About QCBT

Press Release

QCR Holdings, Inc. Announces Record Net Income of $15.9 Million for the Fourth Quarter and $57.4 Million for the Full Year 2019

Company Release - 1/22/2020 4:05 PM ET

Fourth Quarter 2019 Highlights

  • Net income of $15.9 million, or $0.99 per diluted share
  • Adjusted net income (non-GAAP) of $15.4 million, or $0.96 per diluted share
  • NIM and NIM (TEY)(non-GAAP) at 3.36% and 3.51%, respectively
  • Noninterest income of $29.8 million for the quarter and $78.8 million for the year
  • Completed the sale of the operations of Rockford Bank & Trust (“RB&T”) to Heartland Financial USA, Inc.
  • Excluding RB&T held for sale assets and liabilities:
    • Annualized loan and lease growth was 8.9% for the quarter and 10.9% for the year
    • Annualized deposit growth was 11.5% for the quarter and 10.3% for the year
    • Nonperforming assets were down $0.2 million, or 1.2% from the prior quarter

MOLINE, Ill., Jan. 22, 2020 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $15.9 million and diluted earnings per share (“EPS”) of $0.99 for the fourth quarter of 2019, compared to net income of $15.1 million and diluted EPS of $0.94 for the third quarter of 2019. The fourth quarter results included a $12.3 million gain on sale and $3.3 million of disposition costs due to the sale of RB&T. Additionally there was a $3.0 million goodwill impairment charge related to the Bates Companies as a result of the decision to exit the Rockford market. The fourth quarter results also included $1.5 million of post-acquisition compensation, transition and integration costs (after-tax), compared to $0.7 million of similar costs in the third quarter of 2019.

Excluding these expenses and some modest cost for early debt extinguishment, the Company reported adjusted net income (non-GAAP) of $15.4 million and adjusted diluted EPS of $0.96 for the fourth quarter of 2019, compared to adjusted net income (non-GAAP) of $15.9 million and adjusted diluted EPS of $1.00 for the third quarter of 2019. For the fourth quarter of 2018, net income and diluted EPS were $13.3 million and $0.84, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS were $14.5 million and $0.91, respectively.

 For the Quarter Ended 
 December 31,September 30,December 31, 
$ in millions (except per share data) 2019 2019 2018 
Net Income$  15.9$  15.1$  13.3 
Diluted EPS$  0.99$  0.94$  0.84 
Adjusted Net Income (non-GAAP)(1)$  15.4$  15.9$  14.5 
Adjusted Diluted EPS (non-GAAP)(1) $  0.96$  1.00$  0.91  
(1) See GAAP to non-GAAP reconciliations.     

“We are very pleased with our financial performance in 2019, highlighted by record net income and a 19% increase in adjusted earnings per share,” said Larry J. Helling, Chief Executive Officer. “Our strong results were driven by robust revenue growth, due to both record fee income and increased net interest income. Our loans and deposits both grew organically by over 10% for the year, as we continued to gain market share across our charters, capitalizing on the ongoing favorable economic environment as well as the value that our clients place on relationship-based community banking. Additionally, we successfully expanded our net interest margin over the course of the year as our initiatives in this area gained traction.”

“We also were pleased to complete the sale of RB&T, which enables us to redeploy capital in our other more profitable markets to help drive continued organic and acquisitive growth.”

Mr. Helling continued, “We finished the year building substantial momentum, delivering solid loan and lease production, successfully attracting new deposits and generating very strong fee income. Our asset quality remains excellent and our capital levels are strong. Looking to the year ahead, we remain optimistic about our ability to continue delivering exceptional financial results given our healthy loan pipeline and our high quality deposit base, which we believe will lead to improved returns and enhanced shareholder value in 2020 and beyond.”

Completion of the sale of Rockford Bank & Trust to Heartland Financial USA

On November 30, 2019 the Company completed the sale of substantially all of the assets and transfer of substantially all of the deposits and certain other liabilities of the Company’s wholly-owned subsidiary, RB&T to Illinois Bank & Trust (“IB&T”), a wholly-owned subsidiary of Dubuque, IA-based Heartland Financial USA, Inc. The purchase and assumption transaction was valued at approximately $59.1 million, representing a cash payment of approximately $46.9 million from IB&T, including the purchase price premium of $12.5 million, and the separate liquidation of net assets retained by QCRH of $12.2 million.  As a result, substantially all of RB&T’s assets and liabilities were classified as held for sale as of September 30, 2019, which impacts balance sheet comparisons to prior quarters. 

Annualized Loan and Lease Growth of 8.9% for the Quarter and 10.9% for the Year

During the fourth quarter of 2019, the Company’s total loans and leases increased $79.9 million to a total of $3.7 billion. Continued loan and lease growth was funded by an increase in core deposits. Core deposits (excluding brokered deposits) increased $192.0 million, or 5.4% on a linked quarter basis. At quarter-end, the percentage of wholesale funds to total assets was 8.8%, which was down significantly from 11.6% in the third quarter. Additionally, at quarter-end, the percentage of gross loans and leases to total assets was 75%, which remained consistent with the third quarter when excluding assets held for sale.  

“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 relatively consistent from the third quarter of 2019 and down significantly from the fourth quarter of 2018. Our loan and lease pipeline remains strong and our markets remain healthy, giving us confidence that we can achieve organic loan growth for the full year 2020 of between 8% and 10%.” 

Net Interest Income of $39.9 million

Net interest income for the fourth quarter of 2019 totaled $39.9 million, compared to $40.7 million for the third quarter of 2019 and $39.6 million for the fourth quarter of 2018. The slight decrease was primarily due to a decline in average interest earning assets of $80.0 million, or 1.7% on a linked quarter basis, due to the sale of RB&T. Acquisition-related net accretion totaled $0.9 million (pre-tax) for the fourth quarter of 2019, compared to $1.3 million for the third quarter of 2019 and was $2.6 million for the fourth quarter of 2018. Adjusted net interest income (non-GAAP) was $40.8 million for the fourth quarter of 2019, compared to $41.2 million for the third quarter of 2019 and $38.7 million for the fourth quarter of 2018.

Net interest income totaled $155.6 million for the year ended December 31, 2019, compared to $142.4 million for the year ended December 31, 2018.

In the fourth quarter, reported net interest margin was 3.36% and, on a tax-equivalent yield basis (non-GAAP), net interest margin (non-GAAP) was 3.51%, with both metrics slightly decreasing by 1 basis point from the third quarter of 2019. Net interest margin, excluding acquisition-related net accretion was 3.43%, up 2 basis points from the third quarter. The increase in adjusted net interest margin during the quarter was due to a 27 basis point decline in the total cost of interest-bearing funds (due to both mix and rate), partially offset by a 24 basis point decrease in the yield on earning assets.

 For the Quarter Ended
 December 31,September 30,
 20192019
NIM3.36%3.37%
NIM (TEY)(non-GAAP)(1)3.51%3.52%
Adjusted NIM (TEY)(non-GAAP)(1)3.43%3.41%
(1)  See GAAP to non-GAAP reconciliations.  

“Our organic loan and lease growth during the fourth quarter was more than funded by our ongoing success in gathering core deposits,” stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “We also once again expanded our adjusted net interest margin during the quarter as we experienced meaningfully lower deposit costs due to lower short-term interest rates and lower CD rates. However, the decline in deposit costs was largely offset by lower yields on our loans as well as some excess liquidity.”

Noninterest Income of $29.8 million

Noninterest income for the fourth quarter of 2019 totaled $29.8 million, compared to $19.9 million for the third quarter of 2019. The fourth quarter results included a $12.3 million gain on the sale of RB&T. Excluding the gain, noninterest income totaled $17.5 million in the fourth quarter. The decline from the third quarter was primarily due to a $2.4 million decrease in swap fee income and $0.4 million decrease on gains on the sale of the government guaranteed portions of loans. Wealth management revenue was $4.0 million for the quarter, as compared to $4.1 million for the third quarter of 2019. The slight decline was primarily due to the elimination of wealth management revenue due to the sale of RB&T. Noninterest income, excluding the gain on sale of RB&T, increased 14.7% when compared to the fourth quarter of 2018.

Noninterest income, excluding the gain on sale of RB&T, totaled $66.5 million for the year ended December 31, 2019, compared to $41.5 million for the year ended December 31, 2018, an increase of 60%.

“Our noninterest income was again driven by another strong quarter of swap fee income. Swap fee income and gains on the sale of government guaranteed loans totaled $29.0 million for the full year 2019, well in excess of our initial full-year target of $8 million to $12 million,” added Mr. Gipple.

Noninterest Expenses of $46.3 million

Noninterest expense for the fourth quarter of 2019 totaled $46.3 million, compared to $39.9 million and $36.4 million for the third quarter of 2019 and fourth quarter of 2018, respectively. The linked quarter increase was due to a number of factors, including $3.3 million of disposition costs and a $3.0 million goodwill impairment charge, both related to the decision to exit the Rockford market. In addition post-acquisition transition and integration costs increased by $1.0 million due to the completion of the core conversion of Springfield First Community Bank.

Asset Quality Remains Solid

Nonperforming assets (“NPAs”) totaled $13.1 million, a decrease of $0.2 million from the third quarter of 2019. The relatively stable NPAs resulted in the ratio of NPAs to total assets remaining consistent at 0.27% on December 31, 2019 compared to September 30, 2019 and down from 0.56% at December 31, 2018.

The Company’s provision for loan and lease losses totaled $1.0 million for the fourth quarter of 2019, down from $2.0 million in the prior quarter and $1.6 million in the fourth quarter of 2018. The linked quarter decrease in the provision for loan and lease losses was primarily due to continued strength in overall portfolio quality and $488 thousand of provision taken in the third quarter related to an RB&T nonperforming loan held for sale. As of December 31, 2019, the Company’s allowance to total loans and leases was 0.98%, which was down from 1.00% at September 30, 2019 and down from 1.07% at December 31, 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 ($7.0 million at December 31, 2019).

Strong Capital Levels

As of December 31, 2019, the Company’s total risk-based capital ratio was 13.48%, the common equity tier 1 ratio was 10.29%, and the tangible common equity to tangible assets ratio was 9.25%. By comparison, these respective ratios were 12.22%, 9.12% and 8.20% as of September 30, 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, January 23, 2020, at 10:00 a.m. Central Time. Dial-in information for the call is toll free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be available for replay through February 6, 2020. The replay access information is 877-344-7529 (international 412-317-0088); access code 10137973. 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, and Springfield communities through its wholly owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, and Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company engages in commercial leasing through its wholly owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 25 locations in Illinois, Iowa, Wisconsin and Missouri. As of December 31, 2019, the Company had approximately $4.9 billion in assets, $3.7 billion in loans and $3.9 billion in deposits. For additional information, please visit the Company’s 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 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]

  QCR Holdings, Inc.
     
  Consolidated Financial Highlights
     
   (Unaudited)       
        Held for SaleHeld for Sale 
 As of  As ofAs of 
 December 31, September 30,June 30,March 31,December 31,  December 31,September 30, 
  2019 2019 2019 2019 2018   2019 2019 
           
 (dollars in thousands)     
           
CONDENSED BALANCE SHEET          
           
Cash and due from banks$76,254$91,671$87,919$76,527$85,523  $-$11,031 
Federal funds sold and interest-bearing deposits 157,691 197,263 205,497 216,032 159,596   - 2,415 
Securities 611,341 555,409 643,803 655,749 662,969   - 66,009 
Net loans/leases 3,654,204 3,574,154 3,869,415 3,758,268 3,692,907   - 362,011 
Intangibles 14,969 15,529 16,089 16,918 17,450   - - 
Goodwill 74,748 77,748 77,748 77,872 77,832   - - 
Other assets 307,877 315,061 294,381 265,296 253,433   11,966 24,081 
Assets held for sale 11,966 465,547 - - -   - - 
Total assets$ 4,909,050$ 5,292,382$ 5,194,852$ 5,066,662$ 4,949,710  $ 11,966$ 465,547 
           
Total deposits$3,911,051$3,802,241$4,322,510$4,194,220$3,977,031  $-$451,546 
Total borrowings 278,955 320,457 230,953 282,994 404,968   - 16,157 
Other liabilities 178,690 179,411 137,089 101,041 94,573   5,003 2,827 
Liabilities held for sale 5,003 470,530 - - -   - - 
Total stockholders' equity 535,351 519,743 504,300 488,407 473,138   - - 
Total liabilities and stockholders' equity$ 4,909,050$ 5,292,382$ 5,194,852$ 5,066,662$ 4,949,710  $ 5,003$ 470,530 
           
ANALYSIS OF LOAN PORTFOLIO          
Loan/lease mix:          
Commercial and industrial loans$1,507,825$1,469,978$1,548,657$1,479,247$1,429,410     
Commercial real estate loans 1,736,396 1,687,922 1,837,473 1,790,845 1,766,111     
Direct financing leases 87,869 92,307 101,180 108,543 117,969     
Residential real estate loans 239,904 245,667 293,479 288,502 290,759     
Installment and other consumer loans 109,352 106,540 120,947 123,087 119,381     
Deferred loan/lease origination costs, net of fees 8,859 7,856 8,783 9,208 9,124     
Total loans/leases$3,690,205$3,610,270$3,910,519$3,799,432$3,732,754     
Less allowance for estimated losses on loans/leases 36,001 36,116 41,104 41,164 39,847     
Net loans/leases$ 3,654,204$ 3,574,154$ 3,869,415$ 3,758,268$ 3,692,907     
           
ANALYSIS OF SECURITIES PORTFOLIO          
Securities mix:          
U.S. government sponsored agency securities$20,078$21,268$35,762$35,843$36,411     
Municipal securities 447,853 391,329 440,853 450,376 459,409     
Residential mortgage-backed and related securities 120,587 123,880 159,228 161,692 159,249     
Other securities 22,823 18,932 7,960 7,838 7,900     
Total securities$ 611,341$ 555,409$ 643,803$ 655,749$ 662,969     
           
ANALYSIS OF DEPOSITS          
Deposit mix:          
Noninterest-bearing demand deposits$777,224$782,232$795,951$821,599$791,101     
Interest-bearing demand deposits 2,444,925 2,245,557 2,505,956 2,334,474 2,204,206     
Time deposits 533,920 536,352 733,135 719,286 704,903     
Brokered deposits 154,982 238,100 287,468 318,861 276,821     
Total deposits$ 3,911,051$ 3,802,241$ 4,322,510$ 4,194,220$ 3,977,031     
           
ANALYSIS OF BORROWINGS          
Borrowings mix:          
Term FHLB advances$50,000$60,000$46,433$66,380$76,327     
Overnight FHLB advances (1) 109,300 135,800 59,300 59,800 190,165     
Wholesale structured repurchase agreements - - - 35,000 35,000     
Customer repurchase agreements 2,193 2,421 2,181 3,056 2,084     
Federal funds purchased 11,230 16,105 17,010 12,830 26,690     
Subordinated notes 68,394 68,334 68,274 68,215 4,782     
Junior subordinated debentures 37,838 37,797 37,755 37,713 37,670     
Other borrowings - - - - 32,250     
Total borrowings$ 278,955$ 320,457$ 230,953$ 282,994$ 404,968     
           
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 1.73%.       
           


  QCR Holdings, Inc.
   
  Consolidated Financial Highlights
   
  (Unaudited)
   
         
   For the Quarter Ended 
   December 31,September 30,June 30,March 31,December 31, 
    2019 2019  2019  2019 2018  
         
   (dollars in thousands, except per share data) 
         
INCOME STATEMENT       
Interest income $52,977$56,817 $54,181 $52,102$52,703  
Interest expense  13,058 16,098  16,168  15,194 13,110  
Net interest income  39,919 40,719  38,013  36,908 39,593  
Provision for loan/lease losses  979 2,012  1,941  2,134 1,611  
Net interest income after provision for loan/lease losses $ 38,940$ 38,707 $ 36,072 $ 34,774$ 37,982  
         
         
Trust department fees $2,365$2,340 $2,361 $2,493$2,216  
Investment advisory and management fees  1,589 1,782  1,888  1,736 1,657  
Deposit service fees  1,787 1,813  1,658  1,554 1,623  
Gain on sales of residential real estate loans  823 890  489  369 361  
Gain on sales of government guaranteed portions of loans  159 519  39  31 -  
Swap fee income  7,409 9,797  7,891  3,198 7,069  
Securities gains (losses), net  26 (3) (52) - -  
Earnings on bank-owned life insurance  533 489  412  540 341  
Debit card fees  766 886  914  792 807  
Correspondent banking fees  194 189  172  216 179  
Gain on sale of assets and liabilities of subsidiary  12,286 -  -  - -  
Other   1,868 1,204  1,293  1,064 1,026  
Total noninterest income $ 29,805$ 19,906 $ 17,065 $ 11,993$ 15,279  
         
         
Salaries and employee benefits $24,220$24,215 $22,749 $20,879$19,779  
Occupancy and equipment expense  4,019 3,860  3,533  3,694 3,367  
Professional and data processing fees  3,570 4,030  3,031  2,750 3,577  
Acquisition costs  - -  -  - (4) 
Post-acquisition compensation, transition and integration costs  1,855 884  708  134 1,427  
Disposition costs  3,325 -  -  - -  
FDIC insurance, other insurance and regulatory fees  523 542  926  964 1,065  
Loan/lease expense  349 221  312  214 624  
Net cost of (income from) and gains/losses on operations of other real estate  232 2,078  1,182  298 2,477  
Advertising and marketing  1,670 1,056  1,037  785 1,122  
Bank service charges  516 502  508  483 469  
Losses on debt extinguishment, net  288 148  -  - -  
Correspondent banking expense  216 209  206  204 207  
Intangibles amortization  560 560  615  532 540  
Goodwill impairment  3,000 -  -  - -  
Other   1,951 1,640  1,753  1,498 1,760  
Total noninterest expense $ 46,294$ 39,945 $ 36,560 $ 32,435$ 36,410  
         
Net income before income taxes $ 22,451$ 18,668 $ 16,577 $ 14,332$ 16,851  
Federal and state income tax expense  6,560 3,573  3,073  1,414 3,535  
Net income  $ 15,891$ 15,095 $ 13,504 $ 12,918$ 13,316  
         
Basic EPS  $1.01$0.96 $0.86 $0.82$0.85  
Diluted EPS $0.99$0.94 $0.85 $0.81$0.84  
         
         
Weighted average common shares outstanding  15,772,703 15,739,430  15,714,588  15,693,345 15,641,401  
Weighted average common and common equivalent shares outstanding  16,033,043 15,976,742  15,938,377  15,922,940 15,898,591  


QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
      
   For the Year Ended
   December 31, December 31,
    2019   2018
      
   (dollars in thousands, except per share data)
      
INCOME STATEMENT    
Interest income $216,076  $182,879
Interest expense  60,517   40,484
Net interest income  155,559   142,395
Provision for loan/lease losses  7,066   12,658
Net interest income after provision for loan/lease losses $ 148,493  $ 129,737
      
      
Trust department fees $9,559  $8,707
Investment advisory and management fees  6,995   4,726
Deposit service fees  6,812   6,420
Gain on sales of residential real estate loans  2,571   901
Gain on sales of government guaranteed portions of loans  748   405
Swap fee income  28,295   10,787
Securities losses, net  (30)  -
Earnings on bank-owned life insurance  1,973   1,632
Debit card fees  3,357   3,263
Correspondent banking fees  773   852
Gain on sale of assets and liabilities of subsidiary  12,286   -
Other   5,429   3,848
Total noninterest income $ 78,768  $ 41,541
      
      
Salaries and employee benefits $92,063  $68,994
Occupancy and equipment expense  15,106   12,884
Professional and data processing fees  13,381   11,452
Acquisition costs  -   1,795
Post-acquisition compensation, transition and integration costs  3,582   2,086
Disposition costs  3,325   -
FDIC insurance, other insurance and regulatory fees  2,955   3,594
Loan/lease expense  1,097   1,544
Net cost of and gains/losses on operations of other real estate  3,789   2,489
Advertising and marketing  4,548   3,552
Bank service charges  2,009   1,838
Losses on debt extinguishment  436   -
Correspondent banking expense  836   821
Intangibles amortization  2,266   1,692
Goodwill impairment  3,000   -
Other   6,841   6,402
Total noninterest expense $ 155,234  $ 119,143
      
Net income before income taxes $ 72,027  $ 52,135
Federal and state income tax expense  14,619   9,015
Net income  $ 57,408  $ 43,120
      
Basic EPS  $3.65  $2.92
Diluted EPS $3.60  $2.86
      
      
Weighted average common shares outstanding  15,730,016   14,768,687
Weighted average common and common equivalent shares outstanding  15,967,775   15,064,730


QCR Holdings, Inc. 
Consolidated Financial Highlights 
(Unaudited) 
          
 As of and for the Quarter Ended For the Year Ended 
 December 31,September 30,June 30,March 31,December 31, December 31,December 31, 
  2019  2019  2019  2019  2018   2019  2018  
          
 (dollars in thousands, except per share data) 
          
COMMON SHARE DATA         
Common shares outstanding 15,828,098  15,790,462  15,772,939  15,755,442  15,718,208     
Book value per common share (1)$33.82 $32.91 $31.97 $31.00 $30.10     
Tangible book value per common share (2)$28.15 $27.01 $26.02 $24.98 $24.04     
Closing stock price$43.86 $37.98 $34.87 $33.92 $32.09     
Market capitalization$694,220 $599,722 $550,002 $534,425 $504,397     
Market price / book value 129.69% 115.40% 109.06% 109.42% 106.61%    
Market price / tangible book value 155.76% 140.61% 134.00% 135.77% 133.49%    
Earnings per common share (basic) LTM (3)$3.65 $3.49 $3.10 $2.99 $2.92     
Price earnings ratio LTM (3)12.02 x10.88 x11.25 x11.34 x10.98 x    
TCE / TA (4) 9.25% 8.20% 8.05% 7.92% 7.78%    
          
          
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY     
Beginning balance$519,743 $504,300 $488,407 $473,138 $457,387     
Net income 15,891  15,095  13,504  12,918  13,316     
Other comprehensive income (loss), net of tax (684) 543  2,243  2,343  1,943     
Common stock cash dividends declared (947) (944) (942) (942) (939)    
Proceeds from issuance of 9,400 shares of common stock as a result of the performance based targets met for Bates Companies 400  -  -  -  -     
Proceeds from issuance of 23,501 shares of common stock, net of costs, as a result of the acquisition of Bates Companies -  -  -  -  1,000     
Other (5) 948  749  1,088  950  431     
Ending balance$ 535,351 $ 519,743 $ 504,300 $ 488,407 $ 473,138     
          
          
REGULATORY CAPITAL RATIOS (6):         
Total risk-based capital ratio 13.48% 12.22% 12.04% 12.26% 10.69%    
Tier 1 risk-based capital ratio 11.17% 9.94% 9.76% 9.87% 9.77%    
Tier 1 leverage capital ratio 9.53% 9.02% 8.96% 8.90% 8.87%    
Common equity tier 1 ratio 10.29% 9.12% 8.93% 9.02% 8.89%    
          
          
KEY PERFORMANCE RATIOS AND OTHER METRICS          
Return on average assets (annualized) 1.23% 1.16% 1.06% 1.04% 1.10%  1.12% 0.98% 
Return on average total equity (annualized) 11.93% 11.70% 10.84% 10.71% 11.42%  11.31% 10.62% 
Net interest margin 3.36% 3.37% 3.25% 3.25% 3.48%  3.31% 3.46% 
Net interest margin (TEY) (Non-GAAP)(7) 3.51% 3.52% 3.40% 3.40% 3.63%  3.45% 3.62% 
Efficiency ratio (Non-GAAP) (8) 66.40% 65.89% 66.38% 66.33% 66.35%  66.25% 64.77% 
Gross loans and leases / total assets (10) 75.36% 74.80% 75.28% 74.99% 75.41%  75.36% 75.41% 
Gross loans and leases / total deposits (10) 94.35% 94.95% 90.47% 90.59% 93.86%  94.35% 93.86% 
Effective tax rate 29.22% 19.14% 18.54% 9.87% 20.98%  20.30% 17.29% 
Full-time equivalent employees (9) 697  766  773  771  755   697  755  
          
          
AVERAGE BALANCES          
Assets$5,147,754 $5,217,763 $5,077,900 $4,968,502 $4,842,232  $5,102,980 $4,392,121  
Loans/leases 3,868,435  3,962,464  3,839,674  3,759,615  3,699,885   3,857,547  3,352,357  
Deposits 3,362,180  4,302,995  4,271,391  4,110,868  3,986,236   3,261,462  3,602,221  
Total stockholders' equity 532,756  516,195  498,263  482,423  466,271   507,409  405,973  
          
          
          
(1) Includes accumulated other comprehensive income (loss).        
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets.      
(3) LTM : Last twelve months.         
(4) TCE / TCA : tangible common equity / total tangible assets. See GAAP to non-GAAP reconciliations.     
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.  
(6) Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release.   
(7) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.       
(8) See GAAP to Non-GAAP reconciliations.         
(9) Decrease due to sale of subsidiary Rockford Bank & Trust.       
(10) Excludes assets held for sale as of September 30, 2019 and Deccember 31, 2019.      


QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
             
ANALYSIS OF NET INTEREST INCOME AND MARGIN (4)          
             
  For the Quarter Ended
  December 31, 2019 September 30, 2019 December 31, 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 $2,933$121.62% $7,234$422.30% $20,426$1152.23%
Interest-bearing deposits at financial institutions 208,040 8681.66%  172,386 9512.19%  98,875 5172.07%
Securities (1)  610,676 5,9133.84%  626,471 6,0803.85%  671,613 6,2313.68%
Restricted investment securities 21,226 2835.29%  22,719 2935.12%  22,478 3185.61%
Loans (1)  3,868,435 47,6844.89%  3,962,464 51,2145.13%  3,699,885 47,2735.07%
Total earning assets (1)$4,711,310$54,7604.61% $4,791,274$58,5804.85% $4,513,277$54,4544.79%
             
Interest-bearing deposits$2,520,696$6,5471.03% $2,505,383$7,9071.25% $2,211,148$6,1101.10%
Time deposits  865,392 4,6312.12%  975,736 5,4862.23%  956,754 4,4331.84%
Short-term borrowings 19,491 871.77%  17,333 982.24%  20,129 1072.11%
Federal Home Loan Bank advances 87,527 2100.95%  123,107 1,0233.30%  190,232 1,1312.36%
Other borrowings  - -0.00%  - -0.00%  72,264 8044.41%
Subordinated debentures 68,356 1,0045.83%  68,299 1,0035.83%  - -0.00%
Junior subordinated debentures 37,813 5796.07%  37,774 5816.10%  37,644 5255.53%
Total interest-bearing liabilities$3,599,275$13,0581.44% $3,727,632$16,0981.71% $3,488,171$13,1101.49%
             
Net interest income / spread (1) $41,7023.17%  $42,4823.14%  $41,3443.30%
Net interest margin (2)  3.36%   3.37%   3.48%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)  3.51%   3.52%   3.63%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.43%   3.41%   3.40%
             
             
  For the Year Ended    
  December 31, 2019 December 31, 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 $8,898$2042.29% $20,472$3381.65%    
Interest-bearing deposits at financial institutions 179,635 3,9102.18%  66,275 1,2671.91%    
Securities (1)  635,650 24,1503.80%  659,017 23,6213.58%    
Restricted investment securities 21,559 1,1745.45%  22,023 1,0934.96%    
Loans (1)  3,857,547 193,3655.01%  3,352,357 163,1974.87%    
Total earning assets (1)$4,703,289$222,8034.74% $4,120,144$189,5164.60%    
             
Interest-bearing deposits$2,443,989$29,8981.22% $2,043,314$18,6510.91%    
Time deposits  966,745 20,9772.17%  766,020 12,0241.57%    
Short-term borrowings 16,837 3632.16%  19,458 2931.51%    
Federal Home Loan Bank advances 108,536 2,8952.67%  202,715 4,7682.35%    
Other borrowings  13,563 5123.77%  69,623 2,7493.95%    
Subordinated debentures 60,883 3,5645.85%  - -0.00%    
Junior subordinated debentures 37,751 2,3086.11%  37,578 1,9995.32%    
Total interest-bearing liabilities$3,648,304$60,5171.66% $3,138,708$40,4841.29%    
             
Net interest income / spread (1) $162,2863.08%  $149,0323.31%    
Net interest margin (2)  3.31%   3.46%    
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)  3.45%   3.62%    
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.36%   3.48%    
             
             
(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.         
(4) Interest earning assets and interest bearing liabilities classified as held for sale as of September 30, 2019 are included in the calculations above.    


QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
      
 As of
 December 31,September 30,June 30,March 31,December 31,
  2019 2019 2019 2019 2018
      
 (dollars in thousands, except per share data)
      
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES     
Beginning balance$36,116 $41,104 $41,164 $39,847 $43,077 
Reclassification of allowance related to held for sale loans -  (6,122) -  -  - 
Provision charged to expense (2) 979  1,584  1,941  2,134  1,611 
Loans/leases charged off (1,182) (741) (2,152) (1,059) (4,967)
Recoveries on loans/leases previously charged off 88  291  151  242  126 
Ending balance$ 36,001 $ 36,116 $ 41,104 $ 41,164 $ 39,847 
      
      
NONPERFORMING ASSETS      
Nonaccrual loans/leases$7,902 $8,231 $13,148 $13,406 $14,260 
Accruing loans/leases past due 90 days or more 33  -  58  61  632 
Troubled debt restructures - accruing 979  763  1,313  3,794  3,659 
Total nonperforming loans/leases 8,914  8,994  14,519  17,261  18,551 
Other real estate owned 4,129  4,248  8,637  9,110  9,378 
Other repossessed assets 41  -  -  -  8 
Total nonperforming assets$ 13,084 $ 13,242 $ 23,156 $ 26,371 $ 27,937 
      
      
ASSET QUALITY RATIOS     
Nonperforming assets / total assets (3) 0.27% 0.27% 0.45% 0.52% 0.56%
Allowance / total loans/leases (1) 0.98% 1.00% 1.05% 1.08% 1.07%
Allowance / nonperforming loans/leases (1) 403.87% 401.56% 283.10% 238.48% 214.79%
Net charge-offs as a % of average loans/leases 0.03% 0.01% 0.05% 0.02% 0.13%
      
(1) Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminates the allowance and impacts these ratios.
(2) Excludes provision related to loans included in assets held for sale of $428 thousand for the quarter ending September 30, 2019.
(3) Excludes assets held for sale as of September 30, 2019.    



QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
            
   For the Quarter EndedFor the Year Ended
   December 31, September 30, December 31, December 31, December 31,
 SELECT FINANCIAL DATA - SUBSIDIARIES  2019   2019   2018   2019   2018 
            
   (dollars in thousands)
            
 TOTAL ASSETS          
            
 Quad City Bank and Trust (1) $1,682,477  $1,642,950  $1,623,369     
 m2 Lease Funds, LLC  239,794   232,432   231,662     
 Cedar Rapids Bank and Trust  1,572,324   1,592,896   1,379,222     
 Community State Bank - Ankeny  853,834   801,596   785,364     
 Springfield First Community Bank  748,753   693,897   632,849     
            
 TOTAL DEPOSITS          
            
 Quad City Bank and Trust (1) $1,458,587  $1,371,721  $1,308,085     
 Cedar Rapids Bank and Trust  1,248,598   1,271,828   1,167,552     
 Community State Bank - Ankeny  735,089   695,980   627,127     
 Springfield First Community Bank  531,498   484,225   449,983     
            
 TOTAL LOANS & LEASES          
            
 Quad City Bank and Trust (1) $1,329,667  $1,290,195  $1,233,117     
 m2 Lease Funds, LLC  236,735   230,061   228,646     
 Cedar Rapids Bank and Trust  1,174,963   1,148,952   1,037,469     
 Community State Bank - Ankeny  639,270   594,227   582,453     
 Springfield First Community Bank  546,306   526,466   475,801     
            
 TOTAL LOANS & LEASES / TOTAL DEPOSITS          
            
 Quad City Bank and Trust (1)  91%  94%  94%    
 Cedar Rapids Bank and Trust  94%  90%  89%    
 Community State Bank - Ankeny  87%  85%  93%    
 Springfield First Community Bank  103%  109%  106%    
            
            
 TOTAL LOANS & LEASES / TOTAL ASSETS          
            
 Quad City Bank and Trust (1)  79%  79%  76%    
 Cedar Rapids Bank and Trust  75%  72%  75%    
 Community State Bank - Ankeny  75%  74%  74%    
 Springfield First Community Bank  73%  76%  75%    
            
 ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES          
            
 Quad City Bank and Trust (1)  1.03%  1.07%  1.09%    
 m2 Lease Funds, LLC  1.51%  1.39%  1.49%    
 Cedar Rapids Bank and Trust (2)  1.14%  1.17%  1.19%    
 Community State Bank - Ankeny (2)  1.04%  1.13%  1.05%    
 Springfield First Community Bank (2)  0.41%  0.42%  0.21%    
            
 RETURN ON AVERAGE ASSETS           
            
 Quad City Bank and Trust (1)  1.44%  1.33%  1.22%  1.30%  1.31%
 Cedar Rapids Bank and Trust  1.82%  2.04%  1.78%  1.84%  1.54%
 Community State Bank - Ankeny  1.38%  1.71%  0.94%  1.34%  1.18%
 Springfield First Community Bank  1.44%  1.32%  1.74%  1.32%  1.64%
            
 NET INTEREST MARGIN PERCENTAGE (3)          
            
 Quad City Bank and Trust (1)  3.55%  3.49%  3.20%  3.39%  3.38%
 Cedar Rapids Bank and Trust (5)  3.49%  3.41%  3.60%  3.43%  3.59%
 Community State Bank - Ankeny (4)  4.35%  4.83%  4.73%  4.33%  4.48%
 Springfield First Community Bank (6)  3.95%  3.64%  4.68%  3.93%  4.55%
            
 ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET        
 INTEREST MARGIN, NET          
            
 Cedar Rapids Bank and Trust $103  $229  $740  $547  $1,350 
 Community State Bank - Ankeny  94   649   415   877   1,746 
 Springfield First Community Bank  775   432   1,498   3,088   2,614 
 QCR Holdings, Inc. (7)  (41)  (42)  (44)  (168)  (183)
            
(1)Quad City Bank and Trust figures include m2 Lease Funds, LLC, as this entity is wholly-owned and consolidated with the Bank. m2 Lease Funds, LLC  
  is also presented separately for certain (applicable) measurements.          
(2)Upon acquisition and per GAAP, acquired loans are recorded at market value, which eliminates the allowance and impacts this ratio.    
(3)Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using  
 a 21% tax rate.          
(4)Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest  
 margin would have been 4.27% for the quarter ended December 31, 2019, 4.46% for the quarter ended September 30, 2019 and 4.00% for the  
 quarter ended December 31, 2018.          
(5)Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest
 margin would have been 3.46% for the quarter ended December 31, 2019, 3.34% for the quarter ended September 30, 2019 and 3.36% for the  
 quarter ended December 31, 2018.          
(6)Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest
 margin would have been 3.47% for the quarter ended December 31, 2019, 3.16% for the quarter ended September 30, 2019 and 3.52% for the  
 quarter ended December 31, 2018.          
(7)Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013. 


QCR Holdings, Inc. 
Consolidated Financial Highlights 
(Unaudited) 
                
  As of    
  December 31, September 30, June 30, March 31, December 31,     
GAAP TO NON-GAAP RECONCILIATIONS  2019   2019   2019   2019   2018      
                
  (dollars in thousands, except per share data)    
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)               
                
Stockholders' equity (GAAP) $535,351  $519,743  $504,300  $488,407  $473,138      
Less: Intangible assets  89,717   93,277   93,837   94,790   95,282      
Tangible common equity (non-GAAP) $445,634  $426,466  $410,463  $393,617  $377,856      
                
Total assets (GAAP) $4,909,050  $5,292,382  $5,194,852  $5,066,662  $4,949,710      
Less: Intangible assets  89,717   93,277   93,837   94,790   95,282      
Tangible assets (non-GAAP) $4,819,333  $5,199,105  $5,101,015  $4,971,872  $4,854,428      
                
Tangible common equity to tangible assets ratio (non-GAAP)  9.25%  8.20%  8.05%  7.92%  7.78%     
                
                
  For the Quarter EndedFor the Year Ended 
  December 31, September 30, June 30, March 31, December 31, December 31, December 31, 
ADJUSTED NET INCOME (2)  2019   2019   2019   2019   2018   2019   2018  
                
Net income (GAAP) $15,891  $15,095  $13,504  $12,918  $13,316  $57,408  $43,120  
                
Less nonrecurring items (post-tax) (3):               
Income:               
Securities gains(losses), net  21  $(2) $(41) $-  $-  $(22) $-  
Gain on sale of assets and liabilities of subsidiary  8,539   -   -   -   -   8,539   -  
Total nonrecurring income (non-GAAP) $8,559  $(2) $(41) $-  $-  $8,516  $-  
                
Expense:               
Losses on debt extinguishment, net $228  $117  $-  $-  $-  $345  $-  
Goodwill impairment  3,000   -    -    -    -    3,000    -  
Disposition costs  2,627   -   -   -   -   2,627  $-  
Acquisition costs (4)  -   -   -   -   29   -   1,645  
Tax expense on expected liquidation of RB&T BOLI  790   -    -   -   -   790   -  
Post-acquisition compensation, transition and integration costs 1,465   698   559   106   1,127   2,828   1,647  
Total nonrecurring expense (non-GAAP) $8,110  $815  $559  $106  $1,156  $9,590  $3,292  
Adjusted net income (non-GAAP) (2) $ 15,441  $ 15,912  $ 14,104  $ 13,024  $ 14,472  $ 58,481  $ 46,412  
                
ADJUSTED EARNINGS PER COMMON SHARE (2)               
                
Adjusted net income (non-GAAP) (from above) $15,441  $15,912  $14,104  $13,024  $14,472  $58,481  $46,412  
                
Weighted average common shares outstanding  15,772,703   15,739,430   15,714,588   15,693,345   15,641,401   15,730,016   14,768,687  
Weighted average common and common equivalent shares outstanding 16,033,043   15,976,742   15,938,377   15,922,940   15,898,591   15,967,775   15,064,730  
                
Adjusted earnings per common share (non-GAAP):               
Basic $ 0.98  $ 1.01  $ 0.90  $ 0.83  $ 0.93  $ 3.72  $ 3.14  
Diluted $ 0.96  $ 1.00  $ 0.88  $ 0.82  $ 0.91  $ 3.66  $ 3.08  
                
ADJUSTED RETURN ON AVERAGE ASSETS (2)               
                
Adjusted net income (non-GAAP) (from above) $15,441  $15,912  $14,104  $13,024  $14,472  $58,481  $46,412  
                
Average Assets $5,147,754  $5,217,763  $5,077,900  $4,968,502  $4,842,232  $5,102,980  $4,392,121  
                
Adjusted return on average assets (annualized) (non-GAAP)  1.20%  1.22%  1.11%  1.05%  1.20%  1.15%  1.06% 
                
NET INTEREST MARGIN (TEY) (6)               
                
Net interest income (GAAP) $39,919  $40,719  $38,013   $36,908 $-$39,593  $155,559  $142,395  
                
Plus: Tax equivalent adjustment (5)  1,783   1,763   1,808   1,794  - 1,751   6,727   6,637  
                
Net interest income - tax equivalent (Non-GAAP) $41,702  $42,482  $39,821  $38,702  $41,344  $162,286  $149,032  
                
Less: Acquisition accounting net accretion  931   1,268   1,076   1,069   2,609   4,344   5,527  
                
Adjusted net interest income $40,771  $41,214  $38,745  $37,633  $38,735  $157,942  $143,505