Table of Contents
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 42-1397595 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer ID Number) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Page | ||||||||
Number | ||||||||
Part I | FINANCIAL INFORMATION | |||||||
Item 1 | Consolidated Financial Statements (Unaudited) | |||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7-15 | ||||||||
Item 2 | 16-40 | |||||||
Item 3 | 41-42 | |||||||
Item 4 | 43 | |||||||
Part II | OTHER INFORMATION | |||||||
Item 1 | 44 | |||||||
Item 1.A. | 44 | |||||||
Item 2 | 44 | |||||||
Item 3 | 44 | |||||||
Item 4 | 44 | |||||||
Item 5 | 44 | |||||||
Item 6 | 45 | |||||||
Signatures | 46-47 | |||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
1
Table of Contents
September 30, 2007 and December 31, 2006
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 40,506,946 | $ | 42,502,770 | ||||
Federal funds sold | 7,150,000 | 2,320,000 | ||||||
Interest-bearing deposits at financial institutions | 2,607,078 | 2,130,096 | ||||||
Securities held to maturity, at amortized cost | 350,000 | 350,000 | ||||||
Securities available for sale, at fair value | 228,575,788 | 194,423,893 | ||||||
228,925,788 | 194,773,893 | |||||||
Loans receivable held for sale | 4,438,113 | 6,186,632 | ||||||
Loans/leases receivable held for investment | 1,048,511,032 | 954,560,692 | ||||||
1,052,949,145 | 960,747,324 | |||||||
Less: Allowance for estimated losses on loans/leases | (11,895,767 | ) | (10,612,082 | ) | ||||
1,041,053,378 | 950,135,242 | |||||||
Premises and equipment, net | 32,359,507 | 32,524,840 | ||||||
Goodwill | 3,222,688 | 3,222,688 | ||||||
Intangible asset | 887,542 | — | ||||||
Accrued interest receivable | 8,502,697 | 7,160,298 | ||||||
Bank-owned life insurance | 28,660,370 | 18,877,526 | ||||||
Other assets | 20,391,610 | 18,027,603 | ||||||
Total assets | $ | 1,414,267,604 | $ | 1,271,674,956 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 128,412,664 | $ | 124,184,486 | ||||
Interest-bearing | 767,077,204 | 751,262,781 | ||||||
Total deposits | 895,489,868 | 875,447,267 | ||||||
Short-term borrowings | 175,923,055 | 111,683,951 | ||||||
Federal Home Loan Bank advances | 159,877,064 | 151,858,749 | ||||||
Other borrowings | 47,717,395 | 3,761,636 | ||||||
Junior subordinated debentures | 36,085,000 | 36,085,000 | ||||||
Other liabilities | 21,769,688 | 20,592,953 | ||||||
Total liabilities | 1,336,862,070 | 1,199,429,556 | ||||||
Minority interest in consolidated subsidiaries | 1,626,017 | 1,362,820 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred stock, $1 par value; shares authorized 250,000; September 2007 and December 2006 - 268 shares issued and outstanding, | 268 | 268 | ||||||
Common stock, $1 par value; shares authorized 10,000,000 September 2007 - 4,592,148 shares issued and outstanding, December 2006 - 4,560,629 shares issued and outstanding, | 4,592,148 | 4,560,629 | ||||||
Additional paid-in capital | 34,883,577 | 34,293,511 | ||||||
Retained earnings | 35,180,098 | 32,000,213 | ||||||
Accumulated other comprehensive income | 1,123,426 | 27,959 | ||||||
Total stockholders’ equity | 75,779,517 | 70,882,580 | ||||||
Total liabilities and stockholders’ equity | $ | 1,414,267,604 | $ | 1,271,674,956 | ||||
2
Table of Contents
Three Months Ended September 30,
2007 | 2006 | |||||||
Interest and dividend income: | ||||||||
Loans/leases, including fees | $ | 19,253,493 | $ | 16,132,528 | ||||
Securities: | ||||||||
Taxable | 2,485,746 | 1,763,217 | ||||||
Nontaxable | 251,526 | 270,205 | ||||||
Interest-bearing deposits at financial institutions | 70,931 | 86,125 | ||||||
Federal funds sold | 40,758 | 121,128 | ||||||
Total interest and dividend income | 22,102,454 | 18,373,203 | ||||||
Interest expense: | ||||||||
Deposits | 8,149,734 | 7,610,255 | ||||||
Short-term borrowings | 1,529,680 | 771,359 | ||||||
Federal Home Loan Bank advances | 1,859,131 | 1,464,357 | ||||||
Other borrowings | 591,458 | 178,126 | ||||||
Junior subordinated debentures | 660,690 | 665,115 | ||||||
Total interest expense | 12,790,693 | 10,689,212 | ||||||
Net interest income | 9,311,761 | 7,683,991 | ||||||
Provision for loan/lease losses | 1,037,351 | 728,678 | ||||||
Net interest income after provision for loan/lease losses | 8,274,410 | 6,955,313 | ||||||
Noninterest income: | ||||||||
Credit card fees, net of processing costs | 442,643 | 476,783 | ||||||
Trust department fees | 924,464 | 787,796 | ||||||
Deposit service fees | 706,271 | 478,299 | ||||||
Gains on sales of loans, net | 277,265 | 218,854 | ||||||
Securities gains, net | 0 | 71,013 | ||||||
Gains (losses) on sales of foreclosed assets | 0 | (100,000 | ) | |||||
Gains on sales of other assets | 435,791 | 0 | ||||||
Earnings on bank-owned life insurance | 261,372 | 152,308 | ||||||
Investment advisory and management fees | 369,239 | 285,635 | ||||||
Other | 441,445 | 371,634 | ||||||
Total noninterest income | 3,858,490 | 2,742,322 | ||||||
Noninterest expenses: | ||||||||
Salaries and employee benefits | 6,154,660 | 5,510,926 | ||||||
Professional and data processing fees | 888,753 | 879,938 | ||||||
Advertising and marketing | 322,632 | 389,812 | ||||||
Occupancy and equipment expense | 1,297,634 | 1,304,567 | ||||||
Stationery and supplies | 158,709 | 159,758 | ||||||
Postage and telephone | 262,664 | 241,867 | ||||||
Bank service charges | 145,364 | 151,369 | ||||||
FDIC and other insurance | 295,138 | 161,381 | ||||||
Other | 350,210 | 207,960 | ||||||
Total noninterest expenses | 9,875,764 | 9,007,578 | ||||||
Income before income taxes | 2,257,136 | 690,057 | ||||||
Federal and state income taxes | 646,281 | 125,094 | ||||||
Income before minority interest in net income of consolidated subsidiaries | 1,610,855 | 564,963 | ||||||
Minority interest in income of consolidated subsidiary | 17,046 | 45,410 | ||||||
Net income | $ | 1,593,809 | $ | 519,553 | ||||
Net income | $ | 1,593,809 | $ | 519,553 | ||||
Less preferred stock dividends | 268,000 | 0 | ||||||
Net income available to common stockholders | $ | 1,325,809 | $ | 519,553 | ||||
Earnings per common share: | ||||||||
Basic | $ | 0.29 | $ | 0.11 | ||||
Diluted | $ | 0.29 | $ | 0.11 | ||||
Weighted average common shares outstanding | 4,591,576 | 4,553,589 | ||||||
Weighted average common and common equivalent shares outstanding | 4,599,406 | 4,590,829 | ||||||
Cash dividends declared per common share | $ | 0.00 | $ | 0.00 | ||||
Comprehensive income | $ | 3,324,477 | $ | 1,308,129 | ||||
3
Table of Contents
Nine Months Ended September 30,
2007 | 2006 | |||||||
Interest and dividend income: | ||||||||
Loans/leases, including fees | $ | 55,179,242 | $ | 43,119,928 | ||||
Securities: | ||||||||
Taxable | 6,611,317 | 5,169,400 | ||||||
Nontaxable | 790,804 | 627,301 | ||||||
Interest-bearing deposits at financial institutions | 294,561 | 222,135 | ||||||
Federal funds sold | 214,329 | 325,514 | ||||||
Total interest and dividend income | 63,090,253 | 49,464,278 | ||||||
Interest expense: | ||||||||
Deposits | 24,152,481 | 18,891,305 | ||||||
Short-term borrowings | 3,971,806 | 2,211,653 | ||||||
Federal Home Loan Bank advances | 5,370,203 | 4,047,472 | ||||||
Other borrowings | 1,170,699 | 432,371 | ||||||
Junior subordinated debentures | 1,965,959 | 1,828,567 | ||||||
Total interest expense | 36,631,148 | 27,411,368 | ||||||
Net interest income | 26,459,105 | 22,052,910 | ||||||
Provision for loan/lease losses | 2,268,343 | 1,624,258 | ||||||
Net interest income after provision for loan/lease losses | 24,190,762 | 20,428,652 | ||||||
Noninterest income: | ||||||||
Credit card fees, net of processing costs | 1,248,917 | 1,464,233 | ||||||
Trust department fees | 2,783,795 | 2,310,737 | ||||||
Deposit service fees | 1,962,409 | 1,422,379 | ||||||
Gains on sales of loans, net | 965,680 | 711,857 | ||||||
Securities gains (losses), net | 0 | (142,866 | ) | |||||
Gains on sales of foreclosed assets | 1,007 | 650,134 | ||||||
Gains on sales of other assets | 435,791 | 0 | ||||||
Earnings on bank-owned life insurance | 661,355 | 565,316 | ||||||
Investment advisory and management fees, gross | 1,134,362 | 949,573 | ||||||
Other | 1,391,746 | 1,203,774 | ||||||
Total noninterest income | 10,585,062 | 9,135,137 | ||||||
Noninterest expenses: | ||||||||
Salaries and employee benefits | 17,626,748 | 16,253,426 | ||||||
Professional and data processing fees | 2,781,970 | 2,439,191 | ||||||
Advertising and marketing | 944,109 | 1,016,661 | ||||||
Occupancy and equipment expense | 3,724,000 | 3,829,228 | ||||||
Stationery and supplies | 453,036 | 497,127 | ||||||
Postage and telephone | 769,433 | 715,108 | ||||||
Bank service charges | 429,062 | 429,844 | ||||||
FDIC and other insurance | 707,616 | 447,870 | ||||||
Loss on disposals/sales of fixed assets | 239,016 | 0 | ||||||
Other | 990,903 | 254,776 | ||||||
Total noninterest expenses | 28,665,893 | 25,883,231 | ||||||
Income before income taxes | 6,109,931 | 3,680,558 | ||||||
Federal and state income taxes | 1,691,896 | 977,802 | ||||||
Income before minority interest in net income of consolidated subsidiaries | 4,418,035 | 2,702,756 | ||||||
Minority interest in income of consolidated subsidiaries | 250,935 | 146,551 | ||||||
Net income | $ | 4,167,100 | $ | 2,556,205 | ||||
Net income | $ | 4,167,100 | $ | 2,556,205 | ||||
Less preferred stock dividends | 804,000 | 0 | ||||||
Net income available to common stockholders | $ | 3,363,100 | $ | 2,556,205 | ||||
Earnings per common share: | ||||||||
Basic | $ | 0.73 | $ | 0.55 | ||||
Diluted | $ | 0.73 | $ | 0.55 | ||||
Weighted average common shares outstanding | 4,576,963 | 4,605,776 | ||||||
Weighted average common and common equivalent shares outstanding | 4,596,791 | 4,649,988 | ||||||
Cash dividends declared per common share | $ | 0.04 | $ | 0.04 | ||||
Comprehensive income | $ | 5,262,567 | $ | 2,839,810 | ||||
4
Nine Months Ended September 30, 2007
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
Preferred | Common | Paid-In | Retained | Comprehensive | ||||||||||||||||||||
Stock | Stock | Capital | Earnings | Income (Loss) | Total | |||||||||||||||||||
Balance December 31, 2006 | $ | 268 | $ | 4,560,629 | $ | 34,293,511 | $ | 32,000,213 | $ | 27,959 | $ | 70,882,580 | ||||||||||||
Comprehensive income: | — | |||||||||||||||||||||||
Net income | 1,262,686 | 1,262,686 | ||||||||||||||||||||||
Other comprehensive income, net of tax | 348,548 | 348,548 | ||||||||||||||||||||||
Comprehensive income | 1,611,234 | |||||||||||||||||||||||
Preferred cash dividends declared | (268,000 | ) | (268,000 | ) | ||||||||||||||||||||
Additional costs from fourth quarter 2006 issuance of preferred stock | (10,671 | ) | (10,671 | ) | ||||||||||||||||||||
Proceeds from issuance of 3,879 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan | 3,879 | 56,307 | 60,186 | |||||||||||||||||||||
Proceeds from issuance of 650 shares of common stock as a result of stock options exercised | 650 | 4,942 | 5,592 | |||||||||||||||||||||
Tax benefit of nonqualified stock options exercised | 1,032 | 1,032 | ||||||||||||||||||||||
Stock compensation expense | 85,105 | 85,105 | ||||||||||||||||||||||
Balance March 31, 2007 | $ | 268 | $ | 4,565,158 | $ | 34,430,226 | $ | 32,994,899 | $ | 376,507 | $ | 72,367,058 | ||||||||||||
Comprehensive income: | — | |||||||||||||||||||||||
Net income | 1,310,605 | 1,310,605 | ||||||||||||||||||||||
Other comprehensive income, net of tax | (983,749 | ) | (983,749 | ) | ||||||||||||||||||||
Comprehensive income | 326,856 | |||||||||||||||||||||||
Common cash dividends declared $0.04 per share | (183,215 | ) | (183,215 | ) | ||||||||||||||||||||
Preferred cash dividends declared | (268,000 | ) | (268,000 | ) | ||||||||||||||||||||
Proceeds from issuance of 5,994 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan | 5,994 | 77,407 | 83,401 | |||||||||||||||||||||
Proceeds from issuance of 11,814 shares of common stock as a result of stock options exercised | 11,814 | 95,775 | 107,589 | |||||||||||||||||||||
Exchange of 1,590 shares of common stock in connection with options exercised | (1,590 | ) | (25,756 | ) | (27,346 | ) | ||||||||||||||||||
Tax benefit of nonqualified stock options exercised | 20,042 | 20,042 | ||||||||||||||||||||||
Stock compensation expense | 87,342 | 87,342 | ||||||||||||||||||||||
Balance June 30, 2007 | $ | 268 | $ | 4,581,376 | $ | 34,685,036 | $ | 33,854,289 | $ | (607,242 | ) | $ | 72,513,727 | |||||||||||
Comprehensive income: | — | |||||||||||||||||||||||
Net income | 1,593,809 | 1,593,809 | ||||||||||||||||||||||
Other comprehensive income, net of tax | 1,730,668 | 1,730,668 | ||||||||||||||||||||||
Comprehensive income | 3,324,477 | |||||||||||||||||||||||
Preferred cash dividends declared | (268,000 | ) | (268,000 | ) | ||||||||||||||||||||
Proceeds from issuance of 4,639 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan | 4,639 | 61,578 | 66,217 | |||||||||||||||||||||
Proceeds from issuance of 6,133 shares of common stock as a result of stock options exercised | 6,133 | 50,440 | 56,573 | |||||||||||||||||||||
Tax benefit of nonqualified stock options exercised | 401 | 401 | ||||||||||||||||||||||
Stock compensation expense | 86,122 | 86,122 | ||||||||||||||||||||||
Balance September 30, 2007 | $ | 268 | $ | 4,592,148 | $ | 34,883,577 | $ | 35,180,098 | $ | 1,123,426 | $ | 75,779,517 | ||||||||||||
5
Table of Contents
Nine Months Ended September 30,
2007 | 2006 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 4,167,100 | $ | 2,556,205 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 1,708,848 | 1,742,286 | ||||||
Provision for loan/lease losses | 2,268,343 | 1,624,258 | ||||||
Amortization of offering costs on subordinated debentures | 10,738 | 10,738 | ||||||
Stock-based compensation expense | (30,538 | ) | 78,299 | |||||
Minority interest in income of consolidated subsidiaries | 250,935 | 146,553 | ||||||
Gains on sale of foreclosed assets | (1,007 | ) | (650,134 | ) | ||||
Gains on sale of other assets | (435,791 | ) | 0 | |||||
(Accretion of discounts) amortization of premiums on securities, net | (48,767 | ) | 208,905 | |||||
Investment securities losses, net | 0 | 142,866 | ||||||
Loans originated for sale | (81,123,640 | ) | (63,795,689 | ) | ||||
Proceeds on sales of loans | 83,837,553 | 61,875,883 | ||||||
Net gains on sales of loans | (965,680 | ) | (711,857 | ) | ||||
Net losses on disposals/sales of premises and equipment | 239,016 | 0 | ||||||
Increase in accrued interest receivable | (1,342,399 | ) | (1,897,901 | ) | ||||
Increase in other assets | (3,202,295 | ) | (1,727,746 | ) | ||||
Decrease in other liabilities | 1,542,807 | 1,287,986 | ||||||
Net cash provided by operating activities | $ | 6,875,223 | $ | 890,652 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Net increase in federal funds sold | (4,830,000 | ) | (3,630,000 | ) | ||||
Net increase in interest-bearing deposits at financial institutions | (476,982 | ) | (5,192,169 | ) | ||||
Proceeds from sale of foreclosed assets | 93,901 | 913,852 | ||||||
Proceeds from sale of other assets | 500,000 | 0 | ||||||
Activity in securities portfolio: | ||||||||
Purchases | (94,049,814 | ) | (50,854,245 | ) | ||||
Calls, maturities and redemptions | 61,291,150 | 39,575,000 | ||||||
Paydowns | 435,831 | 549,107 | ||||||
Sales | 0 | 4,857,134 | ||||||
Activity in bank-owned life insurance: | ||||||||
Purchases | (9,121,488 | ) | (750,765 | ) | ||||
Increase in cash value | (661,356 | ) | (565,316 | ) | ||||
Net loans/leases originated and held for investment | (94,934,998 | ) | (184,209,540 | ) | ||||
Purchase of premises and equipment | (1,782,531 | ) | (3,898,529 | ) | ||||
Purchase of intangible asset | (887,542 | ) | 0 | |||||
Net cash used in investing activities | $ | (144,423,829 | ) | $ | (203,205,471 | ) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Net increase in deposit accounts | 20,042,601 | 174,749,305 | ||||||
Net increase (decrease) in short-term borrowings | 64,239,104 | (11,024,910 | ) | |||||
Activity in Federal Home Loan Bank advances: | ||||||||
Advances | 58,400,000 | 46,500,000 | ||||||
Payments | (50,381,685 | ) | (30,673,010 | ) | ||||
Net increase in other borrowings | 43,955,759 | 4,514,818 | ||||||
Proceeds from issuance of junior subordinated debentures | 0 | 10,310,000 | ||||||
Tax benefit of nonqualified stock options exercised | 21,475 | 36,301 | ||||||
Payment of cash dividends | (1,066,013 | ) | (363,142 | ) | ||||
Costs from issuance of preferred stock, net | (10,671 | ) | 0 | |||||
Proceeds from issuance of common stock, net | 352,212 | 249,971 | ||||||
Net cash provided by financing activities | $ | 135,552,782 | $ | 194,299,333 | ||||
Net decrease in cash and due from banks | (1,995,824 | ) | (8,015,486 | ) | ||||
Cash and due from banks, beginning | 42,502,770 | 38,956,627 | ||||||
Cash and due from banks, ending | $ | 40,506,946 | $ | 30,941,141 | ||||
Supplemental disclosure of cash flow information, cash payments for: | ||||||||
Interest | $ | 36,499,392 | $ | 25,613,367 | ||||
Income/franchise taxes | $ | 767,932 | $ | 1,001,808 | ||||
Supplemental schedule of noncash investing activities: | ||||||||
Change in accumulated other comprehensive income (loss), unrealized losses on securities available for sale, net | $ | 1,095,467 | $ | 283,605 | ||||
Transfers of loans to other real estate owned | $ | 0 | $ | 50,001 | ||||
6
Table of Contents
Item 1
AND SUBSIDIARIES
7
Table of Contents
Item 1
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net income available to common stockholders, basic and diluted earnings | $ | 1,325,809 | $ | 519,553 | $ | 3,363,100 | $ | 2,556,205 | ||||||||
Weighted average common shares outstanding | 4,591,576 | 4,553,589 | 4,576,963 | 4,605,776 | ||||||||||||
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan | 7,830 | 37,240 | 19,828 | 44,212 | ||||||||||||
Weighted average common and common equivalent shares oustanding | 4,599,406 | 4,590,829 | 4,596,791 | 4,649,988 | ||||||||||||
8
Table of Contents
Item 1
9
Table of Contents
Three Months and Nine Months Ended September 30, 2007 and 2006
Commercial Banking | ||||||||||||||||||||||||||||||||||||||||
Quad Bank | Cedar Rapids | Rockford | First Wisconsin | Credit Card | Trust | Leasing | Parent | Intercompany | Consolidated | |||||||||||||||||||||||||||||||
& Trust | Bank & Trust | Bank & Trust | Bank & Trust | Processing | Management | Services | and Other | Eliminations | Total | |||||||||||||||||||||||||||||||
Three Months Ended September 30, 2007 | ||||||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 14,268,121 | $ | 6,412,503 | $ | 2,334,069 | $ | 735,549 | $ | 442,643 | $ | 937,556 | $ | 1,376,792 | $ | 490,949 | $ | (1,037,238 | ) | $ | 25,960,944 | |||||||||||||||||||
Percent of consolidated total revenue | 55 | % | 25 | % | 9 | % | 3 | % | 2 | % | 4 | % | 5 | % | 2 | % | -4 | % | 100 | % | ||||||||||||||||||||
Net Income | $ | 1,795,138 | $ | 602,486 | $ | (258,591 | ) | $ | (233,797 | ) | $ | 57,874 | $ | 259,959 | $ | 99,718 | $ | (626,055 | ) | $ | (102,922 | ) | $ | 1,593,809 | ||||||||||||||||
Percent of consolidated net income | 113 | % | 38 | % | -16 | % | -15 | % | 4 | % | 16 | % | 6 | % | -39 | % | -6 | % | 100 | % | ||||||||||||||||||||
Total Assets | $ | 855,368,760 | $ | 367,714,176 | $ | 138,899,065 | $ | 47,553,642 | $ | 980,836 | $ | — | $ | 69,545,917 | $ | 130,083,814 | $ | (195,878,606 | ) | $ | 1,414,267,604 | |||||||||||||||||||
Percent of consolidated total assets | 60 | % | 26 | % | 10 | % | 3 | % | 0 | % | 0 | % | 5 | % | 9 | % | -14 | % | 100 | % | ||||||||||||||||||||
Depreciation | $ | 303,007 | $ | 144,822 | $ | 76,410 | $ | 19,301 | $ | 8,672 | $ | — | $ | 8,857 | $ | 2,855 | $ | — | $ | 563,925 | ||||||||||||||||||||
Percent of consolidated depreciation | 54 | % | 26 | % | 14 | % | 3 | % | 2 | % | 0 | % | 2 | % | 1 | % | 0 | % | 100 | % | ||||||||||||||||||||
Capital Expenditures | $ | 328,155 | $ | 87,139 | $ | 35,551 | $ | 154,225 | $ | 29,058 | $ | — | $ | 3,480 | $ | — | $ | — | $ | 637,608 | ||||||||||||||||||||
Percent of consolidated capital expenditures | 51 | % | 14 | % | 6 | % | 24 | % | 5 | % | 0 | % | 1 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Intangible Assets | $ | — | $ | — | $ | — | $ | 887,542 | $ | — | $ | — | $ | 3,222,688 | $ | — | $ | — | $ | 4,110,230 | ||||||||||||||||||||
Percent of consolidated intangible assets | 0 | % | 0 | % | 0 | % | 22 | % | 0 | % | 0 | % | 78 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Three Months Ended September 30, 2006 | ||||||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 12,715,754 | $ | 5,326,623 | $ | 1,570,705 | $ | — | $ | 476,783 | $ | 787,795 | $ | 917,329 | $ | 104,625 | $ | (784,089 | ) | $ | 21,115,525 | |||||||||||||||||||
Percent of consolidated total revenue | 60 | % | 25 | % | 7 | % | 0 | % | 2 | % | 4 | % | 4 | % | 0 | % | -4 | % | 100 | % | ||||||||||||||||||||
Net Income | $ | 1,080,192 | $ | 415,967 | $ | (471,093 | ) | $ | — | $ | 66,548 | $ | 201,146 | $ | 257,561 | $ | (773,205 | ) | $ | (257,563 | ) | $ | 519,553 | |||||||||||||||||
Percent of consolidated net income | 208 | % | 80 | % | -91 | % | 0 | % | 13 | % | 39 | % | 50 | % | -149 | % | -50 | % | 100 | % | ||||||||||||||||||||
Total Assets | $ | 815,104,765 | $ | 326,543,993 | $ | 109,326,145 | $ | — | $ | 1,194,632 | $ | — | $ | 51,065,796 | $ | 109,943,861 | $ | (171,920,775 | ) | $ | 1,241,258,417 | |||||||||||||||||||
Percent of consolidated total assets | 66 | % | 26 | % | 9 | % | 0 | % | 0 | % | 0 | % | 4 | % | 9 | % | -14 | % | 100 | % | ||||||||||||||||||||
Depreciation | $ | 358,014 | $ | 158,348 | $ | 44,231 | $ | — | $ | 8,443 | $ | — | $ | 14,408 | $ | 625 | $ | — | $ | 584,069 | ||||||||||||||||||||
Percent of consolidated depreciation | 61 | % | 27 | % | 8 | % | 0 | % | 1 | % | 0 | % | 2 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Capital Expenditures | $ | 173,747 | $ | 23,496 | $ | 1,492,992 | $ | — | $ | — | $ | — | $ | 1,123 | $ | — | $ | — | $ | 1,691,358 | ||||||||||||||||||||
Percent of consolidated capital expenditures | 10 | % | 1 | % | 88 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Intangible Assets | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,222,688 | $ | — | $ | — | $ | 3,222,688 | ||||||||||||||||||||
Percent of consolidated intangible assets | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 100 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Nine Months Ended September 30, 2007 | ||||||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 42,417,857 | $ | 18,564,112 | $ | 5,817,441 | $ | 1,667,771 | $ | 1,248,917 | $ | 2,796,886 | $ | 3,817,240 | $ | 670,812 | $ | (3,325,721 | ) | $ | 73,675,315 | |||||||||||||||||||
Percent of consolidated total revenue | 58 | % | 25 | % | 8 | % | 2 | % | 2 | % | 4 | % | 5 | % | 1 | % | -5 | % | 100 | % | ||||||||||||||||||||
Net Income | $ | 5,357,784 | $ | 1,757,569 | $ | (766,540 | ) | $ | (814,092 | ) | $ | 76,873 | $ | 816,149 | $ | 800,737 | $ | (2,151,552 | ) | $ | (909,827 | ) | $ | 4,167,100 | ||||||||||||||||
Percent of consolidated net income | 129 | % | 42 | % | -18 | % | -20 | % | 2 | % | 20 | % | 19 | % | -52 | % | -22 | % | 100 | % | ||||||||||||||||||||
Total Assets | $ | 855,368,760 | $ | 367,714,176 | $ | 138,899,065 | $ | 47,553,642 | $ | 980,836 | $ | — | $ | 69,545,917 | $ | 130,083,814 | $ | (195,878,606 | ) | $ | 1,414,267,604 | |||||||||||||||||||
Percent of consolidated total assets | 60 | % | 26 | % | 10 | % | 3 | % | 0 | % | 0 | % | 5 | % | 9 | % | -14 | % | 100 | % | ||||||||||||||||||||
Depreciation | $ | 939,686 | $ | 433,792 | $ | 227,625 | $ | 48,401 | $ | 24,454 | $ | — | $ | 26,915 | $ | 7,974 | $ | — | $ | 1,708,848 | ||||||||||||||||||||
Percent of consolidated depreciation | 55 | % | 25 | % | 13 | % | 3 | % | 1 | % | 0 | % | 2 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Capital Expenditures | $ | 585,086 | $ | 858,987 | $ | 53,088 | $ | 230,791 | $ | 31,571 | $ | — | $ | 3,480 | $ | 19,528 | $ | — | $ | 1,782,531 | ||||||||||||||||||||
Percent of consolidated capital expenditures | 33 | % | 48 | % | 3 | % | 13 | % | 2 | % | 0 | % | 0 | % | 1 | % | 0 | % | 100 | % | ||||||||||||||||||||
Intangible Assets | $ | — | $ | — | $ | — | $ | 887,542 | $ | — | $ | — | $ | 3,222,688 | $ | — | $ | — | $ | 4,110,230 | ||||||||||||||||||||
Percent of consolidated intangible assets | 0 | % | 0 | % | 0 | % | 22 | % | 0 | % | 0 | % | 78 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Nine Months Ended September 30, 2006 | ||||||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 35,758,919 | $ | 14,931,484 | $ | 3,226,467 | $ | — | $ | 1,464,233 | $ | 2,310,737 | $ | 2,500,117 | $ | 310,350 | $ | (1,902,892 | ) | $ | 58,599,415 | |||||||||||||||||||
Percent of consolidated total revenue | 61 | % | 25 | % | 6 | % | 0 | % | 2 | % | 4 | % | 4 | % | 1 | % | -3 | % | 100 | % | ||||||||||||||||||||
Net Income | $ | 4,197,241 | $ | 1,173,815 | $ | (1,347,436 | ) | $ | — | $ | 244,649 | $ | 561,493 | $ | 849,693 | $ | (2,273,555 | ) | $ | (849,695 | ) | $ | 2,556,205 | |||||||||||||||||
Percent of consolidated net income | 164 | % | 46 | % | -53 | % | 0 | % | 10 | % | 22 | % | 33 | % | -89 | % | -33 | % | 100 | % | ||||||||||||||||||||
Total Assets | $ | 815,104,765 | $ | 326,543,993 | $ | 109,326,145 | $ | — | $ | 1,194,632 | $ | — | $ | 51,065,796 | $ | 109,943,861 | $ | (171,920,775 | ) | $ | 1,241,258,417 | |||||||||||||||||||
Percent of consolidated total assets | 66 | % | 26 | % | 9 | % | 0 | % | 0 | % | 0 | % | 4 | % | 9 | % | -14 | % | 100 | % | ||||||||||||||||||||
Depreciation | $ | 1,095,515 | $ | 468,463 | $ | 119,860 | $ | — | $ | 25,198 | $ | — | $ | 31,375 | $ | 1,875 | $ | — | $ | 1,742,286 | ||||||||||||||||||||
Percent of consolidated depreciation | 63 | % | 27 | % | 7 | % | 0 | % | 1 | % | 0 | % | 2 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Capital Expenditures | $ | 603,114 | $ | 215,483 | $ | 3,050,105 | $ | — | $ | 5,228 | $ | — | $ | 24,599 | $ | — | $ | — | $ | 3,898,529 | ||||||||||||||||||||
Percent of consolidated capital expenditures | 15 | % | 6 | % | 78 | % | 0 | % | 0 | % | 0 | % | 1 | % | 0 | % | 0 | % | 100 | % | ||||||||||||||||||||
Intangible Assets | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,222,688 | $ | — | $ | — | $ | 3,222,688 | ||||||||||||||||||||
Percent of consolidated intangible assets | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 100 | % | 0 | % | 0 | % | 100 | % |
10
Table of Contents
Item 1
11
Table of Contents
Item 1
12
Table of Contents
Item 1
13
Table of Contents
Item 1
Note Payable to Trust II | $ | 12,372,000 | ||
Note Payable to Trust III | 8,248,000 | |||
Note Payable to Trust IV | 5,155,000 | |||
Note Payable to Trust V | 10,310,000 | |||
$ | 36,085,000 | |||
14
Table of Contents
Item 1
15
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• | Quad City Bank & Trust commenced operations in 1994 and provides full-service commercial and consumer banking, and trust and asset management services to the Quad City area and adjacent communities through its five offices that are located in Bettendorf and Davenport, Iowa and Moline, Illinois. Quad City Bank & Trust also provides leasing services through its 80%-owned subsidiary, M2 Lease Funds, located in Brookfield, Wisconsin. | ||
• | Cedar Rapids Bank & Trust commenced operations in 2001 and provides full-service commercial and consumer banking services to Cedar Rapids and adjacent communities through its main office located on First Avenue in downtown Cedar Rapids, Iowa and its branch facility located on Council Street in northern Cedar Rapids. Cedar Rapids Bank & Trust also provides residential real estate mortgage lending services through its 50%-owned joint venture, Cedar Rapids Mortgage Company. | ||
• | Rockford Bank & Trust commenced operations in January 2005 and provides full-service commercial and consumer banking services to Rockford and adjacent communities through its original office located in downtown Rockford, and its branch facility located on Guilford Road at Alpine Road in Rockford. | ||
• | On February 20, 2007 the Company completed a transaction that resulted in the acquisition of a Wisconsin bank charter, the transfer of the Wisconsin-based assets and liabilities of Rockford Bank & Trust into this charter, and the creation of First Wisconsin Bank & Trust. First Wisconsin Bank & Trust is a wholly owned subsidiary of the Company providing full-service commercial and consumer banking services in the Milwaukee area through its main office located in Brookfield, Wisconsin. |
16
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
17
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
18
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
• | The average yield on interest-earning assets increased 36 basis points. | ||
• | The average cost of interest-bearing liabilities increased 19 basis points. | ||
• | The net interest spread increased 17 basis points from 2.45% to 2.62%. | ||
• | The net interest margin increased 16 basis points from 2.84% to 3.00%. |
• | The average yield on interest-earning assets increased 48 basis points. | ||
• | The average cost of interest-bearing liabilities increased 49 basis points. | ||
• | The net interest spread declined 1 basis point from 2.55% to 2.54%. | ||
• | The net interest margin increase 4 basis points from 2.90% to 2.94%. |
19
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
for 3 months ended September 30, | ||||||||||||||||||||||||
2007 | 2006 | |||||||||||||||||||||||
Interest | Average | Interest | Average | |||||||||||||||||||||
Average | Earned | Yield or | Average | Earned | Yield or | |||||||||||||||||||
Balance | or Paid | Cost | Balance | or Paid | Cost | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Interest earnings assets: | ||||||||||||||||||||||||
Federal funds sold | $ | 3,837 | 41 | 4.27 | % | $ | 9,661 | 121 | 5.01 | % | ||||||||||||||
Interest-bearing deposits at financial institutions | 4,783 | 71 | 5.94 | % | 6,686 | 86 | 5.15 | % | ||||||||||||||||
Investment securities (1) | 217,327 | 2,860 | 5.26 | % | 186,839 | 2,172 | 4.65 | % | ||||||||||||||||
Gross loans/leases receivable (2) | 1,032,302 | 19,253 | 7.46 | % | 899,621 | 16,133 | 7.17 | % | ||||||||||||||||
Total interest earning assets | 1,258,249 | 22,225 | 7.07 | % | 1,102,807 | 18,512 | 6.71 | % | ||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 39,481 | 35,741 | ||||||||||||||||||||||
Premises and equipment | 32,012 | 27,204 | ||||||||||||||||||||||
Less allowance for estimated losses on loans/leases | (11,712 | ) | (10,023 | ) | ||||||||||||||||||||
Other | 54,423 | 42,177 | ||||||||||||||||||||||
Total assets | $ | 1,372,453 | $ | 1,197,906 | ||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 318,819 | 2,907 | 3.65 | % | $ | 285,650 | 2,560 | 3.58 | % | ||||||||||||||
Savings deposits | 31,688 | 170 | 2.15 | % | 31,307 | 177 | 2.26 | % | ||||||||||||||||
Time deposits | 402,955 | 5,073 | 5.04 | % | 407,015 | 4,873 | 4.79 | % | ||||||||||||||||
Short-term borrowings | 164,965 | 1,530 | 3.71 | % | 95,253 | 772 | 3.24 | % | ||||||||||||||||
Federal Home Loan Bank advances | 161,344 | 1,859 | 4.61 | % | 137,806 | 1,464 | 4.25 | % | ||||||||||||||||
Junior subordinated debentures | 36,085 | 661 | 7.33 | % | 36,085 | 665 | 7.37 | % | ||||||||||||||||
Other borrowings | 33,931 | 591 | 6.97 | % | 11,293 | 178 | 6.30 | % | ||||||||||||||||
Total interest-bearing liabilities | 1,149,787 | 12,791 | 4.45 | % | 1,004,409 | 10,689 | 4.26 | % | ||||||||||||||||
Noninterest-bearing demand | 127,383 | 124,233 | ||||||||||||||||||||||
Other noninterest-bearing liabilities | 18,785 | 11,699 | ||||||||||||||||||||||
Total liabilities | 1,295,955 | 1,140,341 | ||||||||||||||||||||||
Minority interest in consolidated subsidiaries | 1,619 | 775 | ||||||||||||||||||||||
Stockholders’ equity | 74,880 | 56,790 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,372,453 | $ | 1,197,906 | ||||||||||||||||||||
Net interest income | $ | 9,434 | $ | 7,823 | ||||||||||||||||||||
Net interest spread | 2.62 | % | 2.45 | % | ||||||||||||||||||||
Net interest margin | 3.00 | % | 2.84 | % | ||||||||||||||||||||
Ratio of average interest earning assets to average interest-bearing liabilities | 109.43 | % | 109.80 | % | ||||||||||||||||||||
(1) | Interest earned and yields on nontaxable investment securities are determined on a tax equivalent basis using a 34% tax rate for each period presented. | |
(2) | Loan/lease fees are not material and are included in interest income from loans/leases receivable. |
20
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
Inc./(Dec.) | Components | |||||||||||
from | of Change (1) | |||||||||||
Prior Period | Rate | Volume | ||||||||||
2007 vs. 2006 | ||||||||||||
(Dollars in Thousands) | ||||||||||||
INTEREST INCOME | ||||||||||||
Federal funds sold | $ | (80 | ) | $ | (16 | ) | $ | (64 | ) | |||
Interest-bearing deposits at financial institutions | (15 | ) | 64 | (79 | ) | |||||||
Investment securities (2) | 688 | 308 | 380 | |||||||||
Gross loans/leases receivable (3) | 3,120 | 666 | 2,454 | |||||||||
Total change in interest income | $ | 3,713 | $ | 1,022 | $ | 2,691 | ||||||
INTEREST EXPENSE | ||||||||||||
Interest-bearing demand deposits | $ | 347 | $ | 45 | $ | 302 | ||||||
Savings deposits | (7 | ) | (20 | ) | 13 | |||||||
Time deposits | 200 | 493 | (293 | ) | ||||||||
Short-term borrowings | 758 | 125 | 633 | |||||||||
Federal Home Loan Bank advances | 395 | 131 | 264 | |||||||||
Junior subordinated debentures | (4 | ) | (4 | ) | — | |||||||
Other borrowings | 413 | 21 | 392 | |||||||||
Total change in interest expense | $ | 2,102 | $ | 791 | $ | 1,311 | ||||||
Total change in net interest income | $ | 1,611 | $ | 231 | $ | 1,380 | ||||||
(1) | The column “increase/decrease from prior period” is segmented into the changes attributable to variations in volume and the changes attributable to changes in interest rates. The variations attributable to simultaneous volume and rate changes have been proportionately allocated to rate and volume. | |
(2) | Interest earned and yields on nontaxable investment securities are determined on a tax equivalent basis using a 34% tax rate for each period presented. | |
(3) | Loan/lease fees are not material and are included in interest income from loans/leases receivable. |
21
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
for 9 months ended September 30, | ||||||||||||||||||||||||
2007 | 2006 | |||||||||||||||||||||||
Interest | Average | Interest | Average | |||||||||||||||||||||
Average | Earned | Yield or | Average | Earned | Yield or | |||||||||||||||||||
Balance | or Paid | Cost | Balance | or Paid | Cost | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Interest earnings assets: | ||||||||||||||||||||||||
Federal funds sold | $ | 6,163 | 215 | 4.65 | % | $ | 9,927 | 325 | 4.37 | % | ||||||||||||||
Interest-bearing deposits at financial institutions | 6,975 | 294 | 5.62 | % | 6,134 | 222 | 4.83 | % | ||||||||||||||||
Investment securities (1) | 201,748 | 7,786 | 5.15 | % | 183,952 | 6,120 | 4.44 | % | ||||||||||||||||
Gross loans/leases receivable (2) | 1,004,073 | 55,178 | 7.33 | % | 827,091 | 43,120 | 6.95 | % | ||||||||||||||||
Total interest earning assets | 1,218,957 | 63,473 | 6.94 | % | 1,027,104 | 49,787 | 6.46 | % | ||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 37,239 | 34,669 | ||||||||||||||||||||||
Premises and equipment | 32,125 | 26,343 | ||||||||||||||||||||||
Less allowance for estimated losses on loans/leases | (11,257 | ) | (9,527 | ) | ||||||||||||||||||||
Other | 49,551 | 41,458 | ||||||||||||||||||||||
Total assets | $ | 1,326,616 | $ | 1,120,047 | ||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 307,527 | 8,380 | 3.63 | % | $ | 265,258 | 6,370 | 3.20 | % | ||||||||||||||
Savings deposits | 31,255 | 496 | 2.12 | % | 32,730 | 539 | 2.20 | % | ||||||||||||||||
Time deposits | 409,962 | 15,278 | 4.97 | % | 365,263 | 11,982 | 4.37 | % | ||||||||||||||||
Short-term borrowings | 139,667 | 3,972 | 3.79 | % | 94,291 | 2,212 | 3.13 | % | ||||||||||||||||
Federal Home Loan Bank advances | 160,054 | 5,369 | 4.47 | % | 132,264 | 4,047 | 4.08 | % | ||||||||||||||||
Junior subordinated debentures | 36,085 | 1,967 | 7.27 | % | 34,367 | 1,829 | 7.10 | % | ||||||||||||||||
Other borrowings | 24,836 | 1,170 | 6.28 | % | 9,518 | 432 | 6.05 | % | ||||||||||||||||
Total interest-bearing liabilities | 1,109,386 | 36,632 | 4.40 | % | 933,691 | 27,411 | 3.91 | % | ||||||||||||||||
Noninterest-bearing demand | 122,883 | 119,015 | ||||||||||||||||||||||
Other noninterest-bearing liabilities | 19,498 | 10,721 | ||||||||||||||||||||||
Total liabilities | 1,251,767 | 1,063,427 | ||||||||||||||||||||||
Minority interest in consolidated subsidiaries | 1,519 | 724 | ||||||||||||||||||||||
Stockholders’ equity | 73,329 | 55,896 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,326,616 | $ | 1,120,047 | ||||||||||||||||||||
Net interest income | $ | 26,841 | $ | 22,376 | ||||||||||||||||||||
Net interest spread | 2.54 | % | 2.55 | % | ||||||||||||||||||||
Net interest margin | 2.94 | % | 2.90 | % | ||||||||||||||||||||
Ratio of average interest earning assets to average interest-bearing liabilities | 109.88 | % | 110.00 | % | ||||||||||||||||||||
(1) | Interest earned and yields on nontaxable investment securities are determined on a tax equivalent basis using a 34% tax rate in each year presented. | |
(2) | Loan/lease fees are not material and are included in interest income from loans/leases receivable. |
22
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
Inc./(Dec.) | Components | |||||||||||
from | of Change (1) | |||||||||||
Prior Period | Rate | Volume | ||||||||||
2007 vs. 2006 | ||||||||||||
(Dollars in Thousands) | ||||||||||||
INTEREST INCOME | ||||||||||||
Federal funds sold | $ | (110 | ) | $ | 32 | $ | (142 | ) | ||||
Interest-bearing deposits at financial institutions | 72 | 39 | 33 | |||||||||
Investment securities (2) | 1,666 | 1,039 | 627 | |||||||||
Gross loans/leases receivable (3) | 12,058 | 2,433 | 9,625 | |||||||||
Total change in interest income | $ | 13,686 | $ | 3,543 | $ | 10,143 | ||||||
INTEREST EXPENSE | ||||||||||||
Interest-bearing demand deposits | $ | 2,010 | $ | 921 | $ | 1,089 | ||||||
Savings deposits | (43 | ) | (19 | ) | (24 | ) | ||||||
Time deposits | 3,296 | 1,735 | 1,561 | |||||||||
Short-term borrowings | 1,760 | 539 | 1,221 | |||||||||
Federal Home Loan Bank advances | 1,322 | 416 | 906 | |||||||||
Junior subordinated debentures | 138 | 45 | 93 | |||||||||
Other borrowings | 738 | 17 | 721 | |||||||||
Total change in interest expense | $ | 9,221 | $ | 3,654 | $ | 5,567 | ||||||
Total change in net interest income | $ | 4,465 | $ | (111 | ) | $ | 4,576 | |||||
(1) | The column “increase/decrease from prior period” is segmented into the changes attributable to variations in volume and the changes attributable to changes in interest rates. The variations attributable to simultaneous volume and rate changes have been proportionately allocated to rate and volume. | |
(2) | Interest earned and yields on nontaxable investment securities are determined on a tax equivalent basis using a 34% tax rate for each period presented. | |
(3) | Loan/lease fees are not material and are included in interest income from loans/leases receivable. |
23
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
24
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
25
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
Three months ended | ||||||||||||
September 30, | ||||||||||||
2007 | 2006 | % change | ||||||||||
Credit card fees, net of processing costs | $ | 442,643 | $ | 476,783 | (7.16 | )% | ||||||
Trust department fees | 924,464 | 787,796 | 17.3 | % | ||||||||
Deposit service fees | 706,271 | 478,299 | 47.7 | % | ||||||||
Gains on sales of loans, net | 277,265 | 218,854 | 26.7 | % | ||||||||
Securities gains, net | 0 | 71,013 | — | |||||||||
Gains (losses) on sales of foreclosed assets | 0 | (100,000 | ) | — | ||||||||
Gains on sales of other assets | 435,791 | 0 | — | |||||||||
Earnings on bank-owned life insurance | 261,372 | 152,308 | 71.6 | % | ||||||||
Investment advisory and management fees | 369,239 | 285,635 | 29.3 | % | ||||||||
Other | 441,445 | 371,634 | 18.5 | % | ||||||||
Total noninterest income | $ | 3,858,490 | $ | 2,742,322 | 41.0 | % | ||||||
• | Trust department fees increased $137 thousand. This increase was due to both the continued development of existing trust relationships with a resulting growth in managed assets and the addition of new trust customers with a resulting growth in the number of accounts throughout the past twelve months. | ||
• | Deposit service fees increased $228 thousand. This increase was primarily a result of an increase in NSF (non-sufficient funds or overdraft) charges related to demand deposit accounts at the Company’s subsidiary banks. The quarterly average balance of the Company’s consolidated demand deposits at September 30, 2007 increased $33.2 million, or 12%, from September 30, 2006. Service charges and NSF charges related to the Company’s demand deposit accounts were the main components of deposit service fees. | ||
• | Gains on sales of loans, net, increased $58 thousand. Loans originated for sale during the third quarter of 2007 were $26.7 million and during the third quarter of 2006 were $20.3 million. Proceeds on the sales of loans during the third quarters of 2007 and 2006 were $28.5 million and $22.7 million, respectively. |
26
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
• | On July 11, 2007, the Company announced the sale of its 20% interest in Nobel to TriSource Solutions, LLC (“TriSource”). The consideration received by the Company in the sale was $500 thousand in cash and a 2.25% ownership interest in TriSource, resulting in a net gain on sale of investment of $436 thousand. | ||
• | Earnings on bank-owned life insurance (BOLI) increased by $109 thousand. Over the past 9 months, the subsidiary banks have purchased additional BOLI for key executives increasing the level of insurance $9.1 million. | ||
• | Investment advisory and management fees increased $84 thousand. This increase was due to both the continued development of existing customers and the addition of new customers with a resulting growth in the number and value of accounts throughout the past three months. | ||
• | Other noninterest income increased $69 thousand, as the result of modest increases in several areas. Other noninterest income in each quarter consists primarily of income from affiliated companies, earnings on other assets, Visa check card fees, gain on disposal of leased assets and ATM fees. |
Three months ended | ||||||||||||
September 30, | ||||||||||||
2007 | 2006 | % change | ||||||||||
Salaries and employee benefits | $ | 6,154,660 | $ | 5,510,926 | 11.7 | % | ||||||
Professional and data processing fees | 888,753 | 879,938 | 1.0 | % | ||||||||
Advertising and marketing | 322,632 | 389,812 | (17.2 | )% | ||||||||
Occupancy and equipment expense | 1,297,634 | 1,304,567 | (0.5 | )% | ||||||||
Stationery and supplies | 158,709 | 159,758 | (0.7 | )% | ||||||||
Postage and telephone | 262,664 | 241,867 | 8.6 | % | ||||||||
Bank service charges | 145,364 | 151,369 | (4.0 | )% | ||||||||
FDIC and other insurance | 295,138 | 161,381 | 82.9 | % | ||||||||
Other | 350,210 | 207,960 | 68.4 | % | ||||||||
Total noninterest expenses | $ | 9,875,764 | $ | 9,007,578 | 9.6 | % | ||||||
27
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
• | Total salaries and benefits, which is the largest component of noninterest expenses, increased $644 thousand. The increase was primarily due to an increase in employees at the Company’s newest subsidiary banks which increased 14 full time equivalents (FTEs) from year-to-year, as a result of the Company’s continued expansion in those markets. Increases in salary and employee benefits expense at Rockford Bank & Trust and First Wisconsin Bank & Trust, in aggregate, contributed $273 thousand of the total year-to-year increase. Also, contributing to the increase was an increase of $102 thousand, in aggregate, for compensation programs for senior executives, such as stock appreciation rights (SARs), tax benefit rights (TBRs), and deferred compensation. |
• | Advertising and marketing expense decreased $67 thousand. The Company invested $127 thousand and $221 thousand in advertising and marketing expense at Quad City Bank &Trust for the three months ended September 30, 2007 and 2006, respectively. This decrease was offset by increases in marketing at the Company’s newest subsidiary banks, Rockford Bank & Trust and First Wisconsin Bank & Trust, as investment in marketing increased $27 thousand when comparing the first nine months of 2007 to 2006. Investment in advertising and marketing tends to fluctuate as it is dependent on the need in the particular market as determined by management. | ||
• | FDIC and other insurance expense increased 83% to $295 thousand. The $134 thousand increase was entirely the result of the Federal Deposit Insurance Corporation’s (FDIC’s) new premium pricing system and the assessment methodology for deposit insurance coverage now being applied to the subsidiary banks. |
28
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
29
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
Nine months ended | ||||||||||||
September 30, | ||||||||||||
2007 | 2006 | % change | ||||||||||
Credit card fees, net of processing costs | $ | 1,248,917 | $ | 1,464,233 | (14.7 | )% | ||||||
Trust department fees | 2,783,795 | 2,310,737 | 20.5 | % | ||||||||
Deposit service fees | 1,962,409 | 1,422,379 | 38.0 | % | ||||||||
Gains on sales of loans, net | 965,680 | 711,857 | 35.7 | % | ||||||||
Securities gains (losses), net | 0 | (142,866 | ) | — | ||||||||
Gains on sales of foreclosed assets | 1,007 | 650,134 | (99.9 | )% | ||||||||
Gains on sales of other assets | 435,791 | 0 | — | |||||||||
Earnings on bank-owned life insurance | 661,355 | 565,316 | 17.0 | % | ||||||||
Investment advisory and management fees | 1,134,362 | 949,573 | 19.5 | % | ||||||||
Other | 1,391,746 | 1,203,774 | 15.5 | % | ||||||||
Total noninterest income | $ | 10,585,062 | $ | 9,135,137 | 15.9 | % | ||||||
• | Bancard’s credit card fees, net of processing costs, decreased $215 thousand for the first nine months of 2007 when compared to the like period of 2006. The majority of this decrease is an increase in net charge-offs. For the first nine months of 2007, Bancard incurred net charge offs totaling $224 thousand which is an increase of $157 thousand as compared to the first nine months of 2006. Additionally, the recovery of the remaining balance of an ISO-conversion reserve of $64 thousand in March 2006 accounted for approximately 30% of the year-to-year decline. | ||
• | Trust department fees increased $473 thousand. This increase was due to both the continued development of existing trust relationships with a resulting growth in managed assets and the addition of new trust customers with a resulting growth in the number of accounts throughout the past twelve months. | ||
• | Deposit service fees increased $540 thousand. This increase was primarily a result of an increase in NSF (non-sufficient funds or overdraft) charges related to demand deposit accounts at the Company’s subsidiary banks. The nine-month average balance of the Company’s consolidated demand deposits at September 30, 2007 increased $42.3 million, or 16%, from September 30, 2006. Service charges and NSF charges related to the Company’s demand deposit accounts were the main components of deposit service fees. |
30
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
• | Gains on sales of loans, net, increased $254 thousand. Loans originated for sale during the first nine months of 2007 were $81.1 million and during the like period of 2006 were $63.8 million. Proceeds on the sales of loans during the first nine months of 2007 and 2006 were $83.8 million and $61.9 million, respectively. | ||
• | During the second quarter of 2006, Quad City Bank & Trust completed the sale of a foreclosed asset, which resulted in a gain of $745 thousand. | ||
• | On July 11, 2007, the Company announced the sale of its 20% interest in Nobel to TriSource Solutions, LLC (“TriSource”). The consideration received by the Company in the sale was $500 thousand in cash and a 2.25% ownership interest in TriSource, resulting in a net gain on sale of investment of $436 thousand. | ||
• | Earnings on bank-owned life insurance (BOLI) increased by $96 thousand. Over the past 9 months, the subsidiary banks have purchased additional BOLI for key executives increasing the level of insurance $9.1 million. | ||
• | Investment advisory and management fees increased $185 thousand. This increase was due to both the continued development of existing customers and the addition of new customers with a resulting growth in the number and value of accounts throughout the past three months. |
Nine months ended | ||||||||||||
September 30, | ||||||||||||
2007 | 2006 | % change | ||||||||||
Salaries and employee benefits | $ | 17,626,748 | $ | 16,253,426 | 8.5 | % | ||||||
Professional and data processing fees | 2,781,970 | 2,439,191 | 14.1 | % | ||||||||
Advertising and marketing | 944,109 | 1,016,661 | (7.1 | )% | ||||||||
Occupancy and equipment expense | 3,724,000 | 3,829,228 | (2.8 | )% | ||||||||
Stationery and supplies | 453,036 | 497,127 | (8.9 | )% | ||||||||
Postage and telephone | 769,433 | 715,108 | 7.6 | % | ||||||||
Bank service charges | 429,062 | 429,844 | (0.2 | )% | ||||||||
FDIC and other insurance | 707,616 | 447,870 | 58.0 | % | ||||||||
Loss on disposals/sales of fixed assets | 239,016 | — | — | |||||||||
Other | 990,903 | 254,776 | 288.9 | % | ||||||||
Total noninterest expenses | $ | 28,665,893 | $ | 25,883,231 | 10.8 | % | ||||||
31
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
• | Total salaries and benefits, which is the largest component of noninterest expenses, increased $1.4 million. The increase was primarily due to an increase in employees at the Company’s newest subsidiary banks which increased 14 full time equivalents (FTEs) from year-to-year, as a result of the Company’s continued expansion in those markets. Increases in salary and employee benefits expense at Rockford Bank & Trust and First Wisconsin Bank & Trust, in aggregate, contributed 80% of the total year-to-year increase. | ||
• | Professional and data processing fees increased $343 thousand. The primary contributors to the year-to-year increase were increases in data processing fees at the subsidiary banks of $254 thousand and an increase of $101 thousand in audit/accounting fees at the parent Company level. |
• | Occupancy and equipment expense decreased $105 thousand. The decrease was the net effect of two offsetting items. The first item was a $242 thousand increase, which proportionately reflects the Company’s investment in additional facilities at the subsidiary banks, in combination with the related costs associated with additional furniture, fixtures and equipment, such as depreciation, maintenance, utilities, and property taxes. The offsetting item was a $347 thousand elimination of rental expense, which resulted from the addition of Velie Plantation Holding Company as a consolidated subsidiary during the fourth quarter of 2006. | ||
• | FDIC and other insurance expense increased 58% to $708 thousand. The $260 thousand increase was entirely the result of the Federal Deposit Insurance Corporation’s (FDIC’s) new premium pricing system and the assessment methodology for deposit insurance coverage now being applied to the subsidiary banks. | ||
• | During the first quarter of 2007, Quad City Bank & Trust contributed two vacant lots to a developer to allow for the development of upscale retail space adjacent to its Five Points facility, which resulted in an aggregate write off of $239 thousand. |
32
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
33
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
34
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
35
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
36
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
37
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
38
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
39
Table of Contents
Item 2
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — continued
40
Table of Contents
Item 3
41
Table of Contents
Item 3
42
Table of Contents
Item 4
43
Table of Contents
Part II
QCR HOLDINGS, INC.
AND SUBSIDIARIES
PART II — OTHER INFORMATION
Item 1 | Legal Proceedings |
There are no material pending legal proceedings to which the Company or its subsidiaries is a party other than ordinary routine litigation incidental to their respective businesses.
Item 1.A. | Risk Factors |
There have been no material changes in the risk factors applicable to the Company from those disclosed in Part I, Item 1.A. “Risk Factors,” in the Company’s 2006 Annual Report on Form 10-K. Please refer to that section of the Company’s Form 10-K for disclosures regarding the risks and uncertainties related to the Company’s business.
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
None
Item 3 | Defaults Upon Senior Securities |
None
Item 4 | Submission of Matters to a Vote of Security Holders |
None
Item 5 | Other Information |
None
44
1
Table of Contents
Part II
PART II — OTHER INFORMATION — continued
Item 6 | Exhibits |
(a) | Exhibits |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) |
32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
45
2
Table of Contents
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
QCR HOLDINGS, INC.
(Registrant)
DateNovember 9, 2007
/s/ Douglas M. Hultquist
Douglas M. Hultquist, President
Chief Executive Officer
DateNovember 9, 2007
/s/ Todd A. Gipple
Todd A. Gipple, Executive Vice President
Chief Financial Officer
46
3
Table of Contents
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
QCR HOLDINGS, INC.
(Registrant)
DateNovember 9, 2007
Douglas M. Hultquist, President
Chief Executive Officer
DateNovember 9, 2007
Todd A. Gipple, Executive Vice President
Chief Financial Officer
47
4