About QCBT

Press Release

QCR Holdings, Inc. Announces Record Net Income of $9.9 Million for the Fourth Quarter of 2017 And Record Net Income of $35.7 Million for the Year

Company Release - 2/1/2018 4:00 PM ET

MOLINE, Ill., Feb. 01, 2018 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $9.9 million and diluted earnings per share (“EPS”) of $0.70 for the quarter ended December 31, 2017.  This included $2.1 million of acquisition costs and post-acquisition compensation, transition and integration costs (after-tax) related to the previously announced acquisition of Guaranty Bank and Trust Company (“Guaranty Bank”), based in Cedar Rapids, Iowa, which closed on October 1, 2017.  It also included $753 thousand of cost (after-tax) related to the core processor conversion at Community State Bank (“CSB”), based in Ankeny, Iowa, which is planned for late 2018.  Additionally, due to the impact of the Tax Cuts and Jobs Act (“Tax Act”), the Company recorded a $2.9 million increase in the value of its net deferred tax asset, which was recorded as a reduction in income tax expense in the fourth quarter of 2017.  Excluding these, and other non-core items, the Company reported core net income (non-GAAP) of $9.9 million and diluted EPS of $0.70.  

By comparison, for the quarter ended September 30, 2017, the Company reported net income of $7.9 million and diluted EPS of $0.58.  This included $605 thousand of acquisition costs and post-acquisition transition and integration costs (after-tax) related to the acquisition of Guaranty Bank.  Excluding these costs and other non-core items, the Company reported core net income (non-GAAP) of $8.5 million and diluted EPS of $0.63.  For the quarter ended December 31, 2016, the Company reported net income of $8.5 million and diluted EPS of $0.64. 

For the year ended December 31, 2017, the Company reported net income of $35.7 million and diluted EPS of $2.61.  Excluding all non-core items, the Company reported core net income (non-GAAP) of $36.3 million and diluted EPS of $2.66.  By comparison, for the year ended December 31, 2016, the Company reported net income of $27.7 million and diluted EPS of $2.17.  Excluding all non-core items, the Company reported core net income (non-GAAP) of $29.4 million and diluted EPS of $2.31 for the year ended December 31, 2016.

“We are pleased with our operating performance this year,” commented Douglas M. Hultquist, President and Chief Executive Officer, “and we continue to strategize and pursue ways to improve our profitability through our ongoing key initiatives.  We finished the year on a strong note, with solid organic loan and deposit growth, and significant fee income.   The acquisition of Guaranty Bank in the fourth quarter of 2017 and CSB in the third quarter of 2016 also contributed to our improved profitability.”

Organic Loan and Lease Growth of 15.2% for the Year
Swap Fee Income and Gains on the Sale of Government Guaranteed Loans Total $4.3 million in 2017

During the fourth quarter of 2017, the Company’s total assets increased $432.2 million, or 12%, to a total of $4.0 billion.  Of this growth in assets, $274.8 million was attributable to the acquisition of Guaranty Bank.  Total loans and leases grew $287.7 million in the fourth quarter of 2017, of which $192.5 million was attributable to the acquisition of Guaranty Bank.  Loan and lease growth was primarily funded by deposit growth.  Deposits grew organically by $159.9 million, or 6% in the fourth quarter of 2017.

“Organic loan and lease growth totaled $366.5 million for the full year, or an annual growth rate of 15.2%,” commented Mr. Hultquist.  “We were quite pleased with another year of very strong organic loan growth in 2017.  We will continue to grow loans organically through market share increases, as customers continue to appreciate the way we do business and are attracted to our relationship-based community banking model.”

“Swap fee income and gains on the sale of government guaranteed loans were very strong in the fourth quarter and totaled $4.3 million for the full year.  Given the nature of this fee income source, large fluctuations can occur from quarter-to-quarter, as we experienced in 2017,” stated Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer.  “We plan to continue executing these types of transactions, as they provide unique and beneficial solutions for our clients.”

Net Interest Income Improvement
Driven By Strong Loan Growth and Acquisition

Net interest income totaled $31.8 million for the quarter ended December 31, 2017.  By comparison, net interest income totaled $28.6 million and $29.3 million for the quarters ended September 30, 2017 and December 31, 2016, respectively.  Acquisition-related net accretion totaled $745 thousand for the quarter ended December 31, 2017.  By comparison, acquisition-related net accretion totaled $474 thousand for the quarter ended September 30, 2017 and $2.9 million for the quarter ended December 31, 2016.  Excluding acquisition-related net accretion, net interest income of $31.0 million for the fourth quarter of 2017 increased 11%, compared to $28.1 million for the quarter ended September 30, 2017.

Net interest income totaled $116.1 million for the year ended December 31, 2017.  By comparison, net interest income totaled $94.5 million for the year ended December 31, 2016. 

“We saw the benefit of our strong organic loan growth during 2017 with a significant increase in net interest income this quarter and for the full year.  Net interest margin (excluding acquisition accounting net accretion) decreased four basis points when comparing linked quarters at 3.61% for the fourth quarter of 2017 and 3.65% for the third quarter of 2017,” stated Mr. Gipple.  “While we had strong organic loan growth in the quarter, most of the growth occurred later in the quarter and as a result we carried, on average, $52.2 million of excess liquidity in the fourth quarter due to strong deposit growth.  Excluding this excess liquidity, our net interest margin would have increased one basis point when comparing linked quarters.”

Nonperforming Assets Decrease in Fourth Quarter

Nonperforming assets (“NPAs”) decreased $1.4 million in the current quarter.  The ratio of NPAs to total assets was 0.81% at December 31, 2017, which was down from 0.95% at September 30, 2017 and down from 0.82% a year ago. 

 “Asset quality was stable in the fourth quarter.  The large CRE relationship that we added to NPAs in the third quarter of this year was moved to other real estate owned and we charged off a portion of the balance,” stated Mr. Hultquist.  He continued, “We remain committed to improving asset quality.”

The Company’s provision for loan and lease losses totaled $2.3 million for the fourth quarter of 2017, which was up $168 thousand from the prior quarter, and down $344 thousand compared to the fourth quarter of 2016.  As of December 31, 2017, the Company’s allowance to total loans and leases was 1.16%, which was down compared to 1.31% at September 30, 2017 and down from 1.28% at December 31, 2016. 

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of CSB and Guaranty Bank were recorded at market value; therefore, there was no allowance associated with the acquired loans.  Management continues to evaluate the allowance needed on the acquired loans factoring in the net remaining discount ($8.1 million at December 31, 2017).  When factoring this remaining discount into the Company’s allowance to total loans and leases calculation, the Company’s allowance as a percentage of total loans and leases increases from 1.16% to 1.43%.

Capital Levels Remain Strong

As of December 31, 2017, the Company’s total risk-based capital ratio was 11.09%, the common equity tier 1 ratio was 9.06%, and the tangible common equity to tangible assets ratio was 8.01%.  By comparison, these respective ratios were 11.49%, 9.33% and 8.31% as of September 30, 2017.  The decrease in ratios was primarily due to the acquisition of Guaranty Bank, as well as strong loan growth. 
             
“As a result of solid earnings performance, capital ratios continue to be strong and we are growing tangible common equity at a steady pace,” stated Mr. Gipple.  He continued, “Additionally, the Company issued $30.7 million in common stock, net of issuance costs, as part of the Guaranty Bank acquisition.  In total, tangible common equity has increased $52.4 million or 20% year-over-year when comparing December 31, 2017 to the same period of the prior year, and tangible book value per share increased by approximately 13%, increasing from $20.11 at December 31, 2016 to $22.70 at December 31, 2017.”

Continued Focus on Seven Key Initiatives

The Company continues to focus on the following initiatives in an effort to improve profitability and drive increased shareholder value:

  • Strong organic loan and lease growth 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 USDA and SBA loans, and fee income on interest rate swaps, as a significant and consistent component of core revenue
  • Grow wealth management net income by 10% annually
  • Carefully manage noninterest expense growth
  • Maintain asset quality metrics at better than peer levels
  • Participate as an acquirer in the consolidation taking place in our industry to further boost ROAA, improve efficiency ratio, and increase EPS

Conference Call Details

The Company will host an earnings call/webcast on February 2, 2018 at 10 a.m. central time.  Dial-in information for the call is toll-free 1-888-317-6016 (international 1-412-317-6016).  Participants should request to join the QCR Holdings, Inc. call. The event will be archived and available for digital replay through February 16, 2018.  The replay access information is toll-free 1-877-344-7529 (international 1-412-317-0088); access code 10116044.  A webcast of the teleconference can be accessed at the Company’s News and Events page at http://www.qcrh.com or https://services.choruscall.com/links/qcrh180202.html .  The archived audio webcast will be available until February 2, 2019.  Participants should visit the Company’s website or call in to the conference line set forth above at least 10 minutes prior to the scheduled start of the call.
             

About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company, which serves the Quad City, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, and Rockford communities through its wholly owned subsidiary banks.  Quad City Bank & Trust Company, which is based in Bettendorf, Iowa, and commenced operations in 1994, Cedar Rapids Bank & Trust Company, which is based in Cedar Rapids, Iowa, and commenced operations in 2001, Community State Bank, which is based in Ankeny, Iowa and was acquired by the Company in 2016, and Rockford Bank & Trust Company, which is based in Rockford, Illinois, and commenced operations in 2005, provide full-service commercial and consumer banking and trust and wealth management services.  Quad City Bank & Trust Company also provides correspondent banking services.  In addition, Quad City Bank & Trust Company engages in commercial leasing through its wholly owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin.  Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company.  The Company enhanced its presence in Cedar Rapids, Iowa with the acquisition of Guaranty Bank & Trust Company in October 2017, which merged with Cedar Rapids Bank & Trust in December 2017.

Special Note Concerning Forward-Looking Statements.  This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company.  Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should” or other similar expressions.  Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
               
A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements.  These factors include, among others, the following: (i) the strength of the local, national and international economies; (ii) the economic impact of any future terrorist threats and attacks, and the response of the United States to any such threats and attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) unexpected results of acquisitions, including the acquisition of Guaranty Bank, which may include failure to realize the anticipated benefits of the acquisition and the possibility that the transaction costs may be greater than anticipated; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x)  unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices.  These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

       
 As of 
 December 31,September 30,June 30,March 31,December 31, 
  2017 2017 2017 2017 2016 
 (dollars in thousands) 
       
CONDENSED BALANCE SHEET      
       
Cash and due from banks$  75,722$  56,275$  77,161$  56,326$  70,570 
Federal funds sold and interest-bearing deposits   85,962   61,789   72,354   173,219   86,206 
Securities   652,382   583,936   593,485   557,646   574,022 
Net loans/leases   2,930,130   2,641,772   2,520,209   2,403,791   2,374,730 
Core deposit intangible   9,079   6,689   6,919   7,150   7,381 
Goodwill   28,334   13,111   13,111   13,111   13,111 
Other assets   201,056   186,891   173,948   169,770   175,924 
Total assets$   3,982,665 $   3,550,463 $   3,457,187 $   3,381,013 $   3,301,944  
       
Total deposits$  3,266,655$  2,894,268$  2,870,234$  2,805,931$  2,669,261 
Total borrowings   309,479   296,145   230,263   231,534   290,952 
Other liabilities   53,244   47,011   51,607   47,708   55,690 
Total stockholders' equity   353,287   313,039   305,083   295,840   286,041 
Total liabilities and stockholders' equity$   3,982,665 $   3,550,463 $   3,457,187 $   3,381,013 $   3,301,944  
       
ANALYSIS OF LOAN PORTFOLIO      
Loan/lease mix:      
Commercial and industrial loans$  1,134,516$  1,034,530$  942,539$  851,578$  827,637 
Commercial real estate loans   1,303,492   1,157,855   1,131,906   1,106,842   1,093,459 
Direct financing leases   141,448   147,063   153,337   159,368   165,419 
Residential real estate loans   258,646   239,958   233,871   231,326   229,233 
Installment and other consumer loans   118,611   89,606   84,047   78,771   81,666 
Deferred loan/lease origination costs, net of fees   7,773   7,742   7,866   7,965   8,073 
Total loans/leases$  2,964,486$  2,676,754$  2,553,566$  2,435,850$  2,405,487 
Less allowance for estimated losses on loans/leases   34,356   34,982   33,357   32,059   30,757 
Net loans/leases$   2,930,130 $   2,641,772 $   2,520,209 $   2,403,791 $   2,374,730  
       
ANALYSIS OF SECURITIES PORTFOLIO      
Securities mix:      
U.S. government sponsored agency securities$  38,097$  39,340$  41,944$  47,556$  46,084 
Municipal securities 445,049 379,694 381,254 356,776 374,463 
Residential mortgage-backed and related securities 163,301 158,969 164,415 147,504 147,702 
Other securities 5,935 5,933 5,872 5,810 5,773 
Total securities$   652,382 $   583,936 $   593,485 $   557,646 $   574,022  
       
ANALYSIS OF DEPOSITS      
Deposit mix:      
Noninterest-bearing demand deposits$  789,548$  715,537$  760,625$  777,150$  797,415 
Interest-bearing demand deposits   1,855,893   1,614,894   1,526,103   1,486,047   1,369,226 
Time deposits 516,058 430,270 478,580 458,170 439,169 
Brokered deposits 105,156 133,567 104,926 84,564 63,451 
Total deposits$   3,266,655 $   2,894,268 $   2,870,234 $   2,805,931 $   2,669,261  
       
ANALYSIS OF BORROWINGS      
Borrowings mix:      
Term FHLB advances$  56,600$  58,600$  57,000$  59,000$  63,000 
Overnight FHLB advances (1) 135,400 110,455 49,500 47,550 74,500 
Wholesale structured repurchase agreements 35,000 45,000 45,000 45,000 45,000 
Customer repurchase agreements 7,003 3,671 4,897 7,170 8,132 
Federal funds purchased 6,990 12,340 13,320 12,300 31,840 
Junior subordinated debentures 37,486 33,579 33,546 33,514 33,480 
Other borrowings 31,000 32,500   27,000   27,000 35,000 
Total borrowings$   309,479 $   296,145 $   230,263 $   231,534 $   290,952  
       
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 1.63%. 
       

 

        
   For the Year Ended  
   December 31, December 31,  
    2017   2016  
   (dollars in thousands, except per share data)
  
        
INCOME STATEMENT      
Interest income $  135,517  $  106,468  
Interest expense    19,452     11,951  
Net interest income     116,065     94,517  
Provision for loan/lease losses    8,470     7,478  
Net interest income after provision for loan/lease losses $   107,595   $   87,039   
        
Trust department fees $  7,188  $  6,164  
Investment advisory and management fees    3,870     2,993  
Deposit service fees    5,919     4,440  
Gain on sales of residential real estate loans    409     431  
Gain on sales of government guaranteed portions of loans    1,164     3,159  
Swap fee income    3,095     1,708  
Securities gains (losses), net    (88)    4,592  
Earnings on bank-owned life insurance    1,802     1,771  
Debit card fees    2,942     1,815  
Correspondent banking fees    916     1,050  
Other      3,265     2,914  
Total noninterest income $   30,482   $   31,037   
        
Salaries and employee benefits $  55,722  $  46,317  
Occupancy and equipment expense    10,938     8,405  
Professional and data processing fees    10,757     7,113  
Acquisition costs    1,069     1,400  
Post-acquisition compensation, transition and integration costs    4,310     1,041  
FDIC insurance, other insurance and regulatory fees    2,752     2,549  
Loan/lease expense    1,164     662  
Net cost of operation of other real estate    2     591  
Advertising and marketing    2,625     2,128  
Bank service charges    1,771     1,693  
Losses on debt extinguishment, net    -      4,578  
Correspondent banking expense    807     751  
CDI amortization    1,001     443  
Other     4,506     3,815  
Total noninterest expense $   97,424   $   81,486   
        
Net income before taxes $   40,653   $   36,590   
Income tax expense    4,946     8,903  
Net income  $   35,707   $   27,687   
        
Basic EPS $  2.68  $  2.20  
Diluted EPS $  2.61  $  2.17  
        
Weighted average common shares outstanding    13,325,128     12,570,767  
Weighted average common and common equivalent shares outstanding    13,680,472     12,766,003  
        

 

        
   For the Quarter Ended
   December 31,September 30,June 30,March 31,December 31,
    2017  2017  2017 2017 2016 
   (dollars in thousands, except per share data)
        
INCOME STATEMENT      
Interest income $  37,878 $  33,841 $  32,453$  31,345$  32,236 
Interest expense    6,085    5,285    4,406   3,676   2,956 
Net interest income     31,793    28,556    28,047   27,669   29,280 
Provision for loan/lease losses    2,255    2,087    2,023   2,105   2,599 
Net interest income after provision for loan/lease losses $   29,538  $   26,469  $   26,024 $   25,564 $   26,681  
        
        
Trust department fees $  2,034 $  1,722 $  1,692$  1,740$  1,558 
Investment advisory and management fees    1,071    969    868   962   876 
Deposit service fees    1,622    1,522    1,459   1,316   1,411 
Gain on sales of residential real estate loans    101    98    113   96   142 
Gain on sales of government guaranteed portions of loans    34    92    87   951   458 
Swap fee income    2,460    194    327   114   350 
Securities gains (losses), net    (63)   (63)   38   -    (36)
Earnings on bank-owned life insurance    445    428    459   470   447 
Debit card fees    741    755    743   703   688 
Correspondent banking fees    231    239    200   245   249 
Other      1,038    746    796   687   886 
Total noninterest income $   9,714  $   6,702  $   6,782 $   7,284 $   7,029  
        
        
Salaries and employee benefits $  16,060 $  13,424 $  12,931$  13,307$  13,396 
Occupancy and equipment expense    3,221    2,516    2,699   2,502   2,630 
Professional and data processing fees    3,382    2,951    2,341   2,083   2,192 
Acquisition costs    661    408    -    -    36 
Post-acquisition transition and integration costs    3,787    523    -    -    4 
FDIC insurance, other insurance and regulatory fees    795    690    646   621   683 
Loan/lease expense    352    257    260   294   242 
Net cost of operation of other real estate    120    (160)   28   14   78 
Advertising and marketing    778    670    568   609   760 
Bank service charges    439    460    447   424   446 
Losses on debt extinguishment, net    -     -     -    -    357 
Correspondent banking expense    203    204    202   198   186 
CDI amortization    308    231    231   231   232 
Other     1,245    1,221    1,052   990   1,066 
Total noninterest expense $   31,351  $   23,395  $   21,405 $   21,273 $   22,308  
        
Net income before taxes $   7,901  $   9,776  $   11,401 $   11,575 $   11,402  
Income tax expense (benefit)    (2,001)   1,922    2,635   2,390   2,873 
Net income  $   9,902  $   7,854  $   8,766 $   9,185 $   8,529  
        
Basic EPS $  0.72 $  0.60 $  0.67$  0.70$  0.65 
Diluted EPS $  0.70 $  0.58 $  0.65$  0.68$  0.64 
        
Weighted average common shares outstanding    13,845,497    13,151,350    13,170,283   13,133,382   13,087,592 
Weighted average common and common equivalent shares outstanding   14,193,191    13,507,955    13,532,324   13,488,417   13,323,883 
        

 

         
 For the Quarter Ended For the Year Ended
 December 31,September 30,June 30,March 31,December 31, December 31,December 31,
  2017  2017  2017  2017  2016   2017  2016 
 (dollars in thousands, except per share data)
 
COMMON SHARE DATA        
Common shares outstanding  13,918,168  13,201,959  13,175,234  13,161,219  13,106,845    
Book value per common share (1)$25.38 $23.71 $23.16 $22.48 $21.82    
Tangible book value per common share (2)$22.70 $22.21 $21.64 $20.94 $20.11    
Closing stock price$42.85 $45.50 $47.40 $42.35 $43.30    
Market capitalization$596,393 $600,689 $624,506 $557,378 $567,526    
Market price / book value 168.81% 191.89% 204.70% 188.41% 198.41%   
Market price / tangible book value 188.81% 204.85% 219.08% 202.26% 215.36%   
Earnings per common share (basic) LTM (3)$2.69 $2.62 $2.49 $2.36 $2.20    
Price earnings ratio LTM (3) 15.93 x  17.37 x  19.11 x  17.94 x  19.68 x    
TCE / TA (4) 8.01% 8.31% 8.29% 8.20% 8.04%   
         
         
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY    
Beginning balance$  313,039 $  305,083 $  295,840 $  286,041 $  280,857    
Net income   9,902    7,854    8,766    9,185    8,529    
Other comprehensive income (loss), net of tax   (295)   275    702    411    (3,681)   
Common stock cash dividends declared   (693)   (658)   (657)   (657)   (523)   
Proceeds from issuance of 678,670 shares of
  common stock, net of costs, as a result of the
  acquisition of Guaranty Bank & Trust
   30,741    -     -     -     -     
Other (5)   593    485    432    860    859    
Ending balance$   353,287  $   313,039  $   305,083  $   295,840  $   286,041     
         
         
REGULATORY CAPITAL RATIOS (6):        
Total risk-based capital ratio 11.09% 11.49% 11.65% 11.90% 11.56%   
Tier 1 risk-based capital ratio 10.09% 10.35% 10.51% 10.75% 10.46%   
Tier 1 leverage capital ratio 9.00% 9.23% 9.34% 9.37% 9.10%   
Common equity tier 1 ratio 9.06% 9.33% 9.46% 9.64% 9.41%   
         
         
KEY PERFORMANCE RATIOS AND OTHER METRICS        
Return on average assets (annualized) 1.01% 0.90% 1.04% 1.12% 1.04%  1.01% 0.97%
Return on average total equity (annualized) 11.67% 10.15% 11.65% 12.63% 12.04%  11.51% 10.56%
Net interest margin 3.41% 3.43% 3.54% 3.65% 3.80%  3.50% 3.53%
Net interest margin (TEY) (Non-GAAP)(7) 3.69% 3.71% 3.81% 3.90% 4.02%  3.78% 3.75%
Efficiency ratio (Non-GAAP) (8) (12) 75.53% 66.35% 61.46% 60.86% 61.44%  66.48% 64.90%
Gross loans and leases / total assets 74.43% 75.39% 73.86% 72.04% 72.85%  74.43% 72.85%
Effective tax rate (11) -25.33% 19.66% 23.11% 20.65% 25.20%  12.17% 24.33%
Tax benefit related to stock options exercised and restricted stock awards vested (9) 406  191  90  533  N/A   1,220  N/A 
Full-time equivalent employees (10) 641  580  585  561  572   641  572 
         
         
AVERAGE BALANCES         
Assets$3,923,337 $3,503,148 $3,378,195 $  3,274,713 $  3,277,814  $  3,519,848 $  2,846,697 
Loans/leases   2,930,711    2,629,626    2,488,828    2,398,387    2,358,960     2,611,888    2,042,555 
Deposits   3,256,481    2,882,106    2,835,711    2,692,009    2,717,923     2,916,577    2,243,623 
Total stockholders' equity   339,468    309,596    300,868    290,906    283,292     310,210    262,075 
         
(1) Includes accumulated other comprehensive income (loss).
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets.
(3) LTM : Last twelve months.
(4) TCE / TCA : tangible common equity / total tangible assets.  See GAAP to non-GAAP reconciliations.
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation. 
(6) Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release.
(7) TEY : Tax equivalent yield.  See GAAP to Non-GAAP reconciliations.
(8) See GAAP to Non-GAAP reconciliations.
(9) ASC 2016-09 became effective on January 1, 2017 and affects the accounting for stock compensation.  This amount reflects the tax benefit recognized as a result of this new standard.
(10) Full-time equivalent employees increased in the 4th quarter of 2017 due to the acquisition of Guaranty, as well as the filling of open positions throughout the Company.
(11) The effective tax rate for the fourth quarter of 2017 and the full year were impacted by a $2.9 million tax benefit recorded as a result of the Tax Act.
(12) The efficiency ratio was unusually high in the fourth quarter of 2017 due to one-time acquisition costs and post-acquisition transition and integration costs totaling $4.4 million.

 

             
ANALYSIS OF NET INTEREST INCOME AND MARGIN          
             
  For the Quarter Ended
  December 31, 2017 September 30, 2017 December 31, 2016
   Average Balance  Interest Earned or Paid  Average Yield or Cost   Average Balance  Interest Earned or Paid  Average Yield or Cost   Average Balance  Interest Earned or Paid  Average Yield or Cost 
  (dollars in thousands)
             
Fed funds sold $  20,509$  450.87% $  19,966$  521.03% $  11,475$  90.31%
Interest-bearing deposits at financial institutions   94,404   3141.32%    42,178   1411.33%    123,838   1670.54%
Securities (1)    635,389   6,1113.82%    593,451   5,8083.88%    562,164   4,9703.52%
Restricted investment securities   18,180   1964.28%    17,793   1733.86%    12,785   1263.92%
Loans (1)    2,930,711   33,7974.58%    2,629,626   29,9784.52%    2,358,960   28,6914.84%
Total earning assets (1)$  3,699,193$  40,4634.34% $  3,303,014$  36,1524.34% $  3,069,222$  33,9634.40%
             
Interest-bearing deposits$  1,903,983$  2,7870.58% $  1,613,162$  2,2300.55% $  1,387,319$  9280.27%
Time deposits    546,376   1,4451.05%    530,120   1,3260.99%    496,855   9840.79%
Short-term borrowings   31,120   380.48%    16,138   330.81%    36,728   200.22%
Federal Home Loan Bank advances (4)   143,171   6161.71%    146,556   6081.65%    83,231   60.03%
Other borrowings    74,199   7754.14%    72,617   7263.97%    73,816   6933.73%
Junior subordinated debentures   35,531   4244.73%    33,563   3624.28%    33,463   3253.86%
Total interest-bearing liabilities$  2,734,380$  6,0850.88% $  2,412,156$  5,2850.87% $  2,111,412$  2,9560.56%
             
Net interest income / spread (1) $  34,3783.46%  $  30,8673.47%  $  31,0073.84%
Net interest margin (2)  3.41%   3.43%   3.80%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)  3.69%   3.71%   4.02%
             
             
  For the Year Ended    
  December 31, 2017 December 31, 2016  
   Average Balance  Interest Earned or Paid  Average Yield or Cost   Average Balance  Interest Earned or Paid  Average Yield or Cost     
  (dollars in thousands)    
             
Fed funds sold $  17,577$  1490.85% $  15,142$  450.30%    
Interest-bearing deposits at financial institutions   78,842   8741.11%    70,757   3930.56%    
Securities (1)    590,761   22,4603.80%    535,912   19,0543.56%    
Restricted investment securities   15,768   6314.00%    13,993   5223.73%    
Loans (1)    2,611,888   120,6184.62%    2,042,555   92,4754.53%    
Total earning assets (1)$  3,314,836$  144,7324.37% $  2,678,359$  112,4894.20%    
             
Interest-bearing deposits$  1,622,724$  7,9920.49% $  1,092,687$  3,8430.35%    
Time deposits    528,834   5,0200.95%    436,070   2,1750.50%    
Short-term borrowings   22,596   1140.50%    50,899   940.18%    
Federal Home Loan Bank advances (4)   120,206   1,9811.65%    114,797   1,2841.12%    
Other borrowings    73,394   2,8793.92%    98,105   3,3183.38%    
Junior subordinated debentures   34,030   1,4664.31%    33,735   1,2373.67%    
Total interest-bearing liabilities$  2,401,784$  19,4520.81% $  1,826,293$  11,9510.65%    
             
Net interest income / spread (1) $  125,2803.56%  $  100,5383.55%    
Net interest margin (2)  3.50%   3.53%    
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)  3.78%   3.75%    
             
             
(1) Includes nontaxable securities and loans.  Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period presented. 
(2) See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented.
(3) TEY : Tax equivalent yield.  See GAAP to Non-GAAP reconciliations.
(4) Average cost of Federal Home Loan Bank advances for the quarter and year ending December 31, 2016 was affected by the acceleration of the premium on advances recognized at the acquisition of CSB.  $342 thousand was accelerated due to the prepayment of $15.0 million of advances in the fourth quarter of 2016.
   

 

 
 As of 
 December 31,September 30,June 30,March 31,December 31, 
  2017  2017  2017  2017  2016  
 (dollars in thousands, except per share data) 
       
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES      
Beginning balance$  34,982 $  33,357 $  32,059 $  30,757 $  28,827  
Provision charged to expense   2,255    2,087    2,023    2,105    2,599  
Loans/leases charged off   (2,979)   (650)   (851)   (893)   (755) 
Recoveries on loans/leases previously charged off   98    188    126    90    86  
Ending balance$   34,356  $   34,982  $   33,357  $   32,059  $   30,757   
       
       
NONPERFORMING ASSETS       
Nonaccrual loans/leases$  11,441 $  20,443 $  13,217 $  14,205 $  13,919  
Accruing loans/leases past due 90 days or more   89    423    424    955    967  
Troubled debt restructures - accruing   7,113    7,563    6,915    6,229    6,347  
Total nonperforming loans/leases   18,643    28,429    20,556    21,389    21,233  
Other real estate owned   13,558    5,135    5,174    5,625    5,523  
Other repossessed assets   80    120    123    285    202  
Total nonperforming assets$   32,281  $   33,684  $   25,853  $   27,299  $   26,958   
       
       
ASSET QUALITY RATIOS      
Nonperforming assets / total assets 0.81% 0.95% 0.75% 0.81% 0.82% 
Allowance / total loans/leases (1) 1.16% 1.31% 1.31% 1.32% 1.28% 
Allowance / nonperforming loans/leases (1) 184.28% 123.05% 162.27% 149.89% 144.85% 
Net charge-offs as a % of average loans/leases 0.10% 0.02% 0.03% 0.03% 0.03% 
       
(1) Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminated the allowance and impacts these ratios.  
  

 

            
   For the Quarter Ended For the Year Ended
   December 31, September 30, December 31, December 31, December 31,
 SELECT FINANCIAL DATA - SUBSIDIARIES  2017   2017   2016   2017   2016 
   (dollars in thousands)
            
 TOTAL ASSETS          
            
 Quad City Bank and Trust (1) $  1,541,778  $  1,456,251  $  1,395,785     
 m2 Lease Funds, LLC    218,035     216,997     213,159     
 Cedar Rapids Bank and Trust    1,307,377     1,007,062     913,056     
 Community State Bank - Ankeny    670,516     631,963     600,076     
 Rockford Bank and Trust    461,651     445,099     391,155     
            
 TOTAL DEPOSITS          
            
 Quad City Bank and Trust (1) $  1,272,111  $  1,164,828  $  1,125,932     
 Cedar Rapids Bank and Trust    1,060,139     845,576     747,785     
 Community State Bank - Ankeny    570,620     547,915     513,588     
 Rockford Bank and Trust    382,002     358,940     311,556     
            
 TOTAL LOANS & LEASES          
            
 Quad City Bank and Trust (1) $  1,136,753  $  1,111,964  $  1,010,443     
 m2 Lease Funds, LLC    215,236     214,959     211,045     
 Cedar Rapids Bank and Trust    973,971     755,817     652,212     
 Community State Bank - Ankeny    489,075     453,898     429,511     
 Rockford Bank and Trust    364,686     355,075     313,321     
            
 TOTAL LOANS & LEASES / TOTAL ASSETS          
            
 Quad City Bank and Trust (1)  74%  76%  72%    
 Cedar Rapids Bank and Trust  74%  75%  71%    
 Community State Bank - Ankeny  73%  72%  72%    
 Rockford Bank and Trust  79%  80%  80%    
            
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