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Section 1: 8-K (8-K)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event Reported): July 23, 2019

 

QCR Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

 

0-22208

 

42-1397595

(State or Other Jurisdiction of
 Incorporation)

 

(Commission File Number)

 

(I.R.S. Employer Identification
Number)

 

3551 Seventh Street, Moline, Illinois 61265

(Address of Principal Executive Offices) (Zip Code)

 

(309) 736-3584
(Registrant’s telephone number, including area code)

 

N/A
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $1.00 Par Value

 

QCRH

 

The Nasdaq Global Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 


 

Item 2.02. Results of Operations and Financial Condition.

 

On July 23, 2019, QCR Holdings, Inc. issued a press release disclosing financial results for the quarter ended June 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by QCR Holdings, Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1

 

Press Release dated July 23, 2019, containing financial information for the quarter ended June 30, 2019.

 

 

2


 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

QCR Holdings, Inc.

 

 

 

Date: July 23, 2019

By:

/s/ Todd A. Gipple

 

 

Todd A. Gipple

 

 

President, Chief Operating Officer and Chief Financial Officer

 

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Section 2: EX-99.1 (EX-99.1)

Exhibit 99.1

 

PRESS RELEASE

FOR IMMEDIATE RELEASE

 

QCR Holdings, Inc. Announces Record Net Income of $13.5 Million for the Second Quarter of 2019

 

Second Quarter 2019 Highlights

 

·                  Net income of $13.5 million, or $0.85 per diluted share

 

·                  Adjusted net income (non-GAAP) of $14.1 million, or $0.88 per diluted share

 

·                  Annualized loan and lease growth of 11.7% for the quarter and 9.5% year-to-date

 

·                  Annualized deposit growth of 12.2% for the quarter and 17.4% year-to-date

 

·                  Record noninterest income of $17.1 million for the quarter and $29.1 million year-to-date

 

·                  NIM and NIM (TEY)(non-GAAP) stabilized at 3.25% and 3.40%, respectively

 

·                  Nonperforming assets down $3.2 million, or 12.2% from the prior quarter

 

Moline, IL, July 23, 2019 — QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $13.5 million and diluted earnings per share (“EPS”) of $0.85 for the second quarter of 2019, compared to net income of $12.9 million and diluted EPS of $0.81 for the first quarter of 2019. The second quarter results included $0.6 million of post-acquisition compensation, transition and integration costs (after-tax), compared to $0.1 million of similar costs in the first quarter of 2019. Excluding these expenses, the Company reported adjusted net income (non-GAAP) of $14.1 million and adjusted diluted EPS of $0.88 for the second quarter of 2019, compared to adjusted net income (non-GAAP) of $13.0 million and adjusted diluted EPS of $0.82 for the first quarter of 2019. For the second quarter of 2018, net income and diluted EPS were $10.4 million and $0.73, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS were $10.9 million and $0.77, respectively.

 

 

 

For the Quarter Ended

 

 

 

June 30,

 

Mar. 31,

 

June 30,

 

$ in millions (except per share data)

 

2019

 

2019

 

2018

 

Net Income

 

$

13.5

 

$

12.9

 

$

10.4

 

Diluted EPS

 

$

0.85

 

$

0.81

 

$

0.73

 

Adjusted Net Income (non-GAAP)(1)

 

$

14.1

 

$

13.0

 

$

10.9

 

Adjusted Diluted EPS (non-GAAP)(1) 

 

$

0.88

 

$

0.82

 

$

0.77

 

 


(1)  See GAAP to non-GAAP reconciliations.

 

“We are very pleased with our results for the second quarter,” commented Larry J. Helling, Chief Executive Officer. “We posted a record quarter of net income, driven by strong loan and deposit growth, record fee income, excellent credit quality and careful management of noninterest expenses. We successfully deployed our increase in core deposits during the quarter with solid loan and lease production, while maintaining disciplined underwriting. The higher average loan balances, combined with a stable net interest margin, enabled us to generate an increase in net interest income from the prior quarter.”

 

Annualized Loan and Lease Growth of 11.7%

 

During the second quarter of 2019, the Company’s total assets increased $128.2 million to a total of $5.2 billion, while total loans and leases grew $111.1 million, or 2.9%, compared to the first quarter of 2019. Loan and lease growth was funded by an increase in core deposits. Core deposits (excluding brokered deposits) increased $159.7 million, or 4.1% on a linked quarter basis. At quarter-end, the percentage of wholesale funds to total assets was 10.0%, an improvement from 11.9% in the first quarter. Additionally, at quarter-end the percentage of gross loans and leases to total assets remained consistent on a linked quarter basis at 75%.

 

“Our solid loan growth for the quarter was driven by strength in commercial and industrial and commercial real estate construction loans,” added Mr. Helling. “Production was driven by both our core commercial lending business, as well as our Specialty Finance Group. We also experienced another quarter of a more normalized level of payoffs, which were up modestly from the first quarter, but relatively flat with the second quarter of 2018. Our loan and lease pipeline remains solid, giving us confidence that we are on track to achieve organic loan growth of between 8% and 10% for the full year.”

 


 

Net Interest Income of $38.0 million

 

Net interest income for the second quarter of 2019 totaled $38.0 million, compared to $36.9 million for the first quarter of 2019 and $32.1 million for the second quarter of 2018. The increase was due to growth in average interest earning assets of $85.5 million, or 1.9% on a linked quarter basis, as reported net interest margin remained stable. Acquisition-related net accretion totaled $1.1 million (pre-tax) for the second quarter of 2019, consistent with the first quarter of 2019 and was $0.5 million for the second quarter of 2018. Adjusted net interest income (non-GAAP) was $38.7 million for the second quarter of 2019, compared to $37.6 million for the first quarter of 2019 and $33.0 million for the second quarter of 2018.

 

In the second quarter, reported net interest margin was 3.25% and, on a tax-equivalent yield basis, net interest margin was 3.40%. Both measures remained stable relative to the first quarter of 2019. Net interest margin, excluding acquisition-related net accretion was 3.31%, also consistent with the first quarter. The stability in adjusted net interest margin during the quarter was due to the 4 basis point increase in the yield on interest earning assets, offset by a 4 basis point increase in the total cost of funds (due to both mix and rate).

 

 

 

For the Quarter Ended

 

 

 

June 30,

 

Mar. 31,

 

 

 

2019

 

2019

 

NIM

 

3.25

%

3.25

%

NIM (TEY)(non-GAAP)(1)

 

3.40

%

3.40

%

Adjusted NIM (TEY)(non-GAAP)(1)

 

3.31

%

3.31

%

 


(1) See GAAP to non-GAAP reconciliations.

 

“While competition for new deposits remained strong and deposit costs increased slightly during the quarter, our ability to gather core deposits and significantly reduce our wholesale funding enabled us to limit the increase in our cost of funds to only 4 basis points,” stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “Excluding the impact of acquisition-related accretion, our adjusted loan yields on a tax-equivalent basis also increased by 4 basis points, which resulted in a stable net interest margin for the second quarter.”

 

Record Noninterest Income of $17.1 million

 

Noninterest income for the second quarter of 2019 totaled $17.1 million, compared to $12.0 million for the first quarter of 2019. The increase was primarily due to a $4.7 million increase in swap fee income. Wealth management revenue was $4.2 million for the quarter, comparable to the first quarter of 2019. Noninterest income increased 91.5% when compared to the second quarter of 2018.

 

“Continued strong production from our Specialty Finance Group led to a record $7.9 million in swap fee income during the quarter. Swap fee income and gains on the sale of government guaranteed loans totaled $11.2 million for the first six months of 2019, already putting us near the high end of our full-year target of $8 to $12 million,” added Mr. Gipple.

 

Noninterest Expenses of $36.6 million

 

Noninterest expense for the second quarter of 2019 totaled $36.6 million, compared to $32.4 million and $26.4 million for the first quarter of 2019 and second quarter of 2018, respectively. The linked quarter increase was due to a number of factors, including a $0.9 million increase in net costs of operations of other real estate, as the Company reduced the carrying value of an OREO property by $1.0 million. There was also an additional $2.5 million of bonus and commission expense in the quarter, driven by the strong financial results and higher than anticipated swap fee income. Excluding post-acquisition expenses, higher incentive compensation and the OREO write-down, noninterest expense would have totaled $32.4 million.

 

Asset Quality Improvement

 

Nonperforming assets (“NPAs”) totaled $23.2 million, a decrease of $3.2 million from the first quarter of 2019. The lower NPAs resulted in the ratio of NPAs to total assets improving to 0.45% at June 30, 2019, compared to 0.52% at March 31, 2019 and 0.65% at June 30, 2018.

 

The Company’s provision for loan and lease losses totaled $1.9 million for the second quarter of 2019, which was down from $2.1 million from the prior quarter and down from $2.4 million in the second quarter of 2018. The linked quarter decrease in the provision for loan and

 

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lease losses was primarily due to improved credit quality.  As of June 30, 2019, the Company’s allowance to total loans and leases was 1.05%, which was down from 1.08% at March 31, 2019 and down from 1.21% at June 30, 2018.

 

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through past acquisitions were recorded at market value; therefore, there was no allowance associated with the acquired loans at the acquisition date. Management continues to evaluate the allowance needed on the acquired loans factoring in the net remaining discount ($9.3 million at June 30, 2019).

 

Strong Capital Levels

 

As of June 30, 2019, the Company’s total risk-based capital ratio was 12.18%, the common equity Tier 1 ratio was 9.04%, and the tangible common equity to tangible assets ratio was 8.05%. By comparison, these respective ratios were 12.26%, 9.02% and 7.92% as of March 31, 2019.

 

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 return on average assets, improve efficiency ratio, and increase EPS

 

Conference Call Details

 

The Company will host an earnings call/webcast tomorrow, July 24, 2019, at 10:00 a.m. Central Time. Dial-in information for the call is toll-free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be  available for digital replay through August 8, 2019. The replay access information is toll-free: 877-344-7529 (international 412-317-0088); access code: 10133166. A webcast of the teleconference can be accessed at the Company’s News and Events page at www.qcrh.com. An archived version of the webcast will be available at the same location shortly after the live event has ended.

 

About Us

 

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, 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. In July 2018, the Company completed a merger with Springfield Bancshares, Inc., the holding company of Springfield First Community Bank of Springfield, Missouri. With this addition of Springfield First Community Bank, the Company has 27 locations in Illinois, Iowa, Wisconsin and Missouri. As of June 30, 2019, the Company had approximately $5.2 billion in assets, $3.9 billion in loans and $4.3 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, state, national and international economies (including the impact of

 

3


 

tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations); (ii) the economic impact of any future terrorist threats and attacks, 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 acquisitions and the possibility that 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

President

Chief Operating Officer

Chief Financial Officer

(309) 743-7745

[email protected]

 

Christopher J. Lindell

Executive Vice President

Corporate Communications

(319) 743-7006

[email protected]

 

4


 

QCR HOLDINGS, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

 

As of

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

 

 

(dollars in thousands)

 

CONDENSED BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

87,919

 

$

76,527

 

$

85,523

 

$

73,407

 

$

69,069

 

Federal funds sold and interest-bearing deposits

 

205,497

 

216,032

 

159,596

 

129,660

 

51,667

 

Securities

 

643,803

 

655,749

 

662,969

 

650,745

 

657,997

 

Net loans/leases

 

3,869,415

 

3,758,268

 

3,692,907

 

3,610,309

 

3,077,247

 

Intangibles

 

16,089

 

16,918

 

17,450

 

16,137

 

8,470

 

Goodwill

 

77,748

 

77,872

 

77,832

 

73,618

 

28,091

 

Other assets

 

294,381

 

265,296

 

253,433

 

238,856

 

214,342

 

Total assets

 

$

5,194,852

 

$

5,066,662

 

$

4,949,710

 

$

4,792,732

 

$

4,106,883

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits

 

$

4,322,510

 

$

4,194,220

 

$

3,977,031

 

$

3,788,277

 

$

3,298,276

 

Total borrowings

 

230,953

 

282,994

 

404,968

 

483,635

 

380,392

 

Other liabilities

 

137,089

 

101,041

 

94,573

 

63,433

 

58,627

 

Total stockholders’ equity

 

504,300

 

488,407

 

473,138

 

457,387

 

369,588

 

Total liabilities and stockholders’ equity

 

$

5,194,852

 

$

5,066,662

 

$

4,949,710

 

$

4,792,732

 

$

4,106,883

 

 

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS OF LOAN PORTFOLIO

 

 

 

 

 

 

 

 

 

 

 

Loan/lease mix:

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial loans

 

$

1,548,657

 

$

1,479,247

 

$

1,429,410

 

$

1,380,543

 

$

1,273,000

 

Commercial real estate loans

 

1,837,473

 

1,790,845

 

1,766,111

 

1,727,326

 

1,349,319

 

Direct financing leases

 

101,180

 

108,543

 

117,969

 

126,752

 

133,197

 

Residential real estate loans

 

293,479

 

288,502

 

290,759

 

309,288

 

257,434

 

Installment and other consumer loans

 

120,947

 

123,087

 

119,381

 

100,191

 

92,952

 

Deferred loan/lease origination costs, net of fees

 

8,783

 

9,208

 

9,124

 

9,286

 

8,890

 

Total loans/leases

 

$

3,910,519

 

$

3,799,432

 

$

3,732,754

 

$

3,653,386

 

$

3,114,792

 

Less allowance for estimated losses on loans/leases

 

41,104

 

41,164

 

39,847

 

43,077

 

37,545

 

Net loans/leases

 

$

3,869,415

 

$

3,758,268

 

$

3,692,907

 

$

3,610,309

 

$

3,077,247

 

 

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS OF SECURITIES PORTFOLIO

 

 

 

 

 

 

 

 

 

 

 

Securities mix:

 

 

 

 

 

 

 

 

 

 

 

U.S. government sponsored agency securities

 

$

35,762

 

$

35,843

 

$

36,411

 

$

36,492

 

$

35,667

 

Municipal securities

 

440,853

 

450,376

 

459,409

 

453,275

 

458,510

 

Residential mortgage-backed and related securities

 

159,228

 

161,692

 

159,249

 

155,733

 

158,534

 

Other securities

 

7,960

 

7,838

 

7,900

 

5,245

 

5,286

 

Total securities

 

$

643,803

 

$

655,749

 

$

662,969

 

$

650,745

 

$

657,997

 

 

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS OF DEPOSITS

 

 

 

 

 

 

 

 

 

 

 

Deposit mix:

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

$

795,951

 

$

821,599

 

$

791,101

 

$

802,090

 

$

746,822

 

Interest-bearing demand deposits

 

2,505,956

 

2,334,474

 

2,204,206

 

2,094,814

 

1,865,382

 

Time deposits

 

733,135

 

719,286

 

704,903

 

615,323

 

519,999

 

Brokered deposits

 

287,468

 

318,861

 

276,821

 

276,050

 

166,073

 

Total deposits

 

$

4,322,510

 

$

4,194,220

 

$

3,977,031

 

$

3,788,277

 

$

3,298,276

 

 

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS OF BORROWINGS

 

 

 

 

 

 

 

 

 

 

 

Borrowings mix:

 

 

 

 

 

 

 

 

 

 

 

Term FHLB advances

 

$

46,433

 

$

66,380

 

$

76,327

 

$

63,399

 

$

46,600

 

Overnight FHLB advances (1)

 

59,300

 

59,800

 

190,165

 

295,730

 

207,500

 

Wholesale structured repurchase agreements

 

 

35,000

 

35,000

 

35,000

 

35,000

 

Customer repurchase agreements

 

2,181

 

3,056

 

2,084

 

3,049

 

2,186

 

Federal funds purchased

 

17,010

 

12,830

 

26,690

 

8,670

 

15,400

 

Subordinated notes

 

68,274

 

68,215

 

4,782

 

 

 

Junior subordinated debentures

 

37,755

 

37,713

 

37,670

 

37,626

 

37,581

 

Other borrowings

 

 

 

32,250

 

40,161

 

36,125

 

Total borrowings

 

$

230,953

 

$

282,994

 

$

404,968

 

$

483,635

 

$

380,392

 

 


(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 2.39%.

 

5


 

QCR HOLDINGS, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

 

For the Quarter Ended

 

 

 

June 30,

 

March 31

 

December 31,

 

September 30,

 

June 30,

 

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

INCOME STATEMENT

 

 

 

Interest income

 

$

54,181

 

$

52,102

 

$

52,703

 

$

49,831

 

$

40,799

 

Interest expense

 

16,168

 

15,194

 

13,110

 

11,517

 

8,714

 

Net interest income

 

38,013

 

36,908

 

39,593

 

38,314

 

32,085

 

Provision for loan/lease losses

 

1,941

 

2,134

 

1,611

 

6,206

 

2,301

 

Net interest income after provision for loan/lease losses

 

$

36,072

 

$

34,774

 

$

37,982

 

$

32,108

 

$

29,784

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust department fees

 

$

2,361

 

$

2,493

 

$

2,216

 

$

2,196

 

$

2,058

 

Investment advisory and management fees

 

1,888

 

1,736

 

1,657

 

1,059

 

1,058

 

Deposit service fees

 

1,658

 

1,554

 

1,623

 

1,656

 

1,610

 

Gain on sales of residential real estate loans, net

 

489

 

369

 

361

 

337

 

102

 

Gain on sales of government guaranteed portions of loans, net

 

39

 

31

 

 

46

 

 

Swap fee income

 

7,891

 

3,198

 

7,069

 

1,110

 

1,649

 

Securities losses, net

 

(52

)

 

 

 

 

Earnings on bank-owned life insurance

 

412

 

540

 

341

 

474

 

399

 

Debit card fees

 

914

 

792

 

807

 

846

 

844

 

Correspondent banking fees

 

172

 

216

 

179

 

195

 

213

 

Other

 

1,293

 

1,064

 

1,026

 

890

 

979

 

Total noninterest income

 

$

17,065

 

$

11,993

 

$

15,279

 

$

8,809

 

$

8,912

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

22,749

 

$

20,879

 

$

19,779

 

$

17,433

 

$

15,804

 

Occupancy and equipment expense

 

3,533

 

3,694

 

3,367

 

3,318

 

3,133

 

Professional and data processing fees

 

3,031

 

2,750

 

3,577

 

2,396

 

2,771

 

Acquisition costs

 

 

 

(4

)

1,292

 

414

 

Post-acquisition compensation, transition and integration costs

 

708

 

134

 

1,427

 

494

 

165

 

FDIC insurance, other insurance and regulatory fees

 

926

 

964

 

1,065

 

933

 

840

 

Loan/lease expense

 

312

 

214

 

624

 

369

 

260

 

Net cost and gains/losses on operations of other real estate

 

1,182

 

298

 

2,477

 

(50

)

(70

)

Advertising and marketing

 

1,037

 

785

 

1,122

 

984

 

753

 

Bank service charges

 

508

 

483

 

469

 

462

 

466

 

Correspondent banking expense

 

206

 

204

 

207

 

205

 

204

 

Intangibles amortization

 

615

 

532

 

540

 

542

 

305

 

Other

 

1,753

 

1,498

 

1,760

 

2,122

 

1,325

 

Total noninterest expense

 

$

36,560

 

$

32,435

 

$

36,410

 

$

30,500

 

$

26,370

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income before taxes

 

$

16,577

 

$

14,332

 

$

16,851

 

$

10,417

 

$

12,326

 

Federal and state income tax expense

 

3,073

 

1,414

 

3,535

 

1,608

 

1,881

 

Net income

 

$

13,504

 

$

12,918

 

$

13,316

 

$

8,809

 

$

10,445

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

$

0.86

 

$

0.82

 

$

0.85

 

$

0.56

 

$

0.75

 

Diluted EPS

 

$

0.85

 

$

0.81

 

$

0.84

 

$

0.55

 

$

0.73

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

15,714,588

 

15,693,345

 

15,641,401

 

15,625,123

 

13,919,565

 

Weighted average common and common equivalent shares outstanding

 

15,938,377

 

15,922,940

 

15,898,591

 

15,922,324

 

14,232,423

 

 

6


 

QCR HOLDINGS, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

 

For the Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

 

2018

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

INCOME STATEMENT

 

 

 

Interest income

 

$

106,283

 

$

80,345

 

Interest expense

 

31,362

 

15,857

 

Net interest income

 

74,921

 

64,488

 

Provision for loan/lease losses

 

4,075

 

4,841

 

Net interest income after provision for loan/lease losses

 

$

70,846

 

$

59,647

 

 

 

 

 

 

 

Trust department fees

 

$

4,854

 

$

4,295

 

Investment advisory and management fees

 

3,624

 

2,010

 

Deposit service fees

 

3,212

 

3,142

 

Gain on sales of residential real estate loans

 

858

 

203

 

Gain on sales of government guaranteed portions of loans

 

70

 

358

 

Swap fee income

 

11,089

 

2,608

 

Securities losses, net

 

(52

)

 

Earnings on bank-owned life insurance

 

952

 

817

 

Debit card fees

 

1,706

 

1,610

 

Correspondent banking fees

 

388

 

477

 

Other

 

2,357

 

1,934

 

Total noninterest income

 

$

29,058

 

$

17,454

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

43,628

 

$

31,782

 

Occupancy and equipment expense

 

7,227

 

6,198

 

Professional and data processing fees

 

5,781

 

5,479

 

Acquisition costs

 

 

506

 

Post-acquisition compensation, transition and integration costs

 

842

 

165

 

FDIC insurance, other insurance and regulatory fees

 

1,890

 

1,597

 

Loan/lease expense

 

526

 

551

 

Net cost of operation of other real estate

 

1,480

 

62

 

Advertising and marketing

 

1,822

 

1,446

 

Bank service charges

 

991

 

907

 

Correspondent banking expense

 

410

 

409

 

Intangibles amortization

 

1,147

 

609

 

Other

 

3,251

 

2,523

 

Total noninterest expense

 

$

68,995

 

$

52,234

 

 

 

 

 

 

 

Net income before taxes

 

$

30,909

 

$

24,867

 

Income tax expense

 

4,487

 

3,872

 

Net income

 

$

26,422

 

$

20,995

 

 

 

 

 

 

 

Basic EPS

 

$

1.68

 

$

1.51

 

Diluted EPS

 

$

1.66

 

$

1.48

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

15,703,967

 

13,904,113

 

Weighted average common and common equivalent shares outstanding

 

15,930,659

 

14,219,003

 

 

7


 

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,

 

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

2019

 

2018

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

COMMON SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

15,772,939

 

15,755,442

 

15,718,208

 

15,673,760

 

13,973,940

 

 

 

 

 

Book value per common share (1)

 

$

31.97

 

$

31.00

 

$

30.10

 

$

29.18

 

$

26.45

 

 

 

 

 

Tangible book value per common share (2)

 

$

26.02

 

$

24.98

 

$

24.04

 

$

23.46

 

$

23.83

 

 

 

 

 

Closing stock price

 

$

34.87

 

$

33.92

 

$

32.09

 

$

40.85

 

$

47.45

 

 

 

 

 

Market capitalization

 

$

550,002

 

$

534,425

 

$

504,397

 

$

640,273

 

$

663,063

 

 

 

 

 

Market price / book value

 

109.06

%

109.42

%

106.61

%

139.98

%

179.41

%

 

 

 

 

Market price / tangible book value

 

134.00

%

135.77

%

133.49

%

174.16

%

199.10

%

 

 

 

 

Earnings per common share (basic) LTM (3)

 

$

3.10

 

$

2.99

 

$

2.92

 

$

2.79

 

$

2.83

 

 

 

 

 

Price earnings ratio LTM (3)

 

11.25 x

 

11.34 x

 

10.98 x

 

14.64 x

 

16.77 x

 

 

 

 

 

TCE / TA (4)

 

8.05

%

7.92

%

7.78

%

7.82

%

8.18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

488,407

 

$

473,138

 

$

457,387

 

$

369,588

 

$

360,428

 

 

 

 

 

Net income

 

13,504

 

12,918

 

13,316

 

8,809

 

10,445

 

 

 

 

 

Other comprehensive income (loss), net of tax

 

2,243

 

2,343

 

1,943

 

(612

)

(1,335

)

 

 

 

 

Common stock cash dividends declared

 

(942

)

(942

)

(939

)

(938

)

(836

)

 

 

 

 

Proceeds from issuance of 1,689,561 shares of common stock, net of costs, as a result of the acquisition of Springfield First Community Bank

 

 

 

 

80,063

 

 

 

 

 

 

Proceeds from issuance of 23,501 shares of common stock, net of costs, as a result of the acquisition of Bates Companies

 

 

 

1,000

 

 

 

 

 

 

 

Other (5)

 

1,088

 

950

 

431

 

477

 

886

 

 

 

 

 

Ending balance

 

$

504,300

 

$

488,407

 

$

473,138

 

$

457,387

 

$

369,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REGULATORY CAPITAL RATIOS (6):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

12.18

%

12.26

%

10.69

%

10.87

%

11.23

%

 

 

 

 

Tier 1 risk-based capital ratio

 

9.87

%

9.87

%

9.77

%

9.83

%

10.19

%

 

 

 

 

Tier 1 leverage capital ratio

 

8.96

%

8.90

%

8.87

%

8.87

%

9.22

%

 

 

 

 

Common equity tier 1 ratio

 

9.04

%

9.02

%

8.89

%

8.92

%

9.16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY PERFORMANCE RATIOS AND OTHER METRICS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

1.06

%

1.04

%

1.10

%

0.75

%

1.03

%

1.05

%

1.04

%

Return on average total equity (annualized)

 

10.84

%

10.71

%

11.42

%

8.08

%

11.45

%

10.78

%

11.64

%

Net interest margin

 

3.25

%

3.25

%

3.48

%

3.46

%

3.37

%

3.25

%

3.43

%

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

 

3.40

%

3.40

%

3.63

%

3.60

%

3.52

%

3.40

%

3.58

%

Efficiency ratio (Non-GAAP) (8)

 

66.38

%

66.33

%

66.35

%

64.72

%

64.32

%

66.35

%

63.75

%

Gross loans and leases / total assets

 

75.28

%

74.99

%

75.41

%

76.23

%

75.84

%

75.28

%

75.84

%

Gross loans and leases / total deposits

 

90.47

%

90.59

%

93.86

%

96.44

%

94.44

%

90.47

%

94.44

%

Effective tax rate

 

18.54

%

9.87

%

20.98

%

15.44

%

15.26

%

14.52

%

15.57

%

Full-time equivalent employees (9)

 

773

 

771

 

755

 

728

 

666

 

773

 

666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

5,077,900

 

$

4,968,502

 

$

4,842,232

 

$

4,677,875

 

$

4,053,684

 

$

5,023,201

 

$

4,024,188

 

Loans/leases

 

3,839,674

 

3,759,615

 

3,699,885

 

3,612,648

 

3,077,517

 

3,799,645

 

3,048,447

 

Deposits

 

4,271,391

 

4,110,868

 

3,986,236

 

3,840,077

 

3,343,003

 

4,191,130

 

3,291,283

 

Total stockholders’ equity

 

498,263

 

482,423

 

466,271

 

436,065

 

365,031

 

490,343

 

360,778

 

 


(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) Growth in full-time equivalents due primarily to the merger with Springfield Bancshares, Inc., the acquisition of the Bates Companies and the addition of several new positions created to build scale.

 

8


 

QCR HOLDINGS, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

ANALYSIS OF NET INTEREST INCOME AND MARGIN

 

 

 

For the Quarter Ended

 

 

 

June 30, 2019

 

March 31, 2019

 

June 30, 2018

 

 

 

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

 

$

9,690

 

$

56

 

2.32

%

$

15,736

 

$

93

 

2.40

%

$

18,561

 

$

61

 

1.32

%

Interest-bearing deposits at financial institutions

 

182,651

 

1,168

 

2.56

%

155,463

 

923

 

2.41

%

54,879

 

228

 

1.67

%

Securities (1)

 

644,999

 

6,062

 

3.77

%

660,454

 

6,096

 

3.74

%

648,276

 

5,752

 

3.56

%

Restricted investment securities

 

21,007

 

290

 

5.54

%

21,285

 

307

 

5.85

%

21,100

 

212

 

4.03

%

Loans (1)

 

3,839,674

 

48,413

 

5.06

%

3,759,615

 

46,477

 

5.01

%

3,077,517

 

36,008

 

4.69

%

Total earning assets (1)

 

$

4,698,021

 

$

55,989

 

4.78

%

$

4,612,553

 

$

53,896

 

4.74

%

$

3,820,333

 

$

42,261

 

4.44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

2,461,768

 

$

8,271

 

1.35

%

$

2,288,109

 

$

7,174

 

1.27

%

$

1,919,406

 

$

4,089

 

0.85

%

Time deposits

 

1,013,391

 

5,554

 

2.20

%

1,012,459

 

5,305

 

2.12

%

665,643

 

2,439

 

1.47

%

Short-term borrowings

 

16,145

 

81

 

2.01

%

14,377

 

71

 

2.00

%

19,024

 

63

 

1.33

%

Federal Home Loan Bank advances

 

76,154

 

601

 

3.17

%

147,355

 

1,060

 

2.92

%

174,826

 

1,019

 

2.34

%

Other borrowings

 

10,550

 

92

 

3.50

%

43,701

 

448

 

4.16

%

67,044

 

596

 

3.57

%

Subordinated debentures

 

68,239

 

993

 

5.84

%

38,637

 

564

 

5.92

%

 

 

0.00

%

Junior subordinated debentures

 

37,731

 

576

 

6.12

%

37,686

 

572

 

6.16

%

37,558

 

508

 

5.43

%

Total interest-bearing liabilities

 

$

3,683,978

 

$

16,168

 

1.76

%

$

3,582,324

 

$

15,194

 

1.72

%

$

2,883,501

 

$

8,714

 

1.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / spread (1)

 

 

 

$

39,821

 

3.02

%

 

 

$

38,702

 

3.02

%

 

 

$

33,547

 

3.23

%

Net interest margin (2)

 

 

 

 

 

3.25

%

 

 

 

 

3.25

%

 

 

 

 

3.37

%

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

 

 

 

 

 

3.40

%

 

 

 

 

3.40

%

 

 

 

 

3.52

%

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

 

 

 

 

 

3.31

%

 

 

 

 

3.31

%

 

 

 

 

3.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

 

 

 

 

 

 

 

June 30, 2019

 

June 30, 2018

 

 

 

 

 

 

 

 

 

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

 

$

12,713

 

$

150

 

2.38

%

$

19,132

 

$

118

 

1.24

%

 

 

 

 

 

 

Interest-bearing deposits at financial institutions

 

169,057

 

2,091

 

2.49

%

52,205

 

425

 

1.64

%

 

 

 

 

 

 

Securities (1)

 

652,727

 

12,158

 

3.76

%

648,656

 

11,418

 

3.55

%

 

 

 

 

 

 

Restricted investment securities

 

21,146

 

598

 

5.70

%

21,465

 

446

 

4.19

%

 

 

 

 

 

 

Loans (1)

 

3,799,645

 

94,795

 

5.03

%

3,048,447

 

70,753

 

4.68

%

 

 

 

 

 

 

Total earning assets (1)

 

$

4,655,288

 

$

109,792

 

4.76

%

$

3,789,905

 

$

83,160

 

4.42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

2,374,939

 

$

15,445

 

1.31

%

$

1,873,817

 

$

7,109

 

0.77

%

 

 

 

 

 

 

Time deposits

 

1,012,925

 

10,859

 

2.16

%

641,152

 

4,301

 

1.35

%

 

 

 

 

 

 

Short-term borrowings

 

15,261

 

152

 

2.01

%

18,148

 

95

 

1.06

%

 

 

 

 

 

 

Federal Home Loan Bank advances

 

111,755

 

1,662

 

3.00

%

205,758

 

2,215

 

2.17

%

 

 

 

 

 

 

Other borrowings

 

27,126

 

539

 

4.01

%

65,862

 

1,182

 

3.62

%

 

 

 

 

 

 

Subordinated debentures

 

53,438

 

1,557

 

5.88

%

 

 

0.00

%

 

 

 

 

 

 

Junior subordinated debentures

 

37,709

 

1,148

 

6.14

%

37,534

 

955

 

5.13

%

 

 

 

 

 

 

Total interest-bearing liabilities

 

$

3,633,153

 

$

31,362

 

1.74

%

$

2,842,271

 

$

15,857

 

1.13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / spread (1)

 

 

 

$

78,430

 

3.02

%

 

 

$

67,303

 

3.29

%

 

 

 

 

 

 

Net interest margin (2)

 

 

 

 

 

3.25

%

 

 

 

 

3.43

%

 

 

 

 

 

 

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

 

 

 

 

 

3.40

%

 

 

 

 

3.58

%

 

 

 

 

 

 

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

 

 

 

 

 

3.30

%

 

 

 

 

3.51

%

 

 

 

 

 

 

 


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

(2) See “Select Financial Data - Subsidiaries” for a breakdown of amortization/accretion included in net interest margin for each period presented.

(3) TEY : Tax equivalent yield.  See GAAP to Non-GAAP reconciliations.

 

9


 

QCR HOLDINGS, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

 

As of

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

41,164

 

$

39,847

 

$

43,077

 

$

37,545

 

$

36,533

 

Provision charged to expense

 

1,941

 

2,134

 

1,611

 

6,206

 

2,301

 

Loans/leases charged off

 

(2,152

)

(1,059

)

(4,967

)

(991

)

(1,525

)

Recoveries on loans/leases previously charged off

 

151

 

242

 

126

 

317

 

236

 

Ending balance

 

$

41,104

 

$

41,164

 

$

39,847

 

$

43,077

 

$

37,545

 

 

 

 

 

 

 

 

 

 

 

 

 

NONPERFORMING ASSETS

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans/leases

 

$

13,148

 

$

13,406

 

$

14,260

 

$

23,576

 

$

12,554

 

Accruing loans/leases past due 90 days or more

 

58

 

61

 

632

 

1,410

 

20

 

Troubled debt restructures - accruing

 

1,313

 

3,794

 

3,659

 

4,240

 

1,327

 

Total nonperforming loans/leases

 

14,519

 

17,261

 

18,551

 

29,226

 

13,901

 

Other real estate owned

 

8,637

 

9,110

 

9,378

 

12,204

 

12,750

 

Other repossessed assets

 

 

 

8

 

150

 

150

 

Total nonperforming assets

 

$

23,156

 

$

26,371

 

$

27,937

 

$

41,580

 

$

26,801

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSET QUALITY RATIOS

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets / total assets

 

0.45

%

0.52

%

0.56

%

0.87

%

0.65

%

Allowance / total loans/leases (1)

 

1.05

%

1.08

%

1.07

%

1.18

%

1.21

%

Allowance / nonperforming loans/leases (1)

 

283.10

%

238.48

%

214.80

%

147.39

%

270.09

%

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

 

0.05

%

0.02

%

0.13

%

0.02

%

0.04

%

 


(1) Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminates the allowance and impacts these ratios. 

 

10


 

 

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

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

 

(dollars in thousands)

 

TOTAL ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quad City Bank and Trust (1)

 

$

1,637,115

 

$

1,660,374

 

$

1,563,643

 

 

 

 

 

m2 Lease Funds, LLC

 

234,072

 

231,470

 

234,566

 

 

 

 

 

Cedar Rapids Bank and Trust

 

1,527,521

 

1,446,637

 

1,345,431

 

 

 

 

 

Community State Bank - Ankeny

 

806,704

 

785,076

 

712,139

 

 

 

 

 

Springfield First Community Bank

 

671,644

 

638,542

 

N/A