8-K
QCR HOLDINGS INC (QCRH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
Date of Report (Date of earliest event Reported): January 27, 2021
QCR Holdings, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-22208 | 42-1397595 |
|---|---|---|
| (State or Other Jurisdiction of | (Commission File Number) | (I.R.S. Employer Identification |
| Incorporation) | Number) | |
| 3551 Seventh Street, Moline, Illinois 61265 | ||
| --- | ||
| (Address of Principal Executive Offices) (Zip Code) |
(309) 736-3584
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> Symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Common Stock, $1.00 Par Value | QCRH | The Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On January 27, 2021, QCR Holdings, Inc. (the “Company”) issued a press release disclosing financial results for the quarter and year ended December 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 7.01. Regulation FD Disclosure.
On January 27, 2021, the Company posted a presentation to the Company’s website. The presentation is available to view at www.qcrh.com, and is also attached hereto as Exhibit 99.2.
The information in Item 7.01 of this Current Report on Form 8-K and the related Exhibit 99.2 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 99.1 | Press Release dated January 27, 2021. |
|---|---|
| 99.2 | Investor Presentation dated January 27, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| QCR Holdings, Inc. | ||
|---|---|---|
| Date: January 27, 2021 | By: | /s/ Todd A. Gipple |
| Todd A. Gipple | ||
| President, Chief Operating Officer and Chief Financial Officer |
Exhibit 99.1
| PRESS RELEASE | FOR IMMEDIATE RELEASE |
|---|
QCR Holdings, Inc. Announces Record NetIncome of $18.3 Million for the Fourth Quarter and $60.6 Million for the Full Year 2020
Fourth Quarter and Full Year 2020 Highlights
| · | Record net income of $18.3 million, or $1.14 per diluted share |
|---|---|
| · | Adjusted net income (non-GAAP) of $19.1 million, or $1.20 per diluted share |
| --- | --- |
| · | Noninterest income of $32.0 million for the quarter and $113.8 million for the year |
| --- | --- |
| · | Adjusted NIM (TEY)(non-GAAP) was up 1 basis point after further adjusting for higher third quarter interest recoveries onpreviously charged-off loans |
| --- | --- |
| · | Annualized core loan and lease growth (non-GAAP) of 9.0% for the quarter and 7.8% for the year, excluding SBA Paycheck ProtectionProgram (“PPP”) loans |
| --- | --- |
| · | Core deposits relatively stable for the quarter and up 22.3% for the year |
| --- | --- |
| · | Provision expense of $7.1 million for the quarter, increasing ALLL to total loans and leases, excluding PPP loans (non-GAAP),by 7 basis points to 2.12% |
| --- | --- |
| · | Nonperforming assets improved by 22% for the quarter and now represent only 0.26% of total assets |
| --- | --- |
Moline, IL, January 27, 2021 -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced record net income of $18.3 million and diluted earnings per share (“EPS”) of $1.14 for the fourth quarter of 2020, compared to net income of $17.3 million and diluted EPS of $1.09 for the third quarter of 2020. Pre-provision, pre-tax adjusted net income (non-GAAP) was $30.4 million in the fourth quarter of 2020, compared to a record $42.2 million in the third quarter of 2020.
The Company reported adjusted net income (non-GAAP) of $19.1 million and adjusted diluted EPS of $1.20 for the fourth quarter of 2020, compared to adjusted net income (non-GAAP) of $17.7 million and adjusted diluted EPS of $1.11 for the third quarter of 2020. For the fourth quarter of 2019, net income and diluted EPS were $15.9 million and $0.99, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS were $15.4 million and $0.96, respectively.
| For the Quarter Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||
| $ in millions (except per share data) | 2020 | 2020 | 2019 | ||||||
| Net Income | $ | 18.3 | $ | 17.3 | $ | 15.9 | |||
| Diluted EPS | $ | 1.14 | $ | 1.09 | $ | 0.99 | |||
| Adjusted Net Income (non-GAAP) | $ | 19.1 | $ | 17.7 | $ | 15.4 | |||
| Adjusted Diluted EPS (non-GAAP) | $ | 1.20 | $ | 1.11 | $ | 0.96 | |||
| Pre-Provision/Pre-Tax Adjusted Income (non-GAAP) | $ | 30.4 | $ | 42.2 | $ | 20.4 | |||
| Pre-Provision/Pre-Tax Adjusted ROAA (non-GAAP) | 2.08 | % | 2.90 | % | 1.58 | % | |||
| See GAAP to non-GAAP reconciliations |
“We are very pleased with our financial performance in 2020, highlighted by record net income for the fourth quarter and full year,” said CEO Larry J. Helling. “Our strong results were driven by robust revenue growth, record fee income and increased net interest income. We grew core loans by nearly 8% for the year, while maintaining disciplined underwriting and solid credit quality. Our asset quality and credit metrics improved during the quarter as we improved nonperforming assets by 22%, down to only 0.26% of total assets.”
“Additionally, we continued to see a reduction in loan deferrals at year-end, as most of our clients who received payment relief early in the COVID-19 pandemic have resumed making normal payments,” Helling said. “We believe this speaks to the high quality of our loan portfolio and the resiliency of our local markets, which continue to exhibit improving economic activity.”
Adjusted non-GAAP measurements of financial performance exclude non-recurring income and expense items. The Company believes these measurements provide a better comparison for analysis and may provide a better indicator of future performance.
Annualized Loan and Lease Growth of 9.0%for the Quarter and 7.8% for the Year, excluding PPP Loans (non-GAAP)
During the fourth quarter of 2020, the Company’s total loans and leases, excluding PPP loans, increased $87.5 million to a total of $4.0 billion. Loan and lease growth during the quarter was 9.0% on an annualized basis. Continued loan and lease growth was funded by some of the Company’s excess liquidity. Core deposits (excluding brokered deposits) declined by $18.8 million and brokered deposits declined by $54.3 million as the Company allowed certain higher cost brokered deposits to run off the balance sheet. In addition, short-term borrowings decreased by $50.0 million during the quarter. At quarter-end, the percentage of wholesale funds to total assets was 3.2%, which was down from 4.9% in the third quarter of 2020 as the Company’s need for wholesale funding continued to decline. Additionally, at quarter-end, the percentage of gross loans and leases to total assets was 74.8%, up from 72.4% in the third quarter, driven primarily by lower excess liquidity.
“Our solid loan growth for the quarter was driven by strength in our core commercial lending business, as well as our Specialty Finance Group,” added Helling. “However, until we have better visibility on the pandemic recovery, we are targeting organic loan growth for the full year 2021 of between 6% and 8%, slightly lower than our long-term goal of 9%.”
Net Interest Incomeof $43.7 million
Net interest income for the fourth quarter of 2020 totaled $43.7 million, compared to $44.6 million for the third quarter of 2020 and $39.9 million for the fourth quarter of 2019. The slight decrease was primarily due to a decline in the yield on earning assets of 8 basis points on a linked quarter basis, primarily due to the higher than normal amount of interest recoveries on previously charged-off loans in the third quarter. Acquisition-related net accretion totaled $1.1 million for the fourth quarter of 2020, up from $833 thousand in the third quarter of 2020 and $931 thousand for the fourth quarter of 2019. Adjusted net interest income (non-GAAP) was $45.3 million for the fourth quarter of 2020, compared to $45.7 million for the third quarter of 2020 and $40.8 million for the fourth quarter of 2019.
Net interest income totaled $167.0 million for the year ended December 31, 2020, compared to $155.6 million for the year ended December 31, 2019.
Excluding the impact of interest recoveries in the prior quarter, which created an 8 basis point reduction in adjusted NIM (non-GAAP) on a linked-quarter basis, adjusted NIM was up 1 basis point. The reported net interest margin was 3.25%. On a tax-equivalent yield basis (non-GAAP), net interest margin was 3.45%, decreasing by 11 and 6 basis points, respectively, from the third quarter of 2020. Net interest margin, excluding acquisition-related net accretion (non-GAAP) was 3.37%, down 7 basis points from the third quarter. The total cost of interest-bearing funds was down 2 basis points for the quarter, as further improvement in our deposit costs was partially offset by the full quarter impact of our $50.0 million subordinated note offering in the third quarter.
| For the Quarter Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | ||||||||
| 2020 | 2020 | 2019 | ||||||||
| NIM | 3.25 | % | 3.36 | % | 3.36 | % | ||||
| NIM (TEY)(non-GAAP) | 3.45 | % | 3.51 | % | 3.51 | % | ||||
| Adjusted NIM (TEY)(non-GAAP) | 3.37 | % | 3.44 | % | (1) | 3.43 | % | |||
| See GAAP to non-GAAP reconciliations | ||||||||||
| (1) | Increased by 8 bps due to one-time interest recoveries on previously charged-off loans. | |||||||||
| --- | --- |
“Our deposit costs decreased significantly over the course of the year as we grew core deposits and significantly reduced our wholesale funding,” stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “However, our average loan yields also decreased due to the sharp decline in short-term interest rates. Despite this and the fact that we carried a significant amount of excess liquidity for most of the year, we were able to protect our margins, as adjusted NIM increased by 2 basis points for the full year.”
Noninterest Income of $32.0 million
Noninterest income for the fourth quarter of 2020 totaled $32.0 million, compared to $38.0 million for the third quarter of 2020. The decrease was primarily due to a $5.3 million reduction in swap fee income from the record third quarter. Wealth management revenue was $3.3 million for the quarter, down $232 thousand from the third quarter, due to the impact of the sale of the Bates Companies in the third quarter. Excluding that impact, wealth management revenue was up $241 thousand on a linked-quarter basis. In addition, securities gains decreased by $1.2 million and gain on sale of loans increased by $316 thousand from the prior quarter. Noninterest income increased $14.5 million, or an increase of 83% compared to the fourth quarter of 2019, excluding the gain on sale of Rockford Bank & Trust (“RB&T”), which was recorded in that quarter.
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Noninterest income for the year ended December 31, 2020, totaled $113.8 million, compared to $66.5 million for the year ended December 31, 2019, excluding the gain on the sale of RB&T, an increase of 71%.
“Our noninterest income was again driven by another strong quarter of swap fee income. Swap fee income totaled $74.8 million for the full year 2020 as a result of strong demand for these lending products, where we are making high-quality, long-term variable rate loans and are enabling our clients to lock in attractive fixed long-term rates through the use of swaps. The pipeline of swap loans at our banks and our Specialty Finance Group remains healthy and we believe that this source of fee income remains sustainable for the foreseeable future,” added Gipple. “Our current expectation is that swap fee income will be approximately $14 to $18 million per quarter for 2021.”
Noninterest Expensesof $46.4 million
Noninterest expense for the fourth quarter of 2020 totaled $46.4 million, compared to $40.8 million for the third quarter of 2020 and $46.3 million for the fourth quarter of 2019. The linked-quarter increase was due to several factors, but primarily the result of increased salary and benefits expense of $4.4 million, driven by strong financial results in the second half of the year. In addition, occupancy and equipment expense increased by $1.1 million, and advertising and marketing expense increased by $526 thousand. These increases were partially offset by a linked-quarter decline in losses on liability extinguishment of $417 thousand and loss on the sale of a subsidiary of $452 thousand.
Asset Quality Remains Strong and NPAsImproved
Continued to Build Reserves
Nonperforming assets (“NPAs”) totaled $14.8 million at the end of the fourth quarter, a decrease of $4.1 million from the third quarter of 2020. The decrease was primarily due to a reduction in nonaccrual loans as a number of loans returned to performing status or were either monetized or charged-off during the quarter. The ratio of NPAs to total assets improved to 0.26% on December 31, 2020, compared to 0.32% on September 30, 2020, and 0.27% on December 31, 2019. In addition, the Company’s criticized loans and classified loans to total loans and leases decreased to 3.24% and 1.55%, respectively, from 3.53% and 1.66% as of September 30, 2020.
The Company’s provision for loan and lease losses totaled $7.1 million for the fourth quarter of 2020, down from $20.3 million in the prior quarter. As of December 31, 2020, the Company’s allowance to total loans and leases was 1.98%, which was up from 1.87% on September 30, 2020, and from 0.98% at December 31, 2019. Excluding the $273 million impact of PPP loans that are on the Company’s balance sheet, the ALLL to total loans and leases was 2.12% (non-GAAP).
In accordance with GAAP for acquisition accounting, loans acquired through past acquisitions were recorded at market value; therefore, there was no allowance associated with the acquired loans at the acquisition date. Management continues to evaluate the allowance needed on the acquired loans factoring in the net remaining discount of $3.1 million on December 31, 2020.
Strong Capital Levels
As of December 31, 2020, the Company’s total risk-based capital ratio was 15.13%, the common equity tier 1 ratio was 10.69% and the tangible common equity to tangible assets ratio was 9.08%. By comparison, these respective ratios were 14.93%, 10.44% and 8.42% as of September 30, 2020.
Focus on Three Strategic Long-Term Initiatives
As part of the Company’s ongoing efforts to grow earnings and drive attractive long-term returns for shareholders, it continues to operate under three key strategic long-term initiatives:
| · | Organic loan and lease growth of 9% per year, funded by core deposits; |
|---|---|
| · | Grow fee-based income by at least 6% per year; and |
| --- | --- |
| · | Limit our annual operating expense growth to 5% per year. |
| --- | --- |
These initiatives are long-term targets. Due to the impact of the COVID-19 pandemic, among other factors, the Company may not be able to achieve these goals for the full year 2021.
Supplemental Presentation and Where to Find It
In addition to this press release, the Company has included a supplemental presentation that provides further information regarding the Company’s loan exposures and deferrals. Investors, analysts and other interested persons may find this presentation on the Securities and Exchange Commission’s EDGAR filing system at www.sec.gov/edgar.shtml, or on the Company’s website at www.qcrh.com.
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Conference Call Details
The Company will host an earnings call/webcast tomorrow, January 28, 2021, at 10:00 a.m. Central Time. Dial-in information for the call is toll-free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be available for replay through February 11, 2021. The replay access information is 877-344-7529 (international 412-317-0088); access code 10151041. A webcast of the teleconference can be accessed at the Company’s News and Events page at www.qcrh.com. An archived version of the webcast will be available at the same location shortly after the live event has ended.
About Us
QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny and Springfield communities through its wholly-owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, and Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company engages in commercial leasing through its wholly-owned subsidiary, m2 Equipment Finance, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 24 locations in Iowa, Missouri, Wisconsin and Illinois. As of December 31, 2020, the Company had approximately $5.7 billion in assets, $4.3 billion in loans and $4.6 billion in deposits. For additional information, please visit the Company’s website at www.qcrh.com.
Special Note Concerning Forward-Looking Statements. Thisdocument contains, and future oral and written statements of the Company and its management may contain, forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results ofoperations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based uponbeliefs, expectations and assumptions of the Company’s management and on information currently available to management, aregenerally 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, andthe 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 abilityof the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements.These factors include, among others, the following: (i) the strength of the local, state, national and international economies(including the impact of the new presidential administration and the impact of tariffs, a U.S. withdrawal from or significant renegotiationof trade agreements, trade wars and other changes in trade regulations); (ii) the economic impact of any future terroristthreats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), or other adverse externalevents that could cause economic deterioration or instability in credit markets, and the response of the local, state and nationalgovernments to any such adverse external events; (iii) changes in accounting policies and practices (including the new currentexpected credit loss (CECL) impairment standards, that will change how the Company estimates credit losses when implemented); (iv)changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (v) changesin interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out); (vi) increasedcompetition in the financial services sector and the inability to attract new customers; (vii) changes in technology and theability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may includefailure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated;(ix) the loss of key executives or employees; (x) changes in consumer spending; and (xi) unexpected outcomes of existingor new litigation involving the Company. These risks and uncertainties should be considered in evaluating forward-looking statementsand undue reliance should not be placed on such statements. Additional information concerning the Company and its business, includingadditional factors that could materially affect the Company’s financial results, is included in the Company’s filingswith the Securities and Exchange Commission.
Contacts:
| Todd A. Gipple | Kim K. Garrett |
|---|---|
| President | Vice President |
| Chief Operating Officer | Corporate Communications |
| Chief Financial Officer | Investor Relations Manager |
| (309) 743-7745 | (319) 743-7006 |
| tgipple@qcrh.com | kgarret@qcrh.com |
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QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| As of | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||
| 2020 | 2020 | 2020 | 2020 | 2019 | ||||||
| (dollars in thousands) | ||||||||||
| CONDENSED BALANCE SHEET | ||||||||||
| Cash and due from banks | $ | 61,329 | $ | 68,932 | $ | 88,577 | $ | 169,827 | $ | 76,254 |
| Federal funds sold and interest-bearing deposits | 95,676 | 302,668 | 142,900 | 206,708 | 157,691 | |||||
| Securities | 838,131 | 782,088 | 748,883 | 684,571 | 611,341 | |||||
| Net loans/leases | 4,166,753 | 4,168,395 | 4,079,432 | 3,662,435 | 3,654,204 | |||||
| Intangibles | 11,381 | 11,902 | 13,872 | 14,421 | 14,970 | |||||
| Goodwill | 74,066 | 74,066 | 74,248 | 74,248 | 74,748 | |||||
| Derivatives | 222,757 | 236,381 | 225,164 | 195,973 | 87,827 | |||||
| Other assets | 212,704 | 220,128 | 220,920 | 213,134 | 220,049 | |||||
| Assets held for sale | - | - | 10,765 | 10,758 | 11,966 | |||||
| Total assets | $ | 5,682,797 | $ | 5,864,560 | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 |
| Total deposits | $ | 4,599,137 | $ | 4,672,268 | $ | 4,349,775 | $ | 4,170,478 | $ | 3,911,051 |
| Total borrowings | 177,114 | 226,962 | 376,250 | 244,399 | 278,955 | |||||
| Derivatives | 229,270 | 244,510 | 233,589 | 203,744 | 88,436 | |||||
| Other liabilities | 83,483 | 148,207 | 87,539 | 71,185 | 90,254 | |||||
| Liabilities held for sale | - | - | 1,588 | 3,130 | 5,003 | |||||
| Total stockholders' equity | 593,793 | 572,613 | 556,020 | 539,139 | 535,351 | |||||
| Total liabilities and stockholders' equity | $ | 5,682,797 | $ | 5,864,560 | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 |
| ANALYSIS OF LOAN PORTFOLIO | ||||||||||
| Loan/lease mix: | ||||||||||
| Commercial and industrial loans | $ | 1,726,723 | $ | 1,823,049 | $ | 1,850,110 | $ | 1,484,979 | $ | 1,507,825 |
| Commercial real estate loans | 2,107,629 | 1,999,715 | 1,869,162 | 1,783,086 | 1,736,396 | |||||
| Direct financing leases | 66,016 | 73,011 | 79,105 | 83,324 | 87,869 | |||||
| Residential real estate loans | 252,121 | 245,032 | 241,069 | 237,742 | 239,904 | |||||
| Installment and other consumer loans | 91,302 | 102,471 | 99,150 | 106,728 | 109,352 | |||||
| Deferred loan/lease origination costs, net of fees | 7,338 | 4,699 | 1,663 | 8,809 | 8,859 | |||||
| Total loans/leases | $ | 4,251,129 | $ | 4,247,977 | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 |
| Less allowance for estimated losses on loans/leases | 84,376 | 79,582 | 60,827 | 42,233 | 36,001 | |||||
| Net loans/leases | $ | 4,166,753 | $ | 4,168,395 | $ | 4,079,432 | $ | 3,662,435 | $ | 3,654,204 |
| ANALYSIS OF SECURITIES PORTFOLIO | ||||||||||
| Securities mix: | ||||||||||
| U.S. government sponsored agency securities | $ | 15,336 | $ | 18,437 | $ | 17,472 | $ | 19,457 | $ | 20,078 |
| Municipal securities | 627,523 | 569,075 | 526,192 | 493,664 | 447,853 | |||||
| Residential mortgage-backed and related securities | 132,842 | 134,147 | 145,672 | 122,853 | 120,587 | |||||
| Asset backed securities | 40,683 | 40,665 | 39,797 | 28,499 | 16,887 | |||||
| Other securities | 21,747 | 19,764 | 19,750 | 20,098 | 5,936 | |||||
| Total securities | $ | 838,131 | $ | 782,088 | $ | 748,883 | $ | 684,571 | $ | 611,341 |
| ANALYSIS OF DEPOSITS | ||||||||||
| Deposit mix: | ||||||||||
| Noninterest-bearing demand deposits | $ | 1,145,378 | $ | 1,175,085 | $ | 1,177,482 | $ | 829,782 | $ | 777,224 |
| Interest-bearing demand deposits | 2,987,469 | 2,938,194 | 2,488,755 | 2,440,907 | 2,407,502 | |||||
| Time deposits | 460,659 | 499,021 | 560,982 | 617,979 | 571,343 | |||||
| Brokered deposits | 5,631 | 59,968 | 122,556 | 281,810 | 154,982 | |||||
| Total deposits | $ | 4,599,137 | $ | 4,672,268 | $ | 4,349,775 | $ | 4,170,478 | $ | 3,911,051 |
| ANALYSIS OF BORROWINGS | ||||||||||
| Borrowings mix: | ||||||||||
| Term FHLB advances | $ | - | $ | 40,000 | $ | 90,000 | $ | 55,000 | $ | 50,000 |
| Overnight FHLB advances | 15,000 | - | 55,000 | 40,000 | 109,300 | |||||
| FRB borrowings | - | - | 100,000 | 30,000 | - | |||||
| Other short-term borrowings | 5,430 | 30,430 | 24,818 | 13,067 | 13,423 | |||||
| Subordinated notes | 118,691 | 118,577 | 68,516 | 68,455 | 68,394 | |||||
| Junior subordinated debentures | 37,993 | 37,955 | 37,916 | 37,877 | 37,838 | |||||
| Total borrowings | $ | 177,114 | $ | 226,962 | $ | 376,250 | $ | 244,399 | $ | 278,955 |
| 5 |
| --- |
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Quarter Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||
| 2020 | 2020 | 2020 | 2020 | 2019 | |||||||||
| (dollars in thousands, except per share data) | |||||||||||||
| INCOME STATEMENT | |||||||||||||
| Interest income | $ | 49,851 | $ | 50,890 | $ | 48,650 | $ | 48,982 | $ | 52,977 | |||
| Interest expense | 6,144 | 6,309 | 7,694 | 11,276 | 13,058 | ||||||||
| Net interest income | 43,707 | 44,581 | 40,956 | 37,706 | 39,919 | ||||||||
| Provision for loan/lease losses | 7,080 | 20,342 | 19,915 | 8,367 | 979 | ||||||||
| Net interest income after provision for loan/lease losses | $ | 36,627 | $ | 24,239 | $ | 21,041 | $ | 29,339 | $ | 38,940 | |||
| Trust department fees | $ | 2,388 | $ | 2,280 | $ | 2,227 | $ | 2,312 | $ | 2,365 | |||
| Investment advisory and management fees | 926 | 1,266 | 1,399 | 1,727 | 1,589 | ||||||||
| Deposit service fees | 1,875 | 1,403 | 1,286 | 1,477 | 1,787 | ||||||||
| Gain on sales of residential real estate loans | 1,462 | 1,370 | 1,196 | 652 | 823 | ||||||||
| Gain on sales of government guaranteed portions of loans | 224 | - | - | - | 159 | ||||||||
| Swap fee income | 21,402 | 26,688 | 19,927 | 6,804 | 7,409 | ||||||||
| Securities gains, net | 617 | 1,802 | 65 | - | 26 | ||||||||
| Earnings on bank-owned life insurance | 461 | 502 | 612 | 329 | 533 | ||||||||
| Debit card fees | 923 | 946 | 775 | 758 | 766 | ||||||||
| Correspondent banking fees | 270 | 220 | 198 | 215 | 194 | ||||||||
| Gain on sale of assets and liabilities of subsidiary | - | - | - | - | 12,286 | ||||||||
| Other | 1,469 | 1,482 | 941 | 922 | 1,868 | ||||||||
| Total noninterest income | $ | 32,017 | $ | 37,959 | $ | 28,626 | $ | 15,196 | $ | 29,805 | |||
| Salaries and employee benefits | $ | 30,446 | $ | 25,999 | $ | 21,304 | $ | 18,519 | $ | 24,220 | |||
| Occupancy and equipment expense | 4,917 | 3,807 | 3,748 | 4,032 | 4,019 | ||||||||
| Professional and data processing fees | 3,871 | 3,758 | 3,646 | 3,369 | 3,570 | ||||||||
| Post-acquisition compensation, transition and integration costs | 25 | (32 | ) | 70 | 151 | 1,855 | |||||||
| Disposition costs | 64 | 192 | (83 | ) | 517 | 3,325 | |||||||
| FDIC insurance, other insurance and regulatory fees | 1,272 | 1,301 | 908 | 683 | 523 | ||||||||
| Loan/lease expense | 465 | 403 | 339 | 228 | 349 | ||||||||
| Net cost of (income from) and gains/losses on operations of other real estate | (4 | ) | 16 | (332 | ) | 13 | 232 | ||||||
| Advertising and marketing | 1,276 | 750 | 552 | 682 | 1,670 | ||||||||
| Bank service charges | 523 | 488 | 501 | 504 | 516 | ||||||||
| Losses on liability extinguishment | 1,457 | 1,874 | 429 | 147 | 288 | ||||||||
| Correspondent banking expense | 205 | 205 | 212 | 216 | 216 | ||||||||
| Intangibles amortization | 521 | 531 | 548 | 549 | 560 | ||||||||
| Goodwill impairment | - | - | - | 500 | 3,000 | ||||||||
| Loss on sale of subsidiary | (147 | ) | 305 | - | - | - | |||||||
| Other | 1,473 | 1,241 | 1,288 | 1,313 | 1,951 | ||||||||
| Total noninterest expense | $ | 46,364 | $ | 40,838 | $ | 33,130 | $ | 31,423 | $ | 46,294 | |||
| Net income before income taxes | $ | 22,280 | $ | 21,360 | $ | 16,537 | $ | 13,112 | $ | 22,451 | |||
| Federal and state income tax expense | 4,009 | 4,016 | 2,798 | 1,884 | 6,560 | ||||||||
| Net income | $ | 18,271 | $ | 17,344 | $ | 13,739 | $ | 11,228 | $ | 15,891 | |||
| Basic EPS | $ | 1.16 | $ | 1.10 | $ | 0.87 | $ | 0.71 | $ | 1.01 | |||
| Diluted EPS | $ | 1.14 | $ | 1.09 | $ | 0.86 | $ | 0.70 | $ | 0.99 | |||
| Weighted average common shares outstanding | 15,775,596 | 15,767,152 | 15,747,056 | 15,796,796 | 15,772,703 | ||||||||
| Weighted average common and common equivalent shares outstanding | 15,973,054 | 15,923,578 | 15,895,336 | 16,011,456 | 16,033,043 |
| 6 |
| --- |
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Year Ended | ||||||
|---|---|---|---|---|---|---|
| Decenber 31, | Decenber 31, | |||||
| 2020 | 2019 | |||||
| (dollars in thousands, except per share data) | ||||||
| INCOME STATEMENT | ||||||
| Interest income | $ | 198,373 | $ | 216,076 | ||
| Interest expense | 31,423 | 60,517 | ||||
| Net interest income | 166,950 | 155,559 | ||||
| Provision for loan/lease losses | 55,704 | 7,066 | ||||
| Net interest income after provision for loan/lease losses | $ | 111,246 | $ | 148,493 | ||
| Trust department fees | $ | 9,207 | $ | 9,559 | ||
| Investment advisory and management fees | 5,318 | 6,995 | ||||
| Deposit service fees | 6,041 | 6,812 | ||||
| Gain on sales of residential real estate loans | 4,680 | 2,571 | ||||
| Gain on sales of government guaranteed portions of loans | 224 | 748 | ||||
| Swap fee income | 74,821 | 28,295 | ||||
| Securities gains (losses), net | 2,484 | (30 | ) | |||
| Earnings on bank-owned life insurance | 1,904 | 1,973 | ||||
| Debit card fees | 3,402 | 3,357 | ||||
| Correspondent banking fees | 903 | 773 | ||||
| Gain on sale of assets and liabilities of subsidiary | - | 12,286 | ||||
| Other | 4,814 | 5,429 | ||||
| Total noninterest income | $ | 113,798 | $ | 78,768 | ||
| Salaries and employee benefits | $ | 96,268 | $ | 92,063 | ||
| Occupancy and equipment expense | 16,504 | 15,106 | ||||
| Professional and data processing fees | 14,644 | 13,381 | ||||
| Post-acquisition compensation, transition and integration costs | 214 | 3,582 | ||||
| Disposition costs | 690 | 3,325 | ||||
| FDIC insurance, other insurance and regulatory fees | 4,164 | 2,955 | ||||
| Loan/lease expense | 1,435 | 1,097 | ||||
| Net cost of (income from) and gains/losses on operation of other real estate | (307 | ) | 3,789 | |||
| Advertising and marketing | 3,260 | 4,548 | ||||
| Bank service charges | 2,016 | 2,009 | ||||
| Losses on liability extinguishment | 3,907 | 436 | ||||
| Correspondent banking expense | 838 | 836 | ||||
| Intangibles amortization | 2,149 | 2,266 | ||||
| Goodwill impairment | 500 | 3,000 | ||||
| Loss on sale of subsidiary | 158 | - | ||||
| Other | 5,315 | 6,841 | ||||
| Total noninterest expense | $ | 151,755 | $ | 155,234 | ||
| Net income before taxes | $ | 73,289 | $ | 72,027 | ||
| Income tax expense | 12,707 | 14,619 | ||||
| Net income | $ | 60,582 | $ | 57,408 | ||
| Basic EPS | $ | 3.89 | $ | 3.65 | ||
| Diluted EPS | $ | 3.80 | $ | 3.60 | ||
| Weighted average common shares outstanding | 15,571,650 | 15,730,016 | ||||
| Weighted average common and common equivalent shares outstanding | 15,952,637 | 15,967,775 |
7
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| As of and for the Quarter Ended | For the Year Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||
| 2020 | 2020 | 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||
| COMMON SHARE DATA | |||||||||||||||||||||
| Common shares outstanding | 15,805,711 | 15,792,357 | 15,790,611 | 15,773,736 | 15,828,098 | ||||||||||||||||
| Book value per common share (1) | $ | 37.57 | $ | 36.26 | $ | 35.21 | $ | 34.18 | $ | 33.82 | |||||||||||
| Tangible book value per common share (2) | $ | 32.16 | $ | 30.82 | $ | 29.63 | $ | 28.56 | $ | 28.15 | |||||||||||
| Closing stock price | $ | 39.59 | $ | 27.41 | $ | 31.18 | $ | 27.07 | $ | 43.86 | |||||||||||
| Market capitalization | $ | 625,748 | $ | 432,869 | $ | 492,351 | $ | 426,995 | $ | 694,220 | |||||||||||
| Market price / book value | 105.38 | % | 75.60 | % | 88.55 | % | 79.20 | % | 129.69 | % | |||||||||||
| Market price / tangible book value | 123.09 | % | 88.95 | % | 105.23 | % | 94.79 | % | 155.76 | % | |||||||||||
| Earnings per common share (basic) LTM (3) | $ | 3.84 | $ | 3.69 | $ | 3.55 | $ | 3.54 | $ | 3.65 | |||||||||||
| Price earnings ratio LTM (3) | 10.31 | x | 7.43 | x | 8.78 | x | 7.65 | x | 12.02 | x | |||||||||||
| TCE / TA (4) | 9.08 | % | 8.42 | % | 8.48 | % | 8.76 | % | 9.25 | % | |||||||||||
| CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||||||||||||||||
| Beginning balance | $ | 572,613 | $ | 556,020 | $ | 539,139 | $ | 535,351 | $ | 519,743 | |||||||||||
| Net income | 18,271 | 17,344 | 13,739 | 11,228 | 15,891 | ||||||||||||||||
| Other comprehensive income (loss), net of tax | 3,157 | (614 | ) | 3,622 | (3,691 | ) | (683 | ) | |||||||||||||
| Common stock cash dividends declared | (947 | ) | (945 | ) | (945 | ) | (942 | ) | (947 | ) | |||||||||||
| Proceeds from issuance of 9,400 shares<br>of common stock as a result of the performance based targets met for Bates Companies | - | - | - | - | 399 | ||||||||||||||||
| Repurchase and cancellation of 100,932<br>shares of common stock as a result of a share repurchase program | - | - | - | (3,780 | ) | - | |||||||||||||||
| Other (5) | 699 | 808 | 465 | 973 | 948 | ||||||||||||||||
| Ending balance | $ | 593,793 | $ | 572,613 | $ | 556,020 | $ | 539,139 | $ | 535,351 | |||||||||||
| REGULATORY CAPITAL RATIOS (6): | |||||||||||||||||||||
| Total risk-based capital ratio | 15.13 | % | 14.93 | % | 13.71 | % | 13.54 | % | 13.33 | % | |||||||||||
| Tier 1 risk-based capital ratio | 11.49 | % | 11.25 | % | 11.07 | % | 11.16 | % | 11.04 | % | |||||||||||
| Tier 1 leverage capital ratio | 9.49 | % | 9.21 | % | 8.91 | % | 10.19 | % | 9.53 | % | |||||||||||
| Common equity tier 1 ratio | 10.69 | % | 10.44 | % | 10.25 | % | 10.31 | % | 10.18 | % | |||||||||||
| KEY PERFORMANCE RATIOS AND OTHER METRICS | |||||||||||||||||||||
| Return on average assets (annualized) | 1.25 | % | 1.19 | % | 0.95 | % | 0.91 | % | 1.23 | % | 1.08 | % | 1.09 | % | |||||||
| Return on average total equity (annualized) | 12.43 | % | 12.06 | % | 9.88 | % | 8.23 | % | 11.93 | % | 10.70 | % | 11.09 | % | |||||||
| Net interest margin | 3.25 | % | 3.36 | % | 3.14 | % | 3.40 | % | 3.36 | % | 3.28 | % | 3.29 | % | |||||||
| Net interest margin (TEY) (Non-GAAP)(7) | 3.45 | % | 3.51 | % | 3.27 | % | 3.56 | % | 3.51 | % | 3.44 | % | 3.43 | % | |||||||
| Efficiency ratio (Non-GAAP) (8) | 61.23 | % | 49.48 | % | 47.61 | % | 59.40 | % | 66.40 | % | 54.05 | % | 66.18 | % | |||||||
| Gross loans and leases / total assets (10) | 74.81 | % | 72.43 | % | 74.01 | % | 70.95 | % | 75.36 | % | 74.81 | % | 74.80 | % | |||||||
| Gross loans and leases / total deposits (10) | 92.43 | % | 90.92 | % | 95.18 | % | 88.83 | % | 94.35 | % | 92.43 | % | 94.95 | % | |||||||
| Effective tax rate | 17.99 | % | 18.80 | % | 16.92 | % | 14.37 | % | 29.22 | % | 17.34 | % | 16.26 | % | |||||||
| Full-time equivalent employees | 714 | 687 | 712 | 703 | 697 | 714 | 766 | ||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||||
| Assets | $ | 5,842,299 | $ | 5,820,555 | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,604,074 | $ | 5,088,055 | |||||||
| Loans/leases | 4,250,951 | 4,185,275 | 3,999,523 | 3,686,410 | 3,868,435 | 4,031,567 | 3,853,918 | ||||||||||||||
| Deposits | 4,742,602 | 4,726,881 | 4,732,626 | 3,954,707 | 4,227,572 | 4,540,266 | 4,228,418 | ||||||||||||||
| Total stockholders' equity | 588,042 | 575,061 | 556,047 | 545,548 | 532,624 | 566,240 | 507,383 | ||||||||||||||
| (1) | Includes accumulated other<br>comprehensive income (loss). | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | Includes accumulated other<br>comprehensive income (loss) and excludes intangible assets. | ||||||||||||||||||||
| (3) | LTM : Last twelve months. | ||||||||||||||||||||
| (4) | TCE / TCA : tangible common<br>equity / total tangible assets. See GAAP to non-GAAP reconciliations. | ||||||||||||||||||||
| (5) | Includes mostly common<br>stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation. | ||||||||||||||||||||
| (6) | Ratios for the current<br>quarter are subject to change upon final calculation for regulatory filings due after earnings release. | ||||||||||||||||||||
| (7) | TEY : Tax equivalent yield. See<br>GAAP to Non-GAAP reconciliations. | ||||||||||||||||||||
| (8) | See GAAP to Non-GAAP reconciliations. | ||||||||||||||||||||
| (9) | Growth in full-time equivalents<br>from September 30, 2020 to December 31, 2020 due to the addition of new positions created to build scale. Decrease from June 30,<br>2020 to September 30, 2020 due to sale of Bates<br>Companies and interns employed only during the summer. | ||||||||||||||||||||
| (10) | Excludes assets held for<br>sale as of Deccember 31, 2019, March 31, 2020 and June 30, 2020. |
8
QCR Holdings,Inc. Consolidated Financial Highlights(Unaudited)
| For<br> the Quarter Ended | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December<br> 31, 2020 | September<br> 30, 2020 | December<br> 31, 2019 | |||||||||||||||||||
| ANALYSIS<br> OF NET INTEREST INCOME AND MARGIN | Average<br> <br><br> Balance | Interest<br> <br><br> Earned or <br><br> Paid | Average<br> <br><br> Yield or Cost | Average<br><br> Balance | Interest<br> <br><br> Earned or <br><br>Paid | Average<br> <br><br> Yield or Cost | Average<br><br> Balance | Interest<br> <br><br> Earned or <br><br> Paid | Average<br> <br><br> Yield or Cost | ||||||||||||
| (dollars in<br> thousands) | |||||||||||||||||||||
| Fed<br> funds sold | $ | 1,216 | $ | 1 | 0.08 | % | $ | 2,205 | $ | 1 | 0.18 | % | $ | 2,933 | $ | 12 | 1.62 | % | |||
| Interest-bearing<br> deposits at financial institutions | 279,024 | 82 | 0.12 | % | 321,679 | 92 | 0.11 | % | 208,040 | 868 | 1.66 | % | |||||||||
| Securities (1) | 795,696 | 7,207 | 3.62 | % | 749,425 | 6,836 | 3.66 | % | 610,676 | 5,913 | 3.84 | % | |||||||||
| Restricted<br> investment securities | 18,790 | 236 | 4.92 | % | 19,714 | 249 | 4.94 | % | 21,226 | 283 | 5.29 | % | |||||||||
| Loans<br> (1) | 4,250,951 | 44,956 | 4.21 | % | 4,185,275 | 45,654 | 4.34 | % | 3,868,435 | 47,684 | 4.89 | % | |||||||||
| Total<br> earning assets (1) | $ | 5,345,677 | $ | 52,482 | 3.91 | % | $ | 5,278,298 | $ | 52,832 | 3.99 | % | $ | 4,711,310 | $ | 54,760 | 4.61 | % | |||
| Interest-bearing<br> deposits | $ | 3,033,119 | $ | 2,060 | 0.27 | % | $ | 2,932,988 | $ | 2,086 | 0.28 | % | $ | 2,520,696 | $ | 6,547 | 1.03 | % | |||
| Time<br> deposits | 530,813 | 1,752 | 1.31 | % | 638,031 | 2,399 | 1.50 | % | 865,392 | 4,631 | 2.12 | % | |||||||||
| Short-term<br> borrowings | 19,115 | 3 | 0.17 | % | 26,996 | 11 | 0.17 | % | 19,491 | 87 | 1.77 | % | |||||||||
| Federal<br> Home Loan Bank advances | 33,207 | 80 | 0.94 | % | 57,078 | 211 | 1.45 | % | 87,527 | 210 | 0.95 | % | |||||||||
| Subordinated<br> debentures | 118,612 | 1,678 | 5.66 | % | 77,783 | 1,031 | 5.30 | % | 68,356 | 1,004 | 5.83 | % | |||||||||
| Junior<br> subordinated debentures | 37,969 | 571 | 5.88 | % | 37,936 | 571 | 5.89 | % | 37,813 | 579 | 6.07 | % | |||||||||
| Total<br> interest-bearing liabilities | $ | 3,772,835 | $ | 6,144 | 0.64 | % | $ | 3,770,812 | $ | 6,309 | 0.66 | % | $ | 3,599,275 | $ | 13,058 | 1.44 | % | |||
| Net<br> interest income (1) | $ | 46,338 | $ | 46,523 | $ | 41,702 | |||||||||||||||
| Net<br> interest margin (2) | 3.25 | % | 3.36 | % | 3.36 | % | |||||||||||||||
| Net<br> interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.45 | % | 3.51 | % | 3.51 | % | |||||||||||||||
| Adjusted<br> net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.37 | % | 3.44 | % | 3.43 | % | |||||||||||||||
| For<br> the Year Ended | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| December<br> 31, 2020 | December<br> 31, 2019 | ||||||||||||||||||||
| Average<br><br> Balance | Interest<br><br> Earned or <br> Paid | Average<br> <br> Yield or Cost | Average<br><br> Balance | Interest<br><br> Earned or <br><br>Paid | Average<br><br> Yield or Cost | ||||||||||||||||
| (dollars in<br> thousands) | |||||||||||||||||||||
| Fed<br> funds sold | $ | 2,398 | $ | 19 | 0.79 | % | $ | 8,898 | $ | 204 | 2.29 | % | |||||||||
| Interest-bearing<br> deposits at financial institutions | 315,616 | 669 | 0.21 | % | 179,635 | 3,910 | 2.18 | % | |||||||||||||
| Securities (1) | 715,808 | 26,773 | 3.74 | % | 635,650 | 24,150 | 3.80 | % | |||||||||||||
| Restricted<br> investment securities | 20,270 | 1,031 | 5.00 | % | 21,559 | 1,174 | 5.45 | % | |||||||||||||
| Loans<br> (1) | 4,031,567 | 178,097 | 4.42 | % | 3,857,547 | 193,365 | 5.01 | % | |||||||||||||
| Total<br> earning assets (1) | $ | 5,085,659 | $ | 206,589 | 4.06 | % | $ | 4,703,289 | $ | 222,803 | 4.74 | % | |||||||||
| Interest-bearing<br> deposits | $ | 2,797,669 | $ | 11,980 | 0.43 | % | $ | 2,443,989 | $ | 29,898 | 1.22 | % | |||||||||
| Time<br> deposits | 690,222 | 11,289 | 1.64 | % | 966,745 | 20,977 | 2.17 | % | |||||||||||||
| Short-term<br> borrowings | 22,625 | 84 | 0.37 | % | 16,837 | 363 | 2.16 | % | |||||||||||||
| Federal<br> Home Loan Bank advances | 74,167 | 1,087 | 1.44 | % | 108,536 | 2,895 | 2.67 | % | |||||||||||||
| Other<br> borrowings | - | - | 0.00 | % | 13,563 | 512 | 3.77 | % | |||||||||||||
| Subordinated<br> debentures | 83,404 | 4,697 | 5.63 | % | 60,883 | 3,564 | 5.85 | % | |||||||||||||
| Junior<br> subordinated debentures | 37,913 | 2,286 | 5.93 | % | 37,751 | 2,308 | 6.11 | % | |||||||||||||
| Total<br> interest-bearing liabilities | $ | 3,706,000 | $ | 31,423 | 0.85 | % | $ | 3,648,304 | $ | 60,517 | 1.66 | % | |||||||||
| Net<br> interest income (1) | $ | 175,166 | $ | 162,286 | |||||||||||||||||
| Net<br> interest margin (2) | 3.28 | % | 3.31 | % | |||||||||||||||||
| Net<br> interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.44 | % | 3.45 | % | |||||||||||||||||
| Adjusted<br> net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.38 | % | 3.36 | % |
(1) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate.
(2) See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented.
(3) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.
9
QCR Holdings,Inc. Consolidated Financial Highlights(Unaudited)
| As<br> of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||
| (dollars in<br> thousands, except per share data) | |||||||||||||||
| ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES | |||||||||||||||
| Beginning balance | $ | 79,582 | $ | 60,827 | $ | 42,233 | $ | 36,001 | $ | 36,116 | |||||
| Provision charged to expense | 7,080 | 20,342 | 19,915 | 8,367 | 979 | ||||||||||
| Loans/leases charged off | (2,779 | ) | (1,819 | ) | (1,450 | ) | (2,335 | ) | (1,182 | ) | |||||
| Recoveries on loans/leases<br> previously charged off | 493 | 232 | 129 | 200 | 88 | ||||||||||
| Ending balance | $ | 84,376 | $ | 79,582 | $ | 60,827 | $ | 42,233 | $ | 36,001 | |||||
| NONPERFORMING<br> ASSETS | |||||||||||||||
| Nonaccrual loans/leases | $ | 13,940 | $ | 17,597 | $ | 12,099 | $ | 11,628 | $ | 7,902 | |||||
| Accruing loans/leases past due 90 days or more | 3 | 86 | 99 | 1,419 | 33 | ||||||||||
| Troubled debt restructures<br> - accruing | 741 | 1,061 | 920 | 545 | 979 | ||||||||||
| Total nonperforming loans/leases | 14,684 | 18,744 | 13,118 | 13,592 | 8,914 | ||||||||||
| Other real estate owned | 20 | 125 | 157 | 3,298 | 4,129 | ||||||||||
| Other repossessed assets | 135 | 110 | 25 | 45 | 41 | ||||||||||
| Total<br> nonperforming assets | $ | 14,839 | $ | 18,979 | $ | 13,300 | $ | 16,935 | $ | 13,084 | |||||
| ASSET QUALITY<br> RATIOS | |||||||||||||||
| Nonperforming assets / total assets (1) | 0.26 | % | 0.32 | % | 0.24 | % | 0.32 | % | 0.27 | % | |||||
| Allowance / total loans/leases (2) | 1.98 | % | 1.87 | % | 1.47 | % | 1.14 | % | 0.98 | % | |||||
| Allowance / nonperforming loans/leases (2) | 574.61 | % | 424.57 | % | 463.69 | % | 310.72 | % | 403.87 | % | |||||
| Net charge-offs as a % of average loans/leases | 0.05 | % | 0.04 | % | 0.03 | % | 0.06 | % | 0.03 | % | |||||
| INTERNALLY<br> ASSIGNED RISK RATING (3) | |||||||||||||||
| Special mention (rating 6) | $ | 71,482 | $ | 79,587 | $ | 104,608 | $ | 34,738 | $ | 19,952 | |||||
| Substandard (rating 7) | 66,081 | 70,409 | 39,855 | 36,612 | 33,649 | ||||||||||
| Doubtful (rating 8) | - | - | - | - | - | ||||||||||
| $ | 137,563 | $ | 149,996 | $ | 144,463 | $ | 71,350 | $ | 53,601 | ||||||
| Criticized loans (4) | $ | 137,563 | $ | 149,996 | $ | 144,463 | $ | 71,350 | $ | 53,601 | |||||
| Classified loans (5) | 66,081 | 70,409 | 39,855 | 36,612 | 33,649 | ||||||||||
| Criticized loans as a % of total loans/leases | 3.24 | % | 3.53 | % | 3.49 | % | 1.93 | % | 1.45 | % | |||||
| Classified loans as a % of total loans/leases | 1.55 | % | 1.66 | % | 0.96 | % | 0.99 | % | 0.91 | % |
(1) Excludes assets held for sale.
(2) Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminates the allowance and impacts these ratios.
(3) Amounts exclude the government guaranteed portion, if any. The Company assigns internal risk ratings of Pass (Rating 2) for the government guaranteed portion.
(4) Criticized loans are defined as C&I and CRE loans with internally assigned risk ratings of 6, 7, or 8, regardless of performance.
(5) Classified loans are defined as C&I and CRE loans with internally assigned risk ratings of 7 or 8, regardless of performance.
10
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Quarter Ended | For the Year Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||
| SELECT FINANCIAL DATA - SUBSIDIARIES | 2020 | **** | 2020 | **** | 2019 | **** | 2020 | **** | 2019 | **** | |||||
| (dollars in thousands) | |||||||||||||||
| TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 2,149,469 | $ | 2,205,935 | $ | 1,682,477 | |||||||||
| m2 Equipment Finance, LLC | 243,090 | 241,452 | 239,794 | ||||||||||||
| Cedar Rapids Bank and Trust | 1,952,308 | 2,012,182 | 1,572,324 | ||||||||||||
| Community State Bank - Ankeny | 1,000,670 | 937,017 | 853,834 | ||||||||||||
| Springfield First Community Bank | 779,955 | 803,478 | 748,753 | ||||||||||||
| TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,866,635 | $ | 1,955,360 | $ | 1,458,587 | |||||||||
| Cedar Rapids Bank and Trust | 1,378,108 | 1,399,267 | 1,248,598 | ||||||||||||
| Community State Bank - Ankeny | 875,400 | 822,261 | 735,089 | ||||||||||||
| Springfield First Community Bank | 569,036 | 592,528 | 531,498 | ||||||||||||
| TOTAL LOANS & LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,556,762 | $ | 1,556,798 | $ | 1,329,667 | |||||||||
| m2 Equipment Finance, LLC | 244,325 | 241,783 | 236,735 | ||||||||||||
| Cedar Rapids Bank and Trust | 1,362,056 | 1,387,372 | 1,174,963 | ||||||||||||
| Community State Bank - Ankeny | 707,681 | 683,086 | 639,270 | ||||||||||||
| Springfield First Community Bank | 624,629 | 620,721 | 546,306 | ||||||||||||
| TOTAL LOANS & LEASES / TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | 83 | % | 80 | % | 91 | % | |||||||||
| Cedar Rapids Bank and Trust | 99 | % | 99 | % | 94 | % | |||||||||
| Community State Bank - Ankeny | 81 | % | 83 | % | 87 | % | |||||||||
| Springfield First Community Bank | 110 | % | 105 | % | 103 | % | |||||||||
| TOTAL LOANS & LEASES / TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 72 | % | 71 | % | 79 | % | |||||||||
| Cedar Rapids Bank and Trust | 70 | % | 69 | % | 75 | % | |||||||||
| Community State Bank - Ankeny | 71 | % | 73 | % | 75 | % | |||||||||
| Springfield First Community Bank | 80 | % | 77 | % | 73 | % | |||||||||
| ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | 1.95 | % | 1.86 | % | 1.03 | % | |||||||||
| m2 Equipment Finance, LLC | 2.63 | % | 2.53 | % | 1.51 | % | |||||||||
| Cedar Rapids Bank and Trust (2) | 2.35 | % | 2.22 | % | 1.14 | % | |||||||||
| Community State Bank - Ankeny (2) | 2.02 | % | 1.92 | % | 1.04 | % | |||||||||
| Springfield First Community Bank (2) | 1.23 | % | 1.09 | % | 0.41 | % | |||||||||
| RETURN ON AVERAGE ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 1.52 | % | 0.56 | % | 1.44 | % | 0.99 | % | 1.30 | % | |||||
| Cedar Rapids Bank and Trust | 0.59 | % | 2.66 | % | 1.82 | % | 1.81 | % | 1.84 | % | |||||
| Community State Bank - Ankeny | 3.25 | % | 0.82 | % | 1.38 | % | 1.25 | % | 1.34 | % | |||||
| Springfield First Community Bank | 3.02 | % | 1.52 | % | 1.44 | % | 1.74 | % | 1.32 | % | |||||
| NET INTEREST MARGIN PERCENTAGE (3) | |||||||||||||||
| Quad City Bank and Trust (1) | 3.19 | % | 3.07 | % | 3.55 | % | 3.17 | % | 3.39 | % | |||||
| Cedar Rapids Bank and Trust (5) | 3.51 | % | 3.54 | % | 3.49 | % | 3.47 | % | 3.43 | % | |||||
| Community State Bank - Ankeny (4) | 3.77 | % | 4.12 | % | 4.35 | % | 3.89 | % | 4.33 | % | |||||
| Springfield First Community Bank (6) | 4.03 | % | 3.75 | % | 3.95 | % | 3.87 | % | 3.93 | % | |||||
| ACQUISITION-RELATED<br> AMORTIZATION/ACCRETION INCLUDED IN NET INTEREST MARGIN, NET | |||||||||||||||
| Cedar Rapids Bank and Trust | $ | 103 | $ | 217 | $ | 103 | $ | 430 | $ | 547 | |||||
| Community State Bank - Ankeny | 132 | 56 | 94 | 325 | 877 | ||||||||||
| Springfield First Community Bank | 880 | 598 | 775 | 2,671 | 3,088 | ||||||||||
| QCR Holdings, Inc. (7) | (38 | ) | (38 | ) | (41 | ) | (155 | ) | (168 | ) | |||||
| (1) | Quad<br> City Bank and Trust figures include m2 Equipment Finance, LLC, as this entity is wholly-owned and consolidated with the<br> Bank. m2 Equipment Finance, LLC is also presented separately for certain (applicable) measurements. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | Upon acquisition and per GAAP, acquired loans are recorded at market value, which eliminates the allowance and impacts this ratio. | ||||||||||||||
| (3) | Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate. | ||||||||||||||
| (4) | Community<br> State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those<br> adjustments, net interest margin would have been 3.69% for the quarter ended December 31, 2020, 4.06% for the quarter ended September 30, 2020 and 4.27% for the quarter ended December 31, 2019. | ||||||||||||||
| (5) | Cedar<br> Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding<br> those adjustments, net interest margin would have been 3.47% for the quarter ended December 31, 2020, 3.46% for the quarter ended September 30, 2020 and 3.46% for the quarter ended December 31, 2019. | ||||||||||||||
| (6) | Springfield<br> First Community Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding<br> those adjustments, net interest margin would have been 3.59% for the<br> quarter ended December 31, 2020, 4.02% for the quarter ended September 30, 2020 and 3.47% for the quarter ended December 31, 2019. | ||||||||||||||
| (7) | Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013. |
| 11 |
| --- |
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| GAAP TO NON-GAAP RECONCILIATIONS | 2020 | **** | 2020 | **** | 2020 | **** | 2020 | **** | 2019 | **** | |||||
| (dollars in thousands, except per share data) | |||||||||||||||
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1) | |||||||||||||||
| Stockholders' equity (GAAP) | $ | 593,793 | $ | 572,613 | $ | 556,020 | $ | 539,139 | $ | 535,351 | |||||
| Less: Intangible assets | 85,447 | 85,968 | 88,120 | 88,669 | 89,717 | ||||||||||
| Tangible common equity (non-GAAP) | $ | 508,346 | $ | 486,645 | $ | 467,900 | $ | 450,470 | $ | 445,634 | |||||
| Total assets (GAAP) | $ | 5,682,797 | $ | 5,864,560 | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | |||||
| Less: Intangible assets | 85,447 | 85,968 | 88,120 | 88,669 | 89,717 | ||||||||||
| Tangible assets (non-GAAP) | $ | 5,597,350 | $ | 5,778,592 | $ | 5,516,641 | $ | 5,143,406 | $ | 4,819,333 | |||||
| Tangible common equity to tangible assets ratio (non-GAAP) | **** | 9.08 | % | **** | 8.42 | % | **** | 8.48 | % | **** | 8.76 | % | **** | 9.25 | % |
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO EXCLUDING PPP LOANS (1) | |||||||||||||||
| Stockholder's equity (GAAP) | $ | 593,793 | $ | 572,613 | $ | 556,020 | $ | 539,139 | $ | 535,351 | |||||
| Less: PPP loan interest income (post-tax) (2) | 7,691 | 4,934 | 2,085 | - | - | ||||||||||
| Less: Intangible assets | 85,447 | 85,968 | 88,120 | 88,669 | 89,717 | ||||||||||
| Tangible common equity, excluding PPP loan income (non-GAAP) | $ | 500,655 | $ | 481,711 | $ | 465,815 | $ | 450,470 | $ | 445,634 | |||||
| Total assets (GAAP) | $ | 5,682,797 | $ | 5,864,560 | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | |||||
| Less: PPP loans | 273,146 | 357,506 | 358,052 | - | - | ||||||||||
| Less: Intangible assets | 85,447 | 85,968 | 88,120 | 88,669 | 89,717 | ||||||||||
| Tangible assets, excluding PPP loans (non-GAAP) | $ | 5,324,204 | $ | 5,421,086 | $ | 5,158,589 | $ | 5,143,406 | $ | 4,819,333 | |||||
| Tangible common equity to tangible assets ratio, excluding PPP loans (non-GAAP) | **** | 9.40 | % | **** | 8.89 | % | **** | 9.03 | % | **** | 8.76 | % | **** | 9.25 | % |
| (1) | This ratio is a non-GAAP financial measure.<br> The Company's management believes that this measurement is important to many investors in the marketplace who are interested<br> in changes period-to-period in common equity. In compliance with applicable rules of the SEC, this non-GAAP<br> measure is reconciled to stockholders' equity and total assets, which are the most directly comparable GAAP financial measures. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | PPP interest income (post-tax) is calculated using an estimated effective tax rate of 21%. |
| 12 |
| --- |
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| GAAP<br> TO NON-GAAP RECONCILIATIONS | For<br> the Quarter Ended | For<br> the Year Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December<br> 31, | September<br> 30, | June<br> 30, | March<br> 31, | December<br> 31, | December<br> 31, | December<br> 31, | |||||||||||||||
| ADJUSTED NET INCOME (1) | 2020 | 2020 | 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||
| Net income<br> (GAAP) | $ | 18,271 | $ | 17,344 | $ | 13,739 | $ | 11,228 | $ | 15,891 | $ | 60,582 | $ | 57,408 | |||||||
| Less non-core items (post-tax)<br> (2): | |||||||||||||||||||||
| Income: | |||||||||||||||||||||
| Securities gains(losses),<br> net | 487 | 1,424 | 51 | - | 21 | $ | 1,962 | $ | (22 | ) | |||||||||||
| Loss on syndicated loan | (210 | ) | - | - | - | $ | (210 | ) | |||||||||||||
| Gain<br> on sale of assets and liabilities of subsidiary | - | - | - | - | 8,539 | - | 8,539 | ||||||||||||||
| Total non-core income<br> (non-GAAP) | $ | 277 | $ | 1,424 | $ | 51 | $ | - | $ | 8,560 | $ | 1,752 | $ | 8,517 | |||||||
| Expense: | |||||||||||||||||||||
| Losses on debt extinguishment,<br> net | $ | 1,151 | $ | 1,480 | $ | 339 | $ | 116 | $ | 228 | $ | 3,087 | $ | 345 | |||||||
| Goodwill impairment | - | - | - | 500 | 3,000 | 500 | 3,000 | ||||||||||||||
| Disposition costs | 51 | 152 | (66 | ) | 408 | 2,627 | 545 | 2,627 | |||||||||||||
| Tax expense on expected<br> liquidation of RB&T BOLI | - | - | - | - | 790 | - | 790 | ||||||||||||||
| Post-acquisition compensation,<br> transition and integration costs | 20 | (25 | ) | 55 | 119 | 1,465 | 169 | 2,828 | |||||||||||||
| Loss<br> on sale of subsidiary | (102 | ) | 212 | - | - | - | 110 | - | |||||||||||||
| Total non-core expense<br> (non-GAAP) | $ | 1,119 | $ | 1,819 | $ | 329 | $ | 1,143 | $ | 8,110 | $ | 4,411 | $ | 9,590 | |||||||
| Adjusted net income(non-GAAP) (1) | $ | 19,113 | **** | $ | 17,739 | **** | $ | 14,016 | **** | $ | 12,372 | **** | $ | 15,441 | **** | $ | 63,240 | **** | $ | 58,480 | **** |
| PRE-PROVISION/PRE-TAX<br> ADJUSTED INCOME (1) | |||||||||||||||||||||
| Net income (GAAP) | $ | 18,271 | $ | 17,344 | $ | 13,739 | $ | 11,228 | $ | 15,891 | $ | 60,582 | $ | 57,408 | |||||||
| Less: Non-core income<br> not tax-effected | 351 | 1,802 | 65 | - | 12,313 | 2,218 | 12,258 | ||||||||||||||
| Plus: Non-core expense<br> not tax-effected | 1,399 | 2,339 | 416 | 1,315 | 9,258 | 5,469 | 11,132 | ||||||||||||||
| Provision expense | 7,080 | 20,342 | 19,915 | 8,367 | 979 | 55,704 | 7,066 | ||||||||||||||
| Federal and state income tax<br> expense | 4,009 | 4,016 | 2,798 | 1,884 | 6,560 | 12,707 | 14,619 | ||||||||||||||
| Pre-provision/pre-tax adjusted income(non-GAAP) (1) | $ | 30,408 | **** | $ | 42,239 | **** | $ | 36,803 | **** | $ | 22,794 | **** | $ | 20,375 | **** | $ | 132,244 | **** | $ | 77,966 | **** |
| PRE-PROVISION/PRE-TAX<br> ADJUSTED RETURN ON AVERAGE ASSETS (NON-GAAP) | |||||||||||||||||||||
| Pre-provision/pre-tax adjusted income(non-GAAP) | $ | 30,408 | $ | 42,239 | $ | 36,803 | $ | 22,794 | $ | 20,375 | $ | 132,244 | $ | 77,966 | |||||||
| Average Assets | $ | 5,842,299 | $ | 5,820,555 | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,604,074 | $ | 5,102,980 | |||||||
| Pre-provision/pre-tax adjusted return on average assets (non-GAAP) | **** | 2.08 | % | **** | 2.90 | % | **** | 2.54 | % | **** | 1.84 | % | **** | 1.58 | % | **** | 2.36 | % | **** | 2.04 | % |
| ADJUSTED EARNINGS<br> PER COMMON SHARE (1) | |||||||||||||||||||||
| Adjusted net income (non-GAAP)<br> (from above) | $ | 19,113 | $ | 17,739 | $ | 14,016 | $ | 12,372 | $ | 15,441 | $ | 63,240 | $ | 58,480 | |||||||
| Weighted average common shares outstanding | 15,775,596 | 15,767,152 | 15,747,056 | 15,796,796 | 15,772,703 | 15,571,650 | 15,730,016 | ||||||||||||||
| Weighted average common<br> and common equivalent shares outstanding | 15,973,054 | 15,923,578 | 15,895,336 | 16,011,456 | 16,033,043 | 15,952,637 | 15,967,775 | ||||||||||||||
| Adjusted earnings<br> per common share (non-GAAP): | |||||||||||||||||||||
| Basic | $ | 1.21 | **** | $ | 1.13 | **** | $ | 0.89 | **** | $ | 0.78 | **** | $ | 0.98 | **** | $ | 4.06 | **** | $ | 3.72 | **** |
| Diluted | $ | 1.20 | **** | $ | 1.11 | **** | $ | 0.88 | **** | $ | 0.77 | **** | $ | 0.96 | **** | $ | 3.96 | **** | $ | 3.66 | **** |
| ADJUSTED<br> RETURN ON AVERAGE ASSETS (1) | |||||||||||||||||||||
| Adjusted net income (non-GAAP)<br> (from above) | $ | 19,113 | $ | 17,739 | $ | 14,016 | $ | 12,372 | $ | 15,441 | $ | 63,240 | $ | 58,480 | |||||||
| Average Assets | $ | 5,842,299 | $ | 5,820,555 | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,604,074 | $ | 5,102,980 | |||||||
| Adjusted return on average assets (annualized) (non-GAAP) | **** | 1.31 | % | **** | 1.22 | % | **** | 0.97 | % | **** | 1.00 | % | **** | 1.20 | % | **** | 1.13 | % | **** | 1.15 | % |
| NET<br> INTEREST MARGIN (TEY) (4) | |||||||||||||||||||||
| Net interest income (GAAP) | $ | 43,707 | $ | 44,581 | $ | 40,948 | $ | 37,698 | $ | 39,919 | $ | 166,950 | $ | 155,559 | |||||||
| Plus:<br> Tax equivalent adjustment (3) | 2,631 | 1,942 | 1,728 | 1,790 | 1,783 | 8,216 | 6,727 | ||||||||||||||
| Net interest income -<br> tax equivalent (Non-GAAP) | $ | 46,338 | $ | 46,523 | $ | 42,676 | $ | 39,488 | $ | 41,702 | $ | 175,166 | $ | 162,286 | |||||||
| Less:Acquisition accounting<br> net accretion | 1,077 | 833 | 736 | 625 | 931 | 3,271 | 4,344 | ||||||||||||||
| Adjusted net interest<br> income | $ | 45,261 | $ | 45,690 | $ | 41,940 | $ | 38,863 | $ | 40,771 | $ | 171,895 | $ | 157,942 | |||||||
| Average earning assets | $ | 5,345,677 | $ | 5,278,298 | $ | 5,252,663 | $ | 4,461,018 | $ | 4,711,310 | $ | 5,085,659 | $ | 4,703,289 | |||||||
| Net interest margin (GAAP) | 3.25 | % | 3.36 | % | 3.14 | % | 3.40 | % | 3.36 | % | 3.28 | % | 3.31 | % | |||||||
| Net interest margin (TEY)<br> (Non-GAAP) | 3.45 | % | 3.51 | % | 3.27 | % | 3.56 | % | 3.51 | % | 3.44 | % | 3.45 | % | |||||||
| Adjusted net interest<br> margin (TEY) (Non-GAAP) | 3.37 | % | 3.44 | % | 3.21 | % | 3.50 | % | 3.43 | % | 3.38 | % | 3.36 | % | |||||||
| EFFICIENCY<br> RATIO (5) | |||||||||||||||||||||
| Noninterest expense (GAAP) | $ | 46,364 | $ | 40,838 | $ | 33,122 | $ | 31,415 | $ | 46,294 | $ | 151,755 | $ | 155,234 | |||||||
| Net interest income (GAAP) | $ | 43,707 | $ | 44,581 | $ | 40,948 | $ | 37,698 | $ | 39,919 | $ | 166,950 | $ | 155,559 | |||||||
| Noninterest<br> income (GAAP) | 32,017 | 37,959 | 28,626 | 15,196 | 29,805 | 113,798 | 78,768 | ||||||||||||||
| Total income | $ | 75,724 | $ | 82,540 | $ | 69,574 | $ | 52,894 | $ | 69,724 | $ | 280,748 | $ | 234,327 | |||||||
| Efficiency ratio (noninterest<br> expense/total income) (Non-GAAP) | 61.23 | % | 49.48 | % | 47.61 | % | 59.39 | % | 66.40 | % | 54.05 | % | 66.25 | % | |||||||
| ALLOWANCE FOR LOAN AND LEASE LOSSES TO TOTAL LOANS AND LEASES,EXCLUDING PPP LOANS (6) | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Allowance for loan and<br> lease losses | $ | 84,376 | $ | 79,582 | $ | 60,827 | $ | 42,233 | $ | 36,001 | $ | 84,376 | $ | 36,001 | |||||||
| Total loans and leases | $ | 4,251,129 | $ | 4,247,977 | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 | $ | 4,251,129 | $ | 3,690,205 | |||||||
| Less:PPP loans | 273,146 | 357,506 | 358,052 | 358,052 | - | 273,146 | - | ||||||||||||||
| Total loans and leases,<br> excluding PPP loans | $ | 3,977,983 | $ | 3,890,471 | $ | 3,782,207 | $ | 3,346,616 | $ | 3,690,205 | $ | 3,977,983 | $ | 3,690,205 | |||||||
| Allowance for loan and lease losses to total loans and leases, excluding PPP loans | **** | 2.12 | % | 2.05 | % | 1.61 | % | 1.26 | % | 0.98 | % | 2.12 | % | 0.98 | % | ||||||
| LOAN<br> GROWTH ANNUALIZED, EXCLUDING PPP LOANS | |||||||||||||||||||||
| Total loans and leases | $ | 4,251,129 | $ | 4,247,977 | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 | $ | 4,251,129 | $ | 3,690,205 | |||||||
| Less:PPP loans | 273,146 | 357,506 | 358,052 | - | - | 273,146 | - | ||||||||||||||
| Total loans and leases,<br> excluding PPP loans | $ | 3,977,983 | $ | 3,890,471 | $ | 3,782,207 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,977,983 | $ | 3,690,205 | |||||||
| Loan growth annualized, excluding PPP loans | **** | 9.00 | % | 11.45 | % | 8.37 | % | 1.57 | % | 8.86 | % | 7.80 | % | -0.07 | % | ||||||
| (1) | Adjusted<br> net income, Adjusted net income attributable to QCR Holdings, Inc. common stockholders, Adjusted earnings per common share<br> and Adjusted return on average assets are non-GAAP financial measures.The Company's management believes that these measurements<br> are important to investors as they exclude non-recurring income and expense items, therefore, they provide a more realistic<br> run-rate for future periods. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net income,<br> which is the most directly comparable GAAP financial measure. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | Nonrecurring<br> items (post-tax) are calculated using an estimated effective tax rate of 21% with the exception of goodwill impairment which<br> is not deductible for tax and gain/loss on sale of assets and liabiliities of subsidary has an estimated effective tax rate<br> of 30.5%. | ||||||||||||||||||||
| (3) | Interest<br> earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21%. | ||||||||||||||||||||
| (4) | Net<br> interest margin (TEY) is a non-GAAP financial measure.The Company's management utilizes this measurement to take into account<br> the tax benefit associated with certain loans and securities.It is also standard industry practice to measure net interest<br> margin using tax-equivalent measures.In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to<br> net interest income, which is the most directly comparable GAAP financial measure.In addition, the Company calculates net<br> interest margin without the impact of acquisition accounting net accretion as this can fluctuate and it's difficult to provide<br> a more realistic run-rate for future periods. | ||||||||||||||||||||
| (5) | Efficiency<br> ratio is a non-GAAP measure.The Company's management utilizes this ratio to compare to industry peers.The ratio is used to<br> calculate overhead as a percentage of revenue. In compliance with the applicable rules of the SEC, this non-GAAP measure is<br> reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP<br> financial measures. | ||||||||||||||||||||
| (6) | Allowance for loan and lease losses to total loans and leases, excluding PPP loans is a non-GAAP measure.The Company's management utilizes this ratio to remove the from the allowance calculation the impact of PPP loans which are fully guaranteed by the federal government and for which these loans have no allowance for loan and lease loss allocation. |
| 13 |
| --- |
Exhibit 99.2
| COVID-19 EXPOSURE Q4 2020 |
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| FORWARD-LOOKING STATEMENTS A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economies (including the impact of the new presidential administration and the impact of tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations); (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices (including the new current expected credit loss (CECL) impairment standards, that will change how the Company estimates credit losses when implemented); (iv) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or employees; (x) changes in consumer spending; and (xi) unexpected outcomes of existing or new litigation involving the Company. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission. |
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| PPP &LRP Participation |
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| PPP In 2020, QCRH originated 1,698 PPP loans with a total of $358MM. •As of Dec. 31, 2020, 316 of these loans, totaling $85MM were paid off. This total includes the acquisition of new, highly desired clients in our existing markets: •Number of new client loans: 309 (18% of total PPP loans) •Total of new client loans: $63MM |
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| LOAN RELIEF The QCRH LRP offers immediate payment relief to consumer and small business loan clients. •As of Dec. 31, 2020, there were $28MM or 0.66% of total loans and leases still on deferral. •This is down from $83MM or 1.98% of total loans and leases on deferral, as of Sept. 30, 2020. Loan Relief Program Impact on NPAs: •As of Dec. 31, 2020, five loans totaling $1.3 million received deferrals and are now classified as nonperforming assets. |
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| LOAN RELIEF A breakdown of the industries for deferrals: Industry Deferrals as of Sept. 30, 2020 Deferrals as of Dec. 31, 2020 Total Amount (in millions) % of Total Loans/Leases Total Amount (in millions) % of Total Loans/Leases % of Loans in Industry Segment All Investment Real Estate $9 0.21% $9 0.22% 0.50% Hotels $36 0.85% $6 0.14% 7.14% Retail (Including Automotive) $1 0.02% $3 0.07% 1.41% Arts, Entertainment and Recreation $3 0.07% $2 0.05% 7.41% Consumer $2 0.05% $1 0.02% 0.39% Media and Telecommunications $13 0.31% $0 0.00% 0.00% Health Care and Social Assistance $2 0.05% $0 0.00% 0.00% All Other $1 0.02% $0 0.00% N/A Construction $0 0.00% $0 0.00% 0.00% Other Services $1 0.02% $0 0.00% 0.00% Restaurants (Limited & Full Service) $1 0.02% $0 0.00% 0.00% Manufacturing $0 0.00% $0 0.00% 0.00% Management of Companies and Enterprises $0 0.00% $0 0.00% 0.00% m2 Equipment Finance LLC. $14 0.33% $7 0.16% N/A TOTAL $83 1.95% $28 0.66% N/A |
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| ASSET QUALITY 7 **Classified loans are defined as C&I and CRE loans with internally assigned risk ratings of 7 or 8, regardless of performance. |
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| Industry Concentration Disclosures |
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| PRIMARY The following industries were deemed higher risk in our commercial loan portfolio due to the COVID-19 pandemic. As of Dec. 31: |
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| SECONDARY As of Dec. 31, QCRH retail exposure was $213MM, or 5.01% of total loans. Overview in Our Markets •Grocery-related sales continue to grow. •Automotive/truck sales in our markets remain strong and better than the national average, which reported an estimated 15% decline from the previous year. •Sales at bars and traditional restaurants slid as typical holiday outings were cancelled. |
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