8-K
Qcr Holdings Inc (QCRH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of earliest event Reported): July 27, 2020
QCR Holdings,Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-22208 | 42-1397595 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification 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 of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $1.00 Par Value | QCRH | The Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On July 27, 2020, QCR Holdings, Inc. (the “Company”) issued a press release disclosing financial results for the quarter ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 7.01. Regulation FD Disclosure.
On July 27, 2020, the Company posted a presentation to the Company’s website. The presentation is available to view at www.qcrh.com, and is also attached hereto as Exhibit 99.2.
The information in Item 7.01 of this Current Report on Form 8-K and the related Exhibit 99.2 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.2 Investor Presentation dated July 27, 2020.
SIGNATURE
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 27, 2020 | By: | /s/ Todd A. Gipple |
| Todd A. Gipple | ||
| President, Chief Operating Officer and Chief Financial Officer |
Exhibit 99.1
| PRESS RELEASE | FOR IMMEDIATE RELEASE |
|---|
QCR Holdings, Inc. Announces Second QuarterEarnings and Continued COVID-19 Pandemic Response
EPS of $0.86 Driven by Record Pre-Provision/Pre-TaxAdjusted Net Income
Second Quarter 2020 Highlights
| · | Net income of $13.7 million, or $0.86 per diluted share |
|---|---|
| · | Adjusted net income (non-GAAP) of $14.0 million, or $0.88 per diluted share |
| --- | --- |
| · | Noninterest income of $28.6 million |
| --- | --- |
| · | Net interest margin was stable, excluding the impact of excess liquidity |
| --- | --- |
| · | Record pre-provision, pre-tax adjusted net income (non-GAAP) of $36.8 million |
| --- | --- |
| · | Pre-provision, pre-tax adjusted ROAA (non-GAAP) of 2.54% |
| --- | --- |
| · | Provision expense of $19.9 million for the quarter, increasing ALLL by 33 bps to 1.47% |
| --- | --- |
| · | Nonperforming assets to total assets of 0.24%, improving 8 basis points from the prior quarter |
| --- | --- |
| · | Annualized core loan and lease growth (non-GAAP) of 8.4% for the quarter, excluding SBA Paycheck Protection Program (“PPP”)loans |
| --- | --- |
| · | Annualized deposit growth of 17.2% for the quarter |
| --- | --- |
| · | PPP loan participation of 1,655 totaling $358 million to both new and existing clients |
| --- | --- |
Moline, IL, July 27, 2020 -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $13.7 million and diluted earnings per share (“EPS”) of $0.86 for the second quarter of 2020, compared to net income of $11.2 million and diluted EPS of $0.70 for the first quarter of 2020. Pre-provision, pre-tax adjusted net income (non-GAAP) increased $14.0 million in the second quarter, compared to the first quarter led by strong loan growth, net interest income, and record swap fee income. Provision expense increased $11.5 million in the second quarter, compared to the first quarter. This increase was due primarily to qualitative factors in response to deteriorating economic prospects as a result of the COVID-19 pandemic.
The Company reported adjusted net income (non-GAAP) of $14.0 million and adjusted diluted EPS (non-GAAP) of $0.88 for the second quarter of 2020, compared to adjusted net income (non-GAAP) of $12.4 million and adjusted diluted EPS (non-GAAP) of $0.77 for the first quarter of 2020. For the second quarter of 2019, net income and diluted EPS were $13.5 million and $0.85, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $14.1 million and $0.88, respectively.
| For the Quarter Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | |||||||
| $ in millions (except per share data) | 2020 | 2020 | 2019 | ||||||
| Net Income | $ | 13.7 | $ | 11.2 | $ | 13.5 | |||
| Diluted EPS | $ | 0.86 | $ | 0.70 | $ | 0.85 | |||
| Adjusted Net Income (non-GAAP) | $ | 14.0 | $ | 12.4 | $ | 14.1 | |||
| Adjusted Diluted EPS (non-GAAP) | $ | 0.88 | $ | 0.77 | $ | 0.88 | |||
| Pre-Provision/Pre-Tax Adjusted Income (non-GAAP) | $ | 36.8 | $ | 22.8 | $ | 19.3 | |||
| Pre-Provision/Pre-Tax Adjusted ROAA (non-GAAP) | 2.54 | % | 1.84 | % | 1.52 | % | |||
| SeeGAAP to non-GAAP reconciliations |
“We are very pleased with our core operating performance for the second quarter,” commented Larry J. Helling, Chief Executive Officer. “We delivered record pre-provision, pre-tax adjusted net income, driven by strong loan growth, strong fee income, and careful management of noninterest expenses. In addition to successfully funding over $350 million of PPP loans to both new and existing customers, we grew our core loans by over 8% on an annualized basis. Our core deposit gathering was even stronger during the quarter with the outsized growth in deposits creating significant excess liquidity that led to compression in our net interest margin.”
Additionally, asset quality remains strong and our current credit metrics improved during the quarter. “We reduced nonperforming assets by 21%, through the sale of an OREO property,” Helling said. “While we do not currently see meaningful degradation of specific credits in our portfolio, we chose to be prudent and increased our provision for loan losses during the quarter in order to build reserves against future potential credit issues related to COVID-19.”
“QCRH continues to successfully navigate the challenges presented by the COVID-19 pandemic, including supporting impacted clients through the QCRH Loan Relief Program, enabling clients to defer payments and preserve cash and liquidity. It’s difficult to predict the ultimate impact that this Pandemic will have on our clients. However, we believe our banks are well positioned to deal with the Pandemic,” Helling said. “All of our employees are dedicated to helping our clients weather this storm, and we have seasoned credit teams at all charters experienced in dealing with significant economic downturns.”
Annualized Loan and Lease Growth of 8.4%,excluding PPP loans (non-GAAP)
During the second quarter of 2020, the Company’s total loans and leases increased by $435.6 million to a total of $4.1 billion. Included in this amount was $358.1 million of PPP loans made to both new and existing customers. Excluding the PPP loans, loan and lease growth during the quarter was 8.4% on an annualized basis (non-GAAP), reflecting healthy demand across all markets. Core deposits (excluding brokered deposits) increased $338.6 million, or 8.7% on a linked quarter basis. Brokered deposits declined by $159.3 million as the Company allowed certain higher cost brokered deposits to run off the balance sheet. Throughout the quarter, deposits grew significantly with average deposit growth of $777.9 million, or 19.7% for the quarter. The Company’s correspondent banking portfolio contributed to the majority of this outsized growth as our correspondent bank clients grew liquidity with deposit growth significantly outpacing loans. These outsized liquidity balances temporarily shifted off balance sheet at quarter-end. The percentage of wholesale funds to total assets was 8.9% as of the second quarter, which was down from 10.1% in the first quarter of 2020 as the Company’s need for wholesale funding declined due to the strong growth in core deposits. At quarter-end, the percentage of gross loans and leases to total assets was 73.9%, which was up from 70.8% in the first quarter, primarily driven by the increase in PPP loan balances.
“Despite the uncertainty caused by the COVID-19 pandemic, we delivered solid loan growth for the quarter in addition to the $358 million of PPP loans that we funded,” added Helling. “Loan production improved in both our core commercial lending business and our Specialty Finance Group. Excluding our PPP loan production, loan and lease growth for the first six months of 2020 has been 5.0% on an annualized basis, and given our current pipeline, we believe that we will be able to achieve organic loan growth of between 3% and 5% for the full year.”
Net Interest Incomeof $40.9 million
Net interest income for the second quarter of 2020 totaled $40.9 million, compared to $37.7 million for the first quarter of 2020 and $38.0 million for the second quarter of 2019. The increase was primarily due to growth in average interest earning assets of $791.6 million, or 17.7% on a linked quarter basis, of which $404.9 million of the increase was due to excess cash derived from the aforementioned outsized deposit growth. Partially offsetting the impact of the higher average balance of interest earning assets, was a lower reported net interest margin, due to the significant excess liquidity. Acquisition-related net accretion totaled $736 thousand (pre-tax) for the second quarter of 2020, up slightly from the first quarter of 2020 and down from $1.1 million for the second quarter of 2019. Adjusted net interest income (non-GAAP) was $41.9 million for the second quarter of 2020, compared to $38.9 million for the first quarter of 2020 and $38.7 million for the second quarter of 2019.
In the second quarter, NIM was 3.14% and, on a tax-equivalent yield basis (non-GAAP), NIM was 3.27%, a decrease of 26 basis points and 29 basis points from the first quarter of 2020, respectively. Adjusted NIM (non-GAAP), excluding acquisition-related net accretion was 3.21%, down 29 basis points from the first quarter. The decline in adjusted NIM (non-GAAP) during the quarter was entirely due to the significant excess liquidity carried for the quarter. Average excess liquidity of $404.9 million with modest negative arbitrage contributed approximately 30 basis points to the NIM dilution. Excluding the impact of excess liquidity, the Company’s NIM was stable as cost of funds declines offset pricing pressure on earning assets.
| For the Quarter Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | |||||||
| 2020 | 2020 | 2019 | |||||||
| NIM | 3.14 | % | 3.40 | % | 3.25 | % | |||
| NIM (TEY)(non-GAAP) | 3.27 | % | 3.56 | % | 3.40 | % | |||
| Adjusted NIM (TEY)(non-GAAP) | 3.21 | % | 3.50 | % | 3.31 | % | |||
| See GAAP to non-GAAP reconciliations |
“Our deposit costs decreased significantly during the quarter as we gathered core deposits and reduced our wholesale funding, allowing us to reduce our total cost of interest-bearing funds by 53 basis points. However, our average loan yields also decreased due to the sharp decline in short-term interest rates, and when combined with the significant excess liquidity that we carried during the quarter, our adjusted NIM was adversely impacted by 29 basis points,” stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “Excluding the impact of the excess liquidity, adjusted NIM would have been stable from the first quarter.”
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Noninterest Incomeof $28.6 million
Noninterest income for the second quarter of 2020 totaled $28.6 million, compared to $15.2 million for the first quarter of 2020. The increase was primarily due to $19.9 million in swap fee income, up $13.1 million from the first quarter of 2020. Wealth management revenue was $3.6 million for the quarter, down from $4.0 million in the first quarter due to a full quarter of lower fair market values of the assets under management. Noninterest income increased 67.7% when compared to the second quarter of 2019.
“Continued strong production from our Specialty Finance Group and our core banks led to a record $19.9 million in swap fee income during the quarter. Swap fee income totaled $26.7 million for the first six months of 2020, putting us on track to exceed last year’s record amount,” added Mr. Gipple. “Our current expectation is that for the remainder of 2020, this fee income source will be approximately $30 to $32 million for the six month period.”
Noninterest Expensesof $33.1 million
Noninterest expense for the second quarter of 2020 totaled $33.1 million, compared to $31.4 million for the first quarter of 2020. The linked quarter increase was primarily due to increased salary and benefits expense of $2.8 million with increased bonus and commission expense in the quarter driven by the strong financial results and higher than anticipated swap fee income. This was partially offset by a $600 thousand decline in disposition costs, a $285 thousand decline in occupancy and equipment costs and a $345 thousand increase in gains and income from the operations of other real estate. In addition, the first quarter of 2020 included a goodwill impairment charge of $500 thousand.
NPAs at Historical Lows
Building Reserves for COVID-19
Nonperforming assets (“NPAs”) totaled $13.3 million, a decrease of $3.6 million from the first quarter of 2020. The decrease was primarily due to the disposition of other real estate owned. The ratio of NPAs to total assets decreased to 0.24% at June 30, 2020, compared to 0.32% at March 31, 2020, and down from 0.45% at June 30, 2019.
The Company’s provision for loan and lease losses totaled $19.9 million for the second quarter of 2020, up from $8.4 million in the prior quarter. The linked quarter increase in the provision for loan and lease losses was primarily due to increased qualitative factors in response to the COVID-19 pandemic. As of June 30, 2020, the Company’s allowance to total loans and leases was 1.47%, which was up from 1.14% at March 31, 2020, and from 1.05% at June 30, 2019. Excluding the impact of the $358 million in PPP loans, the allowance for estimated losses on loans and leases to total loans and leases was 1.61% (non-GAAP).
In accordance with GAAP for acquisition accounting, loans acquired through past acquisitions were recorded at market value; therefore, there was no allowance associated with the acquired loans at the acquisition date. Management continues to evaluate the allowance needed on the acquired loans factoring in the net remaining discount of $5.5 million at June 30, 2020.
Strong Capital Levels
As of June 30, 2020, the Company’s total risk-based capital ratio was 13.74%, the common equity tier 1 ratio was 10.28%, and the tangible common equity to tangible assets ratio was 8.48% (non-GAAP). By comparison, these respective ratios were 13.54%, 10.31% and 8.76% as of March 31, 2020. The decline in the tangible common equity to tangible assets ratio was primarily the result of asset growth associated with the increase in PPP loans during the quarter. Excluding the impact of the PPP loans, the tangible common equity to tangible assets ratio was 9.03% (non-GAAP).
Focus on Three Strategic Long-Term Initiatives
As part of the Company’s ongoing efforts to grow earnings and drive attractive long-term returns for shareholders, it continues to operate under three key strategic long-term initiatives:
| · | Organic loan and lease growth of 9% per year, funded by core deposits; |
|---|---|
| · | Grow fee-based income by at least 6% per year; and |
| --- | --- |
| · | Limit our annual operating expense growth to 5% per year. |
| --- | --- |
It should be noted that these initiatives are long-term targets. Due to the impact of the COVID-19 pandemic, the Company may not be able to achieve these goals for the full year 2020.
Supplemental Presentation and Where to Find It
In addition to this press release, the Company has included a supplemental presentation that provides further information regarding the Company’s loan exposures and deferrals. Investors, analysts and other interested persons may find this presentation on the Securities and Exchange Commission’s EDGAR filing system at www.sec.gov/edgar.shtml, or on the Company’s website at www.qcrh.com.
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Conference Call Details
The Company will host an earnings call/webcast tomorrow, July 28, 2020, 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 11, 2020. The replay access information is 877-344-7529 (international 412-317-0088); access code 10145663. A webcast of the teleconference can be accessed at the Company’s News and Events page at www.qcrh.com. An archived version of the webcast will be available at the same location shortly after the live event has ended.
About Us
QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, and Springfield communities through its wholly-owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, and Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company engages in commercial leasing through its wholly-owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 25 locations in Illinois, Iowa, Wisconsin and Missouri. As of June 30, 2020, the Company had approximately $5.6 billion in assets, $4.1 billion in loans and $4.3 billion in deposits. For additional information, please visit the Company’s website at www.qcrh.com.
SpecialNote Concerning Forward-Looking Statements***.*** This document contains, and future oral and writtenstatements of the Company and its management may contain, forward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performanceand business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’smanagement and on information currently available to management, are generally identifiable by the use of words such as “believe,”“expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,”“intend,” “estimate,” ”annualize,” “may,” “will,” “would,”“could,” “should” or other similar expressions. Additionally, all statements in this document, includingforward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statementin light of new information or future events.
Anumber of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differmaterially from those in its forward-looking statements. These factors include, among others, the following: (i) the strengthof the local, state, national and international economies (including the impact of the 2020 presidential election and the impactof tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations);(ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in creditmarkets, and the response of the local, state and national governments to any such adverse external events; (iii) changesin accounting policies and practices (including the new current expected credit loss (CECL) impairment standards, that will changehow the Company estimates credit losses when implemented); (iv) changes in state and federal laws, regulations and governmentalpolicies concerning the Company’s general business; (v) changes in interest rates and prepayment rates of the Company’sassets (including the impact of LIBOR phase-out); (vi) increased competition in the financial services sector and the inabilityto attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronicsystems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitionsand the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or employees;(x) changes in consumer spending; and (xi) unexpected outcomes of existing or new litigation involving the Company. Theserisks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed onsuch statements. Additional information concerning the Company and its business, including additional factors that could materiallyaffect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.
Contacts:
Todd A. Gipple
President
Chief Operating Officer
Chief Financial Officer
(309) 743-7745
Kim K. Garrett
Vice President
Corporate Communications
Investor Relations Manager
(319) 743-7006
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QCR Holdings,Inc.
Consolidated FinancialHighlights
(Unaudited)
| Held<br> for Sale | Held<br> for Sale | Held<br> for Sale | Held<br> for Sale | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As<br> of | As<br> of | As<br> of | As<br> of | As<br> of | ||||||||||||||
| June<br> 30, | March<br> 31, | December<br> 31, | September<br> 30, | June<br> 30, | June<br> 30, | March<br> 31, | December<br> 31, | September<br> 30, | ||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2020 | 2019 | 2019 | ||||||||||
| (dollars<br> in thousands) | ||||||||||||||||||
| CONDENSED<br> BALANCE SHEET | ||||||||||||||||||
| Cash and due<br> from banks | $ | 88,577 | $ | 169,827 | $ | 76,254 | $ | 91,671 | $ | 87,919 | $ | - | $ | - | $ | - | $ | 11,031 |
| Federal funds sold and<br> interest-bearing deposits | 142,900 | 206,708 | 157,691 | 197,263 | 205,497 | - | - | - | 2,415 | |||||||||
| Securities | 748,883 | 684,571 | 611,341 | 555,409 | 643,803 | - | - | - | 66,009 | |||||||||
| Net loans/leases | 4,079,432 | 3,662,435 | 3,654,204 | 3,574,154 | 3,869,415 | - | - | - | 362,011 | |||||||||
| Intangibles | 13,872 | 14,421 | 14,970 | 15,529 | 16,089 | - | - | - | - | |||||||||
| Goodwill | 74,248 | 74,248 | 74,748 | 77,748 | 77,748 | - | - | - | - | |||||||||
| Derivatives | 225,164 | 195,973 | 87,827 | 104,388 | 65,922 | - | - | - | - | |||||||||
| Other assets | 220,920 | 213,134 | 220,049 | 210,673 | 228,459 | 10,765 | 10,758 | 11,966 | 24,081 | |||||||||
| Assets<br> held for sale | 10,765 | 10,758 | 11,966 | 465,547 | - | - | - | - | - | |||||||||
| Total<br> assets | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | $ | 5,292,382 | $ | 5,194,852 | $ | 10,765 | $ | 10,758 | $ | 11,966 | $ | 465,547 |
| Total deposits | $ | 4,349,775 | $ | 4,170,478 | $ | 3,911,051 | $ | 3,802,241 | $ | 4,322,510 | $ | - | $ | - | $ | - | $ | 451,546 |
| Total borrowings | 376,250 | 244,399 | 278,955 | 320,457 | 230,953 | - | - | - | 16,157 | |||||||||
| Derivatives | 233,589 | 203,744 | 88,436 | 109,242 | 69,556 | - | - | - | - | |||||||||
| Other liabilities | 87,539 | 71,185 | 90,254 | 70,169 | 67,533 | 1,588 | 3,130 | 5,003 | 2,827 | |||||||||
| Liabilities held for sale | 1,588 | 3,130 | 5,003 | 470,530 | - | - | - | - | - | |||||||||
| Total<br> stockholders' equity | 556,020 | 539,139 | 535,351 | 519,743 | 504,300 | - | - | - | - | |||||||||
| Total<br> liabilities and stockholders' equity | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | $ | 5,292,382 | $ | 5,194,852 | $ | 1,588 | $ | 3,130 | $ | 5,003 | $ | 470,530 |
| ANALYSIS<br> OF LOAN PORTFOLIO | ||||||||||||||||||
| Loan/lease mix: | ||||||||||||||||||
| Commercial and industrial<br> loans | $ | 1,850,110 | $ | 1,484,979 | $ | 1,507,825 | $ | 1,469,978 | $ | 1,548,657 | ||||||||
| Commercial real estate<br> loans | 1,869,162 | 1,783,086 | 1,736,396 | 1,687,922 | 1,837,473 | |||||||||||||
| Direct financing leases | 79,105 | 83,324 | 87,869 | 92,307 | 101,180 | |||||||||||||
| Residential real estate<br> loans | 241,069 | 237,742 | 239,904 | 245,667 | 293,479 | |||||||||||||
| Installment and other<br> consumer loans | 99,150 | 106,728 | 109,352 | 106,540 | 120,947 | |||||||||||||
| Deferred<br> loan/lease origination costs, net of fees | 1,663 | 8,809 | 8,859 | 7,856 | 8,783 | |||||||||||||
| Total loans/leases | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 3,910,519 | ||||||||
| Less<br> allowance for estimated losses on loans/leases | 60,827 | 42,233 | 36,001 | 36,116 | 41,104 | |||||||||||||
| Net<br> loans/leases | $ | 4,079,432 | $ | 3,662,435 | $ | 3,654,204 | $ | 3,574,154 | $ | 3,869,415 | ||||||||
| ANALYSIS<br> OF SECURITIES PORTFOLIO | ||||||||||||||||||
| Securities mix: | ||||||||||||||||||
| U.S. government sponsored<br> agency securities | $ | 17,472 | $ | 19,457 | $ | 20,078 | $ | 21,268 | $ | 35,762 | ||||||||
| Municipal securities | 526,192 | 493,664 | 447,853 | 391,329 | 440,853 | |||||||||||||
| Residential mortgage-backed<br> and related securities | 145,672 | 122,853 | 120,587 | 123,880 | 159,228 | |||||||||||||
| Asset backed securities | 39,797 | 28,499 | 16,887 | 10,957 | - | |||||||||||||
| Other<br> securities | 19,750 | 20,098 | 5,936 | 7,975 | 7,960 | |||||||||||||
| Total<br> securities | $ | 748,883 | $ | 684,571 | $ | 611,341 | $ | 555,409 | $ | 643,803 | ||||||||
| ANALYSIS OF DEPOSITS | ||||||||||||||||||
| Deposit mix: | ||||||||||||||||||
| Noninterest-bearing demand<br> deposits | $ | 1,177,482 | $ | 829,782 | $ | 777,224 | $ | 782,232 | $ | 795,951 | ||||||||
| Interest-bearing demand<br> deposits | 2,488,755 | 2,440,907 | 2,407,502 | 2,245,557 | 2,505,956 | |||||||||||||
| Time deposits | 560,982 | 617,979 | 571,343 | 536,352 | 733,135 | |||||||||||||
| Brokered<br> deposits | 122,556 | 281,810 | 154,982 | 238,100 | 287,468 | |||||||||||||
| Total<br> deposits | $ | 4,349,775 | $ | 4,170,478 | $ | 3,911,051 | $ | 3,802,241 | $ | 4,322,510 | ||||||||
| ANALYSIS OF BORROWINGS | ||||||||||||||||||
| Borrowings mix: | ||||||||||||||||||
| Term FHLB advances | $ | 90,000 | $ | 55,000 | $ | 50,000 | $ | 60,000 | $ | 46,433 | ||||||||
| Overnight FHLB advances<br> (1) | 55,000 | 40,000 | 109,300 | 135,800 | 59,300 | |||||||||||||
| FRB borrowings | 100,000 | 30,000 | - | - | - | |||||||||||||
| Other short-term borrowings | 24,818 | 13,067 | 13,423 | 18,526 | 19,191 | |||||||||||||
| Subordinated notes | 68,516 | 68,455 | 68,394 | 68,334 | 68,274 | |||||||||||||
| Junior<br> subordinated debentures | 37,916 | 37,877 | 37,838 | 37,797 | 37,755 | |||||||||||||
| Total<br> borrowings | $ | 376,250 | $ | 244,399 | $ | 278,955 | $ | 320,457 | $ | 230,953 |
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 0.37%.
| 5 |
| --- |
QCR Holdings,Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Quarter Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||
| (dollars in thousands, except per share data) | |||||||||||||
| INCOME STATEMENT | |||||||||||||
| Interest income | $ | 48,650 | $ | 48,982 | $ | 52,977 | $ | 56,817 | $ | 54,181 | |||
| Interest expense | 7,702 | 11,284 | 13,058 | 16,098 | 16,168 | ||||||||
| Net interest income | 40,948 | 37,698 | 39,919 | 40,719 | 38,013 | ||||||||
| Provision for loan/lease losses | 19,915 | 8,367 | 979 | 2,012 | 1,941 | ||||||||
| Net interest income after provision for loan/lease losses | $ | 21,033 | $ | 29,331 | $ | 38,940 | $ | 38,707 | $ | 36,072 | |||
| Trust department fees | $ | 2,227 | $ | 2,312 | $ | 2,365 | $ | 2,340 | $ | 2,361 | |||
| Investment advisory and management fees | 1,399 | 1,727 | 1,589 | 1,782 | 1,888 | ||||||||
| Deposit service fees | 1,286 | 1,477 | 1,787 | 1,813 | 1,658 | ||||||||
| Gain on sales of residential real estate loans | 1,196 | 652 | 823 | 890 | 489 | ||||||||
| Gain on sales of government guaranteed portions of loans | - | - | 159 | 519 | 39 | ||||||||
| Swap fee income | 19,927 | 6,804 | 7,409 | 9,797 | 7,891 | ||||||||
| Securities gains (losses), net | 65 | - | 26 | (3 | ) | (52 | ) | ||||||
| Earnings on bank-owned life insurance | 612 | 329 | 533 | 489 | 412 | ||||||||
| Debit card fees | 775 | 758 | 766 | 886 | 914 | ||||||||
| Correspondent banking fees | 198 | 215 | 194 | 189 | 172 | ||||||||
| Gain on sale of assets and liabilities of subsidiary | - | - | 12,286 | - | - | ||||||||
| Other | 941 | 922 | 1,868 | 1,204 | 1,293 | ||||||||
| Total noninterest income | $ | 28,626 | $ | 15,196 | $ | 29,805 | $ | 19,906 | $ | 17,065 | |||
| Salaries and employee benefits | $ | 21,304 | $ | 18,519 | $ | 24,220 | $ | 24,215 | $ | 22,749 | |||
| Occupancy and equipment expense | 3,748 | 4,032 | 4,019 | 3,860 | 3,533 | ||||||||
| Professional and data processing fees | 3,646 | 3,369 | 3,570 | 4,030 | 3,031 | ||||||||
| Post-acquisition compensation, transition and integration costs | 70 | 151 | 1,855 | 884 | 708 | ||||||||
| Disposition costs | (83 | ) | 517 | 3,325 | - | - | |||||||
| FDIC insurance, other insurance and regulatory fees | 908 | 683 | 523 | 542 | 926 | ||||||||
| Loan/lease expense | 339 | 228 | 349 | 221 | 312 | ||||||||
| Net cost of (income from) and gains/losses on operations of other real estate | (332 | ) | 13 | 232 | 2,078 | 1,182 | |||||||
| Advertising and marketing | 552 | 682 | 1,670 | 1,056 | 1,037 | ||||||||
| Bank service charges | 501 | 504 | 516 | 502 | 508 | ||||||||
| Losses on debt extinguishment, net | 429 | 147 | 288 | 148 | - | ||||||||
| Correspondent banking expense | 212 | 216 | 216 | 209 | 206 | ||||||||
| Intangibles amortization | 548 | 549 | 560 | 560 | 615 | ||||||||
| Goodwill impairment | - | 500 | 3,000 | - | - | ||||||||
| Other | 1,280 | 1,305 | 1,951 | 1,640 | 1,753 | ||||||||
| Total noninterest expense | $ | 33,122 | $ | 31,415 | $ | 46,294 | $ | 39,945 | $ | 36,560 | |||
| Net income before income taxes | $ | 16,537 | $ | 13,112 | $ | 22,451 | $ | 18,668 | $ | 16,577 | |||
| Federal and state income tax expense | 2,798 | 1,884 | 6,560 | 3,573 | 3,073 | ||||||||
| Net income | $ | 13,739 | $ | 11,228 | $ | 15,891 | $ | 15,095 | $ | 13,504 | |||
| Basic EPS | $ | 0.87 | $ | 0.71 | $ | 1.01 | $ | 0.96 | $ | 0.86 | |||
| Diluted EPS | $ | 0.86 | $ | 0.70 | $ | 0.99 | $ | 0.94 | $ | 0.85 | |||
| Weighted average common shares outstanding | 15,747,056 | 15,796,796 | 15,772,703 | 15,739,430 | 15,714,588 | ||||||||
| Weighted average common and common equivalent shares outstanding | 15,895,336 | 16,011,456 | 16,033,043 | 15,976,742 | 15,938,377 |
6
QCR Holdings,Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||
| 2020 | 2019 | |||||
| (dollars in thousands, except per share data) | ||||||
| INCOME STATEMENT | ||||||
| Interest income | $ | 97,632 | $ | 106,283 | ||
| Interest expense | 18,986 | 31,362 | ||||
| Net interest income | 78,646 | 74,921 | ||||
| Provision for loan/lease losses | 28,282 | 4,075 | ||||
| Net interest income after provision for loan/lease losses | $ | 50,364 | $ | 70,846 | ||
| Trust department fees | 4,539 | $ | 4,854 | |||
| Investment advisory and management fees | 3,126 | 3,624 | ||||
| Deposit service fees | 2,763 | 3,212 | ||||
| Gain on sales of residential real estate loans | 1,848 | 858 | ||||
| Gain on sales of government guaranteed portions of loans | - | 70 | ||||
| Swap fee income | 26,731 | 11,089 | ||||
| Securities losses, net | 65 | (52 | ) | |||
| Earnings on bank-owned life insurance | 941 | 952 | ||||
| Debit card fees | 1,533 | 1,706 | ||||
| Correspondent banking fees | 413 | 388 | ||||
| Other | 1,863 | 2,357 | ||||
| Total noninterest income | $ | 43,822 | $ | 29,058 | ||
| Salaries and employee benefits | 39,823 | $ | 43,628 | |||
| Occupancy and equipment expense | 7,780 | 7,227 | ||||
| Professional and data processing fees | 7,015 | 5,781 | ||||
| Post-acquisition compensation, transition and integration costs | 221 | 842 | ||||
| Disposition costs | 434 | - | ||||
| FDIC insurance, other insurance and regulatory fees | 1,591 | 1,890 | ||||
| Loan/lease expense | 567 | 526 | ||||
| Net cost of operation of other real estate | (319 | ) | 1,480 | |||
| Advertising and marketing | 1,234 | 1,822 | ||||
| Bank service charges | 1,005 | 991 | ||||
| Losses on debt extinguishment, net | 576 | - | ||||
| Correspondent banking expense | 428 | 410 | ||||
| Intangibles amortization | 1,097 | 1,147 | ||||
| Goodwill impairment | 500 | - | ||||
| Other | 2,585 | 3,251 | ||||
| Total noninterest expense | $ | 64,537 | $ | 68,995 | ||
| Net income before taxes | $ | 29,649 | $ | 30,909 | ||
| Income tax expense | 4,682 | 4,487 | ||||
| Net income | $ | 24,967 | $ | 26,422 | ||
| Basic EPS | $ | 1.58 | $ | 1.68 | ||
| Diluted EPS | $ | 1.56 | $ | 1.66 | ||
| Weighted average common shares outstanding | 15,771,926 | 15,703,967 | ||||
| Weighted average common and common equivalent shares outstanding | 15,956,958 | 15,930,659 |
7
QCR Holdings,Inc.
Consolidated FinancialHighlights
(Unaudited)
| As<br> of and for the Quarter Ended | For<br> the Six Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June30, | March<br> 31, | December<br> 31, | September<br> 30, | June<br> 30, | June<br> 30, | June<br> 30, | |||||||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | |||||||||||||||
| (dollars<br> in thousands, except per share data) | |||||||||||||||||||||
| COMMON<br> SHARE DATA | |||||||||||||||||||||
| Common shares outstanding | 15,790,611 | 15,773,736 | 15,828,098 | 15,790,462 | 15,772,939 | ||||||||||||||||
| Book value per common share (1) | $ | 35.21 | $ | 34.18 | $ | 33.82 | $ | 32.91 | $ | 31.97 | |||||||||||
| Tangible book value per common share (2) | $ | 29.63 | $ | 28.56 | $ | 28.15 | $ | 27.01 | $ | 26.02 | |||||||||||
| Closing stock price | $ | 31.18 | $ | 27.07 | $ | 43.86 | $ | 37.98 | $ | 34.87 | |||||||||||
| Market capitalization | $ | 492,351 | $ | 426,995 | $ | 694,220 | $ | 599,722 | $ | 550,002 | |||||||||||
| Market price / book value | 88.55 | % | 79.20 | % | 129.69 | % | 115.40 | % | 109.06 | % | |||||||||||
| Market price / tangible book value | 105.23 | % | 94.79 | % | 155.76 | % | 140.61 | % | 134.00 | % | |||||||||||
| Earnings per common share<br> (basic) LTM (3) | $ | 3.55 | $ | 3.54 | $ | 3.65 | $ | 3.49 | $ | 3.10 | |||||||||||
| Price earnings ratio LTM<br> (3) | 8.78<br> x | 7.65<br> x | 12.02<br> x | 10.88<br> x | 11.25<br> x | ||||||||||||||||
| TCE / TA (4) | 8.48 | % | 8.76 | % | 9.25 | % | 8.20 | % | 8.05 | % | |||||||||||
| CONDENSED STATEMENT<br> OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||||||||||||||||
| Beginning balance | $ | 539,139 | $ | 535,351 | $ | 519,743 | $ | 504,300 | $ | 488,407 | |||||||||||
| Net income | 13,739 | 11,228 | 15,891 | 15,095 | 13,504 | ||||||||||||||||
| Other comprehensive income<br> (loss), net of tax | 3,622 | (3,691 | ) | (683 | ) | 543 | 2,243 | ||||||||||||||
| Common stock cash dividends<br> declared | (945 | ) | (942 | ) | (947 | ) | (944 | ) | (942 | ) | |||||||||||
| Proceeds from issuance<br> of 9,400 shares of common stock as a result of the performance based<br> targets met for Bates Companies | - | - | 399 | - | - | ||||||||||||||||
| Repurchase and<br> cancellation of 100,932 shares of common stock as a result of a share repurchase program | - | (3,780 | ) | ||||||||||||||||||
| Other (5) | 465 | 973 | 948 | 749 | 1,088 | ||||||||||||||||
| Ending balance | $ | 556,020 | $ | 539,139 | $ | 535,351 | $ | 519,743 | $ | 504,300 | |||||||||||
| REGULATORY<br> CAPITAL RATIOS (6): | |||||||||||||||||||||
| Total risk-based capital<br> ratio | 13.74 | % | 13.54 | % | 13.33 | % | 12.22 | % | 12.04 | % | |||||||||||
| Tier 1 risk-based capital<br> ratio | 11.11 | % | 11.16 | % | 11.04 | % | 9.94 | % | 9.76 | % | |||||||||||
| Tier 1 leverage capital<br> ratio | 8.91 | % | 10.19 | % | 9.53 | % | 9.02 | % | 8.96 | % | |||||||||||
| Common equity tier 1 ratio | 10.28 | % | 10.31 | % | 10.18 | % | 9.12 | % | 8.93 | % | |||||||||||
| KEY<br> PERFORMANCE RATIOS AND OTHER METRICS | |||||||||||||||||||||
| Return on average assets<br> (annualized) | 0.95 | % | 0.91 | % | 1.23 | % | 1.16 | % | 1.06 | % | 0.93 | % | 1.05 | % | |||||||
| Return on average total<br> equity (annualized) | 10.29 | % | 8.23 | % | 11.93 | % | 11.70 | % | 10.84 | % | 9.30 | % | 10.78 | % | |||||||
| Net interest margin | 3.14 | % | 3.40 | % | 3.36 | % | 3.37 | % | 3.25 | % | 3.26 | % | 3.25 | % | |||||||
| Net interest margin (TEY)<br> (Non-GAAP)(7) | 3.27 | % | 3.56 | % | 3.51 | % | 3.52 | % | 3.40 | % | 3.40 | % | 3.40 | % | |||||||
| Efficiency ratio (Non-GAAP)<br> (8) | 47.61 | % | 59.39 | % | 66.40 | % | 65.89 | % | 66.38 | % | 52.70 | % | 66.35 | % | |||||||
| Gross loans and leases<br> / total assets (10) | 74.01 | % | 70.95 | % | 75.36 | % | 74.80 | % | 75.28 | % | 74.01 | % | 75.28 | % | |||||||
| Gross loans and leases<br> / total deposits (10) | 95.18 | % | 88.83 | % | 94.35 | % | 94.95 | % | 90.47 | % | 95.18 | % | 90.47 | % | |||||||
| Effective tax rate | 16.92 | % | 14.37 | % | 29.22 | % | 19.14 | % | 18.54 | % | 15.79 | % | 14.52 | % | |||||||
| Full-time equivalent employees<br> (9) | 712 | 703 | 697 | 766 | 773 | 712 | 773 | ||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||||
| Assets | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,217,763 | $ | 5,077,900 | $ | 5,374,224 | $ | 5,023,201 | |||||||
| Loans/leases | 3,999,523 | 3,686,410 | 3,868,435 | 3,962,464 | 3,839,674 | 3,842,967 | 3,799,645 | ||||||||||||||
| Deposits | 4,732,626 | 3,954,707 | 4,227,572 | 4,302,995 | 4,271,391 | 4,343,653 | 4,191,130 | ||||||||||||||
| Total stockholders' equity | 534,095 | 545,678 | 532,756 | 516,195 | 498,263 | 536,775 | 490,343 | ||||||||||||||
| (1) Includes accumulated other comprehensive income (loss). | |||||||||||||||||||||
| --- | |||||||||||||||||||||
| (2) Includes accumulated other comprehensive income (loss) and excludes intangible assets. | |||||||||||||||||||||
| (3) LTM : Last twelve months. | |||||||||||||||||||||
| (4) TCE / TCA : tangible common equity / total tangible assets. See GAAP to non-GAAP reconciliations. | |||||||||||||||||||||
| (5) 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) Decrease from June 30, 2019 and September 30, 2019 due to sale of subsidiary Rockford Bank & Trust. | |||||||||||||||||||||
| (10) Excludes assets held for sale as of September 30, 2019, Deccember 31, 2019, March 31, 2020 and June 30, 2020. |
| 8 |
| --- |
QCRHoldings, Inc.
Consolidated Financial Highlights
(Unaudited)
| ANALYSIS<br> OF NET INTEREST INCOME AND MARGIN (4) | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For<br> the Quarter Ended | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June<br> 30, 2020 | March<br> 31, 2020 | June<br> 30, 2019 | |||||||||||||||||||
| 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 funds<br> sold | $ | 865 | $ | 1 | 0.46 | % | $ | 5,324 | $ | 18 | 1.36 | % | $ | 9,690 | $ | 56 | 2.32 | % | |||
| Interest-bearing deposits<br> at financial institutions | 533,483 | 135 | 0.10 | % | 128,612 | 361 | 1.13 | % | 182,651 | 1,168 | 2.56 | % | |||||||||
| Securities (1) | 697,559 | 6,536 | 3.77 | % | 619,307 | 6,080 | 3.95 | % | 644,999 | 6,062 | 3.77 | % | |||||||||
| Restricted investment<br> securities | 21,234 | 288 | 5.46 | % | 21,365 | 258 | 4.86 | % | 21,007 | 290 | 5.54 | % | |||||||||
| Loans (1) | 3,999,522 | 43,417 | 4.37 | % | 3,686,410 | 44,056 | 4.81 | % | 3,839,674 | 48,413 | 5.06 | % | |||||||||
| Total earning assets (1) | $ | 5,252,663 | $ | 50,377 | 3.86 | % | $ | 4,461,018 | $ | 50,773 | 4.58 | % | $ | 4,698,021 | $ | 55,989 | 4.78 | % | |||
| Interest-bearing deposits | $ | 2,840,860 | $ | 2,429 | 0.34 | % | $ | 2,379,635 | $ | 5,328 | 0.90 | % | $ | 2,461,768 | $ | 8,271 | 1.35 | % | |||
| Time deposits | 809,233 | 3,337 | 1.66 | % | 785,135 | 3,879 | 1.99 | % | 1,013,391 | 5,554 | 2.20 | % | |||||||||
| Short-term borrowings | 25,064 | 22 | 0.35 | % | 19,315 | 64 | 1.33 | % | 16,145 | 81 | 2.01 | % | |||||||||
| Federal Home Loan Bank<br> advances | 95,616 | 347 | 1.46 | % | 111,407 | 449 | 1.62 | % | 76,154 | 601 | 3.17 | % | |||||||||
| Other borrowings | - | - | 0.00 | % | - | - | 0.00 | % | 10,550 | 92 | 3.50 | % | |||||||||
| Subordinated debentures | 68,480 | 994 | 5.84 | % | 68,418 | 994 | 5.84 | % | 68,239 | 993 | 5.84 | % | |||||||||
| Junior subordinated debentures | 37,891 | 572 | 6.07 | % | 37,853 | 571 | 6.07 | % | 37,731 | 576 | 6.12 | % | |||||||||
| Total interest-bearing<br> liabilities | $ | 3,877,144 | $ | 7,701 | 0.80 | % | $ | 3,401,763 | $ | 11,285 | 1.33 | % | $ | 3,683,978 | $ | 16,168 | 1.76 | % | |||
| Net interest income /<br> spread (1) | $ | 42,676 | 3.06 | % | $ | 39,488 | 3.24 | % | $ | 39,821 | 3.02 | % | |||||||||
| Net interest margin (2) | 3.14 | % | 3.40 | % | 3.25 | % | |||||||||||||||
| Net interest margin (TEY)<br> (Non-GAAP) (1) (2) (3) | 3.27 | % | 3.56 | % | 3.40 | % | |||||||||||||||
| Adjusted net interest<br> margin (TEY) (Non-GAAP) (1) (2) (3) | 3.21 | % | 3.50 | % | 3.31 | % | |||||||||||||||
| For<br> the Six Months Ended | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| June<br> 30, 2020 | June<br> 30, 2019 | ||||||||||||||||||||
| 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 Paid | Average<br><br><br> Yield or Cost | ||||||||||||||||
| (dollars<br> in thousands) | |||||||||||||||||||||
| Fed funds<br> sold | $ | 3,095 | $ | 18 | 1.17 | % | $ | 12,713 | $ | 150 | 2.38 | % | |||||||||
| Interest-bearing deposits<br> at financial institutions | 331,048 | 495 | 0.30 | % | 169,057 | 2,091 | 2.49 | % | |||||||||||||
| Securities (1) | 658,433 | 12,616 | 3.85 | % | 652,727 | 12,158 | 3.76 | % | |||||||||||||
| Restricted investment<br> securities | 21,300 | 546 | 5.15 | % | 21,146 | 598 | 5.70 | % | |||||||||||||
| Loans (1) | 3,842,966 | 87,474 | 4.58 | % | 3,799,645 | 94,795 | 5.03 | % | |||||||||||||
| Total earning assets (1) | $ | 4,856,842 | $ | 101,149 | 4.19 | % | $ | 4,655,288 | $ | 109,792 | 4.76 | % | |||||||||
| Interest-bearing deposits | $ | 2,610,248 | $ | 7,756 | 0.60 | % | $ | 2,374,939 | $ | 15,445 | 1.31 | % | |||||||||
| Time deposits | 797,184 | 7,216 | 1.82 | % | 1,012,925 | 10,859 | 2.16 | % | |||||||||||||
| Short-term borrowings | 22,190 | 86 | 0.78 | % | 15,261 | 152 | 2.01 | % | |||||||||||||
| Federal Home Loan Bank<br> advances | 103,512 | 796 | 1.55 | % | 111,755 | 1,662 | 3.00 | % | |||||||||||||
| Other borrowings | - | - | 0.00 | % | 27,126 | 539 | 4.01 | % | |||||||||||||
| Subordinated debentures | 68,449 | 1,988 | 5.84 | % | 53,438 | 1,557 | 5.88 | % | |||||||||||||
| Junior<br> subordinated debentures | 37,872 | 1,144 | 6.07 | % | 37,709 | 1,148 | 6.14 | % | |||||||||||||
| Total interest-bearing<br> liabilities | $ | 3,639,455 | $ | 18,986 | 1.05 | % | $ | 3,633,153 | $ | 31,362 | 1.74 | % | |||||||||
| Net interest income /<br> spread (1) | $ | 82,163 | 3.14 | % | $ | 78,430 | 3.02 | % | |||||||||||||
| Net interest margin (2) | 3.26 | % | 3.25 | % | |||||||||||||||||
| Net interest margin (TEY)<br> (Non-GAAP) (1) (2) (3) | 3.40 | % | 3.40 | % | |||||||||||||||||
| Adjusted net interest<br> margin (TEY) (Non-GAAP) (1) (2) (3) | 3.35 | % | 3.30 | % | |||||||||||||||||
| (1) | Includes nontaxable securities<br>and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using<br>a 21% tax rate. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | See "Select Financial Data<br>- Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (3) | TEY : Tax equivalent yield. See<br>GAAP to Non-GAAP reconciliations. | ||||||||||||||||||||
| --- | --- |
9
QCRHoldings, Inc.
Consolidated Financial Highlights
(Unaudited)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||
| ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES | |||||||||||||||
| Beginning balance | $ | 42,233 | $ | 36,001 | $ | 36,116 | $ | 41,104 | $ | 41,164 | |||||
| Reclassification of allowance related to held for sale loans | - | - | - | (6,122 | ) | - | |||||||||
| Provision charged to expense (2) | 19,915 | 8,367 | 979 | 1,584 | 1,941 | ||||||||||
| Loans/leases charged off | (1,450 | ) | (2,335 | ) | (1,182 | ) | (741 | ) | (2,152 | ) | |||||
| Recoveries on loans/leases previously charged off | 129 | 200 | 88 | 291 | 151 | ||||||||||
| Ending balance | $ | 60,827 | $ | 42,233 | $ | 36,001 | $ | 36,116 | $ | 41,104 | |||||
| NONPERFORMING ASSETS | |||||||||||||||
| Nonaccrual loans/leases | $ | 12,099 | $ | 11,628 | $ | 7,902 | $ | 8,231 | $ | 13,148 | |||||
| Accruing loans/leases past due 90 days or more | 99 | 1,419 | 33 | - | 58 | ||||||||||
| Troubled debt restructures - accruing | 920 | 545 | 979 | 763 | 1,313 | ||||||||||
| Total nonperforming loans/leases | 13,118 | 13,592 | 8,914 | 8,994 | 14,519 | ||||||||||
| Other real estate owned | 157 | 3,298 | 4,129 | 4,248 | 8,637 | ||||||||||
| Other repossessed assets | 25 | 45 | 41 | - | - | ||||||||||
| Total nonperforming assets | $ | 13,300 | $ | 16,935 | $ | 13,084 | $ | 13,242 | $ | 23,156 | |||||
| ASSET QUALITY RATIOS | |||||||||||||||
| Nonperforming assets / total assets (3) | 0.24 | % | 0.32 | % | 0.27 | % | 0.27 | % | 0.45 | % | |||||
| Allowance / total loans/leases (1) | 1.47 | % | 1.14 | % | 0.98 | % | 1.00 | % | 1.05 | % | |||||
| Allowance / nonperforming loans/leases (1) | 463.69 | % | 310.72 | % | 403.87 | % | 401.56 | % | 283.10 | % | |||||
| Net charge-offs as a % of average loans/leases | 0.03 | % | 0.06 | % | 0.03 | % | 0.01 | % | 0.05 | % | |||||
| (1) Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminates the allowance and impacts these ratios. | |||||||||||||||
| --- | |||||||||||||||
| (2) Excludes provision related to loans included in assets held for sale of $428 thousand for the quarter ending September 30, 2019. | |||||||||||||||
| (3) Excludes assets held for sale. |
10
QCRHoldings, Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Quarter Ended | For the<br><br> Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||
| SELECT FINANCIAL DATA - SUBSIDIARIES | 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||
| (dollars in thousands) | |||||||||||||||
| TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,984,245 | $ | 1,914,785 | $ | 1,637,115 | |||||||||
| m2 Lease Funds, LLC | 241,114 | 237,198 | 234,072 | ||||||||||||
| Cedar Rapids Bank and Trust | 2,021,043 | 1,719,773 | 1,527,521 | ||||||||||||
| Community State Bank - Ankeny | 903,648 | 863,903 | 806,704 | ||||||||||||
| Springfield First Community Bank | 745,474 | 708,736 | 671,644 | ||||||||||||
| TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,707,970 | $ | 1,678,889 | $ | 1,434,467 | |||||||||
| Cedar Rapids Bank and Trust | 1,351,784 | 1,247,989 | 1,283,151 | ||||||||||||
| Community State Bank - Ankeny | 778,499 | 743,645 | 705,777 | ||||||||||||
| Springfield First Community Bank | 564,710 | 524,420 | 471,340 | ||||||||||||
| TOTAL LOANS & LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,485,971 | $ | 1,338,915 | $ | 1,273,400 | |||||||||
| m2 Lease Funds, LLC | 239,351 | 235,144 | 230,676 | ||||||||||||
| Cedar Rapids Bank and Trust | 1,380,672 | 1,159,453 | 1,100,823 | ||||||||||||
| Community State Bank - Ankeny | 671,772 | 634,253 | 597,486 | ||||||||||||
| Springfield First Community Bank | 601,843 | 572,046 | 515,566 | ||||||||||||
| TOTAL LOANS & LEASES / TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | 87 | % | 80 | % | 89 | % | |||||||||
| Cedar Rapids Bank and Trust | 102 | % | 93 | % | 86 | % | |||||||||
| Community State Bank - Ankeny | 86 | % | 85 | % | 85 | % | |||||||||
| Springfield First Community Bank | 107 | % | 109 | % | 109 | % | |||||||||
| TOTAL LOANS & LEASES / TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 75 | % | 70 | % | 78 | % | |||||||||
| Cedar Rapids Bank and Trust | 68 | % | 67 | % | 72 | % | |||||||||
| Community State Bank - Ankeny | 74 | % | 73 | % | 74 | % | |||||||||
| Springfield First Community Bank | 81 | % | 81 | % | 77 | % | |||||||||
| ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | 1.51 | % | 1.17 | % | 1.06 | % | |||||||||
| m2 Lease Funds, LLC | 1.99 | % | 1.50 | % | 1.38 | % | |||||||||
| Cedar Rapids Bank and Trust (2) | 1.62 | % | 1.35 | % | 1.19 | % | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Community State Bank - Ankeny (2) | 1.56 | % | 1.21 | % | 1.09 | % | |||||||||
| Springfield First Community Bank (2) | 0.94 | % | 0.56 | % | 0.37 | % | |||||||||
| RETURN ON AVERAGE ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 0.68 | % | 1.33 | % | 1.22 | % | 0.95 | % | 1.20 | % | |||||
| Cedar Rapids Bank and Trust | 2.36 | % | 1.60 | % | 1.95 | % | 2.01 | % | 1.75 | % | |||||
| Community State Bank - Ankeny | 0.25 | % | 0.50 | % | 1.17 | % | 0.37 | % | 1.12 | % | |||||
| Springfield First Community Bank | 1.04 | % | 1.29 | % | 1.37 | % | 1.16 | % | 1.24 | % | |||||
| NET INTEREST MARGIN PERCENTAGE (3) | |||||||||||||||
| Quad City Bank and Trust (1) | 2.88 | % | 3.68 | % | 3.29 | % | 3.22 | % | 3.26 | % | |||||
| Cedar Rapids Bank and Trust (5) | 3.37 | % | 3.43 | % | 3.41 | % | 3.40 | % | 3.41 | % | |||||
| Community State Bank - Ankeny (4) | 3.77 | % | 3.91 | % | 4.08 | % | 3.84 | % | 4.06 | % | |||||
| Springfield First Community Bank (6) | 3.88 | % | 3.83 | % | 4.10 | % | 3.85 | % | 4.08 | % | |||||
| ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET | |||||||||||||||
| INTEREST MARGIN, NET | |||||||||||||||
| Cedar Rapids Bank and Trust | $ | 62 | $ | 49 | $ | 71 | $ | 111 | $ | 215 | |||||
| Community State Bank - Ankeny | 72 | 64 | 76 | $ | 136 | 134 | |||||||||
| Springfield First Community Bank | 641 | 552 | 971 | $ | 1,193 | 1,881 | |||||||||
| QCR Holdings, Inc. (7) | (39 | ) | (40 | ) | (42 | ) | $ | (79 | ) | (85) | |||||
| (1) | Quad City Bank and Trust figures include m2 Lease Funds, LLC, as this entity is wholly-owned and consolidated<br> with the Bank. m2 Lease Funds, LLC is also presented separately for certain (applicable) measurements. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | Upon acquisition and per GAAP, acquired loans are recorded at market value, which eliminates the allowance and impacts<br> this ratio. | ||||||||||||||
| (3) | Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are<br> determined on a tax equivalent basis using a 21% tax rate. | ||||||||||||||
| (4) | Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding<br> those adjustments, net interest margin would have been 3.71% for the quarter ended June 30, 2020, 3.86% for the quarter ended<br> March 31, 2020 and 4.01% for the quarter ended June 30, 2019. | ||||||||||||||
| (5) | Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding<br> those adjustments, net interest margin would have been 3.35% for the quarter ended June 30, 2020, 3.42% for the quarter ended<br> March 31, 2020 and 3.39% for the quarter ended June 30, 2019. | ||||||||||||||
| (6) | Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding<br> those adjustments, net interest margin would have been 4.29% for the quarter ended June 30, 2020, 4.52% for the quarter ended<br> March 31, 2020 and 3.39% for the quarter ended June 30, 2019. | ||||||||||||||
| (7) | Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community<br> National Bank acquisition in 2013. |
11
QCR Holdings, Inc.
Consolidated FinancialHighlights
(Unaudited)
| As<br> of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June<br> 30, | March<br> 31, | December<br> 31, | September<br> 30, | June<br> 30, | |||||||||||
| GAAP<br> TO NON-GAAP RECONCILIATIONS | 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||
| (dollars<br> in thousands, except per share data) | |||||||||||||||
| TANGIBLE<br> COMMON EQUITY TO TANGIBLE ASSETS RATIO (1) | |||||||||||||||
| Stockholders'<br> equity (GAAP) | $ | 556,020 | $ | 539,139 | $ | 535,351 | $ | 519,743 | $ | 504,300 | |||||
| Less:<br> Intangible assets | 88,120 | 88,669 | 89,717 | 93,277 | 93,837 | ||||||||||
| Tangible<br> common equity (non-GAAP) | $ | 467,900 | $ | 450,470 | $ | 445,634 | $ | 426,466 | $ | 410,463 | |||||
| Total<br> assets (GAAP) | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | $ | 5,292,382 | $ | 5,194,852 | |||||
| Less:<br> Intangible assets | 88,120 | 88,669 | 89,717 | 93,277 | 93,837 | ||||||||||
| Tangible<br> assets (non-GAAP) | $ | 5,516,641 | $ | 5,143,406 | $ | 4,819,333 | $ | 5,199,105 | $ | 5,101,015 | |||||
| Tangible<br> common equity to tangible assets ratio (non-GAAP) | 8.48 | % | 8.76 | % | 9.25 | % | 8.20 | % | 8.05 | % | |||||
| TANGIBLE<br> COMMON EQUITY TO TANGIBLE ASSETS RATIO EXCLUDING PPP LOANS (1) | |||||||||||||||
| Stockholder's<br> equity (GAAP) | $ | 556,020 | $ | 539,139 | $ | 535,351 | $ | 519,743 | $ | 504,300 | |||||
| Less:<br> PPP loan interest income (post-tax) (2) | 2,085 | - | - | - | - | ||||||||||
| Less:<br> Intangible assets | 88,120 | 88,669 | 89,717 | 93,277 | 93,837 | ||||||||||
| Tangible<br> common equity, excluding PPP loan income (non-GAAP) | $ | 465,815 | $ | 450,470 | $ | 445,634 | $ | 426,466 | $ | 410,463 | |||||
| Total<br> assets (GAAP) | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | $ | 5,292,382 | $ | 5,194,852 | |||||
| Less:<br> PPP loans | 358,052 | - | - | - | - | ||||||||||
| Less:<br> Intangible assets | 88,120 | 88,669 | 89,717 | 93,277 | 93,837 | ||||||||||
| Tangible<br> assets, excluding PPP loans (non-GAAP) | $ | 5,158,589 | $ | 5,143,406 | $ | 4,819,333 | $ | 5,199,105 | $ | 5,101,015 | |||||
| Tangible<br> common equity to tangible assets ratio, excluding PPP loans (non-GAAP) | 9.03 | % | 8.76 | % | 9.25 | % | 8.20 | % | 8.05 | % | |||||
| (1) | This ratio is a non-GAAP financial measure. The Company's management believes that this measurement is important to<br>many investors in the marketplace who are interested in changes period-to-period in common equity. In compliance with<br>applicable rules of the SEC, this non-GAAP measure is reconciled to stockholders' equity and total assets, which are the most<br>directly comparable GAAP financial measures. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | PPP interest income (post-tax) is calculated using<br>an estimated effective tax rate of 21%. |
| 12 |
| --- |
QCR Holdings,Inc.
Consolidated Financial 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) | 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | ||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||
| Net income (GAAP) | $ | 13,739 | $ | 11,228 | $ | 15,891 | $ | 15,095 | $ | 13,504 | $ | 24,967 | $ | 26,422 | |||||||
| Less non-core items (post-tax) (2): | |||||||||||||||||||||
| Income: | |||||||||||||||||||||
| Securities gains(losses), net | 51 | - | 21 | $ | (2 | ) | $ | (41 | ) | $ | 51 | $ | (41 | ) | |||||||
| Gain on sale of assets and liabilities of subsidiary | - | - | 8,539 | - | - | - | - | ||||||||||||||
| Total non-core income (non-GAAP) | $ | 51 | $ | - | $ | 8,560 | $ | (2 | ) | $ | (41 | ) | $ | 51 | $ | (41 | ) | ||||
| Expense: | |||||||||||||||||||||
| Losses on debt extinguishment, net | $ | 339 | $ | 116 | $ | 228 | $ | 117 | $ | - | $ | 455 | $ | - | |||||||
| Goodwill impairment | - | 500 | 3,000 | - | - | 500 | - | ||||||||||||||
| Disposition costs | (66 | ) | 408 | 2,627 | - | - | 343 | $ | - | ||||||||||||
| Tax expense on expected liquidation of RB&T BOLI | - | - | 790 | - | - | - | - | ||||||||||||||
| Post-acquisition compensation, transition and integration costs | 55 | 119 | 1,465 | 698 | 559 | 175 | 665 | ||||||||||||||
| Total non-core expense (non-GAAP) | $ | 329 | $ | 1,143 | $ | 8,110 | $ | 815 | $ | 559 | $ | 1,472 | $ | 665 | |||||||
| Adjusted net income (non-GAAP) (1) | $ | 14,016 | $ | 12,372 | $ | 15,441 | $ | 15,912 | $ | 14,104 | $ | 26,388 | $ | 27,128 | |||||||
| PRE-PROVISION/PRE-TAX ADJUSTED INCOME (1) | |||||||||||||||||||||
| Net income (GAAP) | $ | 13,739 | $ | 11,228 | $ | 15,891 | $ | 15,095 | $ | 13,504 | $ | 24,967 | $ | 26,422 | |||||||
| Less: Non-core income not tax-effected | 65 | - | 12,313 | (3 | ) | (52 | ) | 65 | (52 | ) | |||||||||||
| Plus: Non-core expense not tax-effected | 416 | 1,315 | 9,258 | 1,032 | 708 | 1,731 | 842 | ||||||||||||||
| Provision expense | 19,915 | 8,367 | 979 | 2,012 | 1,941 | 28,282 | 4,075 | ||||||||||||||
| Federal and state income tax expense | 2,798 | 1,884 | 6,560 | 3,573 | 3,073 | 4,682 | 4,487 | ||||||||||||||
| Pre-provision/pre-tax adjusted income (non-GAAP) (1) | $ | 36,803 | $ | 22,794 | $ | 20,375 | $ | 21,714 | $ | 19,277 | $ | 59,597 | $ | 35,878 | |||||||
| PRE-PROVISION/PRE-TAX ADJUSTED RETURN ON AVERAGE ASSETS (NON-GAAP) | |||||||||||||||||||||
| Pre-provision/pre-tax adjusted income (non-GAAP) | $ | 36,803 | $ | 22,794 | $ | 20,375 | $ | 21,714 | $ | 19,277 | $ | 59,597 | $ | 35,878 | |||||||
| Average Assets | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,217,763 | $ | 5,077,900 | $ | 5,374,224 | $ | 5,023,201 | |||||||
| Pre-provision/pre-tax adjusted return on average assets (non-GAAP) | 2.54 | % | 1.84 | % | 1.58 | % | 1.66 | % | 1.52 | % | 2.22 | % | 1.43 | % | |||||||
| ADJUSTED EARNINGS PER COMMON SHARE (1) | |||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 14,016 | $ | 12,372 | $ | 15,441 | $ | 15,912 | $ | 14,104 | $ | 26,388 | $ | 27,128 | |||||||
| Weighted average common shares outstanding | 15,747,056 | 15,796,796 | 15,772,703 | 15,739,430 | 15,714,588 | 15,771,926 | 15,703,967 | ||||||||||||||
| Weighted average common and common equivalent shares outstanding | 15,895,336 | 16,011,456 | 16,033,043 | 15,976,742 | 15,938,377 | 15,956,958 | 15,930,659 | ||||||||||||||
| Adjusted earnings per common share (non-GAAP): | |||||||||||||||||||||
| Basic | $ | 0.89 | $ | 0.78 | $ | 0.98 | $ | 1.01 | $ | 0.90 | $ | 1.67 | $ | 1.73 | |||||||
| Diluted | $ | 0.88 | $ | 0.77 | $ | 0.96 | $ | 1.00 | $ | 0.88 | $ | 1.65 | $ | 1.70 | |||||||
| ADJUSTED RETURN ON AVERAGE ASSETS (1) | |||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 14,016 | $ | 12,372 | $ | 15,441 | $ | 15,912 | $ | 14,104 | $ | 26,388 | $ | 27,128 | |||||||
| Average Assets | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,217,763 | $ | 5,077,900 | $ | 5,374,224 | $ | 5,023,201 | |||||||
| Adjusted return on average assets (annualized) (non-GAAP) | 0.97 | % | 1.00 | % | 1.20 | % | 1.22 | % | 1.11 | % | 0.98 | % | 1.08 | % | |||||||
| NET INTEREST MARGIN (TEY) (4) | |||||||||||||||||||||
| Net interest income (GAAP) | $ | 40,948 | $ | 37,698 | $ | 39,919 | $ | 40,719 | $ | 38,013 | $ | 78,646 | $ | 74,921 | |||||||
| Plus: Tax equivalent adjustment (3) | 1,728 | 1,790 | 1,783 | 1,763 | 1,808 | 3,517 | 3,509 | ||||||||||||||
| Net interest income - tax equivalent (Non-GAAP) | $ | 42,676 | $ | 39,488 | $ | 41,702 | $ | 42,482 | $ | 39,821 | $ | 82,163 | $ | 78,430 | |||||||
| Less:<br> Acquisition accounting net accretion | 736 | 625 | 931 | 1,268 | 1,076 | 1,361 | 2,145 | ||||||||||||||
| Adjusted net interest income | $ | 41,940 | $ | 38,863 | $ | 40,771 | $ | 41,214 | $ | 38,745 | $ | 80,802 | $ | 76,285 | |||||||
| Average earning assets | $ | 5,252,663 | $ | 4,461,018 | $ | 4,711,310 | $ | 4,791,274 | $ | 4,698,021 | $ | 4,856,842 | $ | 4,655,288 | |||||||
| Net interest margin (GAAP) | 3.14 | % | 3.40 | % | 3.36 | % | 3.37 | % | 3.25 | % | 3.26 | % | 3.25 | % | |||||||
| Net interest margin (TEY) (Non-GAAP) | 3.27 | % | 3.56 | % | 3.51 | % | 3.52 | % | 3.40 | % | 3.40 | % | 3.40 | % | |||||||
| Adjusted net interest margin (TEY) (Non-GAAP) | 3.21 | % | 3.50 | % | 3.43 | % | 3.41 | % | 3.31 | % | 3.35 | % | 3.30 | % | |||||||
| EFFICIENCY RATIO (5) | |||||||||||||||||||||
| Noninterest expense (GAAP) | $ | 33,122 | $ | 31,415 | $ | 46,294 | $ | 39,945 | $ | 36,560 | $ | 64,537 | $ | 68,995 | |||||||
| Net interest income (GAAP) | $ | 40,948 | $ | 37,698 | $ | 39,919 | $ | 40,719 | $ | 38,013 | $ | 78,646 | $ | 74,921 | |||||||
| Noninterest income (GAAP) | 28,626 | 15,196 | 29,805 | 19,906 | 17,065 | 43,822 | 29,058 | ||||||||||||||
| Total income | $ | 69,574 | $ | 52,894 | $ | 69,724 | $ | 60,625 | $ | 55,078 | $ | 122,468 | $ | 103,979 | |||||||
| Efficiency ratio (noninterest expense/total income) (Non-GAAP) | 47.61 | % | 59.39 | % | 66.40 | % | 65.89 | % | 66.38 | % | 52.70 | % | 66.35 | % | |||||||
| ALLOWANCE FOR LOAN AND LEASE LOSSES TO TOTAL LOANS AND LEASES, EXCLUDING PPP LOANS (6) | |||||||||||||||||||||
| Allowance for loan and lease losses | $ | 60,827 | $ | 42,233 | $ | 36,001 | $ | 36,116 | $ | 41,104 | $ | 60,827 | $ | 41,104 | |||||||
| Total loans and leases | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 3,910,519 | $ | 4,140,259 | $ | 3,910,519 | |||||||
| Less: PPP loans | 358,052 | - | - | - | - | 358,052 | - | ||||||||||||||
| Total loans and leases, excluding PPP loans | $ | 3,782,207 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 3,910,519 | $ | 3,782,207 | $ | 3,910,519 | |||||||
| Allowance for loan and lease losses to total loans and leases, excluding PPP loans | 1.61 | % | 1.14 | % | 0.98 | % | 1.00 | % | 1.05 | % | 1.61 | % | 1.05 | % | |||||||
| LOAN GROWTH ANNUALIZED, EXCLUDING PPP LOANS | |||||||||||||||||||||
| Total loans and leases | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 3,910,519 | $ | 4,140,259 | $ | 3,910,519 | |||||||
| Less: PPP loans | 358,052 | - | - | - | - | 358,052 | - | ||||||||||||||
| Total loans and leases, excluding PPP loans | $ | 3,782,207 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 3,910,519 | $ | 3,782,207 | $ | 3,910,519 | |||||||
| Loan growth annualized, excluding PPP loans | 8.37 | % | 1.57 | % | 8.86 | % | -30.71 | % | 13.57 | % | 4.99 | % | 9.52 | % | |||||||
| (1) | Adjusted net income, Adjusted net income attributable to QCR Holdings, Inc. common stockholders, Adjusted earnings per common share and Adjusted return on average assets are non-GAAP financial measures. The Company's management believes that these measurements are important to investors as they exclude non-recurring income and expense items, therefore, they provide a more realistic run-rate for future periods. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net income, which is the most directly comparable GAAP financial measure. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | Nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 21% with the exception of goodwill impairment which is not deductible for tax and gain on sale of subsidiary which has an estimated effective tax rate of 30.5%. | ||||||||||||||||||||
| (3) | Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21%. | ||||||||||||||||||||
| (4) | Net interest margin (TEY) is a non-GAAP financial measure. The Company's management utilizes this measurement to take into account the tax benefit associated with certain loans and securities. It is also standard industry practice to measure net interest margin using tax-equivalent measures. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net interest income, which is the most directly comparable GAAP financial measure. In addition, the Company calculates net interest margin without the impact of acquisition accounting net accretion as this can fluctuate and it's difficult to provide a more realistic run-rate for future periods. | ||||||||||||||||||||
| (5) | Efficiency ratio is a non-GAAP measure. The Company's management utilizes this ratio to compare to industry peers. The ratio is used to calculate overhead as a percentage of revenue. In compliance with the applicable rules of the SEC, this non-GAAP measure is reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP financial measures. | ||||||||||||||||||||
| (6) | Allowance for loan and lease losses to total loans and leases, excluding PPP loans is a non-GAAP measure. The Company's management utilizes this ratio to remove the from the allowance calculation the impact of PPP loans which are fully guaranteed by the federal government and for which these loans have no allowance for loan and lease loss allocation. |
| 13 |
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Exhibit 99.2
COVID - 19 EXPOSURE Q2 2020
This document contains, and future oral and written statements of QCR Holdings, Inc. (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 c ond ition, results of operations, plans, objectives, future performance and business of the Company. Forward - looking statements, which may be based u pon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally ide ntifiable by the use of words such as “believe,” “expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,” “intend,” “estimate,” “annual ize ,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward - looking statem ents, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future ev ent s. A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ mate ria lly from those in its forward - looking statements. These factors include, among others, the following: (i) the strength of the local, state, national a nd international economies (including the impact of the 2020 presidential election and the impact of tariffs, a U.S. withdrawal from or significant rene got iation of trade agreements, trade wars and other changes in trade regulations); (ii) the economic impact of any future terrorist threats and attacks, wid esp read disease or pandemics (including the COVID - 19 pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of local, state and national governments to any such adverse external events; (i ii) changes in accounting policies and practices (including the new current expected credit loss (CECL) impairment standards, that will change how the Com pany estimates credit losses when implemented); (iv) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase - out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the abi lity to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to real ize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or e mpl oyees; (x) changes in consumer spending; and (xi) unexpected outcomes of existing or new litigation involving the Company. These risks and uncertainties should be considered in evaluating forward - looking statements and undue reliance should not be placed on such statements. Additional infor mation concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is i ncl uded in the Company’s filings with the Securities and Exchange Commission. FORWARD - LOOKING STATEMENTS
• QCRH has transitioned employees back to the office as needed, with some continuing to work from home. • Most locations re - opened lobbies with social distancing measures in place • Protective barriers installed at all locations • Face masks provided to all employees for use when social distancing is not an option • Traffic in lobbies remains lower than usual, but steady • Use of drive - up windows and online activity higher on average vs. pre - pandemic • Business travel, large events and in - person meetings remain on hold. RESPONSE Client and Employee Safety Measures 3
PPP & LRP Participation
Paycheck Protection Program (PPP) QCRH experienced robust client participation in the PPP. As of June 30: • Total number of PPP loans: 1,655 • Total dollar amount: $ 358MM This total includes the acquisition of new , highly desired clients in our existing markets: • Number of new client loans: 309 (19% of total PPP loans) • Total of new client loans: $63MM Client Participation in the Paycheck Protection Program (PPP) PPP 5 PPP Loan Size # of Loans Total ($MM) Average Loan Size <$350K 1421 $113MM $79K $350K - $2MM 206 $158MM $768K >$2MM 28 $87MM $3MM TOTAL 1,655 $358MM $216K
Supporting our Clients | QCRH Loan Relief Program Round 1 The QCRH LRP offered immediate payment relief to consumer and small business loan clients. • Offered 3 months of loan payment deferrals • Improved cash flow for clients without penalty Bank LRP participation, as of June 30: • Total number of loans: 1,466 • Total dollar amount: $ 491MM • Percentage of QCRH total loan portfolio: 11.86% M2 Lease Funds LRP participation, as of June 30: • Total number of loans/leases: 935 • Total dollar amount: $53MM • Percentage of QCRH total loan portfolio: 1.2% QCRH Loan Relief Program (LRP) LOAN RELIEF 6
LOAN RELIEF A breakdown of the industries participating in the LRP in Round 1: Industry Amount % of Loans in Industry Segment % of Total Loans All Investment Real Estate $250MM 17% 6.04% Retail (Including $24MM Automotive) $75MM 32% 1.81% Consumer $41MM 12% 0.99% Hotels $38MM 44% 0.92% Health Care and Social Assistance $21MM 8% 0.51% Construction $10MM 3% 0.24% Other Services $10MM 10% 0.24% Arts, Entertainment and Recreation $9MM 28% 0.22% Restaurants (Limited & Full Service) $8MM 20% 0.19% Manufacturing $5MM 4% 0.12% Management of Companies and Enterprises $5MM 4% 0.12% All Other $19MM N/A 0.46% TOTAL $491MM N/A 11.86% Bank Loan Relief Program (LRP) by Industry 7
Supporting our Clients | QCRH Loan Relief Program As of July 24, we have had limited requests for a second deferral from clients. 5.4% of clients who participated in the first round have requested a second deferral. Bank LRP participation – Round 2: • Total number of loans: 14 • Total dollar amount: $28MM • Percentage of QCRH total loan portfolio: 0.68% M2 LRP participation – Round 2: • Total number of loans/leases: 115 • Total dollar amount: $10MM • Percentage of QCRH total loan portfolio: 0.24% QCRH Loan Relief Program (LRP) – Round 2 LOAN RELIEF 8
Industry Concentration Disclosures
PRIMARY The following industries were deemed higher risk in our commercial loan portfolio due to the COVID - 19 pandemic. As of June 30: Industry Amount % of Total Loans Hotels $87MM 2.10% Restaurants $41MM 0.99% Entertainment $31MM 0.75% Aviation $0MM 0.00% Energy $0MM 0.00% TOTAL $159MM 3.84% Primary Industry Concentration Overview 10
Hotel Exposure As of June 30, QCRH hotel exposure was $87MM, or 2.10% of total loans. Overview in Our Markets • Hotels generally have seen improvement; occupancy ranging from 35% to 45% as some youth sports activities have resumed • Our portfolio has little reliance on conventions or large events • Majority of hotels are top franchises with experienced operators Hotel Exposure HOTEL 11 Hotel Exposure Loan Type # of Loans Amount % of Total Loans National Upscale/Luxury (3 with conference centers) 11 $46MM 1.11% National Midscale/Economy 21 $33MM 0.80% Independent 1 $8MM 0.19% TOTAL 33 $87MM 2.10%
Hotel Exposure As of June 30, QCRH full and limited - service restaurant exposure was $41MM, or 0.99% of total loans. Overview in Our Markets • Most restaurants have limited seating and continue to focus on carry out or drive - thru • Many restaurants with carry out and drive - thrus are performing very well, some even better than before the pandemic • Some operators have reduced the size of their staff to match reduced demand Restaurant Exposure RESTAURANT 12 Restaurant Exposure Loan Type # of Loans Amount % of Total Loans Full - Service 81 $18MM 0.43% Limited - Service 65 $23MM 0.56% TOTAL 146 $41MM 0.99%
Entertainment Exposure As of June 30 , QCRH arts & entertainment exposure was $30MM, or 0.72% of total loans. Overview in Our Markets • Golf courses have experienced minimal impact • Recreation centers are open with restrictions • Many entertainment businesses have introduced online offerings, virtual tours and streaming services Arts & Entertainment Exposure ENTERTAINMENT 13 Entertainment Exposure Loan Type # of Loans Amount % of Total Loans Amusement, Gambling, Recreation Industries 90 $26MM 0.63% Performing Arts, Spectator Sports & Related 31 $3MM 0.07% Museums, Historical Sites & Related 12 $2MM 0.05% TOTAL 133 $31MM 0.75%
SECONDARY Secondary Industry Concentration | Retail As of June 30 , QCRH retail exposure was $236MM, or 5.70% of total loans. 14 Overview in Our Markets • Retail sales jumped 17.7% in May from a month earlier, much better than expected • General retail activity is starting to return • Automotive/truck/RV sales and repair performing very well and better than anticipated • Food and beverage industry continues to be very strong Retail Amount % of Total Loans Retail Investment CRE $144MM 3.47% C&I Retail $45MM 1.09% Retail Owner Occupied CRE $26MM 0.63% Other $21MM 0.51% TOTAL $236MM 5.70%
SECONDARY Secondary Industry Concentration | Retail Investment Commercial Real Estate As of June 30 , QCRH retail investment commercial real estate exposure was $144MM, or 3.47% of total loans. 15 Retail Investment Commercial Real Estate Number of Loans Amount % of Total Loans Multi - Tenant 77 $103MM 2.49% Single - Tenant 36 $37MM 0.89% Mall 1 $4MM 0.09% TOTAL 114 $144MM 3.47%
Secondary Industry Concentration | Retail CRE Non - Owner Occupied 77 Multi - tenant properties with exposure of $103MM or 2.49% of total loans. Tenant Type Number of Loans Amount % of Total Loans Mixed 44 $64MM 1.55% National 12 $26MM 0.63% Independent 15 $10MM 0.24% Regional 6 $3MM 0.07% TOTAL 77 $103MM 2.49% Tenant Type Number of Loans Amount % of Total Loans National 11 $20MM 0.48% Independent 21 $13MM 0.31% Regional 4 $4MM 0.10% TOTAL 36 $37MM 0.89% 16 SECONDARY 36 Single - tenant properties with exposure of $37MM or 0.89% of total loans. Secondary Industry Concentration | Retail Investment Commercial Real Estate 16