MOLINE, Ill., July 20, 2017 (GLOBE NEWSWIRE) — QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $8.8 million and diluted earnings per share (“EPS”) of $0.65 for the quarter ended June 30, 2017.  By comparison, for the quarter ended March 31, 2017, the Company reported net income of $9.2 million and diluted EPS of $0.68.  For the quarter ended June 30, 2016, the Company reported net income of $6.7 million and diluted EPS of $0.53.  In the second quarter of 2017, the Company recognized a tax benefit related to stock options exercised and restricted stock awards vested of $90 thousand, compared to $533 thousand of reduced income tax expense for the first quarter of 2017.

For the six months ended June 30, 2017, the Company reported net income of $18.0 million, and diluted EPS of $1.33.  By comparison, for the six months ended June 30, 2016, the Company reported net income of $13.1 million, and diluted EPS of $1.07.

“Our operating performance for the first half of the year 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 1.08% from 1.00%, when comparing the first six months of 2017 to the same period of the prior year.  This is the result of strong organic loan growth, robust growth in core deposits, reductions in wholesale borrowings, margin improvements, modest operating expense growth, and solid fee income.  Our acquisition of Community State Bank, based in Ankeny, Iowa (“CSB”) in the 3rd quarter of 2016 also contributed to our improved profitability.”

Annualized Loan and Lease Growth of 19.2% for Second Quarter of 2017

During the second quarter of 2017, the Company’s total assets increased $76.2 million, or 2%, to a total of $3.46 billion, while total loans and leases grew $117.7 million, or 4.8%.  Loan and lease growth was funded by deposit growth that occurred in the first six months of 2017.

“Organic loan and lease growth totaled $117.7 million for the quarter, or an annual growth rate of 19.2%,” commented Mr. Hultquist.  “This was a very strong quarter and puts us back on track to achieve targeted organic growth of 10-12% for the full year, assuming no major economic shifts.  We intend to continue our organic growth 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.”

“Swap fee income and gains on the sale of government guaranteed loans totaled $1.5 million for the first six months of the year.  The second quarter of 2017 was slow in this area.  Given the nature of this fee income source, large fluctuations can occur from quarter-to-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 CSB.”

Net Interest Income Continues to be
Impacted by Acquisition-Related Accounting

Net interest income totaled $28.0 million for the quarter ended June 30, 2017.  By comparison, net interest income totaled $27.7 million and $21.0 million for the quarters ended March 31, 2017 and June 30, 2016, respectively.  Acquisition-related net accretion  totaled $1.6 million for the quarter ended June 30, 2017.  By comparison, acquisition-related net accretion totaled $2.1 million for the quarter ended March 31, 2017.  Excluding acquisition-related net accretion, net interest income of $26.5 million for the second quarter of 2017 increased 3%, compared to $25.6 million for the quarter ended March 31, 2017.

Net interest income totaled $55.7 million for the six months ended June 30, 2017.  By comparison, net interest income totaled $41.6 million for the six months ended June 30, 2016.

“Net interest margin (excluding acquisition accounting net accretion) was relatively flat showing a modest decline of one basis point at 3.62% for the second quarter of 2017, compared to 3.63% for the first quarter of 2017,” stated Mr. Gipple.  “Loan yield (excluding loan discount accretion) actually increased five basis points when comparing linked quarters at 4.39% for the second quarter of 2017 and 4.34% for the first quarter of 2017.  Although we had a successful quarter of loan growth, much of that growth came late in the quarter so the full benefit will be seen in future periods.”

Nonperforming Assets Decrease 5.3% in Second Quarter

Nonperforming assets (“NPAs”) decreased $1.4 million in the current quarter.  The ratio of NPAs to total assets was 0.75% at June 30, 2017, which was down from 0.81% at March 31, 2017 and up from 0.70% a year ago.

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

The Company’s provision for loan and lease losses totaled $2.0 million for the second quarter of 2017, which was down slightly from the prior quarter, and up $825 thousand compared to the second quarter of 2016.  As of June 30, 2017, the Company’s allowance to total loans and leases was 1.31%, which was down from 1.32% at March 31, 2017 and down from 1.46% at June 30, 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 ($6.3 million at June 30, 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 1.31% to 1.55%.

Capital Levels Remain Strong

As of June 30, 2017, the Company’s total risk-based capital ratio was 12.01%, the common equity tier 1 ratio was 9.76%, and the tangible common equity to tangible assets ratio increased to 8.29%.  By comparison, these respective ratios were 11.90%, 9.64% and 8.20% as of March 31, 2017.

“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.

Acquisition of Guaranty Bank and Trust Company, Headquartered in Cedar Rapids, Iowa

As previously announced, the Company plans to close the acquisition of Guaranty Bank and Trust Company late in the third quarter or early in the fourth quarter of 2017, pending regulatory and shareholder approvals and certain customary closing conditions.

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 to 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 July 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 August 4, 2017.  The replay access information is toll-free 1-877-344-7529 (international 1-412-317-0088); access code 10110356.  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/qcrh170721.html.  The archived audio webcast will be available until July 21, 2018.  Participants should visit the Company’s website or call in to the conference line set forth above 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, including the acquisition of CSB and the planned acquisition of Guaranty Bank and Trust Company, 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  
  June 30, March 31, December 31, September 30, June 30,  
   2017  2017  2016  2016  2016  
             
  (dollars in thousands)  
             
CONDENSED BALANCE SHEET            
             
Cash and due from banks $   77,161 $   56,326 $   70,570 $   61,213 $   49,581  
Federal funds sold and interest-bearing deposits     72,354     173,219     86,206     96,047     68,432  
Securities     593,485     557,646     574,022     564,930     510,959  
Net loans/leases     2,520,209     2,403,791     2,374,730     2,331,774     1,894,676  
Core deposit intangible     6,919     7,150     7,381     7,614     1,372  
Goodwill     13,111     13,111     13,111     13,632     3,223  
Other assets     173,948     169,770     175,924     205,776     155,191  
Total assets $    3,457,187 $    3,381,013 $    3,301,944 $    3,280,986 $    2,683,434  
             
Total deposits $   2,870,234 $   2,805,931 $   2,669,261 $   2,594,913 $   1,973,594  
Total borrowings     230,263     231,534     290,952     312,104     381,874  
Other liabilities     51,607     47,708     55,690     93,112     52,849  
Total stockholders’ equity     305,083     295,840     286,041     280,857     275,117  
Total liabilities and stockholders’ equity $    3,457,187 $    3,381,013 $    3,301,944 $    3,280,986 $    2,683,434  
             
ANALYSIS OF LOAN PORTFOLIO            
Loan/lease mix:            
Commercial and industrial loans (1) $   942,539 $   851,578 $   827,637 $   804,308 $   706,261  
Commercial real estate loans     1,131,906     1,106,842     1,093,459     1,070,305     784,379  
Direct financing leases (1)     153,337     159,368     165,419     166,924     169,928  
Residential real estate loans     233,871     231,326     229,233     229,081     180,482  
Installment and other consumer loans     84,047     78,771     81,666     81,918     73,658  
Deferred loan/lease origination costs, net of fees     7,866     7,965     8,073     8,065     8,065  
Total loans/leases $   2,553,566 $   2,435,850 $   2,405,487 $   2,360,601 $   1,922,773  
Less allowance for estimated losses on loans/leases     33,357     32,059     30,757     28,827     28,097  
Net loans/leases $    2,520,209 $    2,403,791 $    2,374,730 $    2,331,774 $    1,894,676  
             
ANALYSIS OF SECURITIES PORTFOLIO            
Securities mix:            
U.S. government sponsored agency securities $   41,944 $   47,556 $   46,084 $   67,885 $   88,321  
Municipal securities   381,254   356,776   374,463   360,330   302,689  
Residential mortgage-backed and related securities   164,415   147,504   147,702   133,173   116,765  
Other securities   5,872   5,810   5,773   3,542   3,184  
Total securities $    593,485 $    557,646 $    574,022 $    564,930 $    510,959  
             
ANALYSIS OF DEPOSITS            
Deposit mix:            
Noninterest-bearing demand deposits $   760,625 $   777,150 $   797,415 $   764,615 $   615,764  
Interest-bearing demand deposits     1,526,103     1,486,047     1,369,226     1,298,781     918,036  
Time deposits   478,580   458,170   439,169   420,470   337,584  
Brokered deposits   104,926   84,564   63,451   111,047   102,210  
Total deposits $    2,870,234 $    2,805,931 $    2,669,261 $    2,594,913 $    1,973,594  
             
ANALYSIS OF BORROWINGS            
Borrowings mix:            
Term FHLB advances $   57,000 $   59,000 $   63,000 $   83,343 $   78,000  
Overnight FHLB advances (2)   49,500   47,550   74,500   55,300   118,900  
Wholesale structured repurchase agreements   45,000   45,000   45,000   45,000   100,000  
Customer repurchase agreements   4,897   7,170   8,132   8,265   21,441  
Federal funds purchased   13,320   12,300   31,840   51,750   30,120  
Junior subordinated debentures   33,546   33,514   33,480   33,446   33,413  
Other borrowings   27,000   27,000   35,000     35,000    
Total borrowings $    230,263 $    231,534 $    290,952 $    312,104 $    381,874  
             
(1) m2 Lease Funds, LLC originates Equipment Financing Agreements, which are classified as commercial and industrial loans.    
(2) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 1.31%.      
             

 

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 
      For the Six Months Ended    
      June 30,   June 30,    
       2017    2016    
               
    (dollars in thousands, except per share data)  
               
INCOME STATEMENT            
Interest income   $   63,798   $   47,415    
Interest expense       8,082       5,809    
Net interest income        55,716       41,606    
Provision for loan/lease losses       4,128       3,271    
Net interest income after provision for loan/lease losses   $    51,588   $    38,335    
               
Trust department fees   $   3,432   $   3,088    
Investment advisory and management fees       1,830       1,351    
Deposit service fees       2,775       1,878    
Gain on sales of residential real estate loans       209       145    
Gain on sales of government guaranteed portions of loans       1,038       2,482    
Swap fee income       441       1,025    
Securities gains, net       38       376    
Earnings on bank-owned life insurance       929       874    
Debit card fees       1,446       651    
Correspondent banking fees       445       547    
Other          1,483       1,168    
Total noninterest income   $    14,066   $    13,585    
               
Salaries and employee benefits   $   26,238   $   21,718    
Occupancy and equipment expense       5,201       3,711    
Professional and data processing fees       4,424       2,990    
Acquisition costs           355    
FDIC insurance, other insurance and regulatory fees       1,267       1,284    
Loan/lease expense       554       317    
Net cost of operation of other real estate       42       380    
Advertising and marketing       1,177       820    
Postage and communications       642       474    
Stationery and supplies       422       323    
Bank service charges       871       831    
Losses on debt extinguishment, net           83    
Correspondent banking expense       400       359    
Other         1,440       1,053    
Total noninterest expense   $    42,678   $    34,698    
               
Net income before taxes   $    22,976   $    17,222    
Income tax expense       5,025       4,172    
Net income     $    17,951   $    13,050    
               
Basic EPS   $   1.36   $   1.08    
Diluted EPS   $   1.33   $   1.07    
               
Weighted average common shares outstanding       13,151,833       12,064,349    
Weighted average common and common equivalent shares outstanding       13,502,505       12,235,212    
               

 

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
                 
      For the Quarter Ended  
      June 30, March 31, December 31, September 30, June 30,  
        2017   2017   2016     2016   2016  
                 
      (dollars in thousands, except per share data)  
                 
INCOME STATEMENT              
Interest income   $   32,453 $   31,345 $   32,236   $   26,817 $   23,913  
Interest expense       4,406     3,676     2,956       3,186     2,904  
Net interest income        28,047     27,669     29,280       23,631     21,009  
Provision for loan/lease losses       2,023     2,105     2,599       1,608     1,198  
Net interest income after provision for loan/lease losses   $    26,024 $    25,564 $    26,681   $    22,023 $    19,811  
                 
                 
Trust department fees   $   1,692 $   1,740 $   1,558   $   1,519 $   1,512  
Investment advisory and management fees       868     962     876       766     693  
Deposit service fees       1,459     1,316     1,411       1,151     947  
Gain on sales of residential real estate loans       113     96     142       144     84  
Gain on sales of government guaranteed portions of loans       87     951     458       219     1,604  
Swap fee income       327     114     350       334     168  
Securities gains, net       38       (36 )     4,252     18  
Earnings on bank-owned life insurance       459     470     447       450     480  
Debit card fees       743     703     688       475     344  
Correspondent banking fees       200     245     249       254     245  
Other          796     687     886       859     667  
Total noninterest income   $    6,782 $    7,284 $    7,029   $    10,423 $    6,762  
                 
                 
Salaries and employee benefits   $   12,931 $   13,307 $   13,396   $   11,202 $   10,917  
Occupancy and equipment expense       2,699     2,502     2,630       2,086     1,885  
Professional and data processing fees       2,341     2,083     2,192       1,931     1,542  
Acquisition costs           40       2,046     355  
FDIC insurance, other insurance and regulatory fees       646     621     683       583     650  
Loan/lease expense       260     294     242       103     154  
Net cost of operation of other real estate       28     14     78       133     278  
Advertising and marketing       568     609     760       548     433  
Bank service charges       447     424     446       415     415  
Losses on debt extinguishment, net           357       4,137    
Correspondent banking expense       202     198     186       206     182  
Other         1,283     1,221     1,298       1,090     933  
Total noninterest expense   $    21,405 $    21,273 $    22,308   $    24,480 $    17,744  
                 
Net income before taxes   $    11,401 $    11,575 $    11,402   $    7,966 $    8,829  
Income tax expense       2,635     2,390     2,873       1,858     2,153  
Net income     $    8,766 $    9,185 $    8,529   $    6,108 $    6,676  
                 
Basic EPS   $   0.67 $   0.70 $   0.65   $   0.47 $   0.54  
Diluted EPS   $   0.65 $   0.68 $   0.64   $   0.46 $   0.53  
                 
Weighted average common shares outstanding       13,170,283     13,133,382     13,087,592       13,066,777     12,335,077  
Weighted average common and common equivalent shares outstanding     13,516,592     13,488,417     13,323,883       13,269,703     12,516,474  
                 

 

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 
  For the Quarter Ended   For the Six Months Ended  
  June 30, March 31, December 31, September 30, June 30,   June 30, June 30,  
    2017     2017     2016     2016     2016       2017     2016    
                   
  (dollars in thousands, except per share data)        
 
COMMON SHARE DATA                  
Common shares outstanding      13,175,234       13,161,219       13,106,845       13,075,307       13,057,368          
Book value per common share (1) $ 23.16   $ 22.48   $ 21.82   $ 21.48   $ 21.07          
Tangible book value per common share (2) $ 21.64   $ 20.94   $ 20.11   $ 19.74   $ 20.72          
Closing stock price $ 47.40   $ 42.35   $ 43.30   $ 31.74   $ 27.19          
Market capitalization $ 624,506   $ 557,378   $ 567,526   $ 415,010   $ 355,030          
Market price / book value   204.70 %   188.41 %   198.41 %   147.77 %   129.05 %        
Market price / tangible book value   219.08 %   202.26 %   215.36 %   160.79 %   131.24 %        
Earnings per common share (basic) LTM (3) $   2.49   $   2.36   $   2.20   $   2.13   $   2.21          
Price earnings ratio LTM (3)  19.11 x   17.94 x   19.68 x   14.90 x   12.30 x         
TCE / TA (4)   8.29 %   8.20 %   8.04 %   7.92 %   10.10 %        
                   
                   
CONDENSED STATEMENT OF CHANGES IN
STOCKHOLDERS’ EQUITY
                 
Beginning balance $   295,840   $   286,041   $   280,857   $   275,117   $   235,143          
Net income     8,766       9,185       8,529       6,108       6,676          
Other comprehensive income (loss), net of tax     702       411       (3,681 )     (361 )     1,181          
Common stock cash dividends declared     (657 )     (657 )     (523 )     (521 )     (521 )        
Proceeds from issuance of 1,215,000 shares of
  common stock, net of costs
                    29,829          
Other (5)     432       860       859       514       2,809          
Ending balance $    305,083   $    295,840   $    286,041   $    280,857   $    275,117          
                   
                   
REGULATORY CAPITAL RATIOS (6):                  
Total risk-based capital ratio   12.01 %   11.90 %   11.56 %   11.30 %   14.29 %        
Tier 1 risk-based capital ratio   10.85 %   10.75 %   10.46 %   10.29 %   13.04 %        
Tier 1 leverage capital ratio   9.37 %   9.37 %   9.10 %   10.09 %   11.18 %        
Common equity tier 1 ratio   9.76 %   9.64 %   9.41 %   9.22 %   11.72 %        
                   
                   
KEY PERFORMANCE RATIOS AND OTHER METRICS                  
Return on average assets (annualized)   1.04 %   1.12 %   1.04 %   0.85 %   1.01 %     1.08 %   1.00 %  
Return on average total equity (annualized)   11.65 %   12.63 %   12.04 %   8.78 %   10.46 %     12.13 %   10.73 %  
Net interest margin   3.54 %   3.65 %   3.80 %   3.48 %   3.40 %     3.59 %   3.39 %  
Net interest margin (TEY) (Non-GAAP)(7)   3.81 %   3.90 %   4.02 %   3.71 %   3.62 %     3.86 %   3.61 %  
Efficiency ratio (Non-GAAP) (8)   61.46 %   60.86 %   61.44 %   71.89 %   63.89 %     61.16 %   62.87 %  
Gross loans and leases / total assets   73.86 %   72.04 %   72.85 %   71.95 %   71.65 %     73.86 %   71.65 %  
Effective tax rate   23.11 %   20.65 %   25.20 %   23.32 %   24.39 %     23.11 %   24.22 %  
Tax benefit related to stock options exercised and restricted stock
awards vested (9)
  90   533 N/A N/A N/A     623 N/A  
Full-time equivalent employees (10)   585   561   572   572   410     585   410  
                   
                   
AVERAGE BALANCES                   
Assets $   3,378,195   $   3,274,713   $   3,277,814   $   2,865,947   $   2,640,678     $   3,326,454   $   2,621,514    
Loans/leases     2,488,828       2,398,387       2,358,960       2,077,376       1,899,932         2,443,608       1,866,941    
Deposits     2,835,711       2,692,009       2,717,923       2,243,397       2,033,116         2,763,861       2,006,586    
Total stockholders’ equity     300,868       290,906       283,292       278,369       255,391         295,887       243,319    
                   
(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 / TA : 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) ASC 2016-09 became effective on January 1, 2017 and affects the accounting for stock compensation.  This amount reflects the tax benefit recognized as a result of this new standard.  
(10) Full-time equivalent ”FTEs” employees increased in the second quarter of 2017 due to the addition of summer interns (13.6 FTEs).   
  FTEs increased in the third quarter of 2016 due to the acquisition of CSB.  

 

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 
ANALYSIS OF NET INTEREST INCOME AND MARGIN                    
                         
    For the Quarter Ended
    June 30, 2017   March 31, 2017   June 30, 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   $   18,742 $   38 0.81 %   $   11,092 $   15 0.55 %   $   14,174 $   11 0.31 %
Interest-bearing deposits at financial institutions     86,236     220 1.02 %       92,551     199 0.87 %       50,747     62 0.49 %
Securities (1)       573,747     5,384 3.76 %       560,455     5,158 3.73 %       505,697     4,573 3.64 %
Restricted investment securities     13,226     132 4.00 %       13,871     130 3.80 %       14,171     134 3.80 %
Loans (1)       2,488,828     28,881 4.65 %       2,398,387     27,793 4.70 %       1,899,932     20,497 4.34 %
Total earning assets (1) $   3,180,779 $   34,655 4.37 %   $   3,076,356 $   33,295 4.39 %   $   2,484,721 $   25,277 4.09 %
                         
Interest-bearing deposits $   1,566,106 $   1,835 0.47 %   $   1,407,645 $   1,140 0.33 %   $   941,856 $   600 0.26 %
Time deposits       527,719     1,156 0.88 %       511,119     1,093 0.87 %       425,216     744 0.70 %
Short-term borrowings     17,936     19 0.42 %       25,188     24 0.39 %       50,122     18 0.14 %
Federal Home Loan Bank advances (4)     76,739     354 1.85 %       114,356     403 1.43 %       128,956     416 1.30 %
Other borrowings       33,530     347 4.15 %       74,761     683 3.71 %       100,008     824 3.31 %
Junior subordinated debentures     72,000     696 3.88 %       33,497     333 4.03 %       33,396     302 3.64 %
Total interest-bearing liabilities $   2,294,030 $   4,407 0.77 %   $   2,166,566 $   3,676 0.69 %   $   1,679,554 $   2,904 0.70 %
                         
Net interest income / spread (1)   $   30,248 3.60 %     $   29,619 3.70 %     $   22,373 3.39 %
Net interest margin (2)     3.54 %       3.65 %       3.40 %
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)     3.81 %       3.90 %       3.62 %
                         
                         
    For the Six Months Ended        
    June 30, 2017   June 30, 2016    
    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   $   14,917 $   53 0.72 %   $   15,703 $   23 0.29 %        
Interest-bearing deposits at financial institutions     89,394     418 0.94 %       45,691     123 0.54 %        
Securities (1)       567,101     10,543 3.75 %       528,034     9,257 3.53 %        
Restricted investment securities     13,549     262 3.90 %       14,156     264 3.75 %        
Loans (1)       2,443,608     56,741 4.68 %       1,866,941     40,454 4.36 %        
Total earning assets (1) $   3,128,569 $   68,017 4.38 %   $   2,470,525 $   50,121 4.08 %        
                         
Interest-bearing deposits $   1,486,876 $   2,974 0.40 %   $   933,551 $   1,214 0.26 %        
Time deposits       519,419     2,249 0.87 %       412,410     1,420 0.69 %        
Short-term borrowings     21,562     43 0.40 %       68,331     61 0.18 %        
Federal Home Loan Bank advances     95,548     758 1.60 %       128,696     858 1.34 %        
Other borrowings       33,514     680 4.09 %       100,873     1,650 3.29 %        
Junior subordinated debentures     73,381     1,379 3.79 %       34,023     606 3.58 %        
Total interest-bearing liabilities $   2,230,300 $   8,083 0.73 %   $   1,677,884 $   5,809 0.70 %        
                         
Net interest income / spread (1)   $   59,934 3.65 %     $   44,312 3.38 %        
Net interest margin (2)     3.59 %       3.39 %        
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)     3.86 %       3.61 %        
                         
                         
(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.                  

 

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 
  As of    
  June 30, March 31, December 31, September 30, June 30,    
    2017     2017     2016     2016     2016      
               
  (dollars in thousands, except per share data)    
               
ROLLFORWARD OF ALLOWANCE FOR
LOAN/LEASE LOSSES
             
Beginning balance $   32,059   $   30,757   $   28,827   $   28,097   $   27,395      
Provision charged to expense     2,023       2,105       2,599       1,608       1,198      
Loans/leases charged off     (851 )     (893 )     (755 )     (987 )     (634 )    
Recoveries on loans/leases previously charged off     126       90       86       109       138      
Ending balance $    33,357   $    32,059   $    30,757   $    28,827   $    28,097      
               
               
NONPERFORMING ASSETS              
Nonaccrual loans/leases $   13,217   $   14,205   $   13,919   $   14,371   $   10,737      
Accruing loans/leases past due 90 days or more     424       955       967       392       86      
Troubled debt restructures – accruing     6,915       6,229       6,347       1,825       1,753      
Total nonperforming loans/leases     20,556       21,389       21,233       16,588       12,576      
Other real estate owned     5,174       5,625       5,523       5,808       6,179      
Other repossessed assets     123       285       202       353       154      
Total nonperforming assets $    25,853   $    27,299   $    26,958   $    22,749   $    18,909      
               
               
ASSET QUALITY RATIOS              
Nonperforming assets / total assets   0.75 %   0.81 %   0.82 %   0.69 %   0.70 %    
Allowance / total loans/leases (1)   1.31 %   1.32 %   1.28 %   1.22 %   1.46 %    
Allowance / nonperforming loans/leases (1)   162.27 %   149.89 %   144.85 %   173.78 %   223.42 %    
Net charge-offs as a % of average loans/leases   0.03 %   0.03 %   0.03 %   0.04 %   0.03 %    
               
               
(1) Upon acquisition and per GAAP, 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 Six Months Ended  
      June 30,    March 31,   June 30,   June 30,   June 30,  
  SELECT FINANCIAL DATA – SUBSIDIARIES     2017       2017       2016       2017       2016    
      (dollars in thousands)  
                         
  TOTAL ASSETS                      
                         
  Quad City Bank and Trust (1)   $   1,400,308     $   1,442,952     $   1,390,025            
  m2 Lease Funds, LLC       215,689         210,062         207,334            
  Cedar Rapids Bank and Trust       993,769         929,111         904,367            
  Community State Bank       642,761         608,431       N/A            
  Rockford Bank and Trust       426,160         398,455         402,157            
                         
  TOTAL DEPOSITS                      
                         
  Quad City Bank and Trust (1)   $   1,205,516     $   1,261,075     $   1,049,049            
  Cedar Rapids Bank and Trust       789,750         733,227         690,377            
  Community State Bank       554,767         527,171       N/A            
  Rockford Bank and Trust       346,893         312,817         296,613            
                         
  TOTAL LOANS & LEASES                      
                         
  Quad City Bank and Trust (1)   $   1,045,625     $   1,015,241     $   968,905            
  m2 Lease Funds, LLC       214,253         208,459         205,883            
  Cedar Rapids Bank and Trust       728,562         673,431         648,727            
  Community State Bank       442,845         427,365       N/A            
  Rockford Bank and Trust       336,534         319,813         305,141            
                         
  TOTAL LOANS & LEASES / TOTAL ASSETS                      
                         
  Quad City Bank and Trust (1)     75 %     70 %     70 %          
  Cedar Rapids Bank and Trust     73 %     72 %     72 %          
  Community State Bank     69 %     70 %     N/A            
  Rockford Bank and Trust     79 %     80 %     76 %          
                         
  ALLOWANCE AS A PERCENTAGE OF TOTAL LOANS/LEASES                      
                         
  Quad City Bank and Trust (1)     1.28 %     1.34 %     1.31 %          
  m2 Lease Funds, LLC     1.60 %     1.72 %     1.80 %          
  Cedar Rapids Bank and Trust     1.58 %     1.66 %     1.65 %          
  Community State Bank (2)     0.71 %     0.53 %     N/A            
  Rockford Bank and Trust     1.59 %     1.58 %     1.53 %          
                         
  RETURN ON AVERAGE ASSETS                      
                         
  Quad City Bank and Trust (1)     1.26 %     1.22 %     1.24 %     1.24 %     1.10 %  
  Cedar Rapids Bank and Trust     1.23 %     1.33 %     1.46 %     1.28 %     1.42 %  
  Community State Bank (3)     1.26 %     1.30 %     N/A       1.28 %     N/A    
  Rockford Bank and Trust     0.82 %     0.86 %     0.80 %     0.84 %     0.73 %  
                         
  NET INTEREST MARGIN PERCENTAGE (4)                      
                         
  Quad City Bank and Trust (1)     3.63 %     3.71 %     3.66 %     3.67 %     3.63 %  
  Cedar Rapids Bank and Trust     3.66 %     3.75 %     3.77 %     3.70 %     3.77 %  
  Community State Bank (5)     5.06 %     5.37 %     N/A       5.21 %     N/A    
  Rockford Bank and Trust     3.40 %     3.43 %     3.49 %     3.41 %     3.52 %  
                         
  ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET                      
  INTEREST MARGIN, NET                      
                         
  Cedar Rapids Bank and Trust   $   6     $   9     $   51     $   15     $   130    
  Community State Bank       1,580         2,054       N/A         3,635       N/A    
  QCR Holdings, Inc. (6)       (33 )       (33 )       (34 )       (66 )       (68 )  
                         
(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 3.95% for the quarter ended June 30, 2017 and 3.83% for the quarter ended March 31, 2017.              
(6 ) Relates to the trust preferred securities acquired as part of the Community National Bank acquisition in 2013.                
                         

 

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 
    As of          
    June 30,   March 31,   December 31,   September 30,   June 30,            
GAAP TO NON-GAAP RECONCILIATIONS     2017       2017       2016       2016       2016              
        (dollars in thousands, except per share data)                
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
RATIO (1)
                               
                                 
Stockholders’ equity (GAAP)   $   305,083     $   295,840     $   286,041     $   280,857     $   275,117              
Less: Intangible assets       20,030         20,261         22,522         22,755         4,595              
Tangible common equity (non-GAAP)   $   285,053     $   275,579     $   263,519     $   258,102     $   270,522              
                                 
Total assets (GAAP)   $   3,457,187     $   3,381,013     $   3,301,944     $   3,280,986     $   2,683,434              
Less: Intangible assets       20,030         20,261         22,522         22,755         4,595              
Tangible assets (non-GAAP)   $   3,437,157     $   3,360,752     $   3,279,422     $   3,258,231     $   2,678,839              
                                 
Tangible common equity to tangible assets ratio (non-GAAP)     8.29 %     8.20 %     8.04 %     7.92 %     10.10 %            
                                 
                                 
    For the Quarter Ended   For the Six Months Ended  
    June 30,   March 31,   December 31,   September 30,   June 30,     June 30,   June 30,   
CORE NET INCOME (2)     2017       2017       2016       2016       2016         2017       2016    
                                 
Net income (GAAP)   $   8,766     $   9,185     $   8,529     $   6,108     $   6,676       $   17,951     $   13,050    
                                 
Less nonrecurring items (post-tax) (3):                                
Income:                                
     Securities gains, net   $   25     $   –     $   (23 )   $   2,764     $   12       $   25     $   245    
Total nonrecurring income (non-GAAP)   $   25     $   –     $   (23 )   $   2,764     $   12       $   25     $   245    
                                 
Expense:                                
     Losses on debt extinguishment, net   $   –     $   –     $   232     $   2,689     $   –       $   –     $   54    
     Acquisition costs (4)       –         –         26         1,506         231           –         231    
Total nonrecurring expense (non-GAAP)   $   –     $   –     $   258     $   4,195     $   231       $   –     $   285    
                                 
Core net income attributable to QCR Holdings, Inc. common
stockholders (non-GAAP) (2)
  $    8,741     $    9,185     $    8,810     $    7,539     $    6,895       $    17,926     $    13,090    
                                 
CORE EARNINGS PER COMMON SHARE (2)                                
                                 
Core net income attributable to QCR Holdings, Inc. common
stockholders (non-GAAP) (from above)
  $   8,741     $   9,185     $   8,810     $   7,539     $   6,895       $   17,926     $   13,090    
                                 
Weighted average common shares outstanding       13,170,283         13,133,382         13,087,592         13,066,777         12,335,077           13,151,833         12,064,349    
Weighted average common and common equivalent shares outstanding     13,516,592         13,488,417         13,323,883         13,269,703         12,516,474           13,502,505         12,235,212    
                                 
Core earnings per common share (non-GAAP):                                
Basic   $    0.66     $    0.70     $    0.67     $    0.58     $    0.56       $    1.36     $    1.09    
Diluted   $    0.65     $    0.68     $    0.66     $    0.57     $    0.55       $    1.33     $    1.07    
                                 
CORE RETURN ON AVERAGE ASSETS (2)                                
                                 
Core net income attributable to QCR Holdings, Inc. common
stockholders (non-GAAP) (from above)
  $   8,741     $   9,185     $   8,810     $   7,539     $   6,895       $   17,926     $   13,090    
                                 
Average Assets   $   3,378,195     $   3,274,713     $   3,277,814     $   2,865,947     $   2,640,678       $   3,326,454     $   2,621,514    
                                 
Core return on average assets (annualized) (non-GAAP)     1.04 %     1.12 %     1.08 %     1.05 %     1.04 %       1.08 %     1.00 %  
                                 
NET INTEREST MARGIN (TEY) (5)                                
                                 
Net interest income (GAAP)   $   28,047     $   27,669     $   29,280     $   23,631     $   21,009       $   55,716     $   41,606    
                                 
Plus: Tax equivalent adjustment (6)       2,201         1,950         1,727         1,587         1,364           4,218         2,706    
                                 
Net interest income – tax equivalent (Non-GAAP)   $   30,248     $   29,619     $   31,007     $   25,218     $   22,373       $   59,934     $   44,312    
                                 
Average earning assets   $   3,180,779     $   3,076,356     $   3,069,122     $   2,703,162     $   2,484,721       $   3,128,569     $   2,470,525    
                                 
Net interest margin (GAAP)     3.54 %     3.65 %     3.80 %     3.48 %     3.40 %       3.59 %     3.39 %  
Net interest margin (TEY) (Non-GAAP)     3.81 %     3.90 %     4.02 %     3.71 %     3.62 %       3.86 %     3.61 %  
                                 
EFFICIENCY RATIO (7)                                
                                 
Noninterest expense (GAAP)   $   21,405     $   21,273     $   22,308     $   24,480     $   17,744       $   42,678     $   34,698    
                                 
Net interest income (GAAP)   $   28,047     $   27,669     $   29,280     $   23,631     $   21,009       $   55,716     $   41,606    
Noninterest income (GAAP)       6,782         7,284         7,029         10,423         6,762           14,066         13,585    
Total income   $   34,829     $   34,953     $   36,309     $   34,054     $   27,771       $   69,782     $   55,191    
                                 
Efficiency ratio (noninterest expense/total income) (Non-GAAP)     61.46 %     60.86 %     61.44 %     71.89 %     63.89 %       61.16 %     62.87 %  
                                 
                                 
(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