other  217  242  146  594  578
Total noninterest income  $ 7,649  $ 5,652  $ 5,162  $ 19,626  $ 15,342
           
ANALYSIS OF NONINTEREST EXPENSE          
           
Salaries and employee benefits  $ 10,583  $ 11,092  $ 10,359  $ 32,710  $ 30,299
Occupancy and equipment expense  1,864  1,865  1,806  5,508  5,539
Professional and data processing fees  1,742  1,471  1,530  4,683  4,518
FDIC and other insurance  702  731  712  2,152  2,122
Loan/lease expense  253  368  185  1,088  908
Advertising and marketing  460  490  555  1,368  1,394
Postage and telephone  221  214  147  684  696
Stationery and supplies  145  137  138  424  436
Bank service charges  392  359  337  1,089  959
Losses on debt extinguishment  —   6,894  —   6,894  — 
Correspondent banking expense  177  165  165  518  478
Other  654  506  548  1,675  1,469
Total noninterest expense  $ 17,193  $ 24,292  $ 16,482  $ 58,793  $ 48,818
 
 
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
             
             
  For the Quarter Ended For the Nine Months Ended
  September 30, June 30, December 31, September 30, September 30, September 30,
SELECT FINANCIAL DATA – SUBSIDIARIES 2015 2015 2014 2014 2015 2014
  (dollars in thousands)
             
TOTAL ASSETS            
             
Quad City Bank and Trust (1)  $ 1,328,053  $ 1,299,557  $ 1,320,684  $ 1,274,033  $ 1,328,053  $ 1,274,033
m2 Lease Funds, LLC  195,712  189,951  178,016  170,821  $ 195,712  $ 170,821
Cedar Rapids Bank and Trust  867,064  860,403  840,332  822,349  $ 867,064  $ 822,349
Rockford Bank and Trust  360,348  363,050  353,448  346,503  $ 360,348  $ 346,503
             
TOTAL DEPOSITS            
             
Quad City Bank and Trust (1)  $ 919,904  $ 929,817  $ 813,805  $ 873,869  $ 919,904  $ 873,869
Cedar Rapids Bank and Trust  685,537  649,586  636,718  611,193  $ 685,537  $ 611,193
Rockford Bank and Trust  254,050  260,373  234,201  234,057  $ 254,050  $ 234,057
             
TOTAL LOANS & LEASES            
             
Quad City Bank and Trust (1)  $ 853,755  $ 832,799  $ 783,486  $ 760,562  $ 853,755  $ 760,562
m2 Lease Funds, LLC  194,911  189,311  177,444  169,742  $ 194,911  $ 169,742
Cedar Rapids Bank and Trust  617,215  598,002  576,322  552,645  $ 617,215  $ 552,645
Rockford Bank and Trust  284,703  285,944  271,658  261,174  $ 284,703  $ 261,174
             
TOTAL LOANS & LEASES / TOTAL ASSETS            
             
Quad City Bank and Trust (1) 64% 64% 59% 60% 64% 60%
Cedar Rapids Bank and Trust 71% 70% 69% 67% 71% 67%
Rockford Bank and Trust 79% 79% 77% 75% 79% 75%
             
ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES            
             
Quad City Bank and Trust (1) 1.34% 1.52% 1.41% 1.37% 1.34% 1.37%
m2 Lease Funds, LLC 1.80% 1.88% 1.94% 1.83% 1.80% 1.83%
Cedar Rapids Bank and Trust 1.60% 1.56% 1.37% 1.53% 1.60% 1.53%
Rockford Bank and Trust 1.49% 1.45% 1.51% 1.50% 1.49% 1.50%
             
ALLOWANCE AS A PERCENTAGE OF NONPERFORMING LOANS/LEASES            
             
Quad City Bank and Trust (1) 130.52% 114.35% 83.68% 64.50% 130.52% 64.50%
m2 Lease Funds, LLC 303.73% 308.95% 257.13% 186.05% 303.73% 186.05%
Cedar Rapids Bank and Trust 505.44% 419.03% 197.42% 101.88% 505.44% 101.88%
Rockford Bank and Trust 264.68% 266.62% 143.36% 95.29% 264.68% 95.29%
             
NET INCOME (4)            
             
Quad City Bank and Trust (1)  $ 4,086  $ 622  $ 1,972  $ 2,896  $ 7,683  $ 8,478
m2 Lease Funds, LLC (2)  712  834  328  718  2,198  1,953
Cedar Rapids Bank and Trust  3,016  (214)  2,101  1,975  4,971  5,905
Rockford Bank and Trust  800  473  323  621  1,737  1,553
             
RETURN ON AVERAGE ASSETS            
             
Quad City Bank and Trust (1) 1.23% 0.19% 0.60% 0.90% 0.79% 0.89%
Cedar Rapids Bank and Trust 1.36% -0.10% 0.99% 0.93% 0.77% 0.96%
Rockford Bank and Trust 0.88% 0.53% 0.36% 0.70% 0.65% 0.65%
             
NET INTEREST MARGIN PERCENTAGE (3)            
             
Quad City Bank and Trust (1) 3.49% 3.28% 3.07% 3.10% 3.30% 3.07%
Cedar Rapids Bank and Trust 3.71% 3.63% 3.58% 3.41% 3.66% 3.40%
Rockford Bank and Trust 3.41% 3.38% 3.34% 3.29% 3.41% 3.41%
             
             
(1) Quad City Bank and Trust figures include m2 Lease Funds, LLC, as this entity is wholly-owned and consolidated with the Bank. m2 Lease Funds, LLC is also presented separately for certain (applicable) measurements.
(2) m2 Lease Funds, LLC net income is post-tax, using an estimated effective tax rate of 35%.
(3) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period presented. 
(4) Net income declines for the quarter ended June 30, 2015 at Quad City Bank and Trust and Cedar Rapids Bank and Trust were primarily the result of losses on debt extinguishment (pre-tax) totaling $3.1 million and $3.8 million, respectively.
 
 
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
           
           
  As of  
  September 30, June 30, December 31, September 30,  
GAAP TO NON-GAAP RECONCILIATIONS 2015 2015 2014 2014  
  (dollars in thousands, except per share data)  
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)          
           
Stockholders’ equity (GAAP)  $ 221,115  $ 211,697  $ 144,079  $ 138,180  
Less: Intangible assets  4,744  4,794  4,894  4,944  
Tangible common equity (non-GAAP)  $ 216,371  $ 206,903  $ 139,185  $ 133,236  
           
Total assets (GAAP)  $ 2,575,855  $ 2,542,969  $ 2,524,958  $ 2,450,596  
Less: Intangible assets  4,744  4,794  4,894  4,944  
Tangible assets (non-GAAP)  $ 2,571,111  $ 2,538,175  $ 2,520,064  $ 2,445,652  
           
Tangible common equity to tangible assets ratio (non-GAAP) 8.42% 8.15% 5.52% 5.45%  
           
           
           
  For the Quarter ended For the Nine Months Ended
  September 30, June 30, September 30, September 30, September 30,
CORE NET INCOME (2) 2015 2015 2014 2015 2014
           
Net income (loss) (GAAP)  $ 6,489  $ (524)  $ 4,063  $ 10,143  $ 11,960
           
Less nonrecurring items (post-tax) (3):          
Income:          
Securities gains  $ 37  $ —  $ 12  $ 308  $ 27
Lawsuit settlement  252  —  —  252  —
Total nonrecurring income (non-GAAP)  $ 289  $ —  $ 12  $ 560  $ 27
           
Expense:          
Losses on debt extinguishment  $ —  $ 4,481  $ —  $ 4,481  $ —
Other non-recurring expenses  —  513  —  513  —
Total nonrecurring expense (non-GAAP)  $ —  $ 4,994  $ —  $ 4,994  $ —
           
Core net income (non-GAAP)  $ 6,200  $ 4,470  $ 4,051  $ 14,577  $ 11,933
Less: Preferred stock dividends  —  —  —  —  1,082
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (2)  $ 6,200  $ 4,470  $ 4,051  $ 14,577  $ 10,851
           
           
CORE EARNINGS PER COMMON SHARE (2)          
           
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above)  $ 6,200  $ 4,470  $ 4,051  $ 14,577  $ 10,851
           
Weighted average common shares outstanding  11,713,993  9,946,744  7,931,944  9,878,882  7,919,201
Weighted average common and common equivalent shares outstanding  11,875,930  9,946,744  8,053,985  10,024,441  8,040,418
           
Core earnings per common share (non-GAAP):          
Basic  $ 0.53  $ 0.45  $ 0.51  $ 1.48  $ 1.37
Diluted  $ 0.52  $ 0.45  $ 0.50  $ 1.45  $ 1.35
           
           
CORE RETURN ON AVERAGE ASSETS (2)          
           
Core net income (non-GAAP) (from above)  $ 6,200  $ 4,470  $ 4,051  $ 14,577  $ 11,933
           
Average Assets  $ 2,563,739  $ 2,518,170  $ 2,467,191  $ 2,529,469  $ 2,442,338
           
Core return on average assets (annualized) (non-GAAP) 0.97% 0.71% 0.66% 0.77% 0.65%
           
           
(1) This ratio is a non-GAAP financial measure. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in changes period-to-period in common equity.
(2) Core net income, core net income attributable to QCR Holdings, Inc. common stockholders, core earnings per common share and core return on average assets are non-GAAP financial measures. The Company’s management believes that these measure are important to investors as they exclude non-recurring income and expense items, therefore, they provide a more realistic run-rate for future periods.
(3) Nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 35%.
CONTACT: Todd A. Gipple
         Executive Vice President
         Chief Operating Officer
         Chief Financial Officer
         (309) 743-7745

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