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Section 1: 8-K (FORM 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 27, 2020

 

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:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ 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 ¨

 

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. ¨

 

 

 

   

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On July 27, 2020, QCR Holdings, Inc. (the “Company”) issued a press release disclosing financial results for the quarter ended June 30, 2020. 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 the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 Exchange Act.

 

Item 7.01. Regulation FD Disclosure.

 

On July 27, 2020, the Company posted a presentation to the Company’s website. The presentation is available to view at www.qcrh.com, and is also attached hereto as Exhibit 99.2.

 

The information in Item 7.01 of this Current Report on Form 8-K and the related Exhibit 99.2 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Exchange Act, 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 Exchange Act.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1     Press Release dated July 27, 2020, containing financial information for the quarter ended June 30, 2020.

 

99.2     Investor Presentation dated July 27, 2020.

 

   

 

 


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 27, 2020 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 (EXHIBIT 99.1)

 

Exhibit 99.1

 

PRESS RELEASE FOR IMMEDIATE RELEASE

 

QCR Holdings, Inc. Announces Second Quarter Earnings and Continued COVID-19 Pandemic Response

EPS of $0.86 Driven by Record Pre-Provision/Pre-Tax Adjusted Net Income

 

Second Quarter 2020 Highlights

 

·Net income of $13.7 million, or $0.86 per diluted share
·Adjusted net income (non-GAAP) of $14.0 million, or $0.88 per diluted share
·Noninterest income of $28.6 million
·Net interest margin was stable, excluding the impact of excess liquidity
·Record pre-provision, pre-tax adjusted net income (non-GAAP) of $36.8 million
·Pre-provision, pre-tax adjusted ROAA (non-GAAP) of 2.54%
·Provision expense of $19.9 million for the quarter, increasing ALLL by 33 bps to 1.47%
·Nonperforming assets to total assets of 0.24%, improving 8 basis points from the prior quarter
·Annualized core loan and lease growth (non-GAAP) of 8.4% for the quarter, excluding SBA Paycheck Protection Program (“PPP”) loans
·Annualized deposit growth of 17.2% for the quarter
·PPP loan participation of 1,655 totaling $358 million to both new and existing clients

 

Moline, IL, July 27, 2020 -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $13.7 million and diluted earnings per share (“EPS”) of $0.86 for the second quarter of 2020, compared to net income of $11.2 million and diluted EPS of $0.70 for the first quarter of 2020. Pre-provision, pre-tax adjusted net income (non-GAAP) increased $14.0 million in the second quarter, compared to the first quarter led by strong loan growth, net interest income, and record swap fee income. Provision expense increased $11.5 million in the second quarter, compared to the first quarter. This increase was due primarily to qualitative factors in response to deteriorating economic prospects as a result of the COVID-19 pandemic.

 

The Company reported adjusted net income (non-GAAP) of $14.0 million and adjusted diluted EPS (non-GAAP) of $0.88 for the second quarter of 2020, compared to adjusted net income (non-GAAP) of $12.4 million and adjusted diluted EPS (non-GAAP) of $0.77 for the first quarter of 2020. For the second quarter of 2019, net income and diluted EPS were $13.5 million and $0.85, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $14.1 million and $0.88, respectively.

 

   For the Quarter Ended 
   June 30,   March 31,   June 30, 
$ in millions (except per share data)  2020   2020   2019 
Net Income  $13.7   $11.2   $13.5 
Diluted EPS  $0.86   $0.70   $0.85 
Adjusted Net Income (non-GAAP)  $14.0   $12.4   $14.1 
Adjusted Diluted EPS (non-GAAP)  $0.88   $0.77   $0.88 
Pre-Provision/Pre-Tax Adjusted Income (non-GAAP)  $36.8   $22.8   $19.3 
Pre-Provision/Pre-Tax Adjusted ROAA (non-GAAP)   2.54%   1.84%   1.52%
See GAAP to non-GAAP reconciliations               

 

“We are very pleased with our core operating performance for the second quarter,” commented Larry J. Helling, Chief Executive Officer. “We delivered record pre-provision, pre-tax adjusted net income, driven by strong loan growth, strong fee income, and careful management of noninterest expenses. In addition to successfully funding over $350 million of PPP loans to both new and existing customers, we grew our core loans by over 8% on an annualized basis. Our core deposit gathering was even stronger during the quarter with the outsized growth in deposits creating significant excess liquidity that led to compression in our net interest margin.”

 

Additionally, asset quality remains strong and our current credit metrics improved during the quarter. “We reduced nonperforming assets by 21%, through the sale of an OREO property,” Helling said. “While we do not currently see meaningful degradation of specific credits in our portfolio, we chose to be prudent and increased our provision for loan losses during the quarter in order to build reserves against future potential credit issues related to COVID-19.”

 

“QCRH continues to successfully navigate the challenges presented by the COVID-19 pandemic, including supporting impacted clients through the QCRH Loan Relief Program, enabling clients to defer payments and preserve cash and liquidity. It’s difficult to predict the ultimate impact that this Pandemic will have on our clients. However, we believe our banks are well positioned to deal with the Pandemic,” Helling said. “All of our employees are dedicated to helping our clients weather this storm, and we have seasoned credit teams at all charters experienced in dealing with significant economic downturns.”

 

   

 

 

Annualized Loan and Lease Growth of 8.4%, excluding PPP loans (non-GAAP)

 

During the second quarter of 2020, the Company’s total loans and leases increased by $435.6 million to a total of $4.1 billion. Included in this amount was $358.1 million of PPP loans made to both new and existing customers. Excluding the PPP loans, loan and lease growth during the quarter was 8.4% on an annualized basis (non-GAAP), reflecting healthy demand across all markets. Core deposits (excluding brokered deposits) increased $338.6 million, or 8.7% on a linked quarter basis. Brokered deposits declined by $159.3 million as the Company allowed certain higher cost brokered deposits to run off the balance sheet. Throughout the quarter, deposits grew significantly with average deposit growth of $777.9 million, or 19.7% for the quarter. The Company’s correspondent banking portfolio contributed to the majority of this outsized growth as our correspondent bank clients grew liquidity with deposit growth significantly outpacing loans. These outsized liquidity balances temporarily shifted off balance sheet at quarter-end. The percentage of wholesale funds to total assets was 8.9% as of the second quarter, which was down from 10.1% in the first quarter of 2020 as the Company’s need for wholesale funding declined due to the strong growth in core deposits. At quarter-end, the percentage of gross loans and leases to total assets was 73.9%, which was up from 70.8% in the first quarter, primarily driven by the increase in PPP loan balances.

 

“Despite the uncertainty caused by the COVID-19 pandemic, we delivered solid loan growth for the quarter in addition to the $358 million of PPP loans that we funded,” added Helling. “Loan production improved in both our core commercial lending business and our Specialty Finance Group. Excluding our PPP loan production, loan and lease growth for the first six months of 2020 has been 5.0% on an annualized basis, and given our current pipeline, we believe that we will be able to achieve organic loan growth of between 3% and 5% for the full year.”

 

Net Interest Income of $40.9 million

 

Net interest income for the second quarter of 2020 totaled $40.9 million, compared to $37.7 million for the first quarter of 2020 and $38.0 million for the second quarter of 2019. The increase was primarily due to growth in average interest earning assets of $791.6 million, or 17.7% on a linked quarter basis, of which $404.9 million of the increase was due to excess cash derived from the aforementioned outsized deposit growth. Partially offsetting the impact of the higher average balance of interest earning assets, was a lower reported net interest margin, due to the significant excess liquidity. Acquisition-related net accretion totaled $736 thousand (pre-tax) for the second quarter of 2020, up slightly from the first quarter of 2020 and down from $1.1 million for the second quarter of 2019. Adjusted net interest income (non-GAAP) was $41.9 million for the second quarter of 2020, compared to $38.9 million for the first quarter of 2020 and $38.7 million for the second quarter of 2019.

 

In the second quarter, NIM was 3.14% and, on a tax-equivalent yield basis (non-GAAP), NIM was 3.27%, a decrease of 26 basis points and 29 basis points from the first quarter of 2020, respectively. Adjusted NIM (non-GAAP), excluding acquisition-related net accretion was 3.21%, down 29 basis points from the first quarter. The decline in adjusted NIM (non-GAAP) during the quarter was entirely due to the significant excess liquidity carried for the quarter. Average excess liquidity of $404.9 million with modest negative arbitrage contributed approximately 30 basis points to the NIM dilution. Excluding the impact of excess liquidity, the Company’s NIM was stable as cost of funds declines offset pricing pressure on earning assets.

 

   For the Quarter Ended 
   June 30,   March 31,   June 30, 
   2020   2020   2019 
NIM   3.14%   3.40%   3.25%
NIM (TEY)(non-GAAP)   3.27%   3.56%   3.40%
Adjusted NIM (TEY)(non-GAAP)   3.21%   3.50%   3.31%
See GAAP to non-GAAP reconciliations               

 

“Our deposit costs decreased significantly during the quarter as we gathered core deposits and reduced our wholesale funding, allowing us to reduce our total cost of interest-bearing funds by 53 basis points. However, our average loan yields also decreased due to the sharp decline in short-term interest rates, and when combined with the significant excess liquidity that we carried during the quarter, our adjusted NIM was adversely impacted by 29 basis points,” stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “Excluding the impact of the excess liquidity, adjusted NIM would have been stable from the first quarter.”

 

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Noninterest Income of $28.6 million

 

Noninterest income for the second quarter of 2020 totaled $28.6 million, compared to $15.2 million for the first quarter of 2020. The increase was primarily due to $19.9 million in swap fee income, up $13.1 million from the first quarter of 2020. Wealth management revenue was $3.6 million for the quarter, down from $4.0 million in the first quarter due to a full quarter of lower fair market values of the assets under management. Noninterest income increased 67.7% when compared to the second quarter of 2019.

 

“Continued strong production from our Specialty Finance Group and our core banks led to a record $19.9 million in swap fee income during the quarter. Swap fee income totaled $26.7 million for the first six months of 2020, putting us on track to exceed last year’s record amount,” added Mr. Gipple. “Our current expectation is that for the remainder of 2020, this fee income source will be approximately $30 to $32 million for the six month period.”

 

Noninterest Expenses of $33.1 million

 

Noninterest expense for the second quarter of 2020 totaled $33.1 million, compared to $31.4 million for the first quarter of 2020. The linked quarter increase was primarily due to increased salary and benefits expense of $2.8 million with increased bonus and commission expense in the quarter driven by the strong financial results and higher than anticipated swap fee income. This was partially offset by a $600 thousand decline in disposition costs, a $285 thousand decline in occupancy and equipment costs and a $345 thousand increase in gains and income from the operations of other real estate. In addition, the first quarter of 2020 included a goodwill impairment charge of $500 thousand.

 

NPAs at Historical Lows

Building Reserves for COVID-19

 

Nonperforming assets (“NPAs”) totaled $13.3 million, a decrease of $3.6 million from the first quarter of 2020. The decrease was primarily due to the disposition of other real estate owned. The ratio of NPAs to total assets decreased to 0.24% at June 30, 2020, compared to 0.32% at March 31, 2020, and down from 0.45% at June 30, 2019.

 

The Company’s provision for loan and lease losses totaled $19.9 million for the second quarter of 2020, up from $8.4 million in the prior quarter. The linked quarter increase in the provision for loan and lease losses was primarily due to increased qualitative factors in response to the COVID-19 pandemic. As of June 30, 2020, the Company’s allowance to total loans and leases was 1.47%, which was up from 1.14% at March 31, 2020, and from 1.05% at June 30, 2019. Excluding the impact of the $358 million in PPP loans, the allowance for estimated losses on loans and leases to total loans and leases was 1.61% (non-GAAP).

 

In accordance with GAAP for acquisition accounting, 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 of $5.5 million at June 30, 2020.

 

Strong Capital Levels

 

As of June 30, 2020, the Company’s total risk-based capital ratio was 13.74%, the common equity tier 1 ratio was 10.28%, and the tangible common equity to tangible assets ratio was 8.48% (non-GAAP). By comparison, these respective ratios were 13.54%, 10.31% and 8.76% as of March 31, 2020. The decline in the tangible common equity to tangible assets ratio was primarily the result of asset growth associated with the increase in PPP loans during the quarter. Excluding the impact of the PPP loans, the tangible common equity to tangible assets ratio was 9.03% (non-GAAP).

 

Focus on Three Strategic Long-Term Initiatives

 

As part of the Company’s ongoing efforts to grow earnings and drive attractive long-term returns for shareholders, it continues to operate under three key strategic long-term initiatives:

 

·Organic loan and lease growth of 9% per year, funded by core deposits;
·Grow fee-based income by at least 6% per year; and
·Limit our annual operating expense growth to 5% per year.

 

It should be noted that these initiatives are long-term targets. Due to the impact of the COVID-19 pandemic, the Company may not be able to achieve these goals for the full year 2020.

 

Supplemental Presentation and Where to Find It

 

In addition to this press release, the Company has included a supplemental presentation that provides further information regarding the Company’s loan exposures and deferrals. Investors, analysts and other interested persons may find this presentation on the Securities and Exchange Commission’s EDGAR filing system at www.sec.gov/edgar.shtml, or on the Company’s website at www.qcrh.com.

 

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Conference Call Details

 

The Company will host an earnings call/webcast tomorrow, July 28, 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 August 11, 2020. The replay access information is 877-344-7529 (international 412-317-0088); access code 10145663. 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 June 30, 2020, the Company had approximately $5.6 billion in assets, $4.1 billion in loans and $4.3 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 the 2020 presidential election and 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, widespread disease or pandemics (including the COVID-19 pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices (including the new current expected credit loss (CECL) impairment standards, that will change how the Company estimates credit losses when implemented); (iv) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) 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; (ix) the loss of key executives or employees; (x) changes in consumer spending; and (xi) unexpected outcomes of existing or new litigation involving the Company. 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]

 

Kim K. Garrett

Vice President

Corporate Communications

Investor Relations Manager

(319) 743-7006

[email protected]

 

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QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

                       Held for Sale   Held for Sale   Held for Sale   Held for Sale 
   As of   As of   As of   As of   As of 
   June 30,   March 31,   December 31,   September 30,   June 30,   June 30,   March 31,   December 31,   September 30, 
   2020   2020   2019   2019   2019   2020   2020   2019   2019 
   (dollars in thousands)                 
CONDENSED BALANCE SHEET                                    
Cash and due from banks  $88,577   $169,827   $76,254   $91,671   $87,919   $-   $-   $-   $11,031 
Federal funds sold and interest-bearing deposits   142,900    206,708    157,691    197,263    205,497    -    -    -    2,415 
Securities   748,883    684,571    611,341    555,409    643,803    -    -    -    66,009 
Net loans/leases   4,079,432    3,662,435    3,654,204    3,574,154    3,869,415    -    -    -    362,011 
Intangibles   13,872    14,421    14,970    15,529    16,089    -    -    -    - 
Goodwill   74,248    74,248    74,748    77,748    77,748    -    -    -    - 
Derivatives   225,164    195,973    87,827    104,388    65,922    -    -    -    - 
Other assets   220,920    213,134    220,049    210,673    228,459    10,765    10,758    11,966    24,081 
Assets held for sale   10,765    10,758    11,966    465,547    -    -    -    -    - 
Total assets  $5,604,761   $5,232,075   $4,909,050   $5,292,382   $5,194,852   $10,765   $10,758   $11,966   $465,547 
                                              
Total deposits  $4,349,775   $4,170,478   $3,911,051   $3,802,241   $4,322,510   $-   $-   $-   $451,546 
Total borrowings   376,250    244,399    278,955    320,457    230,953    -    -    -    16,157 
Derivatives   233,589    203,744    88,436    109,242    69,556    -    -    -    - 
Other liabilities   87,539    71,185    90,254    70,169    67,533    1,588    3,130    5,003    2,827 
Liabilities held for sale   1,588    3,130    5,003    470,530    -    -    -    -    - 
Total stockholders' equity   556,020    539,139    535,351    519,743    504,300    -    -    -    - 
Total liabilities and stockholders' equity  $5,604,761   $5,232,075   $4,909,050   $5,292,382   $5,194,852   $1,588   $3,130   $5,003   $470,530 
                                              
ANALYSIS OF LOAN PORTFOLIO                                             
Loan/lease mix:                                             
Commercial and industrial loans  $1,850,110   $1,484,979   $1,507,825   $1,469,978   $1,548,657                     
Commercial real estate loans   1,869,162    1,783,086    1,736,396    1,687,922    1,837,473                     
Direct financing leases   79,105    83,324    87,869    92,307    101,180                     
Residential real estate loans   241,069    237,742    239,904    245,667    293,479                     
Installment and other consumer loans   99,150    106,728    109,352    106,540    120,947                     
Deferred loan/lease origination costs, net of fees   1,663    8,809    8,859    7,856    8,783                     
Total loans/leases  $4,140,259   $3,704,668   $3,690,205   $3,610,270   $3,910,519                     
Less allowance for estimated losses on loans/leases   60,827    42,233    36,001    36,116    41,104                     
Net loans/leases  $4,079,432   $3,662,435   $3,654,204   $3,574,154   $3,869,415                     
                                              
ANALYSIS OF SECURITIES PORTFOLIO                                             
Securities mix:                                             
U.S. government sponsored agency securities  $17,472   $19,457   $20,078   $21,268   $35,762                     
Municipal securities   526,192    493,664    447,853    391,329    440,853                     
Residential mortgage-backed and related securities   145,672    122,853    120,587    123,880    159,228                     
Asset backed securities   39,797    28,499    16,887    10,957    -                     
Other securities   19,750    20,098    5,936    7,975    7,960                     
Total securities  $748,883   $684,571   $611,341   $555,409   $643,803                     
                                              
ANALYSIS OF DEPOSITS                                             
Deposit mix:                                             
Noninterest-bearing demand deposits  $1,177,482   $829,782   $777,224   $782,232   $795,951                     
Interest-bearing demand deposits   2,488,755    2,440,907    2,407,502    2,245,557    2,505,956                     
Time deposits   560,982    617,979    571,343    536,352    733,135                     
Brokered deposits   122,556    281,810    154,982    238,100    287,468                     
Total deposits  $4,349,775   $4,170,478   $3,911,051   $3,802,241   $4,322,510                     
                                              
ANALYSIS OF BORROWINGS                                             
Borrowings mix:                                             
Term FHLB advances  $90,000   $55,000   $50,000   $60,000   $46,433                     
Overnight FHLB advances (1)   55,000    40,000    109,300    135,800    59,300                     
FRB borrowings   100,000    30,000    -    -    -                     
Other short-term borrowings   24,818    13,067    13,423    18,526    19,191                     
Subordinated notes   68,516    68,455    68,394    68,334    68,274                     
Junior subordinated debentures   37,916    37,877    37,838    37,797    37,755                     
Total borrowings  $376,250   $244,399   $278,955   $320,457   $230,953                     

 

(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 0.37%.

 

 5 

 

 

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

   For the Quarter Ended 
   June 30,   March 31,   December 31,   September 30,   June 30, 
   2020   2020   2019   2019   2019 
   (dollars in thousands, except per share data) 
INCOME STATEMENT    
Interest income  $48,650   $48,982   $52,977   $56,817   $54,181 
Interest expense   7,702    11,284    13,058    16,098    16,168 
Net interest income   40,948    37,698    39,919    40,719    38,013 
Provision for loan/lease losses   19,915    8,367    979    2,012    1,941 
Net interest income after provision for loan/lease losses  $21,033   $29,331   $38,940   $38,707   $36,072 
                          
                          
Trust department fees  $2,227   $2,312   $2,365   $2,340   $2,361 
Investment advisory and management fees   1,399    1,727    1,589    1,782    1,888 
Deposit service fees   1,286    1,477    1,787    1,813    1,658 
Gain on sales of residential real estate loans   1,196    652    823    890    489 
Gain on sales of government guaranteed portions of loans   -    -    159    519    39 
Swap fee income   19,927    6,804    7,409    9,797    7,891 
Securities gains (losses), net   65    -    26    (3)   (52)
Earnings on bank-owned life insurance   612    329    533    489    412 
Debit card fees   775    758    766    886    914 
Correspondent banking fees   198    215    194    189    172 
Gain on sale of assets and liabilities of subsidiary   -    -    12,286    -    - 
Other   941    922    1,868    1,204    1,293 
Total noninterest income  $28,626   $15,196   $29,805   $19,906   $17,065 
                          
                          
Salaries and employee benefits  $21,304   $18,519   $24,220   $24,215   $22,749 
Occupancy and equipment expense   3,748    4,032    4,019    3,860    3,533 
Professional and data processing fees   3,646    3,369    3,570    4,030    3,031 
Post-acquisition compensation, transition and integration costs   70    151    1,855    884    708 
Disposition costs   (83)   517    3,325    -    - 
FDIC insurance, other insurance and regulatory fees   908    683    523    542    926 
Loan/lease expense   339    228    349    221    312 
Net cost of (income from) and gains/losses on operations of other real estate   (332)   13    232    2,078    1,182 
Advertising and marketing   552    682    1,670    1,056    1,037 
Bank service charges   501    504    516    502    508 
Losses on debt extinguishment, net   429    147    288    148    - 
Correspondent banking expense   212    216    216    209    206 
Intangibles amortization   548    549    560    560    615 
Goodwill impairment   -    500    3,000    -    - 
Other   1,280    1,305    1,951    1,640    1,753 
Total noninterest expense  $33,122   $31,415   $46,294   $39,945   $36,560 
                          
Net income before income taxes  $16,537   $13,112   $22,451   $18,668   $16,577 
Federal and state income tax expense   2,798    1,884    6,560    3,573    3,073 
Net income  $13,739   $11,228   $15,891   $15,095   $13,504 
                          
Basic EPS  $0.87   $0.71   $1.01   $0.96   $0.86 
Diluted EPS  $0.86   $0.70   $0.99   $0.94   $0.85 
                          
                          
Weighted average common shares outstanding   15,747,056    15,796,796    15,772,703    15,739,430    15,714,588 
Weighted average common and common equivalent shares outstanding   15,895,336    16,011,456    16,033,043    15,976,742    15,938,377 

 

6

 

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

   For the Six Months Ended 
   June 30,   June 30, 
   2020   2019 
   (dollars in thousands, except per share data) 
INCOME STATEMENT          
Interest income  $97,632   $106,283 
Interest expense   18,986    31,362 
Net interest income   78,646    74,921 
Provision for loan/lease losses   28,282    4,075 
Net interest income after provision for loan/lease losses  $50,364   $70,846 
           
           
Trust department fees   4,539   $4,854 
Investment advisory and management fees   3,126    3,624 
Deposit service fees   2,763    3,212 
Gain on sales of residential real estate loans   1,848    858 
Gain on sales of government guaranteed portions of loans   -    70 
Swap fee income   26,731    11,089 
Securities losses, net   65    (52)
Earnings on bank-owned life insurance   941    952 
Debit card fees   1,533    1,706 
Correspondent banking fees   413    388 
Other   1,863    2,357 
Total noninterest income  $43,822   $29,058 
           
           
Salaries and employee benefits   39,823   $43,628 
Occupancy and equipment expense   7,780    7,227 
Professional and data processing fees   7,015    5,781 
Post-acquisition compensation, transition and integration costs   221    842 
Disposition costs   434    - 
FDIC insurance, other insurance and regulatory fees   1,591    1,890 
Loan/lease expense   567    526 
Net cost of operation of other real estate   (319)   1,480 
Advertising and marketing   1,234    1,822 
Bank service charges   1,005    991 
Losses on debt extinguishment, net   576    - 
Correspondent banking expense   428    410 
Intangibles amortization   1,097    1,147 
Goodwill impairment   500    - 
Other   2,585    3,251 
Total noninterest expense  $64,537   $68,995 
           
Net income before taxes  $29,649   $30,909 
Income tax expense   4,682    4,487 
Net income  $24,967   $26,422 
           
Basic EPS  $1.58   $1.68 
Diluted EPS  $1.56   $1.66 
           
Weighted average common shares outstanding   15,771,926    15,703,967 
Weighted average common and common equivalent shares outstanding   15,956,958    15,930,659 

 

7

 

 

 

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

   As of and for the Quarter Ended   For the Six Months Ended 
   June30,   March 31,   December 31,   September 30,   June 30,   June 30,   June 30, 
   2020   2020   2019   2019   2019   2020   2019 
   (dollars in thousands, except per share data)             
COMMON SHARE DATA                                   
Common shares outstanding   15,790,611    15,773,736    15,828,098    15,790,462    15,772,939           
Book value per common share (1)  $35.21   $34.18   $33.82   $32.91   $31.97           
Tangible book value per common share (2)  $29.63   $28.56   $28.15   $27.01   $26.02           
Closing stock price  $31.18   $27.07   $43.86   $37.98   $34.87           
Market capitalization  $492,351   $426,995   $694,220   $599,722   $550,002           
Market price / book value   88.55%   79.20%   129.69%   115.40%   109.06%          
Market price / tangible book value   105.23%   94.79%   155.76%   140.61%   134.00%          
Earnings per common share (basic) LTM (3)  $3.55   $3.54   $3.65   $3.49   $3.10           
Price earnings ratio LTM (3)   8.78 x    7.65 x    12.02 x    10.88 x    11.25 x           
TCE / TA (4)   8.48%   8.76%   9.25%   8.20%   8.05%          
                                    
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY                                   
Beginning balance  $539,139   $535,351   $519,743   $504,300   $488,407           
Net income   13,739    11,228    15,891    15,095    13,504           
Other comprehensive income (loss), net of tax   3,622    (3,691)   (683)   543    2,243           
Common stock cash dividends declared   (945)   (942)   (947)   (944)   (942)          
Proceeds from issuance of 9,400 shares of common stock as a result of the performance based targets met for  Bates Companies   -    -    399    -    -           
Repurchase and cancellation of 100,932 shares of common stock as a result of a share repurchase program   -    (3,780)                         
Other (5)   465    973    948    749    1,088           
Ending balance  $556,020   $539,139   $535,351   $519,743   $504,300           
                                    
REGULATORY CAPITAL RATIOS (6):                                   
Total risk-based capital ratio   13.74%   13.54%   13.33%   12.22%   12.04%          
Tier 1 risk-based capital ratio   11.11%   11.16%   11.04%   9.94%   9.76%          
Tier 1 leverage capital ratio   8.91%   10.19%   9.53%   9.02%   8.96%          
Common equity tier 1 ratio   10.28%   10.31%   10.18%   9.12%   8.93%          
                                    
KEY PERFORMANCE RATIOS AND OTHER METRICS                                   
Return on average assets (annualized)   0.95%   0.91%   1.23%   1.16%   1.06%   0.93%   1.05%
Return on average total equity (annualized)   10.29%   8.23%   11.93%   11.70%   10.84%   9.30%   10.78%
Net interest margin   3.14%   3.40%   3.36%   3.37%   3.25%   3.26%   3.25%
Net interest margin (TEY) (Non-GAAP)(7)   3.27%   3.56%   3.51%   3.52%   3.40%   3.40%   3.40%
Efficiency ratio (Non-GAAP) (8)   47.61%   59.39%   66.40%   65.89%   66.38%   52.70%   66.35%
Gross loans and leases / total assets (10)   74.01%   70.95%   75.36%   74.80%   75.28%   74.01%   75.28%
Gross loans and leases / total deposits (10)   95.18%   88.83%   94.35%   94.95%   90.47%   95.18%   90.47%
Effective tax rate   16.92%   14.37%   29.22%   19.14%   18.54%   15.79%   14.52%
Full-time equivalent employees (9)   712    703    697    766    773    712    773 
                                    
AVERAGE BALANCES                                   
Assets  $5,800,164   $4,948,311   $5,147,754   $5,217,763   $5,077,900   $5,374,224   $5,023,201 
Loans/leases   3,999,523    3,686,410    3,868,435    3,962,464    3,839,674    3,842,967    3,799,645 
Deposits   4,732,626    3,954,707    4,227,572    4,302,995    4,271,391    4,343,653    4,191,130 
Total stockholders' equity   534,095    545,678    532,756    516,195    498,263    536,775    490,343 

 

  (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 from June 30, 2019 and September 30, 2019 due to sale of subsidiary Rockford Bank & Trust.
  (10) Excludes assets held for sale as of September 30, 2019, Deccember 31, 2019, March 31, 2020 and June 30, 2020.

 

 8 

 

 

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

ANALYSIS OF NET INTEREST INCOME AND MARGIN (4)

 

   For the Quarter Ended 
   June 30, 2020   March 31, 2020   June 30, 2019 
   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  $865   $1    0.46%  $5,324   $18    1.36%  $9,690   $56    2.32%
Interest-bearing deposits at financial institutions   533,483    135    0.10%   128,612    361    1.13%   182,651    1,168    2.56%
Securities (1)   697,559    6,536    3.77%   619,307    6,080    3.95%   644,999    6,062    3.77%
Restricted investment securities   21,234    288    5.46%   21,365    258    4.86%   21,007    290    5.54%
Loans (1)   3,999,522    43,417    4.37%   3,686,410    44,056    4.81%   3,839,674    48,413    5.06%
Total earning assets (1)  $5,252,663   $50,377    3.86%  $4,461,018   $50,773    4.58%  $4,698,021   $55,989    4.78%
                                              
Interest-bearing deposits  $2,840,860   $2,429    0.34%  $2,379,635   $5,328    0.90%  $2,461,768   $8,271    1.35%
Time deposits   809,233    3,337    1.66%   785,135    3,879    1.99%   1,013,391    5,554    2.20%
Short-term borrowings   25,064    22    0.35%   19,315    64    1.33%   16,145    81    2.01%
Federal Home Loan Bank advances   95,616    347    1.46%   111,407    449    1.62%   76,154    601    3.17%
Other borrowings   -    -    0.00%   -    -    0.00%   10,550    92    3.50%
Subordinated debentures   68,480    994    5.84%   68,418    994    5.84%   68,239    993    5.84%
Junior subordinated debentures   37,891    572    6.07%   37,853    571    6.07%   37,731    576    6.12%
Total interest-bearing liabilities  $3,877,144   $7,701    0.80%  $3,401,763   $11,285    1.33%  $3,683,978   $16,168    1.76%
                                              
Net interest income / spread (1)       $42,676    3.06%       $39,488    3.24%       $39,821    3.02%
Net interest margin (2)             3.14%             3.40%             3.25%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)             3.27%             3.56%             3.40%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)             3.21%             3.50%             3.31%

 

   For the Six Months Ended 
   June 30, 2020   June 30, 2019 
   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  $3,095   $18    1.17%  $12,713   $150    2.38%
Interest-bearing deposits at financial institutions   331,048    495    0.30%   169,057    2,091    2.49%
Securities (1)   658,433    12,616    3.85%   652,727    12,158    3.76%
Restricted investment securities   21,300    546    5.15%   21,146    598    5.70%
Loans (1)   3,842,966    87,474    4.58%   3,799,645    94,795    5.03%
Total earning assets (1)  $4,856,842   $101,149    4.19%  $4,655,288   $109,792    4.76%
                               
Interest-bearing deposits  $2,610,248   $7,756    0.60%  $2,374,939   $15,445    1.31%
Time deposits   797,184    7,216    1.82%   1,012,925    10,859    2.16%
Short-term borrowings   22,190    86    0.78%   15,261    152    2.01%
Federal Home Loan Bank advances   103,512    796    1.55%   111,755    1,662    3.00%
Other borrowings   -    -    0.00%   27,126    539    4.01%
Subordinated debentures   68,449    1,988    5.84%   53,438    1,557    5.88%
Junior subordinated debentures   37,872    1,144    6.07%   37,709    1,148    6.14%
Total interest-bearing liabilities  $3,639,455   $18,986    1.05%  $3,633,153   $31,362    1.74%
                               
Net interest income / spread (1)       $82,163    3.14%       $78,430    3.02%
Net interest margin (2)             3.26%             3.25%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)             3.40%             3.40%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)             3.35%             3.30%

 

(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, 
   2020   2020   2019   2019   2019 
   (dollars in thousands, except per share data) 
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES    
Beginning balance  $42,233   $36,001   $36,116   $41,104   $41,164 
Reclassification of allowance related to held for sale loans   -    -    -    (6,122)   - 
Provision charged to expense (2)   19,915    8,367    979    1,584    1,941 
Loans/leases charged off   (1,450)   (2,335)   (1,182)   (741)   (2,152)
Recoveries on loans/leases previously charged off   129    200    88    291    151 
Ending balance  $60,827   $42,233   $36,001   $36,116   $41,104 
                          
NONPERFORMING ASSETS                         
Nonaccrual loans/leases  $12,099   $11,628   $7,902   $8,231   $13,148 
Accruing loans/leases past due 90 days or more   99    1,419    33    -    58 
Troubled debt restructures - accruing   920    545    979    763    1,313 
Total nonperforming loans/leases   13,118    13,592    8,914    8,994    14,519 
Other real estate owned   157    3,298    4,129    4,248    8,637 
Other repossessed assets   25    45    41    -    - 
Total nonperforming assets  $13,300   $16,935   $13,084   $13,242   $23,156 
                          
ASSET QUALITY RATIOS                         
Nonperforming assets / total assets (3)   0.24%   0.32%   0.27%   0.27%   0.45%
Allowance / total loans/leases (1)   1.47%   1.14%   0.98%   1.00%   1.05%
Allowance / nonperforming loans/leases (1)   463.69%   310.72%   403.87%   401.56%   283.10%
Net charge-offs as a % of average loans/leases   0.03%   0.06%   0.03%   0.01%   0.05%

 

(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.

 

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  2020   2020  2019  2020  2019
    (dollars in thousands)        
TOTAL ASSETS                     
                      
Quad City Bank and Trust (1)  $1,984,245   $1,914,785  $1,637,115        
m2 Lease Funds, LLC   241,114    237,198   234,072        
Cedar Rapids Bank and Trust   2,021,043    1,719,773   1,527,521        
Community State Bank - Ankeny   903,648    863,903   806,704        
Springfield First Community Bank   745,474    708,736   671,644        
                      
TOTAL DEPOSITS                     
                      
Quad City Bank and Trust (1)  $1,707,970   $1,678,889  $1,434,467        
Cedar Rapids Bank and Trust   1,351,784    1,247,989   1,283,151        
Community State Bank - Ankeny   778,499    743,645   705,777        
Springfield First Community Bank   564,710    524,420   471,340        
                      
TOTAL LOANS & LEASES                     
                      
Quad City Bank and Trust (1)  $1,485,971   $1,338,915  $1,273,400        
m2 Lease Funds, LLC   239,351    235,144   230,676        
Cedar Rapids Bank and Trust   1,380,672    1,159,453   1,100,823        
Community State Bank - Ankeny   671,772    634,253   597,486        
Springfield First Community Bank   601,843    572,046   515,566        
                      
TOTAL LOANS & LEASES / TOTAL DEPOSITS                     
                      
Quad City Bank and Trust (1)   87%   80%  89%       
Cedar Rapids Bank and Trust   102%   93%  86%       
Community State Bank - Ankeny   86%   85%  85%       
Springfield First Community Bank   107%   109%  109%       
                      
                      
TOTAL LOANS & LEASES / TOTAL ASSETS                     
                      
Quad City Bank and Trust (1)   75%   70%  78%       
Cedar Rapids Bank and Trust   68%   67%  72%       
Community State Bank - Ankeny   74%   73%  74%       
Springfield First Community Bank   81%   81%  77%       
                      
ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES                     
                      
Quad City Bank and Trust (1)   1.51%   1.17%  1.06%       
m2 Lease Funds, LLC   1.99%   1.50%  1.38%       

Cedar Rapids Bank and Trust (2)   1.62%   1.35%  1.19%         
Community State Bank - Ankeny (2)   1.56%   1.21%  1.09%         
Springfield First Community Bank (2)   0.94%   0.56%  0.37%         
                        
RETURN ON AVERAGE ASSETS                       
                        
Quad City Bank and Trust (1)   0.68%   1.33%  1.22%  0.95%   1.20%
Cedar Rapids Bank and Trust   2.36%   1.60%  1.95%  2.01%   1.75%
Community State Bank - Ankeny   0.25%   0.50%  1.17%  0.37%   1.12%
Springfield First Community Bank   1.04%   1.29%  1.37%  1.16%   1.24%
                        
NET INTEREST MARGIN PERCENTAGE (3)                       
                        
Quad City Bank and Trust (1)   2.88%   3.68%  3.29%  3.22%   3.26%
Cedar Rapids Bank and Trust (5)   3.37%   3.43%  3.41%  3.40%   3.41%
Community State Bank - Ankeny (4)   3.77%   3.91%  4.08%  3.84%   4.06%
Springfield First Community Bank (6)   3.88%   3.83%  4.10%  3.85%   4.08%
                        
ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET                       
INTEREST MARGIN, NET                       
                        
Cedar Rapids Bank and Trust  $62   $49  $71  $111   $215 
Community State Bank - Ankeny   72    64   76  $136    134  
Springfield First Community Bank   641    552   971  $1,193    1,881  
QCR Holdings, Inc. (7)   (39)   (40)  (42) $(79)   (85)  

 

(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 3.71% for the quarter ended June 30, 2020, 3.86% for the quarter ended March 31, 2020 and 4.01% for the quarter ended June 30, 2019.
(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 3.35% for the quarter ended June 30, 2020, 3.42% for the quarter ended March 31, 2020 and 3.39% for the quarter ended June 30, 2019.
(6) Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments.  Excluding those adjustments, net interest margin would have been 4.29% for the quarter ended June 30, 2020, 4.52% for the quarter ended March 31, 2020 and 3.39% for the quarter ended June 30, 2019.
(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.

 

11 

 

 

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

   As of 
   June 30,   March 31,   December 31,   September 30,   June 30, 
GAAP TO NON-GAAP RECONCILIATIONS  2020   2020   2019   2019   2019 
   (dollars in thousands, except per share data) 
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)                         
Stockholders' equity (GAAP)  $556,020   $539,139   $535,351   $519,743   $504,300 
Less: Intangible assets   88,120    88,669    89,717    93,277    93,837 
Tangible common equity (non-GAAP)  $467,900   $450,470   $445,634   $426,466   $410,463 
                          
Total assets (GAAP)  $5,604,761   $5,232,075   $4,909,050   $5,292,382   $5,194,852 
Less: Intangible assets   88,120    88,669    89,717    93,277    93,837 
Tangible assets (non-GAAP)  $5,516,641   $5,143,406   $4,819,333   $5,199,105   $5,101,015 
                          
Tangible common equity to tangible assets ratio (non-GAAP)   8.48%   8.76%   9.25%   8.20%   8.05%
                          
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO EXCLUDING PPP LOANS (1)                         
                          
Stockholder's equity (GAAP)  $556,020   $539,139   $535,351   $519,743   $504,300 
Less: PPP loan interest income (post-tax) (2)   2,085    -    -    -    - 
Less: Intangible assets   88,120    88,669    89,717    93,277    93,837 
Tangible common equity, excluding PPP loan income (non-GAAP)  $465,815   $450,470   $445,634   $426,466   $410,463 
                          
Total assets (GAAP)  $5,604,761   $5,232,075   $4,909,050   $5,292,382   $5,194,852 
Less: PPP loans   358,052    -    -    -    - 
Less: Intangible assets   88,120    88,669    89,717    93,277    93,837 
Tangible assets, excluding PPP loans (non-GAAP)  $5,158,589   $5,143,406   $4,819,333   $5,199,105   $5,101,015 
                          
Tangible common equity to tangible assets ratio, excluding PPP loans (non-GAAP)   9.03%   8.76%   9.25%   8.20%   8.05%

 

  (1) This ratio is a non-GAAP financial measure.  The Company's management believes that this measurement is important to many investors in the marketplace who are interested in changes period-to-period in common equity.  In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to stockholders' equity and total assets, which are the most directly comparable GAAP financial measures.
  (2) PPP interest income (post-tax) is calculated using an estimated effective tax rate of 21%.

  

 12 

 

 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

 

GAAP TO NON-GAAP RECONCILIATIONS  For the Quarter Ended   For the Six Months Ended 
   June 30,   March 31,   December 31,   September 30,   June 30,   June 30,   June 30, 
ADJUSTED NET INCOME (1)  2020   2020   2019   2019   2019   2020   2019 
   (dollars in thousands, except per share data) 
Net income (GAAP)  $13,739   $11,228   $15,891   $15,095   $13,504   $24,967   $26,422 
                                    
Less non-core items (post-tax) (2):                                   
Income:                                   
Securities gains(losses), net   51    -    21   $(2)  $(41)  $51   $(41)
Gain on sale of assets and liabilities of subsidiary   -    -    8,539    -    -    -    - 
Total non-core income (non-GAAP)  $51   $-   $8,560   $(2)  $(41)  $51   $(41)
                                    
Expense:                                   
Losses on debt extinguishment, net  $339   $116   $228   $117   $-   $455   $- 
Goodwill impairment   -    500    3,000    -    -    500    - 
Disposition costs   (66)   408    2,627    -    -    343   $- 
Tax expense on expected liquidation of RB&T BOLI   -    -    790    -    -    -    - 
Post-acquisition compensation, transition and integration costs   55    119    1,465    698    559    175    665 
Total non-core expense (non-GAAP)  $329   $1,143   $8,110   $815   $559   $1,472   $665 
Adjusted net income  (non-GAAP) (1)  $14,016   $12,372   $15,441   $15,912