Filed by QCR Holdings, Inc.

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: Guaranty Federal Bancshares, Inc.

Commission File Number: 000-23325

 

PRESS RELEASE FOR IMMEDIATE RELEASE

QCR Holdings, Inc. Announces Net Income of $27.0 Million for the Fourth Quarter and Record Net Income of $98.9 Million for the Full Year 2021

Fourth Quarter and Full Year 2021 Highlights

· Record annual net income of $98.9 million, or $6.20 per diluted share

· Quarterly net income of $27.0 million, or $1.71 per diluted share

· Adjusted quarterly net income (non-GAAP) of $27.4 million, or $1.73 per diluted share

· Record adjusted quarterly net interest income (non-GAAP) of $49.2 million, a 6.1% annualized increase compared to the third quarter of 2021

· Net Interest Margin (“NIM”) of 3.29% and Adjusted NIM (TEY)(non-GAAP) of 3.49% for the quarter

· Loan and lease growth of 12.0% (annualized) for the quarter and 16.9% for the full year, excluding SBA Paycheck Protection Program (“PPP”) loans (non-GAAP)

· Annualized core deposit growth of 4.3% for the quarter and 7.2% for the full year

· Nonperforming assets improved by 60% for the quarter and 80% for the full year and now represent only 0.05% of total assets

· Allowance for credit losses (“ACL”) to total loans/leases of 1.69%, excluding PPP loans (non-GAAP)

Moline, IL, January 25, 2022 -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $27.0 million and diluted earnings per share (“EPS”) of $1.71 for the fourth quarter of 2021, compared to net income of $31.6 million and diluted EPS of $1.99 for the third quarter of 2021. For the full year, the Company reported record net income of $98.9 million, or $6.20 per diluted share.

The Company reported adjusted net income (non-GAAP) of $27.4 million and adjusted diluted EPS of $1.73 for the fourth quarter of 2021, compared to adjusted net income (non-GAAP) of $31.6 million and adjusted diluted EPS of $1.99 for the third quarter of 2021. For the fourth quarter of 2020, net income and diluted EPS were $18.3 million and $1.14, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS were $19.1 million and $1.20, respectively.

	For the Quarter Ended
	December 31,		September 30,		December 31,
$ in millions (except per share data)	2021		2021		2020
Net Income	$	27.0	$	31.6	$	18.3
Diluted EPS	$	1.71	$	1.99	$	1.14
Adjusted Net Income (non-GAAP)	$	27.4	$	31.6	$	19.1
Adjusted Diluted EPS (non-GAAP)	$	1.73	$	1.99	$	1.20

Adjusted non-GAAP measurements of financial performance exclude non-recurring income and expense items that management believes are not reflective of the anticipated future operation of the Company’s business. The Company believes these measurements provide a better comparison for analysis and may provide a better indicator of future performance. See GAAP to non-GAAP reconciliations.

“We are very pleased with our 2021 financial performance, highlighted by record net income and earnings per share,” said Larry J. Helling, Chief Executive Officer. “Our strong results were driven by robust loan growth of 17% for the year as we capitalized on strengthening economic conditions in our markets as well as the value that our clients place on relationship-based community banking. Additionally, we expanded our net interest margin, produced solid fee income, carefully managed expenses and maintained excellent credit quality.”

“In November, we were excited to announce the anticipated acquisition of Guaranty Federal Bancshares, Inc. which will enhance our market share in the vibrant Springfield and southwest Missouri markets. It will enable us to extend our high-performing and profitable niche business lines into those markets. We expect this transaction to close late in the first quarter or early in the second quarter and look forward to welcoming Guaranty Bank to the team.”

Annualized Loan and Lease Growth of 12.0% for the Quarter and 16.9% for the Year, excluding PPP Loans (non-GAAP)

During the fourth quarter of 2021, the Company’s loans and leases, excluding PPP loans (non-GAAP), increased $135.8 million to a total of $4.7 billion. Loan and lease growth, excluding PPP loans (non-GAAP) during the quarter was 12.0% on an annualized basis and was funded by core deposit growth and some excess liquidity. Core deposits (excluding brokered deposits) increased by $52.0 million during the quarter. The Company’s wholesale funding portfolio has been reduced to predominately subordinated debt that qualifies as regulatory capital.

“Our continued robust loan growth was driven by strength in both our traditional commercial lending and leasing business and our Specialty Finance Group,” added Helling. “We believe this is a testament to the underlying economic strength across our markets and our relationship-based community banking model, emphasizing the importance of strong relationships with new and existing clients. Given our current pipeline, we are targeting organic loan growth for the full year 2022 of between 8% and 10%, consistent with our long-term goals.”

Record Net Interest Income of $46.5 million

Net interest income for the fourth quarter of 2021 totaled a record $46.5 million, compared to $46.2 million for the third quarter of 2021 and $43.7 million for the fourth quarter of 2020. Adjusted net interest income (non-GAAP) during the quarter was $49.2 million, an increase of $744 thousand, or 1.5%, from the prior quarter, primarily due to the strong loan/lease growth. Adjusted net interest income (non-GAAP) was $45.3 million for the fourth quarter of 2020. Acquisition-related net accretion totaled $88 thousand for the fourth quarter of 2021, down from $456 thousand in the third quarter of 2021 and down from $1.1 million for the fourth quarter of 2020.

In the fourth quarter, reported NIM was 3.29% and tax-equivalent yield basis (non-GAAP) NIM was 3.50%, compared to 3.36% and 3.56% in the prior quarter, respectively. Adjusted NIM (non-GAAP), which excludes acquisition-related net accretion, was 3.49%, compared to 3.53% in the third quarter. The slight decrease in Adjusted NIM (non-GAAP) during the quarter was primarily due to a 4 basis point decrease in the yield on earning assets (adjusted for acquisition-related net accretion, non-GAAP) driven by slightly lower loan and securities yields and some elevated excess liquidity. However, adjusted NIM benefited from a 1 basis point decline in the total cost of interest-bearing funds, mainly due to mix.

	For the Quarter Ended
	December 31,			September 30,			December 31,
	2021			2021			2020
NIM		3.29	%		3.36	%		3.25	%
NIM (TEY)(non-GAAP) *		3.50	%		3.56	%		3.45	%
Adjusted NIM (TEY)(non-GAAP) *		3.49	%		3.53	%		3.37	%
* See GAAP to non-GAAP reconciliations

“We grew net interest income to record levels in the quarter, driven by our continued strong loan growth and our ability to protect and actually expand NIM in this challenging interest rate environment,” said Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “While reported adjusted NIM declined by 4 basis points this quarter, the decline was approximately two basis points when excluding the impact of lower PPP income and elevated excess liquidity, matching our guidance for the quarter. We had elevated liquidity during much of the quarter, driven by strong seasonal deposit growth with the majority of our strong loan growth occurring in December.”

2

Noninterest Income of $23.0 million

Noninterest income for the fourth quarter of 2021 totaled $23.0 million, compared to $34.7 million for the third quarter of 2021. The decrease was primarily due to an $11.9 million decrease in capital markets revenue from swap fees, down from the elevated amount in the prior quarter, which benefited from a number of swap transactions that were scheduled to close in the second quarter carrying over into the third quarter. Wealth management revenue was $3.9 million for the quarter, up 3.2% from the third quarter.

“Capital markets revenue from swap fees totaled $13.0 million for the quarter and $61.0 million for the full year,” added Gipple. “Capital markets revenue from swap fees has averaged $17.0 million for the last eight quarters, which gives us confidence in the sustainability of this important source of fee income and supports our continued guidance range of $14 to $18 million per quarter.”

Noninterest Expenses of $39.4 million

Noninterest expense for the fourth quarter of 2021 totaled $39.4 million, compared to $41.4 million for the third quarter of 2021 and $46.4 million for the fourth quarter of 2020. The linked-quarter decrease was primarily due to lower performance-based salary and benefits expense of $3.4 million, mainly the result of a decrease in capital markets revenue production from swap fees. Partially offsetting this decrease was a $584 thousand increase in advertising and marketing and $624 thousand in acquisition costs. Additionally, in the third quarter of 2021, the Company recorded a $1.5 million charge related to the write-down of certain fixed assets and a $1.3 million net gain on the sale of other real estate.

Asset Quality Remains Strong and NPAs Improved

Nonperforming assets (“NPAs”) totaled $2.8 million at the end of the fourth quarter, a decrease of $4.1 million from the third quarter of 2021. The decrease was primarily due to the payoff of one nonaccrual loan during the quarter. The ratio of NPAs to total assets improved to 0.05% as of December 31, 2021, compared to 0.11% as of September 30, 2021, and 0.25% as of December 31, 2020. In addition, the Company’s criticized loans and classified loans to total loans and leases decreased to 2.47% and 1.14%, respectively, from 2.57% and 1.29% as of September 30, 2021.

The Company recorded a $3.2 million negative provision for credit losses in the fourth quarter of 2021, primarily due to continued strong asset quality and a corresponding reduction in the qualitative factor related to the pandemic. As of December 31, 2021, the ACL on total loans/leases was 1.68%, compared to 1.75% as of September 30, 2021. Excluding PPP loans of $28 million, the ACL to total loans/leases as of December 31, 2021, was 1.69% (non-GAAP).

Continued Strong Capital Levels

As of December 31, 2021, the Company’s total risk-based capital ratio was 14.92%, the common equity tier 1 ratio was 10.88% and the tangible common equity to tangible assets ratio (non-GAAP) was 9.87%. By comparison, these respective ratios were 14.64%, 10.55% and 9.54% as of September 30, 2021.

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:

· Generate 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.

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Conference Call Details

The Company will host an earnings call/webcast tomorrow, January 26, 2022, 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 02, 2022. The replay access information is 877-344-7529 (international 412-317-0088); access code 2205260. 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 offers equipment loans and leases to businesses through its wholly-owned subsidiary, m2 Equipment Finance, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 24 locations in Iowa, Missouri, Wisconsin and Illinois. As of December 31, 2021, the Company had approximately $6.1 billion in assets, $4.7 billion in loans and $4.9 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; (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threats thereof, 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, as may be adopted by state and federal regulatory agencies, the FASB or the PCAOB; (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; (xi) unexpected outcomes of existing or new litigation involving the Company; (xii) the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; and (xiii) the ability of the Company to manage the risks associated with the foregoing as well as anticipated. 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 (the “SEC”).

Additional Information

QCR Holdings, Inc. (“QCR Holdings”) has filed a registration statement on Form S-4 with the SEC in connection with the proposed transaction with Guaranty Federal Bancshares, Inc. (“Guaranty”). The registration statement includes a proxy statement of Guaranty that also constitutes a prospectus of QCR Holdings, which will be sent to the stockholders of Guaranty. Guaranty’s stockholders are advised to read the proxy statement/prospectus because it contains important information about QCR Holdings, Guaranty and the proposed transaction. This document and other documents relating to the proposed transaction filed by QCR Holdings and Guaranty can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing QCR Holdings’ website at www.qcrh.com under the tab “Investors Relations” and then under “SEC Filings or by accessing Guaranty’s website at investors.gbankmo.com under the tab "Investor Menu" and then under "SEC Filings.” Alternatively, these documents can be obtained free of charge from QCR Holdings upon written request to QCR Holdings, Inc., Attention: Corporate Secretary, 3551 7^th Street, Moline, Illinois 61265 or by calling (319) 743-7006, or from Guaranty, upon written request to Guaranty Federal Bancshares, Inc., Attention: Ms. Vicki Lindsay, Corporate Secretary, 2144 S. Republic Road, Suite F200, Springfield, Missouri 65804.

4

This document shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Participants in the Guaranty Transaction

QCR Holdings, Guaranty and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders in connection with the proposed transaction under the rules of the SEC. Information about these participants may be found, respectively, in the definitive proxy statement of QCR Holdings relating to its 2021 Annual Meeting of Stockholders filed with the SEC on April 8, 2021 and the definitive proxy statement of Guaranty relating to its 2021 Annual Meeting of Stockholders filed with the SEC on April 12, 2021. These definitive proxy statements can be obtained free of charge from the sources indicated above. Additional information regarding the interests of these participants are also included in the proxy statement/prospectus regarding the proposed transaction.

Contacts:

Todd A. Gipple	Kim K. Garrett
President	Vice President
Chief Operating Officer	Corporate Communications
Chief Financial Officer	Investor Relations Manager
(309) 743-7745	(319) 743-7006
tgipple@qcrh.com	kgarrett@qcrh.com

5

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

	As of
	December 31,		September 30,		June 30,		March 31,		December 31,
	2021		2021		2021		2021		2020
	(dollars in thousands)
CONDENSED BALANCE SHEET
Cash and due from banks	$	37,490	$	57,310	$	55,598	$	78,814	$	61,329
Federal funds sold and interest-bearing deposits		87,662		70,826		88,780		55,056		95,676
Securities, net of allowance for credit losses		810,215		828,719		810,445		799,825		838,131
Net loans/leases		4,601,411		4,519,060		4,338,811		4,279,220		4,166,753
Intangibles		9,349		9,857		10,365		10,873		11,381
Goodwill		74,066		74,066		74,066		74,066		74,066
Derivatives		222,220		198,393		193,395		122,668		222,757
Other assets		253,719		256,277		255,952		246,872		234,950
Total assets	$	6,096,132	$	6,014,508	$	5,827,412	$	5,667,394	$	5,705,043
Total deposits	$	4,922,772	$	4,871,828	$	4,688,935	$	4,631,782	$	4,599,137
Total borrowings		170,805		183,514		198,908		188,601		177,114
Derivatives		225,135		201,450		196,092		125,863		229,270
Other liabilities		100,410		107,902		113,001		112,429		105,729
Total stockholders' equity		677,010		649,814		630,476		608,719		593,793
Total liabilities and stockholders' equity	$	6,096,132	$	6,014,508	$	5,827,412	$	5,667,394	$	5,705,043

ANALYSIS OF LOAN PORTFOLIO
Loan/lease mix: (1)
Commercial and industrial - revolving	$	248,483	$	175,155	$	182,882	$	168,842
Commercial and industrial - other		1,346,602		1,465,580		1,505,384		1,616,144
Commercial real estate, owner occupied		421,701		434,014		427,734		461,272
Commercial real estate, non-owner occupied		646,500		644,850		618,879		610,582
Construction and land development		918,571		852,418		708,289		607,798
Multi-family		600,412		529,727		466,804		396,272
Direct financing leases		45,191		50,237		56,153		60,134
1-4 family real estate		377,361		376,067		382,142		368,927
Consumer		75,311		71,682		69,438		71,080
Total loans/leases	$	4,680,132	$	4,599,730	$	4,417,705	$	4,361,051
Less allowance for credit losses (2)		78,721		80,670		78,894		81,831
Net loans/leases	$	4,601,411	$	4,519,060	$	4,338,811	$	4,279,220
Loan/lease mix: (1)
Commercial and industrial loans	$	1,584,922	$	1,634,047	$	1,680,853	$	1,779,062	$	1,726,723
Commercial real estate loans		2,675,103		2,550,160		2,319,423		2,174,897		2,107,629
Direct financing leases		44,623		49,585		55,371		59,229		66,016
Residential real estate loans		275,552		270,522		268,193		254,900		252,121
Installment and other consumer loans		86,311		85,363		86,925		87,053		91,302
Deferred loan/lease origination costs, net of fees		13,621		10,053		6,940		5,910		7,338
Total loans/leases	$	4,680,132	$	4,599,730	$	4,417,705	$	4,361,051	$	4,251,129
Less allowance for credit losses (2)		78,721		80,670		78,894		81,831		84,376
Net loans/leases	$	4,601,411	$	4,519,060	$	4,338,811	$	4,279,220	$	4,166,753
ANALYSIS OF SECURITIES PORTFOLIO
Securities mix:
U.S. government sponsored agency securities	$	23,328	$	23,689	$	14,670	$	14,581	$	15,336
Municipal securities		639,799		649,486		641,603		614,649		627,523
Residential mortgage-backed and related securities		94,323		100,744		106,139		118,051		132,842
Asset backed securities		27,124		30,607		31,778		39,815		40,683
Other securities		25,839		24,367		16,429		12,903		21,747
Total securities	$	810,413	$	828,893	$	810,619	$	799,999	$	838,131
Less allowance for credit losses (2)		198		174		174		174		-
Net securities	$	810,215	$	828,719	$	810,445	$	799,825	$	838,131
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand deposits	$	1,268,788	$	1,342,273	$	1,258,885	$	1,269,578	$	1,145,378
Interest-bearing demand deposits		3,232,633		3,086,711		2,976,696		2,916,054		2,987,469
Time deposits		421,348		441,743		452,171		445,067		460,659
Brokered deposits		3		1,101		1,183		1,084		5,631
Total deposits	$	4,922,772	$	4,871,828	$	4,688,935	$	4,631,782	$	4,599,137
ANALYSIS OF BORROWINGS
Borrowings mix:
Term FHLB advances	$	-	$	-	$	-	$	-	$	-
Overnight FHLB advances (3)		15,000		30,000		40,000		25,000		15,000
FRB borrowings		-		-		-		-		-
Other short-term borrowings		3,800		1,600		7,070		6,840		5,430
Subordinated notes		113,850		113,811		113,771		118,731		118,691
Junior subordinated debentures		38,155		38,103		38,067		38,030		37,993
Total borrowings	$	170,805	$	183,514	$	198,908	$	188,601	$	177,114

(1)	The Company adopted ASU 2016-13 "CECL", effective January 1, 2021, which included a change in class of receivable and segment categories.
(2)	The Company adopted ASU 2016-13 "CECL", effective January 1, 2021, which requires an allowance for credit losses ("ACL") on loans/leases, off-balance sheet ("OBS") exposures and held to maturity ("HTM") securities, recorded through the income statement within the provision for credit losses. The Day 1 adjustments to ACL were as follows: loans/leases ($8.1) million, OBS $9.1 million, HTM securities $183 thousand.
(3)	At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 0.31%.

6 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

	For the Quarter Ended
	December 31,			September 30,			June 30,			March 31,		December 31,
	2021			2021			2021			2021		2020
	(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income	$	52,020		$	51,667		$	48,903		$	47,565	$	49,851
Interest expense		5,507			5,438			5,387			5,590		6,144
Net interest income		46,513			46,229			43,516			41,975		43,707
Provision for credit losses (1)		(3,227	)		-			-			6,713		7,080
Net interest income after provision for loan/lease losses	$	49,740		$	46,229		$	43,516		$	35,262	$	36,627
Trust department fees	$	2,843		$	2,714		$	2,848		$	2,801	$	2,388
Investment advisory and management fees		1,047			1,054			1,039			940		926
Deposit service fees		1,644			1,588			1,492			1,408		1,875
Gain on sales of residential real estate loans		922			954			1,184			1,337		1,462
Gain on sales of government guaranteed portions of loans		227			-			-			-		224
Swap fee income/capital markets revenue		12,982			24,885			9,568			13,557		21,402
Securities gains (losses), net		-			-			(88	)		-		617
Earnings on bank-owned life insurance		470			446			451			471		461
Debit card fees		1,072			1,085			1,084			975		923
Correspondent banking fees		266			265			269			314		270
Other		1,512			1,661			1,449			1,686		1,469
Total noninterest income	$	22,985		$	34,652		$	19,296		$	23,489	$	32,017
Salaries and employee benefits	$	24,809		$	28,207		$	23,044		$	24,847	$	30,446
Occupancy and equipment expense		3,723			4,122			3,965			4,108		4,917
Professional and data processing fees		3,866			3,568			3,702			3,443		3,871
Acquisition costs		624			-			-			-		-
Post-acquisition compensation, transition and integration costs		-			-			-			-		25
Disposition costs		5			-			-			8		64
FDIC insurance, other insurance and regulatory fees		1,316			1,108			986			1,065		1,272
Loan/lease expense		606			308			457			300		465
Net cost of (income from) and gains/losses on operations of other real estate		-			(1,346	)		(113	)		39		(4	)
Advertising and marketing		1,679			1,095			853			627		1,276
Bank service charges		553			525			572			523		523
Losses on liability extinguishment		-			-			-			-		1,457
Correspondent banking expense		200			201			198			200		205
Intangibles amortization		508			508			508			508		521
Loss (gain) on sale of subsidiary		-			-			-			-		(147	)
Other		1,523			3,091			1,503			1,560		1,473
Total noninterest expense	$	39,412		$	41,387		$	35,675		$	37,228	$	46,364
Net income before income taxes	$	33,313		$	39,494		$	27,137		$	21,523	$	22,280
Federal and state income tax expense		6,304			7,929			4,788			3,541		4,009
Net income	$	27,009		$	31,565		$	22,349		$	17,982	$	18,271
Basic EPS	$	1.73		$	2.02		$	1.41		$	1.14	$	1.16
Diluted EPS	$	1.71		$	1.99		$	1.39		$	1.12	$	1.14
Weighted average common shares outstanding		15,582,276			15,635,123			15,813,932			15,803,643		15,775,596
Weighted average common and common equivalent shares outstanding		15,838,246			15,869,798			16,045,239			16,025,548		15,973,054

(1) Provision for credit losses only included provision for loans/leases for years prior to 2021.

7 

QCR Holdings, Inc.
Consolidated Financial Highlights
(Unaudited)

	For Year Ended
	December 31,			December 31,
	2021			2020
	(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income	$	200,155		$	198,373
Interest expense		21,922			31,423
Net interest income		178,233			166,950
Provision for credit losses (1)		3,486			55,704
Net interest income after provision for loan/lease losses	$	174,747		$	111,246
Trust department fees	$	11,206		$	9,207
Investment advisory and management fees		4,080			5,318
Deposit service fees		6,132			6,041
Gain on sales of residential real estate loans		4,397			4,680
Gain on sales of government guaranteed portions of loans		227			224
Swap fee income/capital markets revenue		60,992			74,821
Securities gains (losses), net		(88	)		2,484
Earnings on bank-owned life insurance		1,838			1,904
Debit card fees		4,216			3,402
Correspondent banking fees		1,114			903
Other		6,308			4,814
Total noninterest income	$	100,422		$	113,798
Salaries and employee benefits	$	100,907		$	96,268
Occupancy and equipment expense		15,918			16,504
Professional and data processing fees		14,579			14,644
Acquisition costs		624			-
Post-acquisition compensation, transition and integration costs		-			214
Disposition costs		13			690
FDIC insurance, other insurance and regulatory fees		4,475			4,164
Loan/lease expense		1,671			1,435
Net cost of (income from) and gains/losses on operations of other real estate		(1,420	)		(307	)
Advertising and marketing		4,254			3,260
Bank service charges		2,173			2,016
Losses on liability extinguishment		-			3,907
Correspondent banking expense		799			838
Intangibles amortization		2,032			2,149
Goodwill impairment		-			500
Loss on sale of subsidiary		-			158
Other		7,677			5,315
Total noninterest expense	$	153,702		$	151,755
Net income before income taxes	$	121,467		$	73,289
Federal and state income tax expense		22,562			12,707
Net income	$	98,905		$	60,582
Basic EPS	$	6.30		$	3.84
Diluted EPS	$	6.20		$	3.80
Weighted average common shares outstanding		15,708,744			15,771,650
Weighted average common and common equivalent shares outstanding		15,944,708			15,952,637

(1) Provision for credit losses only included provision for loans/leases for years prior to 2021.

8

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,
	2021			2021			2021			2021			2020			2021			2020
	(dollars in thousands, except per share data)
COMMON SHARE DATA
Common shares outstanding		15,613,460			15,590,428			15,763,522			15,843,732			15,805,711
Book value per common share (1)	$	43.36		$	41.68		$	40.00		$	38.42		$	37.57
Tangible book value per common share (Non-GAAP) (2)	$	38.02		$	36.30		$	34.64		$	33.06		$	32.16
Closing stock price	$	56.00		$	51.44		$	48.09		$	47.22		$	39.59
Market capitalization	$	874,354		$	801,972		$	758,068		$	748,141		$	625,748
Market price / book value		129.15	%		123.42	%		120.24	%		122.90	%		105.38	%
Market price / tangible book value		147.30	%		141.72	%		138.83	%		142.83	%		123.09	%
Earnings per common share (basic) LTM (3)	$	6.30		$	5.73		$	4.81		$	4.27		$	3.84
Price earnings ratio LTM (3)		8.88 x			8.98 x			10.00 x			11.06 x			10.31x
TCE / TA (Non-GAAP) (4)		9.87	%		9.54	%		9.51	%		9.38	%		9.05	%
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Beginning balance	$	649,814		$	630,476		$	608,719		$	593,793		$	572,613
Cumulative effect from the adoption of ASU 2016-13 "CECL"		-			-			-			(937	)		-
Net income		27,009			31,565			22,349			17,982			18,271
Other comprehensive income (loss), net of tax		295			(2,546	)		4,179			(1,751	)		3,157
Common stock cash dividends declared		(935	)		(946	)		(951	)		(949	)		(947	)
Repurchase and cancellation of shares of common stock as a result of a share repurchase program		-			(9,367	)		(4,800	)		-			-
Other (5)		827			632			980			581			699
Ending balance	$	677,010		$	649,814		$	630,476		$	608,719		$	593,793
REGULATORY CAPITAL RATIOS (6):
Total risk-based capital ratio		14.92	%		14.64	%		14.72	%		14.85	%		14.95	%
Tier 1 risk-based capital ratio		11.58	%		11.26	%		11.26	%		11.31	%		11.34	%
Tier 1 leverage capital ratio		10.46	%		10.28	%		10.29	%		10.10	%		9.49	%
Common equity tier 1 ratio		10.88	%		10.55	%		10.52	%		10.55	%		10.55	%
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets (annualized)		1.76	%		2.11	%		1.56	%		1.27	%		1.25	%		1.68	%		1.08	%
Return on average total equity (annualized)		16.23	%		19.30	%		14.33	%		11.91	%		12.43	%		15.52	%		10.70	%
Net interest margin		3.29	%		3.36	%		3.28	%		3.26	%		3.25	%		3.30	%		3.28	%
Net interest margin (TEY) (Non-GAAP)(7)		3.50	%		3.56	%		3.46	%		3.43	%		3.45	%		3.49	%		3.44	%
Efficiency ratio (Non-GAAP) (8)		56.71	%		51.17	%		56.80	%		56.87	%		61.23	%		55.16	%		54.05	%
Gross loans and leases / total assets		76.77	%		76.48	%		75.81	%		76.95	%		74.52	%		76.77	%		74.81	%
Gross loans and leases / total deposits		95.07	%		94.41	%		94.22	%		94.15	%		92.43	%		95.07	%		92.43	%
Effective tax rate		18.92	%		20.08	%		17.64	%		16.45	%		17.99	%		18.57	%		17.34	%
Full-time equivalent employees		726			724			725			720			714			726			714
AVERAGE BALANCES
Assets	$	6,121,446		$	5,982,583		$	5,761,314		$	5,691,097		$	5,842,299		$	5,890,042		$	5,604,074
Loans/leases		4,608,111			4,529,136			4,412,322			4,271,782			4,250,951			4,456,461			4,031,567
Deposits		4,983,869			4,779,876			4,709,732			4,628,889			4,742,602			4,776,575			4,540,266
Total stockholders' equity		665,698			654,186			624,000			604,012			588,042			637,190			566,240

(1) Includes accumulated other comprehensive income (loss).

(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets (Non-GAAP).

(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

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

ANALYSIS OF NET INTEREST INCOME AND MARGIN

	For the Quarter Ended
	December 31, 2021							September 30, 2021							December 31, 2020
	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	$	3,334	$	1		0.09	%	$	3,030	$	1		0.10	%	$	1,216	$	1		0.08	%
Interest-bearing deposits at financial institutions		161,514		63		0.15	%		99,024		39		0.16	%		279,024		82		0.12	%
Securities (1)		810,334		7,514		3.70	%		799,471		7,646		3.82	%		795,696		7,207		3.62	%
Restricted investment securities		18,929		231		4.78	%		20,910		262		4.97	%		18,790		236		4.92	%
Loans (1)		4,608,111		47,010		4.05	%		4,529,136		46,427		4.07	%		4,250,951		44,956		4.21	%
Total earning assets (1)	$	5,602,222	$	54,819		3.89	%	$	5,451,571	$	54,375		3.96	%	$	5,345,677	$	52,482		3.91	%
Interest-bearing deposits	$	3,231,477	$	2,401		0.29	%	$	3,041,941	$	2,183		0.28	%	$	3,033,119	$	2,060		0.27	%
Time deposits		442,835		963		0.86	%		461,210		1,090		0.94	%		530,813		1,752		1.31	%
Short-term borrowings		2,484		1		0.12	%		6,858		1		0.10	%		19,115		3		0.17	%
Federal Home Loan Bank advances		4,141		3		0.31	%		54,293		41		0.30	%		33,207		80		0.94	%
Subordinated debentures		113,829		1,554		5.46	%		113,789		1,554		5.46	%		118,612		1,678		5.66	%
Junior subordinated debentures		38,132		584		5.99	%		38,084		569		5.84	%		37,969		571		5.88	%
Total interest-bearing liabilities	$	3,832,898	$	5,506		0.57	%	$	3,716,175	$	5,438		0.58	%	$	3,772,835	$	6,144		0.64	%
Net interest income (1)			$	49,313						$	48,937						$	46,338
Net interest margin (2)						3.29	%						3.36	%						3.25	%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.50	%						3.56	%						3.45	%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.49	%						3.53	%						3.37	%

	For the Year Ended
	December 31, 2021							December 31, 2020
	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	$	1,964	$	2		0.10	%	$	2,398	$	19		0.79	%
Interest-bearing deposits at financial institutions		116,421		173		0.15	%		315,616		669		0.21	%
Securities (1)		804,636		29,504		3.66	%		715,808		26,773		3.74	%
Restricted investment securities		19,386		950		4.83	%		20,270		1,031		5.00	%
Loans (1)		4,456,461		179,738		4.03	%		4,031,567		178,097		4.42	%
Total earning assets (1)	$	5,398,868	$	210,367		3.90	%	$	5,085,659	$	206,589		4.06	%
Interest-bearing deposits	$	3,058,917	$	8,621		0.28	%	$	2,797,669	$	11,980		0.43	%
Time deposits		448,191		4,679		1.04	%		690,222		11,289		1.64	%
Short-term borrowings		6,281		5		0.08	%		22,625		84		0.37	%
Federal Home Loan Bank advances		23,389		70		0.30	%		74,167		1,087		1.44	%
Subordinated debentures		115,398		6,272		5.44	%		83,404		4,697		5.63	%
Junior subordinated debentures		38,067		2,276		5.90	%		37,913		2,286		5.93	%
Total interest-bearing liabilities	$	3,690,243	$	21,923		0.59	%	$	3,706,000	$	31,423		0.85	%
Net interest income (1)			$	188,444						$	175,166
Net interest margin (2)						3.30	%						3.28	%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.49	%						3.44	%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.47	%						3.38	%

(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.

10

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

	As of
	December 31,			September 30,			June 30,			March 31,			December 31,
	2021			2021			2021			2021			2020
	(dollars in thousands, except per share data)
ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES ON LOANS/LEASES
Beginning balance	$	80,670		$	78,894		$	81,831		$	84,376		$	79,582
Adoption of ASU 2016-13 "CECL" - Day 1 adjustment		-			-			-			(8,102	)		-
Provision charged to expense		(2,045	)		1,895			(141	)		5,993			7,080
Loans/leases charged off		(375	)		(287	)		(3,163	)		(713	)		(2,779	)
Recoveries on loans/leases previously charged off		471			168			367			277			493
Ending balance	$	78,721		$	80,670		$	78,894		$	81,831		$	84,376
NONPERFORMING ASSETS
Nonaccrual loans/leases	$	2,759		$	6,818		$	8,230		$	13,863		$	13,940
Accruing loans/leases past due 90 days or more		1			14			57			-			3
Total nonperforming loans/leases		2,760			6,832			8,287			13,863			13,943
Other real estate owned		-			-			1,820			173			20
Other repossessed assets		-			-			-			50			135
Total nonperforming assets	$	2,760		$	6,832		$	10,107		$	14,086		$	14,098
ASSET QUALITY RATIOS
Nonperforming assets / total assets		0.05	%		0.11	%		0.17	%		0.25	%		0.25	%
ACL for loans and leases / total loans/leases (1)		1.68	%		1.75	%		1.79	%		1.88	%		1.98	%
ACL for loans and leases / nonperforming loans/leases (1)		2852.21	%		1180.77	%		952.02	%		590.28	%		605.15	%
Net charge-offs as a % of average loans/leases		0.00	%		0.00	%		0.06	%		0.01	%		0.05	%
INTERNALLY ASSIGNED RISK RATING (2)
Special mention (rating 6)	$	62,510		$	58,634		$	51,613		$	53,466		$	71,482
Substandard (rating 7)		53,159			59,402			79,719			84,982			66,081
Doubtful (rating 8)		-			-			-			-			-
	$	115,669		$	118,036		$	131,332		$	138,448		$	137,563
Criticized loans (3)	$	115,669		$	118,036		$	131,332		$	138,448		$	137,563
Classified loans (4)		53,159			59,402			79,719			84,982			66,081
Criticized loans as a % of total loans/leases		2.47	%		2.57	%		2.97	%		3.17	%		3.24	%
Classified loans as a % of total loans/leases		1.14	%		1.29	%		1.80	%		1.95	%		1.55	%

(1) Prior to adoption of ASU 2016-13 "CECL", upon acquisition and per GAAP, acquired loans were recorded at market value, which eliminates the allowance and impacts this ratio. There have been no acquisitions since adopting ASU 2016-13 "CECL", which requires an allowance to be established on acquired loans.

(2) Amounts exclude the government guaranteed portion, if any.  The Company assigns internal risk ratings of Pass (Rating 2) for the government guaranteed portion.

(3) Criticized loans are defined as C&I and CRE loans with internally assigned risk ratings of 6, 7, or 8, regardless of performance.

(4) Classified loans are defined as C&I and CRE loans with internally assigned risk ratings of 7 or 8, regardless of performance.

11

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	2021			2021			2020			2021			2020
	(dollars in thousands)
TOTAL ASSETS
Quad City Bank and Trust (1)	$	2,142,345		$	2,106,631		$	2,153,773
m2 Equipment Finance, LLC		266,588			259,543			243,090
Cedar Rapids Bank and Trust		2,030,279			2,019,018			1,957,695
Community State Bank - Ankeny		1,168,606			1,140,933			1,004,183
Springfield First Community Bank		882,885			880,143			779,955
TOTAL DEPOSITS
Quad City Bank and Trust (1)	$	1,849,313		$	1,797,969		$	1,866,635
Cedar Rapids Bank and Trust		1,504,992			1,526,144			1,378,108
Community State Bank - Ankeny		1,020,548			994,042			875,400
Springfield First Community Bank		590,164			605,947			569,036
TOTAL LOANS & LEASES
Quad City Bank and Trust (1)	$	1,650,234		$	1,636,170		$	1,556,762
m2 Equipment Finance, LLC		270,274			262,962			244,325
Cedar Rapids Bank and Trust		1,437,808			1,410,160			1,362,056
Community State Bank - Ankeny		866,952			834,533			707,681
Springfield First Community Bank		725,139			718,867			624,629
TOTAL LOANS & LEASES / TOTAL DEPOSITS
Quad City Bank and Trust (1)		89	%		91	%		83	%
Cedar Rapids Bank and Trust		96	%		92	%		99	%
Community State Bank - Ankeny		85	%		84	%		81	%
Springfield First Community Bank		123	%		119	%		110	%
TOTAL LOANS & LEASES / TOTAL ASSETS
Quad City Bank and Trust (1)		77	%		78	%		72	%
Cedar Rapids Bank and Trust		71	%		70	%		70	%
Community State Bank - Ankeny		74	%		73	%		70	%
Springfield First Community Bank		82	%		82	%		80	%
ACL ON LOANS/LEASES AS A PERCENTAGE OF LOANS/LEASES
Quad City Bank and Trust (1)		1.82	%		1.88	%		1.95	%
m2 Equipment Finance, LLC		3.55	%		3.78	%		2.63	%
Cedar Rapids Bank and Trust (2)		1.73	%		1.85	%		2.35	%
Community State Bank - Ankeny (2)		1.69	%		1.73	%		2.02	%
Springfield First Community Bank (2)		1.27	%		1.30	%		1.23	%
RETURN ON AVERAGE ASSETS
Quad City Bank and Trust (1)		1.86	%		1.66	%		1.52	%		1.63	%		0.99	%
Cedar Rapids Bank and Trust		2.56	%		3.93	%		0.59	%		2.85	%		1.81	%
Community State Bank - Ankeny		1.50	%		1.17	%		3.25	%		1.17	%		1.25	%
Springfield First Community Bank		1.82	%		2.09	%		3.02	%		1.73	%		1.74	%
NET INTEREST MARGIN PERCENTAGE (3)
Quad City Bank and Trust (1)		3.48	%		3.47	%		3.19	%		3.36	%		3.17	%
Cedar Rapids Bank and Trust (4)		3.66	%		3.68	%		3.51	%		3.62	%		3.47	%
Community State Bank - Ankeny (5)		3.52	%		3.78	%		3.77	%		3.66	%		3.89	%
Springfield First Community Bank (6)		3.49	%		3.67	%		4.03	%		3.56	%		3.87	%
ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET INTEREST MARGIN, NET
Cedar Rapids Bank and Trust	$	21		$	64		$	103		$	190		$	430
Community State Bank - Ankeny		30			52			132			468			325
Springfield First Community Bank		89			376			880			844			2,671
QCR Holdings, Inc. (7)		(52	)		(36	)		(38	)		(162	)		(155	)

(1)	Quad City Bank and Trust figures include m2 Equipment Finance, LLC, as this entity is wholly-owned and consolidated with the Bank.  m2 Equipment Finance, LLC  is also presented separately for certain (applicable) measurements.
(2)	Prior to adoption of ASU 2016-13 "CECL", upon acquisition and per GAAP, acquired loans were recorded at market value, which eliminates the allowance and impacts this ratio. There have been no acquisitions since adopting ASU 2016-13 "CECL", which requires an allowance to be established on acquired loans.
(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)	Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments.  Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.65% for the quarter ended December 31, 2021, 3.66% for the quarter ended September 30, 2021 and 3.47% for the quarter ended December 31, 2020.
(5)	Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.50% for the quarter ended December 31, 2021, 3.75% for the quarter ended September 30, 2021 and 3.69% for the quarter ended December 31, 2020.
(6)	Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments.  Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.50% for the quarter ended December 31, 2021, 3.53% for the quarter ended September 30, 2021 and 3.59% for the quarter ended December 31, 2020.
(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.

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QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited)

	As of
	December 31,			September 30,			June 30,			March 31,			December 31,
GAAP TO NON-GAAP RECONCILIATIONS	2021			2021			2021			2021			2020
	(dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)
Stockholders' equity (GAAP)	$	677,010		$	649,814		$	630,476		$	608,719		$	593,793
Less: Intangible assets		83,415			83,923			84,431			84,939			85,447
Tangible common equity (non-GAAP)	$	593,595		$	565,891		$	546,045		$	523,780		$	508,346
Total assets (GAAP)	$	6,096,132		$	6,014,508		$	5,827,412		$	5,667,394		$	5,705,043
Less: Intangible assets		83,415			83,923			84,431			84,939			85,447
Tangible assets (non-GAAP)	$	6,012,717		$	5,930,585		$	5,742,981		$	5,582,455		$	5,619,596
Tangible common equity to tangible assets ratio (non-GAAP)		9.87	%		9.54	%		9.51	%		9.38	%		9.05	%

(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. 

13 

QCR Holdings, Inc.

Consolidated Financial Highlights

(Unaudited) 

	For the Quarter Ended															For the Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
GAAP TO NON-GAAP RECONCILIATIONS	2021			2021			2021			2021			2020			2021			2020
	(dollars in thousands, except per share data)
ADJUSTED NET INCOME (1)
Net income (GAAP)	$	27,009		$	31,565		$	22,349		$	17,982		$	18,271		$	98,905		$	60,582
Less non-core items (post-tax) (2):
Income:
Securities gains(losses), net		-			-			(69	)		-			487		$	(69	)	$	1,962
Mark to Market gains (losses) on derivatives, net		77			(13	)		(58	)		129			-			135		$	-
Gain on sale of loan		-			28			-			-			-			28
Loss on syndicated loan		-			-			-			-			(210	)		-		$	(210	)
Total non-core income (non-GAAP)	$	77		$	15		$	(127	)	$	129		$	277		$	94		$	1,752
Expense:
Losses on debt extinguishment, net	$	-		$	-		$	-		$	-		$	1,151		$	-		$	3,087
Goodwill impairment		-			-			-			-			-			-			500
Disposition costs		3			-			-			7			51			10			545
Acquisition costs (4)		493			-			-			-			-			493			-
Separation agreement		-			-			-			734			-			734			-
Post-acquisition compensation, transition and integration costs		-			-			-			-			20			-			169
Loss on sale of subsidiary		-			-			-			-			(102	)		-			110
Total non-core expense (non-GAAP)	$	496		$	-		$	-		$	741		$	1,119		$	1,237		$	4,411
Adjusted net income (non-GAAP) (1)	$	27,428		$	31,550		$	22,476		$	18,594		$	19,113		$	100,048		$	63,241
ADJUSTED EARNINGS PER COMMON SHARE (1)
Adjusted net income (non-GAAP) (from above)	$	27,428		$	31,550		$	22,476		$	18,594		$	19,113		$	100,048		$	63,241
Weighted average common shares outstanding		15,582,276			15,635,123			15,813,932			15,803,643			15,775,596			15,708,744			15,771,650
Weighted average common and common equivalent shares outstanding		15,838,246			15,869,798			16,045,239			16,025,548			15,973,054			15,944,708			15,952,637
Adjusted earnings per common share (non-GAAP):
Basic	$	1.76		$	2.02		$	1.42		$	1.18		$	1.21		$	6.37		$	4.01
Diluted	$	1.73		$	1.99		$	1.40		$	1.16		$	1.20		$	6.27		$	3.96
ADJUSTED RETURN ON AVERAGE ASSETS (1)
Adjusted net income (non-GAAP) (from above)	$	27,428		$	31,550		$	22,476		$	18,594		$	19,113		$	100,048		$	63,241
Average Assets	$	6,121,446		$	5,982,583		$	5,761,314		$	5,691,097		$	5,842,299		$	5,890,042		$	5,604,074
Adjusted return on average assets (annualized) (non-GAAP)		1.79	%		2.11	%		1.56	%		1.31	%		1.31	%		1.70	%		1.13	%
NET INTEREST MARGIN (TEY) (4)
Net interest income (GAAP)	$	46,513		$	46,229		$	43,516		$	41,975		$	43,707		$	178,233		$	166,950
Plus: Tax equivalent adjustment (3)		2,800			2,708			2,444			2,267			2,631			10,211			8,216
Net interest income - tax equivalent (Non-GAAP)	$	49,313		$	48,937		$	45,960		$	44,242		$	46,338		$	188,444		$	175,166
Less: Acquisition accounting net accretion		88			456			291			504			1,077			1,340			3,271
Adjusted net interest income	$	49,225		$	48,481		$	45,669		$	43,738		$	45,261		$	187,104		$	171,895
Average earning assets	$	5,602,222		$	5,451,571		$	5,320,881		$	5,218,198		$	5,345,677		$	5,398,868		$	5,085,659
Net interest margin (GAAP)		3.29	%		3.36	%		3.28	%		3.26	%		3.25	%		3.30	%		3.28	%
Net interest margin (TEY) (Non-GAAP)		3.50	%		3.56	%		3.46	%		3.43	%		3.45	%		3.49	%		3.44	%
Adjusted net interest margin (TEY) (Non-GAAP)		3.49	%		3.53	%		3.44	%		3.40	%		3.37	%		3.47	%		3.38	%
EFFICIENCY RATIO (5)
Noninterest expense (GAAP)	$	39,412		$	41,387		$	35,675		$	37,228		$	46,364		$	153,702		$	151,755
Net interest income (GAAP)	$	46,513		$	46,229		$	43,516		$	41,975		$	43,707		$	178,233		$	166,950
Noninterest income (GAAP)		22,985			34,652			19,296			23,489			32,017			100,422			113,798
Total income	$	69,498		$	80,881		$	62,812		$	65,464		$	75,724		$	278,655		$	280,748
Efficiency ratio (noninterest expense/total income) (Non-GAAP)		56.71	%		51.17	%		56.80	%		56.87	%		61.23	%		55.16	%		54.05	%
ALLOWANCE FOR CREDIT LOSSES ON LOANS/LEASES TO TOTAL LOANS/LEASES, EXCLUDING PPP LOANS (6)
Allowance for credit losses on loans and leases	$	78,721		$	80,670		$	78,894		$	81,831		$	84,376		$	78,721		$	84,376
Total loans and leases	$	4,680,132		$	4,599,730		$	4,417,705		$	4,361,051		$	4,251,129		$	4,680,132		$	4,251,129
Less: PPP loans		28,181			83,575			147,506			243,860			273,146			28,181			273,146
Total loans and leases, excluding PPP loans	$	4,651,951		$	4,516,155		$	4,270,199		$	4,117,191		$	3,977,983		$	4,651,951		$	3,977,983
Allowance for credit losses on loans and leases to total loans and leases, excluding PPP loans		1.69	%		1.79	%		1.85	%		1.99	%		2.12	%		1.69	%		2.12	%
LOAN GROWTH ANNUALIZED, EXCLUDING PPP LOANS
Total loans and leases	$	4,680,132		$	4,599,730		$	4,417,705		$	4,361,051		$	4,251,129		$	4,680,132		$	4,251,129
Less: PPP loans		28,181			83,575			147,506			243,860			273,146			28,181			273,146
Total loans and leases, excluding PPP loans	$	4,651,951		$	4,516,155		$	4,270,199		$	4,117,191		$	3,977,983		$	4,651,951		$	3,977,983
Loan growth annualized, excluding PPP loans		12.03	%		23.04	%		14.87	%		14.00	%		9.00	%		16.94	%		7.80	%

(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 assets and liabilities of subsidary 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 credit  losses on loans and leases to total loans and leases, excluding PPP loans is a non-GAAP measure. The Company's management utilizes this ratio to remove 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.

14