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QCR Holdings, Inc. Announces Net Income of $6.7 Million for the Second Quarter of 2016 and Net Income of $13.1 Million Year-to-Date

MOLINE, Ill., July 20, 2016 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $6.7 million and diluted earnings per share (“EPS”) of $0.53 for the quarter ended June 30, 2016. This included $231 thousand of acquisition costs (after-tax) related to the previously announced acquisition of Community State Bank. By comparison, for the quarter ended March 31, 2016, the Company reported net income of $6.4 million and diluted EPS of $0.53. For the second quarter of 2015, the Company reported a net loss of $524 thousand, and diluted EPS of ($0.05), due to the successful completion of a balance sheet restructuring strategy.

For the six months ended June 30, 2016, the Company reported net income of $13.1 million, and diluted EPS of $1.07. By comparison, for the six months ended June 30, 2015, the Company reported net income of $3.7 million, and diluted EPS of $0.40.

“Our operating performance for the first half of 2016 has been solid,” commented Douglas M. Hultquist, President and Chief Executive Officer, “as fee income has been strong, organic loan growth continues to exceed expectations, and net interest margin expands further. Our return on average assets (“ROAA”) has improved to 1.01% for the current quarter. Although we have achieved our targeted ROAA of 1.00%, we expect to continue to enhance profitability through our ongoing key initiatives.”

Loan and Lease Growth Strong at 6.9% Year-To-Date
Swap Fee Income and Gains on the Sale of Government Guaranteed Loans Total $3.5 Million Year-To-Date

During the second quarter of 2016, the Company’s total assets increased $42.8 million, or 2%, to a total of $2.68 billion, while total loans and leases grew $49.0 million. The loan and lease growth was funded primarily by called securities and short-term borrowings. Deposits declined slightly during the quarter, while borrowings increased $34.0 million. Overnight FHLB borrowings increased $48.4 million, as this funding source is currently more cost effective than fed funds purchased.

“Loan and lease growth for the first six months of the year totaled $124.8 million, or an annualized rate of 13.9%,” commented Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer. “Continued loan and lease growth has helped us exceed our targeted annual organic growth rate of 10-12%, while also increasing our loan and lease to total asset ratio to 72%, from 71% as of the end of the first quarter of 2016 and from 67% one year ago.”

“Swap fee income and gains on the sale of government guaranteed loans are off to a very strong start for the first half of 2016, totaling $3.5 million,” said Mr. Gipple. “We plan to continue executing these types of transactions, as they provide unique and beneficial solutions for our clients.”

Net Interest Margin Expanded 3 Basis Points in Second Quarter

Net interest income totaled $21.0 million for the quarter ended June 30, 2016. By comparison, net interest income totaled $20.6 million and $18.5 million for the quarters ended March 31, 2016 and June 30, 2015, respectively. Net interest income totaled $41.6 million for the six months ended June 30, 2016, an increase of 14.7% from the same period of the prior year.

“Net interest margin increased 3 basis points from the prior quarter to 3.62%,” stated Mr. Gipple. He added, “We were successful in further improving asset yield by reinvesting the funds from called securities into both loans and higher yielding securities. The improvement created by this change in asset mix more than offset the 4 basis point decrease in loan yield experienced in the second quarter.”

Nonperforming Assets Flat During the Second Quarter

Nonperforming assets (“NPAs”) stayed relatively flat from the prior quarter and the ratio of NPAs to total assets was 0.70% at June 30, 2016, which was down from 0.71% at March 31, 2016 and down from 1.07% a year ago.

“Although NPAs remained relatively flat from the prior quarter, we remain committed to further improving our asset quality in 2016,” stated Mr. Hultquist.

The Company’s provision for loan and lease losses totaled $1.2 million for the second quarter of 2016, which was down $875 thousand from the prior quarter, and down $1.2 million compared to the second quarter of 2015. As asset quality remains strong, provision for loan and lease losses has moderated. As of June 30, 2016, the Company’s allowance to total loans and leases was 1.46%, which was flat from March 31, 2016 and down slightly from 1.52% at June 30, 2015.

Capital Levels Remain Strong

The Company’s total risk-based capital ratio was 14.23%, the common equity tier 1 ratio was 11.66% and the tangible common equity to tangible assets ratio increased to 10.10%, all as of June 30, 2016. For comparison, these respective ratios were 12.68%, 10.11% and 8.74% as of March 31, 2016. 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 was primarily due to the capital raise executed in the second quarter of 2016, as well as strong earnings.

Acquisition of Community State Bank, Headquartered in Des Moines/Ankeny, Iowa

As previously announced, the Company plans to close the acquisition of Community State Bank during the third quarter, pending regulatory approval by bank regulators and certain customary closing conditions.

Continued Focus on Seven Key Initiatives

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

  • Target loans and leases to total assets ratio in the range of 70-75%
  • Continue to reduce wholesale funding to less than 15% of assets
  • Grow gains on the sale of USDA and SBA loans, and fee income on swaps, to a more significant and consistent component of core revenue
  • Grow wealth management net income by 15% annually
  • Eliminate identified noninterest expenses and manage annual expense growth
  • Return asset quality metrics to better than peer levels
  • Participate as an acquirer in the consolidation taking place in our markets to further boost ROAA, improve efficiency ratio, and increase EPS


About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company, which serves the Quad City, Cedar Rapids, Cedar Valley, 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.

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, including the planned acquisition of Community State Bank; (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
June 30,March 31,December 31,September 30,June 30,
2016 2016 2015 2015 2015
(dollars in thousands)
CONDENSED BALANCE SHEET
Cash and due from banks$ 49,581 $ 44,931 $ 41,742 $ 40,975 $ 39,995
Federal funds sold and interest-bearing deposits 68,432 57,229 56,164 66,684 70,238
Securities 510,959 537,317 577,109 590,775 592,368
Net loans/leases 1,894,676 1,846,428 1,771,882 1,730,138 1,689,238
Core deposit intangible 1,372 1,422 1,471 1,521 1,571
Goodwill 3,223 3,223 3,223 3,223 3,223
Other assets 155,191 150,123 141,607 142,539 146,336
Total assets$ 2,683,434 $ 2,640,673 $ 2,593,198 $ 2,575,855 $ 2,542,969
Total deposits$ 1,973,594 $ 1,989,573 $ 1,880,666 $ 1,855,319 $ 1,836,767
Total borrowings 381,874 347,901 444,162 456,091 456,567
Other liabilities 52,849 68,056 42,484 43,330 37,938
Total stockholders' equity 275,117 235,143 225,886 221,115 211,697
Total liabilities and stockholders' equity$ 2,683,434 $ 2,640,673 $ 2,593,198 $ 2,575,855 $ 2,542,969
ANALYSIS OF LOAN PORTFOLIO
Loan/lease mix:
Commercial and industrial loans$ 706,261 $ 682,057 $ 648,160 $ 647,398 $ 606,826
Commercial real estate loans 784,379 766,159 724,369 692,569 696,122
Direct financing leases 169,928 172,774 173,656 173,304 170,799
Residential real estate loans 180,482 173,096 170,433 165,061 161,985
Installment and other consumer loans 73,658 71,842 73,669 69,863 72,448
Deferred loan/lease origination costs, net of fees 8,065 7,895 7,736 7,477 7,204
Total loans/leases$ 1,922,773 $ 1,873,823 $ 1,798,023 $ 1,755,672 $ 1,715,384
Less allowance for estimated losses on loans/leases 28,097 27,395 26,141 25,534 26,146
Net loans/leases$ 1,894,676 $ 1,846,428 $ 1,771,882 $ 1,730,138 $ 1,689,238
ANALYSIS OF SECURITIES PORTFOLIO
Securities mix:
U.S. government sponsored agency securities$ 88,321 $ 132,742 $ 213,537 $ 247,625 $ 256,444
Municipal securities 302,689 285,009 280,203 265,293 251,992
Residential mortgage-backed and related securities 116,765 116,452 80,670 74,901 80,844
Other securities 3,184 3,114 2,699 2,956 3,088
Total securities$ 510,959 $ 537,317 $ 577,109 $ 590,775 $ 592,368
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand deposits$ 615,764 $ 641,859 $ 615,292 $ 585,300 $ 633,370
Interest-bearing demand deposits 918,036 916,455 886,294 877,642 775,688
Time deposits 337,584 331,786 309,974 302,978 322,826
Brokered deposits 102,210 99,473 69,106 89,399 104,883
Total deposits$ 1,973,594 $ 1,989,573 $ 1,880,666 $ 1,855,319 $ 1,836,767
ANALYSIS OF BORROWINGS
Borrowings mix:
Term FHLB advances$ 78,000 $ 80,000 $ 97,000 $ 102,000 $ 104,000
Overnight FHLB advances (1) 118,900 70,500 54,000 31,000 28,500
Wholesale structured repurchase agreements 100,000 100,000 110,000 115,000 115,000
Customer repurchase agreements 21,441 52,153 73,873 74,404 118,795
Federal funds purchased 30,120 11,870 70,790 93,160 49,780
Junior subordinated debentures 33,413 33,378 38,499 40,527 40,492
Total borrowings$ 381,874 $ 347,901 $ 444,162 $ 456,091 $ 456,567
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 0.40%

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
For the Six Months Ended
June 30, June 30,
2016 2015
(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income $ 47,415 $ 43,952
Interest expense 5,809 7,679
Net interest income 41,606 36,273
Provision for loan/lease losses 3,271 4,059
Net interest income after provision for loan/lease losses $ 38,335 $ 32,214
Trust department fees $ 3,088 $ 3,144
Investment advisory and management fees 1,351 1,468
Deposit service fees 1,878 1,826
Gain on sales of residential real estate loans 145 182
Gain on sales of government guaranteed portions of loans 2,482 140
Swap fee income 1,025 1,120
Securities gains, net 376 417
Earnings on bank-owned life insurance 874 912
Debit card fees 651 493
Correspondent banking fees 547 605
Participation service fees on commercial loan participations 457 446
Fee income from early termination of leases 78 162
Credit card issuing fees 276 270
Other 357 498
Total noninterest income $ 13,585 $ 11,683
Salaries and employee benefits $ 21,718 $ 22,126
Occupancy and equipment expense 3,711 3,660
Professional and data processing fees 2,990 2,941
Acquisition costs 355 -
FDIC insurance, other insurance and regulatory fees 1,284 1,450
Loan/lease expense 317 512
Net cost of operation of other real estate 380 29
Advertising and marketing 820 908
Postage and communications 474 463
Stationery and supplies 323 279
Bank service charges 831 696
Losses on debt extinguishment, net 83 6,894
Correspondent banking expense 359 341
Other 1,053 1,007
Total noninterest expense $ 34,698 $ 41,306
Net income before taxes $ 17,222 $ 2,591
Income tax expense (benefit) 4,172 (1,063)
Net income $ 13,050 $ 3,654
Basic EPS $ 1.08 $ 0.41
Diluted EPS $ 1.07 $ 0.40
Weighted average common shares outstanding 12,064,349 8,961,327
Weighted average common and common equivalent shares outstanding 12,235,212 9,098,697

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
For the Quarter Ended
June 30,March 31,December 31,September 30,June 30,
2016 2016 2015 2015 2015
(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income $ 23,913 $ 23,502 $ 22,910 $ 23,141 $ 22,051
Interest expense 2,904 2,905 3,024 3,004 3,560
Net interest income 21,009 20,597 19,886 20,137 18,491
Provision for loan/lease losses 1,198 2,073 1,177 1,635 2,349
Net interest income after provision for loan/lease losses $ 19,811 $ 18,524 $ 18,709 $ 18,502 $ 16,142
Trust department fees $ 1,512 $ 1,576 $ 1,455 $ 1,532 $ 1,511
Investment advisory and management fees 693 658 721 782 758
Deposit service fees 947 931 1,003 994 925
Gain on sales of residential real estate loans 84 60 57 85 96
Gain on sales of government guaranteed portions of loans 1,604 879 405 760 69
Swap fee income 168 857 535 63 394
Securities gains, net 18 358 325 57 -
Earnings on bank-owned life insurance 480 394 443 407 433
Debit card fees 344 308 290 290 255
Correspondent banking fees 245 302 275 311 285
Participation service fees on commercial loan participations 246 211 218 202 224
Fee income from early termination of leases 66 12 46 89 76
Credit card issuing fees 139 137 134 134 136
Lawsuit settlement - - - 387 -
Other 216 139 271 276 299
Total noninterest income $ 6,762 $ 6,822 $ 6,178 $ 6,369 $ 5,461
Salaries and employee benefits $ 10,917 $ 10,801 $ 10,258 $ 10,583 $ 11,092
Occupancy and equipment expense 1,885 1,827 1,535 1,864 1,865
Professional and data processing fees 1,542 1,447 840 1,742 1,471
Acquisition costs 355 - - - -
FDIC insurance, other insurance and regulatory fees 650 634 573 702 731
Loan/lease expense 154 163 281 90 209
Net cost of operation of other real estate 278 102 (4) (1,118) (48)
Advertising and marketing 433 386 532 460 490
Postage and communications 257 217 252 221 214
Stationery and supplies 158 165 171 145 137
Bank service charges 415 416 396 392 359
Losses on debt extinguishment, net - 83 291 - 6,894
Correspondent banking expense 182 177 186 177 165
Other 518 536 528 655 523
Total noninterest expense $ 17,744 $ 16,954 $ 15,839 $ 15,913 $ 24,102
Net income (loss) before taxes $ 8,829 $ 8,392 $ 9,048 $ 8,958 $ (2,499)
Income tax expense (benefit) 2,153 2,019 2,263 2,469 (1,974)
Net income (loss) $ 6,676 $ 6,373 $ 6,785 $ 6,489 $ (524)
Basic EPS $ 0.54 $ 0.54 $ 0.58 $ 0.55 $ (0.05)
Diluted EPS $ 0.53 $ 0.53 $ 0.57 $ 0.55 $ (0.05)
Weighted average common shares outstanding 12,335,077 11,793,620 11,744,495 11,713,993 9,946,744
Weighted average common and common equivalent shares outstanding 12,516,474 11,953,949 11,926,038 11,875,930 9,946,744

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
For the Quarter Ended For the Six Months Ended
June 30,March 31,December 31,September 30,June 30, June 30,June 30,
2016 2016 2015 2015 2015 2016 2015
(dollars in thousands, except per share data)
COMMON SHARE DATA
Common shares outstanding 13,057,368 11,814,911 11,761,083 11,728,911 11,698,578
Book value per common share (1)$21.07 $19.90 $19.21 $18.85 $18.10
Tangible book value per common share (2)$20.72 $19.51 $18.81 $18.45 $17.69
Closing stock price$27.19 $23.79 $24.29 $21.87 $21.76
Market capitalization$355,030 $281,077 $285,677 $256,511 $254,561
Market price / book value 129.05% 119.53% 126.47% 116.01% 120.25%
Market price / tangible book value 131.24% 121.94% 129.15% 118.55% 123.03%
Earnings per common share (basic) LTM (3)$2.21 $1.62 $1.64 $1.40 $1.36
Price earnings ratio LTM (3) 12.30 x 14.69 x 14.81 x 15.62 x 16.00 x
TCE / TA (4) 10.10% 8.74% 8.55% 8.42% 8.15%
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Beginning balance$ 235,143 $ 225,886 $ 221,115 $ 211,697 $ 150,996
Net income (loss) 6,676 6,373 6,785 6,489 (524)
Other comprehensive income (loss), net of tax 1,181 2,525 (2,287) 2,256 (2,379)
Common cash dividends declared (521) (471) (469) - (465)
Proceeds from issuance of 3,680,000 shares of common stock, net of costs - - - - 63,484
Proceeds from issuance of 1,215,000 shares of common stock, net of costs 29,829 - - - -
Other (5) 2,809 830 742 673 585
Ending balance$ 275,117 $ 235,143 $ 225,886 $ 221,115 $ 211,697
REGULATORY CAPITAL RATIOS (6):
Total risk-based capital ratio 14.23% 12.68% 13.11% 13.06% 12.92%
Tier 1 risk-based capital ratio 12.98% 11.45% 11.88% 11.83% 11.66%
Tier 1 leverage capital ratio 11.18% 9.85% 9.75% 9.73% 9.62%
Common equity tier 1 ratio 11.66% 10.11% 10.33% 10.16% 9.97%
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets (annualized) 1.01% 0.98% 1.04% 1.01% -0.08% 1.00% 0.29%
Return on average total equity (annualized) 10.46% 11.02% 12.14% 11.99% -1.15% 10.73% 4.43%
Net interest margin (TEY) (7) 3.62% 3.59% 3.41% 3.51% 3.33% 3.61% 3.29%
Efficiency ratio 63.89% 61.83% 61.22% 61.88% 100.62% 62.87% 86.20%
Gross loans and leases / total assets 71.65% 70.96% 69.34% 68.16% 67.46% 71.65% 67.46%
Full-time equivalent employees 410 406 406 406 416 410 416
AVERAGE BALANCES
Assets$2,640,678 $2,602,350 $2,611,276 $2,563,739 $2,518,170 $2,621,514 $2,512,334
Loans/leases 1,899,932 1,833,950 1,764,275 1,744,043 1,686,068 1,866,941 1,660,887
Deposits 2,033,116 1,980,056 1,978,737 1,881,604 1,798,787 2,006,586 1,772,996
Total stockholders' equity 255,391 231,247 223,553 216,453 181,811 243,319 164,975
(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

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
ANALYSIS OF NET INTEREST INCOME AND MARGIN
For the Quarter Ended
June 30, 2016 March 31, 2016 June 30, 2015
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 $ 14,174 $ 11 0.31% $ 17,232 $ 13 0.30% $ 19,523 $ 6 0.12%
Interest-bearing deposits at financial institutions 50,747 62 0.49% 40,635 60 0.59% 45,229 65 0.58%
Securities (1) 505,697 4,573 3.64% 550,371 4,685 3.42% 608,688 4,548 3.00%
Restricted investment securities 14,171 134 3.80% 14,140 131 3.73% 15,083 108 2.87%
Loans (1) 1,899,932 20,497 4.34% 1,833,950 19,955 4.38% 1,686,068 18,541 4.41%
Total earning assets (1)$2,484,721 $ 25,277 4.09% $2,456,328 $ 24,844 4.07% $2,374,591 $ 23,268 3.93%
Interest-bearing deposits$ 941,856 $ 600 0.26% $ 925,246 $ 615 0.27% $ 784,148 $ 450 0.23%
Time deposits 425,216 744 0.70% 399,604 675 0.68% 384,895 634 0.66%
Short-term borrowings 50,122 18 0.14% 86,539 43 0.20% 160,479 53 0.13%
Federal Home Loan Bank advances 128,956 416 1.30% 128,436 442 1.38% 173,742 1,002 2.31%
Junior subordinated debentures 33,396 302 3.64% 34,650 305 3.54% 40,475 313 3.10%
Other borrowings 100,008 824 3.31% 101,738 825 3.26% 129,802 1,108 3.42%
Total interest-bearing liabilities$1,679,554 $ 2,904 0.70% $1,676,213 $ 2,905 0.70% $1,673,541 $3,560 0.85%
Net interest income / spread (1) $ 22,373 3.39% $ 21,939 3.37% $ 19,708 3.08%
Net interest margin (1) 3.62% 3.59% 3.33%
For the Six Months Ended
June 30, 2016 June 30, 2015
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 $ 15,703 $ 23 0.29% $ 16,606 $ 11 0.13%
Interest-bearing deposits at financial institutions 45,691 123 0.54% 57,602 142 0.50%
Securities (1) 528,034 9,257 3.53% 617,261 9,037 2.95%
Restricted investment securities 14,156 264 3.75% 15,513 250 3.25%
Loans (1) 1,866,941 40,454 4.36% 1,660,885 36,893 4.48%
Total earning assets (1)$2,470,525 $ 50,121 4.08% $2,367,867 $ 46,333 3.95%
Interest-bearing deposits$ 933,551 $ 1,214 0.26% $ 785,749 $ 892 0.23%
Time deposits 412,410 1,420 0.69% 379,630 1,264 0.67%
Short-term borrowings 68,331 61 0.18% 170,697 117 0.14%
Federal Home Loan Bank advances 128,696 858 1.34% 190,109 2,446 2.59%
Junior subordinated debentures 34,023 606 3.58% 40,458 620 3.09%
Other borrowings 100,873 1,650 3.29% 139,408 2,340 3.38%
Total interest-bearing liabilities$1,677,884 $5,809 0.70% $1,706,051 $7,679 0.91%
Net interest income / spread (1) $ 44,312 3.38% $ 38,654 3.04%
Net interest margin (1) 3.61% 3.29%
(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)
As of
June 30,March 31,December 31,September 30,June 30,
2016 2016 2015 2015 2015
(dollars in thousands, except per share data)
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES
Beginning balance$ 27,395 $ 26,141 $ 25,534 $ 26,146 $ 23,883
Provision charged to expense 1,198 2,073 1,177 1,635 2,349
Loans/leases charged off (634) (868) (1,106) (2,476) (536)
Recoveries on loans/leases previously charged off 138 49 536 229 450
Ending balance$ 28,097 $ 27,395 $ 26,141 $ 25,534 $ 26,146
NONPERFORMING ASSETS
Nonaccrual loans/leases$ 10,737 $ 10,772 $ 10,648 $ 11,269 $ 13,542
Accruing loans/leases past due 90 days or more 86 47 3 3 46
Troubled debt restructures - accruing 1,753 1,157 1,054 1,040 1,266
Total nonperforming loans/leases 12,576 11,976 11,705 12,312 14,854
Other real estate owned 6,179 6,680 7,151 8,140 11,952
Other repossessed assets 154 46 246 194 297
Total nonperforming assets$ 18,909 $ 18,702 $ 19,102 $ 20,646 $ 27,103
ASSET QUALITY RATIOS
Nonperforming assets / total assets 0.70% 0.71% 0.74% 0.80% 1.07%
Allowance / total loans/leases (1) 1.46% 1.46% 1.45% 1.45% 1.52%
Allowance / nonperforming loans/leases (1) 223.42% 228.75% 223.33% 207.39% 176.02%

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 2016 2016 2015 2016 2015
(dollars in thousands)
TOTAL ASSETS
Quad City Bank and Trust (1) $ 1,390,025 $ 1,361,607 $ 1,299,557
m2 Lease Funds, LLC 207,334 205,777 189,951
Cedar Rapids Bank and Trust 904,367 885,858 860,403
Rockford Bank and Trust 402,157 367,032 363,050
TOTAL DEPOSITS
Quad City Bank and Trust (1) $ 1,049,049 $ 1,029,298 $ 929,817
Cedar Rapids Bank and Trust 690,377 686,548 649,586
Rockford Bank and Trust 296,613 278,129 260,373
TOTAL LOANS & LEASES
Quad City Bank and Trust (1) $ 968,905 $ 950,978 $ 832,799
m2 Lease Funds, LLC 205,883 205,214 189,311
Cedar Rapids Bank and Trust 648,727 628,580 598,002
Rockford Bank and Trust 305,141 294,266 285,944
TOTAL LOANS & LEASES / TOTAL ASSETS
Quad City Bank and Trust (1) 70% 70% 64%
Cedar Rapids Bank and Trust 72% 71% 70%
Rockford Bank and Trust 76% 80% 79%
ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES
Quad City Bank and Trust (1) 1.31% 1.31% 1.52%
m2 Lease Funds, LLC 1.80% 1.80% 1.88%
Cedar Rapids Bank and Trust 1.65% 1.66% 1.56%
Rockford Bank and Trust 1.53% 1.51% 1.45%
RETURN ON AVERAGE ASSETS
Quad City Bank and Trust (1) 1.24% 0.95% 0.19% 1.10% 0.56%
Cedar Rapids Bank and Trust 1.46% 1.39% -0.10% 1.42% 0.46%
Rockford Bank and Trust 0.80% 0.66% 0.53% 0.73% 0.53%
NET INTEREST MARGIN PERCENTAGE (3)
Quad City Bank and Trust (1) 3.66% 3.60% 3.28% 3.63% 3.20%
Cedar Rapids Bank and Trust 3.77% 3.75% 3.63% 3.77% 3.63%
Rockford Bank and Trust 3.49% 3.54% 3.38% 3.52% 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.

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
As of
June 30, March 31, December 31, September 30, June 30,
GAAP TO NON-GAAP RECONCILIATIONS 2016 2016 2015 2015 2015
(dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)
Stockholders' equity (GAAP) $ 275,117 $ 235,143 $ 225,886 $ 221,115 $ 211,697
Less: Intangible assets 4,595 4,645 4,694 4,744 4,794
Tangible common equity (non-GAAP) $ 270,522 $ 230,498 $ 221,192 $ 216,371 $ 206,903
Total assets (GAAP) $2,683,434 $2,640,673 $2,593,198 $2,575,855 $2,542,969
Less: Intangible assets 4,595 4,645 4,694 4,744 4,794
Tangible assets (non-GAAP) $2,678,839 $2,636,028 $2,588,504 $ 2,571,111 $2,538,175
Tangible common equity to tangible assets ratio (non-GAAP) 10.10% 8.74% 8.55% 8.42% 8.15%
For the Quarter Ended For the Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
CORE NET INCOME (2) 2016 2016 2015 2015 2015 2016 2015
Net income (loss) (GAAP) $ 6,676 $ 6,373 $ 6,785 $ 6,489 $ (524) $ 13,050 $ 3,654
Less nonrecurring items (post-tax) (3):
Income:
Securities gains $ 12 $ 233 $ 211 $ 37 $ - $ 245 $ 274
Lawsuit award - - - 252 - - -
Total nonrecurring income (non-GAAP) $ 12 $ 233 $ 211 $ 289 $ - $ 245 $ 274
Expense:
Losses on debt extinguishment $ - $ 54 $ 189 $ - $ 4,481 $ 54 $ 4,481
Acquisition costs 231 - - - - 231 -
Other non-recurring expenses - - - - 513 - 513
Accrual adjustments - - (487) - - - -
Total nonrecurring expense (non-GAAP) $ 231 $ 54 $ (298) $ - $ 4,994 $ 285 $ 4,994
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (2) $ 6,895 $ 6,194 $ 6,276 $ 6,200 $ 4,470 $ 13,090 $ 8,374
CORE EARNINGS PER COMMON SHARE (2)
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) $ 6,895 $ 6,194 $ 6,276 $ 6,200 $ 4,470 $ 13,090 $ 8,374
Weighted average common shares outstanding 12,335,077 11,793,620 11,744,495 11,713,993 9,946,744 12,064,349 8,961,327
Weighted average common and common equivalent shares outstanding 12,516,474 11,953,949 11,926,038 11,875,930 9,946,744 12,235,212 9,098,697
Core earnings per common share (non-GAAP):
Basic $ 0.56 $ 0.53 $ 0.53 $ 0.53 $ 0.45 $ 1.09 $ 0.93
Diluted $ 0.55 $ 0.52 $ 0.53 $ 0.52 $ 0.45 $ 1.07 $ 0.92
CORE RETURN ON AVERAGE ASSETS (2)
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) $ 6,895 $ 6,194 $ 6,276 $ 6,200 $ 4,470 $ 13,090 $ 8,374
Average Assets $ 2,640,678 $ 2,602,350 $ 2,611,276 $ 2,563,739 $ 2,518,170 $ 2,621,514 $ 2,512,334
Core return on average assets (annualized) (non-GAAP) 1.04% 0.95% 0.96% 0.97% 0.71% 1.00% 0.67%
(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.
(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 measurements 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%.

Todd A. Gipple Executive Vice President Chief Operating Officer Chief Financial Officer (309) 743-7745

Source:QCR Holdings, Inc.