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): October 26, 2022
QCR Holdings, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-22208 | 42-1397595 |
|---|---|---|
| (State or Other Jurisdiction of<br><br> Incorporation) | (Commission File Number) | (I.R.S. Employer Identification <br><br>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 of each exchange on<br> 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 October 26, 2022, QCR Holdings, Inc. (the “Company”) issued a press release disclosing financial results for the quarter ended September 30, 2022. 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 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 99.1 | Press Release dated October<br>26, 2022. |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline<br>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: October 26, 2022 | By: | /s/ Todd A. Gipple |
| Todd A. Gipple | ||
| President, Chief Operating Officer and Chief Financial Officer |
Exhibit 99.1
| PRESS RELEASE | FOR IMMEDIATE<br> RELEASE |
|---|
QCR Holdings, Inc.Announces Third Quarter 2022 Results
Third Quarter 2022 Highlights
| · | Net income of $29.3 million, or $1.71 per diluted share |
|---|---|
| · | Adjusted net income (non-GAAP) of $28.9 million, or $1.69 per diluted share |
| --- | --- |
| · | Net Interest Margin (“NIM”) of 3.46% and NIM (TEY)(non-GAAP) of 3.71% |
| --- | --- |
| · | Annualized loan and lease growth of 14.5% for the quarter |
| --- | --- |
| · | Annualized deposit growth of 8.3% for the quarter |
| --- | --- |
| · | Nonperforming assets improved for the quarter and represented 0.23% of total assets |
| --- | --- |
| · | Allowance for credit losses (“ACL”) to total loans/leases of 1.51% |
| --- | --- |
| · | Increased total risk-based capital to 14.55% through the issuance of subordinated notes and strong earnings |
| --- | --- |
Moline, IL, October 26, 2022 – QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $29.3 million and diluted earnings per share (“EPS”) of $1.71 for the third quarter of 2022, compared to net income of $15.2 million and diluted EPS of $0.87 for the second quarter of 2022.
Adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) for the third quarter of 2022 were $28.9 million and $1.69, respectively. For the second quarter of 2022, adjusted net income (non-GAAP) was $30.4 million and adjusted diluted EPS (non-GAAP) was $1.73. For the third quarter of 2021, adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $31.6 million and $1.99, respectively.
| For<br> the Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | ||||
| $ in millions<br> (except per share data) | 2022 | 2022 | 2021 | |||
| Net Income | $ | 29.3 | $ | 15.2 | $ | 31.6 |
| Diluted EPS | $ | 1.71 | $ | 0.87 | $ | 1.99 |
| Adjusted Net Income (non-GAAP)* | $ | 28.9 | $ | 30.4 | $ | 31.6 |
| Adjusted Diluted EPS (non-GAAP)* | $ | 1.69 | $ | 1.73 | $ | 1.99 |
*Adjusted non-GAAP measurements offinancial performance exclude non-core and/or nonrecurring income and expense items that management believes are not reflective of theanticipated future operation of the Company’s business. The Company believes these measurements provide a better comparison foranalysis and may provide a better indicator of future performance. See GAAP to non-GAAP reconciliations.
“We delivered another strong quarter of net income, driven by exceptional loan growth, improved credit quality and carefully managed expenses,” said Larry J. Helling, Chief Executive Officer. “Building on the momentum we established in the first half of the year, we generated robust lending activity again in the third quarter with annualized loan growth of 14.5%. This was funded primarily by growth in deposits during the quarter. Additionally, we raised $100 million of subordinated debt, bolstering our capital position against the backdrop of an uncertain economy.”
Net InterestIncome of $60.8 Million
Net interest income for the third quarter of 2022 totaled $60.8 million, compared to $59.4 million for the second quarter of 2022 and $46.2 million for the third quarter of 2021. The increase in net interest income was due to an increase in average earning assets, primarily attributable to loan growth and NIM expansion on a linked-quarter basis. Adjusted net interest income, excluding PPP income (non-GAAP) during the quarter was $64.1 million, an increase of $3.2 million, or 20.8% annualized, from the prior quarter. Acquisition-related net accretion totaled $1.1 million for the third quarter of 2022, as compared to $1.7 million in the second quarter of 2022.
In the third quarter of 2022, NIM was 3.46% and tax-equivalent yield (“TEY”) basis (non-GAAP) NIM was 3.71%, compared to 3.53% and 3.74% in the prior quarter, respectively. Adjusted NIM (non-GAAP), which excludes acquisition-related net accretion, was 3.65%, up 1 basis point from the prior quarter. Excluding the final impact of PPP loans (non-GAAP) on NIM in the prior quarter, adjusted NIM for the current quarter (non-GAAP) was up 5 basis points prior to the dilutive impact of our subordinated debt issuance. The linked-quarter increase was primarily due to the impact of multiple interest rate hikes on our asset-sensitive balance sheet, partially offset by the impact of increased deposit costs and our recent subordinated debt issuance.
| Forthe Quarter Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| September<br>30, | June 30, | September<br>30, | |||||||
| 2022 | 2022 | 2021 | |||||||
| NIM | 3.46 | % | 3.53 | % | 3.36 | % | |||
| NIM (TEY)(non-GAAP) * | 3.71 | % | 3.74 | % | 3.56 | % | |||
| Adjusted NIM (TEY)(non-GAAP) * | 3.65 | % | 3.64 | % | 3.53 | % | |||
| Adjusted NIM ex. PPP (TEY)(non-GAAP)* | 3.65 | % | 3.63 | % | 3.39 | % | |||
| * See GAAP to non-GAAP reconciliations |
“Our adjusted NIM, excluding PPP, expanded by 5 basis points during the third quarter, prior to the dilutive impact of our recent subordinated debt issuance,” said Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “While our balance sheet is well positioned to continue to drive NIM expansion in this rising rate environment, the sharply higher interest rates impacted our deposit mix and pricing this quarter. However, we are very pleased with the expansion in NIM that we have experienced early in the current rising rate cycle of 26 basis points on a year-over-year basis.”
Annualized Loanand Lease Growth of 14.5%
Total Loans andLeases Surpass $6 Billion
During the third quarter of 2022, the Company’s loans and leases increased $210.7 million to a total of $6.0 billion, or 14.5% on an annualized basis. Deposits increased by $120.4 million during the quarter, helping to fund our loan and lease growth.
“Strength in our traditional commercial lending, leasing and our Specialty Finance businesses drove our continued loan growth,” added Mr. Helling. “This speaks to the dedication of our experienced teams and the economic resiliency in our markets. Given our current pipelines, we are reaffirming our targeted loan growth of between 10% and 12% for the fourth quarter, while continuing to be vigilant on maintaining our exceptional credit quality.”
Noninterest Incomeof $21.1 Million
Noninterest income for the third quarter of 2022 totaled $21.1 million, compared to $22.8 million for the second quarter of 2022. The decrease was primarily due to a $2.5 million decline in capital markets revenue from swap fees due to delays in client projects caused by ongoing supply chain disruptions, inflationary pressures and higher interest rates. Wealth management revenue was $3.5 million for the quarter, consistent with the second quarter of 2022, despite ongoing market volatility.
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“Capital markets revenue totaled $10.5 million for the quarter, which was below our guidance due to delays in funding low-income housing tax credit projects,” added Mr. Gipple. “While certain client projects have been delayed, the economics of these projects remain solid, and our pipeline is strong. Capital markets revenue has averaged approximately $11 million per quarter for the last four quarters and therefore we expect this source of fee income to be in a range of $10 to $12 million for the fourth quarter.”
Noninterest Expensesof $47.7 Million
Noninterest expense for the third quarter of 2022 totaled $47.7 million, compared to $54.2 million for the second quarter of 2022 and $41.4 million for the third quarter of 2021. The linked-quarter decrease was primarily due to elevated expenses in the second quarter related to the Guaranty Bank acquisition and lower incentive-based compensation in the third quarter. Excluding acquisition/post-acquisition related costs, noninterest expense for the third quarter was $47.4 million, compared to $47.5 million in the second quarter.
Asset QualityRemains Exceptional
Nonperforming assets (“NPAs”) totaled $18.0 million at the end of the third quarter, a decrease of $6.0 million from the second quarter of 2022. The reduction in NPAs during the quarter was primarily the result of paydowns on several NPAs. The ratio of NPAs to total assets was 0.23% on September 30, 2022, compared to 0.33% on June 30, 2022, and 0.11% on September 30, 2021. In addition, the Company’s criticized loans and classified loans to total loans and leases on September 30, 2022 improved to 2.35% and 1.29%, respectively, as compared to 2.37% and 1.43% as of June 30, 2022.
The Company did not record a provision for credit losses in the third quarter of 2022 as a result of continued improvements in overall credit quality. As of September 30, 2022, the ACL on total loans/leases was 1.51%, compared to 1.59% as of June 30, 2022.
ContinuedStrong Capital Levels
As of September 30, 2022, the Company’s total risk-based capital ratio was 14.55%, the common equity tier 1 ratio was 9.33% and the tangible common equity to tangible assets ratio (non-GAAP) was 7.68%. By comparison, these respective ratios were 13.40%, 9.46% and 8.11% as of June 30, 2022.
On August 18, 2022, the Company announced that it completed a private placement of $100 million in aggregate principal amount subordinated notes. The notes qualify as tier 2 capital and contributed to the increase in the total risk-based capital ratio. This transaction increased our total risk-based capital ratio by 140 bps.
During the third quarter, the Company purchased and retired 190,000 shares of its common stock at an average price of $55.18 per share as the Company executed purchases under the share repurchase plan announced during the second quarter. The 2022 share repurchase plan authorized an approximate 1,500,000 additional shares to be repurchased and the Company has approximately 1,030,000 shares remaining under the program.
The Company’s accumulated other comprehensive income (“AOCI”) declined $24.8 million during the third quarter due to a decrease in the value of its available for sale securities portfolio and certain derivatives resulting from continued sharp increases in interest rates during the quarter. While AOCI and the repurchase of shares reduced the Company’s tangible common equity, solid earnings offset this impact, which led to a slight increase in tangible book value per share (non-GAAP).
Focus on ThreeStrategic 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:
| · | Generate<br> organic loan and lease growth of 9% per year, funded by core deposits; |
|---|---|
| · | Grow<br> fee-based income by at least 6% per year; and |
| --- | --- |
| · | Limit<br> annual operating expense growth to 5% per year. |
| --- | --- |
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Conference Call Details
The Company will host an earnings call/webcast tomorrow, October 27, 2022, 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 November 3, 2022. The replay access information is 877-344-7529 (international 412-317-0088); access code 9369877. A webcast of the teleconference can be accessed on 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, Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018, and Guaranty Bank, also based in Springfield, Missouri, was acquired by the Company and merged with Springfield First Community Bank on April 1, 2022, with the combined entity operating under the Guaranty Bank name. 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 offers equipment loans and leases to businesses through its wholly-owned subsidiary, m2 Equipment Finance, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 40 locations in Iowa, Missouri, Wisconsin and Illinois. As of September 30, 2022, the Company had approximately $7.7 billion in assets, $6.0 billion in loans and $5.9 billion in deposits. For additional information, please visit the Company’s website at www.qcrh.com.
Special Note Concerning Forward-LookingStatements. 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 basedupon beliefs, 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, and the Company undertakesno obligation to update any statement in light of new information or future events.
A number of factors, many of whichare beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-lookingstatements. These factors include, among others, the following: (i) the strength of the local, state, national and internationaleconomies(including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terroristthreats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threatsthereof, or other adverse external events that could cause economic deterioration or instability in credit markets, and the responseof the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices,as may be adopted by state and federal regulatory agencies, the FASB or the PCAOB; (iv) changes in local, state and federal laws,regulations and governmental policies concerning the Company’s general business; (v) changes in interest rates and prepaymentrates of the Company’s assets (including the impact of LIBOR phase-out); (vi) increased competition in the financial servicessector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure andreliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefitsof 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; (xi) unexpected outcomes of existing or new litigation involving the Company; (xii) theeconomic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; and (xiii) the ability of the Companyto manage the risks associated with the foregoing as well as anticipated. These risks and uncertainties should be considered in evaluatingforward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Companyand its business, including additional factors that could materially affect the Company’s financial results, is included in theCompany’s filings with the Securities and Exchange Commission.
Contacts:
Todd A. Gipple
President
Chief Operating Officer
Chief Financial Officer
(309) 743-7745
tgipple@qcrh.com
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QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| As of | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | ||||||
| (dollars in thousands) | ||||||||||
| CONDENSED BALANCE SHEET | ||||||||||
| Cash and due from banks | $ | 86,282 | $ | 92,379 | $ | 50,540 | $ | 37,490 | $ | 57,310 |
| Federal funds sold and interest-bearing deposits | 71,043 | 56,532 | 66,390 | 87,662 | 70,826 | |||||
| Securities, net of allowance for credit losses | 879,450 | 879,918 | 823,311 | 810,215 | 828,719 | |||||
| Net loans/leases | 5,918,121 | 5,705,478 | 4,753,082 | 4,601,411 | 4,519,060 | |||||
| Intangibles | 17,546 | 18,333 | 8,856 | 9,349 | 9,857 | |||||
| Goodwill | 137,607 | 137,607 | 74,066 | 74,066 | 74,066 | |||||
| Derivatives | 185,037 | 97,455 | 107,326 | 222,220 | 198,393 | |||||
| Other assets | 434,963 | 405,239 | 292,248 | 253,719 | 256,277 | |||||
| Total assets | $ | 7,730,049 | $ | 7,392,941 | $ | 6,175,819 | $ | 6,096,132 | $ | 6,014,508 |
| Total deposits | $ | 5,941,035 | $ | 5,820,657 | $ | 4,839,689 | $ | 4,922,772 | $ | 4,871,828 |
| Total borrowings | 701,491 | 583,166 | 443,270 | 170,805 | 183,514 | |||||
| Derivatives | 209,479 | 113,305 | 116,193 | 225,135 | 201,450 | |||||
| Other liabilities | 140,972 | 132,675 | 108,743 | 100,410 | 107,902 | |||||
| Total stockholders' equity | 737,072 | 743,138 | 667,924 | 677,010 | 649,814 | |||||
| Total liabilities and stockholders' equity | $ | 7,730,049 | $ | 7,392,941 | $ | 6,175,819 | $ | 6,096,132 | $ | 6,014,508 |
| ANALYSIS OF LOAN PORTFOLIO | ||||||||||
| Loan/lease mix: | ||||||||||
| Commercial and industrial - revolving | $ | 332,996 | $ | 322,258 | $ | 263,441 | $ | 248,483 | $ | 175,155 |
| Commercial and industrial - other | 1,415,996 | 1,403,689 | 1,374,221 | 1,346,602 | 1,465,580 | |||||
| Total commercial and industrial | 1,748,992 | 1,725,947 | 1,637,662 | 1,595,085 | 1,640,735 | |||||
| Commercial real estate, owner occupied | 627,558 | 628,565 | 439,257 | 421,701 | 434,014 | |||||
| Commercial real estate, non-owner occupied | 920,876 | 889,530 | 679,898 | 646,500 | 644,850 | |||||
| Construction and land development | 1,149,503 | 1,080,372 | 863,116 | 918,571 | 852,418 | |||||
| Multi-family | 933,118 | 860,742 | 711,682 | 600,412 | 529,727 | |||||
| Direct financing leases | 33,503 | 40,050 | 43,330 | 45,191 | 50,237 | |||||
| 1-4 family real estate | 487,508 | 473,141 | 379,613 | 377,361 | 376,067 | |||||
| Consumer | 107,552 | 99,556 | 73,310 | 75,311 | 71,682 | |||||
| Total loans/leases | $ | 6,008,610 | $ | 5,797,903 | $ | 4,827,868 | $ | 4,680,132 | $ | 4,599,730 |
| Less allowance for credit losses | 90,489 | 92,425 | 74,786 | 78,721 | 80,670 | |||||
| Net loans/leases | $ | 5,918,121 | $ | 5,705,478 | $ | 4,753,082 | $ | 4,601,411 | $ | 4,519,060 |
| ANALYSIS OF SECURITIES PORTFOLIO | ||||||||||
| Securities mix: | ||||||||||
| U.S. government sponsored agency securities | $ | 20,527 | $ | 20,448 | $ | 21,380 | $ | 23,328 | $ | 23,689 |
| Municipal securities | 724,204 | 710,638 | 667,245 | 639,799 | 649,486 | |||||
| Residential mortgage-backed and related securities | 68,844 | 81,247 | 86,381 | 94,323 | 100,744 | |||||
| Asset backed securities | 19,630 | 19,956 | 23,233 | 27,124 | 30,607 | |||||
| Other securities | 46,443 | 47,827 | 25,270 | 25,839 | 24,367 | |||||
| Total securities | $ | 879,648 | $ | 880,116 | $ | 823,509 | $ | 810,413 | $ | 828,893 |
| Less allowance for credit losses | 198 | 198 | 198 | 198 | 174 | |||||
| Net securities | $ | 879,450 | $ | 879,918 | $ | 823,311 | $ | 810,215 | $ | 828,719 |
| ANALYSIS OF DEPOSITS | ||||||||||
| Deposit mix: | ||||||||||
| Noninterest-bearing demand deposits | $ | 1,315,555 | $ | 1,514,005 | $ | 1,275,493 | $ | 1,268,788 | $ | 1,342,273 |
| Interest-bearing demand deposits | 3,904,303 | 3,758,566 | 3,181,685 | 3,232,633 | 3,086,711 | |||||
| Time deposits | 672,133 | 540,074 | 382,268 | 421,348 | 441,743 | |||||
| Brokered deposits | 49,044 | 8,012 | 243 | 3 | 1,101 | |||||
| Total deposits | $ | 5,941,035 | $ | 5,820,657 | $ | 4,839,689 | $ | 4,922,772 | $ | 4,871,828 |
| ANALYSIS OF BORROWINGS | ||||||||||
| Borrowings mix: | ||||||||||
| Overnight FHLB advances (1) | $ | 335,000 | $ | 400,000 | $ | 290,000 | $ | 15,000 | $ | 30,000 |
| Other short-term borrowings | 85,180 | 1,070 | 1,190 | 3,800 | 1,600 | |||||
| Subordinated notes | 232,743 | 133,562 | 113,890 | 113,850 | 113,811 | |||||
| Junior subordinated debentures | 48,568 | 48,534 | 38,190 | 38,155 | 38,103 | |||||
| Total borrowings | $ | 701,491 | $ | 583,166 | $ | 443,270 | $ | 170,805 | $ | 183,514 |
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 3.29%.
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QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| For the Quarter Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | |||||||||
| (dollars in thousands, except per share data) | |||||||||||||
| INCOME STATEMENT | |||||||||||||
| Interest income | $ | 79,267 | $ | 68,205 | $ | 51,062 | $ | 52,020 | $ | 51,667 | |||
| Interest expense | 18,498 | 8,805 | 5,329 | 5,507 | 5,438 | ||||||||
| Net interest income | 60,769 | 59,400 | 45,733 | 46,513 | 46,229 | ||||||||
| Provision for credit losses (1) | - | 11,200 | (2,916 | ) | (3,227 | ) | - | ||||||
| Net interest income after provision for loan/lease losses | $ | 60,769 | $ | 48,200 | $ | 48,649 | $ | 49,740 | $ | 46,229 | |||
| Trust department fees | $ | 2,537 | $ | 2,497 | $ | 2,963 | $ | 2,843 | $ | 2,714 | |||
| Investment advisory and management fees | 921 | 983 | 1,036 | 1,047 | 1,054 | ||||||||
| Deposit service fees | 2,214 | 2,223 | 1,555 | 1,644 | 1,588 | ||||||||
| Gain on sales of residential real estate loans | 641 | 809 | 493 | 922 | 954 | ||||||||
| Gain on sales of government guaranteed portions of loans | 50 | - | 19 | 227 | - | ||||||||
| Swap fee income/capital markets revenue | 10,545 | 13,004 | 6,422 | 12,982 | 24,885 | ||||||||
| Earnings on bank-owned life insurance | 605 | 350 | 346 | 470 | 446 | ||||||||
| Debit card fees | 1,453 | 1,499 | 1,007 | 1,072 | 1,085 | ||||||||
| Correspondent banking fees | 189 | 244 | 277 | 266 | 265 | ||||||||
| Loan related fee income | 652 | 682 | 480 | 536 | 550 | ||||||||
| Mark to market gain - derivatives | 904 | 432 | 906 | 97 | (17 | ) | |||||||
| Other | 384 | 59 | 129 | 879 | 1,128 | ||||||||
| Total noninterest income | $ | 21,095 | $ | 22,782 | $ | 15,633 | $ | 22,985 | $ | 34,652 | |||
| Salaries and employee benefits | $ | 29,175 | $ | 29,972 | $ | 23,627 | $ | 24,809 | $ | 28,207 | |||
| Occupancy and equipment expense | 6,033 | 5,978 | 3,937 | 3,723 | 4,122 | ||||||||
| Professional and data processing fees | 4,477 | 4,365 | 3,671 | 3,866 | 3,568 | ||||||||
| Acquisition costs | 315 | 1,973 | 1,851 | 624 | - | ||||||||
| Post-acquisition compensation, transition and integration costs | 62 | 4,796 | - | - | - | ||||||||
| Disposition costs | - | - | - | 5 | - | ||||||||
| FDIC insurance, other insurance and regulatory fees | 1,497 | 1,394 | 1,310 | 1,316 | 1,108 | ||||||||
| Loan/lease expense | 390 | 761 | 267 | 606 | 308 | ||||||||
| Net cost of (income from) and gains/losses on operations of other real estate | 19 | 59 | (1 | ) | - | (1,346 | ) | ||||||
| Advertising and marketing | 1,437 | 1,198 | 761 | 1,679 | 1,095 | ||||||||
| Communication | 639 | 584 | 403 | 481 | 457 | ||||||||
| Supplies | 289 | 237 | 246 | 274 | 298 | ||||||||
| Bank service charges | 568 | 610 | 541 | 553 | 525 | ||||||||
| Correspondent banking expense | 218 | 213 | 199 | 200 | 201 | ||||||||
| Intangibles amortization | 787 | 787 | 493 | 508 | 508 | ||||||||
| Payment card processing | 477 | 626 | 262 | 298 | 346 | ||||||||
| Trust expense | 227 | 195 | 187 | 208 | 188 | ||||||||
| Other | 1,136 | 500 | 571 | 262 | 1,802 | ||||||||
| Total noninterest expense | $ | 47,746 | $ | 54,248 | $ | 38,325 | $ | 39,412 | $ | 41,387 | |||
| Net income before income taxes | $ | 34,118 | $ | 16,734 | $ | 25,957 | $ | 33,313 | $ | 39,494 | |||
| Federal and state income tax expense | 4,824 | 1,492 | 2,333 | 6,304 | 7,929 | ||||||||
| Net income | $ | 29,294 | $ | 15,242 | $ | 23,624 | $ | 27,009 | $ | 31,565 | |||
| Basic EPS | $ | 1.73 | $ | 0.88 | $ | 1.51 | $ | 1.73 | $ | 2.02 | |||
| Diluted EPS | $ | 1.71 | $ | 0.87 | $ | 1.49 | $ | 1.71 | $ | 1.99 | |||
| Weighted average common shares outstanding | 16,900,968 | 17,345,324 | 15,625,112 | 15,582,276 | 15,635,123 | ||||||||
| Weighted average common and common equivalent shares outstanding | 17,110,691 | 17,549,107 | 15,852,256 | 15,838,246 | 15,869,798 | ||||||||
| (1) | Provision for credit losses for the quarter ended June 30, 2022<br>included $11.0 million related to the acquired Guaranty Bank non-PCD loans and $1.4 million related to acquired Guaranty Bank OBS exposures. | ||||||||||||
| --- | --- |
6
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| For Nine Months Ended | |||||
|---|---|---|---|---|---|
| September 30, | September 30, | ||||
| 2022 | 2021 | ||||
| (dollars in thousands, except per share data) | |||||
| INCOME STATEMENT | |||||
| Interest income | $ | 198,534 | $ | 148,135 | |
| Interest expense | 32,632 | 16,415 | |||
| Net interest income | 165,902 | 131,720 | |||
| Provision for credit losses (1) | 8,284 | 6,713 | |||
| Net interest income after provision for loan/lease losses | $ | 157,618 | $ | 125,007 | |
| Trust department fees | $ | 7,997 | $ | 8,363 | |
| Investment advisory and management fees | 2,940 | 3,033 | |||
| Deposit service fees | 5,992 | 4,488 | |||
| Gain on sales of residential real estate loans | 1,943 | 3,475 | |||
| Gain on sales of government guaranteed portions of loans | 69 | - | |||
| Swap fee income/capital markets revenue | 29,971 | 48,010 | |||
| Securities gains (losses), net | - | (88 | ) | ||
| Earnings on bank-owned life insurance | 1,301 | 1,368 | |||
| Debit card fees | 3,959 | 3,144 | |||
| Correspondent banking fees | 710 | 848 | |||
| Loan related fee income | 1,814 | 1,732 | |||
| Mark to market gain- derivatives | 2,242 | 73 | |||
| Other | 572 | 2,991 | |||
| Total noninterest income | $ | 59,510 | $ | 77,437 | |
| Salaries and employee benefits | $ | 82,774 | $ | 76,098 | |
| Occupancy and equipment expense | 15,948 | 12,195 | |||
| Professional and data processing fees | 12,513 | 10,713 | |||
| Acquisition costs | 4,139 | - | |||
| Post-acquisition compensation, transition and integration costs | 4,858 | - | |||
| Disposition costs | - | 8 | |||
| FDIC insurance, other insurance and regulatory fees | 4,201 | 3,159 | |||
| Loan/lease expense | 1,418 | 1,065 | |||
| Net cost of (income from) and gains/losses on operations of other real estate | 77 | (1,420 | ) | ||
| Advertising and marketing | 3,396 | 2,575 | |||
| Communication | 1,626 | 1,317 | |||
| Supplies | 772 | 779 | |||
| Bank service charges | 1,719 | 1,620 | |||
| Correspondent banking expense | 630 | 599 | |||
| Intangibles amortization | 2,067 | 1,524 | |||
| Payment card processing | 1,365 | 1,114 | |||
| Trust expense | 609 | 550 | |||
| Other | 2,207 | 2,394 | |||
| Total noninterest expense | $ | 140,319 | $ | 114,290 | |
| Net income before income taxes | $ | 76,809 | $ | 88,154 | |
| Federal and state income tax expense | 8,649 | 16,258 | |||
| Net income | $ | 68,160 | $ | 71,896 | |
| Basic EPS | $ | 4.25 | $ | 4.54 | |
| Diluted EPS | $ | 4.20 | $ | 4.48 | |
| Weighted average common shares outstanding | 16,030,371 | 15,829,124 | |||
| Weighted average common and common equivalent shares outstanding | 16,243,921 | 16,058,420 | |||
| (1) | Provision<br>for credit losses for the nine months ended September 30, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD<br>loans and $1.4 million related to acquired Guaranty Bank OBS exposures. | ||||
| --- | --- |
7
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| As<br> of and for the Quarter Ended | For<br> the Nine Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||
| (dollars<br> in thousands, except per share data) | |||||||||||||||||||||
| COMMON SHARE<br> DATA | |||||||||||||||||||||
| Common shares outstanding | 16,885,485 | 17,064,347 | 15,579,605 | 15,613,460 | 15,590,428 | ||||||||||||||||
| Book value per common share (1) | $ | 43.65 | $ | 43.55 | $ | 42.87 | $ | 43.36 | $ | 41.68 | |||||||||||
| Tangible book value per common share (Non-GAAP)<br> (2) | $ | 34.46 | $ | 34.41 | $ | 37.55 | $ | 38.02 | $ | 36.30 | |||||||||||
| Closing stock price | $ | 50.94 | $ | 53.99 | $ | 56.59 | $ | 56.00 | $ | 51.44 | |||||||||||
| Market capitalization | $ | 860,147 | $ | 921,304 | $ | 881,650 | $ | 874,354 | $ | 801,972 | |||||||||||
| Market price / book value | 116.70 | % | 123.97 | % | 132.00 | % | 129.15 | % | 123.42 | % | |||||||||||
| Market price / tangible book value | 147.81 | % | 156.90 | % | 150.71 | % | 147.30 | % | 141.72 | % | |||||||||||
| Earnings per common share (basic)<br> LTM (3) | $ | 5.86 | $ | 6.14 | $ | 6.68 | $ | 6.30 | $ | 5.73 | |||||||||||
| Price earnings ratio LTM (3) | 8.70<br> x | 8.79<br> x | 8.47<br> x | 8.88<br> x | 8.98<br> x | ||||||||||||||||
| TCE / TA (Non-GAAP) (4) | 7.68 | % | 8.11 | % | 9.60 | % | 9.87 | % | 9.54 | % | |||||||||||
| CONDENSED<br> STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||||||||||||||||
| Beginning balance | $ | 743,138 | $ | 667,924 | $ | 677,010 | $ | 649,814 | $ | 630,476 | |||||||||||
| Net income | 29,294 | 15,242 | 23,624 | 27,009 | 31,565 | ||||||||||||||||
| Other comprehensive income (loss),<br> net of tax | (24,783 | ) | (24,286 | ) | (27,340 | ) | 295 | (2,546 | ) | ||||||||||||
| Common stock cash dividends declared | (1,012 | ) | (1,059 | ) | (938 | ) | (935 | ) | (946 | ) | |||||||||||
| Issuance of 2,071,291 shares<br> of common stock as a result of the acquisition of Guaranty Federal<br> Bancshares | - | 117,214 | - | - | - | ||||||||||||||||
| Repurchase and cancellation of<br> shares of common stock as a result of a share repurchase program | (10,485 | ) | (33,016 | ) | (4,416 | ) | - | (9,367 | ) | ||||||||||||
| Other (5) | 920 | 1,119 | (16 | ) | 827 | 632 | |||||||||||||||
| Ending balance | $ | 737,072 | $ | 743,138 | $ | 667,924 | $ | 677,010 | $ | 649,814 | |||||||||||
| REGULATORY<br> CAPITAL RATIOS (6): | |||||||||||||||||||||
| Total risk-based capital ratio | 14.55 | % | 13.40 | % | 14.50 | % | 14.77 | % | 14.64 | % | |||||||||||
| Tier 1 risk-based capital ratio | 10.01 | % | 10.18 | % | 11.27 | % | 11.46 | % | 11.26 | % | |||||||||||
| Tier 1 leverage capital ratio | 9.56 | % | 9.61 | % | 10.78 | % | 10.46 | % | 10.28 | % | |||||||||||
| Common equity tier 1 ratio | 9.33 | % | 9.46 | % | 10.61 | % | 10.76 | % | 10.55 | % | |||||||||||
| KEY<br> PERFORMANCE RATIOS AND OTHER METRICS | |||||||||||||||||||||
| Return on average assets (annualized) | 1.53 | % | 0.83 | % | 1.55 | % | 1.76 | % | 2.11 | % | 1.30 | % | 1.66 | % | |||||||
| Return on average total equity<br> (annualized) | 15.39 | % | 7.74 | % | 13.81 | % | 16.23 | % | 19.30 | % | 12.20 | % | 15.27 | % | |||||||
| Net interest margin | 3.46 | % | 3.53 | % | 3.30 | % | 3.29 | % | 3.36 | % | 3.44 | % | 3.30 | % | |||||||
| Net interest margin (TEY) (Non-GAAP)(7) | 3.71 | % | 3.74 | % | 3.50 | % | 3.50 | % | 3.56 | % | 3.66 | % | 3.49 | % | |||||||
| Efficiency ratio (Non-GAAP) (8) | 58.32 | % | 66.01 | % | 62.45 | % | 56.71 | % | 51.17 | % | 62.25 | % | 54.64 | % | |||||||
| Gross loans and leases / total<br> assets | 77.73 | % | 78.42 | % | 78.17 | % | 76.77 | % | 76.48 | % | 77.73 | % | 76.48 | % | |||||||
| Gross loans and leases / total<br> deposits | 101.14 | % | 99.61 | % | 99.76 | % | 95.07 | % | 94.41 | % | 101.14 | % | 94.41 | % | |||||||
| Effective tax rate | 14.14 | % | 8.92 | % | 8.99 | % | 18.92 | % | 20.08 | % | 11.26 | % | 18.44 | % | |||||||
| Full-time equivalent employees<br> (9) | 956 | 968 | 749 | 726 | 724 | 956 | 724 | ||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||||
| Assets | $ | 7,652,463 | $ | 7,324,470 | $ | 6,115,127 | $ | 6,121,446 | $ | 5,982,583 | $ | 7,005,988 | $ | 5,789,753 | |||||||
| Loans/leases | 5,916,100 | 5,711,471 | 4,727,478 | 4,608,111 | 4,529,136 | 5,456,037 | 4,405,355 | ||||||||||||||
| Deposits | 5,891,198 | 5,867,444 | 4,903,354 | 4,983,869 | 4,779,876 | 5,557,617 | 4,706,719 | ||||||||||||||
| Total stockholders' equity | 761,428 | 788,204 | 684,126 | 665,698 | 654,186 | 744,869 | 627,583 |
(1) Includes accumulated other comprehensive income (loss).
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets (Non-GAAP).
(3) LTM : Last twelve months.
(4) TCE / TCA : tangible common equity / total tangible assets. See GAAP to non-GAAP reconciliations.
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.
(6) Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release.
(7) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.
(8) See GAAP to Non-GAAP reconciliations.
(9) Increase at June 30, 2022 due to the acquisition of Guaranty Bank.
8
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| ANALYSIS OF NET INTEREST INCOME<br> AND MARGIN | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For<br> the Quarter Ended | |||||||||||||||||||||
| September 30,<br> 2022 | June 30,<br> 2022 | September 30,<br> 2021 | |||||||||||||||||||
| Average<br><br> Balance | Interest<br><br> Earned or<br><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 | Average<br><br> Balance | Interest<br><br> Earned or<br><br> Paid | Average<br><br> Yield or Cost | |||||||||||||
| (dollars<br> in thousands) | |||||||||||||||||||||
| Fed funds sold | $ | 16,224 | $ | 100 | 2.45 | % | $ | 5,896 | $ | 12 | 0.83 | % | $ | 3,030 | $ | 1 | 0.10 | % | |||
| Interest-bearing deposits at<br> financial institutions | 54,799 | 381 | 2.76 | % | 67,254 | 169 | 1.01 | % | 99,024 | 39 | 0.16 | % | |||||||||
| Securities (1) | 946,096 | 9,602 | 4.05 | % | 920,308 | 9,002 | 3.91 | % | 799,471 | 7,646 | 3.82 | % | |||||||||
| Restricted investment securities | 42,638 | 674 | 6.18 | % | 37,166 | 485 | 5.16 | % | 20,910 | 262 | 4.97 | % | |||||||||
| Loans (1) | 5,916,100 | 72,969 | 4.89 | % | 5,711,471 | 61,932 | 4.35 | % | 4,529,136 | 46,427 | 4.07 | % | |||||||||
| Total earning assets (1) | $ | 6,975,857 | $ | 83,726 | 4.76 | % | $ | 6,742,095 | $ | 71,600 | 4.26 | % | $ | 5,451,571 | $ | 54,375 | 3.96 | % | |||
| Interest-bearing deposits | $ | 3,862,556 | $ | 10,889 | 1.12 | % | $ | 3,791,595 | $ | 4,478 | 0.47 | % | $ | 3,041,941 | $ | 2,183 | 0.28 | % | |||
| Time deposits | 593,490 | 1,681 | 1.12 | % | 529,675 | 1,047 | 0.79 | % | 461,210 | 1,090 | 0.94 | % | |||||||||
| Short-term borrowings | 11,376 | 84 | 2.94 | % | 1,404 | 3 | 0.78 | % | 6,858 | 1 | 0.10 | % | |||||||||
| Federal Home Loan Bank advances | 418,239 | 2,584 | 2.42 | % | 286,484 | 780 | 1.08 | % | 54,293 | 41 | 0.30 | % | |||||||||
| Other borrowings | 4,239 | 53 | 4.93 | % | - | - | 0.00 | % | - | - | 0.00 | % | |||||||||
| Subordinated debentures | 181,177 | 2,518 | 5.56 | % | 133,529 | 1,816 | 5.44 | % | 113,789 | 1,554 | 5.46 | % | |||||||||
| Junior subordinated<br> debentures | 48,551 | 689 | 5.56 | % | 46,536 | 680 | 5.78 | % | 38,084 | 569 | 5.84 | % | |||||||||
| Total interest-bearing liabilities | $ | 5,119,628 | $ | 18,498 | 1.43 | % | $ | 4,789,223 | $ | 8,804 | 0.74 | % | $ | 3,716,175 | $ | 5,438 | 0.58 | % | |||
| Net interest income (1) | $ | 65,228 | $ | 62,796 | $ | 48,937 | |||||||||||||||
| Net interest margin (2) | 3.46 | % | 3.53 | % | 3.36 | % | |||||||||||||||
| Net interest margin (TEY) (Non-GAAP)<br> (1) (2) (3) | 3.71 | % | 3.74 | % | 3.56 | % | |||||||||||||||
| Adjusted net interest margin<br> (TEY) (Non-GAAP) (1) (2) (3) | 3.65 | % | 3.64 | % | 3.53 | % | |||||||||||||||
| Adjusted net interest margin,<br> excluding PPP income (TEY) (Non-GAAP) (1) (2) (3) | 3.65 | % | 3.63 | % | 3.39 | % | |||||||||||||||
| For<br> the Nine Months Ended | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| September 30,<br> 2022 | September 30,<br> 2021 | ||||||||||||||||||||
| 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> Earned or <br><br> Paid | Average<br><br> Yield or Cost | ||||||||||||||||
| (dollars<br> in thousands) | |||||||||||||||||||||
| Fed funds sold | $ | 8,937 | $ | 114 | 1.70 | % | $ | 1,503 | $ | 1 | 0.13 | % | |||||||||
| Interest-bearing deposits at<br> financial institutions | 63,740 | 584 | 1.23 | % | 101,225 | 110 | 0.15 | % | |||||||||||||
| Securities (1) | 890,082 | 26,286 | 3.93 | % | 802,715 | 21,989 | 3.65 | % | |||||||||||||
| Restricted investment securities | 34,071 | 1,439 | 5.57 | % | 19,540 | 718 | 4.85 | % | |||||||||||||
| Loans (1) | 5,456,037 | 180,896 | 4.43 | % | 4,405,355 | 132,728 | 4.03 | % | |||||||||||||
| Total earning assets (1) | $ | 6,452,867 | $ | 209,319 | 4.33 | % | $ | 5,330,338 | $ | 155,546 | 3.90 | % | |||||||||
| Interest-bearing deposits | $ | 3,629,735 | $ | 17,704 | 0.65 | % | $ | 3,000,766 | $ | 6,219 | 0.28 | % | |||||||||
| Time deposits | 508,067 | 3,527 | 0.93 | % | 449,996 | 3,716 | 1.10 | % | |||||||||||||
| Short-term borrowings | 4,945 | 87 | 2.37 | % | 7,560 | 4 | 0.08 | % | |||||||||||||
| Federal Home Loan Bank advances | 264,718 | 3,447 | 1.72 | % | 29,875 | 66 | 0.29 | % | |||||||||||||
| Other borrowings | 1,429 | 53 | 4.90 | % | - | - | 0.00 | % | |||||||||||||
| Subordinated debentures | 143,104 | 5,888 | 5.49 | % | 115,927 | 4,718 | 5.43 | % | |||||||||||||
| Junior subordinated<br> debentures | 44,457 | 1,926 | 5.71 | % | 38,045 | 1,692 | 5.86 | % | |||||||||||||
| Total interest-bearing liabilities | $ | 4,596,455 | $ | 32,632 | 0.95 | % | $ | 3,642,169 | $ | 16,415 | 0.60 | % | |||||||||
| Net interest income (1) | $ | 176,687 | $ | 139,131 | |||||||||||||||||
| Net interest margin (2) | 3.44 | % | 3.30 | % | |||||||||||||||||
| Net interest margin (TEY) (Non-GAAP)<br> (1) (2) (3) | 3.66 | % | 3.49 | % | |||||||||||||||||
| Adjusted net interest margin<br> (TEY) (Non-GAAP) (1) (2) (3) | 3.60 | % | 3.46 | % | |||||||||||||||||
| Adjusted net interest margin,<br> excluding PPP income (TEY) (Non-GAAP) (1) (2) (3) | 3.60 | % | 3.31 | % |
(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 Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | |||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||
| ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES ON LOANS/LEASES | |||||||||||||||
| Beginning balance | $ | 92,425 | $ | 74,786 | $ | 78,721 | $ | 80,670 | $ | 78,894 | |||||
| Initial ACL recorded for acquired PCD loans | - | 5,902 | - | - | - | ||||||||||
| Credit loss expense (1) | 331 | 12,141 | (3,849 | ) | (2,045 | ) | 1,895 | ||||||||
| Loans/leases charged off | (2,489 | ) | (620 | ) | (456 | ) | (375 | ) | (287 | ) | |||||
| Recoveries on loans/leases previously charged off | 222 | 216 | 370 | 471 | 168 | ||||||||||
| Ending balance | $ | 90,489 | $ | 92,425 | $ | 74,786 | $ | 78,721 | $ | 80,670 | |||||
| NONPERFORMING ASSETS | |||||||||||||||
| Nonaccrual loans/leases (2) | $ | 17,511 | $ | 23,574 | $ | 2,744 | $ | 2,759 | $ | 6,818 | |||||
| Accruing loans/leases past due 90 days or more | 3 | 268 | 4 | 1 | 14 | ||||||||||
| Total nonperforming loans/leases | 17,514 | 23,842 | 2,748 | 2,760 | 6,832 | ||||||||||
| Other real estate owned | 177 | 205 | - | - | - | ||||||||||
| Other repossessed assets | 340 | - | - | - | - | ||||||||||
| Total nonperforming assets | $ | 18,031 | $ | 24,047 | $ | 2,748 | $ | 2,760 | $ | 6,832 | |||||
| ASSET QUALITY RATIOS | |||||||||||||||
| Nonperforming assets / total assets | 0.23 | % | 0.33 | % | 0.04 | % | 0.05 | % | 0.11 | % | |||||
| ACL for loans and leases / total loans/leases | 1.51 | % | 1.59 | % | 1.55 | % | 1.68 | % | 1.75 | % | |||||
| ACL for loans and leases / nonperforming loans/leases | 516.67 | % | 387.66 | % | 2721.47 | % | 2852.21 | % | 1180.77 | % | |||||
| Net charge-offs as a % of average loans/leases | 0.04 | % | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||
| INTERNALLY ASSIGNED RISK RATING (3) | |||||||||||||||
| Special mention (rating 6) | $ | 63,973 | $ | 54,558 | $ | 63,622 | $ | 62,510 | $ | 58,634 | |||||
| Substandard (rating 7) | 77,317 | 83,048 | 54,491 | 53,159 | 59,402 | ||||||||||
| Doubtful (rating 8) | - | - | - | - | - | ||||||||||
| $ | 141,290 | $ | 137,606 | $ | 118,113 | $ | 115,669 | $ | 118,036 | ||||||
| Criticized loans (4) | $ | 141,290 | $ | 137,606 | $ | 118,113 | $ | 115,669 | $ | 118,036 | |||||
| Classified loans (5) | 77,317 | 83,048 | 54,491 | 53,159 | 59,402 | ||||||||||
| Criticized loans as a % of total loans/leases | 2.35 | % | 2.37 | % | 2.45 | % | 2.47 | % | 2.57 | % | |||||
| Classified loans as a % of total loans/leases | 1.29 | % | 1.43 | % | 1.13 | % | 1.14 | % | 1.29 | % | |||||
| (1) | Credit<br>loss expense on loans/leases for the quarter ended June 30, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD<br>loans. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | Nonaccrual<br>loans for the quarter ended June 30, 2022 included $7.3 million related to the acquired Guaranty Bank loan portfolio. | ||||||||||||||
| --- | --- | ||||||||||||||
| (3) | Amounts<br>exclude the government guaranteed portion, if any. The Company assigns internal risk ratings of Pass (Rating 2) for the government<br>guaranteed portion. | ||||||||||||||
| --- | --- | ||||||||||||||
| (4) | Criticized<br>loans are defined as C&I and CRE loans with internally assigned risk ratings of 6, 7, or 8, regardless of performance. | ||||||||||||||
| --- | --- | ||||||||||||||
| (5) | Classified<br>loans are defined as C&I and CRE loans with internally assigned risk ratings of 7 or 8, regardless of performance. | ||||||||||||||
| --- | --- |
10
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| For the Quarter Ended | For the Nine Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | September 30, | September 30, | |||||||||||
| SELECT FINANCIAL DATA - SUBSIDIARIES | 2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||
| (dollars in thousands) | |||||||||||||||
| TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 2,218,166 | $ | 2,122,852 | $ | 2,106,631 | |||||||||
| m2 Equipment Finance, LLC | 298,640 | 289,451 | 259,543 | ||||||||||||
| Cedar Rapids Bank and Trust | 2,108,614 | 1,985,199 | 2,019,018 | ||||||||||||
| Community State Bank - Ankeny | 1,270,426 | 1,221,406 | 1,140,933 | ||||||||||||
| Guaranty Bank (2) | 2,107,407 | 2,037,364 | 880,143 | ||||||||||||
| TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,741,472 | $ | 1,787,564 | $ | 1,797,969 | |||||||||
| Cedar Rapids Bank and Trust | 1,627,202 | 1,495,665 | 1,526,144 | ||||||||||||
| Community State Bank - Ankeny | 1,036,998 | 1,006,836 | 994,042 | ||||||||||||
| Guaranty Bank (2) | 1,632,107 | 1,539,978 | 605,947 | ||||||||||||
| TOTAL LOANS & LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,806,776 | $ | 1,737,812 | $ | 1,636,170 | |||||||||
| m2 Equipment Finance, LLC | 300,753 | 293,435 | 262,962 | ||||||||||||
| Cedar Rapids Bank and Trust | 1,579,437 | 1,536,224 | 1,410,160 | ||||||||||||
| Community State Bank - Ankeny | 973,083 | 931,031 | 834,533 | ||||||||||||
| Guaranty Bank (2) | 1,649,313 | 1,592,836 | 718,867 | ||||||||||||
| TOTAL LOANS & LEASES / TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | 104 | % | 97 | % | 91 | % | |||||||||
| Cedar Rapids Bank and Trust | 97 | % | 103 | % | 92 | % | |||||||||
| Community State Bank - Ankeny | 94 | % | 92 | % | 84 | % | |||||||||
| Guaranty Bank | 101 | % | 103 | % | 119 | % | |||||||||
| TOTAL LOANS & LEASES / TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 81 | % | 82 | % | 78 | % | |||||||||
| Cedar Rapids Bank and Trust | 75 | % | 77 | % | 70 | % | |||||||||
| Community State Bank - Ankeny | 77 | % | 76 | % | 73 | % | |||||||||
| Guaranty Bank | 78 | % | 78 | % | 82 | % | |||||||||
| ACL ON LOANS/LEASES AS A PERCENTAGE OF LOANS/LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | 1.59 | % | 1.68 | % | 1.88 | % | |||||||||
| m2 Equipment Finance, LLC | 3.13 | % | 3.31 | % | 3.78 | % | |||||||||
| Cedar Rapids Bank and Trust | 1.54 | % | 1.58 | % | 1.85 | % | |||||||||
| Community State Bank - Ankeny | 1.45 | % | 1.57 | % | 1.73 | % | |||||||||
| Guaranty Bank | 1.42 | % | 1.53 | % | 1.30 | % | |||||||||
| RETURN ON AVERAGE ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 1.41 | % | 1.56 | % | 1.66 | % | 1.61 | % | 1.55 | % | |||||
| Cedar Rapids Bank and Trust | 2.83 | % | 2.72 | % | 3.93 | % | 2.60 | % | 2.95 | % | |||||
| Community State Bank - Ankeny | 1.31 | % | 1.12 | % | 1.17 | % | 1.28 | % | 1.05 | % | |||||
| Guaranty Bank (3) (4) | 1.76 | % | 0.20 | % | 2.09 | % | 1.06 | % | 1.69 | % | |||||
| NET INTEREST MARGIN PERCENTAGE (5) | |||||||||||||||
| Quad City Bank and Trust (1) | 3.65 | % | 3.74 | % | 3.47 | % | 3.63 | % | 3.32 | % | |||||
| Cedar Rapids Bank and Trust (6) | 4.02 | % | 3.66 | % | 3.68 | % | 3.77 | % | 3.61 | % | |||||
| Community State Bank - Ankeny (7) | 3.69 | % | 3.67 | % | 3.78 | % | 3.66 | % | 3.71 | % | |||||
| Guaranty Bank (8) | 4.10 | % | 4.20 | % | 3.67 | % | 4.01 | % | 3.59 | % | |||||
| ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET | |||||||||||||||
| INTEREST MARGIN, NET | |||||||||||||||
| Cedar Rapids Bank and Trust | $ | 5 | $ | 4 | $ | 64 | $ | 60 | $ | 169 | |||||
| Community State Bank - Ankeny | 62 | 28 | 52 | $ | 123 | 437 | |||||||||
| Guaranty Bank | 1,047 | 1,698 | 376 | $ | 2,814 | 755 | |||||||||
| QCR Holdings, Inc. (9) | (34 | ) | (35 | ) | (36 | ) | $ | (104 | ) | (110 | ) | ||||
| (1) | Quad City Bank and Trust figures include m2 Equipment Finance,<br>LLC, as this entity is wholly-owned and consolidated with the Bank. m2 Equipment Finance, LLC is also presented separately<br>for certain (applicable) measurements. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | Increase due to the acquisition of Guaranty Bank on April<br>1, 2022, merging into Springfield First Community Bank with the combined bank operating under the Guaranty Bank name. | ||||||||||||||
| --- | --- | ||||||||||||||
| (3) | Decrease due to CECL Day 2 provision for credit losses of<br>$12.4 million related to the acquisition of Guaranty Bank during the quarter ended June 30, 2022. | ||||||||||||||
| --- | --- | ||||||||||||||
| (4) | Adjusted ROAA excluding non-core adjustments for the Guaranty<br>Bank acquisition (non-GAAP) would have been 2.12% for the quarter ended June 30, 2022 and 1.84% for the nine months ended September 30,<br>2022. | ||||||||||||||
| --- | --- | ||||||||||||||
| (5) | Includes nontaxable securities and loans. Interest<br>earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate. | ||||||||||||||
| --- | --- | ||||||||||||||
| (6) | Cedar Rapids Bank and Trust's net interest margin percentage<br>includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been<br>4.02% for the quarter ended September 30, 2022, 3.62% for the quarter ended June 30, 2022 and 3.66% for the quarter ended September 30,<br>2021. | ||||||||||||||
| --- | --- | ||||||||||||||
| (7) | Community State Bank's net interest margin percentage includes<br>various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.72%<br>for the quarter ended September 30, 2022, 3.66% for the quarter ended June 30, 2022 and 3.66% for the quarter ended June 30, 2021. | ||||||||||||||
| --- | --- | ||||||||||||||
| (8) | Guaranty Bank's net interest margin percentage includes various<br>purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.91% for the<br>quarter ended September 30, 2022, 3.82% for the quarter ended June 30, 2022 and 3.67% for the quarter ended June 30, 2021. | ||||||||||||||
| --- | --- | ||||||||||||||
| (9) | Relates to the trust preferred securities acquired as part<br>of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013. | ||||||||||||||
| --- | --- |
11
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
| GAAP TO NON-GAAP RECONCILIATIONS | 2022 | 2022 | 2022 | 2021 | 2021 | ||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1) | |||||||||||||||
| Stockholders' equity (GAAP) | $ | 737,072 | $ | 743,138 | $ | 667,924 | $ | 677,010 | $ | 649,814 | |||||
| Less: Intangible assets | 155,153 | 155,940 | 82,922 | 83,415 | 83,923 | ||||||||||
| Tangible common equity (non-GAAP) | $ | 581,919 | $ | 587,198 | $ | 585,002 | $ | 593,595 | $ | 565,891 | |||||
| Total assets (GAAP) | $ | 7,730,049 | $ | 7,392,941 | $ | 6,175,819 | $ | 6,096,132 | $ | 6,014,508 | |||||
| Less: Intangible assets | 155,153 | 155,940 | 82,922 | 83,415 | 83,923 | ||||||||||
| Tangible assets (non-GAAP) | $ | 7,574,896 | $ | 7,237,001 | $ | 6,092,897 | $ | 6,012,717 | $ | 5,930,585 | |||||
| Tangible common equity to tangible assets ratio (non-GAAP) | 7.68 | % | 8.11 | % | 9.60 | % | 9.87 | % | 9.54 | % | |||||
| (1) | This<br>ratio is a non-GAAP financial measure. The Company's management believes that this measurement is important to many investors<br>in the marketplace who are interested in changes period-to-period in common equity. In compliance with applicable rules of<br>the SEC, this non-GAAP measure is reconciled to stockholders' equity and total assets, which are the most directly comparable GAAP financial<br>measures. | ||||||||||||||
| --- | --- |
12
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| GAAP TO NON-GAAP RECONCILIATIONS | For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||
| ADJUSTED NET INCOME (1) | |||||||||||||||||||||
| Net income (GAAP) | $ | 29,294 | $ | 15,242 | $ | 23,624 | $ | 27,009 | $ | 31,565 | $ | 68,160 | $ | 71,896 | |||||||
| Less non-core items (post-tax) (2): | |||||||||||||||||||||
| Income: | |||||||||||||||||||||
| Securities gains (losses), net | - | - | - | - | - | $ | - | $ | (69 | ) | |||||||||||
| Mark to market gains (losses) on derivatives, net | 714 | 342 | 715 | 77 | (13 | ) | 1,771 | $ | 58 | ||||||||||||
| Gain on sale of loan | - | - | - | - | 28 | - | $ | 28 | |||||||||||||
| Total non-core income (non-GAAP) | $ | 714 | $ | 342 | $ | 715 | $ | 77 | $ | 15 | $ | 1,771 | $ | 17 | |||||||
| Expense: | |||||||||||||||||||||
| Disposition costs | - | - | - | 3 | - | - | 7 | ||||||||||||||
| Acquisition costs (2) | 321 | 1,932 | 1,462 | 493 | - | 3,715 | - | ||||||||||||||
| Post-acquisition compensation, transition and integration costs | 48 | 3,789 | - | - | - | 3,837 | - | ||||||||||||||
| Separation agreement | - | - | - | - | - | - | 734 | ||||||||||||||
| CECL Day 2 provision for credit losses on acquired non-PCD loans (3) | - | 8,651 | - | - | - | 8,651 | - | ||||||||||||||
| CECL Day 2 provision for credit losses provision on acquired OBS exposure (3) | - | 1,140 | - | - | - | 1,140 | - | ||||||||||||||
| Loss on sale of subsidiary | - | - | - | - | - | - | - | ||||||||||||||
| Total non-core expense (non-GAAP) | $ | 369 | $ | 15,512 | $ | 1,462 | $ | 496 | $ | - | $ | 17,343 | $ | 741 | |||||||
| Adjusted net income (non-GAAP) (1) | $ | 28,949 | $ | 30,412 | $ | 24,371 | $ | 27,428 | $ | 31,550 | $ | 83,732 | $ | 72,620 | |||||||
| ADJUSTED EARNINGS PER COMMON SHARE (1) | |||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 28,949 | $ | 30,412 | $ | 24,371 | $ | 27,428 | $ | 31,550 | $ | 83,732 | $ | 72,620 | |||||||
| Weighted average common shares outstanding | 16,900,968 | 17,345,324 | 15,625,112 | 15,582,276 | 15,635,123 | 16,030,371 | 15,829,124 | ||||||||||||||
| Weighted average common and common equivalent shares outstanding | 17,110,691 | 17,549,107 | 15,852,256 | 15,838,246 | 15,869,798 | 16,243,921 | 16,058,420 | ||||||||||||||
| Adjusted earnings per common share (non-GAAP): | |||||||||||||||||||||
| Basic | $ | 1.71 | $ | 1.75 | $ | 1.56 | $ | 1.76 | $ | 2.02 | $ | 5.22 | $ | 4.59 | |||||||
| Diluted | $ | 1.69 | $ | 1.73 | $ | 1.54 | $ | 1.73 | $ | 1.99 | $ | 5.15 | $ | 4.52 | |||||||
| ADJUSTED RETURN ON AVERAGE ASSETS (1) | |||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 28,949 | $ | 30,412 | $ | 24,371 | $ | 27,428 | $ | 31,550 | $ | 83,732 | $ | 72,620 | |||||||
| Average Assets | $ | 7,652,463 | $ | 7,324,470 | $ | 6,115,127 | $ | 6,121,446 | $ | 5,982,583 | $ | 7,005,988 | $ | 5,789,753 | |||||||
| Adjusted return on average assets (annualized) (non-GAAP) | 1.51 | % | 1.66 | % | 1.59 | % | 1.79 | % | 2.11 | % | 1.59 | % | 1.67 | % | |||||||
| NET INTEREST MARGIN (TEY) (4) | |||||||||||||||||||||
| Net interest income (GAAP) | $ | 60,769 | $ | 59,400 | $ | 45,733 | $ | 46,513 | $ | 46,229 | $ | 165,902 | $ | 131,720 | |||||||
| Plus: Tax equivalent adjustment (5) | 4,459 | 3,396 | 2,933 | 2,800 | 2,708 | 10,785 | 7,411 | ||||||||||||||
| Net interest income - tax equivalent (Non-GAAP) | $ | 65,228 | $ | 62,796 | $ | 48,666 | $ | 49,313 | $ | 48,937 | $ | 176,687 | $ | 139,131 | |||||||
| Less: Acquisition accounting net accretion | 1,080 | 1,695 | 118 | 88 | 456 | 2,893 | 1,251 | ||||||||||||||
| Adjusted net interest income | $ | 64,148 | $ | 61,101 | $ | 48,548 | $ | 49,225 | $ | 48,481 | $ | 173,794 | $ | 137,880 | |||||||
| Less: PPP income | - | 125 | 530 | 1,365 | 1,910 | 125 | 5,831 | ||||||||||||||
| Adjusted net interest income, excluding PPP income | $ | 64,148 | $ | 60,976 | $ | 48,018 | $ | 47,860 | $ | 46,571 | $ | 173,669 | $ | 132,049 | |||||||
| Average earning assets | $ | 6,975,857 | $ | 6,742,095 | $ | 5,625,813 | $ | 5,602,222 | $ | 5,451,571 | $ | 6,452,867 | $ | 5,330,338 | |||||||
| Net interest margin (GAAP) | 3.46 | % | 3.53 | % | 3.30 | % | 3.29 | % | 3.36 | % | 3.44 | % | 3.30 | % | |||||||
| Net interest margin (TEY) (Non-GAAP) | 3.71 | % | 3.74 | % | 3.50 | % | 3.50 | % | 3.56 | % | 3.66 | % | 3.49 | % | |||||||
| Adjusted net interest margin (TEY) (Non-GAAP) | 3.65 | % | 3.64 | % | 3.50 | % | 3.49 | % | 3.53 | % | 3.60 | % | 3.46 | % | |||||||
| Adjusted net interest margin, excluding PPP income (TEY) (Non-GAAP) | 3.65 | % | 3.63 | % | 3.46 | % | 3.39 | % | 3.39 | % | 3.60 | % | 3.31 | % | |||||||
| EFFICIENCY RATIO (6) | |||||||||||||||||||||
| Noninterest expense (GAAP) | $ | 47,746 | $ | 54,248 | $ | 38,325 | $ | 39,412 | $ | 41,387 | $ | 140,319 | $ | 114,290 | |||||||
| Net interest income (GAAP) | $ | 60,769 | $ | 59,400 | $ | 45,733 | $ | 46,513 | $ | 46,229 | $ | 165,902 | $ | 131,720 | |||||||
| Noninterest income (GAAP) | 21,095 | 22,782 | 15,633 | 22,985 | 34,652 | 59,510 | 77,437 | ||||||||||||||
| Total income | $ | 81,864 | $ | 82,182 | $ | 61,366 | $ | 69,498 | $ | 80,881 | $ | 225,412 | $ | 209,157 | |||||||
| Efficiency ratio (noninterest expense/total income) (Non-GAAP) | 58.32 | % | 66.01 | % | 62.45 | % | 56.71 | % | 51.17 | % | 62.25 | % | 54.64 | % | |||||||
| LOAN GROWTH ANNUALIZED, EXCLUDING ACQUIRED AND PPP LOANS | |||||||||||||||||||||
| Total loans and leases | $ | 6,008,610 | $ | 5,797,903 | $ | 4,827,868 | $ | 4,680,132 | $ | 4,599,730 | $ | 6,008,610 | $ | 4,599,730 | |||||||
| Less: Acquired loans (7) | - | 807,599 | - | - | - | - | - | ||||||||||||||
| Less: PPP loans | 79 | 79 | 6,340 | 28,181 | 83,575 | 79 | 83,575 | ||||||||||||||
| Total loans and leases, excluding acquired and PPP loans | $ | 6,008,531 | $ | 4,990,225 | $ | 4,821,528 | $ | 4,651,951 | $ | 4,516,155 | $ | 6,008,531 | $ | 4,516,155 | |||||||
| Loan growth annualized, excluding acquired and PPP loans | 14.54 | % | 14.00 | % | 14.58 | % | 12.03 | % | 23.04 | % | 15.73 | % | 16.08 | % | |||||||
| (1) | Adjusted<br> net income, Adjusted net income attributable to QCR Holdings, Inc. common stockholders,<br> Adjusted earnings per common share and Adjusted return on average assets are non-GAAP financial<br> measures. The Company's management believes that these measurements are important to investors<br> as they exclude non-core or non-recurring income and expense items, therefore, they provide<br> a more realistic run-rate for future periods. In compliance with applicable rules of<br> the SEC, this non-GAAP measure is reconciled to net income, which is the most directly comparable<br> GAAP financial measure. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | Non-core<br> or nonrecurring items (post-tax) are calculated using an estimated effective tax rate of<br> 21% with the exception of acquisition costs which have an estimated effective tax rate of<br> 10.25%. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (3) | The<br> CECL Day 2 provision for credit losses on acquired non-PCD loans and OBS exposures resulted<br> from the Guaranty Bank acquisition on April 1, 2022. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (4) | Interest<br> earned and yields on nontaxable securities and loans are determined on a tax equivalent basis<br> using a 21% effective tax rate. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (5) | Net<br> interest margin (TEY) is a non-GAAP financial measure. The Company's management utilizes<br> this measurement to take into account the tax benefit associated with certain loans and securities. It<br> is also standard industry practice to measure net interest margin using tax-equivalent measures.<br> In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled<br> to net interest income, which is the most directly comparable GAAP financial measure. In<br> addition, the Company calculates net interest margin without the impact of acquisition accounting<br> net accretion as this can fluctuate and it's difficult to provide a more realistic run-rate<br> for future periods. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (6) | Efficiency<br> ratio is a non-GAAP measure. The Company's management utilizes this ratio to compare to industry<br> peers. The ratio is used to calculate overhead as a percentage of revenue. In<br> compliance with the applicable rules of the SEC, this non-GAAP measure is reconciled<br> to noninterest expense, net interest income and noninterest income, which are the most directly<br> comparable GAAP financial measures. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (7) | Loan<br> balances acquired from the Guaranty Bank acquisition on April 1, 2022 are excluded. | ||||||||||||||||||||
| --- | --- |
13