QCR Holdings, Inc. Announces Record Third Quarter Earnings Despite Elevated COVID-19 Provisioning

QCR Holdings, Inc.
·30 min read

EPS of $1.09 Driven by Record Pre-Provision/Pre-Tax Adjusted Net Income

Third Quarter 20 20 Highlights

  • Record n et income of $ 1 7.3 million, or $ 1.09 per diluted share

  • Adjusted net income (non-GAAP) of $ 1 7.7 million, or $ 1.11 per diluted share

  • Record n oninterest income of $ 38.0 million , driven by record swap fee income of $26.7 million

  • Record p re- p rovision , p re- t ax a djusted n et i ncome (non-GAAP) of $ 42.2 million

  • Pre-provision, pre-tax adjusted ROAA (non-GAAP) of 2. 90%

  • N IM increased by 22 bps and NIM (TEY)(non-GAAP) increased by 24 bps to 3. 36 % and 3.5 1 %, respectively

  • Annualized core loan and lease growth (non-GAAP) of 11.5 % for the quarter, excluding SBA Paycheck Protection Program (PPP) loans

  • Provision expense of $ 20.3 million for the quarter, increasing ALLL to t otal l oans and leases , excluding PPP loans (non-GAAP) , by 44 bps to 2.05%

  • Annualized core deposit growth of 36.4 % for the quarter

  • Loan Relief Program (LRP) participation down approximately 90% from the prior quarter to only 1.95% of total loans and leases

MOLINE, Ill., Oct. 27, 2020 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the Company) today announced record quarterly net income of $17.3 million and diluted earnings per share (EPS) of $1.09 for the third quarter of 2020, compared to net income of $13.7 million and diluted EPS of $0.86 for the second quarter of 2020. Pre-provision, pre-tax adjusted net income (non-GAAP) increased $5.4 million in the third quarter compared to the second quarter, led by record swap fee income, strong loan growth and improved net interest income and margin.

The Company reported adjusted net income (non-GAAP) of $17.7 million and adjusted diluted EPS (non-GAAP) of $1.11 for the third quarter of 2020, compared to adjusted net income (non-GAAP) of $14.0 million and adjusted diluted EPS (non-GAAP) of $0.88 for the second quarter of 2020. For the third quarter of 2019, net income and diluted EPS were $15.1 million and $0.94, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $15.9 million and $1.00, respectively.

 

 

 

For the Quarter Ended

 

September 3 0 ,

June 3 0 ,

September 30 ,

$ in millions (except per share data)

 

20 20

 

 

 

20 20

 

 

 

201 9

 

Net Income

$

17.3

 

 

$

13.7

 

 

$

15.1

 

Diluted EPS

$

1.09

 

 

$

0.86

 

 

$

0.94

 

Adjusted Net Income (non-GAAP)

$

17.7

 

 

$

14.0

 

 

$

15.9

 

Adjusted Diluted EPS (non-GAAP)

$

1.11

 

 

$

0.88

 

 

$

1.00

 

Pre-Provision/Pre-Tax Adjusted Income (non-GAAP)

$

42.2

 

 

$

36.8

 

 

$

21.7

 

Pre-Provision/Pre-Tax Adjusted ROAA (non-GAAP)

 

          2.90

%

 

 

             2.54

%

 

 

1.66

%

See GAAP to non-GAAP reconciliations

 

 

 

 

 

 

 

 

 

We are pleased to report a record quarter of net income, pre-provision, pre-tax adjusted net income, and noninterest income, driven by continued strong loan growth, record fee income and an expanded net interest margin, commented Larry J. Helling, Chief Executive Officer. Core loans grew more than 11% on an annualized basis, while maintaining disciplined underwriting and solid credit quality. Core deposits were even stronger this quarter with outsized growth in deposits coming from our correspondent banking relationships. Despite continuing to hold some excess liquidity on our balance sheet, we were able to lower deposit costs and bolster our net interest margin in the quarter.

Additionally, we continued to experience a significant reduction in loan deferrals, and by quarter-end, approximately 90% of our clients who needed payment relief early in the pandemic had resumed making payments, Helling said. We believe this speaks to the high quality of our loan portfolio and the resiliency of our local markets, which continue to improve as pandemic-impacted jobs return at a faster pace than the rest of the country.

Our asset quality remains solid and our banks are well positioned to continue to work through the pandemic, added Helling. We again chose to be prudent and recorded a significant provision for loan and lease losses during the quarter in order to continue to build reserves against future potential credit issues related to the unknown severity and duration of COVID-19.

Annualized Loan and Lease Growth of 11.5 % , excluding PPP L oans (non-GAAP)

During the third quarter of 2020, the Companys total loans and leases increased by $107.7 million to a total of $4.2 billion. Loan and lease growth during the quarter was 11.5% on an annualized basis. Core deposits (excluding brokered deposits) increased $385.1 million, or 36.4% on an annualized basis. Brokered deposits declined by $62.6 million as the Company allowed certain higher cost brokered deposits to run off the balance sheet. The Companys correspondent banking portfolio contributed to the majority of the core deposit growth as our correspondent bank clients grew liquidity. At quarter-end, the percentage of wholesale funds to total assets was 4.9%, which was down sharply from 8.9% in the second quarter of 2020 as the Companys need for wholesale funding declined due to the strong growth in core deposits. Notably, more than half of the remaining wholesale funds consist of subordinated debt and trust preferred securities that provide regulatory capital. Additionally, at quarter-end, the percentage of gross loans and leases to total assets was 72.4%, which was down from 73.9% in the second quarter.

We delivered solid loan growth for the quarter, driven primarily by strong production in our Specialty Finance Group, said Helling. Excluding our PPP loan production, loan and lease growth for the first nine months of 2020 was 7.2% on an annualized basis, and given our current pipeline, we now believe that we will be able to achieve organic loan growth of between 6% and 8% for the full year, higher than our previous guidance.   

Net Interest Income of $ 4 4.6 m illion

Net interest income for the third quarter of 2020 totaled $44.6 million, compared to $41.0 million for the second quarter of 2020 and $40.7 million for the third quarter of 2019. The increase was primarily due to an increase in the reported net interest margin and, to a lesser extent, the growth in average interest-earning assets of $25.6 million, or 0.5% on a linked quarter basis. Acquisition-related net accretion totaled $833 thousand (pre-tax) for the third quarter of 2020, up slightly from the second quarter of 2020 and down from $1.3 million for the third quarter of 2019. Adjusted net interest income (non-GAAP) was $45.7 million for the third quarter of 2020, compared to $41.9 million for the second quarter of 2020 and $41.2 million for the third quarter of 2019.

In the third quarter, NIM was 3.36% and, on a tax-equivalent yield basis (non-GAAP), NIM was 3.51%, an increase of 22 basis points and 24 basis points from the second quarter of 2020, respectively. Adjusted NIM (non-GAAP), excluding acquisition-related net accretion was 3.44%, up 23 basis points from the second quarter. The increase in adjusted NIM (non-GAAP) during the quarter was primarily due to a 13 basis point increase in the yield on earning assets combined with a 14 basis point decline in the total cost of interest-bearing funds (due to both mix and rate).

 

For the Quarter Ended

 

September 30 ,

June 3 0 ,

September 30 ,

 

20 20

 

 

20 20

 

 

2019

 

NIM

3.36

%

 

3.14

%

 

3.37

%

NIM (TEY)(non-GAAP)

3.51

%

 

3.27

%

 

3.52

%

Adjusted NIM (TEY)(non-GAAP)

3.44

%

 

3.21

%

 

3.41

%

See GAAP to non-GAAP reconciliations

 

 

 

During the quarter, we worked to improve the efficiency of the balance sheet by proactively reducing higher cost non-core funding which, in turn, eliminated some of our excess liquidity and helped to enhance our NIM, stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. Combined with a meaningful drop in our funding costs, which was driven by the increased core deposits and reduced wholesale funding, we were able to increase our adjusted NIM by 23 basis points in the quarter.  

Record No ninterest Income of $ 38.0 million

Noninterest income for the third quarter of 2020 totaled $38.0 million, compared to $28.6 million for the second quarter of 2020. The increase was primarily due to $26.7 million in swap fee income, up $6.8 million from the second quarter of 2020. Wealth management revenue was $3.5 million for the quarter, consistent with the second quarter. In addition, securities gains and other income increased by $1.7 million from the prior quarter. Noninterest income increased $18.1 million or 90.7% when compared to the third quarter of 2019.

Continued strong production from our Specialty Finance Group and our commercial teams across all of our banks led to a record $26.7 million in swap fee income during the quarter. Swap fee income totaled $53.4 million for the first nine months of 2020. This level of sustained production puts us on track to exceed our full year expectations for this source of fee income, added Mr. Gipple.

Noninterest Expenses of $ 40.8 million

Noninterest expense for the third quarter of 2020 totaled $40.8 million, compared to $33.1 million for the second quarter of 2020. The linked-quarter increase was primarily due to increased salary and benefits expense of $4.7 million, with increased commission and incentive compensation expense in the quarter driven by the strong financial results and higher than anticipated swap fee income. In addition, losses on debt extinguishment increased $1.4 million, FDIC insurance and regulatory fees increased by $393 thousand due to our larger asset base, net cost on operations of other real estate increased by $348 thousand, disposition costs increased by $275 thousand, and advertising and marketing expenses increased by $198 thousand.

Continued to Significantly Build Reserves for COVID-19

Nonperforming assets (NPAs) totaled $19.0 million, an increase of $5.7 million from the second quarter of 2020. The increase was primarily due to a few isolated relationships that experienced degradation not directly related to COVID-19. The ratio of NPAs to total assets increased to 0.32% at September 30, 2020, compared to 0.24% at June 30, 2020, and 0.27% at September 30, 2019.

The Companys provision for loan and lease losses totaled $20.3 million for the third quarter of 2020, up from $19.9 million in the prior quarter. The linked-quarter increase in the provision for loan and lease losses was primarily due to increased qualitative factors in response to the COVID-19 pandemic. As of September 30, 2020, the Companys allowance to total loans and leases was 1.87%, which was up from 1.47% at June 30, 2020, and from 1.00% at September 30, 2019. Excluding the impact of the $358 million in PPP loans that are on the Companys balance sheet, the ALLL to total loans and leases was 2.05% (non-GAAP).

In accordance with GAAP for acquisition accounting, loans acquired through past acquisitions were recorded at market value; therefore, there was no allowance associated with the acquired loans at the acquisition date. Management continues to evaluate the allowance needed on the acquired loans factoring in the net remaining discount of $4.5 million at September 30, 2020.

Strong Capital Levels

As of September 30, 2020, the Companys total risk-based capital ratio was 14.91%, the common equity tier 1 ratio was 10.43%, and the tangible common equity to tangible assets ratio was 8.42% (non-GAAP). By comparison, these respective ratios were 13.71%, 10.25% and 8.48% as of June 30, 2020. Excluding the impact of the PPP loans, the tangible common equity to tangible assets ratio was 8.89% (non-GAAP).

During the third quarter, the Company successfully completed a private placement of $50.0 million of 5.125% Fixed-to-Floating Rate Subordinated Notes due 2030. This offering enabled us to further build our capital base to support the organic growth of our subsidiary banks and be well positioned for future M&A opportunities.

Focus on Three Strategic Long-Term Initiatives

As part of the Companys ongoing efforts to grow earnings and drive attractive long-term returns for shareholders, it continues to operate under three key strategic long-term initiatives:

  • Organic loan and lease growth of 9% per year, funded by core deposits;

  • Grow fee-based income by at least 6% per year; and

  • Limit our annual operating expense growth to 5% per year.

These initiatives are long-term targets. Due to the impact of the COVID-19 pandemic among other factors, the Company may not be able to achieve these goals for the full year 2020.

Supplemental Presentation and Where to Find It
In addition to this press release, the Company has included a supplemental presentation that provides further information regarding the Companys loan exposures and deferrals. Investors, analysts and other interested persons may find this presentation on the Securities and Exchange Commissions EDGAR filing system at  www.sec.gov/edgar.shtml , or on the Companys website at www.qcrh.com .

C onference Call Details
The Company will host an earnings call/webcast tomorrow, October 28, 2020, at 10:00 a.m. Central Time. Dial-in information for the call is toll-free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be available for replay through November 11, 2020. The replay access information is 877-344-7529 (international 412-317-0088); access code 10148155. A webcast of the teleconference can be accessed at the Companys News and Events page at www.qcrh.com . An archived version of the webcast will be available at the same location shortly after the live event has ended.

About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, and Springfield communities through its wholly-owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, and Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company engages in commercial leasing through its wholly-owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 24 locations in Iowa, Missouri, Wisconsin and Illinois. As of September 30, 2020, the Company had approximately $5.9 billion in assets, $4.2 billion in loans and $4.7 billion in deposits. For additional information, please visit the Companys website at www.qcrh.com .

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 Companys 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 , state, national and international economies (including the impact of the 2020 presidential election and the impact of tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations) ; (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events ; (iii)  changes in accounting policies and practices (including the new current expected credit loss (CECL) impairment standards, that will change how the Company estimates credit losses when implemented ); (iv) changes in state and federal laws, regulations and governmental policies concerning the Companys general business ; (v) changes in interest rates and prepayment rates of the Companys assets (including the impact of LIBOR phase-out) ; (v i ) increased competition in the financial services sector and the inability to attract new customers; (vi i ) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii i ) unexpected results of acquisitions, which may include failure to realize the anticipat ed benefits of acquisition s and the possibility that transaction costs may be greater than anticipated ; ( ix ) the loss of key executives or employees; ( x ) changes in consumer spending; and (x i ) unexpected outcomes of existing or new litigation involving the Company . 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 Companys financial results, is included in the Companys filings with the Securities and Exchange Commission .

Contacts:

Todd A. Gipple
President
Chief Operating Officer
Chief Financial Officer
(309) 743-7745
tgipple@qcrh.com  

Kim K. Garrett
Vice President
Corporate Communications
Investor Relations Manager
(319) 743-7006
kgarret@qcrh.com

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

 

 

 

 

 

 

As of

 

September 30,

June 30,

March 31,

December 31,

September 30,

 

  2020

  2020

  2020

  2019

  2019

 

 

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

 

CONDENSED BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

68,932

$

88,577

$

169,827

$

76,254

$

91,671

Federal funds sold and interest-bearing deposits

 

302,668

 

142,900

 

206,708

 

157,691

 

197,263

Securities

 

782,088

 

748,883

 

684,571

 

611,341

 

555,409

Net loans/leases

 

4,168,395

 

4,079,432

 

3,662,435

 

3,654,204

 

3,574,154

Intangibles

 

11,902

 

13,872

 

14,421

 

14,970

 

15,529

Goodwill

 

74,066

 

74,248

 

74,248

 

74,748

 

77,748

Derivatives

 

236,381

 

225,164

 

195,973

 

87,827

 

104,388

Other assets

 

220,128

 

220,920

 

213,134

 

220,049

 

210,673

Assets held for sale

 

-

 

10,765

 

10,758

 

11,966

 

465,547

Total assets

$

5,864,560

$

5,604,761

$

5,232,075

$

4,909,050

$

5,292,382

 

 

 

 

 

 

Total deposits

$

4,672,268

$

4,349,775

$

4,170,478

$

3,911,051

$

3,802,241

Total borrowings

 

226,962

 

376,250

 

244,399

 

278,955

 

320,457

Derivatives

 

244,510

 

233,589

 

203,744

 

88,436

 

109,242

Other liabilities

 

148,207

 

87,539

 

71,185

 

90,254

 

70,169

Liabilities held for sale

 

-

 

1,588

 

3,130

 

5,003

 

470,530

Total stockholders' equity

 

572,613

 

556,020

 

539,139

 

535,351

 

519,743

Total liabilities and stockholders' equity

$

5,864,560

$

5,604,761

$

5,232,075

$

4,909,050

$

5,292,382

 

 

 

 

 

 

ANALYSIS OF LOAN PORTFOLIO

 

 

 

 

 

Loan/lease mix:

 

 

 

 

 

Commercial and industrial loans

$

1,823,049

$

1,850,110

$

1,484,979

$

1,507,825

$

1,469,978

Commercial real estate loans

 

1,999,715

 

1,869,162

 

1,783,086

 

1,736,396

 

1,687,922

Direct financing leases

 

73,011

 

79,105

 

83,324

 

87,869

 

92,307

Residential real estate loans

 

245,032

 

241,069

 

237,742

 

239,904

 

245,667

Installment and other consumer loans

 

102,471

 

99,150

 

106,728

 

109,352

 

106,540

Deferred loan/lease origination costs, net of fees

 

4,699

 

1,663

 

8,809

 

8,859

 

7,856

Total loans/leases

$

4,247,977

$

4,140,259

$

3,704,668

$

3,690,205

$

3,610,270

Less allowance for estimated losses on loans/leases

 

79,582

 

60,827

 

42,233

 

36,001

 

36,116

Net loans/leases

$

4,168,395

$

4,079,432

$

3,662,435

$

3,654,204

$

3,574,154

 

 

 

 

 

 

ANALYSIS OF SECURITIES PORTFOLIO

 

 

 

 

 

Securities mix:

 

 

 

 

 

U.S. government sponsored agency securities

$

18,437

$

17,472

$

19,457

$

20,078

$

21,268

Municipal securities

 

569,075

 

526,192

 

493,664

 

447,853

 

391,329

Residential mortgage-backed and related securities

 

134,147

 

145,672

 

122,853

 

120,587

 

123,880

Asset backed securities

 

40,665

 

39,797

 

28,499

 

16,887

 

10,957

Other securities

 

19,764

 

19,750

 

20,098

 

5,936

 

7,975

Total securities

$

782,088

$

748,883

$

684,571

$

611,341

$

555,409

 

 

 

 

 

 

ANALYSIS OF DEPOSITS

 

 

 

 

 

Deposit mix:

 

 

 

 

 

Noninterest-bearing demand deposits

$

1,175,085

$

1,177,482

$

829,782

$

777,224

$

782,232

Interest-bearing demand deposits

 

2,938,194

 

2,488,755

 

2,440,907

 

2,407,502

 

2,245,557

Time deposits

 

499,021

 

560,982

 

617,979

 

571,343

 

536,352

Brokered deposits

 

59,968

 

122,556

 

281,810

 

154,982

 

238,100

Total deposits

$

4,672,268

$

4,349,775

$

4,170,478

$

3,911,051

$

3,802,241

 

 

 

 

 

 

ANALYSIS OF BORROWINGS

 

 

 

 

 

Borrowings mix:

 

 

 

 

 

Term FHLB advances

$

40,000

$

90,000

$

55,000

$

50,000

$

60,000

Overnight FHLB advances

 

-

 

55,000

 

40,000

 

109,300

 

135,800

FRB borrowings

 

-

 

100,000

 

30,000

 

-

 

-

Other short-term borrowings

 

30,430

 

24,818

 

13,067

 

13,423

 

18,526

Subordinated notes

 

118,577

 

68,516

 

68,455

 

68,394

 

68,334

Junior subordinated debentures

 

37,955

 

37,916

 

37,877

 

37,838

 

37,797

Total borrowings

$

226,962

$

376,250

$

244,399

$

278,955

$

320,457

 

 

 

 

 

 

 


QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

 

 

September 30,

June 30,

March 31,

December 31,

September 30,

 

 

 

 

2020

 

 

2020

 

 

2020

 

 

2019

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

INCOME STATEMENT

 

 

 

 

 

 

Interest income

 

$

50,890

 

$

48,650

 

$

48,982

 

$

52,977

 

$

56,817

 

Interest expense

 

 

6,309

 

 

7,694

 

 

11,276

 

 

13,058

 

 

16,098

 

Net interest income

 

 

44,581

 

 

40,956

 

 

37,706

 

 

39,919

 

 

40,719

 

Provision for loan/lease losses

 

 

20,342

 

 

19,915

 

 

8,367

 

 

979

 

 

2,012

 

Net interest income after provision for loan/lease losses

 

$

24,239

 

$

21,041

 

$

29,339

 

$

38,940

 

$

38,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust department fees

 

$

2,280

 

$

2,227

 

$

2,312

 

$

2,365

 

$

2,340

 

Investment advisory and management fees

 

 

1,266

 

 

1,399

 

 

1,727

 

 

1,589

 

 

1,782

 

Deposit service fees

 

 

1,403

 

 

1,286

 

 

1,477

 

 

1,787

 

 

1,813

 

Gain on sales of residential real estate loans

 

 

1,370

 

 

1,196

 

 

652

 

 

823

 

 

890

 

Gain on sales of government guaranteed portions of loans

 

 

-

 

 

-

 

 

-

 

 

159

 

 

519

 

Swap fee income

 

 

26,688

 

 

19,927

 

 

6,804

 

 

7,409

 

 

9,797

 

Securities gains (losses), net

 

 

1,802

 

 

65

 

 

-

 

 

26

 

 

(3

)

Earnings on bank-owned life insurance

 

 

502

 

 

612

 

 

329

 

 

533

 

 

489

 

Debit card fees

 

 

946

 

 

775

 

 

758

 

 

766

 

 

886

 

Correspondent banking fees

 

 

220

 

 

198

 

 

215

 

 

194

 

 

189

 

Gain on sale of assets and liabilities of subsidiary

 

 

-

 

 

-

 

 

-

 

 

12,286

 

 

-

 

Other

 

 

 

1,482

 

 

941

 

 

922

 

 

1,868

 

 

1,204

 

Total noninterest income

 

$

37,959

 

$

28,626

 

$

15,196

 

$

29,805

 

$

19,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

25,999

 

$

21,304

 

$

18,519

 

$

24,220

 

$

24,215

 

Occupancy and equipment expense

 

 

3,807

 

 

3,748

 

 

4,032

 

 

4,019

 

 

3,860

 

Professional and data processing fees

 

 

3,758

 

 

3,646

 

 

3,369

 

 

3,570

 

 

4,030

 

Post-acquisition compensation, transition and integration costs

 

 

(32

)

 

70

 

 

151

 

 

1,855

 

 

884

 

Disposition costs

 

 

192

 

 

(83

)

 

517

 

 

3,325

 

 

-

 

FDIC insurance, other insurance and regulatory fees

 

 

1,301

 

 

908

 

 

683

 

 

523

 

 

542

 

Loan/lease expense

 

 

403

 

 

339

 

 

228

 

 

349

 

 

221

 

Net cost of (income from) and gains/losses on operations of other real estate

 

 

16

 

 

(332

)

 

13

 

 

232

 

 

2,078

 

Advertising and marketing

 

 

750

 

 

552

 

 

682

 

 

1,670

 

 

1,056

 

Bank service charges

 

 

488

 

 

501

 

 

504

 

 

516

 

 

502

 

Losses on liability extinguishment

 

 

1,874

 

 

429

 

 

147

 

 

288

 

 

148

 

Correspondent banking expense

 

 

205

 

 

212

 

 

216

 

 

216

 

 

209

 

Intangibles amortization

 

 

531

 

 

548

 

 

549

 

 

560

 

 

560

 

Goodwill impairment

 

 

-

 

 

-

 

 

500

 

 

3,000

 

 

-

 

Loss on sale of subsidiary

 

 

305

 

 

-

 

 

-

 

 

-

 

 

-

 

Other

 

 

 

1,241

 

 

1,288

 

 

1,313

 

 

1,951

 

 

1,640

 

Total noninterest expense

 

$

40,838

 

$

33,130

 

$

31,423

 

$

46,294

 

$

39,945

 

 

 

 

 

 

 

 

 

Net income before income taxes

 

$

21,360

 

$

16,537

 

$

13,112

 

$

22,451

 

$

18,668

 

Federal and state income tax expense

 

 

4,016

 

 

2,798

 

 

1,884

 

 

6,560

 

 

3,573

 

Net income

 

 

$

17,344

 

$

13,739

 

$

11,228

 

$

15,891

 

$

15,095

 

 

 

 

 

 

 

 

 

Basic EPS

 

 

$

1.10

 

$

0.87

 

$

0.71

 

$

1.01

 

$

0.96

 

Diluted EPS

 

$

1.09

 

$

0.86

 

$

0.70

 

$

0.99

 

$

0.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

15,767,152

 

 

15,747,056

 

 

15,796,796

 

 

15,772,703

 

 

15,739,430

 

Weighted average common and common equivalent shares outstanding

 

 

15,923,578

 

 

15,895,336

 

 

16,011,456

 

 

16,033,043

 

 

15,976,742

 

 

 

 

 

 

 

 

 

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

 

 

 

2020

 

 

 

2019

 

 

 

 

 

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

INCOME STATEMENT

 

 

 

 

Interest income

 

$

148,522

 

 

$

163,099

 

Interest expense

 

 

25,279

 

 

 

47,459

 

Net interest income

 

 

123,243

 

 

 

115,640

 

Provision for loan/lease losses

 

 

48,624

 

 

 

6,087

 

Net interest income after provision for loan/lease losses

 

$

74,619

 

 

$

109,553

 

 

 

 

 

 

 

 

 

 

 

Trust department fees

 

 

6,819

 

 

$

7,194

 

Investment advisory and management fees

 

 

4,392

 

 

 

5,406

 

Deposit service fees

 

 

4,166

 

 

 

5,025

 

Gain on sales of residential real estate loans

 

 

3,218

 

 

 

1,748

 

Gain on sales of government guaranteed portions of loans

 

 

-

 

 

 

589

 

Swap fee income

 

 

53,419

 

 

 

20,886

 

Securities gains (losses), net

 

 

1,867

 

 

 

(56

)

Earnings on bank-owned life insurance

 

 

1,443

 

 

 

1,441

 

Debit card fees

 

 

2,479

 

 

 

2,591

 

Correspondent banking fees

 

 

633

 

 

 

578

 

Other

 

 

3,345

 

 

 

3,562

 

Total noninterest income

 

$

81,781

 

 

$

48,964

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

65,822

 

 

$

67,843

 

Occupancy and equipment expense

 

 

11,587

 

 

 

11,087

 

Professional and data processing fees

 

 

10,773

 

 

 

9,811

 

Post-acquisition compensation, transition and integration costs

 

 

189

 

 

 

1,727

 

Disposition costs

 

 

626

 

 

 

-

 

FDIC insurance, other insurance and regulatory fees

 

 

2,892

 

 

 

2,432

 

Loan/lease expense

 

 

970

 

 

 

748

 

Net cost of (income from) and gains/losses on operation of other real estate

 

(303

)

 

 

3,557

 

Advertising and marketing

 

 

1,984

 

 

 

2,878

 

Bank service charges

 

 

1,493

 

 

 

1,494

 

Losses on liability extinguishment

 

 

2,450

 

 

 

148

 

Correspondent banking expense

 

 

633

 

 

 

619

 

Intangibles amortization

 

 

1,628

 

 

 

1,706

 

Goodwill impairment

 

 

500

 

 

 

-

 

Loss on sale of subsidiary

 

 

305

 

 

 

-

 

Other

 

 

3,842

 

 

 

4,891

 

Total noninterest expense

 

$

105,391

 

 

$

108,941

 

 

 

 

 

 

Net income before taxes

 

$

51,009

 

 

$

49,576

 

Income tax expense

 

 

8,698

 

 

 

8,059

 

Net income

 

$

42,311

 

 

$

41,517

 

 

 

 

 

 

Basic EPS

 

$

2.68

 

 

$

2.64

 

Diluted EPS

 

$

2.65

 

 

$

2.60

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

15,770,335

 

 

 

15,715,788

 

Weighted average common and common equivalent shares outstanding

 

 

15,945,832

 

 

 

15,946,020

 

 

 

 

 

 


QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

 

 

 

 

 

 

 

 

 

As of and for the Quarter Ended

 

For the Nine Months Ended

 

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

 

 

2020

 

 

2020

 

 

2020

 

 

2019

 

 

2019

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

COMMON SHARE DATA

 

 

 

 

 

 

 

 

Common shares outstanding

 

15,792,357

 

 

15,790,611

 

 

15,773,736

 

 

15,828,098

 

 

15,790,462

 

 

 

 

Book value per common share (1)

$

36.26

 

$

35.21

 

$

34.18

 

$

33.82

 

$

32.91

 

 

 

 

Tangible book value per common share (2)

$

30.82

 

$

29.63

 

$

28.56

 

$

28.15

 

$

27.01

 

 

 

 

Closing stock price

$

27.41

 

$

31.18

 

$

27.07

 

$

43.86

 

$

37.98

 

 

 

 

Market capitalization

$

432,869

 

$

492,351

 

$

426,995

 

$

694,220

 

$

599,722

 

 

 

 

Market price / book value

 

75.60

%

 

88.55

%

 

79.20

%

 

129.69

%

 

115.40

%

 

 

 

Market price / tangible book value

 

88.95

%

 

105.23

%

 

94.79

%

 

155.76

%

 

140.61

%

 

 

 

Earnings per common share (basic) LTM (3)

$

3.69

 

$

3.55

 

$

3.54

 

$

3.65

 

$

3.49

 

 

 

 

Price earnings ratio LTM (3)

 

7.43 x

 

 

8.78 x

 

 

7.65 x

 

 

12.02 x

 

 

10.88 x

 

 

 

 

TCE / TA (4)

 

8.42

%

 

8.48

%

 

8.76

%

 

9.25

%

 

8.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

 

 

 

 

Beginning balance

$

556,020

 

$

539,139

 

$

535,351

 

$

519,743

 

$

504,300

 

 

 

 

Net income

 

17,344

 

 

13,739

 

 

11,228

 

 

15,891

 

 

15,095

 

 

 

 

Other comprehensive income (loss), net of tax

 

(614

)

 

3,622

 

 

(3,691

)

 

(683

)

 

543

 

 

 

 

Common stock cash dividends declared

 

(945

)

 

(945

)

 

(942

)

 

(947

)

 

(944

)

 

 

 

Proceeds from issuance of 9,400 shares of common stock as a result of the performance based targets met for Bates Companies

 

-

 

 

-

 

 

-

 

 

399

 

 

-

 

 

 

 

Repurchase and cancellation of 100,932 shares of common stock as a result of a share repurchase program

 

-

 

 

-

 

 

(3,780

)

 

-

 

 

-

 

 

 

 

Other (5)

 

808

 

 

465

 

 

973

 

 

948

 

 

749

 

 

 

 

Ending balance

$

572,613

 

$

556,020

 

$

539,139

 

$

535,351

 

$

519,743

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REGULATORY CAPITAL RATIOS (6):

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

14.91

%

 

13.71

%

 

13.54

%

 

13.33

%

 

12.22

%

 

 

 

Tier 1 risk-based capital ratio

 

11.23

%

 

11.07

%

 

11.16

%

 

11.04

%

 

9.94

%

 

 

 

Tier 1 leverage capital ratio

 

9.21

%

 

8.91

%

 

10.19

%

 

9.53

%

 

9.02

%

 

 

 

Common equity tier 1 ratio

 

10.43

%

 

10.25

%

 

10.31

%

 

10.18

%

 

9.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY PERFORMANCE RATIOS AND OTHER METRICS

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

1.19

%

 

0.95

%

 

0.91

%

 

1.23

%

 

1.16

%

 

 

1.02

%

 

1.09

%

Return on average total equity (annualized)

 

12.94

%

 

10.29

%

 

8.23

%

 

11.93

%

 

11.70

%

 

 

10.51

%

 

11.09

%

Net interest margin

 

3.36

%

 

3.14

%

 

3.40

%

 

3.36

%

 

3.37

%

 

 

3.29

%

 

3.29

%

Net interest margin (TEY) (Non-GAAP)(7)

 

3.51

%

 

3.27

%

 

3.56

%

 

3.51

%

 

3.52

%

 

 

3.44

%

 

3.43

%

Efficiency ratio (Non-GAAP) (8)

 

49.48

%

 

47.61

%

 

59.40

%

 

66.40

%

 

65.89

%

 

 

51.40

%

 

66.18

%

Gross loans and leases / total assets (10)

 

72.43

%

 

74.01

%

 

70.95

%

 

75.36

%

 

74.80

%

 

 

72.43

%

 

74.80

%

Gross loans and leases / total deposits (10)

 

90.92

%

 

95.18

%

 

88.83

%

 

94.35

%

 

94.95

%

 

 

90.92

%

 

94.95

%

Effective tax rate

 

18.80

%

 

16.92

%

 

14.37

%

 

29.22

%

 

19.14

%

 

 

17.05

%

 

16.26

%

Full-time equivalent employees (9)

 

687

 

 

712

 

 

703

 

 

697

 

 

766

 

 

 

687

 

 

766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

Assets

$

5,820,555

 

$

5,800,164

 

$

4,948,311

 

$

5,147,754

 

$

5,217,763

 

 

$

5,524,087

 

$

5,088,055

 

Loans/leases

 

4,185,275

 

 

3,999,523

 

 

3,686,410

 

 

3,868,435

 

 

3,962,464

 

 

 

3,957,903

 

 

3,853,918

 

Deposits

 

4,726,881

 

 

4,732,626

 

 

3,954,707

 

 

4,227,572

 

 

4,302,995

 

 

 

4,472,328

 

 

4,228,418

 

Total stockholders' equity

 

536,187

 

 

534,095

 

 

545,678

 

 

532,756

 

 

516,195

 

 

 

536,578

 

 

498,960

 

 

 

 

 

 

 

 

 

 


(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)

Includes mostly 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)

Decrease from September 30, 2019 to December 31, 2019 due to sale of subsidiary Rockford Bank & Trust. The decrease from June 30, 2020 to September 30, 2020 due to sale of Bates Companies and interns employed only during the summer.

(10)

Excludes assets held for sale as of September 30, 2019, Deccember 31, 2019, March 31, 2020 and June 30, 2020.

 

 

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS OF NET INTEREST INCOME AND MARGIN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

 

 

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

 

$

2,205

$

1

0.18

%

 

$

865

$

1

0.46

%

 

$

7,234

$

42

2.30

%

Interest-bearing deposits at financial institutions

 

321,679

 

92

0.11

%

 

 

533,483

 

135

0.10

%

 

 

172,386

 

951

2.19

%

Securities (1)

 

 

749,425

 

6,836

3.66

%

 

 

697,559

 

6,536

3.77

%

 

 

626,471

 

6,080

3.85

%

Restricted investment securities

 

19,714

 

249

4.94

%

 

 

21,234

 

288

5.46

%

 

 

22,719

 

293

5.12

%

Loans (1)

 

 

4,185,275

 

45,654

4.34

%

 

 

3,999,522

 

43,417

4.37

%

 

 

3,962,464

 

51,214

5.13

%

Total earning assets (1)

$

5,278,298

$

52,832

3.99

%

 

$

5,252,663

$

50,377

3.86

%

 

$

4,791,274

$

58,580

4.85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

$

2,932,988

$

2,086

0.28

%

 

$

2,840,860

$

2,429

0.34

%

 

$

2,505,383

$

7,907

1.25

%

Time deposits

 

 

638,031

 

2,399

1.50

%

 

 

809,233

 

3,337

1.66

%

 

 

975,736

 

5,486

2.23

%

Short-term borrowings

 

26,996

 

11

0.17

%

 

 

25,064

 

22

0.35

%

 

 

17,333

 

98

2.24

%

Federal Home Loan Bank advances

 

57,078

 

211

1.45

%

 

 

95,616

 

347

1.46

%

 

 

123,107

 

1,023

3.30

%

Subordinated debentures

 

77,783

 

1,031

5.30

%

 

 

68,480

 

994

5.84

%

 

 

68,299

 

1,003

5.83

%

Junior subordinated debentures

 

37,936

 

571

5.89

%

 

 

37,891

 

572

6.07

%

 

 

37,774

 

581

6.10

%

Total interest-bearing liabilities

$

3,770,812

$

6,309

0.66

%

 

$

3,877,144

$

7,701

0.80

%

 

$

3,727,632

$

16,098

1.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / spread (1)

 

$

46,523

3.33

%

 

 

$

42,676

3.06

%

 

 

$

42,482

3.14

%

Net interest margin (2)

 

 

3.36

%

 

 

 

3.14

%

 

 

 

3.37

%

Net interest margin (TEY) (Non-GAAP) (1) (2) (3)

 

 

3.51

%

 

 

 

3.27

%

 

 

 

3.52

%

Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)

 

3.44

%

 

 

 

3.21

%

 

 

 

3.41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

September 30, 2020

 

September 30, 2019

 

 

 

 

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

 

$

2,795

$

19

0.89

%

 

$

10,887

$

191

2.35

%

 

 

 

 

Interest-bearing deposits at financial institutions

 

327,902

 

587

0.24

%

 

 

170,167

 

3,042

2.39

%

 

 

 

 

Securities (1)

 

 

688,985

 

19,567

3.78

%

 

 

643,975

 

18,237

3.79

%

 

 

 

 

Restricted investment securities

 

20,767

 

795

5.03

%

 

 

21,670

 

891

5.50

%

 

 

 

 

Loans (1)

 

 

3,957,903

 

133,141

4.49

%

 

 

3,853,918

 

145,682

5.05

%

Total earning assets (1)$4,998,352$154,1094.12% $4,700,617$168,0434.78% Interest-bearing deposits$2,718,613$9,9200.49% $2,418,420$23,3511.29% Time deposits 743,746 9,5371.71% 1,000,529 16,3462.18% Short-term borrowings 23,804 810.45% 15,952 2752.30% Federal Home Loan Bank advances 87,920 1,0071.50% 115,539 2,6853.11% Other borrowings - -0.00% 18,084 5123.79% Subordinated debentures 71,582 3,0195.63% 58,392 2,5615.86% Junior subordinated debentures 37,894 1,7155.95% 37,730 1,7296.13% Total interest-bearing liabilities$3,683,559$25,2790.91% $3,664,646$47,4591.73% Net interest income / spread (1) $128,8303.21% $120,5843.05% Net interest margin (2) 3.29% 3.29% Net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.44% 3.43% Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.38% 3.33%


(1)

Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate.

(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

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

2019

2019

(dollars in thousands, except per share data)

ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES

Beginning balance

$

60,827

$

42,233

$

36,001

$

36,116

$

41,104

Reclassification of allowance related to held for sale loans

-

-

-

-

(6,122

)

Provision charged to expense (1)

20,342

19,915

8,367

979

1,584

Loans/leases charged off

(1,819

)

(1,450

)

(2,335

)

(1,182

)

(741

)

Recoveries on loans/leases previously charged off

232

129

200

88

291

Ending balance

$

79,582

$

60,827

$

42,233

$

36,001

$

36,116

NONPERFORMING ASSETS

Nonaccrual loans/leases

$

17,597

$

12,099

$

11,628

$

7,902

$

8,231

Accruing loans/leases past due 90 days or more

86

99

1,419

33

-

Troubled debt restructures - accruing

1,061

920

545

979

763

Total nonperforming loans/leases

18,744

13,118

13,592

8,914

8,994

Other real estate owned

125

157

3,298

4,129

4,248

Other repossessed assets

110

25

45

41

-

Total nonperforming assets

$

18,979

$

13,300

$

16,935

$

13,084

$

13,242

ASSET QUALITY RATIOS

Nonperforming assets / total assets (2)

0.32

%

0.24

%

0.32

%

0.27

%

0.27

%

Allowance / total loans/leases (3)

1.87

%

1.47

%

1.14

%

0.98

%

1.00

%

Allowance / nonperforming loans/leases (3)

424.57

%

463.69

%

310.72

%

403.87

%

401.56

%

Net charge-offs as a % of average loans/leases

0.04

%

0.03

%

0.06

%

0.03

%

0.01

%


(1)

Excludes provision related to loans included in assets held for sale of $428 thousand for the quarter ending September 30, 2019.

(2)

Excludes assets held for sale.

(3)

Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminates 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,

SELECT FINANCIAL DATA - SUBSIDIARIES

2020

2020

2019

2020

2019

(dollars in thousands)

TOTAL ASSETS

Quad City Bank and Trust (1)

$

2,205,935

$

1,984,245

$

1,642,950

m2 Lease Funds, LLC

241,452

241,114

232,432

Cedar Rapids Bank and Trust

2,012,182

2,021,043

1,592,896

Community State Bank - Ankeny

937,017

903,648

801,596

Springfield First Community Bank

803,478

745,474

693,897

TOTAL DEPOSITS

Quad City Bank and Trust (1)

$

1,955,360

$

1,707,970

$

1,371,721

Cedar Rapids Bank and Trust

1,399,267

1,351,784

1,271,828

Community State Bank - Ankeny

822,261

778,499

695,980

Springfield First Community Bank

592,528

564,710

484,225

TOTAL LOANS & LEASES

Quad City Bank and Trust (1)

$

1,556,798

$

1,485,971

$

1,290,195

m2 Lease Funds, LLC

241,783

239,351

230,061

Cedar Rapids Bank and Trust

1,387,372

1,380,672

1,148,952

Community State Bank - Ankeny

683,086

671,773

594,227

Springfield First Community Bank

620,721

601,843

526,466

TOTAL LOANS & LEASES / TOTAL DEPOSITS

Quad City Bank and Trust (1)

80

%

87

%

94

%

Cedar Rapids Bank and Trust

99

%

102

%

90

%

Community State Bank - Ankeny

83

%

86

%

85

%

Springfield First Community Bank

105

%

107

%

109

%

TOTAL LOANS & LEASES / TOTAL ASSETS

Quad City Bank and Trust (1)

71

%

75

%

79

%

Cedar Rapids Bank and Trust

69

%

68

%

72

%

Community State Bank - Ankeny

73

%

74

%

74

%

Springfield First Community Bank

77

%

81

%

76

%

ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES

Quad City Bank and Trust (1)

1.86

%

1.51

%

1.07

%

m2 Lease Funds, LLC

2.53

%

1.99

%

1.39

%

Cedar Rapids Bank and Trust (2)

2.22

%

1.62

%

1.17

%

Community State Bank - Ankeny (2)

1.92

%

1.56

%

1.13

%

Springfield First Community Bank (2)

1.09

%

0.94

%

0.42

%

RETURN ON AVERAGE ASSETS

Quad City Bank and Trust (1)

0.56

%

0.68

%

1.33

%

0.81

%

1.25

%

Cedar Rapids Bank and Trust

2.66

%

2.36

%

2.04

%

2.25

%

1.85

%

Community State Bank - Ankeny

0.82

%

0.25

%

1.71

%

0.53

%

1.33

%

Springfield First Community Bank

1.52

%

1.04

%

1.32

%

1.28

%

1.27

%

NET INTEREST MARGIN PERCENTAGE (3)

Quad City Bank and Trust (1)

3.07

%

2.88

%

3.49

%

3.17

%

3.34

%

Cedar Rapids Bank and Trust (5)

3.54

%

3.37

%

3.41

%

3.45

%

3.41

%

Community State Bank - Ankeny (4)

4.12

%

3.77

%

4.83

%

3.94

%

4.32

%

Springfield First Community Bank (6)

3.75

%

3.88

%

3.64

%

3.82

%

3.93

%

ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET

INTEREST MARGIN, NET

Cedar Rapids Bank and Trust

$

217

$

62

$

229

$

327

$

444

Community State Bank - Ankeny

56

72

649

193

783

Springfield First Community Bank

598

641

432

1,791

2,313

QCR Holdings, Inc. (7)

(38

)

(39

)

(42

)

(117

)

(127

)


(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 eliminates the allowance and impacts this ratio.

(3)

Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate.

(4)

Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 4.06% for the quarter ended September 30, 2020, 3.71% for the quarter ended June 30, 2020 and 4.46% for the quarter ended September 30, 2019.

(5)

Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 3.46% for the quarter ended September 30, 2020, 3.35% for the quarter ended June 30, 2020 and 3.34% for the quarter ended September 30, 2019.

(6)

Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 4.02% for the quarter ended September 30, 2020, 4.29% for the quarter ended June 30, 2020 and 3.16% for the quarter ended September 30, 2019.

(7)

Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013.

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

As of

September 30,

June 30,

March 31,

December 31,

September 30,

GAAP TO NON-GAAP RECONCILIATIONS

2020

2020

2020

2019

2019

(dollars in thousands, except per share data)

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)

Stockholders' equity (GAAP)

$

572,613

$

556,020

$

539,139

$

535,351

$

519,743

Less: Intangible assets

85,968

88,120

88,669

89,717

93,277

Tangible common equity (non-GAAP)

$

486,645

$

467,900

$

450,470

$

445,634

$

426,466

Total assets (GAAP)

$

5,864,560

$

5,604,761

$

5,232,075

$

4,909,050

$

5,292,382

Less: Intangible assets

85,968

88,120

88,669

89,717

93,277

Tangible assets (non-GAAP)

$

5,778,592

$

5,516,641

$

5,143,406

$

4,819,333

$

5,199,105

Tangible common equity to tangible assets ratio (non-GAAP)

8.42

%

8.48

%

8.76

%

9.25

%

8.20

%

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO EXCLUDING PPP LOANS (1)

Stockholder's equity (GAAP)

$

572,613

$

556,020

$

539,139

$

535,351

$

519,743

Less: PPP loan interest income (post-tax) (2)

4,934

2,085

-

-

-

Less: Intangible assets

85,968

88,120

88,669

89,717

93,277

Tangible common equity, excluding PPP loan income (non-GAAP)

$

481,711

$

465,815

$

450,470

$

445,634

$

426,466

Total assets (GAAP)

$

5,864,560

$

5,604,761

$

5,232,075

$

4,909,050

$

5,292,382

Less: PPP loans

357,506

358,052

-

-

-

Less: Intangible assets

85,968

88,120

88,669

89,717

93,277

Tangible assets, excluding PPP loans (non-GAAP)

$

5,421,086

$

5,158,589

$

5,143,406

$

4,819,333

$

5,199,105

Tangible common equity to tangible assets ratio, excluding PPP loans (non-GAAP)

8.89

%

9.03

%

8.76

%

9.25

%

8.20

%


(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)

PPP interest income (post-tax) is calculated using an estimated effective tax rate of 21%.

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

GAAP TO NON-GAAP RECONCILIATIONS

For the Quarter Ended

For the Nine Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

September 30,

ADJUSTED NET INCOME (1)

2020

2020

2020

2019

2019

2020

2019

(dollars in thousands, except per share data)

Net income (GAAP)

$

17,344

$

13,739

$

11,228

$

15,891

$

15,095

$

42,311

$

41,517

Less non-core items (post-tax) (2):

Income:

Securities gains(losses), net

1,424

51

-

21

$

(2

)

$

1,475

$

(43

)

Gain on sale of assets and liabilities of subsidiary

-

-

-

8,539

-

-

-

Total non-core income (non-GAAP)

$

1,424

$

51

$

-

$

8,560

$

(2

)

$

1,475

$

(43

)

Expense:

Losses on debt extinguishment, net

$

1,480

$

339

$

116

$

228

$

117

$

1,936

$

117

Goodwill impairment

-

-

500

3,000

-

500

-

Disposition costs

152

(66

)

408

2,627

-

495

-

Tax expense on expected liquidation of RB&T BOLI

-

-

-

790

-

-

-

Post-acquisition compensation, transition and integration costs

(25

)

55

119

1,465

698

149

1,363

Loss on sale of subsidiary

212

-

-

-

-

212

-

Total non-core expense (non-GAAP)

$

1,819

$

329

$

1,143

$

8,110

$

815

$

3,291

$

1,480

Adjusted net income (non-GAAP) (1)

$

17,739

$

14,016

$

12,372

$

15,441

$

15,912

$

44,127

$

43,040

PRE-PROVISION/PRE-TAX ADJUSTED INCOME (1)

Net income (GAAP)

$

17,344

$

13,739

$

11,228

$

15,891

$

15,095

$

42,311

$

41,517

Less: Non-core income not tax-effected

1,802

65

-

12,313

(3

)

1,867

(54

)

Plus: Non-core expense not tax-effected

2,339

416

1,315

9,258

1,032

4,070

1,873

Provision expense

20,342

19,915

8,367

979

2,012

48,624

6,087

Federal and state income tax expense

4,016

2,798

1,884

6,560

3,573

8,698

8,059

Pre-provision/pre-tax adjusted income (non-GAAP) (1)

$

42,239

$

36,803

$

22,794

$

20,375

$

21,714

$

101,836

$

57,591

PRE-PROVISION/PRE-TAX ADJUSTED RETURN ON AVERAGE ASSETS (NON-GAAP)

Pre-provision/pre-tax adjusted income (non-GAAP)

$

42,239

$

36,803

$

22,794

$

20,375

$

21,714

$

101,836

$

57,591

Average Assets

$

5,820,555

$

5,800,164

$

4,948,311

$

5,147,754

$

5,217,763

$

5,524,087

$

5,088,055

Pre-provision/pre-tax adjusted return on average assets (non-GAAP)

2.90

%

2.54

%

1.84

%

1.58

%

1.66

%

2.46

%

1.51

%

ADJUSTED EARNINGS PER COMMON SHARE (1)

Adjusted net income (non-GAAP) (from above)

$

17,739

$

14,016

$

12,372

$

15,441

$

15,912

$

44,127

$

43,040

Weighted average common shares outstanding

15,767,152

15,747,056

15,796,796

15,772,703

15,739,430

15,770,335

15,715,788

Weighted average common and common equivalent shares outstanding

15,923,578

15,895,336

16,011,456

16,033,043

15,976,742

15,945,832

15,946,020

Adjusted earnings per common share (non-GAAP):

Basic

$

1.13

$

0.89

$

0.78

$

0.98

$

1.01

$

2.80

$

2.74

Diluted

$

1.11

$

0.88

$

0.77

$

0.96

$

1.00

$

2.77

$

2.70

ADJUSTED RETURN ON AVERAGE ASSETS (1)

Adjusted net income (non-GAAP) (from above)

$

17,739

$

14,016