QCR Holdings, Inc. Announces Record Net Income 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:
  • Annualized loan and lease growth was 8.9% for the quarter and 10.9% for the year
  • Annualized deposit growth was 11.5% for the quarter and 10.3% for the year
  • Nonperforming assets were down $0.2 million, or 1.2% from the prior quarter

MOLINE, Ill., Jan. 22, 2020 (GLOBE NEWSWIRE) -- 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 Income of $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.”

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 Expenses of $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 component of core revenue
• 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 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. This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management 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, including forward-looking statements, 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 events.
               
A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economies (including the impact of 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, and the response of the United States to any such threats and attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning 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 in technology 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 be greater than anticipated; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

Contacts:

Todd A. Gipple
President
Chief Operating Officer
Chief Financial Officer
[phone]
[e-mail]

Christopher J. Lindell
Executive Vice President
Corporate Communications
[phone]
[e-mail]

	QCR Holdings, Inc.
	Consolidated Financial Highlights
					(Unaudited)
													Held for Sale		Held for Sale
	As of												As of		As of
	December 31,		September 30,		June 30,		March 31,		December 31,				December 31,		September 30,
	2019		2019		2019		2019		2018				2019		2019
	(dollars in thousands)
CONDENSED BALANCE 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 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 liabilities and stockholders' equity	$	4,909,050	$	5,292,382	$	5,194,852	$	5,066,662	$	4,949,710			$	5,003	$	470,530
ANALYSIS 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 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 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 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 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 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 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%.

	QCR Holdings, Inc.
	Consolidated Financial Highlights
	(Unaudited)
			For the Quarter Ended
			December 31,		September 30,			June 30,			March 31,		December 31,
			2019		2019			2019			2019		2018
			(dollars in 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 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 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 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 costs				1,855		884			708			134		1,427
Disposition costs				3,325		-			-			-		-
FDIC insurance, other insurance and regulatory 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 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 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 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 outstanding				16,033,043		15,976,742			15,938,377			15,922,940		15,898,591

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

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 performance based targets met for Bates Companies		400			-			-			-			-
Proceeds from issuance of 23,501 shares of common stock, net of costs, as a 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.

QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
ANALYSIS OF NET INTEREST INCOME AND MARGIN (4)
		For the Quarter Ended
		December 31, 2019							September 30, 2019							December 31, 2018
		Average Balance		Interest Earned or Paid		Average Yield or Cost			Average Balance		Interest Earned or Paid		Average Yield or Cost			Average Balance		Interest Earned or Paid		Average Yield or Cost
		(dollars in thousands)
Fed funds sold		$	2,933	$	12	1.62	%		$	7,234	$	42	2.30	%		$	20,426	$	115	2.23	%
Interest-bearing 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 investment securities			21,226		283	5.29	%			22,719		293	5.12	%			22,478		318	5.61	%
Loans (1)			3,868,435		47,684	4.89	%			3,962,464		51,214	5.13	%			3,699,885		47,273	5.07	%
Total 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 deposits		$	2,520,696	$	6,547	1.03	%		$	2,505,383	$	7,907	1.25	%		$	2,211,148	$	6,110	1.10	%
Time deposits			865,392		4,631	2.12	%			975,736		5,486	2.23	%			956,754		4,433	1.84	%
Short-term borrowings			19,491		87	1.77	%			17,333		98	2.24	%			20,129		107	2.11	%
Federal Home Loan Bank advances			87,527		210	0.95	%			123,107		1,023	3.30	%			190,232		1,131	2.36	%
Other borrowings			-		-	0.00	%			-		-	0.00	%			72,264		804	4.41	%
Subordinated debentures			68,356		1,004	5.83	%			68,299		1,003	5.83	%			-		-	0.00	%
Junior subordinated debentures			37,813		579	6.07	%			37,774		581	6.10	%			37,644		525	5.53	%
Total 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 interest income / spread (1)				$	41,702	3.17	%				$	42,482	3.14	%				$	41,344	3.30	%
Net interest margin (2)						3.36	%						3.37	%						3.48	%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.51	%						3.52	%						3.63	%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.43	%						3.41	%						3.40	%
		For the Year Ended
		December 31, 2019							December 31, 2018
		Average Balance		Interest Earned or Paid		Average Yield or Cost			Average Balance		Interest Earned or Paid		Average Yield or Cost
		(dollars in thousands)
Fed funds sold		$	8,898	$	204	2.29	%		$	20,472	$	338	1.65	%
Interest-bearing 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 investment securities			21,559		1,174	5.45	%			22,023		1,093	4.96	%
Loans (1)			3,857,547		193,365	5.01	%			3,352,357		163,197	4.87	%
Total earning assets (1)		$	4,703,289	$	222,803	4.74	%		$	4,120,144	$	189,516	4.60	%
Interest-bearing deposits		$	2,443,989	$	29,898	1.22	%		$	2,043,314	$	18,651	0.91	%
Time deposits			966,745		20,977	2.17	%			766,020		12,024	1.57	%
Short-term borrowings			16,837		363	2.16	%			19,458		293	1.51	%
Federal Home Loan Bank advances			108,536		2,895	2.67	%			202,715		4,768	2.35	%
Other borrowings			13,563		512	3.77	%			69,623		2,749	3.95	%
Subordinated debentures			60,883		3,564	5.85	%			-		-	0.00	%
Junior subordinated debentures			37,751		2,308	6.11	%			37,578		1,999	5.32	%
Total interest-bearing liabilities		$	3,648,304	$	60,517	1.66	%		$	3,138,708	$	40,484	1.29	%
Net interest income / spread (1)				$	162,286	3.08	%				$	149,032	3.31	%
Net interest margin (2)						3.31	%						3.46	%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.45	%						3.62	%
Adjusted 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 on a tax equivalent basis using a 21% tax rate.
(2) See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented.
(3) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.
(4) Interest earning assets and interest bearing liabilities classified as held for sale as of September 30, 2019 are included in the calculations above.

QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
	As of
	December 31,			September 30,			June 30,			March 31,			December 31,
	2019			2019			2019			2019			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.

QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
				For the Quarter Ended												For the Year Ended
				December 31,				September 30,				December 31,				December 31,				December 31,
		SELECT FINANCIAL DATA - SUBSIDIARIES		2019				2019				2018				2019				2018
				(dollars in thousands)
		TOTAL 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 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 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 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 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 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 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 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 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 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, 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.

QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
		As of
		December 31,				September 30,					June 30,					March 31,					December 31,
GAAP TO NON-GAAP RECONCILIATIONS		2019				2019					2019					2019					2018
		(dollars in thousands, except per share data)
TANGIBLE 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 assets ratio (non-GAAP)			9.25	%			8.20	%				8.05	%				7.92	%				7.78	%
		For the Quarter Ended																								For the Year Ended
		December 31,				September 30,					June 30,					March 31,					December 31,					December 31,					December 31,
ADJUSTED 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 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 BOLI			790				-					-					-					-					790					-
Post-acquisition compensation, 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) (2)		$	15,441			$	15,912				$	14,104				$	13,024				$	14,472				$	58,481				$	46,412
ADJUSTED EARNINGS PER COMMON 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 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 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 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 (annualized) (non-GAAP)			1.20	%			1.22	%				1.11	%				1.05	%				1.20	%				1.15	%				1.06	%
NET INTEREST 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 (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 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 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) (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 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 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 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 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.
(7) 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.