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): January 22, 2020
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 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 January 22, 2020, QCR Holdings, Inc. issued a press release disclosing financial results for the quarter and year ended December 31, 2019. 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 QCR Holdings, Inc. 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 January<br>22, 2020, containing financial information for the quarter and year ended December 31, 2019. |
|---|
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: January 22, 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 Record NetIncome of $15.9 Million for the Fourth Quarter and $57.4 Million for the Full Year 2019
Fourth Quarter 2019 Highlights
| · | Net income of $15.9 million, or $0.99 per diluted share |
|---|---|
| · | Adjusted net income (non-GAAP) of $15.4 million, or $0.96 per diluted share |
| --- | --- |
| · | NIM and NIM (TEY)(non-GAAP) at 3.36% and 3.51%, respectively |
| --- | --- |
| · | Noninterest income of $29.8 million for the quarter and $78.8 million for the year |
| --- | --- |
| · | Completed the sale of the operations of Rockford Bank & Trust (“RB&T”) to Heartland Financial USA, Inc. |
| --- | --- |
| · | Excluding RB&T held for sale assets and liabilities: |
| --- | --- |
| o | Annualized loan and lease growth was 8.9% for the quarter and 10.9% for the year |
| --- | --- |
| o | Annualized deposit growth was 11.5% for the quarter and 10.3% for the year |
| --- | --- |
| o | Nonperforming assets were down $0.2 million, or 1.2% from the prior quarter |
| --- | --- |
Moline, IL, January 22, 2020 -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $15.9 million and diluted earnings per share (“EPS”) of $0.99 for the fourth quarter of 2019, compared to net income of $15.1 million and diluted EPS of $0.94 for the third quarter of 2019. The fourth quarter results included a $12.3 million gain on sale and $3.3 million of disposition costs due to the sale of RB&T. Additionally there was a $3.0 million goodwill impairment charge related to the Bates Companies as a result of the decision to exit the Rockford market. The fourth quarter results also included $1.5 million of post-acquisition compensation, transition and integration costs (after-tax), compared to $0.7 million of similar costs in the third quarter of 2019.
Excluding these expenses and some modest cost for early debt extinguishment, the Company reported adjusted net income (non-GAAP) of $15.4 million and adjusted diluted EPS of $0.96 for the fourth quarter of 2019, compared to adjusted net income (non-GAAP) of $15.9 million and adjusted diluted EPS of $1.00 for the third quarter of 2019. For the fourth quarter of 2018, net income and diluted EPS were $13.3 million and $0.84, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS were $14.5 million and $0.91, respectively.
| For the Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | ||||
| $ in millions (except per share data) | 2019 | 2019 | 2018 | |||
| Net Income | $ | 15.9 | $ | 15.1 | $ | 13.3 |
| Diluted EPS | $ | 0.99 | $ | 0.94 | $ | 0.84 |
| Adjusted Net Income (non-GAAP)^(1)^ | $ | 15.4 | $ | 15.9 | $ | 14.5 |
| Adjusted Diluted EPS (non-GAAP)^(1)^ | $ | 0.96 | $ | 1.00 | $ | 0.91 |
^(1)^ See GAAP to non-GAAP reconciliations.
“We are very pleased with our financial performance in 2019, highlighted by record net income and a 19% increase in adjusted earnings per share,” said Larry J. Helling, Chief Executive Officer. “Our strong results were driven by robust revenue growth, due to both record fee income and increased net interest income. Our loans and deposits both grew organically by over 10% for the year, as we continued to gain market share across our charters, capitalizing on the ongoing favorable economic environment as well as the value that our clients place on relationship-based community banking. Additionally, we successfully expanded our net interest margin over the course of the year as our initiatives in this area gained traction.”
“We also were pleased to complete the sale of RB&T, which enables us to redeploy capital in our other more profitable markets to help drive continued organic and acquisitive growth.”
Mr. Helling continued, “We finished the year building substantial momentum, delivering solid loan and lease production, successfully attracting new deposits and generating very strong fee income. Our asset quality remains excellent and our capital levels are strong. Looking to the year ahead, we remain optimistic about our ability to continue delivering exceptional financial results given our healthy loan pipeline and our high quality deposit base, which we believe will lead to improved returns and enhanced shareholder value in 2020 and beyond.”
Completion of the sale of Rockford Bank & Trust to Heartland Financial USA
On November 30, 2019 the Company completed the sale of substantially all of the assets and transfer of substantially all of the deposits and certain other liabilities of the Company’s wholly-owned subsidiary, RB&T to Illinois Bank & Trust (“IB&T”), a wholly-owned subsidiary of Dubuque, IA-based Heartland Financial USA, Inc. The purchase and assumption transaction was valued at approximately $59.1 million, representing a cash payment of approximately $46.9 million from IB&T, including the purchase price premium of $12.5 million, and the separate liquidation of net assets retained by QCRH of $12.2 million. As a result, substantially all of RB&T’s assets and liabilities were classified as held for sale as of September 30, 2019, which impacts balance sheet comparisons to prior quarters.
Annualized Loan and Lease Growth of 8.9%for the Quarter and 10.9% for the Year
During the fourth quarter of 2019, the Company’s total loans and leases increased $79.9 million to a total of $3.7 billion. Continued loan and lease growth was funded by an increase in core deposits. Core deposits (excluding brokered deposits) increased $192.0 million, or 5.4% on a linked quarter basis. At quarter-end, the percentage of wholesale funds to total assets was 8.8%, which was down significantly from 11.6% in the third quarter. Additionally, at quarter-end, the percentage of gross loans and leases to total assets was 75%, which remained consistent with the third quarter when excluding assets held for sale.
“Our solid loan growth for the quarter was driven by strength in commercial and industrial and commercial real estate construction loans,” added Mr. Helling. “Production was driven by both our core commercial lending business, as well as our Specialty Finance Group. We also experienced another quarter of a more normalized level of payoffs, which were relatively consistent from the third quarter of 2019 and down significantly from the fourth quarter of 2018. Our loan and lease pipeline remains strong and our markets remain healthy, giving us confidence that we can achieve organic loan growth for the full year 2020 of between 8% and 10%.”
Net Interest Incomeof $39.9 million
Net interest income for the fourth quarter of 2019 totaled $39.9 million, compared to $40.7 million for the third quarter of 2019 and $39.6 million for the fourth quarter of 2018. The slight decrease was primarily due to a decline in average interest earning assets of $80.0 million, or 1.7% on a linked quarter basis, due to the sale of RB&T. Acquisition-related net accretion totaled $0.9 million (pre-tax) for the fourth quarter of 2019, compared to $1.3 million for the third quarter of 2019 and was $2.6 million for the fourth quarter of 2018. Adjusted net interest income (non-GAAP) was $40.8 million for the fourth quarter of 2019, compared to $41.2 million for the third quarter of 2019 and $38.7 million for the fourth quarter of 2018.
Net interest income totaled $155.6 million for the year ended December 31, 2019, compared to $142.4 million for the year ended December 31, 2018.
In the fourth quarter, reported net interest margin was 3.36% and, on a tax-equivalent yield basis (non-GAAP), net interest margin (non-GAAP) was 3.51%, with both metrics slightly decreasing by 1 basis point from the third quarter of 2019. Net interest margin, excluding acquisition-related net accretion was 3.43%, up 2 basis points from the third quarter. The increase in adjusted net interest margin during the quarter was due to a 27 basis point decline in the total cost of interest-bearing funds (due to both mix and rate), partially offset by a 24 basis point decrease in the yield on earning assets.
| For the Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, | September 30, | |||||
| 2019 | 2019 | |||||
| NIM | 3.36 | % | 3.37 | % | ||
| NIM (TEY)(non-GAAP)^(1)^ | 3.51 | % | 3.52 | % | ||
| Adjusted NIM (TEY)(non-GAAP)^(1)^ | 3.43 | % | 3.41 | % |
(1) See GAAP to non-GAAP reconciliations.
“Our organic loan and lease growth during the fourth quarter was more than funded by our ongoing success in gathering core deposits,” stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “We also once again expanded our adjusted net interest margin during the quarter as we experienced meaningfully lower deposit costs due to lower short-term interest rates and lower CD rates. However, the decline in deposit costs was largely offset by lower yields on our loans as well as some excess liquidity.”
2
Noninterest Income of $29.8 million
Noninterest income for the fourth quarter of 2019 totaled $29.8 million, compared to $19.9 million for the third quarter of 2019. The fourth quarter results included a $12.3 million gain on the sale of RB&T. Excluding the gain, noninterest income totaled $17.5 million in the fourth quarter. The decline from the third quarter was primarily due to a $2.4 million decrease in swap fee income and $0.4 million decrease on gains on the sale of the government guaranteed portions of loans. Wealth management revenue was $4.0 million for the quarter, as compared to $4.1 million for the third quarter of 2019. The slight decline was primarily due to the elimination of wealth management revenue due to the sale of RB&T. Noninterest income, excluding the gain on sale of RB&T, increased 14.7% when compared to the fourth quarter of 2018.
Noninterest income, excluding the gain on sale of RB&T, totaled $66.5 million for the year ended December 31, 2019, compared to $41.5 million for the year ended December 31, 2018, an increase of 60%.
“Our noninterest income was again driven by another strong quarter of swap fee income. Swap fee income and gains on the sale of government guaranteed loans totaled $29.0 million for the full year 2019, well in excess of our initial full-year target of $8 million to $12 million,” added Mr. Gipple.
Noninterest Expensesof $46.3 million
Noninterest expense for the fourth quarter of 2019 totaled $46.3 million, compared to $39.9 million and $36.4 million for the third quarter of 2019 and fourth quarter of 2018, respectively. The linked quarter increase was due to a number of factors, including $3.3 million of disposition costs and a $3.0 million goodwill impairment charge, both related to the decision to exit the Rockford market. In addition post-acquisition transition and integration costs increased by $1.0 million due to the completion of the core conversion of Springfield First Community Bank.
Asset Quality Remains Solid
Nonperforming assets (“NPAs”) totaled $13.1 million, a decrease of $0.2 million from the third quarter of 2019. The relatively stable NPAs resulted in the ratio of NPAs to total assets remaining consistent at 0.27% on December 31, 2019 compared to September 30, 2019 and down from 0.56% at December 31, 2018.
The Company’s provision for loan and lease losses totaled $1.0 million for the fourth quarter of 2019, down from $2.0 million in the prior quarter and $1.6 million in the fourth quarter of 2018. The linked quarter decrease in the provision for loan and lease losses was primarily due to continued strength in overall portfolio quality and $488 thousand of provision taken in the third quarter related to an RB&T nonperforming loan held for sale. As of December 31, 2019, the Company’s allowance to total loans and leases was 0.98%, which was down from 1.00% at September 30, 2019 and down from 1.07% at December 31, 2018.
In accordance with generally accepted accounting principles for acquisition accounting, the 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 ($7.0 million at December 31, 2019).
Strong Capital Levels
As of December 31, 2019, the Company’s total risk-based capital ratio was 13.48%, the common equity tier 1 ratio was 10.29%, and the tangible common equity to tangible assets ratio was 9.25%. By comparison, these respective ratios were 12.22%, 9.12% and 8.20% as of September 30, 2019.
Continued Focus on Seven Key Initiatives
The Company continues to focus on the following long-term initiatives in an effort to improve profitability and drive increased shareholder value:
| · | Strong organic loan and lease growth in order to maintain loans and leases to total assets ratio in the range of 73% - 78% |
|---|---|
| · | Grow core deposits to maintain reliance on wholesale funding at less than 15% of assets |
| --- | --- |
| · | Generate gains on sale of government guaranteed loans, and fee income on interest rate swaps, as a significant and consistent<br>component of core revenue |
| --- | --- |
3
| · | Grow wealth management net income by 10% annually |
|---|---|
| · | Carefully manage noninterest expense growth |
| --- | --- |
| · | Maintain asset quality metrics at better than peer levels |
| --- | --- |
| · | Participate as an acquirer in the consolidation taking place in our industry to further boost return on average assets, improve<br>efficiency ratio, and increase EPS |
| --- | --- |
Conference Call Details
The Company will host an earnings call/webcast tomorrow, January 23, 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 February 6, 2020. The replay access information is 877-344-7529 (international 412-317-0088); access code 10137973. 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 December 31, 2019, the Company had approximately $4.9 billion in assets, $3.7 billion in loans and $3.9 billion in deposits. For additional information, please visit the Company’s website at www.qcrh.com.
Special Note Concerning Forward-Looking Statements. Thisdocument contains, and future oral and written statements of the Company and its management may contain, forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results ofoperations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based uponbeliefs, expectations and assumptions of the Company’s management and on information currently available to management, aregenerally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should” or other similar expressions.Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, andthe Company undertakes no obligation to update any statement in light of new information or future events.
A number of factors, many of which are beyond the abilityof the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements.These factors include, among others, the following: (i) the strength of the local, state, national and international economies(including the impact of tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and otherchanges in trade regulations); (ii) the economic impact of any future terrorist threats and attacks, and the response of theUnited States to any such threats and attacks; (iii) changes in state and federal laws, regulations and governmental policiesconcerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets;(v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes intechnology and the ability to develop and maintain secure and reliable electronic systems; (vii) unexpected results of acquisitions,which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may begreater than anticipated; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpectedoutcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. 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
tgipple@qcrh.com
Christopher J. Lindell
Executive Vice President
Corporate Communications
(319) 743-7006
clindell@qcrh.com
4
QCR Holdings,Inc.
Consolidated FinancialHighlights
(Unaudited)
| Held for Sale | Held for Sale | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As<br> of | As<br> of | As<br> of | ||||||||||||
| December<br> 31, | September<br> 30, | June<br> 30, | March<br> 31, | December<br> 31, | December<br> 31, | September<br> 30, | ||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2019 | ||||||||
| (dollars in<br> thousands) | ||||||||||||||
| CONDENSED BALANCE<br> SHEET | ||||||||||||||
| Cash and due from banks | $ | 76,254 | $ | 91,671 | $ | 87,919 | $ | 76,527 | $ | 85,523 | $ | - | $ | 11,031 |
| Federal funds sold and interest-bearing deposits | 157,691 | 197,263 | 205,497 | 216,032 | 159,596 | - | 2,415 | |||||||
| Securities | 611,341 | 555,409 | 643,803 | 655,749 | 662,969 | - | 66,009 | |||||||
| Net loans/leases | 3,654,204 | 3,574,154 | 3,869,415 | 3,758,268 | 3,692,907 | - | 362,011 | |||||||
| Intangibles | 14,969 | 15,529 | 16,089 | 16,918 | 17,450 | - | - | |||||||
| Goodwill | 74,748 | 77,748 | 77,748 | 77,872 | 77,832 | - | - | |||||||
| Other assets | 307,877 | 315,061 | 294,381 | 265,296 | 253,433 | 11,966 | 24,081 | |||||||
| Assets held for sale | 11,966 | 465,547 | - | - | - | - | - | |||||||
| Total<br> assets | $ | 4,909,050 | $ | 5,292,382 | $ | 5,194,852 | $ | 5,066,662 | $ | 4,949,710 | $ | 11,966 | $ | 465,547 |
| Total deposits | $ | 3,911,051 | $ | 3,802,241 | $ | 4,322,510 | $ | 4,194,220 | $ | 3,977,031 | $ | - | $ | 451,546 |
| Total borrowings | 278,955 | 320,457 | 230,953 | 282,994 | 404,968 | - | 16,157 | |||||||
| Other liabilities | 178,690 | 179,411 | 137,089 | 101,041 | 94,573 | 5,003 | 2,827 | |||||||
| Liabilities held for sale | 5,003 | 470,530 | - | - | - | - | - | |||||||
| Total stockholders' equity | 535,351 | 519,743 | 504,300 | 488,407 | 473,138 | - | - | |||||||
| Total<br> liabilities and stockholders' equity | $ | 4,909,050 | $ | 5,292,382 | $ | 5,194,852 | $ | 5,066,662 | $ | 4,949,710 | $ | 5,003 | $ | 470,530 |
| ANALYSIS<br> OF LOAN PORTFOLIO | ||||||||||||||
| Loan/lease mix: | ||||||||||||||
| Commercial and industrial loans | $ | 1,507,825 | $ | 1,469,978 | $ | 1,548,657 | $ | 1,479,247 | $ | 1,429,410 | ||||
| Commercial real estate loans | 1,736,396 | 1,687,922 | 1,837,473 | 1,790,845 | 1,766,111 | |||||||||
| Direct financing leases | 87,869 | 92,307 | 101,180 | 108,543 | 117,969 | |||||||||
| Residential real estate loans | 239,904 | 245,667 | 293,479 | 288,502 | 290,759 | |||||||||
| Installment and other consumer loans | 109,352 | 106,540 | 120,947 | 123,087 | 119,381 | |||||||||
| Deferred loan/lease origination<br> costs, net of fees | 8,859 | 7,856 | 8,783 | 9,208 | 9,124 | |||||||||
| Total loans/leases | $ | 3,690,205 | $ | 3,610,270 | $ | 3,910,519 | $ | 3,799,432 | $ | 3,732,754 | ||||
| Less allowance for estimated<br> losses on loans/leases | 36,001 | 36,116 | 41,104 | 41,164 | 39,847 | |||||||||
| Net loans/leases | $ | 3,654,204 | $ | 3,574,154 | $ | 3,869,415 | $ | 3,758,268 | $ | 3,692,907 | ||||
| ANALYSIS<br> OF SECURITIES PORTFOLIO | ||||||||||||||
| Securities mix: | ||||||||||||||
| U.S. government sponsored agency securities | $ | 20,078 | $ | 21,268 | $ | 35,762 | $ | 35,843 | $ | 36,411 | ||||
| Municipal securities | 447,853 | 391,329 | 440,853 | 450,376 | 459,409 | |||||||||
| Residential mortgage-backed and related securities | 120,587 | 123,880 | 159,228 | 161,692 | 159,249 | |||||||||
| Other securities | 22,823 | 18,932 | 7,960 | 7,838 | 7,900 | |||||||||
| Total<br> securities | $ | 611,341 | $ | 555,409 | $ | 643,803 | $ | 655,749 | $ | 662,969 | ||||
| ANALYSIS OF DEPOSITS | ||||||||||||||
| Deposit mix: | ||||||||||||||
| Noninterest-bearing demand deposits | $ | 777,224 | $ | 782,232 | $ | 795,951 | $ | 821,599 | $ | 791,101 | ||||
| Interest-bearing demand deposits | 2,444,925 | 2,245,557 | 2,505,956 | 2,334,474 | 2,204,206 | |||||||||
| Time deposits | 533,920 | 536,352 | 733,135 | 719,286 | 704,903 | |||||||||
| Brokered deposits | 154,982 | 238,100 | 287,468 | 318,861 | 276,821 | |||||||||
| Total<br> deposits | $ | 3,911,051 | $ | 3,802,241 | $ | 4,322,510 | $ | 4,194,220 | $ | 3,977,031 | ||||
| ANALYSIS OF BORROWINGS | ||||||||||||||
| Borrowings mix: | ||||||||||||||
| Term FHLB advances | $ | 50,000 | $ | 60,000 | $ | 46,433 | $ | 66,380 | $ | 76,327 | ||||
| Overnight FHLB advances (1) | 109,300 | 135,800 | 59,300 | 59,800 | 190,165 | |||||||||
| Wholesale structured repurchase agreements | - | - | - | 35,000 | 35,000 | |||||||||
| Customer repurchase agreements | 2,193 | 2,421 | 2,181 | 3,056 | 2,084 | |||||||||
| Federal funds purchased | 11,230 | 16,105 | 17,010 | 12,830 | 26,690 | |||||||||
| Subordinated notes | 68,394 | 68,334 | 68,274 | 68,215 | 4,782 | |||||||||
| Junior subordinated debentures | 37,838 | 37,797 | 37,755 | 37,713 | 37,670 | |||||||||
| Other borrowings | - | - | - | - | 32,250 | |||||||||
| Total<br> borrowings | $ | 278,955 | $ | 320,457 | $ | 230,953 | $ | 282,994 | $ | 404,968 |
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 1.73%.
5
QCR Holdings,Inc.
Consolidated FinancialHighlights
(Unaudited)
| For<br> the Quarter Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | |||||||||
| (dollars in<br> thousands, except per share data) | |||||||||||||
| INCOME STATEMENT | |||||||||||||
| Interest income | $ | 52,977 | $ | 56,817 | $ | 54,181 | $ | 52,102 | $ | 52,703 | |||
| Interest expense | 13,058 | 16,098 | 16,168 | 15,194 | 13,110 | ||||||||
| Net interest income | 39,919 | 40,719 | 38,013 | 36,908 | 39,593 | ||||||||
| Provision for loan/lease losses | 979 | 2,012 | 1,941 | 2,134 | 1,611 | ||||||||
| Net interest<br> income after provision for loan/lease losses | $ | 38,940 | $ | 38,707 | $ | 36,072 | $ | 34,774 | $ | 37,982 | |||
| Trust department fees | $ | 2,365 | $ | 2,340 | $ | 2,361 | $ | 2,493 | $ | 2,216 | |||
| Investment advisory and management fees | 1,589 | 1,782 | 1,888 | 1,736 | 1,657 | ||||||||
| Deposit service fees | 1,787 | 1,813 | 1,658 | 1,554 | 1,623 | ||||||||
| Gain on sales of residential real estate loans | 823 | 890 | 489 | 369 | 361 | ||||||||
| Gain on sales of government guaranteed portions<br> of loans | 159 | 519 | 39 | 31 | - | ||||||||
| Swap fee income | 7,409 | 9,797 | 7,891 | 3,198 | 7,069 | ||||||||
| Securities gains (losses), net | 26 | (3 | ) | (52 | ) | - | - | ||||||
| Earnings on bank-owned life insurance | 533 | 489 | 412 | 540 | 341 | ||||||||
| Debit card fees | 766 | 886 | 914 | 792 | 807 | ||||||||
| Correspondent banking fees | 194 | 189 | 172 | 216 | 179 | ||||||||
| Gain on sale of assets and liabilities of subsidiary | 12,286 | - | - | - | - | ||||||||
| Other | 1,868 | 1,204 | 1,293 | 1,064 | 1,026 | ||||||||
| Total noninterest<br> income | $ | 29,805 | $ | 19,906 | $ | 17,065 | $ | 11,993 | $ | 15,279 | |||
| Salaries and employee benefits | $ | 24,220 | $ | 24,215 | $ | 22,749 | $ | 20,879 | $ | 19,779 | |||
| Occupancy and equipment expense | 4,019 | 3,860 | 3,533 | 3,694 | 3,367 | ||||||||
| Professional and data processing fees | 3,570 | 4,030 | 3,031 | 2,750 | 3,577 | ||||||||
| Acquisition costs | - | - | - | - | (4 | ) | |||||||
| Post-acquisition compensation, transition and integration<br> costs | 1,855 | 884 | 708 | 134 | 1,427 | ||||||||
| Disposition costs | 3,325 | - | - | - | - | ||||||||
| FDIC insurance, other insurance and regulatory<br> fees | 523 | 542 | 926 | 964 | 1,065 | ||||||||
| Loan/lease expense | 349 | 221 | 312 | 214 | 624 | ||||||||
| Net cost of (income from) and gains/losses on operations<br> of other real estate | 232 | 2,078 | 1,182 | 298 | 2,477 | ||||||||
| Advertising and marketing | 1,670 | 1,056 | 1,037 | 785 | 1,122 | ||||||||
| Bank service charges | 516 | 502 | 508 | 483 | 469 | ||||||||
| Losses on debt extinguishment, net | 288 | 148 | - | - | - | ||||||||
| Correspondent banking expense | 216 | 209 | 206 | 204 | 207 | ||||||||
| Intangibles amortization | 560 | 560 | 615 | 532 | 540 | ||||||||
| Goodwill impairment | 3,000 | - | - | - | - | ||||||||
| Other | 1,951 | 1,640 | 1,753 | 1,498 | 1,760 | ||||||||
| Total noninterest<br> expense | $ | 46,294 | $ | 39,945 | $ | 36,560 | $ | 32,435 | $ | 36,410 | |||
| Net income before income taxes | $ | 22,451 | $ | 18,668 | $ | 16,577 | $ | 14,332 | $ | 16,851 | |||
| Federal and state income tax<br> expense | 6,560 | 3,573 | 3,073 | 1,414 | 3,535 | ||||||||
| Net income | $ | 15,891 | $ | 15,095 | $ | 13,504 | $ | 12,918 | $ | 13,316 | |||
| Basic EPS | $ | 1.01 | $ | 0.96 | $ | 0.86 | $ | 0.82 | $ | 0.85 | |||
| Diluted EPS | $ | 0.99 | $ | 0.94 | $ | 0.85 | $ | 0.81 | $ | 0.84 | |||
| Weighted average common shares outstanding | 15,772,703 | 15,739,430 | 15,714,588 | 15,693,345 | 15,641,401 | ||||||||
| Weighted average common and common equivalent shares<br> outstanding | 16,033,043 | 15,976,742 | 15,938,377 | 15,922,940 | 15,898,591 |
6
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Year Ended | |||||
|---|---|---|---|---|---|
| December 31, | December 31, | ||||
| 2019 | 2018 | ||||
| (dollars in thousands, except per share data) | |||||
| INCOME STATEMENT | |||||
| Interest income | $ | 216,076 | $ | 182,879 | |
| Interest expense | 60,517 | 40,484 | |||
| Net interest income | 155,559 | 142,395 | |||
| Provision for loan/lease losses | 7,066 | 12,658 | |||
| Net interest income after provision for loan/lease losses | $ | 148,493 | $ | 129,737 | |
| Trust department fees | $ | 9,559 | $ | 8,707 | |
| Investment advisory and management fees | 6,995 | 4,726 | |||
| Deposit service fees | 6,812 | 6,420 | |||
| Gain on sales of residential real estate loans | 2,571 | 901 | |||
| Gain on sales of government guaranteed portions of loans | 748 | 405 | |||
| Swap fee income | 28,295 | 10,787 | |||
| Securities losses, net | (30 | ) | - | ||
| Earnings on bank-owned life insurance | 1,973 | 1,632 | |||
| Debit card fees | 3,357 | 3,263 | |||
| Correspondent banking fees | 773 | 852 | |||
| Gain on sale of assets and liabilities of subsidiary | 12,286 | - | |||
| Other | 5,429 | 3,848 | |||
| Total noninterest income | $ | 78,768 | $ | 41,541 | |
| Salaries and employee benefits | $ | 92,063 | $ | 68,994 | |
| Occupancy and equipment expense | 15,106 | 12,884 | |||
| Professional and data processing fees | 13,381 | 11,452 | |||
| Acquisition costs | - | 1,795 | |||
| Post-acquisition compensation, transition and integration costs | 3,582 | 2,086 | |||
| Disposition costs | 3,325 | - | |||
| FDIC insurance, other insurance and regulatory fees | 2,955 | 3,594 | |||
| Loan/lease expense | 1,097 | 1,544 | |||
| Net cost of and gains/losses on operations of other real estate | 3,789 | 2,489 | |||
| Advertising and marketing | 4,548 | 3,552 | |||
| Bank service charges | 2,009 | 1,838 | |||
| Losses on debt extinguishment | 436 | - | |||
| Correspondent banking expense | 836 | 821 | |||
| Intangibles amortization | 2,266 | 1,692 | |||
| Goodwill impairment | 3,000 | - | |||
| Other | 6,841 | 6,402 | |||
| Total noninterest expense | $ | 155,234 | $ | 119,143 | |
| Net income before income taxes | $ | 72,027 | $ | 52,135 | |
| Federal and state income tax expense | 14,619 | 9,015 | |||
| Net income | $ | 57,408 | $ | 43,120 | |
| Basic EPS | $ | 3.65 | $ | 2.92 | |
| Diluted EPS | $ | 3.60 | $ | 2.86 | |
| Weighted average common shares outstanding | 15,730,016 | 14,768,687 | |||
| Weighted average common and common equivalent shares outstanding | 15,967,775 | 15,064,730 |
7
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| As of and for the Quarter Ended | For the Year Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | |||||||||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||||
| COMMON SHARE DATA | |||||||||||||||||||||
| Common shares outstanding | 15,828,098 | 15,790,462 | 15,772,939 | 15,755,442 | 15,718,208 | ||||||||||||||||
| Book value per common share (1) | $ | 33.82 | $ | 32.91 | $ | 31.97 | $ | 31.00 | $ | 30.10 | |||||||||||
| Tangible book value per common share (2) | $ | 28.15 | $ | 27.01 | $ | 26.02 | $ | 24.98 | $ | 24.04 | |||||||||||
| Closing stock price | $ | 43.86 | $ | 37.98 | $ | 34.87 | $ | 33.92 | $ | 32.09 | |||||||||||
| Market capitalization | $ | 694,220 | $ | 599,722 | $ | 550,002 | $ | 534,425 | $ | 504,397 | |||||||||||
| Market price / book value | 129.69 | % | 115.40 | % | 109.06 | % | 109.42 | % | 106.61 | % | |||||||||||
| Market price / tangible book value | 155.76 | % | 140.61 | % | 134.00 | % | 135.77 | % | 133.49 | % | |||||||||||
| Earnings per common share (basic) LTM (3) | $ | 3.65 | $ | 3.49 | $ | 3.10 | $ | 2.99 | $ | 2.92 | |||||||||||
| Price earnings ratio LTM (3) | 12.02 | x | 10.88 | x | 11.25 | x | 11.34 | x | 10.98 | x | |||||||||||
| TCE / TA (4) | 9.25 | % | 8.20 | % | 8.05 | % | 7.92 | % | 7.78 | % | |||||||||||
| CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||||||||||||||||||
| Beginning balance | $ | 519,743 | $ | 504,300 | $ | 488,407 | $ | 473,138 | $ | 457,387 | |||||||||||
| Net income | 15,891 | 15,095 | 13,504 | 12,918 | 13,316 | ||||||||||||||||
| Other comprehensive income (loss), net of tax | (684 | ) | 543 | 2,243 | 2,343 | 1,943 | |||||||||||||||
| Common stock cash dividends declared | (947 | ) | (944 | ) | (942 | ) | (942 | ) | (939 | ) | |||||||||||
| Proceeds from issuance of 9,400 shares of common stock as a result of the<br> performance based targets met for Bates Companies | 400 | - | - | - | - | ||||||||||||||||
| Proceeds from issuance of 23,501 shares of common stock, net of costs, as a<br> result of the acquisition of Bates Companies | - | - | - | - | 1,000 | ||||||||||||||||
| Other (5) | 948 | 749 | 1,088 | 950 | 431 | ||||||||||||||||
| Ending balance | $ | 535,351 | $ | 519,743 | $ | 504,300 | $ | 488,407 | $ | 473,138 | |||||||||||
| REGULATORY CAPITAL RATIOS (6): | |||||||||||||||||||||
| Total risk-based capital ratio | 13.48 | % | 12.22 | % | 12.04 | % | 12.26 | % | 10.69 | % | |||||||||||
| Tier 1 risk-based capital ratio | 11.17 | % | 9.94 | % | 9.76 | % | 9.87 | % | 9.77 | % | |||||||||||
| Tier 1 leverage capital ratio | 9.53 | % | 9.02 | % | 8.96 | % | 8.90 | % | 8.87 | % | |||||||||||
| Common equity tier 1 ratio | 10.29 | % | 9.12 | % | 8.93 | % | 9.02 | % | 8.89 | % | |||||||||||
| KEY PERFORMANCE RATIOS AND OTHER METRICS | |||||||||||||||||||||
| Return on average assets (annualized) | 1.23 | % | 1.16 | % | 1.06 | % | 1.04 | % | 1.10 | % | 1.12 | % | 0.98 | % | |||||||
| Return on average total equity (annualized) | 11.93 | % | 11.70 | % | 10.84 | % | 10.71 | % | 11.42 | % | 11.31 | % | 10.62 | % | |||||||
| Net interest margin | 3.36 | % | 3.37 | % | 3.25 | % | 3.25 | % | 3.48 | % | 3.31 | % | 3.46 | % | |||||||
| Net interest margin (TEY) (Non-GAAP)(7) | 3.51 | % | 3.52 | % | 3.40 | % | 3.40 | % | 3.63 | % | 3.45 | % | 3.62 | % | |||||||
| Efficiency ratio (Non-GAAP) (8) | 66.40 | % | 65.89 | % | 66.38 | % | 66.33 | % | 66.35 | % | 66.25 | % | 64.77 | % | |||||||
| Gross loans and leases / total assets (10) | 75.36 | % | 74.80 | % | 75.28 | % | 74.99 | % | 75.41 | % | 75.36 | % | 75.41 | % | |||||||
| Gross loans and leases / total deposits (10) | 94.35 | % | 94.95 | % | 90.47 | % | 90.59 | % | 93.86 | % | 94.35 | % | 93.86 | % | |||||||
| Effective tax rate | 29.22 | % | 19.14 | % | 18.54 | % | 9.87 | % | 20.98 | % | 20.30 | % | 17.29 | % | |||||||
| Full-time equivalent employees (9) | 697 | 766 | 773 | 771 | 755 | 697 | 755 | ||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||||
| Assets | $ | 5,147,754 | $ | 5,217,763 | $ | 5,077,900 | $ | 4,968,502 | $ | 4,842,232 | $ | 5,102,980 | $ | 4,392,121 | |||||||
| Loans/leases | 3,868,435 | 3,962,464 | 3,839,674 | 3,759,615 | 3,699,885 | 3,857,547 | 3,352,357 | ||||||||||||||
| Deposits | 3,362,180 | 4,302,995 | 4,271,391 | 4,110,868 | 3,986,236 | 3,261,462 | 3,602,221 | ||||||||||||||
| Total stockholders' equity | 532,756 | 516,195 | 498,263 | 482,423 | 466,271 | 507,409 | 405,973 |
(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 due to sale of subsidiary Rockford Bank & Trust.
(10) Excludes assets held for sale as of September 30, 2019 and Deccember 31, 2019.
8
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| ANALYSIS OF NET INTEREST INCOME AND MARGIN (4) | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For<br> the Quarter Ended | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December<br> 31, 2019 | September<br> 30, 2019 | December<br> 31, 2018 | |||||||||||||||||||
| 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 | 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 | $ | 2,933 | $ | 12 | 1.62 | % | $ | 7,234 | $ | 42 | 2.30 | % | $ | 20,426 | $ | 115 | 2.23 | % | |||
| Interest-bearing<br> deposits at financial institutions | 208,040 | 868 | 1.66 | % | 172,386 | 951 | 2.19 | % | 98,875 | 517 | 2.07 | % | |||||||||
| Securities (1) | 610,676 | 5,913 | 3.84 | % | 626,471 | 6,080 | 3.85 | % | 671,613 | 6,231 | 3.68 | % | |||||||||
| Restricted<br> investment securities | 21,226 | 283 | 5.29 | % | 22,719 | 293 | 5.12 | % | 22,478 | 318 | 5.61 | % | |||||||||
| Loans<br> (1) | 3,868,435 | 47,684 | 4.89 | % | 3,962,464 | 51,214 | 5.13 | % | 3,699,885 | 47,273 | 5.07 | % | |||||||||
| Total<br> earning assets (1) | $ | 4,711,310 | $ | 54,760 | 4.61 | % | $ | 4,791,274 | $ | 58,580 | 4.85 | % | $ | 4,513,277 | $ | 54,454 | 4.79 | % | |||
| Interest-bearing<br> deposits | $ | 2,520,696 | $ | 6,547 | 1.03 | % | $ | 2,505,383 | $ | 7,907 | 1.25 | % | $ | 2,211,148 | $ | 6,110 | 1.10 | % | |||
| Time<br> deposits | 865,392 | 4,631 | 2.12 | % | 975,736 | 5,486 | 2.23 | % | 956,754 | 4,433 | 1.84 | % | |||||||||
| Short-term<br> borrowings | 19,491 | 87 | 1.77 | % | 17,333 | 98 | 2.24 | % | 20,129 | 107 | 2.11 | % | |||||||||
| Federal<br> Home Loan Bank advances | 87,527 | 210 | 0.95 | % | 123,107 | 1,023 | 3.30 | % | 190,232 | 1,131 | 2.36 | % | |||||||||
| Other<br> borrowings | - | - | 0.00 | % | - | - | 0.00 | % | 72,264 | 804 | 4.41 | % | |||||||||
| Subordinated<br> debentures | 68,356 | 1,004 | 5.83 | % | 68,299 | 1,003 | 5.83 | % | - | - | 0.00 | % | |||||||||
| Junior<br> subordinated debentures | 37,813 | 579 | 6.07 | % | 37,774 | 581 | 6.10 | % | 37,644 | 525 | 5.53 | % | |||||||||
| Total<br> interest-bearing liabilities | $ | 3,599,275 | $ | 13,058 | 1.44 | % | $ | 3,727,632 | $ | 16,098 | 1.71 | % | $ | 3,488,171 | $ | 13,110 | 1.49 | % | |||
| Net<br> interest income / spread (1) | $ | 41,702 | 3.17 | % | $ | 42,482 | 3.14 | % | $ | 41,344 | 3.30 | % | |||||||||
| Net<br> interest margin (2) | 3.36 | % | 3.37 | % | 3.48 | % | |||||||||||||||
| Net<br> interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.51 | % | 3.52 | % | 3.63 | % | |||||||||||||||
| Adjusted<br> net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.43 | % | 3.41 | % | 3.40 | % | |||||||||||||||
| For<br> the Year Ended | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| December<br> 31, 2019 | December<br> 31, 2018 | ||||||||||||||||||||
| 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<br> funds sold | $ | 8,898 | $ | 204 | 2.29 | % | $ | 20,472 | $ | 338 | 1.65 | % | |||||||||
| Interest-bearing<br> deposits at financial institutions | 179,635 | 3,910 | 2.18 | % | 66,275 | 1,267 | 1.91 | % | |||||||||||||
| Securities (1) | 635,650 | 24,150 | 3.80 | % | 659,017 | 23,621 | 3.58 | % | |||||||||||||
| Restricted<br> investment securities | 21,559 | 1,174 | 5.45 | % | 22,023 | 1,093 | 4.96 | % | |||||||||||||
| Loans<br> (1) | 3,857,547 | 193,365 | 5.01 | % | 3,352,357 | 163,197 | 4.87 | % | |||||||||||||
| Total<br> earning assets (1) | $ | 4,703,289 | $ | 222,803 | 4.74 | % | $ | 4,120,144 | $ | 189,516 | 4.60 | % | |||||||||
| Interest-bearing<br> deposits | $ | 2,443,989 | $ | 29,898 | 1.22 | % | $ | 2,043,314 | $ | 18,651 | 0.91 | % | |||||||||
| Time<br> deposits | 966,745 | 20,977 | 2.17 | % | 766,020 | 12,024 | 1.57 | % | |||||||||||||
| Short-term<br> borrowings | 16,837 | 363 | 2.16 | % | 19,458 | 293 | 1.51 | % | |||||||||||||
| Federal<br> Home Loan Bank advances | 108,536 | 2,895 | 2.67 | % | 202,715 | 4,768 | 2.35 | % | |||||||||||||
| Other<br> borrowings | 13,563 | 512 | 3.77 | % | 69,623 | 2,749 | 3.95 | % | |||||||||||||
| Subordinated<br> debentures | 60,883 | 3,564 | 5.85 | % | - | - | 0.00 | % | |||||||||||||
| Junior<br> subordinated debentures | 37,751 | 2,308 | 6.11 | % | 37,578 | 1,999 | 5.32 | % | |||||||||||||
| Total<br> interest-bearing liabilities | $ | 3,648,304 | $ | 60,517 | 1.66 | % | $ | 3,138,708 | $ | 40,484 | 1.29 | % | |||||||||
| Net<br> interest income / spread (1) | $ | 162,286 | 3.08 | % | $ | 149,032 | 3.31 | % | |||||||||||||
| Net<br> interest margin (2) | 3.31 | % | 3.46 | % | |||||||||||||||||
| Net<br> interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.45 | % | 3.62 | % | |||||||||||||||||
| Adjusted<br> net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.36 | % | 3.48 | % | |||||||||||||||||
| (1) | Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined<br>on a tax equivalent basis using a 21% tax rate. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin<br>for each period presented. | ||||||||||||||||||||
| (3) | TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations. | ||||||||||||||||||||
| (4) | Interest earning assets and interest bearing liabilities classified as held for sale as of September 30, 2019 are included in<br>the calculations above. |
9
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31,<br> 2019 | September 30,<br> 2019 | June 30,<br> 2019 | March 31,<br> 2019 | December 31,<br> 2018 | |||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||
| ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES | |||||||||||||||
| Beginning balance | $ | 36,116 | $ | 41,104 | $ | 41,164 | $ | 39,847 | $ | 43,077 | |||||
| Reclassification of allowance related to held for sale loans | - | (6,122 | ) | - | - | - | |||||||||
| Provision charged to expense (2) | 979 | 1,584 | 1,941 | 2,134 | 1,611 | ||||||||||
| Loans/leases charged off | (1,182 | ) | (741 | ) | (2,152 | ) | (1,059 | ) | (4,967 | ) | |||||
| Recoveries on loans/leases previously charged off | 88 | 291 | 151 | 242 | 126 | ||||||||||
| Ending balance | $ | 36,001 | $ | 36,116 | $ | 41,104 | $ | 41,164 | $ | 39,847 | |||||
| NONPERFORMING ASSETS | |||||||||||||||
| Nonaccrual loans/leases | $ | 7,902 | $ | 8,231 | $ | 13,148 | $ | 13,406 | $ | 14,260 | |||||
| Accruing loans/leases past due 90 days or more | 33 | - | 58 | 61 | 632 | ||||||||||
| Troubled debt restructures - accruing | 979 | 763 | 1,313 | 3,794 | 3,659 | ||||||||||
| Total nonperforming loans/leases | 8,914 | 8,994 | 14,519 | 17,261 | 18,551 | ||||||||||
| Other real estate owned | 4,129 | 4,248 | 8,637 | 9,110 | 9,378 | ||||||||||
| Other repossessed assets | 41 | - | - | - | 8 | ||||||||||
| Total nonperforming assets | $ | 13,084 | $ | 13,242 | $ | 23,156 | $ | 26,371 | $ | 27,937 | |||||
| ASSET QUALITY RATIOS | |||||||||||||||
| Nonperforming assets / total assets (3) | 0.27 | % | 0.27 | % | 0.45 | % | 0.52 | % | 0.56 | % | |||||
| Allowance / total loans/leases (1) | 0.98 | % | 1.00 | % | 1.05 | % | 1.08 | % | 1.07 | % | |||||
| Allowance / nonperforming loans/leases (1) | 403.87 | % | 401.56 | % | 283.10 | % | 238.48 | % | 214.79 | % | |||||
| Net charge-offs as a % of average loans/leases | 0.03 | % | 0.01 | % | 0.05 | % | 0.02 | % | 0.13 | % | |||||
| (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 as of September 30, 2019. |
10
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| For<br> the Quarter Ended | For<br> the Year Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||
| SELECT FINANCIAL<br> DATA - SUBSIDIARIES | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||
| (dollars in<br> thousands) | |||||||||||||||
| TOTAL<br> ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,682,477 | $ | 1,642,950 | $ | 1,623,369 | |||||||||
| m2 Lease Funds, LLC | 239,794 | 232,432 | 231,662 | ||||||||||||
| Cedar Rapids Bank and Trust | 1,572,324 | 1,592,896 | 1,379,222 | ||||||||||||
| Community State Bank - Ankeny | 853,834 | 801,596 | 785,364 | ||||||||||||
| Springfield First Community Bank | 748,753 | 693,897 | 632,849 | ||||||||||||
| TOTAL<br> DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,458,587 | $ | 1,371,721 | $ | 1,308,085 | |||||||||
| Cedar Rapids Bank and Trust | 1,248,598 | 1,271,828 | 1,167,552 | ||||||||||||
| Community State Bank - Ankeny | 735,089 | 695,980 | 627,127 | ||||||||||||
| Springfield First Community Bank | 531,498 | 484,225 | 449,983 | ||||||||||||
| TOTAL<br> LOANS & LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,329,667 | $ | 1,290,195 | $ | 1,233,117 | |||||||||
| m2 Lease Funds, LLC | 236,735 | 230,061 | 228,646 | ||||||||||||
| Cedar Rapids Bank and Trust | 1,174,963 | 1,148,952 | 1,037,469 | ||||||||||||
| Community State Bank - Ankeny | 639,270 | 594,227 | 582,453 | ||||||||||||
| Springfield First Community Bank | 546,306 | 526,466 | 475,801 | ||||||||||||
| TOTAL<br> LOANS & LEASES / TOTAL DEPOSITS | |||||||||||||||
| Quad City Bank and Trust (1) | 91 | % | 94 | % | 94 | % | |||||||||
| Cedar Rapids Bank and Trust | 94 | % | 90 | % | 89 | % | |||||||||
| Community State Bank - Ankeny | 87 | % | 85 | % | 93 | % | |||||||||
| Springfield First Community Bank | 103 | % | 109 | % | 106 | % | |||||||||
| TOTAL<br> LOANS & LEASES / TOTAL ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 79 | % | 79 | % | 76 | % | |||||||||
| Cedar Rapids Bank and Trust | 75 | % | 72 | % | 75 | % | |||||||||
| Community State Bank - Ankeny | 75 | % | 74 | % | 74 | % | |||||||||
| Springfield First Community Bank | 73 | % | 76 | % | 75 | % | |||||||||
| ALLOWANCE<br> AS A PERCENTAGE OF LOANS/LEASES | |||||||||||||||
| Quad City Bank and Trust (1) | 1.03 | % | 1.07 | % | 1.09 | % | |||||||||
| m2 Lease Funds, LLC | 1.51 | % | 1.39 | % | 1.49 | % | |||||||||
| Cedar Rapids Bank and Trust (2) | 1.14 | % | 1.17 | % | 1.19 | % | |||||||||
| Community State Bank - Ankeny (2) | 1.04 | % | 1.13 | % | 1.05 | % | |||||||||
| Springfield First Community Bank (2) | 0.41 | % | 0.42 | % | 0.21 | % | |||||||||
| RETURN<br> ON AVERAGE ASSETS | |||||||||||||||
| Quad City Bank and Trust (1) | 1.44 | % | 1.33 | % | 1.22 | % | 1.30 | % | 1.31 | % | |||||
| Cedar Rapids Bank and Trust | 1.82 | % | 2.04 | % | 1.78 | % | 1.84 | % | 1.54 | % | |||||
| Community State Bank - Ankeny | 1.38 | % | 1.71 | % | 0.94 | % | 1.34 | % | 1.18 | % | |||||
| Springfield First Community Bank | 1.44 | % | 1.32 | % | 1.74 | % | 1.32 | % | 1.64 | % | |||||
| NET<br> INTEREST MARGIN PERCENTAGE (3) | |||||||||||||||
| Quad City Bank and Trust (1) | 3.55 | % | 3.49 | % | 3.20 | % | 3.39 | % | 3.38 | % | |||||
| Cedar Rapids Bank and Trust (5) | 3.49 | % | 3.41 | % | 3.60 | % | 3.43 | % | 3.59 | % | |||||
| Community State Bank - Ankeny (4) | 4.35 | % | 4.83 | % | 4.73 | % | 4.33 | % | 4.48 | % | |||||
| Springfield First Community Bank (6) | 3.95 | % | 3.64 | % | 4.68 | % | 3.93 | % | 4.55 | % | |||||
| ACQUISITION-RELATED AMORTIZATION/ACCRETION<br> INCLUDED IN NET INTEREST MARGIN, NET | |||||||||||||||
| Cedar Rapids Bank and Trust | $ | 103 | $ | 229 | $ | 740 | $ | 547 | $ | 1,350 | |||||
| Community State Bank - Ankeny | 94 | 649 | 415 | 877 | 1,746 | ||||||||||
| Springfield First Community Bank | 775 | 432 | 1,498 | 3,088 | 2,614 | ||||||||||
| QCR Holdings, Inc. (7) | (41 | ) | (42 | ) | (44 | ) | (168 | ) | (183 | ) | |||||
| (1) | Quad City Bank and Trust figures include m2 Lease Funds, LLC, as this entity is wholly-owned and consolidated with the<br> 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 this ratio. | ||||||||||||||
| (3) | Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate. | ||||||||||||||
| (4) | Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 4.27% for the quarter ended December 31, 2019, 4.46% for the quarter ended September 30, 2019 and 4.00% for the quarter ended December 31, 2018. | ||||||||||||||
| (5) | Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 3.46% for the quarter ended December 31, 2019, 3.34% for the quarter ended September 30,<br> 2019 and 3.36% for the quarter ended December 31, 2018. | ||||||||||||||
| (6) | Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 3.47% for the quarter ended December 31, 2019, 3.16% for the quarter ended September 30, 2019 and 3.52% for the quarter ended December 31, 2018. | ||||||||||||||
| (7) | Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013. |
11
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| As<br> of | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||
| GAAP TO NON-GAAP<br> RECONCILIATIONS | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||||||||
| (dollars in<br> thousands, except per share data) | |||||||||||||||||||||
| TANGIBLE<br> COMMON EQUITY TO TANGIBLE ASSETS RATIO (1) | |||||||||||||||||||||
| Stockholders' equity (GAAP) | $ | 535,351 | $ | 519,743 | $ | 504,300 | $ | 488,407 | $ | 473,138 | |||||||||||
| Less: Intangible assets | 89,717 | 93,277 | 93,837 | 94,790 | 95,282 | ||||||||||||||||
| Tangible common equity (non-GAAP) | $ | 445,634 | $ | 426,466 | $ | 410,463 | $ | 393,617 | $ | 377,856 | |||||||||||
| Total assets (GAAP) | $ | 4,909,050 | $ | 5,292,382 | $ | 5,194,852 | $ | 5,066,662 | $ | 4,949,710 | |||||||||||
| Less: Intangible assets | 89,717 | 93,277 | 93,837 | 94,790 | 95,282 | ||||||||||||||||
| Tangible assets (non-GAAP) | $ | 4,819,333 | $ | 5,199,105 | $ | 5,101,015 | $ | 4,971,872 | $ | 4,854,428 | |||||||||||
| Tangible common equity to tangible<br> assets ratio (non-GAAP) | 9.25 | % | 8.20 | % | 8.05 | % | 7.92 | % | 7.78 | % | |||||||||||
| For the Quarter Ended | For the Year Ended | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December<br> 31, | September<br> 30, | June<br> 30, | March<br> 31, | December<br> 31, | December<br> 31, | December<br> 31, | |||||||||||||||
| ADJUSTED<br> NET INCOME (2) | 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Net income (GAAP) | $ | 15,891 | $ | 15,095 | $ | 13,504 | $ | 12,918 | $ | 13,316 | $ | 57,408 | $ | 43,120 | |||||||
| Less nonrecurring items (post-tax) (3): | |||||||||||||||||||||
| Income: | |||||||||||||||||||||
| Securities gains(losses), net | 21 | $ | (2 | ) | $ | (41 | ) | $ | - | $ | - | $ | (22 | ) | $ | - | |||||
| Gain on sale of assets and<br> liabilities of subsidiary | 8,539 | - | - | - | - | 8,539 | - | ||||||||||||||
| Total nonrecurring income (non-GAAP) | $ | 8,559 | $ | (2 | ) | $ | (41 | ) | $ | - | $ | - | $ | 8,516 | $ | - | |||||
| Expense: | |||||||||||||||||||||
| Losses on debt extinguishment, net | $ | 228 | $ | 117 | $ | - | $ | - | $ | - | $ | 345 | $ | - | |||||||
| Goodwill impairment | 3,000 | - | - | - | - | 3,000 | - | ||||||||||||||
| Disposition costs | 2,627 | - | - | - | - | 2,627 | $ | - | |||||||||||||
| Acquisition costs (4) | - | - | - | - | 29 | - | 1,645 | ||||||||||||||
| Tax expense on expected liquidation of RB&T<br> BOLI | 790 | - | - | - | - | 790 | - | ||||||||||||||
| Post-acquisition compensation,<br> transition and integration costs | 1,465 | 698 | 559 | 106 | 1,127 | 2,828 | 1,647 | ||||||||||||||
| Total nonrecurring expense (non-GAAP) | $ | 8,110 | $ | 815 | $ | 559 | $ | 106 | $ | 1,156 | $ | 9,590 | $ | 3,292 | |||||||
| Adjusted net income (non-GAAP)<br> (2) | $ | 15,441 | $ | 15,912 | $ | 14,104 | $ | 13,024 | $ | 14,472 | $ | 58,481 | $ | 46,412 | |||||||
| ADJUSTED EARNINGS PER COMMON<br> SHARE (2) | |||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 15,441 | $ | 15,912 | $ | 14,104 | $ | 13,024 | $ | 14,472 | $ | 58,481 | $ | 46,412 | |||||||
| Weighted average common shares outstanding | 15,772,703 | 15,739,430 | 15,714,588 | 15,693,345 | 15,641,401 | 15,730,016 | 14,768,687 | ||||||||||||||
| Weighted average common and common equivalent shares<br> outstanding | 16,033,043 | 15,976,742 | 15,938,377 | 15,922,940 | 15,898,591 | 15,967,775 | 15,064,730 | ||||||||||||||
| Adjusted earnings per common<br> share (non-GAAP): | |||||||||||||||||||||
| Basic | $ | 0.98 | $ | 1.01 | $ | 0.90 | $ | 0.83 | $ | 0.93 | $ | 3.72 | $ | 3.14 | |||||||
| Diluted | $ | 0.96 | $ | 1.00 | $ | 0.88 | $ | 0.82 | $ | 0.91 | $ | 3.66 | $ | 3.08 | |||||||
| ADJUSTED<br> RETURN ON AVERAGE ASSETS (2) | |||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 15,441 | $ | 15,912 | $ | 14,104 | $ | 13,024 | $ | 14,472 | $ | 58,481 | $ | 46,412 | |||||||
| Average Assets | $ | 5,147,754 | $ | 5,217,763 | $ | 5,077,900 | $ | 4,968,502 | $ | 4,842,232 | $ | 5,102,980 | $ | 4,392,121 | |||||||
| Adjusted return on average assets<br> (annualized) (non-GAAP) | 1.20 | % | 1.22 | % | 1.11 | % | 1.05 | % | 1.20 | % | 1.15 | % | 1.06 | % | |||||||
| NET INTEREST<br> MARGIN (TEY) (6) | |||||||||||||||||||||
| Net interest income (GAAP) | $ | 39,919 | $ | 40,719 | $ | 38,013 | $ | 36,908 | $ | 39,593 | $ | 155,559 | $ | 142,395 | |||||||
| Plus: Tax equivalent adjustment<br> (5) | 1,783 | 1,763 | 1,808 | 1,794 | 1,751 | 6,727 | 6,637 | ||||||||||||||
| Net interest income - tax equivalent (Non-GAAP) | $ | 41,702 | $ | 42,482 | $ | 39,821 | $ | 38,702 | $ | 41,344 | $ | 162,286 | $ | 149,032 | |||||||
| Less: Acquisition<br> accounting net accretion | 931 | 1,268 | 1,076 | 1,069 | 2,609 | 4,344 | 5,527 | ||||||||||||||
| Adjusted net interest income | $ | 40,771 | $ | 41,214 | $ | 38,745 | $ | 37,633 | $ | 38,735 | $ | 157,942 | $ | 143,505 | |||||||
| Average earning assets | $ | 4,711,310 | $ | 4,791,274 | $ | 4,698,021 | $ | 4,612,553 | $ | 4,513,277 | $ | 4,703,289 | $ | 4,120,144 | |||||||
| Net interest margin (GAAP) | 3.36 | % | 3.37 | % | 3.25 | % | 3.25 | % | 3.48 | % | 3.31 | % | 3.46 | % | |||||||
| Net interest margin (TEY) (Non-GAAP) | 3.51 | % | 3.52 | % | 3.40 | % | 3.40 | % | 3.63 | % | 3.45 | % | 3.62 | % | |||||||
| Adjusted net interest margin (TEY) (Non-GAAP) | 3.43 | % | 3.41 | % | 3.31 | % | 3.31 | % | 3.40 | % | 3.36 | % | 3.48 | % | |||||||
| EFFICIENCY<br> RATIO (7) | |||||||||||||||||||||
| Noninterest expense (GAAP) | $ | 46,294 | $ | 39,945 | $ | 36,560 | $ | 32,435 | $ | 36,410 | $ | 155,234 | $ | 119,143 | |||||||
| Net interest income (GAAP) | $ | 39,919 | $ | 40,719 | $ | 38,013 | $ | 36,908 | $ | 39,593 | $ | 155,559 | $ | 142,395 | |||||||
| Noninterest income (GAAP) | 29,805 | 19,906 | 17,065 | 11,993 | 15,279 | 78,768 | 41,541 | ||||||||||||||
| Total income | $ | 69,724 | $ | 60,625 | $ | 55,078 | $ | 48,901 | $ | 54,872 | $ | 234,327 | $ | 183,936 | |||||||
| Efficiency ratio (noninterest expense/total income)<br> (Non-GAAP) | 66.40 | % | 65.89 | % | 66.38 | % | 66.33 | % | 66.35 | % | 66.25 | % | 64.77 | % | |||||||
| (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 applicable rules of the SEC, this non-GAAP measure is reconciled to stockholders' equity and total assets, which are the most directly comparable GAAP financial measures. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | Adjusted net income, Adjusted net income attributable to QCR Holdings, Inc. common stockholders, Adjusted earnings per common<br>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. | ||||||||||||||||||||
| (3) | Nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 21% with the exception of goodwill impairment<br>which is not deductible for tax and gain on sale of subsidiary which has an estimated effective tax rate of 30.5%. | ||||||||||||||||||||
| (4) | Acquisition costs were analyzed individually for deductibility. Presented amounts are tax-effected accordingly. | ||||||||||||||||||||
| (5) | Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21%. | ||||||||||||||||||||
| (6) | Net interest margin (TEY) is a non-GAAP financial measure. The Company's management utilizes this measurement to take<br>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<br>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<br>future periods. | ||||||||||||||||||||
| (7) | Efficiency ratio is a non-GAAP measure. The Company's management utilizes this ratio to compare to industry peers. The<br>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. |
12