EXHIBIT 99.1
QCR Holdings, Inc. Announces Second Quarter Earnings and Successful Closing of Springfield Merger
Q2 2018 Highlights
- Completion of merger with Springfield Bancshares, Inc. on July 1, 2018
- Net income of $10.4 million, or $0.73 per diluted share
- Core net income (non-GAAP) of $10.9 million, or $0.77 per diluted share
- Annualized loan and lease growth of 7.8% for the quarter and 10.1% year-to-date
- Annualized noninterest income growth of 17.4%
MOLINE, Ill., July 19, 2018 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ:QCRH) (the “Company”), today announced net income of $10.4 million and diluted earnings per share (“EPS”) of $0.73 for the second quarter of 2018, compared to net income of $10.6 million and diluted EPS of $0.74 for the first quarter of 2018. The second quarter results included $0.5 million of acquisition and post-acquisition compensation, transition and integration costs (after-tax), compared to $0.1 million of similar costs in the first quarter of 2018. Excluding these non-core items, the Company reported core net income (non-GAAP) of $10.9 million and core diluted EPS of $0.77 for the second quarter of 2018, compared to core net income (non-GAAP) of $10.6 million and core diluted EPS of $0.75 for the first quarter of 2018 For the second quarter of 2017, the Company reported net income of $8.8 million and diluted EPS of $0.65.
For the six months ended June 30, 2018, the Company reported net income of $21.0 million, and diluted EPS of $1.48. Excluding non-core items, the Company reported core net income (non-GAAP) of $21.5 million and core diluted EPS of $1.51. By comparison, for the six months ended June 30, 2017, the Company reported net income of $18.0 million and diluted EPS of $1.33.
Completed merger with SFC Bank, Springfield, Missouri
Effective July 1, 2018, the Company completed its previously announced merger with Springfield Bancshares, Inc., the holding company of Springfield First Community Bank (“SFC Bank”). Established as a de novo bank in 2008, SFC Bank is headquartered in Springfield, Missouri and, as a result of the transaction, became the Company’s fifth independent charter. SFC Bank had approximately $573 million in assets, $487 million in loans and $439 million in deposits as of June 30, 2018.
“We are generally pleased with our core operating performance for the second quarter,” commented Douglas M. Hultquist, President and Chief Executive Officer. “We recorded another solid quarter of net income, driven by continued organic loan growth, strong fee income, improved credit quality and careful management of noninterest expenses. We recently welcomed the clients, employees and shareholders of SFC Bank into the QCR Holdings family on July 1st, less than 75 days from the initial announcement date of the transaction. We are excited they have joined us, as this merger fits well with our strategic growth plans by combining two high-performing financial institutions who share similar values and approaches to client service and community involvement. The merger also positions us to continue growing our franchise and creating value for our shareholders."
Annualized Loan and Lease Growth of 7.8% for the Quarter
And 10.1% Year-to-Date
During the second quarter of 2018, the Company’s total assets increased $80.6 million, to a total of $4.1 billion, while total loans and leases grew $59.9 million, or 2.0% on a linked quarter basis. Loan and lease growth was primarily funded by an increase in core deposits and short-term borrowings. Core deposits (excluding brokered deposits) increased $61.7 million, or 2.0% on a linked quarter basis.
“Annualized organic loan and lease growth was 7.8% during the second quarter. Combined with strong growth in the first quarter, the first six months of 2018 produced an annualized growth rate of 10.1%, within our long-term target of 10% to 12%,” added Mr. Hultquist. “Our loan growth for the second quarter was driven by strong, broad-based demand for commercial and industrial loans and was partially offset by loan payoffs.”
Net Interest Income of $32.1 million
Net interest income for the second quarter of 2018 totaled $32.1 million, compared to $32.4 million for the first quarter of 2018 and $28.0 million for the second quarter of 2017. The slight decrease in net interest income was primarily due to an increase in funding costs, driven by the Federal Reserve's March and June rate hikes, partially offset by an increase in average loan balances and the impact of higher loan yields. Acquisition-related net accretion totaled $0.5 million for the second quarter of 2018, compared to $0.7 million in the first quarter of 2018 and $1.6 million for the second quarter of 2017. Excluding acquisition-related net accretion, net interest income of $31.5 million for the second quarter of 2018 decreased 0.5%, compared to $31.7 million for the first quarter of 2018.
Net interest income totaled $64.5 million for the six months ended June 30, 2018, compared to $55.7 million for the six months ended June 30, 2017.
Net interest margin for the second quarter of 2018, excluding acquisition-related net accretion, was 3.46%, down ten basis points from the first quarter of 2018. This margin compression was primarily due to increases in the cost of funds (due to both mix and rate), as well as reduced loan fee income and higher loan fee amortization on a linked quarter basis.
“Our core loan yields, excluding acquisition-related accretion and loan fee amortization, increased by 13 basis points on a linked-quarter basis,” stated Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer. “However, the competition for deposits remains fierce and consequently our overall cost of interest-bearing liabilities increased by 18 basis points during the quarter.”
Annualized Noninterest Income Growth of 17.4%
Swap Fee Income of $1.6 million
Noninterest income for the second quarter of 2018 totaled $8.9 million, compared to $8.5 million for the first quarter of 2018. The increase was primarily due to $0.7 million in higher swap fee income, partially offset by the lack of gains on the sale of government guaranteed loans. Wealth management revenue was $3.1 million for the quarter, a slight decrease from the first quarter of 2018. Noninterest income increased 31.4% from $6.8 million in the second quarter of 2017. The increase was primarily attributable to higher wealth management revenue and swap fee income.
Noninterest income totaled $17.5 million for the six months ended June 30, 2018, compared to $14.1 million for the six months ended June 30, 2017.
“We delivered annualized noninterest income growth of 17.4% for the second quarter, driven primarily by higher swap fee income. Swap fee income and gains on the sale of government guaranteed loans totaled $3.0 million for the first six months of 2018, well ahead of our annualized expectation of $4.0 million,” added Mr. Gipple. “We are pleased with our wealth management revenue growth of nearly 20% year-to-date and look forward to the addition of the Bates Companies into our Rockford Bank & Trust wealth management group, as that acquisition is expected to close in the third quarter.”
Noninterest Expenses Well-Controlled and Total $26.4 million for the Second Quarter
Noninterest expenses for the second quarter of 2018 totaled $26.4 million, compared to $25.9 million and $21.4 million for the first quarter of 2018 and second quarter of 2017, respectively. The linked quarter increase in noninterest expenses was primarily attributable to a $0.5 million increase in acquisition and post-acquisition compensation, transition and integration costs.
Asset Quality Remains Solid
Nonperforming assets (“NPAs”) totaled $26.8 million, a decrease of $4.2 million from the first quarter of 2018, primarily due to the upgrade of one large credit that was taken out of troubled debt restructure status. The ratio of NPAs to total assets was 0.65% at June 30, 2018, which was down from 0.77% at March 31, 2018 and 0.75% at June 30, 2017.
The Company’s provision for loan and lease losses totaled $2.3 million for the second quarter of 2018, which was down $239 thousand from the prior quarter, and up $278 thousand compared to the second quarter of 2017. The linked quarter decline in the provision for loan and lease losses was due to improved credit quality and a slower pace of loan growth. As of June 30, 2018, the Company’s allowance to total loans and leases was 1.21%, which was relatively flat from 1.20% at March 31, 2018 and down from 1.31% at June 30, 2017.
In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of Community State Bank and Guaranty Bank 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 ($6.6 million at June 30, 2018). 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 1.21% to 1.42%.
Capital Levels Remain Strong
As of June 30, 2018, the Company’s total risk-based capital ratio was 11.33%, the common equity tier 1 ratio was 9.27%, and the tangible common equity to tangible assets ratio was 8.18%. By comparison, these respective ratios were 11.25%, 9.14% and 8.10% as of March 31, 2018.
Continued Focus on Seven Key Initiatives
The Company continues to focus on the following long-term initiatives in an effort to improve profitability and drive increased shareholder value:
- Strong organic loan and lease growth in order to maintain loans and leases to total assets ratio in the range of 73% - 78%
- Grow core deposits to maintain reliance on wholesale funding at less than 15% of assets
- Generate gains on sale of government guaranteed loans, and fee income on interest rate 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 industry to further boost ROAA, improve efficiency ratio, and increase EPS
Conference Call Details
The Company will host an earnings call/webcast tomorrow, July 20, 2018, at 9:00 a.m. central time. Dial-in information for the call is toll-free 888-317-6016 (international 412-317-6016). Participants should request to join the QCR Holdings, Inc. call. The event will be available for digital replay through August 3, 2018. The replay access information is toll-free 877-344-7529 (international 412-317-0088); access code 10121802. A webcast of the teleconference can be accessed at the Company’s News and Events page at http://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, Springfield and Rockford communities through its wholly owned subsidiary banks which 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 Rockford Bank & Trust Company, based in Rockford, Illinois, commenced operations in 2005. 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. The Company enhanced its presence in Cedar Rapids, Iowa with the acquisition of Guaranty Bank & Trust Company in October 2017, which merged with Cedar Rapids Bank & Trust in December 2017. In July 2018, QCR Holdings completed a merger with Springfield Bancshares, Inc., the holding company of SFC Bank of Springfield, Missouri. With the addition of SFC Bank, QCR Holdings has 27 locations in Illinois, Iowa, Wisconsin and Missouri. As of July 1, 2018, QCR Holdings had approximately $4.7 billion in assets, $3.6 billion in loans and $3.7 billion in deposits. For additional information, please visit our 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 Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local, national and international economies; (ii) the economic impact of any future terrorist threats and attacks, and the response of the United States to any such threats and attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of the acquisition and the possibility that the transaction costs may be greater than anticipated; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.
Contacts:
Todd A. Gipple
Executive Vice President
Chief Operating Officer
Chief Financial Officer
(309) 743-7745
tgipple@qcrh.com
Christopher J. Lindell
Executive Vice President
Corporate Communications
(319) 743-7006
clindell@qcrh.com
| QCR HOLDINGS, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||
| As of | ||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | ||||||
| (dollars in thousands) | ||||||||||
| CONDENSED BALANCE SHEET | ||||||||||
| Cash and due from banks | $ | 69,069 | $ | 61,846 | $ | 75,722 | $ | 56,275 | $ | 77,161 |
| Federal funds sold and interest-bearing deposits | 51,667 | 59,557 | 85,962 | 61,789 | 72,354 | |||||
| Securities | 657,997 | 640,906 | 652,382 | 583,936 | 593,485 | |||||
| Net loans/leases | 3,077,247 | 3,018,370 | 2,930,130 | 2,641,772 | 2,520,209 | |||||
| Core deposit intangible | 8,470 | 8,774 | 9,079 | 6,689 | 6,919 | |||||
| Goodwill | 28,091 | 28,334 | 28,334 | 13,111 | 13,111 | |||||
| Other assets | 214,342 | 208,527 | 201,056 | 186,891 | 173,948 | |||||
| Total assets | $ | 4,106,883 | $ | 4,026,314 | $ | 3,982,665 | $ | 3,550,463 | $ | 3,457,187 |
| Total deposits | $ | 3,298,276 | $ | 3,280,001 | $ | 3,266,655 | $ | 2,894,268 | $ | 2,870,234 |
| Total borrowings | 380,392 | 334,802 | 309,479 | 296,145 | 230,263 | |||||
| Other liabilities | 58,627 | 51,083 | 53,244 | 47,011 | 51,607 | |||||
| Total stockholders' equity | 369,588 | 360,428 | 353,287 | 313,039 | 305,083 | |||||
| Total liabilities and stockholders' equity | $ | 4,106,883 | $ | 4,026,314 | $ | 3,982,665 | $ | 3,550,463 | $ | 3,457,187 |
| ANALYSIS OF LOAN PORTFOLIO | ||||||||||
| Loan/lease mix: | ||||||||||
| Commercial and industrial loans | $ | 1,273,000 | $ | 1,201,086 | $ | 1,134,516 | $ | 1,034,530 | $ | 942,539 |
| Commercial real estate loans | 1,349,319 | 1,357,703 | 1,303,492 | 1,157,855 | 1,131,906 | |||||
| Direct financing leases | 133,197 | 137,615 | 141,448 | 147,063 | 153,337 | |||||
| Residential real estate loans | 257,434 | 254,484 | 258,646 | 239,958 | 233,871 | |||||
| Installment and other consumer loans | 92,952 | 95,912 | 118,611 | 89,606 | 84,047 | |||||
| Deferred loan/lease origination costs, net of fees | 8,890 | 8,103 | 7,773 | 7,742 | 7,866 | |||||
| Total loans/leases | $ | 3,114,792 | $ | 3,054,903 | $ | 2,964,486 | $ | 2,676,754 | $ | 2,553,566 |
| Less allowance for estimated losses on loans/leases | 37,545 | 36,533 | 34,356 | 34,982 | 33,357 | |||||
| Net loans/leases | $ | 3,077,247 | $ | 3,018,370 | $ | 2,930,130 | $ | 2,641,772 | $ | 2,520,209 |
| ANALYSIS OF SECURITIES PORTFOLIO | ||||||||||
| Securities mix: | ||||||||||
| U.S. government sponsored agency securities | $ | 35,667 | $ | 36,868 | $ | 38,097 | $ | 39,340 | $ | 41,944 |
| Municipal securities | 458,510 | 438,736 | 445,049 | 379,694 | 381,254 | |||||
| Residential mortgage-backed and related securities | 158,534 | 157,333 | 163,301 | 158,969 | 164,415 | |||||
| Other securities | 5,286 | 7,969 | 5,935 | 5,933 | 5,872 | |||||
| Total securities | $ | 657,997 | $ | 640,906 | $ | 652,382 | $ | 583,936 | $ | 593,485 |
| ANALYSIS OF DEPOSITS | ||||||||||
| Deposit mix: | ||||||||||
| Noninterest-bearing demand deposits | $ | 746,822 | $ | 784,815 | $ | 789,548 | $ | 715,537 | $ | 760,625 |
| Interest-bearing demand deposits | 1,865,382 | 1,789,019 | 1,855,893 | 1,614,894 | 1,526,103 | |||||
| Time deposits | 519,999 | 496,644 | 516,058 | 430,270 | 478,580 | |||||
| Brokered deposits | 166,073 | 209,523 | 105,156 | 133,567 | 104,926 | |||||
| Total deposits | $ | 3,298,276 | $ | 3,280,001 | $ | 3,266,655 | $ | 2,894,268 | $ | 2,870,234 |
| ANALYSIS OF BORROWINGS | ||||||||||
| Borrowings mix: | ||||||||||
| Term FHLB advances | $ | 46,600 | $ | 56,600 | $ | 56,600 | $ | 58,600 | $ | 57,000 |
| Overnight FHLB advances (1) | 207,500 | 159,745 | 135,400 | 110,455 | 49,500 | |||||
| Wholesale structured repurchase agreements | 35,000 | 35,000 | 35,000 | 45,000 | 45,000 | |||||
| Customer repurchase agreements | 2,186 | 3,820 | 7,003 | 3,671 | 4,897 | |||||
| Federal funds purchased | 15,400 | 13,040 | 6,990 | 12,340 | 13,320 | |||||
| Junior subordinated debentures | 37,581 | 37,534 | 37,486 | 33,579 | 33,546 | |||||
| Other borrowings | 36,125 | 29,063 | 31,000 | 32,500 | 27,000 | |||||
| Total borrowings | $ | 380,392 | $ | 334,802 | $ | 309,479 | $ | 296,145 | $ | 230,263 |
| (1) The weighted-average rate of these overnight borrowings was 2.09% as of June 30, 2018; 1.90% as of March 31, 2018; 1.63% as of December 31, 2017; 1.32% as of September 30, 2017; and 1.31% as of June 30, 2017. | ||||||||||
| QCR HOLDINGS, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | ||||||||||||||
| For the Quarter Ended | ||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||
| INCOME STATEMENT | ||||||||||||||
| Interest income | $ | 40,799 | $ | 39,546 | $ | 37,878 | $ | 33,841 | $ | 32,453 | ||||
| Interest expense | 8,714 | 7,143 | 6,085 | 5,285 | 4,406 | |||||||||
| Net interest income | 32,085 | 32,403 | 31,793 | 28,556 | 28,047 | |||||||||
| Provision for loan/lease losses | 2,301 | 2,540 | 2,255 | 2,087 | 2,023 | |||||||||
| Net interest income after provision for loan/lease losses | $ | 29,784 | $ | 29,863 | $ | 29,538 | $ | 26,469 | $ | 26,024 | ||||
| Trust department fees | $ | 2,058 | $ | 2,237 | $ | 2,034 | $ | 1,722 | $ | 1,692 | ||||
| Investment advisory and management fees | 1,058 | 952 | 1,071 | 969 | 868 | |||||||||
| Deposit service fees | 1,610 | 1,531 | 1,622 | 1,522 | 1,459 | |||||||||
| Gain on sales of residential real estate loans | 102 | 101 | 101 | 98 | 113 | |||||||||
| Gain on sales of government guaranteed portions of loans | - | 358 | 34 | 92 | 87 | |||||||||
| Swap fee income | 1,649 | 959 | 2,460 | 194 | 327 | |||||||||
| Securities gains (losses), net | - | - | (63 | ) | (63 | ) | 38 | |||||||
| Earnings on bank-owned life insurance | 399 | 418 | 445 | 428 | 459 | |||||||||
| Debit card fees | 844 | 766 | 741 | 755 | 743 | |||||||||
| Correspondent banking fees | 213 | 265 | 231 | 239 | 200 | |||||||||
| Other | 979 | 954 | 1,038 | 746 | 796 | |||||||||
| Total noninterest income | $ | 8,912 | $ | 8,541 | $ | 9,714 | $ | 6,702 | $ | 6,782 | ||||
| Salaries and employee benefits | $ | 15,804 | $ | 15,978 | $ | 16,060 | $ | 13,424 | $ | 12,931 | ||||
| Occupancy and equipment expense | 3,133 | 3,066 | 3,221 | 2,516 | 2,699 | |||||||||
| Professional and data processing fees | 2,771 | 2,708 | 3,382 | 2,951 | 2,341 | |||||||||
| Acquisition costs | 414 | 93 | 661 | 408 | - | |||||||||
| Post-acquisition compensation, transition and integration costs | 165 | - | 3,787 | 523 | - | |||||||||
| FDIC insurance, other insurance and regulatory fees | 840 | 756 | 795 | 690 | 646 | |||||||||
| Loan/lease expense | 260 | 291 | 352 | 257 | 260 | |||||||||
| Net cost of operation of other real estate | (70 | ) | 132 | 120 | (160 | ) | 28 | |||||||
| Advertising and marketing | 753 | 693 | 778 | 670 | 568 | |||||||||
| Bank service charges | 466 | 441 | 439 | 460 | 447 | |||||||||
| Correspondent banking expense | 204 | 205 | 203 | 204 | 202 | |||||||||
| CDI amortization | 305 | 305 | 308 | 231 | 231 | |||||||||
| Other | 1,325 | 1,195 | 1,245 | 1,221 | 1,052 | |||||||||
| Total noninterest expense | $ | 26,370 | $ | 25,863 | $ | 31,351 | $ | 23,395 | $ | 21,405 | ||||
| Net income before taxes | $ | 12,326 | $ | 12,541 | $ | 7,901 | $ | 9,776 | $ | 11,401 | ||||
| Income tax expense (benefit) | 1,881 | 1,991 | (2,001 | ) | 1,922 | 2,635 | ||||||||
| Net income | $ | 10,445 | $ | 10,550 | $ | 9,902 | $ | 7,854 | $ | 8,766 | ||||
| Basic EPS | $ | 0.75 | $ | 0.76 | $ | 0.72 | $ | 0.60 | $ | 0.67 | ||||
| Diluted EPS | $ | 0.73 | $ | 0.74 | $ | 0.70 | $ | 0.58 | $ | 0.65 | ||||
| Weighted average common shares outstanding | 13,919,565 | 13,888,661 | 13,845,497 | 13,151,350 | 13,170,283 | |||||||||
| Weighted average common and common equivalent shares outstanding | 14,232,423 | 14,205,584 | 14,193,191 | 13,507,955 | 13,532,324 | |||||||||
| QCR HOLDINGS, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||
| For the Six Months Ended | |||||||
| June 30, | June 30, | ||||||
| 2018 | 2017 | ||||||
| (dollars in thousands, except per share data) | |||||||
| INCOME STATEMENT | |||||||
| Interest income | $ | 80,345 | $ | 63,798 | |||
| Interest expense | 15,857 | 8,082 | |||||
| Net interest income | 64,488 | 55,716 | |||||
| Provision for loan/lease losses | 4,841 | 4,128 | |||||
| Net interest income after provision for loan/lease losses | $ | 59,647 | $ | 51,588 | |||
| Trust department fees | $ | 4,295 | $ | 3,432 | |||
| Investment advisory and management fees | 2,010 | 1,830 | |||||
| Deposit service fees | 3,142 | 2,775 | |||||
| Gain on sales of residential real estate loans | 203 | 209 | |||||
| Gain on sales of government guaranteed portions of loans | 358 | 1,038 | |||||
| Swap fee income | 2,608 | 441 | |||||
| Securities gains, net | - | 38 | |||||
| Earnings on bank-owned life insurance | 817 | 929 | |||||
| Debit card fees | 1,610 | 1,446 | |||||
| Correspondent banking fees | 477 | 445 | |||||
| Other | 1,934 | 1,483 | |||||
| Total noninterest income | $ | 17,454 | $ | 14,066 | |||
| Salaries and employee benefits | $ | 31,782 | $ | 26,238 | |||
| Occupancy and equipment expense | 6,198 | 5,201 | |||||
| Professional and data processing fees | 5,479 | 4,424 | |||||
| Acquisition costs | 506 | - | |||||
| Post-acquisition compensation, transition and integration costs | 165 | - | |||||
| FDIC insurance, other insurance and regulatory fees | 1,597 | 1,267 | |||||
| Loan/lease expense | 551 | 554 | |||||
| Net cost of operation of other real estate | 62 | 42 | |||||
| Advertising and marketing | 1,446 | 1,177 | |||||
| Bank service charges | 907 | 871 | |||||
| Correspondent banking expense | 409 | 400 | |||||
| CDI amortization | 609 | 462 | |||||
| Other | 2,523 | 2,042 | |||||
| Total noninterest expense | $ | 52,234 | $ | 42,678 | |||
| Net income before taxes | $ | 24,867 | $ | 22,976 | |||
| Income tax expense | 3,872 | 5,025 | |||||
| Net income | $ | 20,995 | $ | 17,951 | |||
| Basic EPS | $ | 1.51 | $ | 1.36 | |||
| Diluted EPS | $ | 1.48 | $ | 1.33 | |||
| Weighted average common shares outstanding | 13,904,113 | 13,151,833 | |||||
| Weighted average common and common equivalent shares outstanding | 14,219,003 | 13,502,505 | |||||
| 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, | ||||||||||||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||||
| COMMON SHARE DATA | ||||||||||||||||||||||
| Common shares outstanding | 13,973,940 | 13,936,957 | 13,918,168 | 13,201,959 | 13,175,234 | |||||||||||||||||
| Book value per common share (1) | $ | 26.45 | $ | 25.86 | $ | 25.38 | $ | 23.71 | $ | 23.16 | ||||||||||||
| Tangible book value per common share (2) | $ | 23.83 | $ | 23.20 | $ | 22.70 | $ | 22.21 | $ | 21.64 | ||||||||||||
| Closing stock price | $ | 47.45 | $ | 44.85 | $ | 42.85 | $ | 45.50 | $ | 47.40 | ||||||||||||
| Market capitalization | $ | 663,063 | $ | 625,073 | $ | 596,393 | $ | 600,689 | $ | 624,506 | ||||||||||||
| Market price / book value | 179.41 | % | 173.43 | % | 168.81 | % | 191.89 | % | 204.70 | % | ||||||||||||
| Market price / tangible book value | 199.10 | % | 193.33 | % | 188.81 | % | 204.85 | % | 219.08 | % | ||||||||||||
| Earnings per common share (basic) LTM (3) | $ | 2.83 | $ | 2.74 | $ | 2.69 | $ | 2.62 | $ | 2.49 | ||||||||||||
| Price earnings ratio LTM (3) | 16.77 | x | 16.37 | x | 15.93 | x | 17.37 | x | 19.11 | x | ||||||||||||
| TCE / TA (4) | 8.18 | % | 8.10 | % | 8.01 | % | 8.31 | % | 8.29 | % | ||||||||||||
| CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||||||||||||||
| Beginning balance | $ | 360,428 | $ | 353,287 | $ | 313,039 | $ | 305,083 | $ | 295,840 | ||||||||||||
| Net income | 10,445 | 10,550 | 9,902 | 7,854 | 8,766 | |||||||||||||||||
| Other comprehensive income (loss), net of tax | (1,335 | ) | (3,201 | ) | (295 | ) | 275 | 702 | ||||||||||||||
| Common stock cash dividends declared | (836 | ) | (834 | ) | (693 | ) | (658 | ) | (657 | ) | ||||||||||||
| Proceeds from issuance of 678,670 shares of common stock, net of costs, as a result of the acquisition of Guaranty Bank & Trust | - | - | 30,741 | - | - | |||||||||||||||||
| Other (5) | 886 | 626 | 593 | 485 | 432 | |||||||||||||||||
| Ending balance | $ | 369,588 | $ | 360,428 | $ | 353,287 | $ | 313,039 | $ | 305,083 | ||||||||||||
| REGULATORY CAPITAL RATIOS (6): | ||||||||||||||||||||||
| Total risk-based capital ratio | 11.33 | % | 11.25 | % | 11.15 | % | 11.49 | % | 11.65 | % | ||||||||||||
| Tier 1 risk-based capital ratio | 10.31 | % | 10.21 | % | 10.14 | % | 10.35 | % | 10.51 | % | ||||||||||||
| Tier 1 leverage capital ratio | 9.22 | % | 9.08 | % | 8.98 | % | 9.23 | % | 9.34 | % | ||||||||||||
| Common equity tier 1 ratio | 9.27 | % | 9.14 | % | 9.10 | % | 9.33 | % | 9.46 | % | ||||||||||||
| KEY PERFORMANCE RATIOS AND OTHER METRICS | ||||||||||||||||||||||
| Return on average assets (annualized) | 1.03 | % | 1.06 | % | 1.01 | % | 0.90 | % | 1.04 | % | 1.04 | % | 1.08 | % | ||||||||
| Return on average total equity (annualized) | 11.45 | % | 11.84 | % | 11.67 | % | 10.15 | % | 11.65 | % | 11.64 | % | 12.13 | % | ||||||||
| Net interest margin | 3.37 | % | 3.50 | % | 3.41 | % | 3.43 | % | 3.54 | % | 3.43 | % | 3.59 | % | ||||||||
| Net interest margin (TEY) (Non-GAAP)(7) | 3.52 | % | 3.64 | % | 3.69 | % | 3.71 | % | 3.81 | % | 3.58 | % | 3.86 | % | ||||||||
| Efficiency ratio (Non-GAAP) (8) (12) | 64.32 | % | 63.17 | % | 75.53 | % | 66.35 | % | 61.46 | % | 63.75 | % | 61.16 | % | ||||||||
| Gross loans and leases / total assets | 75.84 | % | 75.87 | % | 74.43 | % | 75.39 | % | 73.86 | % | 75.84 | % | 73.86 | % | ||||||||
| Effective tax rate (11) | 15.26 | % | 15.88 | % | -25.33 | % | 19.66 | % | 23.11 | % | 15.57 | % | 23.11 | % | ||||||||
| Tax benefit related to stock options exercised and restricted stock awards vested (9) | 200 | 133 | 406 | 191 | 90 | 333 | 623 | |||||||||||||||
| Full-time equivalent employees (10) | 666 | 639 | 641 | 580 | 585 | 666 | 585 | |||||||||||||||
| �� | ||||||||||||||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||||
| Assets | $ | 4,053,684 | $ | 3,994,691 | $ | 3,923,337 | $ | 3,503,148 | $ | 3,378,195 | $ | 4,024,188 | $ | 3,326,454 | ||||||||
| Loans/leases | 3,077,517 | 3,019,376 | 2,930,711 | 2,629,626 | 2,488,828 | 3,048,447 | 2,443,608 | |||||||||||||||
| Deposits | 3,343,003 | 3,239,562 | 3,256,481 | 2,882,106 | 2,835,711 | 3,291,283 | 2,763,861 | |||||||||||||||
| Total stockholders' equity | 365,031 | 356,525 | 339,468 | 309,596 | 300,868 | 360,778 | 295,887 | |||||||||||||||
| (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) 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 employees increased in the 2nd quarter of 2018 due primarily to the addition of summer interns and several new positions created to build scale. Full-time equivalent employees increased in the 4th quarter of 2017 due to the acquisition of Guaranty, as well as the filling of open positions throughout the Company. | ||||||||||||||||||||||
| (11) The effective tax rate for the fourth quarter of 2017 and the full year were impacted by a $2.9 million tax benefit recorded as a result of the Tax Act. | ||||||||||||||||||||||
| (12) The efficiency ratio was unusually high in the fourth quarter of 2017 due to one-time acquisition costs and post-acquisition transition and integration costs totaling $4.4 million. | ||||||||||||||||||||||
| QCR HOLDINGS, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||
| ANALYSIS OF NET INTEREST INCOME AND MARGIN | |||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||
| June 30, 2018 | March 31, 2018 | June 30, 2017 | |||||||||||||||||||
| 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 | $ | 18,561 | $ | 61 | 1.32 | % | $ | 19,703 | $ | 56 | 1.15 | % | $ | 18,742 | $ | 38 | 0.81 | % | |||
| Interest-bearing deposits at financial institutions | 54,879 | 228 | 1.67 | % | 49,531 | 197 | 1.61 | % | 86,236 | 220 | 1.02 | % | |||||||||
| Securities (1) | 648,276 | 5,752 | 3.56 | % | 649,035 | 5,839 | 3.65 | % | 573,747 | 5,384 | 3.76 | % | |||||||||
| Restricted investment securities | 21,100 | 212 | 4.03 | % | 21,830 | 234 | 4.35 | % | 13,226 | 132 | 4.00 | % | |||||||||
| Loans (1) | 3,077,517 | 36,008 | 4.69 | % | 3,019,376 | 34,573 | 4.64 | % | 2,488,828 | 28,881 | 4.65 | % | |||||||||
| Total earning assets (1) | $ | 3,820,333 | $ | 42,261 | 4.44 | % | $ | 3,759,475 | $ | 40,899 | 4.41 | % | $ | 3,180,779 | $ | 34,655 | 4.37 | % | |||
| Interest-bearing deposits | $ | 1,919,406 | $ | 4,089 | 0.85 | % | $ | 1,828,228 | $ | 3,019 | 0.67 | % | $ | 1,566,106 | $ | 1,835 | 0.47 | % | |||
| Time deposits | 665,643 | 2,439 | 1.47 | % | 616,661 | 1,862 | 1.22 | % | 527,719 | 1,156 | 0.88 | % | |||||||||
| Short-term borrowings | 19,024 | 63 | 1.33 | % | 17,271 | 33 | 0.77 | % | 17,936 | 19 | 0.42 | % | |||||||||
| Federal Home Loan Bank advances | 174,826 | 882 | 2.02 | % | 236,689 | 1,064 | 1.82 | % | 76,739 | 354 | 1.85 | % | |||||||||
| Other borrowings | 67,044 | 733 | 4.39 | % | 64,680 | 718 | 4.50 | % | 72,000 | 696 | 3.88 | % | |||||||||
| Junior subordinated debentures | 37,558 | 508 | 5.43 | % | 37,510 | 447 | 4.83 | % | 33,530 | 347 | 4.15 | % | |||||||||
| Total interest-bearing liabilities | $ | 2,883,501 | $ | 8,714 | 1.21 | % | $ | 2,801,039 | $ | 7,143 | 1.03 | % | $ | 2,294,030 | $ | 4,407 | 0.77 | % | |||
| Net interest income / spread (1) | $ | 33,547 | 3.23 | % | $ | 33,756 | 3.38 | % | $ | 30,248 | 3.60 | % | |||||||||
| Net interest margin (2) | 3.37 | % | 3.50 | % | 3.54 | % | |||||||||||||||
| Net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.52 | % | 3.64 | % | 3.81 | % | |||||||||||||||
| For the Six Months Ended | |||||||||||||||||||||
| June 30, 2018 | June 30, 2017 | ||||||||||||||||||||
| 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 | $ | 19,132 | $ | 118 | 1.24 | % | $ | 14,917 | $ | 53 | 0.72 | % | |||||||||
| Interest-bearing deposits at financial institutions | 52,205 | 425 | 1.64 | % | 89,394 | 418 | 0.94 | % | |||||||||||||
| Securities (1) | 648,656 | 11,418 | 3.55 | % | 567,101 | 10,543 | 3.75 | % | |||||||||||||
| Restricted investment securities | 21,465 | 446 | 4.19 | % | 13,549 | 262 | 3.90 | % | |||||||||||||
| Loans (1) | 3,048,447 | 70,753 | 4.68 | % | 2,443,608 | 56,741 | 4.68 | % | |||||||||||||
| Total earning assets (1) | $ | 3,789,905 | $ | 83,160 | 4.42 | % | $ | 3,128,569 | $ | 68,017 | 4.38 | % | |||||||||
| Interest-bearing deposits | $ | 1,873,817 | $ | 7,109 | 0.77 | % | $ | 1,486,876 | $ | 2,974 | 0.40 | % | |||||||||
| Time deposits | 641,152 | 4,301 | 1.35 | % | 519,419 | 2,249 | 0.87 | % | |||||||||||||
| Short-term borrowings | 18,148 | 95 | 1.06 | % | 21,562 | 43 | 0.40 | % | |||||||||||||
| Federal Home Loan Bank advances | 205,758 | 1,946 | 1.91 | % | 95,548 | 758 | 1.60 | % | |||||||||||||
| Other borrowings | 65,862 | 1,451 | 4.44 | % | 73,381 | 1,379 | 3.79 | % | |||||||||||||
| Junior subordinated debentures | 37,534 | 955 | 5.13 | % | 33,514 | 680 | 4.09 | % | |||||||||||||
| Total interest-bearing liabilities | $ | 2,842,271 | $ | 15,857 | 1.13 | % | $ | 2,230,300 | $ | 8,083 | 0.73 | % | |||||||||
| Net interest income / spread (1) | $ | 67,303 | 3.29 | % | $ | 59,934 | 3.65 | % | |||||||||||||
| Net interest margin (2) | 3.43 | % | 3.59 | % | |||||||||||||||||
| Net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.58 | % | 3.86 | % | |||||||||||||||||
| (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 prior to March 31, 2018 and 21% for periods including and after March 31, 2018. | |||||||||||||||||||||
| (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, | |||||||||||
| 2018 | 2018 | 2017 | 2017 | 2017 | |||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||
| ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES | |||||||||||||||
| Beginning balance | $ | 36,533 | $ | 34,356 | $ | 34,982 | $ | 33,357 | $ | 32,059 | |||||
| Provision charged to expense | 2,301 | 2,540 | 2,255 | 2,087 | 2,023 | ||||||||||
| Loans/leases charged off | (1,525 | ) | (436 | ) | (2,979 | ) | (650 | ) | (851 | ) | |||||
| Recoveries on loans/leases previously charged off | 236 | 73 | 98 | 188 | 126 | ||||||||||
| Ending balance | $ | 37,545 | $ | 36,533 | $ | 34,356 | $ | 34,982 | $ | 33,357 | |||||
| NONPERFORMING ASSETS | |||||||||||||||
| Nonaccrual loans/leases | $ | 12,554 | $ | 12,759 | $ | 11,441 | $ | 20,443 | $ | 13,217 | |||||
| Accruing loans/leases past due 90 days or more | 20 | 41 | 89 | 423 | 424 | ||||||||||
| Troubled debt restructures - accruing | 1,327 | 5,276 | 7,113 | 7,563 | 6,915 | ||||||||||
| Total nonperforming loans/leases | 13,901 | 18,076 | 18,643 | 28,429 | 20,556 | ||||||||||
| Other real estate owned | 12,750 | 12,750 | 13,558 | 5,135 | 5,174 | ||||||||||
| Other repossessed assets | 150 | 200 | 80 | 120 | 123 | ||||||||||
| Total nonperforming assets | $ | 26,801 | $ | 31,026 | $ | 32,281 | $ | 33,684 | $ | 25,853 | |||||
| ASSET QUALITY RATIOS | |||||||||||||||
| Nonperforming assets / total assets | 0.65 | % | 0.77 | % | 0.81 | % | 0.95 | % | 0.75 | % | |||||
| Allowance / total loans/leases (1) | 1.21 | % | 1.20 | % | 1.16 | % | 1.31 | % | 1.31 | % | |||||
| Allowance / nonperforming loans/leases (1) | 270.09 | % | 202.11 | % | 184.28 | % | 123.05 | % | 162.27 | % | |||||
| Net charge-offs as a % of average loans/leases | 0.04 | % | 0.01 | % | 0.10 | % | 0.02 | % | 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 | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||
| TOTAL ASSETS | ||||||||||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,563,643 | $ | 1,526,830 | $ | 1,400,308 | ||||||||||||||||
| m2 Lease Funds, LLC | 234,566 | 224,301 | 215,689 | |||||||||||||||||||
| Cedar Rapids Bank and Trust | 1,345,431 | 1,331,209 | 993,769 | |||||||||||||||||||
| Community State Bank - Ankeny | 712,139 | 696,979 | 642,761 | |||||||||||||||||||
| Rockford Bank and Trust | 484,123 | 468,112 | 426,160 | |||||||||||||||||||
| TOTAL DEPOSITS | ||||||||||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,283,766 | $ | 1,302,005 | $ | 1,205,516 | ||||||||||||||||
| Cedar Rapids Bank and Trust | 1,080,685 | 1,058,251 | 789,750 | |||||||||||||||||||
| Community State Bank - Ankeny | 596,291 | 563,540 | 554,767 | |||||||||||||||||||
| Rockford Bank and Trust | 376,240 | 379,552 | 346,893 | |||||||||||||||||||
| TOTAL LOANS & LEASES | ||||||||||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,184,879 | $ | 1,150,120 | $ | 1,045,625 | ||||||||||||||||
| m2 Lease Funds, LLC | 233,297 | 223,654 | 214,253 | |||||||||||||||||||
| Cedar Rapids Bank and Trust | 1,034,057 | 1,011,971 | 728,562 | |||||||||||||||||||
| Community State Bank - Ankeny | 509,207 | 513,951 | 442,845 | |||||||||||||||||||
| Rockford Bank and Trust | 386,649 | 378,860 | 336,534 | |||||||||||||||||||
| TOTAL LOANS & LEASES / TOTAL ASSETS | ||||||||||||||||||||||
| Quad City Bank and Trust (1) | 76 | % | 75 | % | 75 | % | ||||||||||||||||
| Cedar Rapids Bank and Trust | 77 | % | 76 | % | 73 | % | ||||||||||||||||
| Community State Bank - Ankeny | 72 | % | 74 | % | 69 | % | ||||||||||||||||
| Rockford Bank and Trust | 80 | % | 81 | % | 79 | % | ||||||||||||||||
| ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES | ||||||||||||||||||||||
| Quad City Bank and Trust (1) | 1.12 | % | 1.16 | % | 1.28 | % | ||||||||||||||||
| m2 Lease Funds, LLC | 1.49 | % | 1.67 | % | 1.60 | % | ||||||||||||||||
| Cedar Rapids Bank and Trust (2) | 1.28 | % | 1.24 | % | 1.58 | % | ||||||||||||||||
| Community State Bank - Ankeny (2) | 1.02 | % | 0.95 | % | 0.71 | % | ||||||||||||||||
| Rockford Bank and Trust | 1.50 | % | 1.51 | % | 1.59 | % | ||||||||||||||||
| RETURN ON AVERAGE ASSETS | ||||||||||||||||||||||
| Quad City Bank and Trust (1) | 1.30 | % | 1.37 | % | 1.26 | % | 1.33 | % | 1.24 | % | ||||||||||||
| Cedar Rapids Bank and Trust | 1.46 | % | 1.45 | % | 1.23 | % | 1.45 | % | 1.28 | % | ||||||||||||
| Community State Bank - Ankeny | 1.27 | % | 1.10 | % | 1.26 | % | 1.19 | % | 1.28 | % | ||||||||||||
| Rockford Bank and Trust | 0.74 | % | 0.61 | % | 0.82 | % | 0.68 | % | 0.84 | % | ||||||||||||
| NET INTEREST MARGIN PERCENTAGE (3) | ||||||||||||||||||||||
| Quad City Bank and Trust (1) | 3.45 | % | 3.51 | % | 3.63 | % | 3.48 | % | 3.67 | % | ||||||||||||
| Cedar Rapids Bank and Trust (5) | 3.51 | % | 3.70 | % | 3.66 | % | 3.60 | % | 3.70 | % | ||||||||||||
| Community State Bank - Ankeny (4) | 4.31 | % | 4.40 | % | 5.06 | % | 4.36 | % | 5.21 | % | ||||||||||||
| Rockford Bank and Trust | 3.13 | % | 3.29 | % | 3.40 | % | 3.21 | % | 3.41 | % | ||||||||||||
| ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET | ||||||||||||||||||||||
| INTEREST MARGIN, NET | ||||||||||||||||||||||
| Cedar Rapids Bank and Trust | $ | 209 | $ | 243 | $ | 6 | $ | 452 | $ | 15 | ||||||||||||
| Community State Bank - Ankeny | 382 | 504 | 1,580 | 886 | 3,635 | |||||||||||||||||
| QCR Holdings, Inc. (6) | (46 | ) | (48 | ) | (33 | ) | (94 | ) | (66 | ) | ||||||||||||
| (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 | ) | 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 prior to March 31, 2018 and 21% for periods including and after March 31, 2018. | ||||||||||||||||||||
| (4 | ) | Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 3.96% for the quarter ended June 30, 2018 and 4.04% for the quarter ended March 31, 2018. Excluding those adjustments, net interest margin would have been 4.05% for the six months ended June 30, 2018. | ||||||||||||||||||||
| (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 3.44% for the quarter ended June 30, 2018 and 3.54% for the quarter ended March 31, 2018. Excluding those adjustments, net interest margin would have been 3.53% for the six months ended June 30, 2018. | ||||||||||||||||||||
| (6 | ) | 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 | ||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||||
| GAAP TO NON-GAAP RECONCILIATIONS | 2018 | 2018 | 2017 | 2017 | 2017 | |||||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1) | ||||||||||||||||||||||||||||
| Stockholders' equity (GAAP) | $ | 369,588 | $ | 360,428 | $ | 353,287 | $ | 313,039 | $ | 305,083 | ||||||||||||||||||
| Less: Intangible assets | 36,561 | 37,108 | 37,413 | 19,800 | 20,030 | |||||||||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 333,027 | $ | 323,320 | $ | 315,874 | $ | 293,239 | $ | 285,053 | ||||||||||||||||||
| Total assets (GAAP) | $ | 4,106,883 | $ | 4,026,314 | $ | 3,982,665 | $ | 3,550,463 | $ | 3,457,187 | ||||||||||||||||||
| Less: Intangible assets | 36,561 | 37,108 | 37,413 | 19,800 | 20,030 | |||||||||||||||||||||||
| Tangible assets (non-GAAP) | $ | 4,070,322 | $ | 3,989,206 | $ | 3,945,252 | $ | 3,530,663 | $ | 3,437,157 | ||||||||||||||||||
| Tangible common equity to tangible assets ratio (non-GAAP) | 8.18 | % | 8.10 | % | 8.01 | % | 8.31 | % | 8.29 | % | ||||||||||||||||||
| 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) | 2018 | 2018 | 2017 | 2017 | 2017 | 2018 | 2017 | |||||||||||||||||||||
| Net income (GAAP) | $ | 10,445 | $ | 10,550 | $ | 9,902 | $ | 7,854 | $ | 8,766 | $ | 20,995 | $ | 17,951 | ||||||||||||||
| Less nonrecurring items (post-tax) (3): | ||||||||||||||||||||||||||||
| Income: | ||||||||||||||||||||||||||||
| Securities gains, net | $ | - | $ | - | $ | (41 | ) | $ | (41 | ) | $ | 25 | $ | - | $ | 25 | ||||||||||||
| Total nonrecurring income (non-GAAP) | $ | - | $ | - | $ | (41 | ) | $ | (41 | ) | $ | 25 | $ | - | $ | 25 | ||||||||||||
| Expense: | ||||||||||||||||||||||||||||
| Acquisition costs (4) | 327 | 73 | 430 | 265 | - | 400 | - | |||||||||||||||||||||
| Post-acquisition compensation, transition and integration costs | 130 | - | 2,462 | 340 | - | 130 | - | |||||||||||||||||||||
| Total nonrecurring expense (non-GAAP) | $ | 457 | $ | 73 | $ | 2,892 | $ | 605 | $ | - | $ | 530 | $ | - | ||||||||||||||
| Adjustment of tax expense related to the Tax Act | $ | - | $ | - | $ | 2,919 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
| Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (2) | $ | 10,902 | $ | 10,623 | $ | 9,916 | $ | 8,500 | $ | 8,741 | $ | 21,525 | $ | 17,926 | ||||||||||||||
| CORE EARNINGS PER COMMON SHARE (2) | ||||||||||||||||||||||||||||
| Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) | $ | 10,902 | $ | 10,623 | $ | 9,916 | $ | 8,500 | $ | 8,741 | $ | 21,525 | $ | 17,926 | ||||||||||||||
| Weighted average common shares outstanding | 13,919,565 | 13,888,661 | 13,845,497 | 13,151,350 | 13,170,283 | 13,904,113 | 13,151,833 | |||||||||||||||||||||
| Weighted average common and common equivalent shares outstanding | 14,232,423 | 14,205,584 | 14,193,191 | 13,507,955 | 13,532,324 | 14,219,003 | 13,502,505 | |||||||||||||||||||||
| Core earnings per common share (non-GAAP): | ||||||||||||||||||||||||||||
| Basic | $ | 0.78 | $ | 0.76 | $ | 0.72 | $ | 0.65 | $ | 0.66 | $ | 1.55 | $ | 1.36 | ||||||||||||||
| Diluted | $ | 0.77 | $ | 0.75 | $ | 0.70 | $ | 0.63 | $ | 0.65 | $ | 1.51 | $ | 1.33 | ||||||||||||||
| CORE RETURN ON AVERAGE ASSETS (2) | ||||||||||||||||||||||||||||
| Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) | $ | 10,902 | $ | 10,623 | $ | 9,916 | $ | 8,500 | $ | 8,741 | $ | 21,525 | $ | 17,926 | ||||||||||||||
| Average Assets | $ | 4,053,684 | $ | 3,994,691 | $ | 3,923,337 | $ | 3,503,148 | $ | 3,378,195 | $ | 4,024,188 | $ | 3,326,454 | ||||||||||||||
| Core return on average assets (annualized) (non-GAAP) | 1.08 | % | 1.06 | % | 1.01 | % | 0.97 | % | 1.03 | % | 1.07 | % | 1.08 | % | ||||||||||||||
| NET INTEREST MARGIN (TEY) (6) | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 32,085 | $ | 32,403 | $ | 31,793 | $ | 28,556 | $ | 28,047 | $ | 64,488 | $ | 55,716 | ||||||||||||||
| Plus: Tax equivalent adjustment (5) | 1,462 | 1,353 | 2,585 | 2,311 | 2,201 | 2,815 | 4,218 | |||||||||||||||||||||
| Net interest income - tax equivalent (Non-GAAP) | $ | 33,547 | $ | 33,756 | $ | 34,378 | $ | 30,867 | $ | 30,248 | $ | 67,303 | $ | 59,934 | ||||||||||||||
| Average earning assets | $ | 3,820,333 | $ | 3,759,475 | $ | 3,699,193 | $ | 3,303,014 | $ | 3,180,779 | $ | 3,789,905 | $ | 3,128,569 | ||||||||||||||
| Net interest margin (GAAP) | 3.37 | % | 3.50 | % | 3.41 | % | 3.43 | % | 3.54 | % | 3.43 | % | 3.59 | % | ||||||||||||||
| Net interest margin (TEY) (Non-GAAP) | 3.52 | % | 3.64 | % | 3.69 | % | 3.71 | % | 3.81 | % | 3.58 | % | 3.86 | % | ||||||||||||||
| EFFICIENCY RATIO (7) | ||||||||||||||||||||||||||||
| Noninterest expense (GAAP) | $ | 26,370 | $ | 25,863 | $ | 31,351 | $ | 23,395 | $ | 21,405 | $ | 52,234 | $ | 42,678 | ||||||||||||||
| Net interest income (GAAP) | $ | 32,085 | $ | 32,403 | $ | 31,793 | $ | 28,556 | $ | 28,047 | $ | 64,488 | $ | 55,716 | ||||||||||||||
| Noninterest income (GAAP) | 8,912 | 8,541 | 9,714 | 6,702 | 6,782 | 17,454 | 14,066 | |||||||||||||||||||||
| Total income | $ | 40,997 | $ | 40,944 | $ | 41,507 | $ | 35,258 | $ | 34,829 | $ | 81,942 | $ | 69,782 | ||||||||||||||
| Efficiency ratio (noninterest expense/total income) (Non-GAAP) | 64.32 | % | 63.17 | % | 75.53 | % | 66.35 | % | 61.46 | % | 63.75 | % | 61.16 | % | ||||||||||||||
| (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% for periods prior to March 31, 2018 and 21% for periods including and after March 31, 2018. | ||||||||||||||||||||||||||||
| (4) Acquisition costs were analyzed individually for deductibility. Presented amounts are tax-effected accordingly. | ||||||||||||||||||||||||||||
| (5) Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period prior to March 31, 2018 and 21% for periods including and after March 31, 2018. | ||||||||||||||||||||||||||||
| (6) 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. | ||||||||||||||||||||||||||||
| (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. | ||||||||||||||||||||||||||||