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QCR Holdings, Inc. Announces Record Net Income of $9.2 Million for the First Quarter of 2017

MOLINE, Ill., April 20, 2017 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $9.2 million and diluted earnings per share (“EPS”) of $0.68 for the quarter ended March 31, 2017. By comparison, for the quarter ended December 31, 2016, the Company reported net income of $8.5 million and diluted EPS of $0.64. For the quarter ended March 31, 2016, the Company reported net income of $6.4 million and diluted EPS of $0.53.

“Our operating performance for the first quarter was strong,” commented Douglas M. Hultquist, President and Chief Executive Officer, “and we continue to strategize and pursue ways to improve our profitability through our ongoing key initiatives. Our return on average assets has improved to 1.12% from 0.98%, when comparing the first quarter of 2017 to the same period of the prior year. This is the result of strong year-over-year organic loan growth, robust growth in core deposits, reductions in wholesale borrowings, margin improvements, modest operating expense growth, and strong fee income. Our acquisition of Community State Bank, based in Ankeny, Iowa (“CSB”) also contributed to our improved profitability.”

A new accounting pronouncement became effective on January 1, 2017 that affects the accounting for stock compensation. In the past, the tax benefit related to stock options exercised and restricted stock awards vested was recorded directly to equity. Effective January 1, 2017, this tax benefit is reflected as a credit to income tax expense. This change in accounting resulted in $533 thousand of reduced income tax expense for the current quarter.

Annualized Loan and Lease Growth of 5.0% and Deposit Growth of 20.4% for First Quarter
Swap Fee Income and Gains on the Sale of Government Guaranteed Loans Total $1.1 Million for Quarter

During the first quarter of 2017, the Company’s total assets increased $79.1 million, or 2%, to a total of $3.38 billion, while total loans and leases grew $30.4 million, or 1.3%. Loan and lease growth was funded by deposits, which increased $136.7 million, or 5.1%, in the first quarter. Continued growth in correspondent deposits produced a majority of this increase. This very strong deposit growth also allowed the Company to further reduce borrowings and provides liquidity for future loan and lease growth.

“Organic loan and lease growth totaled $30.4 million for the quarter, or an annual growth rate of 5.0%,” commented Mr. Hultquist. “While this is a slower start to the year relative to recent periods, we still aim to achieve targeted organic growth of 10-12% for the full year, assuming no major economic shifts. We intend to grow primarily through market share increases, as customers continue to appreciate the way we do business and are attracted to our relationship-based community banking model.”

“We started the year off strong, with swap fee income and gains on the sale of government guaranteed loans totaling $1.1 million for the first quarter,” said Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer. “We plan to continue executing these types of transactions, as they provide unique and beneficial solutions for our clients. We also look forward to offering these products in the Des Moines metro market through Community State Bank.”

Net Interest Income Impacted by
Acquisition Accounting

Net interest income totaled $27.7 million for the quarter ended March 31, 2017. By comparison, net interest income totaled $29.3 million and $20.6 million for the quarters ended December 31, 2016 and March 31, 2016, respectively. Acquisition-related accretion (net) totaled $1.9 million for the quarter ended March 31, 2017. By comparison, acquisition-related accretion (net) totaled $3.0 million and $45 thousand for the quarters ended December 31, 2016 and March 31, 2016, respectively. When comparing the first quarter of 2017 to the fourth quarter of 2016, it is also important to note that the fourth quarter of 2016 included two more days, equating to roughly $615 thousand of net interest income. Excluding acquisition-related accretion and the difference in net interest income related to the number of days in the quarter, net interest income of $26.4 million was flat for the current quarter, compared to $26.3 million for the quarter ended December 31, 2016.

“Net interest margin (excluding acquisition accounting accretion) was stable at 3.65% for the first quarter of 2017, compared to 3.64% for the fourth quarter of 2016,” stated Mr. Gipple. “Also important to note is that loan yield (excluding loan discount accretion) was relatively flat when comparing linked quarters at 4.34% for the first quarter of 2017 and 4.35% for the fourth quarter of 2016. Additionally, we had a successful quarter growing core deposits and while loan growth was modest, we expect to put this liquidity to work in loans and leases in order to expand core margin in future periods.”

Nonperforming Assets Flat for First Quarter

Nonperforming assets (“NPAs”) remained fairly flat in the current quarter. The ratio of NPAs to total assets was 0.81% at March 31, 2017, which was down slightly from 0.82% at December 31, 2016 and up from 0.71% a year ago.

“While credit quality metrics remain strong in comparison to peers, we remain committed to further improving asset quality in 2017,” stated Mr. Hultquist.

The Company’s provision for loan and lease losses totaled $2.1 million for the first quarter of 2017, which was down $494 thousand from the prior quarter, and flat compared to the first quarter of 2016. The decrease in provision in the first quarter of 2017 was primarily attributable to CSB. As acquired loans renew, the discount associated with those loans is eliminated and the Company must establish an allowance. This resulted in $774 thousand of provision expense in the first quarter of 2017 compared to $1.2 million of provision expense in the fourth quarter of 2016. As of March 31, 2017, the Company’s allowance to total loans and leases was 1.32%, which was up from 1.28% at December 31, 2016 and down from 1.46% at March 31, 2016.

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of CSB were recorded at market value; therefore, there was no allowance associated with CSB’s loans at acquisition. Management continues to evaluate the allowance needed on the acquired CSB loans factoring in the net remaining discount ($8.0 million at March 31, 2017). When factoring this remaining discount into the Company’s allowance to total loans and leases calculation, the Company’s allowance as a percentage of total loans and leases increases from 1.32% to 1.64%.

Capital Levels Remain Strong

As of March 31, 2017, the Company’s total risk-based capital ratio was 11.65%, the common equity tier 1 ratio was 9.45% and the tangible common equity to tangible assets ratio increased to 8.20%. By comparison, these respective ratios were 11.56%, 9.41% and 8.04% as of December 31, 2016.

“As a result of solid earnings performance, capital ratios continue to be strong and we are growing tangible common equity at a steady pace,” stated Mr. Gipple.

Continued Focus on Seven Key Initiatives

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

  • Continue strong organic loan and lease growth to maintain loans and leases to total assets ratio in the range of 70-75%
  • Continue focus on growing core deposits to maintain reliance on wholesale funding at less than 15% of assets
  • Continue to focus on generating gains on sale of USDA and SBA loans, and fee income on swaps, as a significant and consistent component of core revenue
  • Grow wealth management net income by 10% annually
  • Carefully manage noninterest expense growth
  • Maintain asset quality metrics at better than peer levels
  • Participate as an acquirer in the consolidation taking place in our markets to further boost ROAA, improve efficiency ratio, and increase EPS

Conference Call Details

The Company will host an earnings call/webcast on April 21, 2017 at 9 a.m. central time. Dial-in information for the call is toll-free 1-888-317-6016 (international 1-412-317-6016). Participants should request to join the QCR Holdings, Inc. call. The event will be archived and available for digital replay through May 5, 2017. The replay access information is toll-free 1-877-344-7529 (international 1-412-317-0088); access code 10104342. A webcast of the teleconference can be accessed at the Company’s News and Events page at http://www.qcrh.com or http://services.choruscall.com/links/qcrh170421.html. The archived audio webcast will be available until April 21, 2018. Participants should visit the Company’s website or call in to the conference line set forth below at least 10 minutes prior to the scheduled start of the call.

About Us

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

Special Note Concerning Forward-Looking Statements. This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local, national and international economies; (ii) the economic impact of any future terrorist threats and attacks, and the response of the United States to any such threats and attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of the acquisition and the possibility that the transaction costs may be greater than anticipated; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
As of
March 31,December 31,September 30,June 30,March 31,
2017 2016 2016 2016 2016
(dollars in thousands)
CONDENSED BALANCE SHEET
Cash and due from banks$ 56,326$ 70,570$ 61,213$ 49,581$ 44,931
Federal funds sold and interest-bearing deposits 173,219 86,206 96,047 68,432 57,229
Securities 557,646 574,022 564,930 510,959 537,317
Net loans/leases 2,403,791 2,374,730 2,331,774 1,894,676 1,846,428
Core deposit intangible 7,150 7,381 7,614 1,372 1,422
Goodwill 13,111 13,111 13,632 3,223 3,223
Other assets 169,770 175,924 205,776 155,191 150,123
Total assets$ 3,381,013 $ 3,301,944 $ 3,280,986 $ 2,683,434 $ 2,640,673
Total deposits$ 2,805,931$ 2,669,261$ 2,594,913$ 1,973,594$ 1,989,573
Total borrowings 231,534 290,952 312,104 381,874 347,901
Other liabilities 47,708 55,690 93,112 52,849 68,056
Total stockholders' equity 295,840 286,041 280,857 275,117 235,143
Total liabilities and stockholders' equity$ 3,381,013 $ 3,301,944 $ 3,280,986 $ 2,683,434 $ 2,640,673
ANALYSIS OF LOAN PORTFOLIO
Loan/lease mix:
Commercial and industrial loans$ 851,578$ 827,637$ 804,308$ 706,261$ 682,057
Commercial real estate loans 1,106,842 1,093,459 1,070,305 784,379 766,159
Direct financing leases 159,368 165,419 166,924 169,928 172,774
Residential real estate loans 231,326 229,233 229,081 180,482 173,096
Installment and other consumer loans 78,771 81,666 81,918 73,658 71,842
Deferred loan/lease origination costs, net of fees 7,965 8,073 8,065 8,065 7,895
Total loans/leases$ 2,435,850$ 2,405,487$ 2,360,601$ 1,922,773$ 1,873,823
Less allowance for estimated losses on loans/leases 32,059 30,757 28,827 28,097 27,395
Net loans/leases$ 2,403,791 $ 2,374,730 $ 2,331,774 $ 1,894,676 $ 1,846,428
ANALYSIS OF SECURITIES PORTFOLIO
Securities mix:
U.S. government sponsored agency securities$ 47,556$ 46,084$ 67,885$ 88,321$ 132,742
Municipal securities 356,776 374,463 360,330 302,689 285,009
Residential mortgage-backed and related securities 147,504 147,702 133,173 116,765 116,452
Other securities 5,810 5,773 3,542 3,184 3,114
Total securities$ 557,646 $ 574,022 $ 564,930 $ 510,959 $ 537,317
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand deposits$ 777,150$ 797,415$ 764,615$ 615,764$ 641,859
Interest-bearing demand deposits 1,486,047 1,369,226 1,298,781 918,036 916,455
Time deposits 458,170 439,169 420,470 337,584 331,786
Brokered deposits 84,564 63,451 111,047 102,210 99,473
Total deposits$ 2,805,931 $ 2,669,261 $ 2,594,913 $ 1,973,594 $ 1,989,573
ANALYSIS OF BORROWINGS
Borrowings mix:
Term FHLB advances$ 59,000$ 63,000$ 83,343$ 78,000$ 80,000
Overnight FHLB advances (1) 47,550 74,500 55,300 118,900 70,500
Wholesale structured repurchase agreements 45,000 45,000 45,000 100,000 100,000
Customer repurchase agreements 7,170 8,132 8,265 21,441 52,153
Federal funds purchased 12,300 31,840 51,750 30,120 11,870
Junior subordinated debentures 33,514 33,480 33,446 33,413 33,378
Other borrowings 27,000 35,000 35,000 - -
Total borrowings$ 231,534 $ 290,952 $ 312,104 $ 381,874 $ 347,901
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 1.05%.

For the Quarter Ended
March 31,December 31,September 30,June 30,March 31,
2017 2016 2016 2016 2016
(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income $ 31,345$ 32,236 $ 26,817$ 23,913$ 23,502
Interest expense 3,676 2,956 3,186 2,904 2,905
Net interest income 27,669 29,280 23,631 21,009 20,597
Provision for loan/lease losses 2,105 2,599 1,608 1,198 2,073
Net interest income after provision for loan/lease losses $ 25,564 $ 26,681 $ 22,023 $ 19,811 $ 18,524
Trust department fees $ 1,740$ 1,558 $ 1,519$ 1,512$ 1,576
Investment advisory and management fees 962 876 766 693 658
Deposit service fees 1,316 1,411 1,151 947 931
Gain on sales of residential real estate loans 96 142 144 84 60
Gain on sales of government guaranteed portions of loans 951 458 219 1,604 879
Swap fee income 114 350 334 168 857
Securities gains, net - (36) 4,252 18 358
Earnings on bank-owned life insurance 470 447 450 480 394
Debit card fees 703 688 475 344 308
Correspondent banking fees 245 249 254 245 302
Other 687 886 859 667 499
Total noninterest income $ 7,284 $ 7,029 $ 10,423 $ 6,762 $ 6,822
Salaries and employee benefits $ 13,307$ 13,396 $ 11,202$ 10,917$ 10,801
Occupancy and equipment expense 2,502 2,630 2,086 1,885 1,827
Professional and data processing fees 2,083 2,192 1,931 1,542 1,447
Acquisition costs - 40 2,046 355 -
FDIC insurance, other insurance and regulatory fees 621 683 583 650 634
Loan/lease expense 294 242 103 154 163
Net cost of operation of other real estate 14 78 133 278 102
Advertising and marketing 609 760 548 433 386
Bank service charges 424 446 415 415 416
Losses on debt extinguishment, net - 357 4,137 - 83
Correspondent banking expense 198 186 206 182 177
Other 1,221 1,298 1,090 933 918
Total noninterest expense $ 21,273 $ 22,308 $ 24,480 $ 17,744 $ 16,954
Net income before taxes $ 11,575 $ 11,402 $ 7,966 $ 8,829 $ 8,392
Income tax expense 2,390 2,873 1,858 2,153 2,019
Net income $ 9,185 $ 8,529 $ 6,108 $ 6,676 $ 6,373
Basic EPS $ 0.70$ 0.65 $ 0.47$ 0.54$ 0.54
Diluted EPS $ 0.68$ 0.64 $ 0.46$ 0.53$ 0.53
Weighted average common shares outstanding 13,133,382 13,087,592 13,066,777 12,335,077 11,793,620
Weighted average common and common equivalent shares outstanding 13,488,417 13,323,883 13,269,703 12,516,474 11,953,949

For the Quarter Ended
March 31December 31,September 30,June 30,March 31,
2017 2016 2016 2016 2016
(dollars in thousands, except per share data)
COMMON SHARE DATA
Common shares outstanding 13,161,219 13,106,845 13,075,307 13,057,368 11,814,911
Book value per common share (1)$22.48 $21.82 $21.48 $21.07 $19.90
Tangible book value per common share (2)$20.94 $20.11 $19.74 $20.72 $19.51
Closing stock price$42.35 $43.30 $31.74 $27.19 $23.79
Market capitalization$557,378 $567,526 $415,010 $355,030 $281,077
Market price / book value 188.41% 198.41% 147.77% 129.05% 119.53%
Market price / tangible book value 202.26% 215.36% 160.79% 131.24% 121.94%
Earnings per common share (basic) LTM (3)$2.36 $2.20 $2.13 $2.21 $1.62
Price earnings ratio LTM (3) 17.94 x 19.68 x 14.90 x 12.30 x 14.69 x
TCE / TA (4) 8.20% 8.04% 7.92% 10.10% 8.74%
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Beginning balance$ 286,041 $ 280,857 $ 275,117 $ 235,143 $ 225,886
Net income 9,185 8,529 6,108 6,676 6,373
Other comprehensive income (loss), net of tax 411 (3,681) (361) 1,181 2,525
Common stock cash dividends declared (657) (523) (521) (521) (471)
Proceeds from issuance of 1,215,000 shares of
common stock, net of costs
- - - 29,829 -
Other (5) 860 859 514 2,809 830
Ending balance$ 295,840 $ 286,041 $ 280,857 $ 275,117 $ 235,143
REGULATORY CAPITAL RATIOS (6):
Total risk-based capital ratio 11.65% 11.56% 11.30% 14.29% 12.68%
Tier 1 risk-based capital ratio 10.53% 10.46% 10.29% 13.04% 11.45%
Tier 1 leverage capital ratio 9.40% 9.10% 10.09% 11.18% 9.85%
Common equity tier 1 ratio 9.45% 9.41% 9.22% 11.72% 10.11%
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets (annualized) 1.12% 1.04% 0.85% 1.01% 0.98%
Return on average total equity (annualized) 12.63% 12.04% 8.78% 10.46% 11.02%
Net interest margin 3.65% 3.80% 3.48% 3.40% 3.37%
Net interest margin (TEY) (Non-GAAP)(7) 3.90% 4.02% 3.71% 3.62% 3.59%
Efficiency ratio (Non-GAAP) (8) 60.86% 61.44% 71.89% 63.89% 61.83%
Gross loans and leases / total assets 72.04% 72.85% 71.95% 71.65% 70.96%
Effective tax rate 20.65% 25.20% 23.32% 24.39% 24.06%
Full-time equivalent employees (9) 561 572 572 410 406
AVERAGE BALANCES
Assets$ 3,274,713 $ 3,277,814 $ 2,865,947 $ 2,640,678 $ 2,602,350
Loans/leases 2,398,387 2,358,960 2,077,376 1,899,932 1,833,950
Deposits 2,692,009 2,717,923 2,243,397 2,033,116 1,980,056
Total stockholders' equity 290,906 283,292 278,369 255,391 231,247
(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) Mainly 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) Full-time equivalent employees increased in the third quarter of 2016 due to the acquisition of CSB.

ANALYSIS OF NET INTEREST INCOME AND MARGIN
For the Quarter Ended
March 31, 2017 December 31, 2016 March 31, 2016
Average
Balance
Interest
Earned or Paid
Average Yield
or Cost
Average
Balance
Interest Earned
or Paid
Average Yield
or Cost
Average
Balance
Interest
Earned or Paid
Average Yield
or Cost
(dollars in thousands)
Fed funds sold $ 11,092$ 150.55% $ 11,475$ 90.31% $ 17,232$ 130.30%
Interest-bearing deposits at financial institutions 92,551 1990.87% 123,838 1670.54% 40,635 600.59%
Securities (1) 560,455 5,1583.73% 562,164 4,9703.52% 550,371 4,6853.42%
Restricted investment securities 13,871 1303.80% 12,785 1263.91% 14,140 1313.73%
Loans (1) 2,398,387 27,7934.70% 2,358,960 28,6914.84% 1,833,950 19,9554.38%
Total earning assets (1)$ 3,076,356$ 33,2954.39% $ 3,069,122$ 33,9634.40% $ 2,456,328$ 24,8444.07%
Interest-bearing deposits$ 1,407,645$ 1,1400.33% $ 1,387,319$ 9280.27% $ 925,246$ 6150.27%
Time deposits 511,119 1,0930.87% 496,855 9840.79% 399,604 6750.68%
Short-term borrowings 25,188 240.39% 36,728 200.22% 86,539 430.20%
Federal Home Loan Bank advances (4) 114,356 4031.43% 83,231 60.03% 128,436 4421.38%
Junior subordinated debentures 33,497 3334.03% 33,463 3253.86% 34,650 3053.54%
Other borrowings 74,761 6833.71% 73,816 6933.73% 101,738 8253.26%
Total interest-bearing liabilities$ 2,166,566$ 3,6760.69% $ 2,111,412$ 2,9560.56% $ 1,676,213$ 2,9050.70%
Net interest income / spread (1) $ 29,6193.70% $ 31,0073.84% $ 21,9393.37%
Net interest margin (2) 3.65% 3.80% 3.37%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.90% 4.02% 3.59%
(1) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate
for each period presented.
(2) See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented.
(3) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.
(4) Average cost of Federal Home Loan Bank advances for the quarter and year ending December 31, 2016 was affected by the acceleration of the premium on
advances recognized at the acquisition of CSB. $342 thousand was accelerated due to the prepayment of $15.0 million of advances in the fourth quarter of 2016.

As of
March 31,December 31,September 30,June 30,March 31,
2017 2016 2016 2016 2016
(dollars in thousands, except per share data)
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES
Beginning balance$ 30,757 $ 28,827 $ 28,097 $ 27,395 $ 26,141
Provision charged to expense 2,105 2,599 1,608 1,198 2,073
Loans/leases charged off (893) (755) (987) (634) (868)
Recoveries on loans/leases previously charged off 90 86 109 138 49
Ending balance$ 32,059 $ 30,757 $ 28,827 $ 28,097 $ 27,395
NONPERFORMING ASSETS
Nonaccrual loans/leases$ 14,205 $ 13,919 $ 14,371 $ 10,737 $ 10,772
Accruing loans/leases past due 90 days or more 955 967 392 86 47
Troubled debt restructures - accruing 6,229 6,347 1,825 1,753 1,157
Total nonperforming loans/leases 21,389 21,233 16,588 12,576 11,976
Other real estate owned 5,625 5,523 5,808 6,179 6,680
Other repossessed assets 285 202 353 154 46
Total nonperforming assets$ 27,299 $ 26,958 $ 22,749 $ 18,909 $ 18,702
ASSET QUALITY RATIOS
Nonperforming assets / total assets 0.81% 0.82% 0.69% 0.70% 0.71%
Allowance / total loans/leases (1) 1.32% 1.28% 1.22% 1.46% 1.46%
Allowance / nonperforming loans/leases (1) 149.89% 144.85% 173.78% 223.42% 228.75%
Net charge-offs as a % of average loans/leases 0.03% 0.03% 0.04% 0.03% 0.04%
(1) Upon acquisition and per GAAP, acquired loans are recorded at market value, which eliminated the allowance and impacts these ratios.

For the Quarter Ended
March 31, December 31, March 31,
SELECT FINANCIAL DATA - SUBSIDIARIES 2017 2016 2016
(dollars in thousands)
TOTAL ASSETS
Quad City Bank and Trust (1) $ 1,442,952 $ 1,395,785 $ 1,361,607
m2 Lease Funds, LLC 210,062 213,159 205,777
Cedar Rapids Bank and Trust 929,111 913,056 885,858
Community State Bank 608,431 600,076 N/A
Rockford Bank and Trust 398,455 391,155 367,032
TOTAL DEPOSITS
Quad City Bank and Trust (1) $ 1,261,075 $ 1,125,932 $ 1,029,298
Cedar Rapids Bank and Trust 733,227 747,785 686,548
Community State Bank 527,171 513,588 N/A
Rockford Bank and Trust 312,817 311,556 278,129
TOTAL LOANS & LEASES
Quad City Bank and Trust (1) $ 1,015,241 $ 1,010,443 $ 950,978
m2 Lease Funds, LLC 208,459 211,045 205,214
Cedar Rapids Bank and Trust 673,431 652,212 628,580
Community State Bank 427,365 429,511 N/A
Rockford Bank and Trust 319,813 313,321 294,266
TOTAL LOANS & LEASES / TOTAL ASSETS
Quad City Bank and Trust (1) 70% 72% 70%
Cedar Rapids Bank and Trust 72% 71% 71%
Community State Bank 70% 72% N/A
Rockford Bank and Trust 80% 80% 80%
ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES
Quad City Bank and Trust (1) 1.34% 1.33% 1.31%
m2 Lease Funds, LLC 1.72% 1.78% 1.80%
Cedar Rapids Bank and Trust 1.66% 1.67% 1.66%
Community State Bank (2) 0.53% 0.34% N/A
Rockford Bank and Trust 1.58% 1.57% 1.51%
RETURN ON AVERAGE ASSETS
Quad City Bank and Trust (1) 1.22% 1.17% 0.95%
Cedar Rapids Bank and Trust 1.33% 1.34% 1.39%
Community State Bank (3) 1.30% 1.33% N/A
Rockford Bank and Trust 0.86% 0.90% 0.66%
NET INTEREST MARGIN PERCENTAGE (4)
Quad City Bank and Trust (1) 3.71% 3.71% 3.60%
Cedar Rapids Bank and Trust 3.75% 3.90% 3.75%
Community State Bank (5) 5.37% 6.00% N/A
Rockford Bank and Trust 3.43% 3.35% 3.54%
ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET
INTEREST MARGIN, NET
Cedar Rapids Bank and Trust $ 9 $ 313 $ 79
Community State Bank 1,945 2,681 N/A
QCR Holdings, Inc. (6) (33) (34) (34)
(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 eliminated the allowance and impacts this ratio.
(3)Community State Bank's return on average assets includes acquisition costs and various purchase accounting adjustments.
(4)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.
(5)Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest
margin would have been 3.92% and 3.99% for the quarters ended March 31, 2017 and December 31, 2016, respectively.
(6)Relates to the trust preferred securities acquired as part of the Community National Bank acquisition in 2013.

As of
March 31, December 31, September 30, June 30, March 31,
GAAP TO NON-GAAP RECONCILIATIONS 2017 2016 2016 2016 2016
(dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)
Stockholders' equity (GAAP) $ 295,840 $ 286,041 $ 280,857 $ 275,117 $ 235,143
Less: Intangible assets 20,261 22,522 22,755 4,595 4,645
Tangible common equity (non-GAAP) $ 275,579 $ 263,519 $ 258,102 $ 270,522 $ 230,498
Total assets (GAAP) $ 3,381,013 $ 3,301,944 $ 3,280,986 $ 2,683,434 $ 2,640,673
Less: Intangible assets 20,261 22,522 22,755 4,595 4,645
Tangible assets (non-GAAP) $ 3,360,752 $ 3,279,422 $ 3,258,231 $ 2,678,839 $ 2,636,028
Tangible common equity to tangible assets ratio (non-GAAP) 8.20% 8.04% 7.92% 10.10% 8.74%
For the Quarter Ended
March 31, December 31, September 30, June 30, March 31,
CORE NET INCOME (2) 2017 2016 2016 2016 2016
Net income (GAAP) $ 9,185 $ 8,529 $ 6,108 $ 6,676 $ 6,373
Less nonrecurring items (post-tax) (3):
Income:
Securities gains, net $ - $ (23) $ 2,764 $ 12 $ 233
Total nonrecurring income (non-GAAP) $ - $ (23) $ 2,764 $ 12 $ 233
Expense:
Losses on debt extinguishment, net $ - $ 232 $ 2,689 $ - $ 54
Acquisition costs (4) - 26 1,506 231 -
Total nonrecurring expense (non-GAAP) $ - $ 258 $ 4,195 $ 231 $ 54
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (2) $ 9,185 $ 8,810 $ 7,539 $ 6,895 $ 6,194
CORE EARNINGS PER COMMON SHARE (2)
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) $ 9,185 $ 8,810 $ 7,539 $ 6,895 $ 6,194
Weighted average common shares outstanding 13,133,382 13,087,592 13,066,777 12,335,077 11,793,620
Weighted average common and common equivalent shares outstanding 13,488,417 13,323,883 13,269,703 12,516,474 11,953,949
Core earnings per common share (non-GAAP):
Basic $ 0.70 $ 0.67 $ 0.58 $ 0.56 $ 0.53
Diluted $ 0.68 $ 0.66 $ 0.57 $ 0.55 $ 0.52
CORE RETURN ON AVERAGE ASSETS (2)
Core net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) $ 9,185 $ 8,810 $ 7,539 $ 6,895 $ 6,194
Average Assets $ 3,274,713 $ 3,277,814 $ 2,865,947 $ 2,640,678 $ 2,602,350
Core return on average assets (annualized) (non-GAAP) 1.12% 1.08% 1.05% 1.04% 0.95%
NET INTEREST MARGIN (TEY) (5)
Net interest income (GAAP) $ 27,669 $ 29,280 $ 23,631 $ 21,009 $ 20,597
Plus: Tax equivalent adjustment (6) 1,950 1,727 1,587 1,364 1,342
Net interest income - tax equivalent (Non-GAAP) $ 29,619 $ 31,007 $ 25,218 $ 22,373 $ 21,939
Average earning assets $ 3,076,356 $ 3,069,122 $ 2,703,162 $ 2,484,721 $ 2,456,328
Net interest margin (GAAP) 3.65% 3.80% 3.48% 3.40% 3.37%
Net interest margin (TEY) (Non-GAAP) 3.90% 4.02% 3.71% 3.62% 3.59%
EFFICIENCY RATIO (7)
Noninterest expense (GAAP) $ 21,273 $ 22,308 $ 24,480 $ 17,744 $ 16,954
Net interest income (GAAP) $ 27,669 $ 29,280 $ 23,631 $ 21,009 $ 20,597
Noninterest income (GAAP) 7,284 7,029 10,423 6,762 6,822
Total income $ 34,953 $ 36,309 $ 34,054 $ 27,771 $ 27,419
Efficiency ratio (noninterest expense/total income) (Non-GAAP) 60.86% 61.44% 71.89% 63.89% 61.83%
(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) 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. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net income, which is the most directly comparable GAAP financial measure.
(3) Nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 35%.
(4) Acquisition costs were analyzed individually for deductibility. Presented amounts are tax-effected accordingly.
(5) Net interest margin (TEY) is a non-GAAP financial measure. The Company's management utilizes this measurement to take into account the tax benefit associated with certain loans and securities. It is
also standard industry practice to measure net interest margin using tax-equivalent measures. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net interest
income, which is the most directly comparable GAAP financial measure.
(6) 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.
(7) Efficiency ratio is a non-GAAP measure. The Company's management utilizes this ratio to compare to industry peers. The ratio is used to calculate overhead as a percentage of revenue. In compliance
with the applicable rules of the SEC, this non-GAAP measure is reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP financial
measures.

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

Source:QCR Holdings, Inc.