QCR Holdings, Inc. Announces Record Net Income of $9.2 Million for the First Quarter of 2017

MOLINE, Ill., April 20, 2017 (GLOBE NEWSWIRE) — QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $9.2 million and diluted earnings per share (“EPS”) of $0.68 for the quarter ended March 31, 2017.  By comparison, for the quarter ended December 31, 2016, the Company reported net income of $8.5 million and diluted EPS of $0.64.  For the quarter ended March 31, 2016, the Company reported net income of $6.4 million and diluted EPS of $0.53.

“Our operating performance for the first quarter was strong,” commented Douglas M. Hultquist, President and Chief Executive Officer, “and we continue to strategize and pursue ways to improve our profitability through our ongoing key initiatives.  Our return on average assets has improved to 1.12% from 0.98%, when comparing the first quarter of 2017 to the same period of the prior year.  This is the result of strong year-over-year organic loan growth, robust growth in core deposits, reductions in wholesale borrowings, margin improvements, modest operating expense growth, and strong fee income.  Our acquisition of Community State Bank, based in Ankeny, Iowa (“CSB”) also contributed to our improved profitability.”

A new accounting pronouncement became effective on January 1, 2017 that affects the accounting for stock compensation.  In the past, the tax benefit related to stock options exercised and restricted stock awards vested was recorded directly to equity.  Effective January 1, 2017, this tax benefit is reflected as a credit to income tax expense.  This change in accounting resulted in $533 thousand of reduced income tax expense for the current quarter.    

Annualized Loan and Lease Growth of 5.0% and Deposit Growth of 20.4% for First Quarter
Swap Fee Income and Gains on the Sale of Government Guaranteed Loans Total $1.1 Million for Quarter

During the first quarter of 2017, the Company’s total assets increased $79.1 million, or 2%, to a total of $3.38 billion, while total loans and leases grew $30.4 million, or 1.3%.  Loan and lease growth was funded by deposits, which increased $136.7 million, or 5.1%, in the first quarter.  Continued growth in correspondent deposits produced a majority of this increase.  This very strong deposit growth also allowed the Company to further reduce borrowings and provides liquidity for future loan and lease growth.

 “Organic loan and lease growth totaled $30.4 million for the quarter, or an annual growth rate of 5.0%,” commented Mr. Hultquist.  “While this is a slower start to the year relative to recent periods, we still aim to achieve targeted organic growth of 10-12% for the full year, assuming no major economic shifts.  We intend to grow primarily through market share increases, as customers continue to appreciate the way we do business and are attracted to our relationship-based community banking model.”

“We started the year off strong, with swap fee income and gains on the sale of government guaranteed loans totaling $1.1 million for the first quarter,” said Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer.  “We plan to continue executing these types of transactions, as they provide unique and beneficial solutions for our clients.  We also look forward to offering these products in the Des Moines metro market through Community State Bank.”

Net Interest Income Impacted by
Acquisition Accounting

Net interest income totaled $27.7 million for the quarter ended March 31, 2017.  By comparison, net interest income totaled $29.3 million and $20.6 million for the quarters ended December 31, 2016 and March 31, 2016, respectively.  Acquisition-related accretion (net) totaled $1.9 million for the quarter ended March 31, 2017.  By comparison, acquisition-related accretion (net) totaled $3.0 million and $45 thousand for the quarters ended December 31, 2016 and March 31, 2016, respectively.  When comparing the first quarter of 2017 to the fourth quarter of 2016, it is also important to note that the fourth quarter of 2016 included two more days, equating to roughly $615 thousand of net interest income.  Excluding acquisition-related accretion and the difference in net interest income related to the number of days in the quarter, net interest income of $26.4 million was flat for the current quarter, compared to $26.3 million for the quarter ended December 31, 2016.

“Net interest margin (excluding acquisition accounting accretion) was stable at 3.65% for the first quarter of 2017, compared to 3.64% for the fourth quarter of 2016,” stated Mr. Gipple.  “Also important to note is that loan yield (excluding loan discount accretion) was relatively flat when comparing linked quarters at 4.34% for the first quarter of 2017 and 4.35% for the fourth quarter of 2016.  Additionally, we had a successful quarter growing core deposits and while loan growth was modest, we expect to put this liquidity to work in loans and leases in order to expand core margin in future periods.”

Nonperforming Assets Flat for First Quarter

Nonperforming assets (“NPAs”) remained fairly flat in the current quarter.  The ratio of NPAs to total assets was 0.81% at March 31, 2017, which was down slightly from 0.82% at December 31, 2016 and up from 0.71% a year ago. 

“While credit quality metrics remain strong in comparison to peers, we remain committed to further improving asset quality in 2017,” stated Mr. Hultquist.    

The Company’s provision for loan and lease losses totaled $2.1 million for the first quarter of 2017, which was down $494 thousand from the prior quarter, and flat compared to the first quarter of 2016.  The decrease in provision in the first quarter of 2017 was primarily attributable to CSB.  As acquired loans renew, the discount associated with those loans is eliminated and the Company must establish an allowance.  This resulted in $774 thousand of provision expense in the first quarter of 2017 compared to $1.2 million of provision expense in the fourth quarter of 2016.  As of March 31, 2017, the Company’s allowance to total loans and leases was 1.32%, which was up from 1.28% at December 31, 2016 and down from 1.46% at March 31, 2016. 

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of CSB were recorded at market value; therefore, there was no allowance associated with CSB’s loans at acquisition.  Management continues to evaluate the allowance needed on the acquired CSB loans factoring in the net remaining discount ($8.0 million at March 31, 2017).  When factoring this remaining discount into the Company’s allowance to total loans and leases calculation, the Company’s allowance as a percentage of total loans and leases increases from 1.32% to 1.64%.

Capital Levels Remain Strong

As of March 31, 2017, the Company’s total risk-based capital ratio was 11.65%, the common equity tier 1 ratio was 9.45% and the tangible common equity to tangible assets ratio increased to 8.20%.  By comparison, these respective ratios were 11.56%, 9.41% and 8.04% as of December 31, 2016.
             
“As a result of solid earnings performance, capital ratios continue to be strong and we are growing tangible common equity at a steady pace,” stated Mr. Gipple.

Continued Focus on Seven Key Initiatives

The Company continues to focus on the following initiatives in an effort to improve profitability and drive increased shareholder value:

  • Continue strong organic loan and lease growth to maintain loans and leases to total assets ratio in the range of 70-75%
  • Continue focus on growing core deposits to maintain reliance on wholesale funding at less than 15% of assets
  • Continue to focus on generating gains on sale of USDA and SBA loans, and fee income on swaps, as a significant and consistent component of core revenue
  • Grow wealth management net income by 10% annually
  • Carefully manage noninterest expense growth
  • Maintain asset quality metrics at better than peer levels
  • Participate as an acquirer in the consolidation taking place in our markets to further boost ROAA, improve efficiency ratio, and increase EPS

Conference Call Details

The Company will host an earnings call/webcast on April 21, 2017 at 9 a.m. central time.  Dial-in information for the call is toll-free 1-888-317-6016 (international 1-412-317-6016).  Participants should request to join the QCR Holdings, Inc. call. The event will be archived and available for digital replay through May 5, 2017.  The replay access information is toll-free 1-877-344-7529 (international 1-412-317-0088); access code 10104342.  A webcast of the teleconference can be accessed at the Company’s News and Events page at http://www.qcrh.com or http://services.choruscall.com/links/qcrh170421.html.  The archived audio webcast will be available until April 21, 2018.  Participants should visit the Company’s website or call in to the conference line set forth below at least 10 minutes prior to the scheduled start of the call.

About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company, which serves the Quad City, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, 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, Community State Bank, which is based in Ankeny, Iowa and was acquired by the Company in 2016, 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.  Additionally, the Company 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, national and international economies; (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) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of the acquisition and the possibility that the transaction costs may be greater than anticipated; (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  
  March 31, December 31, September 30, June 30, March 31,  
    2017   2016   2016   2016   2016  
             
  (dollars in thousands)  
             
CONDENSED BALANCE SHEET            
             
Cash and due from banks $   56,326 $   70,570 $   61,213 $   49,581 $   44,931  
Federal funds sold and interest-bearing deposits     173,219     86,206     96,047     68,432     57,229  
Securities     557,646     574,022     564,930     510,959     537,317  
Net loans/leases     2,403,791     2,374,730     2,331,774     1,894,676     1,846,428  
Core deposit intangible     7,150     7,381     7,614     1,372     1,422  
Goodwill     13,111     13,111     13,632     3,223     3,223  
Other assets     169,770     175,924     205,776     155,191     150,123  
Total assets $    3,381,013 $    3,301,944 $    3,280,986 $    2,683,434 $    2,640,673  
             
Total deposits $   2,805,931 $   2,669,261 $   2,594,913 $   1,973,594 $   1,989,573  
Total borrowings     231,534     290,952     312,104     381,874     347,901  
Other liabilities     47,708     55,690     93,112     52,849     68,056  
Total stockholders’ equity     295,840     286,041     280,857     275,117     235,143  
Total liabilities and stockholders’ equity $    3,381,013 $    3,301,944 $    3,280,986 $    2,683,434 $    2,640,673  
             
ANALYSIS OF LOAN PORTFOLIO            
Loan/lease mix:            
Commercial and industrial loans $   851,578 $   827,637 $   804,308 $   706,261 $   682,057  
Commercial real estate loans     1,106,842     1,093,459     1,070,305     784,379     766,159  
Direct financing leases     159,368     165,419     166,924     169,928     172,774  
Residential real estate loans     231,326     229,233     229,081     180,482     173,096  
Installment and other consumer loans     78,771     81,666     81,918     73,658     71,842  
Deferred loan/lease origination costs, net of fees     7,965     8,073     8,065     8,065     7,895  
Total loans/leases $   2,435,850 $   2,405,487 $   2,360,601 $   1,922,773 $   1,873,823  
Less allowance for estimated losses on loans/leases     32,059     30,757     28,827     28,097     27,395  
Net loans/leases $    2,403,791 $    2,374,730 $    2,331,774 $    1,894,676 $    1,846,428  
             
ANALYSIS OF SECURITIES PORTFOLIO            
Securities mix:            
U.S. government sponsored agency securities $   47,556 $   46,084 $   67,885 $   88,321 $   132,742  
Municipal securities   356,776   374,463   360,330   302,689   285,009  
Residential mortgage-backed and related securities   147,504   147,702   133,173   116,765   116,452  
Other securities   5,810   5,773   3,542   3,184   3,114  
Total securities $    557,646 $    574,022 $    564,930 $    510,959 $    537,317  
             
ANALYSIS OF DEPOSITS            
Deposit mix:            
Noninterest-bearing demand deposits $   777,150 $   797,415 $   764,615 $   615,764 $   641,859  
Interest-bearing demand deposits     1,486,047     1,369,226     1,298,781     918,036     916,455  
Time deposits   458,170   439,169   420,470   337,584   331,786  
Brokered deposits   84,564   63,451   111,047   102,210   99,473  
Total deposits $    2,805,931 $    2,669,261 $    2,594,913 $    1,973,594 $    1,989,573  
             
ANALYSIS OF BORROWINGS            
Borrowings mix:            
Term FHLB advances $   59,000 $   63,000 $   83,343 $   78,000 $   80,000  
Overnight FHLB advances (1)   47,550   74,500   55,300   118,900   70,500  
Wholesale structured repurchase agreements   45,000   45,000   45,000   100,000   100,000  
Customer repurchase agreements   7,170   8,132   8,265   21,441   52,153  
Federal funds purchased   12,300   31,840   51,750   30,120   11,870  
Junior subordinated debentures   33,514   33,480   33,446   33,413   33,378  
Other borrowings   27,000   35,000     35,000     –      –   
Total borrowings $    231,534 $    290,952 $    312,104 $    381,874 $    347,901  
             
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 1.05%.      
             

 

               
      For the Quarter Ended
      March 31, December 31, September 30, June 30, March 31,
        2017   2016     2016   2016   2016
               
      (dollars in thousands, except per share data)
               
INCOME STATEMENT            
Interest income   $   31,345 $   32,236   $   26,817 $   23,913 $   23,502
Interest expense       3,676     2,956       3,186     2,904     2,905
Net interest income        27,669     29,280       23,631     21,009     20,597
Provision for loan/lease losses       2,105     2,599       1,608     1,198     2,073
Net interest income after provision for loan/lease losses   $    25,564 $    26,681   $    22,023 $    19,811 $    18,524
               
               
Trust department fees   $   1,740 $   1,558   $   1,519 $   1,512 $   1,576
Investment advisory and management fees       962     876       766     693     658
Deposit service fees       1,316     1,411       1,151     947     931
Gain on sales of residential real estate loans       96     142       144     84     60
Gain on sales of government guaranteed portions of loans       951     458       219     1,604     879
Swap fee income       114     350       334     168     857
Securities gains, net       –      (36 )     4,252     18     358
Earnings on bank-owned life insurance       470     447       450     480     394
Debit card fees       703     688       475     344     308
Correspondent banking fees       245     249       254     245     302
Other          687     886       859     667     499
Total noninterest income   $    7,284 $    7,029   $    10,423 $    6,762 $    6,822
               
               
Salaries and employee benefits   $   13,307 $   13,396   $   11,202 $   10,917 $   10,801
Occupancy and equipment expense       2,502     2,630       2,086     1,885     1,827
Professional and data processing fees       2,083     2,192       1,931     1,542     1,447
Acquisition costs       –      40       2,046     355     – 
FDIC insurance, other insurance and regulatory fees       621     683       583     650     634
Loan/lease expense       294     242       103     154     163
Net cost of operation of other real estate       14     78       133     278     102
Advertising and marketing       609     760       548     433     386
Bank service charges       424     446       415     415     416
Losses on debt extinguishment, net       –      357       4,137     –      83
Correspondent banking expense       198     186       206     182     177
Other         1,221     1,298       1,090     933     918
Total noninterest expense   $    21,273 $    22,308   $    24,480 $    17,744 $    16,954
               
Net income before taxes   $    11,575 $    11,402   $    7,966 $    8,829 $    8,392
Income tax expense       2,390     2,873       1,858     2,153     2,019
Net income     $    9,185 $    8,529   $    6,108 $    6,676 $    6,373
               
Basic EPS   $   0.70 $   0.65   $   0.47 $   0.54 $   0.54
Diluted EPS   $   0.68 $   0.64   $   0.46 $   0.53 $   0.53
               
Weighted average common shares outstanding       13,133,382     13,087,592       13,066,777     12,335,077     11,793,620
Weighted average common and common equivalent shares outstanding     13,488,417     13,323,883       13,269,703     12,516,474     11,953,949
               

 

               
  For the Quarter Ended    
  March 31 December 31, September 30, June 30, March 31,    
    2017     2016     2016     2016     2016      
               
  (dollars in thousands, except per share data)    
 
COMMON SHARE DATA              
Common shares outstanding      13,161,219       13,106,845       13,075,307       13,057,368       11,814,911      
Book value per common share (1) $ 22.48   $ 21.82   $ 21.48   $ 21.07   $ 19.90      
Tangible book value per common share (2) $ 20.94   $ 20.11   $ 19.74   $ 20.72   $ 19.51      
Closing stock price $ 42.35   $ 43.30   $ 31.74   $ 27.19   $ 23.79      
Market capitalization $ 557,378   $ 567,526   $ 415,010   $ 355,030   $ 281,077      
Market price / book value   188.41 %   198.41 %   147.77 %   129.05 %   119.53 %    
Market price / tangible book value   202.26 %   215.36 %   160.79 %   131.24 %   121.94 %    
Earnings per common share (basic) LTM (3) $ 2.36   $ 2.20   $ 2.13   $ 2.21   $ 1.62      
Price earnings ratio LTM (3)  17.94 x   19.68 x   14.90 x   12.30 x   14.69 x     
TCE / TA (4)   8.20 %   8.04 %   7.92 %   10.10 %   8.74 %    
               
               
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY              
Beginning balance $   286,041   $   280,857   $   275,117   $   235,143   $   225,886      
Net income     9,185       8,529       6,108       6,676       6,373      
Other comprehensive income (loss), net of tax     411       (3,681 )     (361 )     1,181       2,525      
Common stock cash dividends declared     (657 )     (523 )     (521 )     (521 )     (471 )    
Proceeds from issuance of 1,215,000 shares of
  common stock, net of costs
    –        –        –        29,829       –       
Other (5)     860       859       514       2,809       830      
Ending balance $    295,840   $    286,041   $    280,857   $    275,117   $    235,143      
               
               
REGULATORY CAPITAL RATIOS (6):              
Total risk-based capital ratio   11.65 %   11.56 %   11.30 %   14.29 %   12.68 %    
Tier 1 risk-based capital ratio   10.53 %   10.46 %   10.29 %   13.04 %   11.45 %    
Tier 1 leverage capital ratio   9.40 %   9.10 %   10.09 %   11.18 %   9.85 %    
Common equity tier 1 ratio   9.45 %   9.41 %   9.22 %   11.72 %   10.11 %    
               
               
KEY PERFORMANCE RATIOS AND OTHER METRICS              
Return on average assets (annualized)   1.12 %   1.04 %   0.85 %   1.01 %   0.98 %    
Return on average total equity (annualized)   12.63 %   12.04 %   8.78 %   10.46 %   11.02 %    
Net interest margin   3.65 %   3.80 %   3.48 %   3.40 %   3.37 %    
Net interest margin (TEY) (Non-GAAP)(7)   3.90 %   4.02 %   3.71 %   3.62 %   3.59 %    
Efficiency ratio (Non-GAAP) (8)   60.86 %   61.44 %   71.89 %   63.89 %   61.83 %    
Gross loans and leases / total assets   72.04 %   72.85 %   71.95 %   71.65 %   70.96 %    
Effective tax rate   20.65 %   25.20 %   23.32 %   24.39 %   24.06 %    
Full-time equivalent employees (9)   561     572     572     410     406      
               
               
AVERAGE BALANCES               
Assets $   3,274,713   $   3,277,814   $   2,865,947   $   2,640,678   $   2,602,350      
Loans/leases     2,398,387       2,358,960       2,077,376       1,899,932       1,833,950      
Deposits     2,692,009       2,717,923       2,243,397       2,033,116       1,980,056      
Total stockholders’ equity     290,906       283,292       278,369       255,391       231,247      
               
(1) Includes accumulated other comprehensive income (loss).          
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets.        
(3) LTM : Last twelve months.              
(4) TCE / TCA : tangible common equity / total tangible assets.  See GAAP to non-GAAP reconciliations.      
(5) Mainly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.   
(6) Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release.  
(7) TEY : Tax equivalent yield.  See GAAP to Non-GAAP reconciliations.  
(8) See GAAP to Non-GAAP reconciliations.  
(9) Full-time equivalent employees increased in the third quarter of 2016 due to the acquisition of CSB.  

 

                         
ANALYSIS OF NET INTEREST INCOME AND MARGIN                  
                         
    For the Quarter Ended
    March 31, 2017   December 31, 2016   March 31, 2016
     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)
                         
Fed funds sold   $   11,092 $   15 0.55 %   $   11,475 $   9 0.31 %   $   17,232 $   13 0.30 %
Interest-bearing deposits at financial institutions     92,551     199 0.87 %       123,838     167 0.54 %       40,635     60 0.59 %
Securities (1)       560,455     5,158 3.73 %       562,164     4,970 3.52 %       550,371     4,685 3.42 %
Restricted investment securities     13,871     130 3.80 %       12,785     126 3.91 %       14,140     131 3.73 %
Loans (1)       2,398,387     27,793 4.70 %       2,358,960     28,691 4.84 %       1,833,950     19,955 4.38 %
Total earning assets (1) $   3,076,356 $   33,295 4.39 %   $   3,069,122 $   33,963 4.40 %   $   2,456,328 $   24,844 4.07 %
                         
Interest-bearing deposits $   1,407,645 $   1,140 0.33 %   $   1,387,319 $   928 0.27 %   $   925,246 $   615 0.27 %
Time deposits       511,119     1,093 0.87 %       496,855     984 0.79 %       399,604     675 0.68 %
Short-term borrowings     25,188     24 0.39 %       36,728     20 0.22 %       86,539     43 0.20 %
Federal Home Loan Bank advances (4)     114,356     403 1.43 %       83,231     6 0.03 %       128,436     442 1.38 %
Junior subordinated debentures     33,497     333 4.03 %       33,463     325 3.86 %       34,650     305 3.54 %
Other borrowings       74,761     683 3.71 %       73,816     693 3.73 %       101,738     825 3.26 %
Total interest-bearing liabilities $   2,166,566 $   3,676 0.69 %   $   2,111,412 $   2,956 0.56 %   $   1,676,213 $   2,905 0.70 %
                         
Net interest income / spread (1)   $   29,619 3.70 %     $   31,007 3.84 %     $   21,939 3.37 %
Net interest margin (2)     3.65 %       3.80 %       3.37 %
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)    3.90 %       4.02 %       3.59 %
                         
                         
(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.                       
(2) See “Select Financial Data – Subsidiaries” for a breakdown of amortization/accretion included in net interest margin for each period presented.        
(3) TEY : Tax equivalent yield.  See GAAP to Non-GAAP reconciliations.                  
(4) Average cost of Federal Home Loan Bank advances for the quarter and year ending December 31, 2016 was affected by the acceleration of the premium on    
  advances recognized at the acquisition of CSB.  $342 thousand was accelerated due to the prepayment of $15.0 million of advances in the fourth quarter of 2016.    

 

 
  As of    
  March 31, December 31, September 30, June 30, March 31,    
    2017     2016     2016     2016     2016      
               
  (dollars in thousands, except per share data)    
               
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES              
Beginning balance $   30,757   $   28,827   $   28,097   $   27,395   $   26,141      
Provision charged to expense     2,105       2,599       1,608       1,198       2,073      
Loans/leases charged off     (893 )     (755 )     (987 )     (634 )     (868 )    
Recoveries on loans/leases previously charged off     90       86       109       138       49      
Ending balance $    32,059   $    30,757   $    28,827   $    28,097   $    27,395      
               
               
NONPERFORMING ASSETS              
Nonaccrual loans/leases $   14,205   $   13,919   $   14,371   $   10,737   $   10,772      
Accruing loans/leases past due 90 days or more     955       967       392       86       47      
Troubled debt restructures – accruing     6,229       6,347       1,825       1,753       1,157      
Total nonperforming loans/leases     21,389       21,233       16,588       12,576       11,976      
Other real estate owned     5,625       5,523       5,808       6,179       6,680      
Other repossessed assets     285       202       353       154       46      
Total nonperforming assets $    27,299   $    26,958   $    22,749   $    18,909   $    18,702      
               
               
ASSET QUALITY RATIOS              
Nonperforming assets / total assets   0.81 %   0.82 %   0.69 %   0.70 %   0.71 %    
Allowance / total loans/leases (1)   1.32 %   1.28 %   1.22 %   1.46 %   1.46 %    
Allowance / nonperforming loans/leases (1)   149.89 %   144.85 %   173.78 %   223.42 %   228.75 %    
Net charge-offs as a % of average loans/leases   0.03 %   0.03 %   0.04 %   0.03 %   0.04 %    
               
               
(1) Upon acquisition and per GAAP, acquired loans are recorded at market value, which eliminated the allowance and impacts these ratios.   
   

 

                   
      For the Quarter Ended    
      March 31,   December 31,   March 31,    
  SELECT FINANCIAL DATA – SUBSIDIARIES     2017       2016       2016      
                               
      (dollars in thousands)    
                   
  TOTAL ASSETS                
                   
  Quad City Bank and Trust (1)   $   1,442,952     $   1,395,785     $   1,361,607      
  m2 Lease Funds, LLC       210,062         213,159         205,777      
  Cedar Rapids Bank and Trust       929,111         913,056         885,858      
  Community State Bank       608,431         600,076        N/A      
  Rockford Bank and Trust       398,455         391,155         367,032      
                   
  TOTAL DEPOSITS                
                   
  Quad City Bank and Trust (1)   $   1,261,075     $   1,125,932     $   1,029,298      
  Cedar Rapids Bank and Trust       733,227         747,785         686,548      
  Community State Bank       527,171         513,588        N/A      
  Rockford Bank and Trust       312,817         311,556         278,129      
                   
  TOTAL LOANS & LEASES                
                   
  Quad City Bank and Trust (1)   $   1,015,241     $   1,010,443     $   950,978      
  m2 Lease Funds, LLC       208,459         211,045         205,214      
  Cedar Rapids Bank and Trust       673,431         652,212         628,580      
  Community State Bank       427,365         429,511        N/A      
  Rockford Bank and Trust       319,813         313,321         294,266      
                   
  TOTAL LOANS & LEASES / TOTAL ASSETS                
                   
  Quad City Bank and Trust (1)     70 %     72 %     70 %    
  Cedar Rapids Bank and Trust     72 %     71 %     71 %    
  Community State Bank     70 %     72 %      N/A      
  Rockford Bank and Trust     80 %     80 %     80 %    
                   
  ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES                
                   
  Quad City Bank and Trust (1)     1.34 %     1.33 %     1.31 %    
  m2 Lease Funds, LLC     1.72 %     1.78 %     1.80 %    
  Cedar Rapids Bank and Trust     1.66 %     1.67 %     1.66 %    
  Community State Bank (2)     0.53 %     0.34 %      N/A      
  Rockford Bank and Trust     1.58 %     1.57 %     1.51 %    
                   
  RETURN ON AVERAGE ASSETS                
                   
  Quad City Bank and Trust (1)     1.22 %     1.17 %     0.95 %    
  Cedar Rapids Bank and Trust     1.33 %     1.34 %     1.39 %    
  Community State Bank (3)     1.30 %     1.33 %      N/A      
  Rockford Bank and Trust     0.86 %     0.90 %     0.66 %    
                   
  NET INTEREST MARGIN PERCENTAGE (4)                
                   
  Quad City Bank and Trust (1)     3.71 %     3.71 %     3.60 %    
  Cedar Rapids Bank and Trust     3.75 %     3.90 %     3.75 %    
  Community State Bank (5)     5.37 %     6.00 %      N/A      
  Rockford Bank and Trust     3.43 %     3.35 %     3.54 %    
                   
  ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET                
  INTEREST MARGIN, NET                
                   
  Cedar Rapids Bank and Trust   $   9     $   313     $   79      
  Community State Bank       1,945         2,681        N/A      
  QCR Holdings, Inc. (6)       (33 )       (34 )       (34 )    
                   
(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 ) Upon acquisition and per GAAP, acquired loans are recorded at market value, which eliminated the allowance and impacts this ratio.     
(3 ) Community State Bank’s return on average assets includes acquisition costs and various purchase accounting adjustments.        
(4 ) 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.                 
(5 ) Community State Bank’s net interest margin percentage includes various purchase accounting adjustments.  Excluding those adjustments, net interest  
  margin would have been 3.92% and 3.99% for the quarters ended March 31, 2017 and December 31, 2016, respectively.        
(6 ) Relates to the trust preferred securities acquired as part of the Community National Bank acquisition in 2013.          

 

                     
    As of
    March 31,   December 31,   September 30,   June 30,   March 31,
GAAP TO NON-GAAP RECONCILIATIONS     2017       2016       2016       2016       2016  
                                         
    (dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)                    
                     
Stockholders’ equity (GAAP)   $   295,840     $   286,041     $   280,857     $   275,117     $   235,143  
Less: Intangible assets       20,261         22,522         22,755         4,595         4,645  
Tangible common equity (non-GAAP)   $   275,579     $   263,519     $   258,102     $   270,522     $   230,498  
                     
Total assets (GAAP)   $   3,381,013     $   3,301,944     $   3,280,986     $   2,683,434     $   2,640,673  
Less: Intangible assets       20,261         22,522         22,755         4,595         4,645  
Tangible assets (non-GAAP)   $   3,360,752     $   3,279,422     $   3,258,231     $   2,678,839     $   2,636,028  
                     
Tangible common equity to tangible assets ratio (non-GAAP)     8.20 %     8.04 %     7.92 %     10.10 %     8.74 %
                     
                     
    For the Quarter Ended
    March 31,   December 31,   September 30,   June 30,   March 31,
CORE NET INCOME (2)     2017       2016       2016       2016       2016  
                     
Net income (GAAP)   $   9,185     $   8,529     $   6,108     $   6,676     $   6,373  
                     
Less nonrecurring items (post-tax) (3):                    
Income:                    
  Securities gains, net   $   –     $   (23 )   $   2,764     $   12     $   233  
Total nonrecurring income (non-GAAP)   $   –     $   (23 )   $   2,764     $   12     $   233  
                     
Expense:                    
  Losses on debt extinguishment, net   $   –     $   232     $   2,689     $   –     $   54  
  Acquisition costs (4)       –         26         1,506         231         –  
Total nonrecurring expense (non-GAAP)   $   –     $   258     $   4,195     $   231     $   54  
                     
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (2)   $    9,185     $    8,810     $    7,539     $    6,895     $    6,194  
                     
CORE EARNINGS PER COMMON SHARE (2)                    
                     
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above)   $   9,185     $   8,810     $   7,539     $   6,895     $   6,194  
                     
Weighted average common shares outstanding       13,133,382         13,087,592         13,066,777         12,335,077         11,793,620  
Weighted average common and common equivalent shares outstanding     13,488,417         13,323,883         13,269,703         12,516,474         11,953,949  
                     
Core earnings per common share (non-GAAP):                    
Basic   $    0.70     $    0.67     $    0.58     $    0.56     $    0.53  
Diluted   $    0.68     $    0.66     $    0.57     $    0.55     $    0.52  
                     
CORE RETURN ON AVERAGE ASSETS (2)                    
                     
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above)   $   9,185     $   8,810     $   7,539     $   6,895     $   6,194  
                     
Average Assets   $   3,274,713     $   3,277,814     $   2,865,947     $   2,640,678     $   2,602,350  
                     
Core return on average assets (annualized) (non-GAAP)     1.12 %     1.08 %     1.05 %     1.04 %     0.95 %
                     
NET INTEREST MARGIN (TEY) (5)                    
                     
Net interest income (GAAP)   $   27,669     $   29,280     $   23,631     $   21,009     $   20,597  
                     
Plus: Tax equivalent adjustment (6)       1,950         1,727         1,587         1,364         1,342  
                     
Net interest income – tax equivalent (Non-GAAP)   $   29,619     $   31,007     $   25,218     $   22,373     $   21,939  
                     
Average earning assets   $   3,076,356     $   3,069,122     $   2,703,162     $   2,484,721     $   2,456,328  
                     
Net interest margin (GAAP)     3.65 %     3.80 %     3.48 %     3.40 %     3.37 %
Net interest margin (TEY) (Non-GAAP)     3.90 %     4.02 %     3.71 %     3.62 %     3.59 %
                     
EFFICIENCY RATIO (7)                    
                     
Noninterest expense (GAAP)   $   21,273     $   22,308     $   24,480     $   17,744     $   16,954  
                     
Net interest income (GAAP)   $   27,669     $   29,280     $   23,631     $   21,009     $   20,597  
Noninterest income (GAAP)       7,284         7,029         10,423         6,762         6,822  
Total income   $   34,953     $   36,309     $   34,054     $   27,771     $   27,419  
                     
Efficiency ratio (noninterest expense/total income) (Non-GAAP)     60.86 %     61.44 %     71.89 %     63.89 %     61.83 %
                     
                     
(1) This ratio is a non-GAAP financial measure.  The Company’s management believes that this measurement is important to many investors in the marketplace who are interested in changes period-to-period 
in common equity.  In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to stockholders’ equity and total assets, which are the most directly comparable
GAAP financial measures.
(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 measurements are important to investors as they exclude non-recurring income and expense items, therefore, they provide a more realistic
run-rate for future periods. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net income, which is the most directly comparable GAAP financial measure.
(3) Nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 35%.              
(4) Acquisition costs were analyzed individually for deductibility.  Presented amounts are tax-effected accordingly.        
(5) Net interest margin (TEY) is a non-GAAP financial measure.  The Company’s management utilizes this measurement to take into account the tax benefit associated with certain loans and securities.  It is 
also standard industry practice to measure net interest margin using tax-equivalent measures.  In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net interest 
income, which is the most directly comparable GAAP financial measure.                    
(6) 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.    
(7) Efficiency ratio is a non-GAAP measure.  The Company’s management utilizes this ratio to compare to industry peers.  The ratio is used to calculate overhead as a percentage of revenue.  In compliance 
with the applicable rules of the SEC, this non-GAAP measure is reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP financial 
measures.
                     

 

CONTACT: Contact:
Todd A. Gipple
Executive Vice President
Chief Operating Officer
Chief Financial Officer
(309) 743-7745

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