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QCR Holdings, Inc. Announces Record Earnings of $6.5 Million for the Third Quarter of 2015

MOLINE, Ill., Oct. 20, 2015 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $6.5 million and diluted earnings per share ("EPS") of $0.55 for the quarter ended September 30, 2015. By comparison, for the quarter ended June 30, 2015, the Company reported a net loss of $524 thousand and diluted EPS of ($0.05). During the second quarter, the Company successfully executed several planned initiatives aimed at improving the long-term profitability of the Company and strengthening its capital base. As a result, financial performance was greatly impacted by several previously announced nonrecurring income and expense items; most prominently the one-time expense related to the prepayment of certain FHLB advances and other wholesale borrowings, which totaled approximately $4.5 million (after-tax). For the third quarter of 2014, the Company reported net income of $4.1 million, and diluted EPS of $0.50. As a result of the redemption of all of the Company's remaining outstanding shares of preferred stock in the second quarter of 2014, none of these periods included preferred stock dividends.

For the nine months ended September 30, 2015, the Company reported net income of $10.1 million and diluted EPS of $1.01. By comparison, for the first nine months ended September 30, 2014, the Company reported net income of $12.0 million, and diluted EPS of $1.35, after preferred stock dividends of $1.1 million. The Company redeemed all of the outstanding shares of preferred stock in the second quarter of 2014.

The Company reported core net income (non-GAAP) for the quarter ending September 30, 2015 of $6.2 million, with diluted core EPS of $0.52. Core net income for the quarter included a $788 thousand (after-tax) gain on the sale of other real estate. While this gain is considered core income, it is non-recurring in nature. Core net income for the quarter excluded after-tax gains on the sale of securities of $37 thousand and after-tax income from the conclusion of a favorable lawsuit of $252 thousand.

For the nine months ended September 30, 2015, the Company reported core net income (non-GAAP) of $14.6 million, with diluted core EPS of $1.45. Core net income year-to-date excludes $5.0 million of after-tax non-recurring expenses, $4.5 million of which related to the previously announced prepayment of FHLB advances and other wholesale borrowings during the second quarter of 2015.

"We are quite pleased with our operating performance in the third quarter," commented Douglas M. Hultquist, President and Chief Executive Officer, "as net interest margin meaningfully increased, organic loan growth was strong, and asset quality metrics showed significant continued improvement. Our core return on average assets ("ROAA") has improved significantly over the past several quarters. Core ROAA was 0.97% for the third quarter. By comparison, core ROAA was 0.71% and 0.66% for the quarters ending June 30, 2015 and September 30, 2014, respectively. We are making strides towards achieving our target ROAA of 1.00%."

Net Interest Margin Expanded 18 Basis Points from Prior Quarter
And 36 Basis Points Compared to Third Quarter of 2014

Net interest income totaled $20.1 million for the quarter ended September 30, 2015. By comparison, net interest income totaled $18.5 million and $17.5 million for the quarters ended June 30, 2015 and September 30, 2014, respectively. Net interest income totaled $56.4 million for the nine months ended September 30, 2015, an increase of nearly 10% compared to the same period of the prior year.

"The planned balance sheet restructuring that we executed in the second quarter of 2015 continues to have a substantial impact on our net interest margin ("NIM") percentage, as our margin expanded 18 basis points from the prior quarter to 3.51% and our cost of interest bearing liabilities declined 14 basis points from the prior quarter to 0.71%," stated Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer. He added, "As the majority of the restructuring activity was executed mid-second quarter, we expected this significant NIM improvement in the third quarter. We were also successful in improving yields on the asset side of the balance sheet, increasing the yield on both the securities portfolio, as well as the loan and lease portfolio. These improvements resulted in a seven basis point increase in asset yield. The continued margin expansion is helping us move closer to our targeted 1.00% ROAA."

Year-to-Date Annualized Loan and Lease Growth of 10.3%
Swap Fee Income Strong Year-to-Date and Gains on the Sale of Government Guaranteed Loans Improve in Third Quarter

During the third quarter of 2015, the Company's total assets increased $32.9 million, or 1%, to a total of $2.58 billion, while total loans and leases grew $40.2 million. The loan and lease growth was funded primarily by deposit growth. Deposits grew $18.6 million, or 1%, during the quarter. Borrowings were flat in the third quarter.

"Loan and lease growth through the third quarter totaled $125.7 million, or 10.3% on an annualized basis," commented Mr. Hultquist. "While net loan growth slowed a bit in the third quarter compared to the second quarter, we are still within our targeted annual organic growth rate of 10-12%. A majority of this growth has been in the commercial and industrial loan category. This segment of our portfolio now accounts for 37% of our total loans and leases. At the same time, we continue to reduce our reliance on commercial real estate loans, with that segment now representing 39% of our portfolio. Additionally, solid loan and lease growth has continued to help us move our loan and lease to total asset ratio upward to 68%, from 67% in the second quarter of 2015 and 64% one year ago. We intend to continue increasing this ratio as we rotate out of securities and into loans and leases, with a goal of growing loans and leases to more than 70% of total assets."

"Swap fee income has been strong this year, totaling $1.2 million through the third quarter," said Mr. Gipple. "The current low interest rate environment has been ideal for the execution of several interest rate swaps on select commercial loans. Additionally, gains on the sale of the government guaranteed portion of loans totaled $760 thousand for the quarter, as this activity accelerated. We plan to continue executing these types of transactions, as they both provide unique solutions for our clients' needs."

Nonperforming Assets Decreased $6.5 Million, or 24%, During the Third Quarter

Nonperforming loans and leases at September 30, 2015 were $12.3 million, a decrease of $2.5 million, or 17%, from June 30, 2015. In addition, the ratio of nonperforming assets ("NPAs") to total assets was 0.80% at September 30, 2015, which was down from 1.07% at June 30, 2015.

"We are very pleased with the continued improvement in our asset quality this quarter. We have been heavily focused on reducing our NPAs to total assets ratio to below 1.00% and were successful in achieving this benchmark during the third quarter, with our actual ratio of 0.80%. The reduction of our NPAs was primarily due to the sale of a large other real estate property during the quarter, as well as a charge-off of a nonaccrual loan that was fully reserved in prior periods," stated Mr. Gipple. "We plan to continue to dispose of our other real estate properties in order to further improve our asset quality ratios. Currently, we have four other real estate properties totaling $7.1 million. Additionally, the Company has two nonaccrual relationships totaling $6.9 million. In total, these six relationships make up $14.0 million, or 68%, of our Company's nonperforming assets. We will concentrate our workout efforts on these six relationships."

The Company's provision for loan/lease losses totaled $1.6 million for the third quarter of 2015, which was down $714 thousand from the prior quarter, and up $572 thousand compared to the third quarter of 2014. The increased provision in the second quarter of 2015 was the result of a $971 thousand increase in a specific allowance allocated to one relationship at Quad City Bank & Trust Company, which was subsequently charged off in the third quarter of 2015.

The Company had net charge-offs of $2.2 million for the third quarter of 2015 which, when coupled with the provision of $1.6 million, decreased the Company's allowance for loan/lease losses ("allowance") to $25.5 million at September 30, 2015. As of September 30, 2015, the Company's allowance to total loans/leases was 1.45%, which was down from 1.52% at June 30, 2015, and flat from 1.45% at September 30, 2014.

The Company's allowance to total nonperforming loans/leases was 207% at September 30, 2015, which was up from 176% at June 30, 2015, and up from 80% at September 30, 2014.

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of Community National Bank ("CNB") in May 2013 were recorded at market value; therefore, there was no allowance associated with CNB's loans at acquisition. Management continues to evaluate the allowance needed on the acquired CNB loans, factoring in the net remaining discount ($805 thousand at September 30, 2015) originally established upon acquisition.

Capital Levels Remain Strong

The Company's total risk-based capital ratio was 13.08%, the common equity tier 1 ratio was 10.18% and the tangible common equity to tangible common assets ratio increased to 8.42%, all as of September 30, 2015. For comparison, these respective ratios were 10.30%, 7.24% and 5.88% as of March 31, 2015, which was the quarter prior to the capital issuance and debt restructuring previously discussed. Both the total risk-based capital ratio and the common equity tier 1 ratio are well above the fully phased-in requirements under Basel III. The increase in the Company's capital ratios is primarily due to the capital raise executed in the second quarter of 2015, as well as strong earnings in the third quarter.

About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company, which serves the Quad City, Cedar Rapids, and Rockford communities through its wholly owned subsidiary banks. Quad City Bank & Trust Company, which is based in Bettendorf, Iowa, and commenced operations in 1994, Cedar Rapids Bank & Trust Company, which is based in Cedar Rapids, Iowa, and commenced operations in 2001, and Rockford Bank & Trust Company, which is based in Rockford, Illinois, and commenced operations in 2005, provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company also provides correspondent banking services. In addition, Quad City Bank & Trust Company engages in commercial leasing through its wholly owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin. With the acquisition of Community National Bancorporation in 2013, the Company now serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company.

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 and national economy; (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, including the Basel III regulatory capital reforms, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued thereunder; (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) the integration of acquired entities; (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.

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
As of
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
(dollars in thousands, except share data)
CONDENSED BALANCE SHEET Amount % Amount % Amount %
Cash, federal funds sold, and interest-bearing deposits $ 107,659 4% $ 110,233 4% $ 120,350 5% $ 106,718 4%
Securities 590,775 23% 592,368 23% 651,539 26% 652,785 27%
Net loans/leases 1,730,138 67% 1,689,238 67% 1,606,929 64% 1,550,101 63%
Core deposit intangible 1,521 0% 1,571 0% 1,671 0% 1,721 0%
Goodwill 3,223 0% 3,223 0% 3,223 0% 3,223 0%
Other assets 142,539 6% 146,336 6% 141,246 5% 136,048 6%
Total assets $ 2,575,855 100% $ 2,542,969 100% $ 2,524,958 100% $ 2,450,596 100%
Total deposits $ 1,855,319 72% $ 1,836,767 73% $ 1,679,668 67% $ 1,713,867 70%
Total borrowings 456,091 18% 456,567 18% 662,558 26% 550,532 22%
Other liabilities 43,330 2% 37,938 1% 38,653 1% 48,017 2%
Total stockholders' equity 221,115 8% 211,697 8% 144,079 6% 138,180 6%
Total liabilities and stockholders' equity $ 2,575,855 100% $ 2,542,969 100% $ 2,524,958 100% $ 2,450,596 100%
SELECTED INFORMATION FOR COMMON STOCKHOLDERS' EQUITY
Common stockholders' equity (1) $ 221,115 $ 211,697 $ 144,079 $ 138,180
Common shares outstanding 11,728,911 11,698,578 7,953,197 7,936,813
Book value per common share (1) $ 18.85 $ 18.10 $ 18.12 $ 17.41
Tangible book value per common share (2) $ 18.45 $ 17.69 $ 17.50 $ 16.79
Closing stock price $ 21.87 $ 21.76 $ 17.86 $ 17.66
Market capitalization $ 256,511 $ 254,561 $ 142,044 $ 140,164
Market price / book value 116.01% 120.25% 98.59% 101.44%
Market price / tangible book value 118.55% 123.03% 102.05% 105.20%
Tangible common equity / total tangible assets (TCE/TA) (3) 8.42% 8.15% 5.52% 5.45%
TCE/TA excluding accumulated other comprehensive income (loss) 8.47% 8.21% 5.60% 5.64%
REGULATORY CAPITAL RATIOS:
Total risk-based capital ratio 13.08% (4) 12.92% 10.91% 11.10%
Tier 1 risk-based capital ratio 11.86% (4) 11.66% 9.52% 9.69%
Tier 1 leverage capital ratio 9.73% (4) 9.62% 7.62% 7.53%
Common equity tier 1 ratio 10.18% (4) 9.97% N/A N/A
For the quarter ended September 30, For the nine months ended September 30,
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 2015 2014 2015 2014
Beginning balance $ 211,697 $ 134,643 $ 144,079 $ 147,577
Net income 6,489 4,063 10,143 11,960
Other comprehensive income (loss) , net of tax 2,256 (812) 2,098 8,895
Preferred and common cash dividends declared -- -- (465) (1,397)
Proceeds from issuance of 3,680,000 shares of common stock, net of costs -- -- 63,484 --
Redemption of 15,000 shares of Series F Preferred Stock -- -- -- (15,000)
Redemption of 14,867 shares of Series F Preferred Stock -- -- -- (14,824)
Other (5) 673 286 1,776 969
Ending balance $ 221,115 $ 138,180 $ 221,115 $ 138,180
(1) Includes accumulated other comprehensive income (loss).
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets.
(3) See GAAP to non-GAAP reconciliations.
(4) Subject to change upon final calculation for regulatory filings due after earnings release.
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
As of
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
(dollars in thousands)
ANALYSIS OF LOAN DATA Amount % Amount % Amount % Amount %
Loan/lease mix:
Commercial and industrial loans $ 647,398 37% $ 606,826 35% $ 523,927 32% $ 479,747 31%
Commercial real estate loans 692,569 39% 696,122 41% 702,140 43% 697,728 44%
Direct financing leases 173,304 10% 170,799 10% 166,032 10% 162,476 10%
Residential real estate loans 165,061 10% 161,985 10% 158,633 10% 154,954 10%
Installment and other consumer loans 69,863 4% 72,448 4% 72,607 5% 71,760 5%
Deferred loan/lease origination costs, net of fees 7,477 0% 7,204 0% 6,664 0% 6,204 0%
Total loans/leases $ 1,755,672 100% $ 1,715,384 100% $ 1,630,003 100% $ 1,572,869 100%
Less allowance for estimated losses on loans/leases 25,534 26,146 23,074 22,768
Net loans/leases $ 1,730,138 $ 1,689,238 $ 1,606,929 $ 1,550,101
ANALYSIS OF SECURITIES DATA
Securities mix:
U.S. government sponsored agency securities $ 247,625 42% $ 256,444 43% $ 307,869 47% $ 306,005 47%
Municipal securities 265,293 45% 251,992 42% 229,230 35% 216,050 33%
Residential mortgage-backed and related securities 74,901 13% 80,844 14% 111,423 17% 127,780 20%
Other securities 2,956 0% 3,088 1% 3,017 1% 2,950 0%
Total securities $ 590,775 100% $ 592,368 100% $ 651,539 100% $ 652,785 100%
ANALYSIS OF DEPOSIT DATA
Deposit mix:
Noninterest-bearing demand deposits $ 585,300 32% $ 633,370 34% $ 511,992 31% $ 535,967 31%
Interest-bearing demand deposits 884,163 48% 785,705 43% 792,052 47% 762,954 44%
Time deposits 302,978 16% 322,826 18% 306,364 18% 319,105 19%
Brokered time deposits 82,878 4% 94,866 5% 69,260 4% 95,841 6%
Total deposits $ 1,855,319 100% $ 1,836,767 100% $ 1,679,668 100% $ 1,713,867 100%
ANALYSIS OF BORROWINGS DATA
Borrowings mix:
FHLB advances $ 133,000 29% $ 132,500 29% $ 203,500 31% $ 196,500 36%
Wholesale structured repurchase agreements 115,000 25% 115,000 25% 130,000 19% 130,000 24%
Customer repurchase agreements 74,404 16% 118,795 26% 137,252 21% 135,697 24%
Federal funds purchased 93,160 21% 49,780 11% 131,100 20% 26,490 5%
Junior subordinated debentures 40,527 9% 40,492 9% 40,424 6% 40,390 7%
Other -- 0% -- 0% 20,282 3% 21,455 4%
Total borrowings $ 456,091 100% $ 456,567 100% $ 662,558 100% $ 550,532 100%
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
As of
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
(dollars in thousands)
NONPERFORMING ASSETS Amount % Amount % Amount % Amount %
Nonaccrual loans/leases $ 11,269 55% $ 13,542 50% $ 18,588 56% $ 26,337 67%
Accruing loans/leases past due 90 days or more 3 0% 46 0% 93 0% 55 0%
Troubled debt restructures - accruing 1,040 5% 1,266 5% 1,421 5% 2,129 5%
Total nonperforming loans/leases 12,312 60% 14,854 55% 20,102 61% 28,521 72%
Other real estate owned 8,140 39% 11,952 44% 12,768 39% 10,680 27%
Other repossessed assets 194 1% 297 1% 155 0% 210 1%
Total nonperforming assets $ 20,646 100% $ 27,103 100% $ 33,025 100% $ 39,411 100%
For the quarter ended September 30, For the nine months ended September 30,
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES 2015 2014 2015 2014
Beginning balance $ 26,146 $ 23,067 $ 23,074 $ 21,448
Provision charged to expense 1,635 1,063 5,694 3,159
Loans/leases charged off (2,476) (1,731) (4,119) (2,486)
Recoveries on loans/leases previously charged off 229 369 885 647
Ending balance $ 25,534 $ 22,768 $ 25,534 $ 22,768
Net charge-offs / average loans/leases 0.13% 0.09% 0.19% 0.12%
As of
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
ASSET QUALITY RATIOS
Nonperforming assets / total assets 0.80% 1.07% 1.31% 1.61%
Allowance / total loans/leases (1) 1.45% 1.52% 1.42% 1.45%
Allowance / nonperforming loans (1) 207.39% 176.02% 114.78% 79.83%
(1) Upon acquisition per GAAP, the acquired loans are recorded at market value which eliminated the allowance and impacts these ratios.
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
For the Quarter Ended For the Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
(dollars in thousands, except per share data)
CONDENSED INCOME STATEMENT
Interest income $ 23,141 $ 22,051 $ 21,796 $ 67,093 $ 63,937
Interest expense 3,004 3,560 4,321 10,683 12,647
Net interest income 20,137 18,491 17,475 56,410 51,290
Provision for loan/lease losses 1,635 2,349 1,063 5,694 3,159
Net interest income after provision for loan/lease losses 18,502 16,142 16,412 50,716 48,131
Noninterest income 7,649 5,652 5,162 19,626 15,342
Noninterest expense 17,193 24,292 16,482 58,793 48,818
Net income (loss) before taxes 8,958 (2,498) 5,092 11,549 14,655
Income tax expense (benefit) 2,469 (1,974) 1,029 1,406 2,695
Net income (loss) $ 6,489 $ (524) $ 4,063 $ 10,143 $ 11,960
Less: Preferred stock dividends -- -- -- -- 1,082
Net income (loss) attributable to QCR Holdings, Inc. common stockholders $ 6,489 $ (524) $ 4,063 $ 10,143 $ 10,878
Earnings (loss) per common share:
Basic $ 0.55 $ (0.05) $ 0.51 $ 1.03 $ 1.37
Diluted $ 0.55 $ (0.05) $ 0.50 $ 1.01 $ 1.35
Earnings per common share (basic) LTM (1) $ 1.40 $ 1.36 $ 1.88
Weighted average common shares outstanding 11,713,993 9,946,744 7,931,944 9,878,882 7,919,201
Weighted average common and common equivalent shares outstanding (2) 11,875,930 9,946,744 8,053,985 10,024,441 8,040,418
AVERAGE BALANCES
Assets $ 2,563,739 $ 2,518,170 $ 2,467,191 $ 2,529,469 $ 2,442,338
Loans/leases $ 1,744,043 $ 1,686,068 $ 1,572,638 $ 1,688,605 $ 1,518,867
Deposits $ 1,881,604 $ 1,798,787 $ 1,727,115 $ 1,809,199 $ 1,695,952
Total stockholders' equity $ 216,453 $ 181,811 $ 136,403 $ 182,134 $ 142,999
Common stockholders' equity $ 216,453 $ 181,811 $ 136,403 $ 182,134 $ 129,277
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets (annualized) (4) 1.01% -0.08% 0.66% 0.53% 0.65%
Return on average common equity (annualized) (3) 11.99% -1.15% 11.91% 7.43% 11.22%
Return on average total equity (annualized) (4) 11.99% -1.15% 11.91% 7.43% 11.15%
Price earnings ratio LTM (1) 15.62 x 16.00 x 9.39 x 15.62 x 9.39 x
Net interest margin (TEY) 3.51% 3.33% 3.15% 3.37% 3.13%
Efficiency ratio 61.88% 100.62% 72.70% 115.98% 73.19%
Gross loans and leases / total assets ratio 68.16% 67.46% 64.18% 68.16% 64.18%
Full-time equivalent employees (5) 406 416 412 406 412
(1) LTM: Last twelve months.
(2) In accordance with GAAP, the common equivalent shares are not considered in the calculation of diluted earnings per share in periods when the numerator is a net loss.
(3) The numerator for this ratio is "Net income attributable to QCR Holdings, Inc. common stockholders".
(4) The numerator for this ratio is "Net income".
(5) FTEs at June 30, 2015 include eight summer interns.
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
ANALYSIS OF NET INTEREST INCOME AND MARGIN
For the Quarter Ended
September 30, 2015 June 30, 2015 September 30, 2014
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)
Securities (1) $ 591,538 $ 4,683 3.14% $ 608,688 $ 4,548 3.00% $ 673,416 $ 4,644 2.74%
Loans (1) 1,744,043 19,564 4.45% 1,686,068 18,541 4.41% 1,572,638 18,003 4.54%
Other 88,039 202 0.91% 79,835 179 0.90% 85,718 202 0.93%
Total earning assets (1) $ 2,423,620 $ 24,449 4.00% $ 2,374,591 $ 23,268 3.93% $ 2,331,772 $ 22,849 3.89%
Deposits $ 1,236,571 $ 1,140 0.37% $ 1,169,043 $ 1,084 0.37% $ 1,167,501 $ 1,168 0.40%
Borrowings 434,750 1,863 1.70% 504,498 2,476 1.97% 572,353 3,153 2.19%
Total interest-bearing liabilities $ 1,671,321 $ 3,003 0.71% $ 1,673,541 $ 3,560 0.85% $ 1,739,854 4,321 0.99%
Net interest income / spread (1) $ 21,446 3.29% $ 19,708 3.08% $ 18,528 2.90%
Net interest margin (1) 3.51% 3.33% 3.15%
For the Nine Months Ended
September 30, 2015 September 30, 2014
Average Balance Interest Earned or Paid Average Yield or Cost Average Balance Interest Earned or Paid Average Yield or Cost
(dollars in thousands)
Securities (1) $ 608,687 $ 13,725 3.01% $ 699,405 $ 14,063 2.69%
Loans (1) 1,688,605 56,452 4.47% 1,518,867 52,063 4.58%
Other 89,160 604 0.91% 91,570 640 0.93%
Total earning assets (1) $ 2,386,452 $ 70,781 3.97% $ 2,309,842 $ 66,766 3.86%
Deposits $ 1,189,110 $ 3,296 0.37% $ 1,122,009 $ 3,372 0.40%
Borrowings 505,364 7,387 1.95% 571,192 9,275 2.17%
Total interest-bearing liabilities $ 1,694,474 $ 10,683 0.84% $ 1,693,201 $ 12,647 1.00%
Net interest income / spread (1) $ 60,098 3.13% $ 54,119 2.86%
Net interest margin (1) 3.37% 3.13%
(1) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period presented.
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
For the Quarter Ended For the Nine Months Ended

September 30, 2015

June 30, 2015

September 30, 2014

September 30, 2015

September 30, 2014
ANALYSIS OF NONINTEREST INCOME (dollars in thousands)
Trust department fees $ 1,532 $ 1,511 $ 1,356 $ 4,676 $ 4,300
Investment advisory and management fees 782 758 727 2,251 2,087
Deposit service fees 1,187 1,101 1,169 3,405 3,307
Gain on sales of residential real estate loans 85 96 121 266 317
Gain on sales of government guaranteed portions of loans 760 69 159 900 861
Earnings on cash surrender value of life insurance 407 433 434 1,319 1,277
Swap fee income 63 394 -- 1,183 62
Debit card fees 290 255 252 782 763
Correspondent banking fees 311 285 295 916 746
Participation service fees on commercial loan participations 202 224 218 648 632
Gains (losses) on other real estate owned, net 1,134 99 31 1,204 (114)
Securities gains, net 57 -- 19 473 41
Gain on disposal of leased assets 89 76 89 251 108
Income on other real estate owned 146 109 146 371 377
Lawsuit settlement 387 -- -- 387 --
Other 217 242 146 594 578
Total noninterest income $ 7,649 $ 5,652 $ 5,162 $ 19,626 $ 15,342
ANALYSIS OF NONINTEREST EXPENSE
Salaries and employee benefits $ 10,583 $ 11,092 $ 10,359 $ 32,710 $ 30,299
Occupancy and equipment expense 1,864 1,865 1,806 5,508 5,539
Professional and data processing fees 1,742 1,471 1,530 4,683 4,518
FDIC and other insurance 702 731 712 2,152 2,122
Loan/lease expense 253 368 185 1,088 908
Advertising and marketing 460 490 555 1,368 1,394
Postage and telephone 221 214 147 684 696
Stationery and supplies 145 137 138 424 436
Bank service charges 392 359 337 1,089 959
Losses on debt extinguishment -- 6,894 -- 6,894 --
Correspondent banking expense 177 165 165 518 478
Other 654 506 548 1,675 1,469
Total noninterest expense $ 17,193 $ 24,292 $ 16,482 $ 58,793 $ 48,818
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
For the Quarter Ended For the Nine Months Ended
September 30, June 30, December 31, September 30, September 30, September 30,
SELECT FINANCIAL DATA - SUBSIDIARIES 2015 2015 2014 2014 2015 2014
(dollars in thousands)
TOTAL ASSETS
Quad City Bank and Trust (1) $ 1,328,053 $ 1,299,557 $ 1,320,684 $ 1,274,033 $ 1,328,053 $ 1,274,033
m2 Lease Funds, LLC 195,712 189,951 178,016 170,821 $ 195,712 $ 170,821
Cedar Rapids Bank and Trust 867,064 860,403 840,332 822,349 $ 867,064 $ 822,349
Rockford Bank and Trust 360,348 363,050 353,448 346,503 $ 360,348 $ 346,503
TOTAL DEPOSITS
Quad City Bank and Trust (1) $ 919,904 $ 929,817 $ 813,805 $ 873,869 $ 919,904 $ 873,869
Cedar Rapids Bank and Trust 685,537 649,586 636,718 611,193 $ 685,537 $ 611,193
Rockford Bank and Trust 254,050 260,373 234,201 234,057 $ 254,050 $ 234,057
TOTAL LOANS & LEASES
Quad City Bank and Trust (1) $ 853,755 $ 832,799 $ 783,486 $ 760,562 $ 853,755 $ 760,562
m2 Lease Funds, LLC 194,911 189,311 177,444 169,742 $ 194,911 $ 169,742
Cedar Rapids Bank and Trust 617,215 598,002 576,322 552,645 $ 617,215 $ 552,645
Rockford Bank and Trust 284,703 285,944 271,658 261,174 $ 284,703 $ 261,174
TOTAL LOANS & LEASES / TOTAL ASSETS
Quad City Bank and Trust (1) 64% 64% 59% 60% 64% 60%
Cedar Rapids Bank and Trust 71% 70% 69% 67% 71% 67%
Rockford Bank and Trust 79% 79% 77% 75% 79% 75%
ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES
Quad City Bank and Trust (1) 1.34% 1.52% 1.41% 1.37% 1.34% 1.37%
m2 Lease Funds, LLC 1.80% 1.88% 1.94% 1.83% 1.80% 1.83%
Cedar Rapids Bank and Trust 1.60% 1.56% 1.37% 1.53% 1.60% 1.53%
Rockford Bank and Trust 1.49% 1.45% 1.51% 1.50% 1.49% 1.50%
ALLOWANCE AS A PERCENTAGE OF NONPERFORMING LOANS/LEASES
Quad City Bank and Trust (1) 130.52% 114.35% 83.68% 64.50% 130.52% 64.50%
m2 Lease Funds, LLC 303.73% 308.95% 257.13% 186.05% 303.73% 186.05%
Cedar Rapids Bank and Trust 505.44% 419.03% 197.42% 101.88% 505.44% 101.88%
Rockford Bank and Trust 264.68% 266.62% 143.36% 95.29% 264.68% 95.29%
NET INCOME (4)
Quad City Bank and Trust (1) $ 4,086 $ 622 $ 1,972 $ 2,896 $ 7,683 $ 8,478
m2 Lease Funds, LLC (2) 712 834 328 718 2,198 1,953
Cedar Rapids Bank and Trust 3,016 (214) 2,101 1,975 4,971 5,905
Rockford Bank and Trust 800 473 323 621 1,737 1,553
RETURN ON AVERAGE ASSETS
Quad City Bank and Trust (1) 1.23% 0.19% 0.60% 0.90% 0.79% 0.89%
Cedar Rapids Bank and Trust 1.36% -0.10% 0.99% 0.93% 0.77% 0.96%
Rockford Bank and Trust 0.88% 0.53% 0.36% 0.70% 0.65% 0.65%
NET INTEREST MARGIN PERCENTAGE (3)
Quad City Bank and Trust (1) 3.49% 3.28% 3.07% 3.10% 3.30% 3.07%
Cedar Rapids Bank and Trust 3.71% 3.63% 3.58% 3.41% 3.66% 3.40%
Rockford Bank and Trust 3.41% 3.38% 3.34% 3.29% 3.41% 3.41%
(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) m2 Lease Funds, LLC net income is post-tax, using an estimated effective tax rate of 35%.
(3) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period presented.
(4) Net income declines for the quarter ended June 30, 2015 at Quad City Bank and Trust and Cedar Rapids Bank and Trust were primarily the result of losses on debt extinguishment (pre-tax) totaling $3.1 million and $3.8 million, respectively.
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
As of
September 30, June 30, December 31, September 30,
GAAP TO NON-GAAP RECONCILIATIONS 2015 2015 2014 2014
(dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)
Stockholders' equity (GAAP) $ 221,115 $ 211,697 $ 144,079 $ 138,180
Less: Intangible assets 4,744 4,794 4,894 4,944
Tangible common equity (non-GAAP) $ 216,371 $ 206,903 $ 139,185 $ 133,236
Total assets (GAAP) $ 2,575,855 $ 2,542,969 $ 2,524,958 $ 2,450,596
Less: Intangible assets 4,744 4,794 4,894 4,944
Tangible assets (non-GAAP) $ 2,571,111 $ 2,538,175 $ 2,520,064 $ 2,445,652
Tangible common equity to tangible assets ratio (non-GAAP) 8.42% 8.15% 5.52% 5.45%
For the Quarter ended For the Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
CORE NET INCOME (2) 2015 2015 2014 2015 2014
Net income (loss) (GAAP) $ 6,489 $ (524) $ 4,063 $ 10,143 $ 11,960
Less nonrecurring items (post-tax) (3):
Income:
Securities gains $ 37 $ -- $ 12 $ 308 $ 27
Lawsuit settlement 252 -- -- 252 --
Total nonrecurring income (non-GAAP) $ 289 $ -- $ 12 $ 560 $ 27
Expense:
Losses on debt extinguishment $ -- $ 4,481 $ -- $ 4,481 $ --
Other non-recurring expenses -- 513 -- 513 --
Total nonrecurring expense (non-GAAP) $ -- $ 4,994 $ -- $ 4,994 $ --
Core net income (non-GAAP) $ 6,200 $ 4,470 $ 4,051 $ 14,577 $ 11,933
Less: Preferred stock dividends -- -- -- -- 1,082
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (2) $ 6,200 $ 4,470 $ 4,051 $ 14,577 $ 10,851
CORE EARNINGS PER COMMON SHARE (2)
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) $ 6,200 $ 4,470 $ 4,051 $ 14,577 $ 10,851
Weighted average common shares outstanding 11,713,993 9,946,744 7,931,944 9,878,882 7,919,201
Weighted average common and common equivalent shares outstanding 11,875,930 9,946,744 8,053,985 10,024,441 8,040,418
Core earnings per common share (non-GAAP):
Basic $ 0.53 $ 0.45 $ 0.51 $ 1.48 $ 1.37
Diluted $ 0.52 $ 0.45 $ 0.50 $ 1.45 $ 1.35
CORE RETURN ON AVERAGE ASSETS (2)
Core net income (non-GAAP) (from above) $ 6,200 $ 4,470 $ 4,051 $ 14,577 $ 11,933
Average Assets $ 2,563,739 $ 2,518,170 $ 2,467,191 $ 2,529,469 $ 2,442,338
Core return on average assets (annualized) (non-GAAP) 0.97% 0.71% 0.66% 0.77% 0.65%
(1) This ratio is a non-GAAP financial measure. The Company's management believes that this measure is important to many investors in the marketplace who are interested in changes period-to-period in common equity.
(2) Core net income, core net income attributable to QCR Holdings, Inc. common stockholders, core earnings per common share and core return on average assets are non-GAAP financial measures. The Company's management believes that these measure are important to investors as they exclude non-recurring income and expense items, therefore, they provide a more realistic run-rate for future periods.
(3) Nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 35%.

CONTACT: Todd A. Gipple Executive Vice President Chief Operating Officer Chief Financial Officer (309) 743-7745Source:QCR Holdings, Inc.