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): July 26, 2023
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 July 26, 2023, QCR Holdings, Inc. (the “Company”) issued a press release disclosing financial results for the quarter ended June 30, 2023. 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 July 26, 2023. |
|---|---|
| 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: July 26, 2023 | By: | /s/ Todd A. Gipple |
| Todd A. Gipple | ||
| President and Chief Financial Officer |
Exhibit 99.1
| PRESS RELEASE | FOR IMMEDIATE RELEASE |
|---|
QCR Holdings, Inc. Announces Net Income of $28.4Million
for the Second Quarter of 2023
Second Quarter 2023 Highlights
| · | Net income of $28.4 million, or $1.69 per diluted share |
|---|---|
| · | Return on average assets of 1.44% and return on average total equity of13.97% |
| --- | --- |
| · | Annualized loan and lease growth of 12.2% |
| --- | --- |
| · | Annualizedcore deposit growth, excluding brokered deposits, of 23.0% |
| --- | --- |
| · | Uninsured and uncollateralized deposits further improved to 19.9% of totaldeposits |
| --- | --- |
| · | CapitalMarkets Revenue grew $5.5 million, or 32.1%, to $22.5 million |
| --- | --- |
| · | Tangible book value (non-GAAP) per share increased $1.28, or 13.2% annualized |
| --- | --- |
| · | TCEratio (non-GAAP) grew 7 basis points to 8.28% |
| --- | --- |
Moline, IL, July 26, 2023 – QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $28.4 million and diluted earnings per share (“EPS”) of $1.69 for the second quarter of 2023, compared to net income of $27.2 million and diluted EPS of $1.60 for the first quarter of 2023.
“We delivered outstanding second quarter results, highlighted by robust loan and core deposit growth, significant fee income and continued strong asset quality,” said Larry J. Helling, Chief Executive Officer. “In addition, we continued to improve upon our already solid capital levels with exceptional earnings performance.”
Robust Core Deposit Growth and StrengthenedLiquidity
During the second quarter of 2023, the Company’s core deposits, which exclude brokered deposits, grew $339.3 million to a total of $6.2 billion, or 23.0% on an annualized basis. Total uninsured and uncollateralized deposits further improved during the second quarter and represented 19.9% of total deposits at quarter-end. The Company maintained approximately $1.5 billion of immediately available liquidity at quarter-end, which exceeds the total amount of uninsured and uncollateralized deposits.
“Our experienced bankers grew core deposits significantly during the quarter building upon our strong and diversified deposit franchise. As a result, our ratio of loans held for investment to deposits further improved to 92.1%,” added Mr. Helling. “We are very pleased with our level of uninsured and uncollateralized deposits and our strong liquidity position.”
Net Income of $28.4 Millionand Diluted EPS of $1.69
Both reported and adjusted (non-GAAP) net income and diluted EPS for the second quarter of 2023 were $28.4 million and $1.69, respectively. For the first quarter of 2023, net income and diluted EPS was $27.2 million and $1.60, respectively while adjusted net income (non-GAAP) was $28.0 million and adjusted diluted EPS (non-GAAP) was $1.65. For the second quarter of 2022, net income and diluted EPS were $15.2 million and $0.87, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $30.4 million and $1.73, respectively.
| For the Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | ||||
| $ in millions (except per share data) | 2023 | 2023 | 2022 | |||
| Net Income | $ | 28.4 | $ | 27.2 | $ | 15.2 |
| Diluted EPS | $ | 1.69 | $ | 1.60 | $ | 0.87 |
| Adjusted Net Income (non-GAAP)* | $ | 28.4 | $ | 28.0 | $ | 30.4 |
| Adjusted Diluted EPS (non-GAAP)* | $ | 1.69 | $ | 1.65 | $ | 1.73 |
*Adjusted non-GAAP measurements of financial performance excludenon-core and/or nonrecurring income and expense items that management believes are not reflective of the anticipated future operationof the Company’s business. The Company believes these measurements provide a better comparison for analysis and may provide a betterindicator of future performance. See GAAP to non-GAAP reconciliations.
Net Interest Income of $53.2Million
Net interest income for the second quarter of 2023 totaled $53.2 million, compared to $56.8 million for the first quarter of 2023 and $59.4 million for the second quarter of 2022. Adjusted net interest income (non-GAAP) during the quarter was $59.6 million, a decrease of $2.4 million from the prior quarter. Acquisition-related net accretion totaled $134 thousand for the second quarter of 2023, compared to $828 thousand in the first quarter.
In the second quarter of 2023, net interest margin (“NIM”) was 2.93% and NIM on a tax-equivalent yield (“TEY”) basis (non-GAAP) was 3.29%, compared to 3.18% and 3.52% in the prior quarter, respectively. Adjusted NIM TEY (non-GAAP) of 3.28% declined by 19 basis points from 3.47% in the first quarter.
“Our adjusted tax-equivalent NIM declined 19 basis points during the second quarter which was inside of our guidance range,” said Todd A. Gipple, President and Chief Financial Officer. “With the inverted yield curve and the competitive deposit landscape, our net interest income was pressured despite continued loan growth and the ongoing expansion of loan yields. During the second quarter, we experienced an increase in the cost of funds as our deposit mix continued to shift from noninterest-bearing and lower beta deposits to higher beta deposits.”
Noninterest Income Grew 26%to $32.5 Million
Noninterest income for the second quarter of 2023 totaled $32.5 million, up 25.8% from $25.8 million for the first quarter of 2023. The Company generated $22.5 million of capital markets revenue in the quarter, an increase of $5.5 million, or 32.1% from the first quarter. Wealth management revenue was $3.8 million for the quarter, consistent with the prior quarter.
“Capital markets revenue was $22.5 million in the second quarter, up significantly from the first quarter and well ahead of our guidance range,” added Mr. Gipple. “Capital markets revenue from swaps continues to benefit from stabilization in the supply chain and construction costs. The demand for affordable housing continues to be strong. This source of fee income has been consistent for us over the last several years. Based on decades of stability in the low- income housing tax credit (“LIHTC”) industry and our own experience, we believe that this business is countercyclical and will be very resilient in future recessionary environments.”
Noninterest Expenses RemainWell-Controlled
Noninterest expense for the second quarter of 2023 totaled $49.7 million, which is a modest increase of only 1.9% from $48.8 million for the first quarter of 2023, and compared to $54.2 million for the second quarter of 2022. The linked-quarter increase was primarily due to higher variable compensation, increased Insured Cash Sweep (“ICS”) fees and FDIC insurance rates. These increases were partially offset by well-controlled salaries and employee benefits expenses.
Exceptional Loan Growth of 12.2% Annualized
During the second quarter of 2023, the Company’s loans and leases grew $189.3 million to a total of $6.4 billion, or 12.2% on an annualized basis. “Our loan growth during the quarter was driven primarily by strength in our LIHTC lending business. Our clients continue to experience strong demand for their projects as the need for affordable housing exceeds supply in the markets they serve,” added Mr. Helling.
2
“We also experienced modest loan demand in the second quarter from our traditional commercial lending and leasing businesses. As a result, we are increasing our guidance for loan growth for the remainder of the year to be in the range of 9 to 12% on an annualized basis, which would result in a 0 to 3% growth rate on an annualized basis net of planned LIHTC loan securitizations. In the first quarter of 2023, we categorized $139.2 million of LIHTC loans as held for sale as part of a future loan securitization transaction. During the second quarter of 2023, we increased the size of our planned securitizations of LIHTC loans, adding an additional $151.8 of loans for a total of $291.1 million to achieve improved pricing and execution. We now expect to close on the transactions early in the fourth quarter,” said Mr. Helling.
Asset Quality Remains Excellent
“Our asset quality continues to be strong as the ratio of nonperforming assets to total assets was 0.32% at quarter-end and compares favorably to historical averages. We remain cautiously optimistic about the relative economic resiliency of our markets as unemployment is low and business activity is still healthy across our footprint,” said Mr. Helling.
Nonperforming assets (“NPAs”) increased modestly during the quarter to $26.1 million or 32 basis points of total assets. “Approximately half of the total dollar amount of NPAs consist of one relationship and we believe that this credit will be resolved without a loss,” added Mr. Helling. The Company’s criticized loans and classified loans to total loans and leases on June 30, 2023, improved to 2.84% and 1.00%, respectively, as compared to 3.16% and 1.14% as of March 31, 2023.
The Company recorded a total provision for credit losses of $3.6 million during the quarter which included $3.3 million of provision on loans/leases. As of June 30, 2023, the ACL to total loans/leases held for investment was 1.41%.
Continued Strong Capital Levels
As of June 30, 2023, the Company’s total risk-based capital ratio was 14.66%, the common equity tier 1 ratio was 9.71% and the tangible common equity to tangible assets ratio (non-GAAP) was 8.28%. By comparison, these respective ratios were 14.68%, 9.60% and 8.21% as of March 31, 2023. During the quarter, we repurchased a modest number of shares, as our priority has shifted to capital retention, targeting capital levels near the top of our peer group.
The Company’s tangible book value per share (non-GAAP) increased $1.28, or 13.2% annualized during the second quarter. Accumulated other comprehensive income (“AOCI”) declined $6.3 million during the quarter due to a decrease in the value of the Company’s available for sale securities portfolio and certain derivatives resulting from the change in interest rates during the second quarter. While the net decline in AOCI diluted the Company’s tangible common equity, strong earnings more than offset this impact, which led to the increase in tangible book value per share (non-GAAP).
Conference Call Details
The Company will host an earnings call/webcast tomorrow, July 27, 2023, 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 August 3, 2023. The replay access information is 877-344-7529 (international 412-317-0088); access code 5035792. 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 36 locations in Iowa, Missouri, Wisconsin and Illinois. As of June 30, 2023, the Company had $8.2 billion in assets, $6.4 billion in loans and $6.6 billion in deposits. For additional information, please visit the Company’s website at www.qcrh.com.
3
Special Note Concerning Forward-Looking Statements. Thisdocument contains, and future oral and written statements of the Company and its management may contain, forward-looking statements withinthe meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans,objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectationsand assumptions of the Company’s management and on information currently available to management, are generally identifiable bythe use of words such as “believe,” “expect,” “anticipate,” “bode”, “predict,” “suggest,” “project”, “appear,” “plan,” “intend,” “estimate,” “annualize,” “may,” “will,” “would,” “could,” “should,” “likely,” “might,” “potential,” “continue,” “annualized,” “target,” “outlook,”as well as the negative forms of those words, or other similar expressions. Additionally, all statements in this document, including forward-lookingstatements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of newinformation or future events.
A number of factors, many of which are beyond the ability of theCompany to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factorsinclude, among others, the following: (i) the strength of the local, state, national and international economies(including effectsof inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats and attacks, widespreaddisease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threats thereof (including the Russianinvasion of Ukraine), or other adverse external events that could cause economic deterioration or instability in credit markets, and theresponse of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies andpractices, as may be adopted by state and federal regulatory agencies, the FASB or the PCAOB; (iv) changes in local, state and federallaws, regulations and governmental policies concerning the Company’s general business and any changes in response to the recentfailures of other banks; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBORphase-out); (vi) increased competition in the financial services sector, including from non-bank competitors such as credit unionsand “fintech” companies, and the inability to attract new customers; (vii) changes in technology and the ability to developand maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize theanticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss ofkey executives or employees; (x) changes in consumer spending; (xi) unexpected outcomes of existing or new litigation involving theCompany; (xii) the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; (xiii) fluctuations inthe value of securities held in our securities portfolio; (xiv) concentrations within our loan portfolio, large loans to certain borrowers,and large deposits from certain clients; (xv) the concentration of large deposits from certain clients who have balances above currentFDIC insurance limits and may withdraw deposits to diversity their exposure; (xvi) the level of non-performing assets on our balance sheets;(xvii) interruptions involving our information technology and communications systems or third-party servicers; (xviii) breaches or failuresof our information security controls or cybersecurity-related incidents, and (xixi) the ability of the Company to manage the risks associatedwith the foregoing as well as anticipated. 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 filings withthe Securities and Exchange Commission.
Contact:
Todd A. Gipple
President and Chief Financial Officer
(309) 743-7745
tgipple@qcrh.com
4
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | |||||||||||
| (dollars in thousands) | |||||||||||||||
| CONDENSED BALANCE SHEET | |||||||||||||||
| Cash and due from banks | $ | 84,084 | $ | 64,295 | $ | 59,723 | $ | 86,282 | $ | 92,379 | |||||
| Federal funds sold and interest-bearing deposits | 175,012 | 253,997 | 124,270 | 71,043 | 56,532 | ||||||||||
| Securities, net of allowance for credit losses | 882,888 | 877,446 | 928,102 | 879,450 | 879,918 | ||||||||||
| Loans receivable held for sale (1) | 295,057 | 140,633 | 1,480 | 3,054 | 1,186 | ||||||||||
| Loans/leases receivable held for investment | 6,084,263 | 6,049,389 | 6,137,391 | 6,005,556 | 5,796,717 | ||||||||||
| Allowance for credit losses | (85,797 | ) | (86,573 | ) | (87,706 | ) | (90,489 | ) | (92,425 | ) | |||||
| Intangibles | 15,228 | 15,993 | 16,759 | 17,546 | 18,333 | ||||||||||
| Goodwill | 139,027 | 138,474 | 137,607 | 137,607 | 137,607 | ||||||||||
| Derivatives | 170,294 | 130,350 | 177,631 | 185,037 | 97,455 | ||||||||||
| Other assets | 466,617 | 452,900 | 453,580 | 434,963 | 405,239 | ||||||||||
| Total assets | $ | 8,226,673 | $ | 8,036,904 | $ | 7,948,837 | $ | 7,730,049 | $ | 7,392,941 | |||||
| Total deposits | $ | 6,606,720 | $ | 6,501,663 | $ | 5,984,217 | $ | 5,941,035 | $ | 5,820,657 | |||||
| Total borrowings | 418,368 | 417,480 | 825,894 | 701,491 | 583,166 | ||||||||||
| Derivatives | 195,841 | 150,401 | 200,701 | 209,479 | 113,305 | ||||||||||
| Other liabilities | 183,055 | 165,866 | 165,301 | 140,972 | 132,675 | ||||||||||
| Total stockholders’ equity | 822,689 | 801,494 | 772,724 | 737,072 | 743,138 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 8,226,673 | $ | 8,036,904 | $ | 7,948,837 | $ | 7,730,049 | $ | 7,392,941 | |||||
| ANALYSIS OF LOAN PORTFOLIO | |||||||||||||||
| Loan/lease mix: | |||||||||||||||
| Commercial and industrial - revolving | $ | 304,617 | $ | 307,612 | $ | 296,869 | $ | 332,996 | $ | 322,258 | |||||
| Commercial and industrial - other | 1,402,553 | 1,420,331 | 1,451,693 | 1,415,996 | 1,403,689 | ||||||||||
| Total commercial and industrial | 1,707,170 | 1,727,943 | 1,748,562 | 1,748,992 | 1,725,947 | ||||||||||
| Commercial real estate, owner occupied | 609,717 | 616,922 | 629,367 | 627,558 | 628,565 | ||||||||||
| Commercial real estate, non-owner occupied | 963,814 | 982,716 | 963,239 | 920,876 | 889,530 | ||||||||||
| Construction and land development* | 1,307,766 | 1,208,185 | 1,192,061 | 1,149,503 | 1,080,372 | ||||||||||
| Multi-family* | 1,100,794 | 969,870 | 963,803 | 933,118 | 860,742 | ||||||||||
| Direct financing leases | 32,937 | 35,373 | 31,889 | 33,503 | 40,050 | ||||||||||
| 1-4 family real estate | 535,405 | 532,491 | 499,529 | 487,508 | 473,141 | ||||||||||
| Consumer | 121,717 | 116,522 | 110,421 | 107,552 | 99,556 | ||||||||||
| Total loans/leases | $ | 6,379,320 | $ | 6,190,022 | $ | 6,138,871 | $ | 6,008,610 | $ | 5,797,903 | |||||
| Less allowance for credit losses | 85,797 | 86,573 | 87,706 | 90,489 | 92,425 | ||||||||||
| Net loans/leases | $ | 6,293,523 | $ | 6,103,449 | $ | 6,051,165 | $ | 5,918,121 | $ | 5,705,478 | |||||
| * | The LIHTC lending business is a significant part of the Company’s Construction and<br> Multi-family loans. For the quarter ended June 30, 2023, the LIHTC portion of the Construction loans was $870 million, or 67%,<br> and the LIHTC portion of the Multi-family loans was $820 million, or 75%. | ||||||||||||||
| --- | --- | ||||||||||||||
| ANALYSIS OF SECURITIES PORTFOLIO | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Securities mix: | |||||||||||||||
| U.S. government sponsored agency securities | $ | 18,942 | $ | 19,320 | $ | 16,981 | $ | 20,527 | $ | 20,448 | |||||
| Municipal securities | 743,608 | 731,689 | 779,450 | 724,204 | 710,638 | ||||||||||
| Residential mortgage-backed and related securities | 60,958 | 63,104 | 66,215 | 68,844 | 81,247 | ||||||||||
| Asset backed securities | 17,393 | 17,967 | 18,728 | 19,630 | 19,956 | ||||||||||
| Other securities | 43,156 | 46,535 | 46,908 | 46,443 | 47,827 | ||||||||||
| Total securities | $ | 884,057 | $ | 878,615 | $ | 928,282 | $ | 879,648 | $ | 880,116 | |||||
| Less allowance for credit losses | 1,169 | 1,169 | 180 | 198 | 198 | ||||||||||
| Net securities | $ | 882,888 | $ | 877,446 | $ | 928,102 | $ | 879,450 | $ | 879,918 | |||||
| ANALYSIS OF DEPOSITS | |||||||||||||||
| Deposit mix: | |||||||||||||||
| Noninterest-bearing demand deposits | $ | 1,101,605 | $ | 1,189,858 | $ | 1,262,981 | $ | 1,315,555 | $ | 1,514,005 | |||||
| Interest-bearing demand deposits | 4,374,847 | 4,033,193 | 3,875,497 | 3,904,303 | 3,758,566 | ||||||||||
| Time deposits | 765,801 | 679,946 | 744,593 | 672,133 | 540,074 | ||||||||||
| Brokered deposits | 364,467 | 598,666 | 101,146 | 49,044 | 8,012 | ||||||||||
| Total deposits | $ | 6,606,720 | $ | 6,501,663 | $ | 5,984,217 | $ | 5,941,035 | $ | 5,820,657 | |||||
| ANALYSIS OF BORROWINGS | |||||||||||||||
| Borrowings mix: | |||||||||||||||
| Term FHLB advances | $ | 135,000 | $ | 135,000 | $ | - | $ | - | $ | - | |||||
| Overnight FHLB advances | - | - | 415,000 | 335,000 | 400,000 | ||||||||||
| Other short-term borrowings | 1,850 | 1,100 | 129,630 | 85,180 | 1,070 | ||||||||||
| Subordinated notes | 232,852 | 232,746 | 232,662 | 232,743 | 133,562 | ||||||||||
| Junior subordinated debentures | 48,666 | 48,634 | 48,602 | 48,568 | 48,534 | ||||||||||
| Total borrowings | $ | 418,368 | $ | 417,480 | $ | 825,894 | $ | 701,491 | $ | 583,166 |
(1) Loans with a fair value of $291.0 million, have been identified for securitization and are included in LHFS at June 30, 2023.
5
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| For the Quarter Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | ||||||||
| (dollars in thousands, except per share data) | ||||||||||||
| INCOME STATEMENT | ||||||||||||
| Interest income | $ | 98,377 | $ | 94,217 | $ | 94,037 | $ | 79,267 | $ | 68,205 | ||
| Interest expense | 45,172 | 37,407 | 28,819 | 18,498 | 8,805 | |||||||
| Net interest income | 53,205 | 56,810 | 65,218 | 60,769 | 59,400 | |||||||
| Provision for credit losses (1) | 3,606 | 3,928 | - | - | 11,200 | |||||||
| Net interest income after provision for credit losses | $ | 49,599 | $ | 52,882 | $ | 65,218 | $ | 60,769 | $ | 48,200 | ||
| Trust department fees | $ | 2,844 | $ | 2,906 | $ | 2,644 | $ | 2,537 | $ | 2,497 | ||
| Investment advisory and management fees | 986 | 879 | 918 | 921 | 983 | |||||||
| Deposit service fees | 2,034 | 2,028 | 2,142 | 2,214 | 2,223 | |||||||
| Gain on sales of residential real estate loans | 500 | 312 | 468 | 641 | 809 | |||||||
| Gain on sales of government guaranteed portions of loans | - | 30 | 50 | 50 | - | |||||||
| Capital markets revenue | 22,490 | 17,023 | 11,338 | 10,545 | 13,004 | |||||||
| Securities gains (losses), net | 12 | (463 | ) | - | - | - | ||||||
| Earnings on bank-owned life insurance | 838 | 707 | 755 | 605 | 350 | |||||||
| Debit card fees | 1,589 | 1,466 | 1,500 | 1,453 | 1,499 | |||||||
| Correspondent banking fees | 356 | 391 | 257 | 189 | 244 | |||||||
| Loan related fee income | 770 | 651 | 614 | 652 | 682 | |||||||
| Fair value gain (loss) on derivatives | 83 | (427 | ) | (267 | ) | 904 | 432 | |||||
| Other | 18 | 339 | 800 | 384 | 59 | |||||||
| Total noninterest income | $ | 32,520 | $ | 25,842 | $ | 21,219 | $ | 21,095 | $ | 22,782 | ||
| Salaries and employee benefits | $ | 31,459 | $ | 32,003 | $ | 32,594 | $ | 29,175 | $ | 29,972 | ||
| Occupancy and equipment expense | 6,100 | 5,914 | 6,027 | 6,033 | 5,978 | |||||||
| Professional and data processing fees | 4,078 | 3,514 | 3,769 | 4,477 | 4,365 | |||||||
| Acquisition costs | - | - | (424 | ) | 315 | 1,973 | ||||||
| Post-acquisition compensation, transition and integration costs | - | 207 | 668 | 62 | 4,796 | |||||||
| FDIC insurance, other insurance and regulatory fees | 1,927 | 1,374 | 1,605 | 1,497 | 1,394 | |||||||
| Loan/lease expense | 652 | 556 | 411 | 390 | 761 | |||||||
| Net cost of (income from) and gains/losses on operations of other real estate | - | (67 | ) | (117 | ) | 19 | 59 | |||||
| Advertising and marketing | 1,735 | 1,237 | 1,562 | 1,437 | 1,198 | |||||||
| Communication and data connectivity | 471 | 665 | 587 | 639 | 584 | |||||||
| Supplies | 281 | 305 | 337 | 289 | 237 | |||||||
| Bank service charges | 621 | 605 | 563 | 568 | 610 | |||||||
| Correspondent banking expense | 221 | 210 | 210 | 218 | 213 | |||||||
| Intangibles amortization | 765 | 766 | 787 | 787 | 787 | |||||||
| Payment card processing | 542 | 545 | 599 | 477 | 626 | |||||||
| Trust expense | 337 | 214 | 166 | 227 | 195 | |||||||
| Other | 538 | 737 | 353 | 1,136 | 500 | |||||||
| Total noninterest expense | $ | 49,727 | $ | 48,785 | $ | 49,697 | $ | 47,746 | $ | 54,248 | ||
| Net income before income taxes | $ | 32,392 | $ | 29,939 | $ | 36,740 | $ | 34,118 | $ | 16,734 | ||
| Federal and state income tax expense | 3,967 | 2,782 | 5,834 | 4,824 | 1,492 | |||||||
| Net income | $ | 28,425 | $ | 27,157 | $ | 30,906 | $ | 29,294 | $ | 15,242 | ||
| Basic EPS | $ | 1.70 | $ | 1.62 | $ | 1.83 | $ | 1.73 | $ | 0.88 | ||
| Diluted EPS | $ | 1.69 | $ | 1.60 | $ | 1.81 | $ | 1.71 | $ | 0.87 | ||
| Weighted average common shares outstanding | 16,701,950 | 16,776,289 | 16,855,973 | 16,900,968 | 17,345,324 | |||||||
| Weighted average common and common equivalent shares outstanding | 16,799,527 | 16,942,132 | 17,047,976 | 17,110,691 | 17,549,107 | |||||||
| (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<br>exposures. | |||||||||||
| --- | --- |
6
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| For the Six Months Ended | |||||
|---|---|---|---|---|---|
| June 30, | June 30, | ||||
| 2023 | 2022 | ||||
| (dollars in thousands, except per share data) | |||||
| INCOME STATEMENT | |||||
| Interest income | $ | 192,594 | $ | 119,267 | |
| Interest expense | 82,579 | 14,134 | |||
| Net interest income | 110,015 | 105,133 | |||
| Provision for credit losses (1) | 7,534 | 8,284 | |||
| Net interest income after provision for loan/lease losses | $ | 102,481 | $ | 96,849 | |
| Trust department fees | $ | 5,750 | $ | 5,460 | |
| Investment advisory and management fees | 1,865 | 2,019 | |||
| Deposit service fees | 4,062 | 3,778 | |||
| Gain on sales of residential real estate loans | 812 | 1,302 | |||
| Gain on sales of government guaranteed portions of loans | 30 | 19 | |||
| Swap fee income/capital markets revenue | 39,513 | 19,426 | |||
| Securities losses, net | (451 | ) | - | ||
| Earnings on bank-owned life insurance | 1,545 | 696 | |||
| Debit card fees | 3,055 | 2,506 | |||
| Correspondent banking fees | 747 | 521 | |||
| Loan related fee income | 1,421 | 1,162 | |||
| Fair value gain (loss) on derivatives | (344 | ) | 1,338 | ||
| Other | 357 | 188 | |||
| Total noninterest income | $ | 58,362 | $ | 38,415 | |
| Salaries and employee benefits | $ | 63,462 | $ | 53,599 | |
| Occupancy and equipment expense | 12,014 | 9,915 | |||
| Professional and data processing fees | 7,592 | 8,036 | |||
| Acquisition costs | - | 3,824 | |||
| Post-acquisition compensation, transition and integration costs | 207 | 4,796 | |||
| FDIC insurance, other insurance and regulatory fees | 3,301 | 2,704 | |||
| Loan/lease expense | 1,208 | 1,028 | |||
| Net cost of (income from) and gains/losses on operations of other real estate | (67 | ) | 58 | ||
| Advertising and marketing | 2,972 | 1,959 | |||
| Communication | 1,136 | 987 | |||
| Supplies | 586 | 483 | |||
| Bank service charges | 1,226 | 1,151 | |||
| Correspondent banking expense | 431 | 412 | |||
| Intangibles amortization | 1,531 | 1,280 | |||
| Payment card processing | 1,087 | 888 | |||
| Trust expense | 551 | 382 | |||
| Other | 1,275 | 1,071 | |||
| Total noninterest expense | $ | 98,512 | $ | 92,573 | |
| Net income before income taxes | $ | 62,331 | $ | 42,691 | |
| Federal and state income tax expense | 6,749 | 3,825 | |||
| Net income | $ | 55,582 | $ | 38,866 | |
| Basic EPS | $ | 3.32 | $ | 2.36 | |
| Diluted EPS | $ | 3.29 | $ | 2.33 | |
| Weighted average common shares outstanding | 16,739,120 | 16,485,218 | |||
| Weighted average common and common equivalent shares outstanding | 16,870,830 | 16,700,682 | |||
| (1) | Provision for credit losses for the six months ended June 30,<br>2022 included $11.0 million related to the acquired Guaranty Bank non-PCD loans and $1.4 million related to acquired Guaranty Bank<br>OBS exposures. | ||||
| --- | --- |
7
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| As<br> of and for the Quarter Ended | For<br> the Six Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | 2023 | 2022 | |||||||||||||||
| (dollars<br> in thousands, except per share data) | |||||||||||||||||||||
| COMMON SHARE DATA | |||||||||||||||||||||
| Common shares outstanding | 16,713,853 | 16,713,775 | 16,795,942 | 16,885,485 | 17,064,347 | ||||||||||||||||
| Book value per common share (1) | $ | 49.22 | $ | 47.95 | $ | 46.01 | $ | 43.65 | $ | 43.55 | |||||||||||
| Tangible book value per common share (Non-GAAP)<br> (2) | $ | 39.99 | $ | 38.71 | $ | 36.82 | $ | 34.46 | $ | 34.41 | |||||||||||
| Closing stock price | $ | 41.03 | $ | 43.91 | $ | 49.64 | $ | 50.94 | $ | 53.99 | |||||||||||
| Market capitalization | $ | 685,769 | $ | 733,902 | $ | 833,751 | $ | 860,147 | $ | 921,304 | |||||||||||
| Market price / book value | 83.36 | % | 91.57 | % | 107.90 | % | 116.70 | % | 123.97 | % | |||||||||||
| Market price / tangible book value | 102.59 | % | 113.43 | % | 134.83 | % | 147.81 | % | 156.90 | % | |||||||||||
| Earnings per common share (basic)<br> LTM (3) | $ | 6.89 | $ | 6.06 | $ | 5.95 | $ | 5.86 | $ | 6.14 | |||||||||||
| Price earnings ratio LTM (3) | 5.96 | x | 7.24 | x | 8.35 | x | 8.70 | x | 8.79 | x | |||||||||||
| TCE / TA (Non-GAAP) (4) | 8.28 | % | 8.21 | % | 7.93 | % | 7.68 | % | 8.11 | % | |||||||||||
| CONDENSED<br> STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||||||||||||
| Beginning balance | $ | 801,494 | $ | 772,724 | $ | 737,072 | $ | 743,138 | $ | 667,924 | |||||||||||
| Net income | 28,425 | 27,157 | 30,906 | 29,294 | 15,242 | ||||||||||||||||
| Other comprehensive income (loss),<br> net of tax | (6,336 | ) | 9,325 | 9,959 | (24,783 | ) | (24,286 | ) | |||||||||||||
| Common stock cash dividends declared | (1,003 | ) | (1,010 | ) | (1,013 | ) | (1,012 | ) | (1,059 | ) | |||||||||||
| Issuance<br> of 2,071,291 shares of common stock as a result of the acquisition of Guaranty Federal Bancshares | - | - | - | - | 117,214 | ||||||||||||||||
| Repurchase and cancellation of<br> shares of common stock as a result of a share repurchase program | (967 | ) | (7,719 | ) | (5,037 | ) | (10,485 | ) | (33,016 | ) | |||||||||||
| Other (5) | 1,076 | 1,017 | 837 | 920 | 1,119 | ||||||||||||||||
| Ending balance | $ | 822,689 | $ | 801,494 | $ | 772,724 | $ | 737,072 | $ | 743,138 | |||||||||||
| REGULATORY<br> CAPITAL RATIOS (6): | |||||||||||||||||||||
| Total risk-based capital ratio | 14.66 | % | 14.68 | % | 14.28 | % | 14.38 | % | 13.40 | % | |||||||||||
| Tier 1 risk-based capital ratio | 10.36 | % | 10.27 | % | 9.95 | % | 9.88 | % | 10.18 | % | |||||||||||
| Tier 1 leverage capital ratio | 10.06 | % | 9.73 | % | 9.61 | % | 9.56 | % | 9.61 | % | |||||||||||
| Common equity tier 1 ratio | 9.71 | % | 9.60 | % | 9.29 | % | 9.21 | % | 9.46 | % | |||||||||||
| KEY<br> PERFORMANCE RATIOS AND OTHER METRICS | |||||||||||||||||||||
| Return on average assets (annualized) | 1.44 | % | 1.37 | % | 1.58 | % | 1.53 | % | 0.83 | % | 1.42 | % | 1.16 | % | |||||||
| Return on average total equity<br> (annualized) | 13.97 | % | 13.67 | % | 16.32 | % | 15.39 | % | 7.74 | % | 13.91 | % | 10.55 | % | |||||||
| Net interest margin | 2.93 | % | 3.18 | % | 3.62 | % | 3.46 | % | 3.53 | % | 3.05 | % | 3.43 | % | |||||||
| Net interest margin (TEY) (Non-GAAP)(7) | 3.29 | % | 3.52 | % | 3.93 | % | 3.71 | % | 3.74 | % | 3.40 | % | 3.63 | % | |||||||
| Efficiency ratio (Non-GAAP) (8) | 58.01 | % | 59.02 | % | 57.50 | % | 58.32 | % | 66.01 | % | 58.51 | % | 64.49 | % | |||||||
| Gross loans and leases / total<br> assets | 77.54 | % | 77.02 | % | 77.23 | % | 77.73 | % | 78.42 | % | 77.54 | % | 78.42 | % | |||||||
| Gross loans and leases / total<br> deposits | 96.56 | % | 95.21 | % | 102.58 | % | 101.14 | % | 99.61 | % | 96.56 | % | 99.61 | % | |||||||
| Effective tax rate | 12.25 | % | 9.29 | % | 15.88 | % | 14.14 | % | 8.92 | % | 10.83 | % | 8.96 | % | |||||||
| Full-time equivalent employees<br> (9) | 1009 | 969 | 973 | 956 | 968 | 1009 | 968 | ||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||||
| Assets | $ | 7,924,597 | $ | 7,906,830 | $ | 7,800,229 | $ | 7,652,463 | $ | 7,324,470 | $ | 7,915,763 | $ | 6,723,137 | |||||||
| Loans/leases | 6,219,980 | 6,165,115 | 6,043,359 | 5,916,100 | 5,711,471 | 6,192,700 | 5,222,193 | ||||||||||||||
| Deposits | 6,292,481 | 6,179,644 | 6,029,455 | 5,891,198 | 5,867,444 | 6,236,374 | 5,388,062 | ||||||||||||||
| Total stockholders’ equity | 816,882 | 794,685 | 757,419 | 761,428 | 788,204 | 805,845 | 736,452 | ||||||||||||||
| (1) | Includes accumulated other comprehensive income (loss). | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | Includes accumulated other comprehensive income (loss) and excludes<br>intangible assets. See GAAP to Non-GAAP reconciliations. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (3) | LTM : Last twelve months. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (4) | TCE / TCA : tangible common equity / total tangible assets. See<br>GAAP to non-GAAP reconciliations. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (5) | Includes mostly common stock issued for options exercised and<br>the employee stock purchase plan, as well as stock-based compensation. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (6) | Ratios for the current quarter are subject to change upon final<br>calculation for regulatory filings due after earnings release. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (7) | TEY : Tax equivalent yield. See GAAP to Non-GAAP<br>reconciliations. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (8) | See GAAP to Non-GAAP reconciliations. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (9) | The increase in full-time equivalent employees in the second<br>quarter of 2023 includes 19 summer interns. | ||||||||||||||||||||
| --- | --- |
8
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
ANALYSIS OF NET INTEREST INCOME AND MARGIN
| For<br> the Quarter Ended | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June<br> 30, 2023 | March<br> 31, 2023 | June<br> 30, 2022 | |||||||||||||||||||
| Average<br> <br><br>Balance | Interest<br><br><br> Earned or <br><br>Paid | Average<br><br><br> Yield or Cost | Average<br><br><br> Balance | Interest<br> <br><br>Earned or <br><br>Paid | Average<br> <br><br>Yield or Cost | Average<br><br><br> Balance | Interest<br> <br><br>Earned or <br><br>Paid | Average<br> <br><br>Yield or Cost | |||||||||||||
| (dollars<br> in thousands) | |||||||||||||||||||||
| Fed<br> funds sold | $ | 16,976 | $ | 223 | 5.27 | % | $ | 19,275 | $ | 234 | 4.93 | % | $ | 5,896 | $ | 12 | 0.83 | % | |||
| Interest-bearing<br> deposits at financial institutions | 90,814 | 1,123 | 4.96 | % | 73,584 | 821 | 4.53 | % | 67,254 | 169 | 1.01 | % | |||||||||
| Investment<br> securities - taxable | 342,991 | 3,693 | 4.30 | % | 332,640 | 3,366 | 4.05 | % | 346,440 | 3,090 | 3.56 | % | |||||||||
| Investment<br> securities - nontaxable (1) | 577,494 | 6,217 | 4.31 | % | 619,225 | 6,791 | 4.39 | % | 573,868 | 5,912 | 4.12 | % | |||||||||
| Restricted<br> investment securities | 35,031 | 506 | 5.71 | % | 37,766 | 513 | 5.43 | % | 37,166 | 485 | 5.16 | % | |||||||||
| Loans<br> (1) | 6,219,980 | 93,159 | 6.01 | % | 6,165,115 | 88,548 | 5.82 | % | 5,711,471 | 61,932 | 4.35 | % | |||||||||
| Total<br> earning assets (1) | $ | 7,283,286 | $ | 104,921 | 5.78 | % | $ | 7,247,605 | $ | 100,273 | 5.60 | % | $ | 6,742,095 | $ | 71,600 | 4.26 | % | |||
| Interest-bearing<br> deposits | $ | 3,965,592 | $ | 27,227 | 2.75 | % | $ | 4,067,405 | $ | 23,776 | 2.37 | % | $ | 3,791,595 | $ | 4,478 | 0.47 | % | |||
| Time deposits | 1,190,440 | 11,219 | 3.78 | % | 869,912 | 6,003 | 2.80 | % | 529,675 | 1,047 | 0.79 | % | |||||||||
| Short-term<br> borrowings | 1,980 | 34 | 6.82 | % | 7,573 | 99 | 5.28 | % | 1,404 | 3 | 0.78 | % | |||||||||
| Federal Home<br> Loan Bank advances | 211,593 | 2,653 | 4.96 | % | 296,333 | 3,521 | 4.75 | % | 286,484 | 780 | 1.08 | % | |||||||||
| Subordinated<br> debentures | 232,782 | 3,303 | 5.68 | % | 232,679 | 3,311 | 5.69 | % | 133,529 | 1,816 | 5.44 | % | |||||||||
| Junior<br> subordinated debentures | 48,647 | 738 | 6.00 | % | 48,613 | 696 | 5.72 | % | 46,536 | 680 | 5.78 | % | |||||||||
| Total<br> interest-bearing liabilities | $ | 5,651,034 | $ | 45,174 | 3.20 | % | $ | 5,522,515 | $ | 37,406 | 2.74 | % | $ | 4,789,223 | $ | 8,804 | 0.74 | % | |||
| Net interest<br> income (1) | $ | 59,747 | $ | 62,867 | $ | 62,796 | |||||||||||||||
| Net interest<br> margin (2) | 2.93 | % | 3.18 | % | 3.53 | % | |||||||||||||||
| Net interest<br> margin (TEY) (Non-GAAP) (1) (2) (3) | 3.29 | % | 3.52 | % | 3.74 | % | |||||||||||||||
| Adjusted<br> net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.28 | % | 3.47 | % | 3.64 | % | |||||||||||||||
| For<br> the Six Months Ended | |||||||||||||||||||||
| June<br> 30, 2023 | June<br> 30, 2022 | ||||||||||||||||||||
| 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 | $ | 18,119 | $ | 457 | 5.09 | % | $ | 5,234 | $ | 14 | 0.53 | % | |||||||||
| Interest-bearing deposits at financial<br> institutions | 82,246 | 1,945 | 4.77 | % | 68,285 | 204 | 0.60 | % | |||||||||||||
| Investment securities - taxable | 337,844 | 7,059 | 4.17 | % | 861,610 | 16,683 | 3.87 | % | |||||||||||||
| Investment securities - nontaxable<br> (1) | 598,244 | 13,009 | 4.35 | % | |||||||||||||||||
| Restricted investment securities | 36,391 | 1,018 | 5.56 | % | 29,716 | 766 | 5.13 | % | |||||||||||||
| Loans (1) | 6,192,700 | 181,707 | 5.92 | % | 5,222,193 | 107,927 | 4.17 | % | |||||||||||||
| Total earning<br> assets (1) | $ | 7,265,544 | $ | 205,195 | 5.69 | % | $ | 6,187,038 | $ | 125,594 | 4.09 | % | |||||||||
| Interest-bearing deposits | $ | 4,016,217 | $ | 51,003 | 2.56 | % | $ | 3,511,396 | $ | 6,816 | 0.39 | % | |||||||||
| Time deposits | 1,031,062 | 17,222 | 3.37 | % | 464,647 | 1,846 | 0.80 | % | |||||||||||||
| Short-term borrowings | 4,642 | 132 | 5.75 | % | 1,676 | 3 | 0.36 | % | |||||||||||||
| Federal Home Loan Bank advances | 253,729 | 6,174 | 4.84 | % | 186,685 | 863 | 0.92 | % | |||||||||||||
| Subordinated debentures | 232,731 | 6,615 | 5.68 | % | 123,753 | 3,370 | 5.45 | % | |||||||||||||
| Junior subordinated<br> debentures | 48,630 | 1,433 | 5.86 | % | 42,376 | 1,236 | 5.80 | % | |||||||||||||
| Total interest-bearing<br> liabilities | $ | 5,587,011 | $ | 82,579 | 2.97 | % | $ | 4,330,533 | $ | 14,134 | 0.66 | % | |||||||||
| Net interest income (1) | $ | 122,616 | $ | 111,460 | |||||||||||||||||
| Net interest margin (2) | 3.05 | % | 3.43 | % | |||||||||||||||||
| Net interest margin (TEY) (Non-GAAP)<br> (1) (2) (3) | 3.40 | % | 3.63 | % | |||||||||||||||||
| Adjusted net interest margin (TEY)<br> (Non-GAAP) (1) (2) (3) | 3.38 | % | 3.57 | % | |||||||||||||||||
| (1) | Includes<br>nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent<br>basis using a 21% tax rate. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | See<br> “Select Financial Data - Subsidiaries” for a breakdown of amortization/accretion included in net interest margin for each period<br>presented. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (3) | TEY<br>: Tax equivalent yield. See GAAP to Non-GAAP reconciliations. | ||||||||||||||||||||
| --- | --- |
9
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | |||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||
| ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES ON LOANS/LEASES | |||||||||||||||
| Beginning balance | $ | 86,573 | $ | 87,706 | $ | 90,489 | $ | 92,425 | $ | 74,786 | |||||
| Initial ACL recorded for acquired PCD loans | - | - | - | - | 5,902 | ||||||||||
| Change in ACL for writedown of LHFS to fair value (1) | (2,277 | ) | (1,709 | ) | - | - | - | ||||||||
| Credit loss expense (2) | 3,313 | 2,458 | 1,013 | 331 | 12,141 | ||||||||||
| Loans/leases charged off | (1,947 | ) | (2,275 | ) | (3,960 | ) | (2,489 | ) | (620 | ) | |||||
| Recoveries on loans/leases previously charged off | 135 | 393 | 164 | 222 | 216 | ||||||||||
| Ending balance | $ | 85,797 | $ | 86,573 | $ | 87,706 | $ | 90,489 | $ | 92,425 | |||||
| NONPERFORMING ASSETS | |||||||||||||||
| Nonaccrual loans/leases | $ | 26,062 | $ | 22,947 | $ | 8,765 | $ | 17,511 | $ | 23,574 | |||||
| Accruing loans/leases past due 90 days or more | 83 | 15 | 5 | 3 | 268 | ||||||||||
| Total nonperforming loans/leases | 26,145 | 22,962 | 8,770 | 17,514 | 23,842 | ||||||||||
| Other real estate owned | - | 61 | 133 | 177 | 205 | ||||||||||
| Other repossessed assets | - | - | - | 340 | - | ||||||||||
| Total nonperforming assets | $ | 26,145 | $ | 23,023 | $ | 8,903 | $ | 18,031 | $ | 24,047 | |||||
| ASSET QUALITY RATIOS | |||||||||||||||
| Nonperforming assets / total assets | 0.32 | % | 0.29 | % | 0.11 | % | 0.23 | % | 0.33 | % | |||||
| ACL for loans and leases / total loans/leases held for investment | 1.41 | % | 1.43 | % | 1.43 | % | 1.51 | % | 1.59 | % | |||||
| ACL for loans and leases / nonperforming loans/leases | 328.16 | % | 377.03 | % | 1000.07 | % | 516.67 | % | 387.66 | % | |||||
| Net charge-offs as a % of average loans/leases | 0.03 | % | 0.03 | % | 0.06 | % | 0.04 | % | 0.01 | % | |||||
| INTERNALLY ASSIGNED RISK RATING (3) | |||||||||||||||
| Special mention (rating 6) | $ | 116,910 | $ | 125,048 | $ | 98,333 | $ | 63,973 | $ | 54,558 | |||||
| Substandard (rating 7)/Classifed loans | 63,956 | 70,866 | 66,021 | 77,317 | 83,048 | ||||||||||
| Doubtful (rating 8)/Classifed loans | - | - | - | - | - | ||||||||||
| Criticized loans (4) | $ | 180,866 | $ | 195,914 | $ | 164,354 | $ | 141,290 | $ | 137,606 | |||||
| Classified loans as a % of total loans/leases | 1.00 | % | 1.14 | % | 1.08 | % | 1.29 | % | 1.43 | % | |||||
| Criticized loans as a % of total loans/leases | 2.84 | % | 3.16 | % | 2.68 | % | 2.35 | % | 2.37 | % | |||||
| (1) | Certain loans were identified for securitization and transferred<br>from loans to LHFS. The fair value of the loans was less than its carrying value at the date of transfer, resulting in a charge to the<br>loan ACL. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | Credit loss expense on loans/leases for the quarter ended June<br>30, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD loans. | ||||||||||||||
| --- | --- | ||||||||||||||
| (3) | Amounts exclude the government guaranteed portion, if any. The<br>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<br>assigned risk ratings of 6, 7, or 8, regardless of performance. | ||||||||||||||
| --- | --- | ||||||||||||||
| (5) | Classified loans are defined as C&I and CRE loans with internally<br>assigned risk ratings of 7 or 8, regardless of performance. | ||||||||||||||
| --- | --- |
10
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| For the Quarter Ended | For the Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||
| SELECT FINANCIAL DATA - SUBSIDIARIES | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||
| (dollars in thousands) | |||||||||||||||
| TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 2,611,832 | $ | 2,548,473 | $ | 2,122,852 | |||||||||
| m2 Equipment Finance, LLC | 322,838 | 317,497 | 289,451 | ||||||||||||
| Cedar Rapids Bank and Trust | 2,389,623 | 2,196,560 | 1,985,199 | ||||||||||||
| Community State Bank | 1,332,966 | 1,286,227 | 1,221,406 | ||||||||||||
| Guaranty Bank | 2,179,844 | 2,147,776 | 2,037,364 | ||||||||||||
| TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 2,166,249 | $ | 2,173,343 | $ | 1,787,564 | |||||||||
| Cedar Rapids Bank and Trust | 1,791,861 | 1,663,138 | 1,495,665 | ||||||||||||
| Community State Bank | 1,073,907 | 1,086,531 | 1,006,836 | ||||||||||||
| Guaranty Bank | 1,653,299 | 1,646,730 | 1,539,978 | ||||||||||||
| TOTAL LOANS & LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,925,162 | $ | 1,872,029 | $ | 1,737,812 | |||||||||
| m2 Equipment Finance, LLC | 328,479 | 321,495 | 293,435 | ||||||||||||
| Cedar Rapids Bank and Trust | 1,728,280 | 1,637,252 | 1,536,224 | ||||||||||||
| Community State Bank | 1,025,844 | 994,454 | 931,031 | ||||||||||||
| Guaranty Bank | 1,700,034 | 1,686,287 | 1,592,836 | ||||||||||||
| TOTAL LOANS & LEASES / TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | 89 | % | 86 | % | 97 | % | |||||||||
| Cedar Rapids Bank and Trust | 96 | % | 98 | % | 103 | % | |||||||||
| Community State Bank | 96 | % | 92 | % | 92 | % | |||||||||
| Guaranty Bank | 103 | % | 102 | % | 103 | % | |||||||||
| TOTAL LOANS & LEASES / TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 74 | % | 73 | % | 82 | % | |||||||||
| Cedar Rapids Bank and Trust | 72 | % | 75 | % | 77 | % | |||||||||
| Community State Bank | 77 | % | 77 | % | 76 | % | |||||||||
| Guaranty Bank | 78 | % | 79 | % | 78 | % | |||||||||
| ACL ON LOANS/LEASES AS A PERCENTAGE OF LOANS/LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | 1.44 | % | 1.41 | % | 1.68 | % | |||||||||
| m2 Equipment Finance, LLC | 3.46 | % | 3.13 | % | 3.31 | % | |||||||||
| Cedar Rapids Bank and Trust | 1.41 | % | 1.50 | % | 1.58 | % | |||||||||
| Community State Bank | 1.27 | % | 1.38 | % | 1.57 | % | |||||||||
| Guaranty Bank | 1.22 | % | 1.29 | % | 1.53 | % | |||||||||
| RETURN ON AVERAGE ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 0.82 | % | 1.23 | % | 1.56 | % | 1.02 | % | 1.71 | % | |||||
| Cedar Rapids Bank and Trust | 3.52 | % | 3.07 | % | 2.72 | % | 3.30 | % | 2.48 | % | |||||
| Community State Bank | 1.42 | % | 1.49 | % | 1.12 | % | 1.46 | % | 1.27 | % | |||||
| Guaranty Bank (7) (8) | 0.97 | % | 1.02 | % | 0.20 | % | 0.99 | % | 0.56 | % | |||||
| NET INTEREST MARGIN PERCENTAGE (2) | |||||||||||||||
| Quad City Bank and Trust (1) | 3.28 | % | 3.44 | % | 3.74 | % | 3.36 | % | 3.62 | % | |||||
| Cedar Rapids Bank and Trust (3) | 3.69 | % | 4.03 | % | 3.66 | % | 3.86 | % | 3.63 | % | |||||
| Community State Bank (4) | 3.90 | % | 3.99 | % | 3.67 | % | 3.94 | % | 3.65 | % | |||||
| Guaranty Bank (5) | 3.10 | % | 3.49 | % | 4.20 | % | 3.30 | % | 3.94 | % | |||||
| ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET | |||||||||||||||
| INTEREST MARGIN, NET | |||||||||||||||
| Cedar Rapids Bank and Trust | $ | - | $ | (8 | ) | $ | 4 | $ | (8 | ) | $ | 55 | |||
| Community State Bank | (1 | ) | 71 | 28 | $ | 70 | 61 | ||||||||
| Guaranty Bank | 168 | 797 | 1,698 | $ | 965 | 1,767 | |||||||||
| QCR Holdings, Inc. (6) | (33 | ) | (32 | ) | (35 | ) | $ | (65 | ) | (70 | ) | ||||
| (1) | Quad<br> City Bank and Trust amounts 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) | Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using | ||||||||||||||
| a 21% federal tax rate. | |||||||||||||||
| (3) | Cedar<br> Rapids Bank and Trust’s net interest margin percentage includes various purchase accounting adjustments. Excluding those<br> adjustments, net interest margin (Non-GAAP) would have been 3.69% for the quarter ended June 30, 2023, 4.03% for the quarter ended March 31, 2023 and 3.62% for the quarter ended June 30, 2022. | ||||||||||||||
| (4) | Community State Bank’s net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest | ||||||||||||||
| margin (Non-GAAP) would have been 3.90% for the quarter ended June 30, 2023, 3.99% for the quarter ended March 31, 2023 and 3.66% for the quarter ended June 30, 2022. | |||||||||||||||
| (5) | Guaranty Bank’s net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest | ||||||||||||||
| margin (Non-GAAP) would have been 3.11% for the quarter ended June 30, 2023, 3.39% for the quarter ended March 31, 2023 and 3.82% for the quarter ended June 30, 2022. | |||||||||||||||
| (6) | Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013. | ||||||||||||||
| (7) | Decrease for quarter ended and six months ended June 30, 2022 due to CECL Day 2 provision for credit losses of $12.4 million related to the acquisition of Guaranty Bank. | ||||||||||||||
| (8) | Adjusted<br> ROAA excluding non-core adjustments for the Guaranty Bank acquisition (non-GAAP) would have been 2.12% for the quarter ended June<br> 30, 2022 and 1.89% for the six months ended June 30, 2022. |
11
QCR Holding, Inc.
ConsolidatedFinancial Highlights
(Unaudited)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| GAAP TO NON-GAAP RECONCILIATIONS | 2023 | 2023 | 2022 | 2022 | 2022 | ||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1) | |||||||||||||||
| Stockholders’ equity (GAAP) | $ | 822,689 | $ | 801,494 | $ | 772,724 | $ | 737,072 | $ | 743,138 | |||||
| Less: Intangible assets | 154,255 | 154,467 | 154,366 | 155,153 | 155,940 | ||||||||||
| Tangible common equity (non-GAAP) | $ | 668,434 | $ | 647,027 | $ | 618,358 | $ | 581,919 | $ | 587,198 | |||||
| Total assets (GAAP) | $ | 8,226,673 | $ | 8,036,904 | $ | 7,948,837 | $ | 7,730,049 | $ | 7,392,941 | |||||
| Less: Intangible assets | 154,255 | 154,467 | 154,366 | 155,153 | 155,940 | ||||||||||
| Tangible assets (non-GAAP) | $ | 8,072,418 | $ | 7,882,437 | $ | 7,794,471 | $ | 7,574,896 | $ | 7,237,001 | |||||
| Tangible common equity to tangible assets ratio (non-GAAP) | 8.28 | % | 8.21 | % | 7.93 | % | 7.68 | % | 8.11 | % | |||||
| (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 Six Months Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||
| ADJUSTED NET INCOME (1) | 2023 | 2023 | 2022 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||
| Net income (GAAP) | $ | 28,425 | $ | 27,157 | $ | 30,906 | $ | 29,294 | $ | 15,242 | $ | 55,582 | $ | 38,866 | |||||||
| Less non-core items (post-tax) (2): | |||||||||||||||||||||
| Income: | |||||||||||||||||||||
| Securities gains (losses), net | 9 | (366 | ) | - | - | - | (356 | ) | - | ||||||||||||
| Fair value gain (loss) on derivatives, net | 66 | (337 | ) | (211 | ) | 714 | 342 | (272 | ) | 1,057 | |||||||||||
| Total non-core income (non-GAAP) | $ | 75 | $ | (703 | ) | $ | (211 | ) | $ | 714 | $ | 342 | $ | (628 | ) | $ | 1,057 | ||||
| Expense: | |||||||||||||||||||||
| Acquisition costs (2) | - | - | (517 | ) | 321 | 1,932 | - | 3,394 | |||||||||||||
| Post-acquisition compensation, transition and integration costs | - | 164 | 529 | 48 | 3,789 | 164 | 3,789 | ||||||||||||||
| Separation agreement | - | - | - | - | - | - | - | ||||||||||||||
| 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 | ||||||||||||||
| Total non-core expense (non-GAAP) | $ | - | $ | 164 | $ | 12 | $ | 369 | $ | 15,512 | $ | 164 | $ | 16,974 | |||||||
| Adjusted net income (non-GAAP) (1) | $ | 28,350 | $ | 28,024 | $ | 31,129 | $ | 28,949 | $ | 30,412 | $ | 56,374 | $ | 54,783 | |||||||
| ADJUSTED EARNINGS PER COMMON SHARE (1) | |||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 28,350 | $ | 28,024 | $ | 31,129 | $ | 28,949 | $ | 30,412 | $ | 56,374 | $ | 54,783 | |||||||
| Weighted average common shares outstanding | 16,701,950 | 16,776,289 | 16,855,973 | 16,900,968 | 17,345,324 | 16,739,120 | 16,485,218 | ||||||||||||||
| Weighted average common and common equivalent shares outstanding | 16,799,527 | 16,942,132 | 17,047,976 | 17,110,691 | 17,549,107 | 16,870,830 | 16,700,682 | ||||||||||||||
| Adjusted earnings per common share (non-GAAP): | |||||||||||||||||||||
| Basic | $ | 1.70 | $ | 1.67 | $ | 1.85 | $ | 1.71 | $ | 1.75 | $ | 3.37 | $ | 3.32 | |||||||
| Diluted | $ | 1.69 | $ | 1.65 | $ | 1.83 | $ | 1.69 | $ | 1.73 | $ | 3.34 | $ | 3.28 | |||||||
| ADJUSTED RETURN ON AVERAGE ASSETS AND AVERAGE EQUITY (1) | |||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 28,350 | $ | 28,024 | $ | 31,129 | $ | 28,949 | $ | 30,412 | $ | 56,374 | $ | 54,783 | |||||||
| Average Assets | $ | 7,924,597 | $ | 7,906,830 | $ | 7,800,229 | $ | 7,652,463 | $ | 7,324,470 | $ | 7,915,763 | $ | 6,723,137 | |||||||
| Adjusted return on average assets (annualized) (non-GAAP) | 1.43 | % | 1.42 | % | 1.60 | % | 1.51 | % | 1.66 | % | 1.42 | % | 1.63 | % | |||||||
| Adjusted return on average equity (annualized) (non-GAAP) | 13.88 | % | 14.11 | % | 16.44 | % | 15.21 | % | 15.43 | % | 13.99 | % | 14.88 | % | |||||||
| NET INTEREST MARGIN (TEY) (4) | |||||||||||||||||||||
| Net interest income (GAAP) | $ | 53,205 | $ | 56,810 | $ | 65,218 | $ | 60,769 | $ | 59,400 | $ | 110,015 | $ | 105,133 | |||||||
| Plus: Tax equivalent adjustment (5) | 6,542 | 6,057 | 5,554 | 4,459 | 3,396 | 12,601 | 6,327 | ||||||||||||||
| Net interest income - tax equivalent (Non-GAAP) | $ | 59,747 | $ | 62,867 | $ | 70,772 | $ | 65,228 | $ | 62,796 | $ | 122,616 | $ | 111,460 | |||||||
| Less: Acquisition accounting net accretion | 134 | 828 | 5,688 | 1,080 | 1,695 | 962 | 1,813 | ||||||||||||||
| Adjusted net interest income | $ | 59,613 | $ | 62,039 | $ | 65,084 | $ | 64,148 | $ | 61,101 | $ | 121,654 | $ | 109,647 | |||||||
| Average earning assets | $ | 7,283,286 | $ | 7,247,605 | $ | 7,148,578 | $ | 6,975,857 | $ | 6,742,095 | $ | 7,265,544 | $ | 6,187,038 | |||||||
| Net interest margin (GAAP) | 2.93 | % | 3.18 | % | 3.62 | % | 3.46 | % | 3.53 | % | 3.05 | % | 3.43 | % | |||||||
| Net interest margin (TEY) (Non-GAAP) | 3.29 | % | 3.52 | % | 3.93 | % | 3.71 | % | 3.74 | % | 3.40 | % | 3.63 | % | |||||||
| Adjusted net interest margin (TEY) (Non-GAAP) | 3.28 | % | 3.47 | % | 3.61 | % | 3.65 | % | 3.64 | % | 3.38 | % | 3.57 | % | |||||||
| EFFICIENCY RATIO (6) | |||||||||||||||||||||
| Noninterest expense (GAAP) | $ | 49,727 | $ | 48,785 | $ | 49,697 | $ | 47,746 | $ | 54,248 | $ | 98,512 | $ | 92,573 | |||||||
| Net interest income (GAAP) | $ | 53,205 | $ | 56,810 | $ | 65,218 | $ | 60,769 | $ | 59,400 | $ | 110,015 | $ | 105,133 | |||||||
| Noninterest income (GAAP) | 32,520 | 25,842 | 21,219 | 21,095 | 22,782 | 58,362 | 38,415 | ||||||||||||||
| Total income | $ | 85,725 | $ | 82,652 | $ | 86,437 | $ | 81,864 | $ | 82,182 | $ | 168,377 | $ | 143,548 | |||||||
| Efficiency ratio (noninterest expense/total income) (Non-GAAP) | 58.01 | % | 59.02 | % | 57.50 | % | 58.32 | % | 66.01 | % | 58.51 | % | 64.49 | % | |||||||
| (1) | Adjusted<br>net income, adjusted earnings per common share, adjusted return on average assets and average equity are non-GAAP financial measures.<br>The Company’s management believes that these measurements are important to investors as they exclude non-core or non-recurring income<br>and expense items, therefore, they provide a more realistic run-rate for future periods. In compliance with applicable rules of the SEC, these non-GAAP measures are reconciled to net income, which is the most directly comparable GAAP financial measure. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | Non-core<br>or nonrecurring items (post-tax) are calculated using an estimated effective federal tax rate of 21% with the exception of acquisition<br>costs which have an estimated effective federal tax rate of 13.62%. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (3) | The<br>CECL Day 2 provision for credit losses on acquired non-PCD loans and OBS exposures resulted from the Guaranty Bank acquisition on April<br>1, 2022. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (4) | Interest<br>earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% effective federal tax rate. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (5) | 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<br>to net interest income, which is the most directly comparable GAAP financial measure. In addition, the Company calculates<br>net interest margin without the impact of acquisition accounting net accretion as this can fluctuate and it’s difficult to provide a<br>more realistic run-rate for future periods. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (6) | Efficiency<br>ratio is a non-GAAP measure. The Company’s management utilizes this ratio to compare to industry peers. The ratio<br>is used to calculate overhead as a percentage of revenue. In compliance with the applicable rules of the SEC, this non-GAAP measure<br>is reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP financial<br>measures. | ||||||||||||||||||||
| --- | --- |
13