Exhibit 99.1
 | PRESS RELEASE |
FOR IMMEDIATE RELEASE
QCR Holdings, Inc. Announces Record Third Quarter Earnings Despite Elevated COVID-19 Provisioning
EPS of $1.09 Driven by Record Pre-Provision/Pre-Tax Adjusted Net Income
Third Quarter 2020 Highlights
| · | Record net income of $17.3 million, or $1.09 per diluted share |
| · | Adjusted net income (non-GAAP) of $17.7 million, or $1.11 per diluted share |
| · | Record noninterest income of $38.0 million, driven by record swap fee income of $26.7 million |
| · | Record pre-provision, pre-tax adjusted net income (non-GAAP) of $42.2 million |
| · | Pre-provision, pre-tax adjusted ROAA (non-GAAP) of 2.90% |
| · | NIM increased by 22 bps and NIM (TEY)(non-GAAP) increased by 24 bps to 3.36% and 3.51%, respectively |
| · | Annualized core loan and lease growth (non-GAAP) of 11.5% for the quarter, excluding SBA Paycheck Protection Program (“PPP”) loans |
| · | Provision expense of $20.3 million for the quarter, increasing ALLL to total loans and leases, excluding PPP loans (non-GAAP), by 44 bps to 2.05% |
| · | Annualized core deposit growth of 36.4% for the quarter |
| · | Loan Relief Program (“LRP”) participation down approximately 90% from the prior quarter to only 1.95% of total loans and leases |
Moline, IL, October 27, 2020 -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced record quarterly net income of $17.3 million and diluted earnings per share (“EPS”) of $1.09 for the third quarter of 2020, compared to net income of $13.7 million and diluted EPS of $0.86 for the second quarter of 2020. Pre-provision, pre-tax adjusted net income (non-GAAP) increased $5.4 million in the third quarter compared to the second quarter, led by record swap fee income, strong loan growth and improved net interest income and margin.
The Company reported adjusted net income (non-GAAP) of $17.7 million and adjusted diluted EPS (non-GAAP) of $1.11 for the third quarter of 2020, compared to adjusted net income (non-GAAP) of $14.0 million and adjusted diluted EPS (non-GAAP) of $0.88 for the second quarter of 2020. For the third quarter of 2019, net income and diluted EPS were $15.1 million and $0.94, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $15.9 million and $1.00, respectively.
| For the Quarter Ended | ||||||||||||
| September 30, | June 30, | September 30, | ||||||||||
| $ in millions (except per share data) | 2020 | 2020 | 2019 | |||||||||
| Net Income | $ | 17.3 | $ | 13.7 | $ | 15.1 | ||||||
| Diluted EPS | $ | 1.09 | $ | 0.86 | $ | 0.94 | ||||||
| Adjusted Net Income (non-GAAP) | $ | 17.7 | $ | 14.0 | $ | 15.9 | ||||||
| Adjusted Diluted EPS (non-GAAP) | $ | 1.11 | $ | 0.88 | $ | 1.00 | ||||||
| Pre-Provision/Pre-Tax Adjusted Income (non-GAAP) | $ | 42.2 | $ | 36.8 | $ | 21.7 | ||||||
| Pre-Provision/Pre-Tax Adjusted ROAA (non-GAAP) | 2.90 | % | 2.54 | % | 1.66 | % | ||||||
| See GAAP to non-GAAP reconciliations | ||||||||||||
“We are pleased to report a record quarter of net income, pre-provision, pre-tax adjusted net income, and noninterest income, driven by continued strong loan growth, record fee income and an expanded net interest margin,” commented Larry J. Helling, Chief Executive Officer. “Core loans grew more than 11% on an annualized basis, while maintaining disciplined underwriting and solid credit quality. Core deposits were even stronger this quarter with outsized growth in deposits coming from our correspondent banking relationships. Despite continuing to hold some excess liquidity on our balance sheet, we were able to lower deposit costs and bolster our net interest margin in the quarter.
“Additionally, we continued to experience a significant reduction in loan deferrals, and by quarter-end, approximately 90% of our clients who needed payment relief early in the pandemic had resumed making payments,” Helling said. “We believe this speaks to the high quality of our loan portfolio and the resiliency of our local markets, which continue to improve as pandemic-impacted jobs return at a faster pace than the rest of the country.
“Our asset quality remains solid and our banks are well positioned to continue to work through the pandemic,” added Helling. “We again chose to be prudent and recorded a significant provision for loan and lease losses during the quarter in order to continue to build reserves against future potential credit issues related to the unknown severity and duration of COVID-19.”
Annualized Loan and Lease Growth of 11.5%, excluding PPP Loans (non-GAAP)
During the third quarter of 2020, the Company’s total loans and leases increased by $107.7 million to a total of $4.2 billion. Loan and lease growth during the quarter was 11.5% on an annualized basis. Core deposits (excluding brokered deposits) increased $385.1 million, or 36.4% on an annualized basis. Brokered deposits declined by $62.6 million as the Company allowed certain higher cost brokered deposits to run off the balance sheet. The Company’s correspondent banking portfolio contributed to the majority of the core deposit growth as our correspondent bank clients grew liquidity. At quarter-end, the percentage of wholesale funds to total assets was 4.9%, which was down sharply from 8.9% in the second quarter of 2020 as the Company’s need for wholesale funding declined due to the strong growth in core deposits. Notably, more than half of the remaining wholesale funds consist of subordinated debt and trust preferred securities that provide regulatory capital. Additionally, at quarter-end, the percentage of gross loans and leases to total assets was 72.4%, which was down from 73.9% in the second quarter.
“We delivered solid loan growth for the quarter, driven primarily by strong production in our Specialty Finance Group,” said Helling. “Excluding our PPP loan production, loan and lease growth for the first nine months of 2020 was 7.2% on an annualized basis, and given our current pipeline, we now believe that we will be able to achieve organic loan growth of between 6% and 8% for the full year, higher than our previous guidance.”
Net Interest Income of $44.6 million
Net interest income for the third quarter of 2020 totaled $44.6 million, compared to $41.0 million for the second quarter of 2020 and $40.7 million for the third quarter of 2019. The increase was primarily due to an increase in the reported net interest margin and, to a lesser extent, the growth in average interest-earning assets of $25.6 million, or 0.5% on a linked quarter basis. Acquisition-related net accretion totaled $833 thousand (pre-tax) for the third quarter of 2020, up slightly from the second quarter of 2020 and down from $1.3 million for the third quarter of 2019. Adjusted net interest income (non-GAAP) was $45.7 million for the third quarter of 2020, compared to $41.9 million for the second quarter of 2020 and $41.2 million for the third quarter of 2019.
In the third quarter, NIM was 3.36% and, on a tax-equivalent yield basis (non-GAAP), NIM was 3.51%, an increase of 22 basis points and 24 basis points from the second quarter of 2020, respectively. Adjusted NIM (non-GAAP), excluding acquisition-related net accretion was 3.44%, up 23 basis points from the second quarter. The increase in adjusted NIM (non-GAAP) during the quarter was primarily due to a 13 basis point increase in the yield on earning assets combined with a 14 basis point decline in the total cost of interest-bearing funds (due to both mix and rate).
| For the Quarter Ended | ||||||||||||
| September 30, | June 30, | September 30, | ||||||||||
| 2020 | 2020 | 2019 | ||||||||||
| NIM | 3.36 | % | 3.14 | % | 3.37 | % | ||||||
| NIM (TEY)(non-GAAP) | 3.51 | % | 3.27 | % | 3.52 | % | ||||||
| Adjusted NIM (TEY)(non-GAAP) | 3.44 | % | 3.21 | % | 3.41 | % | ||||||
See GAAP to non-GAAP reconciliations | ||||||||||||
“During the quarter, we worked to improve the efficiency of the balance sheet by proactively reducing higher cost non-core funding which, in turn, eliminated some of our excess liquidity and helped to enhance our NIM,” stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “Combined with a meaningful drop in our funding costs, which was driven by the increased core deposits and reduced wholesale funding, we were able to increase our adjusted NIM by 23 basis points in the quarter.”
Record Noninterest Income of $38.0 million
Noninterest income for the third quarter of 2020 totaled $38.0 million, compared to $28.6 million for the second quarter of 2020. The increase was primarily due to $26.7 million in swap fee income, up $6.8 million from the second quarter of 2020. Wealth management revenue was $3.5 million for the quarter, consistent with the second quarter. In addition, securities gains and other income increased by $1.7 million from the prior quarter. Noninterest income increased $18.1 million or 90.7% when compared to the third quarter of 2019.
“Continued strong production from our Specialty Finance Group and our commercial teams across all of our banks led to a record $26.7 million in swap fee income during the quarter. Swap fee income totaled $53.4 million for the first nine months of 2020. This level of sustained production puts us on track to exceed our full year expectations for this source of fee income,” added Mr. Gipple.
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Noninterest Expenses of $40.8 million
Noninterest expense for the third quarter of 2020 totaled $40.8 million, compared to $33.1 million for the second quarter of 2020. The linked-quarter increase was primarily due to increased salary and benefits expense of $4.7 million, with increased commission and incentive compensation expense in the quarter driven by the strong financial results and higher than anticipated swap fee income. In addition, losses on debt extinguishment increased $1.4 million, FDIC insurance and regulatory fees increased by $393 thousand due to our larger asset base, net cost on operations of other real estate increased by $348 thousand, disposition costs increased by $275 thousand, and advertising and marketing expenses increased by $198 thousand.
Continued to Significantly Build Reserves for COVID-19
Nonperforming assets (“NPAs”) totaled $19.0 million, an increase of $5.7 million from the second quarter of 2020. The increase was primarily due to a few isolated relationships that experienced degradation not directly related to COVID-19. The ratio of NPAs to total assets increased to 0.32% at September 30, 2020, compared to 0.24% at June 30, 2020, and 0.27% at September 30, 2019.
The Company’s provision for loan and lease losses totaled $20.3 million for the third quarter of 2020, up from $19.9 million in the prior quarter. The linked-quarter increase in the provision for loan and lease losses was primarily due to increased qualitative factors in response to the COVID-19 pandemic. As of September 30, 2020, the Company’s allowance to total loans and leases was 1.87%, which was up from 1.47% at June 30, 2020, and from 1.00% at September 30, 2019. Excluding the impact of the $358 million in PPP loans that are on the Company’s balance sheet, the ALLL to total loans and leases was 2.05% (non-GAAP).
In accordance with GAAP for acquisition accounting, loans acquired through past acquisitions were recorded at market value; therefore, there was no allowance associated with the acquired loans at the acquisition date. Management continues to evaluate the allowance needed on the acquired loans factoring in the net remaining discount of $4.5 million at September 30, 2020.
Strong Capital Levels
As of September 30, 2020, the Company’s total risk-based capital ratio was 14.91%, the common equity tier 1 ratio was 10.43%, and the tangible common equity to tangible assets ratio was 8.42% (non-GAAP). By comparison, these respective ratios were 13.71%, 10.25% and 8.48% as of June 30, 2020. Excluding the impact of the PPP loans, the tangible common equity to tangible assets ratio was 8.89% (non-GAAP).
During the third quarter, the Company successfully completed a private placement of $50.0 million of 5.125% Fixed-to-Floating Rate Subordinated Notes due 2030. This offering enabled us to further build our capital base to support the organic growth of our subsidiary banks and be well positioned for future M&A opportunities.
Focus on Three Strategic Long-Term Initiatives
As part of the Company’s ongoing efforts to grow earnings and drive attractive long-term returns for shareholders, it continues to operate under three key strategic long-term initiatives:
| · | Organic loan and lease growth of 9% per year, funded by core deposits; |
| · | Grow fee-based income by at least 6% per year; and |
| · | Limit our annual operating expense growth to 5% per year. |
These initiatives are long-term targets. Due to the impact of the COVID-19 pandemic among other factors, the Company may not be able to achieve these goals for the full year 2020.
Supplemental Presentation and Where to Find It
In addition to this press release, the Company has included a supplemental presentation that provides further information regarding the Company’s loan exposures and deferrals. Investors, analysts and other interested persons may find this presentation on the Securities and Exchange Commission’s EDGAR filing system at www.sec.gov/edgar.shtml, or on the Company’s website at www.qcrh.com.
Conference Call Details
The Company will host an earnings call/webcast tomorrow, October 28, 2020, at 10:00 a.m. Central Time. Dial-in information for the call is toll-free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be available for replay through November 11, 2020. The replay access information is 877-344-7529 (international 412-317-0088); access code 10148155. 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.
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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 24 locations in Iowa, Missouri, Wisconsin and Illinois. As of September 30, 2020, the Company had approximately $5.9 billion in assets, $4.2 billion in loans and $4.7 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 the 2020 presidential election and 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, widespread disease or pandemics (including the COVID-19 pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices (including the new current expected credit loss (CECL) impairment standards, that will change how the Company estimates credit losses when implemented); (iv) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) 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; (ix) the loss of key executives or employees; (x) changes in consumer spending; and (xi) unexpected outcomes of existing or new litigation involving the Company. 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
(309) 743-7745
tgipple@qcrh.com
Kim K. Garrett
Vice President
Corporate Communications
Investor Relations Manager
(319) 743-7006
kgarret@qcrh.com
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QCR Holdings, Inc.
Consolidated Financial Highlights
Unaudited
| As of | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| CONDENSED BALANCE SHEET | ||||||||||||||||||||
| Cash and due from banks | $ | 68,932 | $ | 88,577 | $ | 169,827 | $ | 76,254 | $ | 91,671 | ||||||||||
| Federal funds sold and interest-bearing deposits | 302,668 | 142,900 | 206,708 | 157,691 | 197,263 | |||||||||||||||
| Securities | 782,088 | 748,883 | 684,571 | 611,341 | 555,409 | |||||||||||||||
| Net loans/leases | 4,168,395 | 4,079,432 | 3,662,435 | 3,654,204 | 3,574,154 | |||||||||||||||
| Intangibles | 11,902 | 13,872 | 14,421 | 14,970 | 15,529 | |||||||||||||||
| Goodwill | 74,066 | 74,248 | 74,248 | 74,748 | 77,748 | |||||||||||||||
| Derivatives | 236,381 | 225,164 | 195,973 | 87,827 | 104,388 | |||||||||||||||
| Other assets | 220,128 | 220,920 | 213,134 | 220,049 | 210,673 | |||||||||||||||
| Assets held for sale | - | 10,765 | 10,758 | 11,966 | 465,547 | |||||||||||||||
| Total assets | $ | 5,864,560 | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | $ | 5,292,382 | ||||||||||
| Total deposits | $ | 4,672,268 | $ | 4,349,775 | $ | 4,170,478 | $ | 3,911,051 | $ | 3,802,241 | ||||||||||
| Total borrowings | 226,962 | 376,250 | 244,399 | 278,955 | 320,457 | |||||||||||||||
| Derivatives | 244,510 | 233,589 | 203,744 | 88,436 | 109,242 | |||||||||||||||
| Other liabilities | 148,207 | 87,539 | 71,185 | 90,254 | 70,169 | |||||||||||||||
| Liabilities held for sale | - | 1,588 | 3,130 | 5,003 | 470,530 | |||||||||||||||
| Total stockholders' equity | 572,613 | 556,020 | 539,139 | 535,351 | 519,743 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 5,864,560 | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | $ | 5,292,382 | ||||||||||
| ANALYSIS OF LOAN PORTFOLIO | ||||||||||||||||||||
| Loan/lease mix: | ||||||||||||||||||||
| Commercial and industrial loans | $ | 1,823,049 | $ | 1,850,110 | $ | 1,484,979 | $ | 1,507,825 | $ | 1,469,978 | ||||||||||
| Commercial real estate loans | 1,999,715 | 1,869,162 | 1,783,086 | 1,736,396 | 1,687,922 | |||||||||||||||
| Direct financing leases | 73,011 | 79,105 | 83,324 | 87,869 | 92,307 | |||||||||||||||
| Residential real estate loans | 245,032 | 241,069 | 237,742 | 239,904 | 245,667 | |||||||||||||||
| Installment and other consumer loans | 102,471 | 99,150 | 106,728 | 109,352 | 106,540 | |||||||||||||||
| Deferred loan/lease origination costs, net of fees | 4,699 | 1,663 | 8,809 | 8,859 | 7,856 | |||||||||||||||
| Total loans/leases | $ | 4,247,977 | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | ||||||||||
| Less allowance for estimated losses on loans/leases | 79,582 | 60,827 | 42,233 | 36,001 | 36,116 | |||||||||||||||
| Net loans/leases | $ | 4,168,395 | $ | 4,079,432 | $ | 3,662,435 | $ | 3,654,204 | $ | 3,574,154 | ||||||||||
| ANALYSIS OF SECURITIES PORTFOLIO | ||||||||||||||||||||
| Securities mix: | ||||||||||||||||||||
| U.S. government sponsored agency securities | $ | 18,437 | $ | 17,472 | $ | 19,457 | $ | 20,078 | $ | 21,268 | ||||||||||
| Municipal securities | 569,075 | 526,192 | 493,664 | 447,853 | 391,329 | |||||||||||||||
| Residential mortgage-backed and related securities | 134,147 | 145,672 | 122,853 | 120,587 | 123,880 | |||||||||||||||
| Asset backed securities | 40,665 | 39,797 | 28,499 | 16,887 | 10,957 | |||||||||||||||
| Other securities | 19,764 | 19,750 | 20,098 | 5,936 | 7,975 | |||||||||||||||
| Total securities | $ | 782,088 | $ | 748,883 | $ | 684,571 | $ | 611,341 | $ | 555,409 | ||||||||||
| ANALYSIS OF DEPOSITS | ||||||||||||||||||||
| Deposit mix: | ||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 1,175,085 | $ | 1,177,482 | $ | 829,782 | $ | 777,224 | $ | 782,232 | ||||||||||
| Interest-bearing demand deposits | 2,938,194 | 2,488,755 | 2,440,907 | 2,407,502 | 2,245,557 | |||||||||||||||
| Time deposits | 499,021 | 560,982 | 617,979 | 571,343 | 536,352 | |||||||||||||||
| Brokered deposits | 59,968 | 122,556 | 281,810 | 154,982 | 238,100 | |||||||||||||||
| Total deposits | $ | 4,672,268 | $ | 4,349,775 | $ | 4,170,478 | $ | 3,911,051 | $ | 3,802,241 | ||||||||||
| ANALYSIS OF BORROWINGS | ||||||||||||||||||||
| Borrowings mix: | ||||||||||||||||||||
| Term FHLB advances | $ | 40,000 | $ | 90,000 | $ | 55,000 | $ | 50,000 | $ | 60,000 | ||||||||||
| Overnight FHLB advances | - | 55,000 | 40,000 | 109,300 | 135,800 | |||||||||||||||
| FRB borrowings | - | 100,000 | 30,000 | - | - | |||||||||||||||
| Other short-term borrowings | 30,430 | 24,818 | 13,067 | 13,423 | 18,526 | |||||||||||||||
| Subordinated notes | 118,577 | 68,516 | 68,455 | 68,394 | 68,334 | |||||||||||||||
| Junior subordinated debentures | 37,955 | 37,916 | 37,877 | 37,838 | 37,797 | |||||||||||||||
| Total borrowings | $ | 226,962 | $ | 376,250 | $ | 244,399 | $ | 278,955 | $ | 320,457 | ||||||||||
5
QCR Holdings,
Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Quarter Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| INCOME STATEMENT | ||||||||||||||||||||
| Interest income | $ | 50,890 | $ | 48,650 | $ | 48,982 | $ | 52,977 | $ | 56,817 | ||||||||||
| Interest expense | 6,309 | 7,694 | 11,276 | 13,058 | 16,098 | |||||||||||||||
| Net interest income | 44,581 | 40,956 | 37,706 | 39,919 | 40,719 | |||||||||||||||
| Provision for loan/lease losses | 20,342 | 19,915 | 8,367 | 979 | 2,012 | |||||||||||||||
| Net interest income after provision for loan/lease losses | $ | 24,239 | $ | 21,041 | $ | 29,339 | $ | 38,940 | $ | 38,707 | ||||||||||
| Trust department fees | $ | 2,280 | $ | 2,227 | $ | 2,312 | $ | 2,365 | $ | 2,340 | ||||||||||
| Investment advisory and management fees | 1,266 | 1,399 | 1,727 | 1,589 | 1,782 | |||||||||||||||
| Deposit service fees | 1,403 | 1,286 | 1,477 | 1,787 | 1,813 | |||||||||||||||
| Gain on sales of residential real estate loans | 1,370 | 1,196 | 652 | 823 | 890 | |||||||||||||||
| Gain on sales of government guaranteed portions of loans | - | - | - | 159 | 519 | |||||||||||||||
| Swap fee income | 26,688 | 19,927 | 6,804 | 7,409 | 9,797 | |||||||||||||||
| Securities gains (losses), net | 1,802 | 65 | - | 26 | (3 | ) | ||||||||||||||
| Earnings on bank-owned life insurance | 502 | 612 | 329 | 533 | 489 | |||||||||||||||
| Debit card fees | 946 | 775 | 758 | 766 | 886 | |||||||||||||||
| Correspondent banking fees | 220 | 198 | 215 | 194 | 189 | |||||||||||||||
| Gain on sale of assets and liabilities of subsidiary | - | - | - | 12,286 | - | |||||||||||||||
| Other | 1,482 | 941 | 922 | 1,868 | 1,204 | |||||||||||||||
| Total noninterest income | $ | 37,959 | $ | 28,626 | $ | 15,196 | $ | 29,805 | $ | 19,906 | ||||||||||
| Salaries and employee benefits | $ | 25,999 | $ | 21,304 | $ | 18,519 | $ | 24,220 | $ | 24,215 | ||||||||||
| Occupancy and equipment expense | 3,807 | 3,748 | 4,032 | 4,019 | 3,860 | |||||||||||||||
| Professional and data processing fees | 3,758 | 3,646 | 3,369 | 3,570 | 4,030 | |||||||||||||||
| Post-acquisition compensation, transition and integration costs | (32 | ) | 70 | 151 | 1,855 | 884 | ||||||||||||||
| Disposition costs | 192 | (83 | ) | 517 | 3,325 | - | ||||||||||||||
| FDIC insurance, other insurance and regulatory fees | 1,301 | 908 | 683 | 523 | 542 | |||||||||||||||
| Loan/lease expense | 403 | 339 | 228 | 349 | 221 | |||||||||||||||
| Net cost of (income from) and gains/losses on operations of other real estate | 16 | (332 | ) | 13 | 232 | 2,078 | ||||||||||||||
| Advertising and marketing | 750 | 552 | 682 | 1,670 | 1,056 | |||||||||||||||
| Bank service charges | 488 | 501 | 504 | 516 | 502 | |||||||||||||||
| Losses on liability extinguishment | 1,874 | 429 | 147 | 288 | 148 | |||||||||||||||
| Correspondent banking expense | 205 | 212 | 216 | 216 | 209 | |||||||||||||||
| Intangibles amortization | 531 | 548 | 549 | 560 | 560 | |||||||||||||||
| Goodwill impairment | - | - | 500 | 3,000 | - | |||||||||||||||
| Loss on sale of subsidiary | 305 | - | - | - | - | |||||||||||||||
Other | 1,241 | 1,288 | 1,313 | 1,951 | 1,640 | |||||||||||||||
| Total noninterest expense | $ | 40,838 | $ | 33,130 | $ | 31,423 | $ | 46,294 | $ | 39,945 | ||||||||||
| Net income before income taxes | $ | 21,360 | $ | 16,537 | $ | 13,112 | $ | 22,451 | $ | 18,668 | ||||||||||
| Federal and state income tax expense | 4,016 | 2,798 | 1,884 | 6,560 | 3,573 | |||||||||||||||
| Net income | $ | 17,344 | $ | 13,739 | $ | 11,228 | $ | 15,891 | $ | 15,095 | ||||||||||
| Basic EPS | $ | 1.10 | $ | 0.87 | $ | 0.71 | $ | 1.01 | $ | 0.96 | ||||||||||
| Diluted EPS | $ | 1.09 | $ | 0.86 | $ | 0.70 | $ | 0.99 | $ | 0.94 | ||||||||||
| Weighted average common shares outstanding | 15,767,152 | 15,747,056 | 15,796,796 | 15,772,703 | 15,739,430 | |||||||||||||||
| Weighted average common and common equivalent shares outstanding | 15,923,578 | 15,895,336 | 16,011,456 | 16,033,043 | 15,976,742 | |||||||||||||||
6
QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Nine Months Ended | ||||||||
| September 30, | September 30, | |||||||
| 2020 | 2019 | |||||||
| (dollars in thousands, except per share data) | ||||||||
| INCOME STATEMENT | ||||||||
| Interest income | $ | 148,522 | $ | 163,099 | ||||
| Interest expense | 25,279 | 47,459 | ||||||
| Net interest income | 123,243 | 115,640 | ||||||
| Provision for loan/lease losses | 48,624 | 6,087 | ||||||
| Net interest income after provision for loan/lease losses | $ | 74,619 | $ | 109,553 | ||||
| Trust department fees | 6,819 | $ | 7,194 | |||||
| Investment advisory and management fees | 4,392 | 5,406 | ||||||
| Deposit service fees | 4,166 | 5,025 | ||||||
| Gain on sales of residential real estate loans | 3,218 | 1,748 | ||||||
| Gain on sales of government guaranteed portions of loans | - | 589 | ||||||
| Swap fee income | 53,419 | 20,886 | ||||||
| Securities gains (losses), net | 1,867 | (56 | ) | |||||
| Earnings on bank-owned life insurance | 1,443 | 1,441 | ||||||
| Debit card fees | 2,479 | 2,591 | ||||||
| Correspondent banking fees | 633 | 578 | ||||||
| Other | 3,345 | 3,562 | ||||||
| Total noninterest income | $ | 81,781 | $ | 48,964 | ||||
| Salaries and employee benefits | 65,822 | $ | 67,843 | |||||
| Occupancy and equipment expense | 11,587 | 11,087 | ||||||
| Professional and data processing fees | 10,773 | 9,811 | ||||||
| Post-acquisition compensation, transition and integration costs | 189 | 1,727 | ||||||
| Disposition costs | 626 | - | ||||||
| FDIC insurance, other insurance and regulatory fees | 2,892 | 2,432 | ||||||
| Loan/lease expense | 970 | 748 | ||||||
| Net cost of (income from) and gains/losses on operation of other real estate | (303 | ) | 3,557 | |||||
| Advertising and marketing | 1,984 | 2,878 | ||||||
| Bank service charges | 1,493 | 1,494 | ||||||
| Losses on liability extinguishment | 2,450 | 148 | ||||||
| Correspondent banking expense | 633 | 619 | ||||||
| Intangibles amortization | 1,628 | 1,706 | ||||||
| Goodwill impairment | 500 | - | ||||||
| Loss on sale of subsidiary | 305 | - | ||||||
| Other | 3,842 | 4,891 | ||||||
| Total noninterest expense | $ | 105,391 | $ | 108,941 | ||||
| Net income before taxes | $ | 51,009 | $ | 49,576 | ||||
| Income tax expense | 8,698 | 8,059 | ||||||
| Net income | $ | 42,311 | $ | 41,517 | ||||
| Basic EPS | $ | 2.68 | $ | 2.64 | ||||
| Diluted EPS | $ | 2.65 | $ | 2.60 | ||||
| Weighted average common shares outstanding | 15,770,335 | 15,715,788 | ||||||
| Weighted average common and common equivalent shares outstanding | 15,945,832 | 15,946,020 | ||||||
7
QCR Holdings,
Inc.
Consolidated Financial Highlights
(Unaudited)
| As of and for the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
| COMMON SHARE DATA | ||||||||||||||||||||||||||||
| Common shares outstanding | 15,792,357 | 15,790,611 | 15,773,736 | 15,828,098 | 15,790,462 | |||||||||||||||||||||||
| Book value per common share (1) | $ | 36.26 | $ | 35.21 | $ | 34.18 | $ | 33.82 | $ | 32.91 | ||||||||||||||||||
| Tangible book value per common share (2) | $ | 30.82 | $ | 29.63 | $ | 28.56 | $ | 28.15 | $ | 27.01 | ||||||||||||||||||
| Closing stock price | $ | 27.41 | $ | 31.18 | $ | 27.07 | $ | 43.86 | $ | 37.98 | ||||||||||||||||||
| Market capitalization | $ | 432,869 | $ | 492,351 | $ | 426,995 | $ | 694,220 | $ | 599,722 | ||||||||||||||||||
| Market price / book value | 75.60 | % | 88.55 | % | 79.20 | % | 129.69 | % | 115.40 | % | ||||||||||||||||||
| Market price / tangible book value | 88.95 | % | 105.23 | % | 94.79 | % | 155.76 | % | 140.61 | % | ||||||||||||||||||
| Earnings per common share (basic) LTM (3) | $ | 3.69 | $ | 3.55 | $ | 3.54 | $ | 3.65 | $ | 3.49 | ||||||||||||||||||
| Price earnings ratio LTM (3) | 7.43 x | 8.78 x | 7.65 x | 12.02 x | 10.88 x | |||||||||||||||||||||||
| TCE / TA (4) | 8.42 | % | 8.48 | % | 8.76 | % | 9.25 | % | 8.20 | % | ||||||||||||||||||
| CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||
| Beginning balance | $ | 556,020 | $ | 539,139 | $ | 535,351 | $ | 519,743 | $ | 504,300 | ||||||||||||||||||
| Net income | 17,344 | 13,739 | 11,228 | 15,891 | 15,095 | |||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | (614 | ) | 3,622 | (3,691 | ) | (683 | ) | 543 | ||||||||||||||||||||
| Common stock cash dividends declared | (945 | ) | (945 | ) | (942 | ) | (947 | ) | (944 | ) | ||||||||||||||||||
| Proceeds from issuance of 9,400 shares of common stock as a result of the performance based targets met for Bates Companies | - | - | - | 399 | - | |||||||||||||||||||||||
| Repurchase and cancellation of 100,932 shares of common stock as a result of a share repurchase program | - | - | (3,780 | ) | - | - | ||||||||||||||||||||||
| Other (5) | 808 | 465 | 973 | 948 | 749 | |||||||||||||||||||||||
| Ending balance | $ | 572,613 | $ | 556,020 | $ | 539,139 | $ | 535,351 | $ | 519,743 | ||||||||||||||||||
| REGULATORY CAPITAL RATIOS (6): | ||||||||||||||||||||||||||||
| Total risk-based capital ratio | 14.91 | % | 13.71 | % | 13.54 | % | 13.33 | % | 12.22 | % | ||||||||||||||||||
| Tier 1 risk-based capital ratio | 11.23 | % | 11.07 | % | 11.16 | % | 11.04 | % | 9.94 | % | ||||||||||||||||||
| Tier 1 leverage capital ratio | 9.21 | % | 8.91 | % | 10.19 | % | 9.53 | % | 9.02 | % | ||||||||||||||||||
| Common equity tier 1 ratio | 10.43 | % | 10.25 | % | 10.31 | % | 10.18 | % | 9.12 | % | ||||||||||||||||||
| KEY PERFORMANCE RATIOS AND OTHER METRICS | ||||||||||||||||||||||||||||
| Return on average assets (annualized) | 1.19 | % | 0.95 | % | 0.91 | % | 1.23 | % | 1.16 | % | 1.02 | % | 1.09 | % | ||||||||||||||
| Return on average total equity (annualized) | 12.94 | % | 10.29 | % | 8.23 | % | 11.93 | % | 11.70 | % | 10.51 | % | 11.09 | % | ||||||||||||||
| Net interest margin | 3.36 | % | 3.14 | % | 3.40 | % | 3.36 | % | 3.37 | % | 3.29 | % | 3.29 | % | ||||||||||||||
| Net interest margin (TEY) (Non-GAAP) (7) | 3.51 | % | 3.27 | % | 3.56 | % | 3.51 | % | 3.52 | % | 3.44 | % | 3.43 | % | ||||||||||||||
| Efficiency ratio (Non-GAAP) (8) | 49.48 | % | 47.61 | % | 59.40 | % | 66.40 | % | 65.89 | % | 51.40 | % | 66.18 | % | ||||||||||||||
| Gross loans and leases / total assets (10) | 72.43 | % | 74.01 | % | 70.95 | % | 75.36 | % | 74.80 | % | 72.43 | % | 74.80 | % | ||||||||||||||
| Gross loans and leases / total deposits (10) | 90.92 | % | 95.18 | % | 88.83 | % | 94.35 | % | 94.95 | % | 90.92 | % | 94.95 | % | ||||||||||||||
| Effective tax rate | 18.80 | % | 16.92 | % | 14.37 | % | 29.22 | % | 19.14 | % | 17.05 | % | 16.26 | % | ||||||||||||||
| Full-time equivalent employees (9) | 687 | 712 | 703 | 697 | 766 | 687 | 766 | |||||||||||||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||||||||||
| Assets | $ | 5,820,555 | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,217,763 | $ | 5,524,087 | $ | 5,088,055 | ||||||||||||||
| Loans/leases | 4,185,275 | 3,999,523 | 3,686,410 | 3,868,435 | 3,962,464 | 3,957,903 | 3,853,918 | |||||||||||||||||||||
| Deposits | 4,726,881 | 4,732,626 | 3,954,707 | 4,227,572 | 4,302,995 | 4,472,328 | 4,228,418 | |||||||||||||||||||||
| Total stockholders' equity | 536,187 | 534,095 | 545,678 | 532,756 | 516,195 | 536,578 | 498,960 | |||||||||||||||||||||
| (1) | Includes accumulated other comprehensive income (loss). |
| (2) | Includes accumulated other comprehensive income (loss) and excludes intangible assets. |
| (3) | LTM : Last twelve months. |
| (4) | TCE / TCA : tangible common equity / total tangible assets. See GAAP to non-GAAP reconciliations. |
| (5) | Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation. |
| (6) | Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release. |
| (7) | TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations. |
| (8) | See GAAP to Non-GAAP reconciliations. |
| (9) | Decrease from September 30, 2019 to December 31, 2019 due to sale of subsidiary Rockford Bank & Trust. The decrease from June 30, 2020 to September 30, 2020 due to sale of Bates Companies and interns employed only during the summer. |
| (10) | Excludes assets held for sale as of September 30, 2019, Deccember 31, 2019, March 31, 2020 and June 30, 2020. |
8
QCR Holdings,
Inc.
Consolidated Financial Highlights
(Unaudited)
| ANALYSIS OF NET INTEREST INCOME AND MARGIN | ||||||||||||||||||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||||||||||||||||||
| September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||||||||||||
| 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 | $ | 2,205 | $ | 1 | 0.18 | % | $ | 865 | $ | 1 | 0.46 | % | $ | 7,234 | $ | 42 | 2.30 | % | ||||||||||||||||||
| Interest-bearing deposits at financial institutions | 321,679 | 92 | 0.11 | % | 533,483 | 135 | 0.10 | % | 172,386 | 951 | 2.19 | % | ||||||||||||||||||||||||
| Securities (1) | 749,425 | 6,836 | 3.66 | % | 697,559 | 6,536 | 3.77 | % | 626,471 | 6,080 | 3.85 | % | ||||||||||||||||||||||||
| Restricted investment securities | 19,714 | 249 | 4.94 | % | 21,234 | 288 | 5.46 | % | 22,719 | 293 | 5.12 | % | ||||||||||||||||||||||||
| Loans (1) | 4,185,275 | 45,654 | 4.34 | % | 3,999,522 | 43,417 | 4.37 | % | 3,962,464 | 51,214 | 5.13 | % | ||||||||||||||||||||||||
| Total earning assets (1) | $ | 5,278,298 | $ | 52,832 | 3.99 | % | $ | 5,252,663 | $ | 50,377 | 3.86 | % | $ | 4,791,274 | $ | 58,580 | 4.85 | % | ||||||||||||||||||
| Interest-bearing deposits | $ | 2,932,988 | $ | 2,086 | 0.28 | % | $ | 2,840,860 | $ | 2,429 | 0.34 | % | $ | 2,505,383 | $ | 7,907 | 1.25 | % | ||||||||||||||||||
| Time deposits | 638,031 | 2,399 | 1.50 | % | 809,233 | 3,337 | 1.66 | % | 975,736 | 5,486 | 2.23 | % | ||||||||||||||||||||||||
| Short-term borrowings | 26,996 | 11 | 0.17 | % | 25,064 | 22 | 0.35 | % | 17,333 | 98 | 2.24 | % | ||||||||||||||||||||||||
| Federal Home Loan Bank advances | 57,078 | 211 | 1.45 | % | 95,616 | 347 | 1.46 | % | 123,107 | 1,023 | 3.30 | % | ||||||||||||||||||||||||
| Subordinated debentures | 77,783 | 1,031 | 5.30 | % | 68,480 | 994 | 5.84 | % | 68,299 | 1,003 | 5.83 | % | ||||||||||||||||||||||||
| Junior subordinated debentures | 37,936 | 571 | 5.89 | % | 37,891 | 572 | 6.07 | % | 37,774 | 581 | 6.10 | % | ||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 3,770,812 | $ | 6,309 | 0.66 | % | $ | 3,877,144 | $ | 7,701 | 0.80 | % | $ | 3,727,632 | $ | 16,098 | 1.71 | % | ||||||||||||||||||
| Net interest income / spread (1) | $ | 46,523 | 3.33 | % | $ | 42,676 | 3.06 | % | $ | 42,482 | 3.14 | % | ||||||||||||||||||||||||
| Net interest margin (2) | 3.36 | % | 3.14 | % | 3.37 | % | ||||||||||||||||||||||||||||||
| Net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.51 | % | 3.27 | % | 3.52 | % | ||||||||||||||||||||||||||||||
| Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.44 | % | 3.21 | % | 3.41 | % | ||||||||||||||||||||||||||||||
| For the Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 30, 2020 | September 30, 2019 | |||||||||||||||||||||||||||||||||||
| 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 | $ | 2,795 | $ | 19 | 0.89 | % | $ | 10,887 | $ | 191 | 2.35 | % | ||||||||||||||||||||||||
| Interest-bearing deposits at financial institutions | 327,902 | 587 | 0.24 | % | 170,167 | 3,042 | 2.39 | % | ||||||||||||||||||||||||||||
| Securities (1) | 688,985 | 19,567 | 3.78 | % | 643,975 | 18,237 | 3.79 | % | ||||||||||||||||||||||||||||
| Restricted investment securities | 20,767 | 795 | 5.03 | % | 21,670 | 891 | 5.50 | % | ||||||||||||||||||||||||||||
| Loans (1) | 3,957,903 | 133,141 | 4.49 | % | 3,853,918 | 145,682 | 5.05 | % | ||||||||||||||||||||||||||||
| Total earning assets (1) | $ | 4,998,352 | $ | 154,109 | 4.12 | % | $ | 4,700,617 | $ | 168,043 | 4.78 | % | ||||||||||||||||||||||||
| Interest-bearing deposits | $ | 2,718,613 | $ | 9,920 | 0.49 | % | $ | 2,418,420 | $ | 23,351 | 1.29 | % | ||||||||||||||||||||||||
| Time deposits | 743,746 | 9,537 | 1.71 | % | 1,000,529 | 16,346 | 2.18 | % | ||||||||||||||||||||||||||||
| Short-term borrowings | 23,804 | 81 | 0.45 | % | 15,952 | 275 | 2.30 | % | ||||||||||||||||||||||||||||
| Federal Home Loan Bank advances | 87,920 | 1,007 | 1.50 | % | 115,539 | 2,685 | 3.11 | % | ||||||||||||||||||||||||||||
| Other borrowings | - | - | 0.00 | % | 18,084 | 512 | 3.79 | % | ||||||||||||||||||||||||||||
| Subordinated debentures | 71,582 | 3,019 | 5.63 | % | 58,392 | 2,561 | 5.86 | % | ||||||||||||||||||||||||||||
| Junior subordinated debentures | 37,894 | 1,715 | 5.95 | % | 37,730 | 1,729 | 6.13 | % | ||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 3,683,559 | $ | 25,279 | 0.91 | % | $ | 3,664,646 | $ | 47,459 | 1.73 | % | ||||||||||||||||||||||||
| Net interest income / spread (1) | $ | 128,830 | 3.21 | % | $ | 120,584 | 3.05 | % | ||||||||||||||||||||||||||||
| Net interest margin (2) | 3.29 | % | 3.29 | % | ||||||||||||||||||||||||||||||||
| Net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.44 | % | 3.43 | % | ||||||||||||||||||||||||||||||||
| Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3) | 3.38 | % | 3.33 | % | ||||||||||||||||||||||||||||||||
| (1) | Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate. |
| (2) | See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented. |
| (3) | TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations. |
9
QCR Holdings,
Inc.
Consolidated Financial Highlights
(Unaudited)
| As of | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES | ||||||||||||||||||||
| Beginning balance | $ | 60,827 | $ | 42,233 | $ | 36,001 | $ | 36,116 | $ | 41,104 | ||||||||||
| Reclassification of allowance related to held for sale loans | - | - | - | - | (6,122 | ) | ||||||||||||||
| Provision charged to expense (1) | 20,342 | 19,915 | 8,367 | 979 | 1,584 | |||||||||||||||
| Loans/leases charged off | (1,819 | ) | (1,450 | ) | (2,335 | ) | (1,182 | ) | (741 | ) | ||||||||||
| Recoveries on loans/leases previously charged off | 232 | 129 | 200 | 88 | 291 | |||||||||||||||
| Ending balance | $ | 79,582 | $ | 60,827 | $ | 42,233 | $ | 36,001 | $ | 36,116 | ||||||||||
| NONPERFORMING ASSETS | ||||||||||||||||||||
| Nonaccrual loans/leases | $ | 17,597 | $ | 12,099 | $ | 11,628 | $ | 7,902 | $ | 8,231 | ||||||||||
| Accruing loans/leases past due 90 days or more | 86 | 99 | 1,419 | 33 | - | |||||||||||||||
| Troubled debt restructures - accruing | 1,061 | 920 | 545 | 979 | 763 | |||||||||||||||
| Total nonperforming loans/leases | 18,744 | 13,118 | 13,592 | 8,914 | 8,994 | |||||||||||||||
| Other real estate owned | 125 | 157 | 3,298 | 4,129 | 4,248 | |||||||||||||||
| Other repossessed assets | 110 | 25 | 45 | 41 | - | |||||||||||||||
| Total nonperforming assets | $ | 18,979 | $ | 13,300 | $ | 16,935 | $ | 13,084 | $ | 13,242 | ||||||||||
| ASSET QUALITY RATIOS | ||||||||||||||||||||
| Nonperforming assets / total assets (2) | 0.32 | % | 0.24 | % | 0.32 | % | 0.27 | % | 0.27 | % | ||||||||||
| Allowance / total loans/leases (3) | 1.87 | % | 1.47 | % | 1.14 | % | 0.98 | % | 1.00 | % | ||||||||||
| Allowance / nonperforming loans/leases (3) | 424.57 | % | 463.69 | % | 310.72 | % | 403.87 | % | 401.56 | % | ||||||||||
| Net charge-offs as a % of average loans/leases | 0.04 | % | 0.03 | % | 0.06 | % | 0.03 | % | 0.01 | % | ||||||||||
| (1) Excludes provision related to loans included in assets held for sale of $428 thousand for the quarter ending September 30, 2019. | |||||
| (2) Excludes assets held for sale. | |||||
| (3) Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminates the allowance and impacts these ratios. | |||||
10
QCR Holdings,
Inc.
Consolidated Financial Highlights
(Unaudited)
| For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| SELECT FINANCIAL DATA - SUBSIDIARIES | 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| TOTAL ASSETS | ||||||||||||||||||||
| Quad City Bank and Trust (1) | $ | 2,205,935 | $ | 1,984,245 | $ | 1,642,950 | ||||||||||||||
| m2 Lease Funds, LLC | 241,452 | 241,114 | 232,432 | |||||||||||||||||
| Cedar Rapids Bank and Trust | 2,012,182 | 2,021,043 | 1,592,896 | |||||||||||||||||
| Community State Bank - Ankeny | 937,017 | 903,648 | 801,596 | |||||||||||||||||
| Springfield First Community Bank | 803,478 | 745,474 | 693,897 | |||||||||||||||||
| TOTAL DEPOSITS | ||||||||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,955,360 | $ | 1,707,970 | $ | 1,371,721 | ||||||||||||||
| Cedar Rapids Bank and Trust | 1,399,267 | 1,351,784 | 1,271,828 | |||||||||||||||||
| Community State Bank - Ankeny | 822,261 | 778,499 | 695,980 | |||||||||||||||||
| Springfield First Community Bank | 592,528 | 564,710 | 484,225 | |||||||||||||||||
| TOTAL LOANS & LEASES | ||||||||||||||||||||
| Quad City Bank and Trust (1) | $ | 1,556,798 | $ | 1,485,971 | $ | 1,290,195 | ||||||||||||||
| m2 Lease Funds, LLC | 241,783 | 239,351 | 230,061 | |||||||||||||||||
| Cedar Rapids Bank and Trust | 1,387,372 | 1,380,672 | 1,148,952 | |||||||||||||||||
| Community State Bank - Ankeny | 683,086 | 671,773 | 594,227 | |||||||||||||||||
| Springfield First Community Bank | 620,721 | 601,843 | 526,466 | |||||||||||||||||
| TOTAL LOANS & LEASES / TOTAL DEPOSITS | ||||||||||||||||||||
| Quad City Bank and Trust (1) | 80 | % | 87 | % | 94 | % | ||||||||||||||
| Cedar Rapids Bank and Trust | 99 | % | 102 | % | 90 | % | ||||||||||||||
| Community State Bank - Ankeny | 83 | % | 86 | % | 85 | % | ||||||||||||||
| Springfield First Community Bank | 105 | % | 107 | % | 109 | % | ||||||||||||||
| TOTAL LOANS & LEASES / TOTAL ASSETS | ||||||||||||||||||||
| Quad City Bank and Trust (1) | 71 | % | 75 | % | 79 | % | ||||||||||||||
| Cedar Rapids Bank and Trust | 69 | % | 68 | % | 72 | % | ||||||||||||||
| Community State Bank - Ankeny | 73 | % | 74 | % | 74 | % | ||||||||||||||
| Springfield First Community Bank | 77 | % | 81 | % | 76 | % | ||||||||||||||
| ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES | ||||||||||||||||||||
| Quad City Bank and Trust (1) | 1.86 | % | 1.51 | % | 1.07 | % | ||||||||||||||
| m2 Lease Funds, LLC | 2.53 | % | 1.99 | % | 1.39 | % | ||||||||||||||
| Cedar Rapids Bank and Trust (2) | 2.22 | % | 1.62 | % | 1.17 | % | ||||||||||||||
| Community State Bank - Ankeny (2) | 1.92 | % | 1.56 | % | 1.13 | % | ||||||||||||||
| Springfield First Community Bank (2) | 1.09 | % | 0.94 | % | 0.42 | % | ||||||||||||||
| RETURN ON AVERAGE ASSETS | ||||||||||||||||||||
| Quad City Bank and Trust (1) | 0.56 | % | 0.68 | % | 1.33 | % | 0.81 | % | 1.25 | % | ||||||||||
| Cedar Rapids Bank and Trust | 2.66 | % | 2.36 | % | 2.04 | % | 2.25 | % | 1.85 | % | ||||||||||
| Community State Bank - Ankeny | 0.82 | % | 0.25 | % | 1.71 | % | 0.53 | % | 1.33 | % | ||||||||||
| Springfield First Community Bank | 1.52 | % | 1.04 | % | 1.32 | % | 1.28 | % | 1.27 | % | ||||||||||
| NET INTEREST MARGIN PERCENTAGE (3) | ||||||||||||||||||||
| Quad City Bank and Trust (1) | 3.07 | % | 2.88 | % | 3.49 | % | 3.17 | % | 3.34 | % | ||||||||||
| Cedar Rapids Bank and Trust (5) | 3.54 | % | 3.37 | % | 3.41 | % | 3.45 | % | 3.41 | % | ||||||||||
| Community State Bank - Ankeny (4) | 4.12 | % | 3.77 | % | 4.83 | % | 3.94 | % | 4.32 | % | ||||||||||
| Springfield First Community Bank (6) | 3.75 | % | 3.88 | % | 3.64 | % | 3.82 | % | 3.93 | % | ||||||||||
| ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET INTEREST MARGIN, NET | ||||||||||||||||||||
| Cedar Rapids Bank and Trust | $ | 217 | $ | 62 | $ | 229 | $ | 327 | $ | 444 | ||||||||||
| Community State Bank - Ankeny | 56 | 72 | 649 | 193 | 783 | |||||||||||||||
| Springfield First Community Bank | 598 | 641 | 432 | 1,791 | 2,313 | |||||||||||||||
| QCR Holdings, Inc. (7) | (38 | ) | (39 | ) | (42 | ) | (117 | ) | (127 | ) | ||||||||||
| (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 4.06% for the quarter ended September 30, 2020, 3.71% for the quarter ended June 30, 2020 and 4.46% for the quarter ended September 30, 2019. |
| (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 September 30, 2020, 3.35% for the quarter ended June 30, 2020 and 3.34% for the quarter ended September 30, 2019. |
| (6) | Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 4.02% for the quarter ended September 30, 2020, 4.29% for the quarter ended June 30, 2020 and 3.16% for the quarter ended September 30, 2019. |
| (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 of | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| GAAP TO NON-GAAP RECONCILIATIONS | 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1) | ||||||||||||||||||||
| Stockholders' equity (GAAP) | $ | 572,613 | $ | 556,020 | $ | 539,139 | $ | 535,351 | $ | 519,743 | ||||||||||
| Less: Intangible assets | 85,968 | 88,120 | 88,669 | 89,717 | 93,277 | |||||||||||||||
| Tangible common equity (non-GAAP) | $ | 486,645 | $ | 467,900 | $ | 450,470 | $ | 445,634 | $ | 426,466 | ||||||||||
| Total assets (GAAP) | $ | 5,864,560 | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | $ | 5,292,382 | ||||||||||
| Less: Intangible assets | 85,968 | 88,120 | 88,669 | 89,717 | 93,277 | |||||||||||||||
| Tangible assets (non-GAAP) | $ | 5,778,592 | $ | 5,516,641 | $ | 5,143,406 | $ | 4,819,333 | $ | 5,199,105 | ||||||||||
| Tangible common equity to tangible assets ratio (non-GAAP) | 8.42 | % | 8.48 | % | 8.76 | % | 9.25 | % | 8.20 | % | ||||||||||
| TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO EXCLUDING PPP LOANS (1) | ||||||||||||||||||||
| Stockholder's equity (GAAP) | $ | 572,613 | $ | 556,020 | $ | 539,139 | $ | 535,351 | $ | 519,743 | ||||||||||
| Less: PPP loan interest income (post-tax) (2) | 4,934 | 2,085 | - | - | - | |||||||||||||||
| Less: Intangible assets | 85,968 | 88,120 | 88,669 | 89,717 | 93,277 | |||||||||||||||
| Tangible common equity, excluding PPP loan income (non-GAAP) | $ | 481,711 | $ | 465,815 | $ | 450,470 | $ | 445,634 | $ | 426,466 | ||||||||||
| Total assets (GAAP) | $ | 5,864,560 | $ | 5,604,761 | $ | 5,232,075 | $ | 4,909,050 | $ | 5,292,382 | ||||||||||
| Less: PPP loans | 357,506 | 358,052 | - | - | - | |||||||||||||||
| Less: Intangible assets | 85,968 | 88,120 | 88,669 | 89,717 | 93,277 | |||||||||||||||
| Tangible assets, excluding PPP loans (non-GAAP) | $ | 5,421,086 | $ | 5,158,589 | $ | 5,143,406 | $ | 4,819,333 | $ | 5,199,105 | ||||||||||
| Tangible common equity to tangible assets ratio, excluding PPP loans (non-GAAP) | 8.89 | % | 9.03 | % | 8.76 | % | 9.25 | % | 8.20 | % | ||||||||||
| (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) | PPP interest income (post-tax) is calculated using an estimated effective tax rate of 21%. |
12
QCR Holdings,
Inc.
Consolidated Financial Highlights
(Unaudited)
| GAAP TO NON-GAAP RECONCILIATIONS | For the Quarter Ended | For the Nine Months Ended | ||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| ADJUSTED NET INCOME (1) | 2020 | 2020 | 2020 | 2019 | 2019 | 2020 | 2019 | |||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 17,344 | $ | 13,739 | $ | 11,228 | $ | 15,891 | $ | 15,095 | $ | 42,311 | $ | 41,517 | ||||||||||||||
| Less non-core items (post-tax) (2): | ||||||||||||||||||||||||||||
| Income: | ||||||||||||||||||||||||||||
| Securities gains(losses), net | 1,424 | 51 | - | 21 | $ | (2 | ) | $ | 1,475 | $ | (43 | ) | ||||||||||||||||
| Gain on sale of assets and liabilities of subsidiary | - | - | - | 8,539 | - | - | - | |||||||||||||||||||||
| Total non-core income (non-GAAP) | $ | 1,424 | $ | 51 | $ | - | $ | 8,560 | $ | (2 | ) | $ | 1,475 | $ | (43 | ) | ||||||||||||
| Expense: | ||||||||||||||||||||||||||||
| Losses on debt extinguishment, net | $ | 1,480 | $ | 339 | $ | 116 | $ | 228 | $ | 117 | $ | 1,936 | $ | 117 | ||||||||||||||
| Goodwill impairment | - | - | 500 | 3,000 | - | 500 | - | |||||||||||||||||||||
| Disposition costs | 152 | (66 | ) | 408 | 2,627 | - | 495 | - | ||||||||||||||||||||
| Tax expense on expected liquidation of RB&T BOLI | - | - | - | 790 | - | - | - | |||||||||||||||||||||
| Post-acquisition compensation, transition and integration costs | (25 | ) | 55 | 119 | 1,465 | 698 | 149 | 1,363 | ||||||||||||||||||||
| Loss on sale of subsidiary | 212 | - | - | - | - | 212 | - | |||||||||||||||||||||
| Total non-core expense (non-GAAP) | $ | 1,819 | $ | 329 | $ | 1,143 | $ | 8,110 | $ | 815 | $ | 3,291 | $ | 1,480 | ||||||||||||||
| Adjusted net income (non-GAAP) (1) | $ | 17,739 | $ | 14,016 | $ | 12,372 | $ | 15,441 | $ | 15,912 | $ | 44,127 | $ | 43,040 | ||||||||||||||
| PRE-PROVISION/PRE-TAX ADJUSTED INCOME (1) | ||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 17,344 | $ | 13,739 | $ | 11,228 | $ | 15,891 | $ | 15,095 | $ | 42,311 | $ | 41,517 | ||||||||||||||
| Less: Non-core income not tax-effected | 1,802 | 65 | - | 12,313 | (3 | ) | 1,867 | (54 | ) | |||||||||||||||||||
| Plus: Non-core expense not tax-effected | 2,339 | 416 | 1,315 | 9,258 | 1,032 | 4,070 | 1,873 | |||||||||||||||||||||
| Provision expense | 20,342 | 19,915 | 8,367 | 979 | 2,012 | 48,624 | 6,087 | |||||||||||||||||||||
| Federal and state income tax expense | 4,016 | 2,798 | 1,884 | 6,560 | 3,573 | 8,698 | 8,059 | |||||||||||||||||||||
| Pre-provision/pre-tax adjusted income (non-GAAP) (1) | $ | 42,239 | $ | 36,803 | $ | 22,794 | $ | 20,375 | $ | 21,714 | $ | 101,836 | $ | 57,591 | ||||||||||||||
| PRE-PROVISION/PRE-TAX ADJUSTED RETURN ON AVERAGE ASSETS (NON-GAAP) | ||||||||||||||||||||||||||||
| Pre-provision/pre-tax adjusted income (non-GAAP) | $ | 42,239 | $ | 36,803 | $ | 22,794 | $ | 20,375 | $ | 21,714 | $ | 101,836 | $ | 57,591 | ||||||||||||||
| Average Assets | $ | 5,820,555 | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,217,763 | $ | 5,524,087 | $ | 5,088,055 | ||||||||||||||
| Pre-provision/pre-tax adjusted return on average assets (non-GAAP) | 2.90 | % | 2.54 | % | 1.84 | % | 1.58 | % | 1.66 | % | 2.46 | % | 1.51 | % | ||||||||||||||
| ADJUSTED EARNINGS PER COMMON SHARE (1) | ||||||||||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 17,739 | $ | 14,016 | $ | 12,372 | $ | 15,441 | $ | 15,912 | $ | 44,127 | $ | 43,040 | ||||||||||||||
| Weighted average common shares outstanding | 15,767,152 | 15,747,056 | 15,796,796 | 15,772,703 | 15,739,430 | 15,770,335 | 15,715,788 | |||||||||||||||||||||
| Weighted average common and common equivalent shares outstanding | 15,923,578 | 15,895,336 | 16,011,456 | 16,033,043 | 15,976,742 | 15,945,832 | 15,946,020 | |||||||||||||||||||||
| Adjusted earnings per common share (non-GAAP): | ||||||||||||||||||||||||||||
| Basic | $ | 1.13 | $ | 0.89 | $ | 0.78 | $ | 0.98 | $ | 1.01 | $ | 2.80 | $ | 2.74 | ||||||||||||||
| Diluted | $ | 1.11 | $ | 0.88 | $ | 0.77 | $ | 0.96 | $ | 1.00 | $ | 2.77 | $ | 2.70 | ||||||||||||||
| ADJUSTED RETURN ON AVERAGE ASSETS (1) | ||||||||||||||||||||||||||||
| Adjusted net income (non-GAAP) (from above) | $ | 17,739 | $ | 14,016 | $ | 12,372 | $ | 15,441 | $ | 15,912 | $ | 44,127 | $ | 43,040 | ||||||||||||||
| Average Assets | $ | 5,820,555 | $ | 5,800,164 | $ | 4,948,311 | $ | 5,147,754 | $ | 5,217,763 | $ | 5,524,087 | $ | 5,088,055 | ||||||||||||||
| Adjusted return on average assets (annualized) (non-GAAP) | 1.22 | % | 0.97 | % | 1.00 | % | 1.20 | % | 1.22 | % | 1.07 | % | 1.13 | % | ||||||||||||||
| NET INTEREST MARGIN (TEY) (4) | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 44,581 | $ | 40,948 | $ | 37,698 | $ | 39,919 | $ | 40,719 | $ | 123,243 | $ | 115,640 | ||||||||||||||
| Plus: Tax equivalent adjustment (3) | 1,942 | 1,728 | 1,790 | 1,783 | 1,763 | 5,587 | 4,944 | |||||||||||||||||||||
| Net interest income - tax equivalent (Non-GAAP) | $ | 46,523 | $ | 42,676 | $ | 39,488 | $ | 41,702 | $ | 42,482 | $ | 128,830 | $ | 120,584 | ||||||||||||||
| Less: Acquisition accounting net accretion | 833 | 736 | 625 | 931 | 1,268 | 2,194 | 3,413 | |||||||||||||||||||||
| Adjusted net interest income | $ | 45,690 | $ | 41,940 | $ | 38,863 | $ | 40,771 | $ | 41,214 | $ | 126,636 | $ | 117,171 | ||||||||||||||
| Average earning assets | $ | 5,278,298 | $ | 5,252,663 | $ | 4,461,018 | $ | 4,711,310 | $ | 4,791,274 | $ | 4,998,352 | $ | 4,700,617 | ||||||||||||||
| Net interest margin (GAAP) | 3.36 | % | 3.14 | % | 3.40 | % | 3.36 | % | 3.37 | % | 3.29 | % | 3.29 | % | ||||||||||||||
| Net interest margin (TEY) (Non-GAAP) | 3.51 | % | 3.27 | % | 3.56 | % | 3.51 | % | 3.52 | % | 3.44 | % | 3.43 | % | ||||||||||||||
| Adjusted net interest margin (TEY) (Non-GAAP) | 3.44 | % | 3.21 | % | 3.50 | % | 3.43 | % | 3.41 | % | 3.38 | % | 3.33 | % | ||||||||||||||
| EFFICIENCY RATIO (5) | ||||||||||||||||||||||||||||
| Noninterest expense (GAAP) | $ | 40,838 | $ | 33,122 | $ | 31,415 | $ | 46,294 | $ | 39,945 | $ | 105,391 | $ | 108,941 | ||||||||||||||
| Net interest income (GAAP) | $ | 44,581 | $ | 40,948 | $ | 37,698 | $ | 39,919 | $ | 40,719 | $ | 123,243 | $ | 115,640 | ||||||||||||||
| Noninterest income (GAAP) | 37,959 | 28,626 | 15,196 | 29,805 | 19,906 | 81,781 | 48,964 | |||||||||||||||||||||
| Total income | $ | 82,540 | $ | 69,574 | $ | 52,894 | $ | 69,724 | $ | 60,625 | $ | 205,024 | $ | 164,604 | ||||||||||||||
| Efficiency ratio (noninterest expense/total income) (Non-GAAP) | 49.48 | % | 47.61 | % | 59.39 | % | 66.40 | % | 65.89 | % | 51.40 | % | 66.18 | % | ||||||||||||||
| ALLOWANCE FOR LOAN AND LEASE LOSSES TO TOTAL LOANS AND LEASES, EXCLUDING PPP LOANS (6) | ||||||||||||||||||||||||||||
| Allowance for loan and lease losses | $ | 79,582 | $ | 60,827 | $ | 42,233 | $ | 36,001 | $ | 36,116 | $ | 79,582 | $ | 36,116 | ||||||||||||||
| Total loans and leases | $ | 4,247,977 | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 4,247,977 | $ | 3,610,270 | ||||||||||||||
| Less: PPP loans | 357,506 | 358,052 | - | - | - | 357,506 | - | |||||||||||||||||||||
| Total loans and leases, excluding PPP loans | $ | 3,890,471 | $ | 3,782,207 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 3,890,471 | $ | 3,610,270 | ||||||||||||||
| Allowance for loan and lease losses to total loans and leases, excluding PPP loans | 2.05 | % | 1.61 | % | 1.14 | % | 0.98 | % | 1.00 | % | 2.05 | % | 1.00 | % | ||||||||||||||
| LOAN GROWTH ANNUALIZED, EXCLUDING PPP LOANS | ||||||||||||||||||||||||||||
| Total loans and leases | $ | 4,247,977 | $ | 4,140,259 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 4,247,977 | $ | 3,610,270 | ||||||||||||||
| Less: PPP loans | 357,506 | 358,052 | - | - | - | 357,506 | - | |||||||||||||||||||||
| Total loans and leases, excluding PPP loans | $ | 3,890,471 | $ | 3,782,207 | $ | 3,704,668 | $ | 3,690,205 | $ | 3,610,270 | $ | 3,890,471 | $ | 3,610,270 | ||||||||||||||
| Loan growth annualized, excluding PPP loans | 11.45 | % | 8.37 | % | 1.57 | % | 8.86 | % | -30.71 | % | 16.28 | % | -9.84 | % | ||||||||||||||
| (1) | Adjusted net income, Adjusted net income attributable to QCR Holdings, Inc. common stockholders, Adjusted earnings per common share and Adjusted return on average assets are non-GAAP financial measures. The Company's management believes that these measurements are important to investors as they exclude non-recurring income and expense items, therefore, they provide a more realistic run-rate for future periods. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net income, which is the most directly comparable GAAP financial measure. |
| (2) | Nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 21% with the exception of goodwill impairment which is not deductible for tax and gain/loss on sale of subsidiary which has an estimated effective tax rate of 30.5%. |
| (3) | Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21%. |
| (4) | Net interest margin (TEY) is a non-GAAP financial measure. The Company's management utilizes this measurement to take into account the tax benefit associated with certain loans and securities. It is also standard industry practice to measure net interest margin using tax-equivalent measures. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net interest income, which is the most directly comparable GAAP financial measure. In addition, the Company calculates net interest margin without the impact of acquisition accounting net accretion as this can fluctuate and it's difficult to provide a more realistic run-rate for future periods. |
| (5) | Efficiency ratio is a non-GAAP measure. The Company's management utilizes this ratio to compare to industry peers. The ratio is used to calculate overhead as a percentage of revenue. In compliance with the applicable rules of the SEC, this non-GAAP measure is reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP financial measures. |
| (6) | Allowance for loan and lease losses to total loans and leases, excluding PPP loans is a non-GAAP measure. The Company's management utilizes this ratio to remove the from the allowance calculation the impact of PPP loans which are fully guaranteed by the federal government and for which these loans have no allowance for loan and lease loss allocation. |
13
