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QCR Holdings, Inc. Announces Net Income of $8.8 Million for the Second Quarter of 2017 And $18.0 Million Year-to-Date

MOLINE, Ill., July 20, 2017 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $8.8 million and diluted earnings per share (“EPS”) of $0.65 for the quarter ended June 30, 2017. By comparison, for the quarter ended March 31, 2017, the Company reported net income of $9.2 million and diluted EPS of $0.68. For the quarter ended June 30, 2016, the Company reported net income of $6.7 million and diluted EPS of $0.53. In the second quarter of 2017, the Company recognized a tax benefit related to stock options exercised and restricted stock awards vested of $90 thousand, compared to $533 thousand of reduced income tax expense for the first quarter of 2017.

For the six months ended June 30, 2017, the Company reported net income of $18.0 million, and diluted EPS of $1.33. By comparison, for the six months ended June 30, 2016, the Company reported net income of $13.1 million, and diluted EPS of $1.07.

“Our operating performance for the first half of the year 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 1.08% from 1.00%, when comparing the first six months of 2017 to the same period of the prior year. This is the result of strong organic loan growth, robust growth in core deposits, reductions in wholesale borrowings, margin improvements, modest operating expense growth, and solid fee income. Our acquisition of Community State Bank, based in Ankeny, Iowa (“CSB”) in the 3rd quarter of 2016 also contributed to our improved profitability.”

Annualized Loan and Lease Growth of 19.2% for Second Quarter of 2017

During the second quarter of 2017, the Company’s total assets increased $76.2 million, or 2%, to a total of $3.46 billion, while total loans and leases grew $117.7 million, or 4.8%. Loan and lease growth was funded by deposit growth that occurred in the first six months of 2017.

“Organic loan and lease growth totaled $117.7 million for the quarter, or an annual growth rate of 19.2%,” commented Mr. Hultquist. “This was a very strong quarter and puts us back on track to achieve targeted organic growth of 10-12% for the full year, assuming no major economic shifts. We intend to continue our organic growth 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.”

“Swap fee income and gains on the sale of government guaranteed loans totaled $1.5 million for the first six months of the year. The second quarter of 2017 was slow in this area. Given the nature of this fee income source, large fluctuations can occur from quarter-to-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 CSB.”

Net Interest Income Continues to be
Impacted by Acquisition-Related Accounting

Net interest income totaled $28.0 million for the quarter ended June 30, 2017. By comparison, net interest income totaled $27.7 million and $21.0 million for the quarters ended March 31, 2017 and June 30, 2016, respectively. Acquisition-related net accretion totaled $1.6 million for the quarter ended June 30, 2017. By comparison, acquisition-related net accretion totaled $2.1 million for the quarter ended March 31, 2017. Excluding acquisition-related net accretion, net interest income of $26.5 million for the second quarter of 2017 increased 3%, compared to $25.6 million for the quarter ended March 31, 2017.

Net interest income totaled $55.7 million for the six months ended June 30, 2017. By comparison, net interest income totaled $41.6 million for the six months ended June 30, 2016.

“Net interest margin (excluding acquisition accounting net accretion) was relatively flat showing a modest decline of one basis point at 3.62% for the second quarter of 2017, compared to 3.63% for the first quarter of 2017,” stated Mr. Gipple. “Loan yield (excluding loan discount accretion) actually increased five basis points when comparing linked quarters at 4.39% for the second quarter of 2017 and 4.34% for the first quarter of 2017. Although we had a successful quarter of loan growth, much of that growth came late in the quarter so the full benefit will be seen in future periods.”

Nonperforming Assets Decrease 5.3% in Second Quarter

Nonperforming assets (“NPAs”) decreased $1.4 million in the current quarter. The ratio of NPAs to total assets was 0.75% at June 30, 2017, which was down from 0.81% at March 31, 2017 and up from 0.70% a year ago.

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

The Company’s provision for loan and lease losses totaled $2.0 million for the second quarter of 2017, which was down slightly from the prior quarter, and up $825 thousand compared to the second quarter of 2016. As of June 30, 2017, the Company’s allowance to total loans and leases was 1.31%, which was down from 1.32% at March 31, 2017 and down from 1.46% at June 30, 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 ($6.3 million at June 30, 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 1.31% to 1.55%.

Capital Levels Remain Strong

As of June 30, 2017, the Company’s total risk-based capital ratio was 12.01%, the common equity tier 1 ratio was 9.76%, and the tangible common equity to tangible assets ratio increased to 8.29%. By comparison, these respective ratios were 11.90%, 9.64% and 8.20% as of March 31, 2017.

“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.

Acquisition of Guaranty Bank and Trust Company, Headquartered in Cedar Rapids, Iowa

As previously announced, the Company plans to close the acquisition of Guaranty Bank and Trust Company late in the third quarter or early in the fourth quarter of 2017, pending regulatory and shareholder approvals and certain customary closing conditions.

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 to 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 July 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 August 4, 2017. The replay access information is toll-free 1-877-344-7529 (international 1-412-317-0088); access code 10110356. 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/qcrh170721.html. The archived audio webcast will be available until July 21, 2018. Participants should visit the Company’s website or call in to the conference line set forth above 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, including the acquisition of CSB and the planned acquisition of Guaranty Bank and Trust Company, 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
June 30,March 31,December 31,September 30,June 30,
2017 2017 2016 2016 2016
(dollars in thousands)
CONDENSED BALANCE SHEET
Cash and due from banks$ 77,161$ 56,326$ 70,570$ 61,213$ 49,581
Federal funds sold and interest-bearing deposits 72,354 173,219 86,206 96,047 68,432
Securities 593,485 557,646 574,022 564,930 510,959
Net loans/leases 2,520,209 2,403,791 2,374,730 2,331,774 1,894,676
Core deposit intangible 6,919 7,150 7,381 7,614 1,372
Goodwill 13,111 13,111 13,111 13,632 3,223
Other assets 173,948 169,770 175,924 205,776 155,191
Total assets$ 3,457,187 $ 3,381,013 $ 3,301,944 $ 3,280,986 $ 2,683,434
Total deposits$ 2,870,234$ 2,805,931$ 2,669,261$ 2,594,913$ 1,973,594
Total borrowings 230,263 231,534 290,952 312,104 381,874
Other liabilities 51,607 47,708 55,690 93,112 52,849
Total stockholders' equity 305,083 295,840 286,041 280,857 275,117
Total liabilities and stockholders' equity$ 3,457,187 $ 3,381,013 $ 3,301,944 $ 3,280,986 $ 2,683,434
ANALYSIS OF LOAN PORTFOLIO
Loan/lease mix:
Commercial and industrial loans (1)$ 942,539$ 851,578$ 827,637$ 804,308$ 706,261
Commercial real estate loans 1,131,906 1,106,842 1,093,459 1,070,305 784,379
Direct financing leases (1) 153,337 159,368 165,419 166,924 169,928
Residential real estate loans 233,871 231,326 229,233 229,081 180,482
Installment and other consumer loans 84,047 78,771 81,666 81,918 73,658
Deferred loan/lease origination costs, net of fees 7,866 7,965 8,073 8,065 8,065
Total loans/leases$ 2,553,566$ 2,435,850$ 2,405,487$ 2,360,601$ 1,922,773
Less allowance for estimated losses on loans/leases 33,357 32,059 30,757 28,827 28,097
Net loans/leases$ 2,520,209 $ 2,403,791 $ 2,374,730 $ 2,331,774 $ 1,894,676
ANALYSIS OF SECURITIES PORTFOLIO
Securities mix:
U.S. government sponsored agency securities$ 41,944$ 47,556$ 46,084$ 67,885$ 88,321
Municipal securities 381,254 356,776 374,463 360,330 302,689
Residential mortgage-backed and related securities 164,415 147,504 147,702 133,173 116,765
Other securities 5,872 5,810 5,773 3,542 3,184
Total securities$ 593,485 $ 557,646 $ 574,022 $ 564,930 $ 510,959
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand deposits$ 760,625$ 777,150$ 797,415$ 764,615$ 615,764
Interest-bearing demand deposits 1,526,103 1,486,047 1,369,226 1,298,781 918,036
Time deposits 478,580 458,170 439,169 420,470 337,584
Brokered deposits 104,926 84,564 63,451 111,047 102,210
Total deposits$ 2,870,234 $ 2,805,931 $ 2,669,261 $ 2,594,913 $ 1,973,594
ANALYSIS OF BORROWINGS
Borrowings mix:
Term FHLB advances$ 57,000$ 59,000$ 63,000$ 83,343$ 78,000
Overnight FHLB advances (2) 49,500 47,550 74,500 55,300 118,900
Wholesale structured repurchase agreements 45,000 45,000 45,000 45,000 100,000
Customer repurchase agreements 4,897 7,170 8,132 8,265 21,441
Federal funds purchased 13,320 12,300 31,840 51,750 30,120
Junior subordinated debentures 33,546 33,514 33,480 33,446 33,413
Other borrowings 27,000 27,000 35,000 35,000 -
Total borrowings$ 230,263 $ 231,534 $ 290,952 $ 312,104 $ 381,874
(1) m2 Lease Funds, LLC originates Equipment Financing Agreements, which are classified as commercial and industrial loans.
(2) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 1.31%.

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
For the Six Months Ended
June 30, June 30,
2017 2016
(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income $ 63,798 $ 47,415
Interest expense 8,082 5,809
Net interest income 55,716 41,606
Provision for loan/lease losses 4,128 3,271
Net interest income after provision for loan/lease losses $ 51,588 $ 38,335
Trust department fees $ 3,432 $ 3,088
Investment advisory and management fees 1,830 1,351
Deposit service fees 2,775 1,878
Gain on sales of residential real estate loans 209 145
Gain on sales of government guaranteed portions of loans 1,038 2,482
Swap fee income 441 1,025
Securities gains, net 38 376
Earnings on bank-owned life insurance 929 874
Debit card fees 1,446 651
Correspondent banking fees 445 547
Other 1,483 1,168
Total noninterest income $ 14,066 $ 13,585
Salaries and employee benefits $ 26,238 $ 21,718
Occupancy and equipment expense 5,201 3,711
Professional and data processing fees 4,424 2,990
Acquisition costs - 355
FDIC insurance, other insurance and regulatory fees 1,267 1,284
Loan/lease expense 554 317
Net cost of operation of other real estate 42 380
Advertising and marketing 1,177 820
Postage and communications 642 474
Stationery and supplies 422 323
Bank service charges 871 831
Losses on debt extinguishment, net - 83
Correspondent banking expense 400 359
Other 1,440 1,053
Total noninterest expense $ 42,678 $ 34,698
Net income before taxes $ 22,976 $ 17,222
Income tax expense 5,025 4,172
Net income $ 17,951 $ 13,050
Basic EPS $ 1.36 $ 1.08
Diluted EPS $ 1.33 $ 1.07
Weighted average common shares outstanding 13,151,833 12,064,349
Weighted average common and common equivalent shares outstanding 13,502,505 12,235,212

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
For the Quarter Ended
June 30,March 31,December 31,September 30,June 30,
2017 2017 2016 2016 2016
(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income $ 32,453$ 31,345$ 32,236 $ 26,817$ 23,913
Interest expense 4,406 3,676 2,956 3,186 2,904
Net interest income 28,047 27,669 29,280 23,631 21,009
Provision for loan/lease losses 2,023 2,105 2,599 1,608 1,198
Net interest income after provision for loan/lease losses $ 26,024 $ 25,564 $ 26,681 $ 22,023 $ 19,811
Trust department fees $ 1,692$ 1,740$ 1,558 $ 1,519$ 1,512
Investment advisory and management fees 868 962 876 766 693
Deposit service fees 1,459 1,316 1,411 1,151 947
Gain on sales of residential real estate loans 113 96 142 144 84
Gain on sales of government guaranteed portions of loans 87 951 458 219 1,604
Swap fee income 327 114 350 334 168
Securities gains, net 38 - (36) 4,252 18
Earnings on bank-owned life insurance 459 470 447 450 480
Debit card fees 743 703 688 475 344
Correspondent banking fees 200 245 249 254 245
Other 796 687 886 859 667
Total noninterest income $ 6,782 $ 7,284 $ 7,029 $ 10,423 $ 6,762
Salaries and employee benefits $ 12,931$ 13,307$ 13,396 $ 11,202$ 10,917
Occupancy and equipment expense 2,699 2,502 2,630 2,086 1,885
Professional and data processing fees 2,341 2,083 2,192 1,931 1,542
Acquisition costs - - 40 2,046 355
FDIC insurance, other insurance and regulatory fees 646 621 683 583 650
Loan/lease expense 260 294 242 103 154
Net cost of operation of other real estate 28 14 78 133 278
Advertising and marketing 568 609 760 548 433
Bank service charges 447 424 446 415 415
Losses on debt extinguishment, net - - 357 4,137 -
Correspondent banking expense 202 198 186 206 182
Other 1,283 1,221 1,298 1,090 933
Total noninterest expense $ 21,405 $ 21,273 $ 22,308 $ 24,480 $ 17,744
Net income before taxes $ 11,401 $ 11,575 $ 11,402 $ 7,966 $ 8,829
Income tax expense 2,635 2,390 2,873 1,858 2,153
Net income $ 8,766 $ 9,185 $ 8,529 $ 6,108 $ 6,676
Basic EPS $ 0.67$ 0.70$ 0.65 $ 0.47$ 0.54
Diluted EPS $ 0.65$ 0.68$ 0.64 $ 0.46$ 0.53
Weighted average common shares outstanding 13,170,283 13,133,382 13,087,592 13,066,777 12,335,077
Weighted average common and common equivalent shares outstanding 13,516,592 13,488,417 13,323,883 13,269,703 12,516,474

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,
2017 2017 2016 2016 2016 2017 2016
(dollars in thousands, except per share data)
COMMON SHARE DATA
Common shares outstanding 13,175,234 13,161,219 13,106,845 13,075,307 13,057,368
Book value per common share (1)$23.16 $22.48 $21.82 $21.48 $21.07
Tangible book value per common share (2)$21.64 $20.94 $20.11 $19.74 $20.72
Closing stock price$47.40 $42.35 $43.30 $31.74 $27.19
Market capitalization$624,506 $557,378 $567,526 $415,010 $355,030
Market price / book value 204.70% 188.41% 198.41% 147.77% 129.05%
Market price / tangible book value 219.08% 202.26% 215.36% 160.79% 131.24%
Earnings per common share (basic) LTM (3)$ 2.49 $ 2.36 $ 2.20 $ 2.13 $ 2.21
Price earnings ratio LTM (3) 19.11 x 17.94 x 19.68 x 14.90 x 12.30 x
TCE / TA (4) 8.29% 8.20% 8.04% 7.92% 10.10%
CONDENSED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
Beginning balance$ 295,840 $ 286,041 $ 280,857 $ 275,117 $ 235,143
Net income 8,766 9,185 8,529 6,108 6,676
Other comprehensive income (loss), net of tax 702 411 (3,681) (361) 1,181
Common stock cash dividends declared (657) (657) (523) (521) (521)
Proceeds from issuance of 1,215,000 shares of
common stock, net of costs
- - - - 29,829
Other (5) 432 860 859 514 2,809
Ending balance$ 305,083 $ 295,840 $ 286,041 $ 280,857 $ 275,117
REGULATORY CAPITAL RATIOS (6):
Total risk-based capital ratio 12.01% 11.90% 11.56% 11.30% 14.29%
Tier 1 risk-based capital ratio 10.85% 10.75% 10.46% 10.29% 13.04%
Tier 1 leverage capital ratio 9.37% 9.37% 9.10% 10.09% 11.18%
Common equity tier 1 ratio 9.76% 9.64% 9.41% 9.22% 11.72%
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets (annualized) 1.04% 1.12% 1.04% 0.85% 1.01% 1.08% 1.00%
Return on average total equity (annualized) 11.65% 12.63% 12.04% 8.78% 10.46% 12.13% 10.73%
Net interest margin 3.54% 3.65% 3.80% 3.48% 3.40% 3.59% 3.39%
Net interest margin (TEY) (Non-GAAP)(7) 3.81% 3.90% 4.02% 3.71% 3.62% 3.86% 3.61%
Efficiency ratio (Non-GAAP) (8) 61.46% 60.86% 61.44% 71.89% 63.89% 61.16% 62.87%
Gross loans and leases / total assets 73.86% 72.04% 72.85% 71.95% 71.65% 73.86% 71.65%
Effective tax rate 23.11% 20.65% 25.20% 23.32% 24.39% 23.11% 24.22%
Tax benefit related to stock options exercised and restricted stock
awards vested (9)
90 533N/AN/AN/A 623N/A
Full-time equivalent employees (10) 585 561 572 572 410 585 410
AVERAGE BALANCES
Assets$ 3,378,195 $ 3,274,713 $ 3,277,814 $ 2,865,947 $ 2,640,678 $ 3,326,454 $ 2,621,514
Loans/leases 2,488,828 2,398,387 2,358,960 2,077,376 1,899,932 2,443,608 1,866,941
Deposits 2,835,711 2,692,009 2,717,923 2,243,397 2,033,116 2,763,861 2,006,586
Total stockholders' equity 300,868 290,906 283,292 278,369 255,391 295,887 243,319
(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 / TA : 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) ASC 2016-09 became effective on January 1, 2017 and affects the accounting for stock compensation. This amount reflects the tax benefit recognized as a result of this new standard.
(10) Full-time equivalent ''FTEs" employees increased in the second quarter of 2017 due to the addition of summer interns (13.6 FTEs).
FTEs increased in the third quarter of 2016 due to the acquisition of CSB.

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
ANALYSIS OF NET INTEREST INCOME AND MARGIN
For the Quarter Ended
June 30, 2017 March 31, 2017 June 30, 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 $ 18,742$ 380.81% $ 11,092$ 150.55% $ 14,174$ 110.31%
Interest-bearing deposits at financial institutions 86,236 2201.02% 92,551 1990.87% 50,747 620.49%
Securities (1) 573,747 5,3843.76% 560,455 5,1583.73% 505,697 4,5733.64%
Restricted investment securities 13,226 1324.00% 13,871 1303.80% 14,171 1343.80%
Loans (1) 2,488,828 28,8814.65% 2,398,387 27,7934.70% 1,899,932 20,4974.34%
Total earning assets (1)$ 3,180,779$ 34,6554.37% $ 3,076,356$ 33,2954.39% $ 2,484,721$ 25,2774.09%
Interest-bearing deposits$ 1,566,106$ 1,8350.47% $ 1,407,645$ 1,1400.33% $ 941,856$ 6000.26%
Time deposits 527,719 1,1560.88% 511,119 1,0930.87% 425,216 7440.70%
Short-term borrowings 17,936 190.42% 25,188 240.39% 50,122 180.14%
Federal Home Loan Bank advances (4) 76,739 3541.85% 114,356 4031.43% 128,956 4161.30%
Other borrowings 33,530 3474.15% 74,761 6833.71% 100,008 8243.31%
Junior subordinated debentures 72,000 6963.88% 33,497 3334.03% 33,396 3023.64%
Total interest-bearing liabilities$ 2,294,030$ 4,4070.77% $ 2,166,566$ 3,6760.69% $ 1,679,554$ 2,9040.70%
Net interest income / spread (1) $ 30,2483.60% $ 29,6193.70% $ 22,3733.39%
Net interest margin (2) 3.54% 3.65% 3.40%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.81% 3.90% 3.62%
For the Six Months Ended
June 30, 2017 June 30, 2016
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 $ 14,917$ 530.72% $ 15,703$ 230.29%
Interest-bearing deposits at financial institutions 89,394 4180.94% 45,691 1230.54%
Securities (1) 567,101 10,5433.75% 528,034 9,2573.53%
Restricted investment securities 13,549 2623.90% 14,156 2643.75%
Loans (1) 2,443,608 56,7414.68% 1,866,941 40,4544.36%
Total earning assets (1)$ 3,128,569$ 68,0174.38% $ 2,470,525$ 50,1214.08%
Interest-bearing deposits$ 1,486,876$ 2,9740.40% $ 933,551$ 1,2140.26%
Time deposits 519,419 2,2490.87% 412,410 1,4200.69%
Short-term borrowings 21,562 430.40% 68,331 610.18%
Federal Home Loan Bank advances 95,548 7581.60% 128,696 8581.34%
Other borrowings 33,514 6804.09% 100,873 1,6503.29%
Junior subordinated debentures 73,381 1,3793.79% 34,023 6063.58%
Total interest-bearing liabilities$ 2,230,300$ 8,0830.73% $ 1,677,884$ 5,8090.70%
Net interest income / spread (1) $ 59,9343.65% $ 44,3123.38%
Net interest margin (2) 3.59% 3.39%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.86% 3.61%
(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.

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
As of
June 30,March 31,December 31,September 30,June 30,
2017 2017 2016 2016 2016
(dollars in thousands, except per share data)
ROLLFORWARD OF ALLOWANCE FOR
LOAN/LEASE LOSSES
Beginning balance$ 32,059 $ 30,757 $ 28,827 $ 28,097 $ 27,395
Provision charged to expense 2,023 2,105 2,599 1,608 1,198
Loans/leases charged off (851) (893) (755) (987) (634)
Recoveries on loans/leases previously charged off 126 90 86 109 138
Ending balance$ 33,357 $ 32,059 $ 30,757 $ 28,827 $ 28,097
NONPERFORMING ASSETS
Nonaccrual loans/leases$ 13,217 $ 14,205 $ 13,919 $ 14,371 $ 10,737
Accruing loans/leases past due 90 days or more 424 955 967 392 86
Troubled debt restructures - accruing 6,915 6,229 6,347 1,825 1,753
Total nonperforming loans/leases 20,556 21,389 21,233 16,588 12,576
Other real estate owned 5,174 5,625 5,523 5,808 6,179
Other repossessed assets 123 285 202 353 154
Total nonperforming assets$ 25,853 $ 27,299 $ 26,958 $ 22,749 $ 18,909
ASSET QUALITY RATIOS
Nonperforming assets / total assets 0.75% 0.81% 0.82% 0.69% 0.70%
Allowance / total loans/leases (1) 1.31% 1.32% 1.28% 1.22% 1.46%
Allowance / nonperforming loans/leases (1) 162.27% 149.89% 144.85% 173.78% 223.42%
Net charge-offs as a % of average loans/leases 0.03% 0.03% 0.03% 0.04% 0.03%
(1) Upon acquisition and per GAAP, 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 Six Months Ended
June 30, March 31, June 30, June 30, June 30,
SELECT FINANCIAL DATA - SUBSIDIARIES 2017 2017 2016 2017 2016
(dollars in thousands)
TOTAL ASSETS
Quad City Bank and Trust (1) $ 1,400,308 $ 1,442,952 $ 1,390,025
m2 Lease Funds, LLC 215,689 210,062 207,334
Cedar Rapids Bank and Trust 993,769 929,111 904,367
Community State Bank 642,761 608,431 N/A
Rockford Bank and Trust 426,160 398,455 402,157
TOTAL DEPOSITS
Quad City Bank and Trust (1) $ 1,205,516 $ 1,261,075 $ 1,049,049
Cedar Rapids Bank and Trust 789,750 733,227 690,377
Community State Bank 554,767 527,171 N/A
Rockford Bank and Trust 346,893 312,817 296,613
TOTAL LOANS & LEASES
Quad City Bank and Trust (1) $ 1,045,625 $ 1,015,241 $ 968,905
m2 Lease Funds, LLC 214,253 208,459 205,883
Cedar Rapids Bank and Trust 728,562 673,431 648,727
Community State Bank 442,845 427,365 N/A
Rockford Bank and Trust 336,534 319,813 305,141
TOTAL LOANS & LEASES / TOTAL ASSETS
Quad City Bank and Trust (1) 75% 70% 70%
Cedar Rapids Bank and Trust 73% 72% 72%
Community State Bank 69% 70% N/A
Rockford Bank and Trust 79% 80% 76%
ALLOWANCE AS A PERCENTAGE OF TOTAL LOANS/LEASES
Quad City Bank and Trust (1) 1.28% 1.34% 1.31%
m2 Lease Funds, LLC 1.60% 1.72% 1.80%
Cedar Rapids Bank and Trust 1.58% 1.66% 1.65%
Community State Bank (2) 0.71% 0.53% N/A
Rockford Bank and Trust 1.59% 1.58% 1.53%
RETURN ON AVERAGE ASSETS
Quad City Bank and Trust (1) 1.26% 1.22% 1.24% 1.24% 1.10%
Cedar Rapids Bank and Trust 1.23% 1.33% 1.46% 1.28% 1.42%
Community State Bank (3) 1.26% 1.30% N/A 1.28% N/A
Rockford Bank and Trust 0.82% 0.86% 0.80% 0.84% 0.73%
NET INTEREST MARGIN PERCENTAGE (4)
Quad City Bank and Trust (1) 3.63% 3.71% 3.66% 3.67% 3.63%
Cedar Rapids Bank and Trust 3.66% 3.75% 3.77% 3.70% 3.77%
Community State Bank (5) 5.06% 5.37% N/A 5.21% N/A
Rockford Bank and Trust 3.40% 3.43% 3.49% 3.41% 3.52%
ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET
INTEREST MARGIN, NET
Cedar Rapids Bank and Trust $ 6 $ 9 $ 51 $ 15 $ 130
Community State Bank 1,580 2,054 N/A 3,635 N/A
QCR Holdings, Inc. (6) (33) (33) (34) (66) (68)
(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 3.95% for the quarter ended June 30, 2017 and 3.83% for the quarter ended March 31, 2017.
(6)Relates to the trust preferred securities acquired as part of the Community National Bank acquisition in 2013.

QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
As of
June 30, March 31, December 31, September 30, June 30,
GAAP TO NON-GAAP RECONCILIATIONS 2017 2017 2016 2016 2016
(dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
RATIO (1)
Stockholders' equity (GAAP) $ 305,083 $ 295,840 $ 286,041 $ 280,857 $ 275,117
Less: Intangible assets 20,030 20,261 22,522 22,755 4,595
Tangible common equity (non-GAAP) $ 285,053 $ 275,579 $ 263,519 $ 258,102 $ 270,522
Total assets (GAAP) $ 3,457,187 $ 3,381,013 $ 3,301,944 $ 3,280,986 $ 2,683,434
Less: Intangible assets 20,030 20,261 22,522 22,755 4,595
Tangible assets (non-GAAP) $ 3,437,157 $ 3,360,752 $ 3,279,422 $ 3,258,231 $ 2,678,839
Tangible common equity to tangible assets ratio (non-GAAP) 8.29% 8.20% 8.04% 7.92% 10.10%
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) 2017 2017 2016 2016 2016 2017 2016
Net income (GAAP) $ 8,766 $ 9,185 $ 8,529 $ 6,108 $ 6,676 $ 17,951 $ 13,050
Less nonrecurring items (post-tax) (3):
Income:
Securities gains, net $ 25 $ - $ (23) $ 2,764 $ 12 $ 25 $ 245
Total nonrecurring income (non-GAAP) $ 25 $ - $ (23) $ 2,764 $ 12 $ 25 $ 245
Expense:
Losses on debt extinguishment, net $ - $ - $ 232 $ 2,689 $ - $ - $ 54
Acquisition costs (4) - - 26 1,506 231 - 231
Total nonrecurring expense (non-GAAP) $ - $ - $ 258 $ 4,195 $ 231 $ - $ 285
Core net income attributable to QCR Holdings, Inc. common
stockholders (non-GAAP) (2)
$ 8,741 $ 9,185 $ 8,810 $ 7,539 $ 6,895 $ 17,926 $ 13,090
CORE EARNINGS PER COMMON SHARE (2)
Core net income attributable to QCR Holdings, Inc. common
stockholders (non-GAAP) (from above)
$ 8,741 $ 9,185 $ 8,810 $ 7,539 $ 6,895 $ 17,926 $ 13,090
Weighted average common shares outstanding 13,170,283 13,133,382 13,087,592 13,066,777 12,335,077 13,151,833 12,064,349
Weighted average common and common equivalent shares outstanding 13,516,592 13,488,417 13,323,883 13,269,703 12,516,474 13,502,505 12,235,212
Core earnings per common share (non-GAAP):
Basic $ 0.66 $ 0.70 $ 0.67 $ 0.58 $ 0.56 $ 1.36 $ 1.09
Diluted $ 0.65 $ 0.68 $ 0.66 $ 0.57 $ 0.55 $ 1.33 $ 1.07
CORE RETURN ON AVERAGE ASSETS (2)
Core net income attributable to QCR Holdings, Inc. common
stockholders (non-GAAP) (from above)
$ 8,741 $ 9,185 $ 8,810 $ 7,539 $ 6,895 $ 17,926 $ 13,090
Average Assets $ 3,378,195 $ 3,274,713 $ 3,277,814 $ 2,865,947 $ 2,640,678 $ 3,326,454 $ 2,621,514
Core return on average assets (annualized) (non-GAAP) 1.04% 1.12% 1.08% 1.05% 1.04% 1.08% 1.00%
NET INTEREST MARGIN (TEY) (5)
Net interest income (GAAP) $ 28,047 $ 27,669 $ 29,280 $ 23,631 $ 21,009 $ 55,716 $ 41,606
Plus: Tax equivalent adjustment (6) 2,201 1,950 1,727 1,587 1,364 4,218 2,706
Net interest income - tax equivalent (Non-GAAP) $ 30,248 $ 29,619 $ 31,007 $ 25,218 $ 22,373 $ 59,934 $ 44,312
Average earning assets $ 3,180,779 $ 3,076,356 $ 3,069,122 $ 2,703,162 $ 2,484,721 $ 3,128,569 $ 2,470,525
Net interest margin (GAAP) 3.54% 3.65% 3.80% 3.48% 3.40% 3.59% 3.39%
Net interest margin (TEY) (Non-GAAP) 3.81% 3.90% 4.02% 3.71% 3.62% 3.86% 3.61%
EFFICIENCY RATIO (7)
Noninterest expense (GAAP) $ 21,405 $ 21,273 $ 22,308 $ 24,480 $ 17,744 $ 42,678 $ 34,698
Net interest income (GAAP) $ 28,047 $ 27,669 $ 29,280 $ 23,631 $ 21,009 $ 55,716 $ 41,606
Noninterest income (GAAP) 6,782 7,284 7,029 10,423 6,762 14,066 13,585
Total income $ 34,829 $ 34,953 $ 36,309 $ 34,054 $ 27,771 $ 69,782 $ 55,191
Efficiency ratio (noninterest expense/total income) (Non-GAAP) 61.46% 60.86% 61.44% 71.89% 63.89% 61.16% 62.87%
(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.