10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to________

Commission file number 0-22208

QCR HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	42-1397595
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3551 7^th Street, Moline, Illinois 61265

(Address of principal executive offices, including zip code)

(309) 736-3580

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 Par Value	QCRH	The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒      No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒      No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐		Non-accelerated filer ☐
Smaller reporting company ☐		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐      No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: As of November 1, 2023, the Registrant had outstanding 16,732,384 shares of common stock, $1.00 par value per share.

QCR HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

			Page Number(s)
Part I	FINANCIAL INFORMATION
	Item 1	Consolidated Financial Statements (Unaudited)
		Consolidated Balance Sheets As of September 30, 2023 and December 31, 2022	4
		Consolidated Statements of Income For the Three Months Ended September 30, 2023 and 2022	5
		Consolidated Statements of Income For the Nine Months Ended September 30, 2023 and 2022	6
		Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended September 30, 2023 and 2022	7
		Consolidated Statements of Changes in Stockholders' Equity For the Three and Nine Months Ended September 30, 2023 and 2022	8
		Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2023 and 2022	9
		Notes to Consolidated Financial Statements	11
		Note 1. Summary of Significant Accounting Policies	11
		Note 2. Investment Securities	13
		Note 3. Loans/Leases Receivable	16
		Note 4. Derivatives and Hedging Activities	26
		Note 5. Income Taxes	29
		Note 6. Earnings Per Share	30
		Note 7. Fair Value	30
		Note 8. Business Segment Information	32
		Note 9. Regulatory Capital Requirements	33
		Note 10. Commitments	34
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations
		Introduction	35
		General	35
		Critical Accounting Policies and Critical Accounting Estimates	35
		Executive Overview	36
		Strategic Financial Metrics	37
		Strategic Developments	38
		GAAP to Non-GAAP Reconciliations	39
		Net Interest Income - (Tax Equivalent Basis)	41
		Results of Operations		45
		Interest Income		45
		Interest Expense		46
		Provision for Credit Losses		46
		Noninterest Income		47

2

		Noninterest Expense	50
		Income Taxes	53
		Financial Condition	53
		Investment Securities	53
		Loans/Leases	54
		Allowance for Credit Losses on Loans/Leases and OBS Exposures	56
		Nonperforming Assets	58
		Deposits	58
		Borrowings	59
		Stockholders' Equity	61
		Liquidity and Capital Resources	61
		Special Note Concerning Forward-Looking Statements	63
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	65
	Item 4	Controls and Procedures	67
Part II	OTHER INFORMATION
	Item 1	Legal Proceedings	68
	Item 1A	Risk Factors	68
	Item 2	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	68
	Item 3	Defaults Upon Senior Securities	68
	Item 4	Mine Safety Disclosures	68
	Item 5	Other Information	68
	Item 6	Exhibits	69
Signatures

Throughout this Quarterly Report on Form 10-Q, we use certain acronyms and abbreviations, as defined in Note 1 to the Consolidated Financial Statements.

3

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of September 30, 2023 and December 31, 2022

	September 30,		December 31,
	2023		2022
	(dollars in thousands)
Assets
Cash and due from banks	$	104,265	$	59,723
Federal funds sold		20,300		56,910
Interest-bearing deposits at financial institutions		60,350		67,360
Securities held to maturity, at amortized cost, net of allowance for credit losses		615,115		587,142
Securities available for sale, at fair value		281,279		340,960
Total securities		896,394		928,102
Loans receivable held for sale		278,893		1,480
Loans/leases receivable held for investment		6,327,414		6,137,391
Gross loans/leases receivable		6,606,307		6,138,871
Less allowance for credit losses		(87,669)		(87,706)
Net loans/leases receivable		6,518,638		6,051,165
Bank-owned life insurance		107,389		106,580
Premises and equipment, net		118,943		117,948
Restricted investment securities		43,748		42,501
Other real estate owned, net		120		133
Goodwill		139,027		137,607
Intangibles		14,537		16,759
Derivatives		291,295		177,631
Other assets		225,051		186,418
Total assets	$	8,540,057	$	7,948,837
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	1,027,791	$	1,262,981
Interest-bearing		5,467,061		4,721,236
Total deposits		6,494,852		5,984,217
Short-term borrowings		470		129,630
Federal Home Loan Bank advances		430,000		415,000
Subordinated notes		232,958		232,662
Junior subordinated debentures		48,698		48,602
Derivatives		320,220		200,701
Other liabilities		184,476		165,301
Total liabilities		7,711,674		7,176,113
Stockholders' Equity:
Preferred stock, $1 par value; shares authorized 250,000 September 2023 and December 2022 - no shares issued or outstanding		—		—
Common stock, $1 par value; shares authorized 20,000,000 September 2023 - 16,731,646 shares issued and outstanding December 2022 - 16,795,942 shares issued and outstanding		16,732		16,796
Additional paid-in capital		369,833		370,712
Retained earnings		523,142		450,114
Accumulated other comprehensive loss:
Securities available for sale		(55,061)		(44,677)
Derivatives		(26,263)		(20,221)
Total stockholders' equity		828,383		772,724
Total liabilities and stockholders' equity	$	8,540,057	$	7,948,837

See Notes to Consolidated Financial Statements (Unaudited)

4

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended September 30, 2023 and 2022

	2023		2022
	(dollars in thousands, except share data)
Interest and dividend income:
Loans/leases, including fees:
Taxable	$	73,396	$	58,143
Nontaxable		23,725		11,712
Securities:
Taxable		3,788		3,304
Nontaxable		5,510		4,955
Interest-bearing deposits at financial institutions		1,206		380
Restricted investment securities		659		673
Federal funds sold		284		100
Total interest and dividend income		108,568		79,267
Interest expense:
Deposits		43,575		12,570
Short-term borrowings		10		84
Federal Home Loan Bank advances		5,724		2,584
Other borrowings		—		53
Subordinated notes		3,307		2,518
Junior subordinated debentures		697		689
Total interest expense		53,313		18,498
Net interest income		55,255		60,769
Provision for credit losses		3,806		—
Net interest income after provision for credit losses		51,449		60,769
Noninterest income:
Trust fees		2,863		2,537
Investment advisory and management fees		947		921
Deposit service fees		2,107		2,214
Gains on sales of residential real estate loans, net		476		641
Gains on sales of government guaranteed portions of loans, net		—		50
Capital markets revenue		15,596		10,545
Earnings on bank-owned life insurance		1,807		605
Debit card fees		1,584		1,453
Correspondent banking fees		450		189
Loan related fee income		800		652
Fair value gain (loss) on derivatives		(336)		904
Other		299		384
Total noninterest income		26,593		21,095
Noninterest expense:
Salaries and employee benefits		32,098		29,175
Occupancy and equipment expense		6,228		6,033
Professional and data processing fees		4,456		4,477
Acquisition costs		—		315
Post-acquisition compensation, transition and integration costs		—		62
FDIC insurance, other insurance and regulatory fees		1,721		1,497
Loan/lease expense		826		390
Net cost of and gains/losses on operations of other real estate		3		19
Advertising and marketing		1,429		1,437
Communication and data connectivity		478		639
Supplies		335		289
Bank service charges		605		568
Correspondent banking expense		232		218
Intangibles amortization		691		787
Payment card processing		733		477
Trust expense		432		227
Other		814		1,136
Total noninterest expense		51,081		47,746
Net income before income taxes		26,961		34,118
Federal and state income tax expense		1,840		4,824
Net income	$	25,121	$	29,294
Basic earnings per common share	$	1.50	$	1.73
Diluted earnings per common share	$	1.49	$	1.71
Weighted average common shares outstanding		16,717,303		16,900,968
Weighted average common and common equivalent shares outstanding		16,847,951		17,110,691
Cash dividends declared per common share	$	0.06	$	0.06

See Notes to Consolidated Financial Statements (Unaudited)

5

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Nine Months Ended September 30, 2023 and 2022

	2023		2022
	(dollars in thousands, except share data)
Interest and dividend income:
Loans/leases, including fees:
Taxable	$	208,449	$	147,366
Nontaxable		60,582		26,489
Securities:
Taxable		10,847		8,792
Nontaxable		15,715		13,750
Interest-bearing deposits at financial institutions		3,151		584
Restricted investment securities		1,677		1,439
Federal funds sold		741		114
Total interest and dividend income		301,162		198,534
Interest expense:
Deposits		111,800		21,231
Short-term borrowings		142		87
Federal Home Loan Bank advances		11,898		3,447
Other borrowings		—		53
Subordinated notes		9,922		5,888
Junior subordinated debentures		2,130		1,926
Total interest expense		135,892		32,632
Net interest income		165,270		165,902
Provision for credit losses		11,340		8,284
Net interest income after provision for loan/lease losses		153,930		157,618
Noninterest income:
Trust fees		8,613		7,997
Investment advisory and management fees		2,812		2,940
Deposit service fees		6,169		5,992
Gains on sales of residential real estate loans, net		1,288		1,943
Gains on sales of government guaranteed portions of loans, net		30		69
Capital markets revenue		55,109		29,971
Securities losses, net		(451)		—
Earnings on bank-owned life insurance		3,352		1,301
Debit card fees		4,639		3,959
Correspondent banking fees		1,197		710
Loan related fee income		2,221		1,814
Fair value gain (loss) on derivatives		(680)		2,242
Other		656		572
Total noninterest income		84,955		59,510
Noninterest expenses:
Salaries and employee benefits		95,560		82,774
Occupancy and equipment expense		18,242		15,948
Professional and data processing fees		12,048		12,513
Acquisition costs		—		4,139
Post-acquisition compensation, transition and integration costs		207		4,858
FDIC insurance, other insurance and regulatory fees		5,022		4,201
Loan/lease expense		2,034		1,418
Net cost of (income from) and gains/losses on operations of other real estate		(64)		77
Advertising and marketing		4,401		3,396
Communication and data connectivity		1,614		1,626
Supplies		921		772
Bank service charges		1,831		1,719
Correspondent banking expense		663		630
Intangibles amortization		2,222		2,067
Payment card processing		1,820		1,365
Trust expense		983		609
Other		2,089		2,207
Total noninterest expenses		149,593		140,319
Net income before income taxes		89,292		76,809
Federal and state income tax expense		8,589		8,649
Net income	$	80,703	$	68,160
Basic earnings per common share	$	4.82	$	4.25
Diluted earnings per common share	$	4.79	$	4.20
Weighted average common shares outstanding		16,731,847		16,030,371
Weighted average common and common equivalent shares outstanding		16,863,203		16,243,921
Cash dividends declared per common share	$	0.18	$	0.18

See Notes to Consolidated Financial Statements (Unaudited)

6

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three and Nine Months Ended September 30, 2023 and 2022

	Three Months Ended September 30,
	2023		2022
	(dollars in thousands)
Net income	$	25,121	$	29,294
Other comprehensive loss:
Unrealized losses on securities available for sale:
Unrealized holding losses arising during the period before tax		(19,072)		(23,069)
		(19,072)		(23,069)
Unrealized losses on derivatives:
Unrealized holding losses arising during the period before tax		(7,019)		(8,955)
Less reclassification adjustment for caplet amortization before tax		(224)		(261)
		(6,795)		(8,694)
Other comprehensive loss, before tax		(25,867)		(31,763)
Tax benefit		(6,452)		(6,980)
Other comprehensive loss, net of tax		(19,415)		(24,783)
Comprehensive income	$	5,706	$	4,511

	Nine Months Ended September 30,
	2023		2022
	(dollars in thousands)
Net income	$	80,703	$	68,160
Other comprehensive loss:
Unrealized losses on securities available for sale:
Unrealized holding losses arising during the period before tax		(14,808)		(76,814)
Less reclassification adjusted for impairment losses included in net income before tax		(989)		—
Less reclassification adjustment for sales losses included in net income before tax		(451)		—
		(13,368)		(76,814)
Unrealized losses on derivatives:
Unrealized holding losses arising during the period before tax		(9,152)		(23,769)
Less reclassification adjustment for caplet amortization before tax		(638)		(723)
		(8,514)		(23,046)
Other comprehensive loss, before tax		(21,882)		(99,860)
Tax benefit		(5,456)		(23,451)
Other comprehensive loss, net of tax		(16,426)		(76,409)
Comprehensive income (loss)	$	64,277	$	(8,249)

See Notes to Consolidated Financial Statements (Unaudited)

7

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

Three and Nine Months Ended September 30, 2023 and 2022

							Accumulated
			Additional				Other
	Common		Paid-In		Retained		Comprehensive
	Stock		Capital		Earnings		(Loss)		Total
	(dollars in thousands)
Balance December 31, 2022	$	16,796	$	370,712	$	450,114	$	(64,898)	$	772,724
Net income		—		—		27,157		—		27,157
Other comprehensive income, net of tax		—		—		—		9,325		9,325
Common cash dividends declared, $0.06 per share		—		—		(1,010)		—		(1,010)
Repurchase and cancellation of 152,500 shares of common stock
as a result of a share repurchase program		(153)		(3,356)		(4,210)		—		(7,719)
Stock-based compensation expense		—		953		—		—		953
Issuance of common stock under employee benefit plans		71		(7)		—		—		64
Balance, March 31, 2023	$	16,714	$	368,302	$	472,051	$	(55,573)	$	801,494
Net income		—		—		28,425		—		28,425
Other comprehensive loss, net of tax		—		—		—		(6,336)		(6,336)
Common cash dividends declared, $0.06 per share		—		—		(1,003)		—		(1,003)
Repurchase and cancellation of 22,500 shares of common stock
as a result of a share repurchase program		(23)		(495)		(449)		—		(967)
Stock-based compensation expense		—		673		—		—		673
Issuance of common stock under employee benefit plans		23		380		—		—		403
Balance, June 30, 2023	$	16,714	$	368,860	$	499,024	$	(61,909)	$	822,689
Net income		—		—		25,121		—		25,121
Other comprehensive loss, net of tax		—		—		—		(19,415)		(19,415)
Common cash dividends declared, $0.06 per share		—		—		(1,003)		—		(1,003)
Stock-based compensation expense		—		527		—		—		527
Issuance of common stock under employee benefit plans		18		446		—		—		464
Balance, September 30, 2023	$	16,732	$	369,833	$	523,142	$	(81,324)	$	828,383

							Accumulated
			Additional				Other
	Common		Paid-In		Retained		Comprehensive
	Stock		Capital		Earnings		Income (Loss)		Total
	(dollars in thousands)
Balance December 31, 2021	$	15,613	$	273,768	$	386,077	$	1,552	$	677,010
Net income		—		—		23,624		—		23,624
Other comprehensive loss, net of tax		—		—		—		(27,340)		(27,340)
Common cash dividends declared, $0.06 per share		—		—		(939)		—		(939)
Repurchase and cancellation of 77,500 shares of common stock
as a result of a share repurchase program		(77)		(1,338)		(3,000)		—		(4,415)
Stock-based compensation expense		—		751		—		—		751
Issuance of common stock under employee benefit plans		44		(811)		—		—		(767)
Balance, March 31, 2022	$	15,580	$	272,370	$	405,762	$	(25,788)	$	667,924
Net income		—		—		15,242		—		15,242
Other comprehensive loss, net of tax		—		—		—		(24,286)		(24,286)
Common cash dividends declared, $0.06 per share		—		—		(1,059)		—		(1,059)
Issuance of 2,071,291 shares of common stock
as a result of acquisition of Guaranty Federal Bancshares		2,071		115,143		—		—		117,214
Repurchase and cancellation of 602,500 shares of common stock
as a result of a share repurchase program		(603)		(13,258)		(19,155)		—		(33,016)
Stock-based compensation expense		—		545		—		—		545
Issuance of common stock under employee benefit plans		16		558		—		—		574
Balance, June 30, 2022	$	17,064	$	375,358	$	400,790	$	(50,074)	$	743,138
Net income		—		—		29,294		—		29,294
Other comprehensive (loss), net of tax		—		—		—		(24,783)		(24,783)
Repurchase and cancellation of 190,000 shares of common stock
as a result of a share repurchase program		(190)		(4,181)		(6,114)		—		(10,485)
Common cash dividends declared, $0.06 per share		—		—		(1,012)		—		(1,012)
Stock-based compensation expense		—		382		—		—		382
Issuance of common stock under employee benefit plans		11		527		—		—		538
Balance, September 30, 2022	$	16,885	$	372,086	$	422,958	$	(74,857)	$	737,072

See Notes to Consolidated Financial Statements (Unaudited)

8

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended September 30, 2023 and 2022

	2023		2022
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	80,703	$	68,160
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		6,132		5,699
Provision for credit losses		11,340		8,284
Stock-based compensation expense		2,153		1,678
Deferred compensation expense accrued		4,188		3,027
Gains on other real estate owned, net		(84)		(19)
Amortization of premiums on securities, net		964		939
Caplet amortization		638		723
Fair value (gain) loss on derivatives		680		(2,242)
Securities losses, net		451		—
Loans originated for sale		(55,271)		(82,009)
Proceeds on sales of loans		57,171		88,010
Gains on sales of residential real estate loans		(1,288)		(1,943)
Gains on sales of government guaranteed portions of loans		(30)		(69)
Losses on sales and disposals of premises and equipment		386		520
Amortization of intangibles		2,222		2,067
Accretion of acquisition fair value adjustments, net		(1,501)		(2,893)
Increase in cash value of bank-owned life insurance		(2,221)		(1,301)
Gain on bank-owned life insurance death benefits		(1,131)
Increase in other assets		(34,126)		(33,840)
Decrease in other liabilities		13,973		21,843
Net cash provided by operating activities	$	85,349	$	76,634
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold		36,610		(15,840)
Net decrease in interest-bearing deposits at financial institutions		7,010		49,593
Proceeds from sales of other real estate owned		295		223
Activity in securities portfolio:
Purchases		(102,669)		(173,331)
Calls, maturities and redemptions		76,011		30,597
Paydowns		11,660		27,311
Sales		30,556		111,375
Activity in restricted investment securities:
Purchases		(4,908)		(19,885)
Redemptions		3,661		2,159
Net increase in loans/leases originated and held for investment		(479,757)		(524,877)
Purchase of premises and equipment		(8,023)		(27,119)
Proceeds from sales of premises and equipment		510		413
Purchase of bank-owned life insurance		—		(10,000)
Proceeds from bank-owned life insurance death benefits		2,543		—
Net cash acquired from acquisition		—		144,973
Net cash used in investing activities	$	(426,501)	$	(404,408)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposit accounts		510,635		(58,310)
Net increase (decrease) in short-term borrowings		(129,160)		81,380
Activity in Federal Home Loan Bank advances:
Term advances		135,000		—
Net change in short-term and overnight advances		(120,000)		320,000
Prepayments		—		(16,000)
Activity in other borrowings:
Proceeds from other borrowings		—		10,000
Calls, maturities and scheduled principal payments		—		(10,000)
Proceeds from subordinated notes		—		100,000
Payment of cash dividends on common stock		(3,026)		(2,933)
Proceeds from issuance of common stock, net		931		345
Repurchase and cancellation of shares		(8,686)		(47,916)
Net cash provided by financing activities	$	385,694	$	376,566
Net increase in cash and due from banks		44,542		48,792
Cash and due from banks, beginning		59,723		37,490
Cash and due from banks, ending	$	104,265	$	86,282

9

	2023		2022
	(dollars in thousands)
Supplemental disclosure of cash flow information, cash payments (receipts) for:
Interest	$	(258,779)	$	32,046
Income/franchise taxes		2,214		107
Supplemental schedule of noncash investing activities:
Change in accumulated other comprehensive income (loss), unrealized gains (losses) on securities available for sale and derivative instruments, net		(16,426)		(76,409)
Increase in fair value of fair value hedges		3,997		—
Transfers of loans to other real estate owned		218		326
Increase (decrease) in the fair value of back-to-back interest rate swap assets and liabilities		110,641		(48,195)
Dividends payable		1,003		1,012
Transfer of loans to loans held for sale		277,995		—
Measurement period adjustment to goodwill		1,420		—
Supplemental disclosure of cash flow information for acquisitions:
Fair value of assets acquired:
Cash and due from banks	$	—	$	171,844
Interest-bearing deposits at financial institutions		—		17,134
Securities		—		143,017
Loans receivable, net		—		801,697
Bank-owned life insurance		—		32,100
Premises and equipment, net		—		16,257
Restricted investment securities		—		2,220
Other real estate owned		—		55
Intangibles		—		10,264
Other assets		—		23,685
Total assets acquired	$	—	$	1,218,273
Fair value of liabilities assumed:
Deposits	$	—	$	1,076,573
FHLB advances		—		16,000
Subordinated debentures		—		19,621
Junior subordinated debentures		—		10,310
Other liabilities		—		15,225
Total liabilities assumed		—		1,137,729
Net assets acquired	$	—	$	80,544
Consideration paid:
Cash paid *	$	—	$	26,871
Common stock		—		117,214
Total consideration paid		—		144,085
Goodwill	$	—	$	63,541
*Net cash acquired at closing totaled $145.0 million for acquisition of Guaranty Bank in 2022.

See Notes to Consolidated Financial Statements (Unaudited)

10

Part I

Item 1

QCR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2023

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation:  The interim unaudited Consolidated Financial Statements contained herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2022, included in the Company's Annual Report on Form 10-K filed with the SEC on March 1, 2023. Accordingly, footnote disclosures, which would substantially duplicate the disclosures contained in the audited Consolidated Financial Statements, have been omitted.

The financial information of the Company included herein has been prepared in accordance with GAAP for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. Any differences appearing between the numbers presented in financial statements and management's discussion and analysis are due to rounding. The results of the interim period ended September 30, 2023 are not necessarily indicative of the results expected for the year ending December 31, 2023, or for any other period.

The acronyms and abbreviations identified below are used throughout this Quarterly Report on Form 10-Q. It may be helpful to refer back to this page as you read this report.

ACL: Allowance for credit losses	GFED: Guaranty Federal Bancshares, Inc.
Allowance: Allowance for credit losses	HTM: Held to maturity
AOCI: Accumulated other comprehensive income (loss)	LIBOR: London Inter-Bank Offered Rate
ASC: Accounting Standards Codification	LIHTC: Low-income housing tax credit
ASU: Accounting Standards Update	m2: m2 Equipment Finance, LLC
BOLI: Bank-owned life insurance	NIM: Net interest margin
Caps: Interest rate cap derivatives	NPA: Nonperforming asset
CECL: Current Expected Credit Losses	NPL: Nonperforming loan
Community National: Community National Bancorporation	OBS: Off-balance sheet
Company: QCR Holdings, Inc.	OREO: Other real estate owned
COVID-19: Coronavirus Disease 2019	OTTI: Other-than-temporary impairment
CRBT: Cedar Rapids Bank & Trust Company	PCAOB: Public Company Accounting Oversight Board
CRE: Commercial real estate	PCD: Purchase credit deteriorated loan
CSB: Community State Bank	PCI: Purchased credit impaired
C&I: Commercial and industrial	PPP: Paycheck Protection Program
EBA: Excess balance account	Provision: Provision for credit losses
EPS: Earnings per share	QCBT: Quad City Bank & Trust Company
Exchange Act: Securities Exchange Act of 1934, as	ROAA: Return on average assets
amended	ROAE: Return on average equity
FASB: Financial Accounting Standards Board	SEC: Securities and Exchange Commission
FDIC: Federal Deposit Insurance Corporation	SFCB: Springfield First Community Bank
Federal Reserve: Board of Governors of the Federal	SFG: Specialty Finance Group
Reserve System	SOFR: Secured Overnight Financing Rate
FHLB: Federal Home Loan Bank	TA: Tangible Assets
FRB: Federal Reserve Bank of Chicago	TBV: Tangible book value
Guaranty: Guaranty Bank, formerly known as Springfield First	TCE: Tangible common equity
Community Bank	TDRs: Troubled debt restructurings
	TEY: Tax equivalent yield

11

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries which include the accounts of four commercial banks:  QCBT, CRBT, CSB and GB. All four banks are state-chartered commercial banks and all are members of the Federal Reserve system. The Company also engages in direct financing lease contracts through m2, a wholly owned subsidiary of QCBT. The company also engages in wealth management services through its banking subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

The acquisition of GFED, the holding company of GB, headquartered in Springfield, Missouri, occurred on April 1, 2022 and on April 2, 2022, GB was merged into SFCB, the Company’s Springfield-based charter.  The combined bank changed its name to Guaranty Bank. The financial results for the periods since the acquisition and merger are included in this report.  See Note 2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information about the acquisition and merger.

Recent accounting developments: In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform,” which provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. ASU 2020-04 is effective March 12, 2020 through December 31, 2022. An entity may elect to apply ASU 2020-04 for contract modifications as of January 1, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.  In December 2022, in response to the postponement of the cessation date of LIBOR, the FASB issued ASU 2022-06 which defers the sunset date of the ASU 2020-4 guidance to December 31, 2024, after which entities will no longer be permitted to apply the relief.

Management has assessed the impacts of ASU 2020-04 and the related opportunities and risks involved in the LIBOR transition. Specifically, management has identified all of the financial instruments with LIBOR exposure, which include certain commercial loans, interest rate swaps, interest rate caps, and certain securities.  In all cases, management has determined a plan of transition from LIBOR to a different index.  This transition occurred prior to the expiration of published LIBOR rates on June 30, 2023 and did not have a significant impact on the Company’s financial statements.

In April 2022, the FASB issued ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures.”  Under the standard, the accounting guidance on troubled debt restructurings for creditors in ASC 310-40 is eliminated and guidance on “vintage disclosures” is amended to require disclosure of current-period gross write-offs by year of origination.  The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.  For public companies that have adopted ASC 326, the changes take effect in reporting periods beginning after December 15, 2022.  This standard was adopted on January 1, 2023 and did not have a significant impact on the Company’s financial statements.

In March 2023, the FASB issued ASU 2023-02, “Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a Consensus of the Emerging Issues Task Force).” Under the standard, the accounting guidance expands use of the proportional amortization method of accounting to equity investments in tax credit programs beyond those in LIHTC programs.  The ASU also prescribes specific information reporting entities must disclose about tax credit investments each period. The ASU is effective for reporting periods beginning after December 31, 2023, for public business entities, with all other entities having an extra year to adopt.  Entities will have the option of applying the ASU using either a modified retrospective or retrospective adoption approach.  For some changes related to existing LIHTC investments, prospective application is permitted. The standard is not expected to have a significant impact on the Company’s financial statements.

Reclassifications: Certain amounts in the prior year’s Consolidated Financial Statements have been reclassified, with no effect on net income or stockholders’ equity, to conform with the current period presentation.

12

NOTE 2– INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of September 30, 2023 and December 31, 2022 are summarized as follows:

			Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
	Cost		(Losses)		Gains		(Losses)		Value
	(dollars in thousands)
September 30, 2023:
Securities HTM:
Municipal securities	$	614,245	$	(180)	$	2,448	$	(92,718)	$	523,795
Other securities		1,050		—		—		(26)		1,024
	$	615,295	$	(180)	$	2,448	$	(92,744)	$	524,819
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	19,130	$	—	$	13	$	(3,141)	$	16,002
Residential mortgage-backed and related securities		66,433		—		—		(8,487)		57,946
Municipal securities		207,318		—		—		(57,546)		149,772
Asset-backed securities		16,226		—		144		(44)		16,326
Other securities		46,531		(989)		2		(4,311)		41,233
	$	355,638	$	(989)	$	159	$	(73,529)	$	281,279

			Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
	Cost		(Losses)		Gains		(Losses)		Value
	(dollars in thousands)
December 31, 2022:
Securities HTM:
Municipal securities	$	586,272	$	(180)	$	5,292	$	(56,798)	$	534,586
Other securities		1,050		—		—		—		1,050
	$	587,322	$	(180)	$	5,292	$	(56,798)	$	535,636
Securities AFS:
U.S. govt. sponsored agency securities	$	19,745	$	—	$	19	$	(2,783)	$	16,981
Residential mortgage-backed and related securities		73,438		—		—		(7,223)		66,215
Municipal securities		239,812		—		66		(46,700)		193,178
Asset-backed securities		18,885		—		48		(205)		18,728
Other securities		48,631		—		27		(2,800)		45,858
	$	400,511	$	—	$	160	$	(59,711)	$	340,960

The Company's HTM municipal securities consist largely of private issues of municipal debt. The large majority of the municipalities are located within the Midwest. The municipal debt investments are underwritten using specific guidelines with ongoing monitoring.

The Company's residential mortgage-backed and related securities portfolio consists entirely of government sponsored or government guaranteed securities. The Company has not invested in private mortgage-backed securities or pooled trust preferred securities.

13

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2023 and December 31, 2022, are summarized in the tables below. Securities available-for-sale, for which an allowance for credit losses has been provided, are not included in these disclosures.

	Less than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
September 30, 2023:
Securities HTM:
Municipal securities	$	235,313	$	(20,751)	$	237,690	$	(71,967)	$	473,003	$	(92,718)
Other securities		523		(26)		—		—		523		(26)
	$	235,836	$	(20,777)	$	237,690	$	(71,967)	$	473,526	$	(92,744)
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	1,649	$	(1)	$	13,377	$	(3,140)	$	15,026	$	(3,141)
Residential mortgage-backed and related securities		77		(1)		57,869		(8,486)		57,946		(8,487)
Municipal securities		1,067		(38)		148,159		(57,508)		149,226		(57,546)
Asset-backed securities		—		—		10,521		(44)		10,521		(44)
Other securities		3,823		(427)		34,190		(3,884)		38,013		(4,311)
	$	6,616	$	(467)	$	264,116	$	(73,062)	$	270,732	$	(73,529)

	Less than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
December 31, 2022:
Securities HTM:
Municipal securities	$	347,651	$	(56,798)	$	—	$	—	$	347,651	$	(56,798)
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	5,138	$	(326)	$	10,591	$	(2,457)	$	15,729	$	(2,783)
Residential mortgage-backed and related securities		48,469		(3,327)		17,690		(3,896)		66,159		(7,223)
Municipal securities		178,172		(42,661)		9,809		(4,039)		187,981		(46,700)
Asset-backed securities		13,684		(205)		—		—		13,684		(205)
Other securities		35,206		(2,404)		4,122		(396)		39,328		(2,800)
	$	280,669	$	(48,923)	$	42,212	$	(10,788)	$	322,881	$	(59,711)

At September 30, 2023, the investment portfolio included 644 securities. Of this number, 621 securities were in an unrealized loss position. The aggregate losses of these securities totaled approximately 17.1% of the total amortized cost of the portfolio. Of these 621 securities, there were 480 securities that had an unrealized loss for twelve months or more due to the current rate environment.  

For the quarter ended March 31, 2023, the Company’s impairment evaluation determined that one publicly traded debt security experienced a decline in fair value due to credit quality, rather than market factors. As a result, the Company recognized a credit loss expense of $989 thousand in the first quarter and established an ACL on the related AFS security. For the quarters ended June 30, 2023 and September 30, 2023, there has been no change to the ACL on the related AFS security.  

The following table presents the activity in the allowance for credit losses for held to maturity and available for sale securities by major security type for the three and nine months ended September 30, 2023 and 2022.

	Three Months Ended						Nine Months Ended
	September 30, 2023				September 30, 2022		September 30, 2023				September 30, 2022
	Securities HTM		Securities AFS		Securities HTM		Securities HTM			Securities AFS	Securities HTM
	Municipal		Corporate		Municipal		Municipal			Corporate	Municipal
	securities		securities		securities		securities			securities	securities
	(dollars in thousands)
Allowance for credit losses:
Beginning balance	$	180	$	989	$	198	$	180	$	—	$	198
Provision for credit loss expense		—		—		—		—		989		—
Balance, ending	$	180	$	989	$	198	$	180	$	989	$	198

14

There were no sales of securities for the three months ended September 30, 2023 and 2022. All sales of securities for the nine months ended September 30, 2023 and 2022 were securities identified as AFS.

	Nine Months Ended
	September 30, 2023		September 30, 2022
Proceeds from sales of securities	$	30,568	$	111,375
Gross gains from sales of securities		56		—
Gross losses from sales of securities		(507)		—

The amortized cost and fair value of securities as of September 30, 2023 by contractual maturity are shown below. Expected maturities of residential mortgage-backed and related securities and asset-backed securities may differ from contractual maturities because the residential mortgages underlying the securities may be prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following table.

	Amortized Cost		Fair Value
	(dollars in thousands)
Securities HTM:
Due in one year or less	$	1,907	$	1,882
Due after one year through five years		27,159		27,700
Due after five years		586,229		495,237
	$	615,295	$	524,819
Securities AFS:
Due in one year or less	$	3,160	$	3,146
Due after one year through five years		14,338		12,239
Due after five years		255,481		191,622
		272,979		207,007
Residential mortgage-backed and related securities		66,433		57,946
Asset-backed securities		16,226		16,326
	$	355,638	$	281,279

Portions of the U.S. government sponsored agency securities and municipal securities as of September 30, 2023, contain call options, which, at the discretion of the issuer, terminate the security at par and at predetermined dates prior to the stated maturity, summarized as follows:

	Amortized Cost		Fair Value
	(dollars in thousands)
Securities HTM:
Municipal securities	$	230,493	$	194,222
Securities AFS:
Municipal securities		205,747		148,235
Other securities		45,577		40,277
	$	251,324	$	188,512

As of September 30, 2023, the Company's municipal securities portfolios were comprised of general obligation bonds issued by 81 issuers with fair values totaling $80.4 million and revenue bonds, issued by 166 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $593.2 million. The Company also held investments in general obligation bonds in 18 states, including seven states in which the aggregate fair value exceeded $5.0 million, and in revenue bonds in 30 states, including 14 states in which the aggregate fair value exceeded $5.0 million.

As of December 31, 2022, the Company's municipal securities portfolios were comprised of general obligation bonds issued by 118 issuers with fair values totaling $110.6 million and revenue bonds, issued by 181 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $617.2 million. The Company also held investments in general obligation bonds in 22 states, including seven states in which the aggregate fair value exceeded $5.0 million, and in revenue bonds in 29 states, including 12 states in which the aggregate fair value exceeded $5.0 million.

15

Both general obligation and revenue bonds are diversified across many issuers. As of September 30, 2023 and as of December 31, 2022, the Company held revenue bonds of two issuers, both located in Ohio, of which the aggregate book or market value exceeded 5% of the Company’s stockholders’ equity. The issuers’ financial conditions are strong and the sources of repayment are diversified. The Company monitors the investments and concentration closely. Of the general obligation and revenue bonds in the Company's portfolio, the majority are unrated bonds that represent small, private issuances. All unrated bonds were underwritten according to the Company’s loan underwriting standards and have an average loan risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services such as water, sewer, education, and medical facilities.

The Company's municipal securities are owned by the four charters, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. The investments of each charter are monitored individually, and as of September 30, 2023, all were within policy limitations approved by the Company’s board of directors. Policy limits are calculated as a percentage of each charter's total risk-based capital.

As of September 30, 2023, the Company's standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credit ratings than those assigned by a nationally recognized statistical rating organization, or in the case of unrated bonds, the rating assigned using the credit underwriting standards.

NOTE 3 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of September 30, 2023 and December 31, 2022 is presented as follows:

	September 30, 2023		December 31, 2022
	(dollars in thousands)
C&I:
C&I - revolving	$	299,588	$	296,869
C&I - other * / **		1,487,568		1,451,693
		1,787,156		1,748,562
CRE - owner occupied		610,618		629,367
CRE - non-owner occupied		955,552		963,239
Construction and land development**		1,394,054		1,192,061
Multi-family**		1,156,980		963,803
Direct financing leases***		34,401		31,889
1-4 family real estate****		539,931		499,529
Consumer		127,615		110,421
		6,606,307		6,138,871
Allowance for credit losses		(87,669)		(87,706)
	$	6,518,638	$	6,051,165
*** Direct financing leases:
Net minimum lease payments to be received	$	38,729	$	34,754
Estimated unguaranteed residual values of leased assets		165		165
Unearned lease/residual income		(4,493)		(3,030)
		34,401		31,889
Plus deferred lease origination costs, net of fees		100		226
		34,501		32,115
Less allowance for credit losses		(1,081)		(970)
	$	33,420	$	31,145

*      Includes equipment financing agreements outstanding at m2, totaling $306.6 million and $278.0 million as of September 30, 2023 and December 31, 2022, respectively.

**     As of September 30, 2023, there were C&I – other, construction and land development and multi-family loans held for sale in preparation for securitization totaling $278.0 million. The balances in these loan classes as of September 30, 2023 were $359 thousand, $12.7 million and $265.0 million, respectively. There were no loans held for sale in preparation for securitization at December 31, 2022.

***   Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal.

**** Includes residential real estate held for sale totaling $898 thousand and $1.5 million as of September 30, 2023 and December 31, 2022, respectively.

16

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $31.3 million and $24.3 million at September 30, 2023 and December 31, 2022, respectively, and was included in other assets on the consolidated balance sheets.

Changes in discounts on acquired loans for the three and nine months ended September 30, 2023 and 2022, respectively, are presented as follows:

	For the Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	Performing		Performing			Performing	Performing
	Loans		Loans		Loans		Loans
	(dollars in thousands)
Balance at the beginning of the period	$	(5,104)	$	(12,989)	$	(6,088)	$	(1,533)
Discount added at acquisition		—		—		—		(13,381)
Accretion recognized		540		1,148		1,524		3,073
Balance at the end of the period	$	(4,564)	$	(11,841)	$	(4,564)	$	(11,841)

The aging of the loan/lease portfolio by classes of loans/leases as of September 30, 2023 and December 31, 2022 is presented as follows:

	As of September 30, 2023
										Accruing Past
				30-59 Days			60-89 Days			Due 90 Days or			Nonaccrual
Classes of Loans/Leases	Current			Past Due			Past Due			More			Loans/Leases			Total
	(dollars in thousands)
C&I:
C&I - revolving	$	299,588		$	—		$	—		$	—		$	—	$		299,588
C&I - other		1,464,582			6,609			6,155			—			10,222			1,487,568
CRE - owner occupied		606,998			133			—			—			3,487			610,618
CRE - non-owner occupied		950,286			88			—			—			5,178			955,552
Construction and land development		1,389,601			—			—			—			4,453			1,394,054
Multi-family		1,148,808			—			—			—			8,172			1,156,980
Direct financing leases		33,694			315			151			—			241			34,401
1-4 family real estate		537,271			—			405			—			2,255			539,931
Consumer		126,983			20			52			—			560			127,615
	$	6,557,811		$	7,165		$	6,763		$	—		$	34,568		$	6,606,307
As a percentage of total loan/lease portfolio		99.27	%		0.11	%		0.10	%		—	%		0.52	%		100.00	%

	As of December 31, 2022
										Accruing Past
				30-59 Days			60-89 Days			Due 90 Days or			Nonaccrual
Classes of Loans/Leases	Current			Past Due			Past Due			More			Loans/Leases			Total
	(dollars in thousands)
C&I
C&I - revolving	$	296,869		$	—		$	—		$	—		$	—		$	296,869
C&I - other		1,442,629			4,800			1,124			5			3,135			1,451,693
CRE - owner occupied		625,611			1,166			—			—			2,590			629,367
CRE - non-owner occupied		962,444			421			—			—			374			963,239
Construction and land development		1,191,929			—			—			—			132			1,192,061
Multi-family		963,803			—			—			—			—			963,803
Direct financing leases		31,557			141			56			—			135			31,889
1-4 family real estate		495,936			1,030			517			—			2,046			499,529
Consumer		110,041			27			—			—			353			110,421
	$	6,120,819		$	7,585		$	1,697		$	5		$	8,765		$	6,138,871
As a percentage of total loan/lease portfolio		99.71	%		0.12	%		0.03	%		0.00	%		0.14	%		100.00	%

17

NPLs by classes of loans/leases as of September 30, 2023 and December 31, 2022 are presented as follows:

	As of September 30, 2023
	Accruing Past		Nonaccrual		Nonaccrual
	Due 90 Days or		Loans/Leases		Loans/Leases				Percentage of
Classes of Loans/Leases	More		with an ACL		without an ACL		Total NPLs		Total NPLs
	(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	-	%
C&I - other		—		7,521		2,701		10,222	29.57
CRE - owner occupied		—		1,225		2,262		3,487	10.09
CRE - non-owner occupied		—		2,040		3,138		5,178	14.98
Construction and land development		—		1,930		2,523		4,453	12.88
Multi-family		—		—		8,172		8,172	23.64
Direct financing leases		—		152		89		241	0.70
1-4 family real estate		—		1,861		394		2,255	6.52
Consumer		—		560		—		560	1.62
	$	—	$	15,289	$	19,279	$	34,568	100.00	%

	As of December 31, 2022
	Accruing Past		Nonaccrual		Nonaccrual
	Due 90 Days or		Loans/Leases		Loans/Leases				Percentage of
Classes of Loans/Leases	More		with an ACL		without an ACL		Total NPLs		Total NPLs
		(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	-	%
C&I - other		5		2,775		360		3,140	35.80
CRE - owner occupied		—		1,738		852		2,590	29.53
CRE - non-owner occupied		—		68		306		374	4.26
Construction and land development		—		132		—		132	1.51
Multi-family		—		—		—		—	-
Direct financing leases		—		80		55		135	1.54
1-4 family real estate		—		1,641		405		2,046	23.33
Consumer		—		353		—		353	4.03
	$	5	$	6,787	$	1,978	$	8,770	100.00	%

The Company did not recognize any interest income on nonaccrual loans during the three and nine months ended September 30, 2023 and 2022.

Changes in the ACL loans/leases by portfolio segment for the three and nine months ended September 30, 2023 and 2022, respectively, are presented as follows:

	Three Months Ended September 30, 2023
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other*		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	4,101	$	27,162	$	8,731	$	11,968	$	15,888	$	11,229	$	5,213	$	1,505	$	85,797
Change in ACL for writedown of LHFS to fair value		—		—		—		—		—		175		—		—		175
Provision		368		1,111		192		(313)		992		875		(45)		80		3,260
Charge-offs		—		(1,734)		(14)		—		(38)		—		—		(30)		(1,816)
Recoveries		—		215		3		26		—		—		—		9		253
Balance, ending	$	4,469	$	26,754	$	8,912	$	11,681	$	16,842	$	12,279	$	5,168	$	1,564	$	87,669

18

	Nine Months Ended September 30, 2023
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other**		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	4,457	$	27,753	$	9,965	$	11,749	$	14,262	$	13,186	$	4,963	$	1,371	$	87,706
Change in ACL for writedown of LHFS to fair value		—		(5)		—		—		(147)		(3,659)		—		—		(3,811)
Provision		12		3,986		(834)		(99)		2,777		2,752		200		237		9,031
Charge-offs		—		(5,709)		(222)		—		(50)		—		—		(57)		(6,038)
Recoveries		—		729		3		31		—		—		5		13		781
Balance, ending	$	4,469	$	26,754	$	8,912	$	11,681	$	16,842	$	12,279	$	5,168	$	1,564	$	87,669

*   Included within the C&I – Other column are ACL on leases with a beginning balance of $1.0 million, provision of $165 thousand, charge-offs of $133 thousand and recoveries of $43 thousand. ACL on leases was $1.1 million as of September 30, 2023.

**   Included within the C&I – Other column are ACL on leases with a beginning balance of $970 thousand, provision of $224 thousand, charge-offs of $186 thousand and recoveries of $73 thousand. ACL on leases was $1.1 million as of September 30, 2023.

	Three Months Ended September 30, 2022
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other*		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	5,179	$	28,093	$	11,065	$	12,049	$	16,388	$	12,783	$	5,513	$	1,355	$	92,425
Provision		1		1,652		(606)		(161)		(693)		437		(276)		(23)		331
Charge-offs		—		(1,915)		—		—		(562)		—		(5)		(7)		(2,489)
Recoveries		—		176		—		—		—		43		—		3		222
Balance, ending	$	5,180	$	28,006	$	10,459	$	11,888	$	15,133	$	13,263	$	5,232	$	1,328	$	90,489

	Nine Months Ended September 30, 2022
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other***		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	3,907	$	25,982	$	8,501	$	8,549	$	16,972	$	9,339	$	4,541	$	930	$	78,721
Initial ACL recorded for PCD loans		600		7		2,481		1,076		1,100		481		137		20		5,902
Provision**		673		4,185		(529)		2,328		(2,377)		3,400		559		384		8,623
Charge-offs		—		(2,790)		—		(193)		(562)		—		(5)		(15)		(3,565)
Recoveries		—		622		6		128		—		43		—		9		808
Balance, ending	$	5,180	$	28,006	$	10,459	$	11,888	$	15,133	$	13,263	$	5,232	$	1,328	$	90,489

*    Included within the C&I – Other column are ACL on leases with adoption impact of $1.6 million, provision of $91 thousand, charge-offs of $708 thousand and recoveries of $65 thousand. ACL on leases was $1.0 million as of September 30, 2022.

**    Provision for the nine months ended September 30, 2022, included $11.0 million related to the acquired Guaranty Bank non-PCD loans.

***   Included within the C&I - Other column are ACL on leases with a beginning balance of $1.5 million, provision of $249 thousand, charge-offs of    $931 thousand and recoveries of $173 thousand. ACL on leases was $1.0 million as of September 30, 2022.

The composition of the ACL loans/leases by portfolio segment based on evaluation method are as follows:

	As of September 30, 2023
	Amortized Cost of Loans Receivable						Allowance for Credit Losses
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Credit Losses		Credit Losses		Total		Credit Losses		Credit Losses		Total
	(dollars in thousands)
C&I :
C&I - revolving	$	3,358	$	296,230	$	299,588	$	944	$	3,525	$	4,469
C&I - other*		19,468		1,502,501		1,521,969		2,380		24,374		26,754
		22,826		1,798,731		1,821,557		3,324		27,899		31,223
CRE - owner occupied		23,952		586,666		610,618		2,844		6,068		8,912
CRE - non-owner occupied		20,456		935,096		955,552		836		10,845		11,681
Construction and land development		4,453		1,389,601		1,394,054		307		16,535		16,842
Multi-family		9,539		1,147,441		1,156,980		427		11,852		12,279
1-4 family real estate		2,906		537,025		539,931		253		4,915		5,168
Consumer		717		126,898		127,615		72		1,492		1,564
	$	84,849	$	6,521,458	$	6,606,307	$	8,063	$	79,606	$	87,669

19

*   Included within the C&I – Other category are leases individually evaluated of $241 thousand with a related allowance for credit losses of $55 thousand and leases collectively evaluated of $34.2 million with a related allowance for credit losses of $1.0 million.

	As of December 31, 2022
	Amortized Cost of Loans Receivable						Allowance for Credit Losses
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Credit Losses		Credit Losses		Total		Credit Losses		Credit Losses		Total
	(dollars in thousands)
C&I :
C&I - revolving	$	3,386	$	293,483	$	296,869	$	961	$	3,496	$	4,457
C&I - other*		9,358		1,474,224		1,483,582		1,445		26,308		27,753
		12,744		1,767,707		1,780,451		2,406		29,804		32,210
CRE - owner occupied		24,880		604,487		629,367		2,853		7,112		9,965
CRE - non-owner occupied		21,588		941,651		963,239		869		10,880		11,749
Construction and land development		10,394		1,181,667		1,192,061		13		14,249		14,262
Multi-family		1,302		962,501		963,803		395		12,791		13,186
1-4 family real estate		3,177		496,352		499,529		317		4,646		4,963
Consumer		741		109,680		110,421		75		1,296		1,371
	$	74,826	$	6,064,045	$	6,138,871	$	6,928	$	80,778	$	87,706

*   Included within the C&I – Other category are leases individually evaluated of $135 thousand with a related allowance for credit losses of $24 thousand and leases collectively evaluated of $31.8 million with a related allowance for credit losses of $946 thousand.

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses as of September 30, 2023 and December 31, 2022:

	As of September 30, 2023
					Non
	Commercial		Owner-occupied		Owner-Occupied		Owner Occupied
	Assets		CRE		Real Estate		Real Estate		Securities		Equipment		Other		Total
	(dollars in thousands)
C & I:
C&I - revolving	$	3,253	$	—	$	—	$	—	$	—	$	105	$	—	$	3,358
C&I - other*		631		—		—		—		5,533		12,916		388		19,468
		3,884		—		—		—		5,533		13,021		388		22,826
CRE - owner occupied		—		23,888		—		64		—		—		—		23,952
CRE - non-owner occupied		—		—		20,456		—		—		—		—		20,456
Construction and land development		—		150		4,303		—		—		—		—		4,453
Multi-family		—		—		9,539		—		—		—		—		9,539
1-4 family real estate		—		—		27		2,879		—		—		—		2,906
Consumer		—		—		119		526		—		—		72		717
	$	3,884	$	24,038	$	34,444	$	3,469	$	5,533	$	13,021	$	460	$	84,849

*   Included within the C&I – Other category are leases individually evaluated of $241 thousand with primary collateral of equipment.

	As of December 31, 2022
					Non
	Commercial		Owner-occupied		Owner-Occupied		Owner Occupied
	Assets		CRE		Real Estate		Real Estate		Securities		Equipment		Other		Total
	(dollars in thousands)
C & I:
C&I - revolving	$	3,281	$	—	$	—	$	—	$	—	$	105	$	—	$	3,386
C&I - other*		1,589		210		—		—		108		7,289		162		9,358
		4,870		210		—		—		108		7,394		162		12,744
CRE - owner occupied		—		24,814		—		66		—		—		—		24,880
CRE - non-owner occupied		—		—		21,588		—		—		—		—		21,588
Construction and land development		—		—		10,394		—		—		—		—		10,394
Multi-family		—		—		1,302		—		—		—		—		1,302
1-4 family real estate		—		—		33		3,144		—		—		—		3,177
Consumer		—		—		120		608		—		—		13		741
	$	4,870	$	25,024	$	33,437	$	3,818	$	108	$	7,394	$	175	$	74,826

*   Included within the C&I – Other category are leases individually evaluated of $135 thousand with primary collateral of equipment.

20

For certain C&I loans, all CRE loans, certain construction and land development loans, all multifamily loans, certain 1-4 family residential loans and certain consumer loans, the Company’s credit quality indicator consists of internally assigned risk ratings.  Each such loan is assigned a risk rating upon origination. The risk rating is reviewed every 15 months, at a minimum, and on an as-needed basis depending on the specific circumstances of the loan.

For certain C&I loans (including equipment financing agreements and direct financing leases), certain construction and land development, certain 1-4 family real estate loans, and certain consumer loans, the Company’s credit quality indicator is performance determined by delinquency status.  Delinquency status is updated daily by the Company’s loan system.

21

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of September 30, 2023:

	As of September 30, 2023
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	272,848	$	272,848
Special Mention (Rating 6)		—		—		—		—		—		—		23,632		23,632
Substandard (Rating 7)		—		—		—		—		—		—		3,108		3,108
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	299,588	$	299,588
C&I - other
Pass (Ratings 1 through 5)	$	372,511	$	318,783	$	156,021	$	85,298	$	69,736	$	139,089	$	—	$	1,141,438
Special Mention (Rating 6)		12,149		8,936		4,225		3,757		801		321		—		30,189
Substandard (Rating 7)		101		123		250		—		3,152		5,675		—		9,301
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	384,761	$	327,842	$	160,496	$	89,055	$	73,689	$	145,085	$	—	$	1,180,928
CRE - owner occupied
Pass (Ratings 1 through 5)	$	71,080	$	130,033	$	148,170	$	112,315	$	30,875	$	62,220	$	11,670	$	566,363
Special Mention (Rating 6)		5,046		720		8,873		5,820		470		386		871		22,186
Substandard (Rating 7)		1,945		711		1,044		16,045		1,186		1,138		—		22,069
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	78,071	$	131,464	$	158,087	$	134,180	$	32,531	$	63,744	$	12,541	$	610,618
CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	107,668	$	290,689	$	199,435	$	131,797	$	74,778	$	84,855	$	6,412	$	895,634
Special Mention (Rating 6)		12,623		59		250		17,277		2,385		6,868		—		39,462
Substandard (Rating 7)		3,919		1,331		—		157		14,996		—		53		20,456
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	124,210	$	292,079	$	199,685	$	149,231	$	92,159	$	91,723	$	6,465	$	955,552
Construction and land development
Pass (Ratings 1 through 5)	$	353,940	$	491,807	$	286,614	$	187,894	$	8,686	$	8,083	$	26,905	$	1,363,929
Special Mention (Rating 6)		—		—		10,109		—		—		—		—		10,109
Substandard (Rating 7)		413		2,773		1,267		—		—		—		—		4,453
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	354,353	$	494,580	$	297,990	$	187,894	$	8,686	$	8,083	$	26,905	$	1,378,491
Multi-family
Pass (Ratings 1 through 5)	$	246,633	$	224,208	$	239,039	$	230,271	$	110,450	$	95,149	$	96	$	1,145,846
Special Mention (Rating 6)		1,595		—		—		—		—		—		—		1,595
Substandard (Rating 7)		—		—		8,208		1,331		—		—		—		9,539
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	248,228	$	224,208	$	247,247	$	231,602	$	110,450	$	95,149	$	96	$	1,156,980
1-4 family real estate
Pass (Ratings 1 through 5)	$	55,287	$	48,557	$	53,234	$	26,292	$	11,171	$	6,963	$	3,606	$	205,110
Special Mention (Rating 6)		29		—		—		—		—		—		—		29
Substandard (Rating 7)		25		—		—		—		2		—		—		27
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	55,341	$	48,557	$	53,234	$	26,292	$	11,173	$	6,963	$	3,606	$	205,166
Consumer
Pass (Ratings 1 through 5)	$	89	$	416	$	373	$	447	$	24	$	727	$	8,279	$	10,355
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		43		280		—		—		—		93		—		416
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	132	$	696	$	373	$	447	$	24	$	820	$	8,279	$	10,771
Total	$	1,245,096	$	1,519,426	$	1,117,112	$	818,701	$	328,712	$	411,567	$	357,480	$	5,798,094

22

	As of September 30, 2023
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - other
Performing	$	113,677	$	116,539	$	47,024	$	15,549	$	3,665	$	326	$	—	$	296,780
Nonperforming		616		6,437		2,442		293		67		5		—		9,860
Total C&I - other	$	114,293	$	122,976	$	49,466	$	15,842	$	3,732	$	331	$	—	$	306,640
Construction and land development
Performing	$	13,912	$	1,306	$	274	$	10	$	2	$	59	$	—	$	15,563
Nonperforming		—		—		—		—		—		—		—		—
Total Construction and land development	$	13,912	$	1,306	$	274	$	10	$	2	$	59	$	—	$	15,563
Direct financing leases
Performing	$	12,138	$	12,548	$	3,706	$	3,248	$	2,075	$	445	$	—	$	34,160
Nonperforming		—		16		22		187		16		—		—		241
Total Direct financing leases	$	12,138	$	12,564	$	3,728	$	3,435	$	2,091	$	445	$	—	$	34,401
1-4 family real estate
Performing	$	56,490	$	58,926	$	80,455	$	69,330	$	15,705	$	51,527	$	80	$	332,513
Nonperforming		—		219		642		418		327		646		—		2,252
Total 1-4 family real estate	$	56,490	$	59,145	$	81,097	$	69,748	$	16,032	$	52,173	$	80	$	334,765
Consumer
Performing	$	15,252	$	10,104	$	2,562	$	2,973	$	710	$	1,310	$	83,653	$	116,564
Nonperforming		—		5		21		13		—		187		54		280
Total Consumer	$	15,252	$	10,109	$	2,583	$	2,986	$	710	$	1,497	$	83,707	$	116,844
Total	$	212,085	$	206,100	$	137,148	$	92,021	$	22,567	$	54,505	$	83,787	$	808,213

* Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual and accruing loans/leases that are greater than or equal to 90 days past due.

The following table shows the gross charge-offs of loans and leases by class of receivable and year of origination for the three and nine months ended September 30, 2023:

	Three Months Ended September 30, 2023														Nine Months Ended September 30, 2023
	Gross Charge-off by Origination Year														Gross Charge-off by Origination Year
Classes of Loans/Leases	2023		2022		2021		2020		2019		Prior		Total		2023		2022		2021		2020		2019		Prior		Total
	(dollars in thousands)														(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
C&I - other		41		1,130		192		204		5		29		1,601		41		2,990		1,063		1,053		238		138		5,523
CRE - owner occupied		—		—		—		—		—		14		14		—		—		208		—		—		14		222
CRE - non-owner occupied		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Construction and land development		—		38		—		—		—		—		38		—		50		—		—		—		—		50
Multi-family		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Direct financing leases		—		34		55		41		3		—		133		—		71		55		41		18		1		186
1-4 family real estate		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Consumer		—		22		7		1		—		—		30		—		41		10		1		5		—		57
	$	41	$	1,224	$	254	$	246	$	8	$	43	$	1,816	$	41	$	3,152	$	1,336	$	1,095	$	261	$	153	$	6,038

23

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of December 31, 2022:

	As of December 31, 2022
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	275,888	$	275,888
Special Mention (Rating 6)		—		—		—		—		—		—		17,595		17,595
Substandard (Rating 7)		—		—		—		—		—		—		3,386		3,386
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	296,869	$	296,869
C&I - other
Pass (Ratings 1 through 5)	$	496,445	$	279,412	$	127,803	$	87,054	$	59,675	$	105,184	$	—	$	1,155,573
Special Mention (Rating 6)		9,542		679		901		723		—		308		—		12,153
Substandard (Rating 7)		187		125		661		4,535		310		106		—		5,924
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	506,174	$	280,216	$	129,365	$	92,312	$	59,985	$	105,598	$	—	$	1,173,650
CRE - owner occupied
Pass (Ratings 1 through 5)	$	146,211	$	182,440	$	142,596	$	33,571	$	27,088	$	45,993	$	13,460	$	591,359
Special Mention (Rating 6)		6,190		—		6,379		484		—		1,346		269		14,668
Substandard (Rating 7)		3,750		171		16,336		1,396		1,197		490		—		23,340
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	156,151	$	182,611	$	165,311	$	35,451	$	28,285	$	47,829	$	13,729	$	629,367
CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	310,163	$	221,953	$	173,478	$	89,337	$	56,898	$	40,923	$	7,510	$	900,262
Special Mention (Rating 6)		2,824		882		18,920		—		12,917		6,198		—		41,741
Substandard (Rating 7)		5,651		—		157		15,217		—		—		211		21,236
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	318,638	$	222,835	$	192,555	$	104,554	$	69,815	$	47,121	$	7,721	$	963,239
Construction and land development
Pass (Ratings 1 through 5)	$	479,016	$	330,434	$	240,778	$	31,607	$	30,300	$	—	$	29,647	$	1,141,782
Special Mention (Rating 6)		1,465		9,200		—		—		—		—		—		10,665
Substandard (Rating 7)		132		10,262		—		—		—		—		—		10,394
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	480,613	$	349,896	$	240,778	$	31,607	$	30,300	$	—	$	29,647	$	1,162,841
Multi-family
Pass (Ratings 1 through 5)	$	237,839	$	254,056	$	224,920	$	134,378	$	99,695	$	7,875	$	2,227	$	960,990
Special Mention (Rating 6)		—		44		—		1,467		—		—		—		1,511
Substandard (Rating 7)		—		—		1,302		—		—		—		—		1,302
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	237,839	$	254,100	$	226,222	$	135,845	$	99,695	$	7,875	$	2,227	$	963,803
1-4 family real estate
Pass (Ratings 1 through 5)	$	61,953	$	57,731	$	33,737	$	12,687	$	5,813	$	6,002	$	5,855	$	183,778
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		28		—		—		5		—		—		—		33
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	61,981	$	57,731	$	33,737	$	12,692	$	5,813	$	6,002	$	5,855	$	183,811
Consumer
Pass (Ratings 1 through 5)	$	511	$	801	$	493	$	122	$	254	$	621	$	10,226	$	13,028
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		282		—		12		—		112		—		—		406
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	793	$	801	$	505	$	122	$	366	$	621	$	10,226	$	13,434
Total	$	1,762,189	$	1,348,190	$	988,473	$	412,583	$	294,259	$	215,046	$	366,274	$	5,387,014

24

	As of December 31, 2022
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - other
Performing	$	170,180	$	69,694	$	25,540	$	8,066	$	1,804	$	79	$	—	$	275,363
Nonperforming		1,110		1,320		155		95		—		—		—		2,680
Total C&I - other	$	171,290	$	71,014	$	25,695	$	8,161	$	1,804	$	79	$	—	$	278,043
Direct financing leases
Performing	$	14,578	$	5,172	$	5,700	$	4,398	$	1,536	$	370	$	—	$	31,754
Nonperforming		—		32		88		7		8		—		—		135
Total Direct financing leases	$	14,578	$	5,204	$	5,788	$	4,405	$	1,544	$	370	$	—	$	31,889
Construction and land development
Performing	$	28,785	$	360	$	10	$	3	$	62	$	—	$	—	$	29,220
Nonperforming		—		—		—		—		—		—		—		—
Total Construction and land development	$	28,785	$	360	$	10	$	3	$	62	$	—	$	—	$	29,220
1-4 family real estate
Performing	$	69,094	$	92,762	$	75,153	$	17,089	$	11,381	$	48,136	$	90	$	313,705
Nonperforming		267		524		487		279		8		448		—		2,013
Total 1-4 family real estate	$	69,361	$	93,286	$	75,640	$	17,368	$	11,389	$	48,584	$	90	$	315,718
Consumer
Performing	$	14,685	$	3,844	$	3,717	$	1,123	$	1,140	$	1,325	$	70,974	$	96,808
Nonperforming		7		—		—		—		3		59		110		179
Total Consumer	$	14,692	$	3,844	$	3,717	$	1,123	$	1,143	$	1,384	$	71,084	$	96,987
Total	$	298,706	$	173,708	$	110,850	$	31,060	$	15,942	$	50,417	$	71,174	$	751,857

* Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual and accruing loans/leases that are greater than or equal to 90 days past due.

The following table shows the amortized cost basis of the loans and leases modified to borrowers experiencing financial difficulty by class of receivable and type of concession granted for the three and nine months ended September 30, 2023.

	For the three months ended				For the nine months ended
	September 30, 2023				September 30, 2023
	Amortized Cost				Amortized Cost
	Payment		% of Class of		Payment		% of Class of
Classes of Loans/Leases	Delay		Receivable		Delay		Receivable
	(dollars in thousands)
Direct Financing Leases	$	90	—	%	$	325	1	%

At September 30, 2023, there were no commitments to extend credit to any of the borrowers experiencing financial difficulty.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three and nine months ended September 30, 2023, that had been modified in the twelve-month period prior to the default.

The Company closely monitors the performance of the loans and leases that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. None of these loan or lease modifications were past due as of September 30, 2023.

Changes in the ACL for OBS exposures for the three and nine months ended September 30, 2023 and 2022 are presented as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(dollars in thousands)
Balance, beginning	$	6,326	$	6,878	$	5,552	$	6,886
Provisions (credited) to expense		546		(331)		1,320		(339)
Balance, ending	$	6,872	$	6,547	$	6,872	$	6,547

25

NOTE 4 – DERIVATIVES AND HEDGING ACTIVITIES

Derivatives are summarized as follows as of September 30, 2023 and December 31, 2022:

	September 30, 2023		December 31, 2022
	(dollars in thousands)
Assets:
Hedged Derivatives
Cash Flow Hedges
Interest rate caps	$	5,196	$	8,327
Interest rate swaps		3,334		477
Fair Value Hedges
Interest rate swaps		3,977		—
Unhedged Derivatives
Interest rate caps		1,533		2,213
Interest rate swaps		277,255		166,614
	$	291,295	$	177,631
Liabilities:
Hedged Derivatives
Cash Flow Hedges
Interest rate swaps		(42,095)		(33,824)
Interest rate collars		(870)		(263)
Unhedged Derivatives
Interest rate swaps		(277,255)		(166,614)
	$	(320,220)	$	(200,701)

The Company uses interest rate swap, cap and collar instruments to manage interest rate risk related to the variability of interest payments due to changes in interest rates.  

The Company has entered into interest rate caps to hedge against the risk of rising interest rates on liabilities.  The liabilities consist of $300.0 million of deposits and the benchmark rates hedged vary at 1-month SOFR, 3-month SOFR and the Prime Rate. The interest rate caps are designated as cash flow hedges in accordance with ASC 815.  An initial premium of $3.5 million was paid upfront for the caps executed.  The details of the interest rate caps are as follows:  

			Balance Sheet					Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Strike Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Deposits	1/1/2020	1/1/2023	Derivatives - Assets	$	25,000	1.75	%	$	-	$	(50)
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		25,000	1.75	%		157		714
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		50,000	1.57	%		474		1,566
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		25,000	1.80	%		237		783
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		25,000	1.75	%		1,010		1,264
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		50,000	1.57	%		2,212		2,700
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		25,000	1.80	%		1,106		1,350
				$	225,000			$	5,196	$	8,327

The Company has entered into interest rate swaps to hedge against the risk of rising rates on its variable rate trust preferred securities. All of the interest rate swaps are designated as cash flow hedges in accordance with ASC 815.  The details of the interest rate swaps are as follows:

				Balance Sheet							Fair Value as of
Hedged Item	Effective Date		Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
		(dollars in thousands)
QCR Holdings Statutory Trust II	9/30/2018		9/30/2028	Derivatives - Assets	$	10,000	8.51	%	5.85	%	$	710	$	464
QCR Holdings Statutory Trust III	9/30/2018		9/30/2028	Derivatives - Assets		8,000	8.51	%	5.85	%		568		372
QCR Holdings Statutory Trust V	7/7/2018		7/7/2028	Derivatives - Assets		10,000	7.12	%	4.54	%		691		459
Community National Statutory Trust II	9/20/2018		9/20/2028	Derivatives - Assets		3,000	7.83	%	5.17	%		212		140
Community National Statutory Trust III	9/15/2018		9/15/2028	Derivatives - Assets		3,500	7.42	%	4.75	%		247		163
Guaranty Bankshares Statutory Trust I	9/15/2018		9/15/2028	Derivatives - Assets		4,500	7.42	%	4.75	%		318		209
Guaranty Statutory Trust II*	5/23/2019		2/23/2026	Derivatives - Assets		10,310	7.09	%	4.09	%		588		477
					$	49,310					$	3,334	$	2,284
* Acquired on 4/1/2022 with GFED acquisition.

26

The Company has entered into interest rate swaps to hedge against the risk of declining interest rates on floating rate loans.    The interest rate swaps are designated as cash flow hedges in accordance with ASC 815.  The details of the interest rate swaps are as follows:

			Balance Sheet							Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities	$	35,000	1.40	%	5.31	%	$	(6,776)	$	(5,646)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities		50,000	1.40	%	5.31	%		(9,680)		(8,066)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities		40,000	1.40	%	5.31	%		(7,755)		(6,464)
Loans	10/1/2022	7/1/2031	Derivatives - Liabilities		25,000	1.30	%	5.31	%		(4,877)		(4,018)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		15,000	1.91	%	5.31	%		(1,301)		(1,144)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		50,000	1.91	%	5.31	%		(4,335)		(3,812)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		35,000	1.91	%	5.31	%		(3,035)		(2,669)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		50,000	1.91	%	5.31	%		(4,336)		(3,812)
				$	300,000					$	(42,095)	$	(35,631)

The Company uses interest rate collars in an effort to manage future interest rate exposure on variable rate loans.  The collar hedging strategy stabilizes interest rate fluctuations by setting both a floor and a cap.  The collar is designated as a cash flow hedge in accordance with ASC 815. The details of the interest rate collars are as follows:

										Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Cap Strike Rate		Floor Strike Rate		September 30, 2023		December 31, 2022
Loans	10/1/2022	10/1/2026	Derivatives - Liabilities	$	50,000	4.40	%	2.44	%	$	(870)	$	(263)

The Company has entered into interest rate swaps to hedge against the risk of rising rates on loans.  The interest rate swaps are designated as fair value hedges in accordance with ASC 815. The details of the interest rate swaps are as follows:

			Balance Sheet							Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Loans	7/12/2023	2/1/2026	Derivatives - Assets	$	25,000	5.31	%	4.38	%	$	204	$	N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		30,000	5.31	%	4.21	%		304		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		32,500	5.31	%	4.08	%		409		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		32,500	5.31	%	3.98	%		488		N/A
Loans	7/12/2023	2/1/2028	Derivatives - Assets		30,000	5.31	%	3.90	%		532		N/A
Loans	7/12/2023	2/1/2026	Derivatives - Assets		15,000	5.31	%	4.38	%		123		N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		15,000	5.31	%	4.21	%		152		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		15,000	5.31	%	4.08	%		189		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		15,000	5.31	%	3.98	%		225		N/A
Loans	7/12/2023	2/1/2028	Derivatives - Assets		15,000	5.31	%	3.90	%		267		N/A
Loans	7/12/2023	8/1/2025	Derivatives - Assets		15,000	5.31	%	4.60	%		90		N/A
Loans	7/12/2023	2/1/2026	Derivatives - Assets		20,000	5.31	%	4.38	%		163		N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		20,000	5.31	%	4.21	%		203		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		20,000	5.31	%	4.08	%		252		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		25,000	5.31	%	3.98	%		376		N/A
				$	325,000					$	3,977	$	N/A

Changes in fair values of derivative financial instruments accounted for as cash flow hedges, to the extent that they are included in the assessment of effectiveness, are recorded as a component of AOCI.  Changes in fair values of derivative financial instruments accounted for as fair value hedges, to the extent that they are included in the assessment of effectiveness, are recorded as a component of interest income/expense.

27

For derivative instruments that are designated as unhedged, the change in fair value of the derivative instrument is recognized into current earnings. The details of the unhedged interest rate caps are as follows:

		Balance Sheet					Fair Value as of
Effective Date	Maturity Date	Location	Notional Amount		Strike Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
1/1/2020	1/3/2023	Derivatives - Assets	$	25,000	1.90	%	$	-	$	3
2/1/2020	2/1/2024	Derivatives - Assets		25,000	1.90	%		310		822
3/1/2020	3/3/2025	Derivatives - Assets		25,000	1.90	%		1,223		1,388
			$	75,000			$	1,533	$	2,213

The Company has also entered into interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Company enters into an interest rate swap with a customer while at the same time entering into an equal and offsetting interest rate swap with a third-party financial institution. Additionally, the Company receives an upfront, non-refundable fee from the counterparty, dependent upon the pricing that is recognized upon receipt from the counterparty.  Because the Company acts as an intermediary for the customer, changes in the fair value of the underlying derivative contracts, for the most part, offset each other and do not significantly impact the Company’s results of operations.

Interest rate swaps that are not designated as hedging instruments are summarized as follows:

		September 30, 2023			December 31, 2022
	Notional Amount		Estimated Fair Value		Notional Amount		Estimated Fair Value
	(dollars in thousands)
Non-Hedging Interest Rate Derivatives Assets:
Interest rate swap contracts	$	2,967,392	$	277,255	$	2,528,949	$	166,614
Non-Hedging Interest Rate Derivatives Liabilities:
Interest rate swap contracts	$	2,967,392	$	277,255	$	2,528,949	$	166,614

The effect of cash flow hedging and fair value accounting on the consolidated statements of income for the three and nine months ended September 30, 2023 and 2022 are as follows:

	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
	Interest and		Interest		Interest and		Interest
	Dividend Income		Expense		Dividend Income		Expense
	(dollars in thousands)
Income and expense line items presented in the consolidated statements of income	$	108,568	$	53,313	$	79,267	$	18,498
The effects of cash flow hedging:
Gain on interest rate caps on deposits		-		(2,066)		-		(263)
Gain on interest rate swaps on junior subordinated debentures		-		(328)		-		73
Loss on interest rate swaps and collars on loans		(2,495)		-		(426)		-
The effects of fair value hedging:
Gain on interest rate swaps on loans		828		-		-		-

	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Interest and		Interest		Interest and		Interest
	Dividend Income		Expense		Dividend Income		Expense
	(dollars in thousands)
Income and expense line items presented in the consolidated statements of income	$	301,162	$	135,892	$	198,534	$	32,632
The effects of cash flow hedging:
Gain on interest rate caps on deposits		-		(5,522)		-		199
Gain on interest rate swaps on junior subordinated debentures		-		(830)		-		536
Loss on interest rate swaps and collars on loans		(6,757)		-		715		-
The effects of fair value hedging:
Gain on interest rate swaps on loans		828		-		-		-

28

The Company’s hedged interest rate swaps and non-hedged interest rate swaps are collateralized with cash and investment securities with carrying values as follows:

	September 30, 2023		December 31, 2022
	(dollars in thousands)
Cash	$	1,275	$	1,272
Municipal securities		3,945		8,227
Residential mortgage-backed and related securities		5,778		29,257
	$	10,998	$	38,756

The Company may be exposed to credit risk in the event of non-performance by the counterparties to its interest rate derivative agreements.  The Company assesses the credit risk of its financial institution counterparties by monitoring publicly available credit ratings and financial information.  Additionally, the Company manages financial institution counterparty credit risk by entering into interest rate derivatives only with primary and highly rated counterparties, and uses ISDA master agreements, central clearing mechanisms and counterparty limits.  The agreements contain bilateral collateral agreements with the amount of collateral to be posted generally governed by the settlement value of outstanding swaps. The Company manages the risk of default by its borrower/customer counterparties through its normal loan underwriting and credit monitoring policies and procedures. The Company underwrites the combination of the base loan amount and potential swap exposure and focuses on high quality borrowers with strong collateral values. The majority of the Company’s swapped loan portfolio consists of loans on projects, with loan-to-values, including the potential swap exposure, below 65%.  The Company does not currently anticipate any losses from failure of interest rate derivative counterparties to honor their obligations.

NOTE 5 – INCOME TAXES

A reconciliation of the expected federal income tax expense to the income tax expense included in the consolidated statements of income is as follows for the three and nine months ended September 30, 2023 and 2022:

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2023				2022				2023				2022
			% of				% of				% of				% of
			Pretax				Pretax				Pretax				Pretax
	Amount		Income		Amount		Income		Amount		Income		Amount		Income
	(dollars in thousands)
Computed "expected" tax expense	$	5,661	21.0	%	$	7,165	21.0	%	$	18,751	21.0	%	$	16,130	21.0	%
Tax exempt income, net		(3,705)	(13.7)			(3,003)	(8.8)			(10,103)	(11.3)			(7,701)	(10.0)
Bank-owned life insurance		(376)	(1.4)			(127)	(0.4)			(700)	(0.8)			(273)	(0.4)
State income taxes, net of federal benefit, current year		955	3.5			1,616	4.7			3,383	3.8			3,889	5.1
Provision adjustment from accounting method change		—	—			—	—			—	—			(1,181)	(1.5)
Tax credits		(202)	(0.7)			(359)	(1.1)			(411)	(0.5)			(890)	(1.2)
Income from tax credit equity investments		(449)	(1.7)			(337)	(1.0)			(1,340)	(1.5)			(939)	(1.2)
Acquisition costs		—	—			78	0.2			—	—			450	0.6
Excess tax benefit on stock options exercised and restricted stock awards vested		(7)	(0.0)			(46)	(0.1)			(451)	(0.5)			(520)	(0.7)
Other		(37)	(0.2)			(163)	(0.4)			(540)	(0.6)			(316)	(0.4)
Federal and state income tax expense	$	1,840	6.8	%	$	4,824	14.1	%	$	8,589	9.6	%	$	8,649	11.3	%

29

NOTE 6 - EARNINGS PER SHARE

The following information was used in the computation of EPS on a basic and diluted basis:

		Three months ended			Nine months ended
		September 30,			September 30,
		2023		2022		2023		2022
	(dollars in thousands, except share data)
Net income	$	25,121	$	29,294	$	80,703	$	68,160
Basic EPS	$	1.50	$	1.73	$	4.82	$	4.25
Diluted EPS	$	1.49	$	1.71	$	4.79	$	4.20
Weighted average common shares outstanding		16,717,303		16,900,968		16,731,847		16,030,371
Weighted average common shares issuable upon exercise of stock options
and under the employee stock purchase plan		130,648		209,723		131,356		213,550
Weighted average common and common equivalent shares outstanding		16,847,951		17,110,691		16,863,203		16,243,921

NOTE 7 – FAIR VALUE

Accounting guidance on fair value measurement uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follows:

● Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in markets;

● Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and

● Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis comprise the following at September 30, 2023 and December 31, 2022:

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
	(dollars in thousands)
September 30, 2023:
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	16,002	$	—	$	16,002	$	—
Residential mortgage-backed and related securities		57,946		—		57,946		—
Municipal securities		149,772		—		149,772		—
Asset-backed securities		16,326		—		16,326		—
Other securities		41,233		—		41,233		—
Derivatives		291,295		—		291,295		—
Total assets measured at fair value	$	572,574	$	—	$	572,574	$	—
Derivatives	$	320,220	$	—	$	320,220	$	—
Total liabilities measured at fair value	$	320,220	$	—	$	320,220	$	—
December 31, 2022:
Securities AFS:
U.S. govt. sponsored agency securities	$	16,981	$	—	$	16,981	$	—
Residential mortgage-backed and related securities		66,215		—		66,215		—
Municipal securities		193,178		—		193,178		—
Asset-backed securities		18,728		—		18,728		—
Other securities		45,858		—		45,858		—
Derivatives		177,631		—		177,631		—
Total assets measured at fair value	$	518,591	$	—	$	518,591	$	—
Derivatives	$	200,701	$	—	$	200,701	$	—
Total liabilities measured at fair value	$	200,701	$	—	$	200,701	$	—

30

The securities AFS portfolio consists of securities whereby the Company obtains fair values from an independent pricing service. The fair values are determined by pricing models that consider observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2 inputs).

Interest rate caps, swaps and collars are used for the purpose of hedging interest rate risk on various financial assets and liabilities, further described in Note 4 to the Consolidated Financial Statements. Interest rate swaps are also executed for select commercial customers.  The fair values are determined by pricing models that consider observable market data for derivative instruments with similar structures (Level 2 inputs).

Certain financial assets are measured at fair value on a non-recurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when a loan/lease is collaterally dependent).

Assets measured at fair value on a non-recurring basis comprised the following at September 30, 2023 and December 31, 2022:

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
September 30, 2023:
Loans/leases evaluated individually	$	35,197	$	—	$	—	$	35,197
Loans receivable held for sale in preparation for securitization		277,995		—		—		277,995
OREO		120		—		—		120
	$	313,312	$	—	$	—	$	313,312
December 31, 2022:
Loans/leases evaluated individually	$	30,765	$	—	$	—	$	30,765
OREO		144		—		—		144
	$	30,909	$	—	$	—	$	30,909

Loans/leases evaluated individually are valued at the lower of cost or fair value and are classified as Level 3 in the fair value hierarchy. Fair value is measured based on the value of the collateral securing these loans/leases. Collateral may be comprised of real estate and/or business assets, including equipment, inventory and/or accounts receivable, and is determined based on appraisals by qualified licensed appraisers hired by the Company. Appraised and reported values are discounted based on management's historical knowledge, changes in market conditions from the time of valuation, and/or management's expertise and knowledge of the client and client's business.

Loans receivable held for sale in preparation for securitization are valued at the lower of cost or fair value in the aggregate by type and are classified as Level 3 in the fair value hierarchy.  Fair value is estimated considering the loans have a floating interest rate with a spread that is commensurate with current market pricing, in addition to factoring in a discount for credit risk.

OREO in the table above consists of property acquired through foreclosures and settlements of loans.  Property acquired is carried at the estimated fair value of the property, less disposal costs, and is classified as a Level 3 in the fair value hierarchy.  The estimated fair value of the property are generally determined based on appraisals by qualified licensed appraisers hired by the Company.  Appraised and reported values are discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the property.

31

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level Fair Value Measurements
	Fair Value		Fair Value
	September 30,		December 31,
	2023		2022		Valuation Technique	Unobservable Input	Range
	(dollars in thousands)
Loans/leases evaluated individually	$	35,197	$	30,765	Appraisal of collateral	Appraisal adjustments	-10.00	%	to	-30.00	%
Loans receivable held for sale in preparation for securitization		277,995		—	Market prices for similar loans	Market price adjustments			n/a
OREO		130		144	Appraisal of collateral	Appraisal adjustments	0.00	%	to	-35.00	%

For the loans/leases evaluated individually, the Company records carrying value at fair value less disposal or selling costs. The amounts reported in the tables above are fair values before the adjustment for disposal or selling costs.

For the loans receivable held for sale in preparation for securitization, the Company records carrying value at fair value factoring in a discount for credit risk.

There have been no changes in valuation techniques used for any assets or liabilities measured at fair value during the three and nine months ended September 30, 2023 and 2022.

The following table presents the carrying values and estimated fair values of financial assets and liabilities carried on the Company's consolidated balance sheets, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis:

	Fair Value	As of September 30, 2023				As of December 31, 2022
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Value		Fair Value		Value		Fair Value
		(dollars in thousands)
Cash and due from banks	Level 1	$	104,265	$	104,265	$	59,723	$	59,723
Federal funds sold	Level 2		20,300		20,300		56,910		56,910
Interest-bearing deposits at financial institutions	Level 2		60,350		60,350		67,360		67,360
Investment securities:
HTM	Level 2		615,115		524,819		587,142		535,636
AFS	Level 2		281,279		281,279		340,960		340,960
Loans/leases receivable, net	Level 3		310,585		313,192		28,486		30,765
Loans/leases receivable, net	Level 2		6,208,053		5,907,226		6,022,679		5,896,443
Derivatives	Level 2		291,295		291,295		177,631		177,631
Deposits:
Nonmaturity deposits	Level 2		5,522,283		5,522,283		5,199,633		5,199,633
Time deposits	Level 2		972,569		966,026		784,584		766,294
Short-term borrowings	Level 2		470		470		129,630		129,630
FHLB advances	Level 2		430,000		429,450		415,000		415,000
Subordinated notes	Level 2		232,958		249,002		232,662		250,613
Junior subordinated debentures	Level 2		48,698		40,204		48,602		41,545
Derivatives	Level 2		320,220		320,220		200,701		200,701

NOTE 8 – BUSINESS SEGMENT INFORMATION

Selected financial and descriptive information is required to be disclosed for reportable operating segments, applying a “management perspective” as the basis for identifying reportable segments. The management perspective is determined by the view that management takes of the segments within the Company when making operating decisions, allocating resources, and measuring performance. The segments of the Company have been defined by the structure of the Company's internal organization, focusing on the financial information that the Company's operating decision-makers routinely use to make decisions about operating matters.

The Company’s Commercial Banking business is geographically divided by markets into the operating segments which are the four subsidiary banks wholly owned by the Company:  QCBT, CRBT, CSB, and GB. Each of these operating segments offers similar products and services, but is managed separately due to different pricing, product demand, and consumer markets. Each offers commercial, consumer, and mortgage loans and deposit services.

32

The Company's All Other segment includes the corporate operations of the parent and operations of all other consolidated subsidiaries and/or defined operating segments that fall below the segment reporting thresholds.  

Selected financial information on the Company's business segments is presented as follows as of and for the three and nine months ended September 30, 2023 and 2022:

	Commercial Banking										Intercompany		Consolidated
	QCBT		CRBT		CSB		GB		All other		Eliminations		Total
	(dollars in thousands)
Three Months Ended September 30, 2023
Total revenue	$	38,165	$	43,592	$	19,225	$	34,498	$	31,878	$	(32,197)	$	135,161
Net interest income		17,198		16,852		11,136		13,743		(3,958)		284		55,255
Provision for credit losses		2,686		503		275		342		—		—		3,806
Net income (loss) from continuing operations		5,856		13,175		4,740		6,801		25,641		(31,092)		25,121
Goodwill		3,223		14,980		9,888		110,936		—		—		139,027
Intangibles		—		950		1,579		12,008		—		—		14,537
Total assets		2,433,084		2,442,263		1,417,249		2,242,638		1,146,137		(1,141,314)		8,540,057
Three Months Ended September 30, 2022
Total revenue	$	26,583	$	34,157	$	14,127	$	25,523	$	36,283	$	(36,311)	$	100,362
Net interest income		18,117		17,160		10,183		18,196		(3,242)		355		60,769
Provision for loan/lease losses		554		(35)		(269)		(250)		—		—		—
Net income (loss) from continuing operations		7,758		14,475		4,106		9,196		29,542		(35,783)		29,294
Goodwill		3,223		14,980		9,888		109,516		—		—		137,607
Intangibles		—		1,344		2,184		14,018		—		—		17,546
Total assets		2,218,166		2,108,614		1,270,426		2,107,407		1,045,774		(1,020,338)		7,730,049
Nine Months Ended September 30, 2023
Total revenue	$	106,664	$	138,018	$	53,126	$	90,443	$	101,472	$	(103,606)	$	386,117
Net interest income		50,590		50,254		32,683		42,716		(11,911)		938		165,270
Provision for loan/lease losses		7,879		2,499		965		(3)		—		—		11,340
Net income (loss) from continuing operations		17,710		48,928		14,113		17,344		82,266		(99,658)		80,703
Goodwill		3,223		14,980		9,888		110,936		—		—		139,027
Intangibles		—		950		1,579		12,008		—		—		14,537
Total assets		2,433,084		2,442,263		1,417,249		2,242,638		1,146,137		(1,141,314)		8,540,057
Nine Months Ended September 30, 2022
Total revenue	$	72,785	$	91,083	$	37,534	$	57,036	$	91,989	$	(92,383)	$	258,044
Net interest income		53,971		46,576		29,365		42,789		(7,845)		1,046		165,902
Provision for loan/lease losses		(88)		(971)		(554)		9,897		—		—		8,284
Net income (loss) from continuing operations		26,153		38,860		11,606		13,327		68,982		(90,768)		68,160
Goodwill		3,223		14,980		9,888		109,516		—		—		137,607
Intangibles		—		1,344		2,184		14,018		—		—		17,546
Total assets		2,218,166		2,108,614		1,270,426		2,107,407		1,045,774		(1,020,338)		7,730,049

NOTE 9 – REGULATORY CAPITAL REQUIREMENTS

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and the subsidiary banks' financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain OBS items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the subsidiary banks to maintain minimum amounts and ratios (set forth in the following table) of total common equity Tier 1 and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets, each as defined by regulation.  Management believes, as of September 30, 2023 and December 31, 2022, that the Company and the subsidiary banks met all capital adequacy requirements to which they are subject.

Under the regulatory framework for prompt corrective action, to be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and common equity Tier 1 ratios as set forth in the following tables. The Company and the subsidiary banks’ actual capital amounts and ratios as of September 30, 2023 and

33

December 31, 2022 are presented in the following tables (dollars in thousands).  As of September 30, 2023 and December 31, 2022, each of the subsidiary banks met such capital requirements to be “well capitalized”.

										For Capital					To Be Well
										Adequacy Purposes					Capitalized Under
					For Capital					With Capital					Prompt Corrective
	Actual				Adequacy Purposes					Conservation Buffer					Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
	( dollars in thousands)
As of September 30, 2023:
Company:
Total risk-based capital	$	1,135,262	14.54	%	$	624,805	>	8.00	%	$	820,057	>	10.50	%	$	781,007	>	10.00	%
Tier 1 risk-based capital		807,582	10.34			468,604	>	6.00			663,856	>	8.50			624,805	>	8.00
Tier 1 leverage		807,582	9.92			325,480	>	4.00			325,480	>	4.00			406,850	>	5.00
Common equity Tier 1		758,884	9.72			351,453	>	4.50			546,705	>	7.00			507,654	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	295,319	12.90	%	$	183,095	>	8.00	%	$	240,313	>	10.50	%	$	228,869	>	10.00	%
Tier 1 risk-based capital		266,688	11.65			137,321	>	6.00			194,539	>	8.50			183,095	>	8.00
Tier 1 leverage		266,688	11.10			96,111	>	4.00			96,111	>	4.00			120,139	>	5.00
Common equity Tier 1		266,688	11.65			102,991	>	4.50			160,208	>	7.00			148,765	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	358,150	17.05	%	$	168,021	>	8.00	%	$	220,527	>	10.50	%	$	210,026	>	10.00	%
Tier 1 risk-based capital		331,423	15.78			126,016	>	6.00			178,522	>	8.50			168,021	>	8.00
Tier 1 leverage		331,423	14.60			90,799	>	4.00			90,799	>	4.00			113,498	>	5.00
Common equity Tier 1		331,423	15.78			94,512	>	4.50			147,018	>	7.00			136,517	>	6.50
Community State Bank:
Total risk-based capital	$	177,296	13.57	%	$	104,554	>	8.00	%	$	137,227	>	10.50	%	$	130,693	>	10.00	%
Tier 1 risk-based capital		152,596	11.68			78,416	>	6.00			111,089	>	8.50			104,554	>	8.00
Tier 1 leverage		152,596	11.24			54,303	>	4.00			54,303	>	4.00			67,879	>	5.00
Common equity Tier 1		152,596	11.68			58,812	>	4.50			91,485	>	7.00			84,950	>	6.50
Guaranty Bank:
Total risk-based capital	$	258,732	12.53	%	$	165,160	>	8.00	%	$	216,772	>	10.50	%	$	206,450	>	10.00	%
Tier 1 risk-based capital		236,071	11.43			123,870	>	6.00			175,482	>	8.50			165,160	>	8.00
Tier 1 leverage		236,071	11.22			84,130	>	4.00			84,130	>	4.00			105,162	>	5.00
Common equity Tier 1		236,071	11.43			92,902	>	4.50			144,515	>	7.00			134,192	>	6.50

										For Capital					To Be Well
										Adequacy Purposes					Capitalized Under
					For Capital					With Capital					Prompt Corrective
	Actual				Adequacy Purposes					Conservation Buffer					Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
	( dollars in thousands)
As of December 31, 2022:
Company:
Total risk-based capital	$	1,055,177	14.28	%	$	591,132	>	8.00	%	$	775,861	>	10.50	%	$	738,915	>	10.00	%
Tier 1 risk-based capital		734,977	9.95			443,349	>	6.00			628,078	>	8.50			591,132	>	8.00
Tier 1 leverage		734,977	9.61			305,959	>	4.00			305,959	>	4.00			382,449	>	5.00
Common equity Tier 1		686,375	9.29			332,512	>	4.50			517,241	>	7.00			480,295	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	275,337	13.07	%	$	168,588	>	8.00	%	$	221,272	>	10.50	%	$	210,735	>	10.00	%
Tier 1 risk-based capital		248,978	11.81			126,441	>	6.00			179,125	>	8.50			168,588	>	8.00
Tier 1 leverage		248,978	11.01			90,419	>	4.00			90,419	>	4.00			133,023	>	5.00
Common equity Tier 1		248,978	11.81			94,831	>	4.50			147,514	>	7.00			136,978	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	308,153	14.84	%	$	166,168	>	8.00	%	$	218,096	>	10.50	%	$	207,711	>	10.00	%
Tier 1 risk-based capital		282,258	13.59			124,626	>	6.00			176,554	>	8.50			166,168	>	8.00
Tier 1 leverage		282,258	13.17			85,707	>	4.00			85,707	>	4.00			107,134	>	5.00
Common equity Tier 1		282,258	13.59			93,470	>	4.50			145,397	>	7.00			135,012	>	6.50
Community State Bank:
Total risk-based capital	$	142,974	12.04	%	$	94,981	>	8.00	%	$	124,662	>	10.50	%	$	118,726	>	10.00	%
Tier 1 risk-based capital		128,130	10.79			71,236	>	6.00			100,917	>	8.50			94,981	>	8.00
Tier 1 leverage		128,130	10.09			50,799	>	4.00			50,799	>	4.00			63,499	>	5.00
Common equity Tier 1		128,130	10.79			53,427	>	4.50			83,108	>	7.00			77,172	>	6.50
Guaranty Bank:
Total risk-based capital	$	243,106	12.24	%	$	158,903	>	8.00	%	$	208,560	>	10.50	%	$	198,629	>	10.00	%
Tier 1 risk-based capital		218,647	11.01			119,177	>	6.00			168,834	>	8.50			158,903	>	8.00
Tier 1 leverage		218,647	10.90			80,229	>	4.00			80,229	>	4.00			100,286	>	5.00
Common equity Tier 1		218,647	11.01			89,383	>	4.50			139,040	>	7.00			129,109	>	6.50

NOTE 10 - COMMITMENTS

The Company entered into a construction contract in 2023 for the construction of a new CRBT facility in Cedar Rapids, Iowa.  The Company will pay the contractor a contract price of approximately $17.0 million, subject to additions and deductions as provided in the contract documents. As of September 30, 2023, the Company has paid $1.2 million of the contract price, resulting in a remaining future commitment of $15.8 million. Construction is anticipated to be completed in 2024.  

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

This section reviews the financial condition and results of operations of the Company and its subsidiaries as of and for the three months ending September 30, 2023. Some tables may include additional periods to comply with disclosure requirements or to illustrate trends. When reading this discussion, also refer to the Consolidated Financial Statements and related notes in this report. Page locations and specific sections and notes that are referred to in this discussion are listed in the table of contents.

Additionally, a comprehensive list of the acronyms and abbreviations used throughout this discussion is included in Note 1 to the Consolidated Financial Statements.

GENERAL

The Company was formed in February 1993 for the purpose of organizing QCBT.  Over the past thirty years, the Company has grown to include four banking subsidiaries and a number of nonbanking subsidiaries.  As of September 30, 2023, the Company had $8.5 billion in consolidated assets, including $6.5 billion in net loans/leases, and $6.5 billion in deposits.  The financial results of acquired entities for the periods since their acquisition are included in this report.  Further information related to acquired entities has been presented in the annual reports previously filed with the SEC corresponding to the year of each acquisition.  

CRITICAL ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

The Company's financial statements are prepared in accordance with GAAP. The financial information contained within these statements is, to a significant extent, financial information that is based on approximate measures of the financial effects of transactions and events that have already occurred. The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance, impairment of goodwill and the fair value of financial instruments.

Based on its consideration of accounting policies that involve the most complex and subjective decisions and assessments, management has identified the following as critical accounting policies and estimates:

● Goodwill

● Allowance for Credit Losses on Loans and Leases and Off-Balance Sheet Exposures

● Fair Value of Loans Acquired in Business Combinations

● Fair Value of Financial Instruments

● Fair Value of Securities

A more detailed discussion of these critical accounting policies and estimates can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

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EXECUTIVE OVERVIEW

The Company reported net income of $25.1 million and diluted EPS of $1.49 for the quarter ended September 30, 2023. By comparison, for the quarter ended June 30, 2023, the Company reported net income of $28.4 million and diluted EPS of $1.69.  For the quarter ended September 30, 2022, the Company reported net income of $29.3 million, and diluted EPS of $1.71.  For the nine months ended September 30, 2023, the Company reported net income of $80.7 million and diluted EPS of $4.79.  By comparison, for the nine months ended September 30, 2022, the Company reported net income of $68.2 million and diluted EPS of $4.20.  

The third quarter of 2023 was also highlighted by the following results and events:

● Adjusted net income (non-GAAP) of $25.4 million, or $1.51 per diluted share;

● Net interest income of $55.3 million, up 3.9% from the second quarter;

● NIM (TEY)(non-GAAP) of 3.31% increased 2 basis points from the prior quarter while Adjusted NIM (TEY)(non-GAAP) of 3.28% was static;

● Capital markets revenue of $15.6 million and $55.1 million year-to-date; and

● Tangible book value (non-GAAP) per share increased $0.34 or 3.4% annualized.

Following is a table that represents various net income measurements for the Company.

	For the three months ended						For the nine months ended
	September 30, 2023		June 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(dollars in thousands)
Net income	$	25,121	$	28,425	$	29,294	$	80,703	$	68,160
Diluted earnings per common share	$	1.49	$	1.69	$	1.71	$	4.79	$	4.20
Weighted average common and common equivalent shares outstanding		16,847,951		16,799,527		17,110,691		16,863,203		16,243,921

The Company reported adjusted net income (non-GAAP) of $25.4 million, with adjusted diluted EPS of $1.51 for the three months ended September 30, 2023.  See section titled “GAAP to Non-GAAP Reconciliations” for additional information.  Adjusted net income for the three months ended September 30, 2023 excludes a number of non-recurring items, after-tax, as set forth in the GAAP to Non-GAAP Reconciliation section.  The Company reported adjusted net income (non-GAAP) of $81.8 million, with adjusted diluted EPS of $4.85 for the nine months ended September 30, 2023.  Adjusted net income for the nine months ended September 30, 2023 excludes a number of non-recurring items, after-tax, as set forth in the GAAP to Non-GAAP Reconciliation section.

Following is a table that represents the major income and expense categories for the Company:

	For the three months ended						For the nine months ended
	September 30, 2023		June 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(dollars in thousands)
Net interest income	$	55,255	$	53,205	$	60,769	$	165,270	$	165,902
Provision for credit losses		3,806		3,606		—		11,340		8,284
Noninterest income		26,593		32,520		21,095		84,955		59,510
Noninterest expense		51,081		49,727		47,746		149,593		140,319
Federal and state income tax expense		1,840		3,967		4,824		8,589		8,649
Net income	$	25,121	$	28,425	$	29,294	$	80,703	$	68,160

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Following are some noteworthy changes in the Company's financial results:

● Net interest income in the third quarter of 2023 increased 4% compared to the second quarter of 2023 and decreased 9% when compared to the third quarter of 2022. The increase from the second quarter of 2023 was primarily due to an increase in average earning assets and strong loan growth. The decrease from the third quarter of 2022 was primarily due to the significantly inverted yield curve, a highly competitive deposit landscape and a continued shift in the deposit mix of noninterest bearing and lower beta deposits to higher beta deposits.  Net interest income remained static when comparing the first nine months of 2023 to the same period of the prior year.

● Provision expense in the third quarter of 2023 increased $200 thousand as compared to the second quarter of 2023 and increased $3.8 million when compared to the third quarter of 2022.  The increase from third quarter 2022 represents a $3.3 million increase related to loans and leases, a $546 thousand increase related to OBS exposures and no change in provision related to securities. Provision expense in the first nine months of 2023 increased $3.1 million compared to the first nine months of 2022, representing a $409 thousand increase related to loans and leases, a $1.7 million increase related to OBS exposures and a $989 thousand increase related to AFS securities. The increase in provision for loans and leases was driven by strong loan growth. The increase in provision related to OBS was due to an increase in the balance of those OBS exposures.  The increase in provision related to AFS securities was entirely due to an impairment of one subordinated debt investment in a failed bank in the first quarter of 2023.  This was a legacy investment acquired as part of the 2022 GFED acquisition and an allowance was established for the entire balance of the investment during the first quarter of 2023.

● Noninterest income in the third quarter of 2023 decreased $5.9 million, or 18%, compared to the second quarter of 2023. The decrease was primarily due to lower capital markets revenue from swap fees in the third quarter as compared to the outsized performance of $22.5 million in the second quarter.  Noninterest income increased $5.5 million, or 26%, compared to the third quarter of 2022. Noninterest income increased $25.4 million, or 43%, when comparing the first nine months of 2023 to the same period of the prior year. The increase was primarily due to higher capital markets revenue from swap fees as strong demand for affordable housing established by our tax credit lending clients has continued.  The demand for low-income housing remains healthy and the economics associated with these tax credit projects continue to be favorable.  The Company has a strong pipeline for this business and expects it to be a solid source of fee income.

● Noninterest expense increased $1.4 million, or 3%, in the third quarter of 2023 compared to the second quarter of 2023.  This increase was primarily due to higher variable employee compensation, increased professional and data processing fees and other expenses related to fixed asset disposals. Noninterest expense increased $3.3 million, or 7%, compared to the third quarter of 2022 and increased $9.3 million, or 7%, when comparing the first nine months of 2023 to the same period of the prior year.  The increase was primarily due to a full nine months of Guaranty Bank expenses in 2023, compared to six months of Guaranty Bank expenses in 2022, due to the acquisition of Guaranty Bank on April 1, 2022.  

STRATEGIC FINANCIAL METRICS

The Company has established certain strategic financial metrics by which it manages its business and measures its performance. The goals are periodically updated to reflect changes in business developments. While the Company is determined to work prudently to achieve these metrics, there is no assurance that they will be met. Moreover, the Company's ability to achieve these metrics may be affected by the factors discussed under “Forward Looking Statements” as well as the factors detailed in the “Risk Factors” section included under Item 1A. of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The Company's long-term strategic financial metrics are as follows:

● Generate loan and lease growth of 9% per year, funded by core deposits;

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

● Grow fee-based income by at least 6% per year; and

● Limit our annual operating expense growth to 5% per year.

The following table shows the evaluation of the Company’s strategic financial metrics:

			Year to Date*
Strategic Financial Metric*	Key Metric	Target	September 30, 2023			June 30, 2023			September 30, 2022
Loan and lease growth organically **	Loans and leases growth	> 9% annually		10.2	%		12.2	%		15.7	%
Fee income growth ***	Fee income growth	> 6% annually		45.8	%		54.2	%		(23.9)	%
Improve operational efficiencies and hold noninterest expense growth	Noninterest expense growth	< 5% annually		10.2	%		8.8	%		15.1	%

* Ratios and amounts provided for these measurements represent year-to-date actual amounts for the respective period that are then annualized for comparison to the prior year actual. The calculations provided exclude non-core noninterest income and noninterest expense.

** Loan and lease growth excludes the initial loan balances from the GFED acquisition.

***Fee income growth and noninterest expense growth are both impacted by the GFED acquisition.

It should be noted that these initiatives are long-term targets.  

STRATEGIC DEVELOPMENTS

The Company has taken the following actions during the third quarter of 2023 to support its corporate strategy:

● The Company grew loans and leases in the third quarter of 2023 by 13.3% on an annualized basis, driven by both our traditional and tax credit lending business. The Company has one LIHTC securitization that closed in October  and one LIHTC securitization scheduled to close prior to the end of November. Securitizations will continue to be utilized on an ongoing basis as a liquidity and capital management tool, as well as creating an ongoing capacity to produce LIHTC loans and the corresponding capital markets revenue generated from this business.

● Correspondent banking has continued to be a core line of business for the Company. The Company is competitively positioned with experienced staff, software systems and processes to continue growing in the four states currently served – Iowa, Wisconsin, Missouri and Illinois. The Company acted as the correspondent bank for 180 downstream banks with total noninterest bearing deposits of $93.0 million and total interest-bearing deposits of $308.2 million as of September 30, 2023. By comparison, the Company acted as the correspondent bank for 187 downstream banks with average total noninterest bearing deposits of $302.9 million and average total interest-bearing deposits of $313.8 million as of September 30, 2022. This line of business provides a strong source of deposits, fee income, high-quality loan participations and bank stock loans.  The Company also manages off-balance sheet liquidity held at the Federal Reserve on behalf of the downstream banks of $258.4 million as of September 30, 2023, as compared to $363.7 million for the quarter ended June 30, 2023.

● The Company is focused on executing interest rate swaps on select commercial loans, including LIHTC permanent loans. These interest rate swaps allow commercial borrowers to pay a fixed interest rate while the Company receives a variable interest rate as well as an upfront nonrefundable fee dependent on the pricing. Management believes that these swaps help position the Company more favorably for rising rate environments.  The Company will continue to review opportunities to execute these swaps at all of its subsidiary banks as appropriate for applicable borrowers and the Company. Levels of capital markets revenue from swap fees are influenced by prevailing interest rates.  Capital markets revenue totaled $15.6 million for the quarter and $55.1 million for the first nine months of 2023.  Capital markets revenue averaged $18.4 million per quarter for the year 2023 and $10.3 million per quarter for the year 2022.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

● In recent years, the Company has been successful in expanding its wealth management client base. Trust department fees continue to be a significant contributor to noninterest income. There were 220 new relationships added in the first nine months of 2023, totaling $576.8 million of new assets under management. Income is generated primarily from fees charged based on assets under administration for corporate and personal trusts and for custodial services. Trust department fees are primarily determined based on the value of the investments within fully managed trusts. The Company expects trust department fees to be negatively impacted during periods of significantly lower market valuations and positively impacted during periods of significantly higher market valuations.  During the third quarter of 2023, the Company began offering trust and wealth management services at Guaranty Bank.

● Noninterest expense for the first nine months of 2023 totaled $149.6 million as compared to $140.3 million in the first nine months of 2022. The increase was primarily due to nine months of operating expenses in 2023 for the combined GB entity as compared to six months of operating expenses in 2022 for the combined GB entity.

GAAP TO NON-GAAP RECONCILIATIONS

The following table presents certain non-GAAP financial measures related to the “TCE/TA ratio”, “adjusted net income”, “adjusted EPS”, “adjusted ROAA and adjusted ROAE”, “NIM (TEY)”, “adjusted NIM (TEY)” and “efficiency ratio”. In compliance with applicable rules of the SEC, all non-GAAP measures are reconciled to the most directly comparable GAAP measure, as follows:

● TCE/TA ratio (non-GAAP) is reconciled to stockholders’ equity and total assets;

● Adjusted net income, adjusted EPS, adjusted ROAA and adjusted ROAE (all non-GAAP measures) are reconciled to net income;

● NIM (TEY) (non-GAAP) and adjusted NIM (TEY) (non-GAAP) are reconciled to NIM; and

● Efficiency ratio (non-GAAP) is reconciled to noninterest expense, net interest income and noninterest income.

The TCE/TA non-GAAP ratio has been a focus for investors and management believes that this ratio may assist investors in analyzing the Company’s capital position without regard to the effects of intangible assets.

The following tables also include several “adjusted” non-GAAP measurements of financial performance. The Company’s management believes that these measures are important to investors as they exclude non-recurring income and expense items; therefore, they provide a better comparison for analysis and may provide a better indicator of future performance.

NIM (TEY) is a financial measure that the Company’s management utilizes to take into account the tax benefit associated with certain tax-exempt loans and securities. It is standard industry practice to measure net interest margin using tax-equivalent measures. In addition, the Company calculates NIM without the impact of acquisition accounting net accretion (adjusted NIM), as accretion amounts can fluctuate widely, making comparisons difficult.

The efficiency ratio is a ratio that management utilizes to compare the Company to its peers. It is a standard ratio used to calculate overhead as a percentage of revenue in the banking industry and is widely utilized by investors.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

limitations as analytical tools and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

	As of
GAAP TO NON-GAAP	September 30,			June 30,			September 30,
RECONCILIATIONS	2023			2023			2022
	(dollars in thousands, except per share data)
TCE/TA RATIO
Stockholders' equity (GAAP)	$	828,383		$	822,689		$	737,072
Less: Intangible assets		153,564			154,255			155,153
TCE (non-GAAP)	$	674,819		$	668,434		$	581,919
Total assets (GAAP)	$	8,540,057		$	8,226,673		$	7,730,049
Less: Intangible assets		153,564			154,255			155,153
TA (non-GAAP)	$	8,386,493		$	8,072,418		$	7,574,896
TCE/TA ratio (non-GAAP)		8.05	%		8.28	%		7.68	%

	For the Quarter Ended									For the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2023			2023			2022			2023			2022
	(dollars in thousands, except per share data)
ADJUSTED NET INCOME
Net income (GAAP)	$	25,121		$	28,425		$	29,294		$	80,703		$	68,160
Less non-core items (post-tax) (*):
Income:
Securities gains (losses), net	$	—		$	9		$	—		$	(356)		$	—
Fair value gain(loss) on derivatives, net		(265)			66			714			(537)			1,771
Total non-core income (non-GAAP)	$	(265)		$	75		$	714		$	(893)		$	1,771
Expense:
Acquisition costs	$	—		$	—		$	321		$	—		$	3,715
Post-acquisition compensation, transition and integration costs		—			—			48			164			3,837
CECL Day 2 credit loss expense on acquired loans		—			—			—			—			8,651
CECL Day 2 credit loss expense on acquired OBS exposure		—			—			—			—			1,140
Total non-core expense (non-GAAP)	$	—		$	—		$	369		$	164		$	17,343
Adjusted net income (non-GAAP)	$	25,386		$	28,350		$	28,949		$	81,760		$	83,732
ADJUSTED EPS
Adjusted net income (non-GAAP) (from above)	$	25,386		$	28,350		$	28,949		$	81,760		$	83,732
Weighted average common shares outstanding		16,717,303			16,701,950			16,900,968			16,731,847			16,030,371
Weighted average common and common equivalent shares outstanding		16,847,951			16,799,527			17,110,691			16,863,203			16,243,921
Adjusted EPS (non-GAAP):
Basic	$	1.52		$	1.70		$	1.71		$	4.89		$	5.22
Diluted	$	1.51		$	1.69		$	1.69		$	4.85		$	5.15
ADJUSTED ROAA and ADJUSTED ROAE (non-GAAP)
Adjusted net income (non-GAAP) (from above)	$	25,386		$	28,350		$	28,949		$	81,760		$	83,732
Average Assets	$	8,287,813		$	7,924,597		$	7,652,463		$	8,041,141		$	7,005,988
Adjusted ROAA (non-GAAP)		1.23	%		1.43	%		1.51	%		1.36	%		1.59	%
Adjusted ROAE (non-GAAP)		12.12	%		13.88	%		15.21	%		13.35	%		14.99	%
ADJUSTED NIM (TEY)*
Net interest income (GAAP)	$	55,255		$	53,205		$	60,769		$	165,270		$	165,902
Plus: Tax equivalent adjustment		7,771			6,542			4,459			20,283			10,785
Net interest income - tax equivalent (non-GAAP)	$	63,026		$	59,747		$	65,228		$	185,553		$	176,687
Less: Acquisition accounting net accretion		539			134			1,080			1,501			2,893
Adjusted net interest income		62,487			59,613			64,148			184,052			173,794
Average earning assets	$	7,573,785		$	7,283,286		$	6,975,857		$	7,369,420		$	6,452,867
NIM (GAAP)		2.89	%		2.93	%		3.46	%		3.00	%		3.44	%
NIM (TEY) (non-GAAP)		3.31	%		3.29	%		3.71	%		3.37	%		3.66	%
Adjusted NIM (TEY) (non-GAAP)		3.28	%		3.28	%		3.65	%		3.34	%		3.60	%
EFFICIENCY RATIO
Noninterest expense (GAAP)	$	51,081		$	49,727		$	47,746		$	149,593		$	140,319
Net interest income (GAAP)	$	55,255		$	53,205		$	60,769		$	165,270		$	165,902
Noninterest income (GAAP)		26,593			32,520			21,095			84,955			59,510
Total income	$	81,848		$	85,725		$	81,864		$	250,225		$	225,412
Efficiency ratio (noninterest expense/total income) (non-GAAP)		62.41	%		58.01	%		58.32	%		59.78	%		62.25	%

*     Nonrecurring items (after-tax) are calculated using an estimated effective federal tax rate of 21% with the exception of acquisition costs which have an estimated effective federal tax rate of 13.62%.

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NET INTEREST INCOME - (TAX EQUIVALENT BASIS)

Net interest income, on a GAAP basis, decreased 9% for the quarter ended September 30, 2023, compared to the same quarter of the prior year.  Net interest income, on a tax equivalent basis (non-GAAP), decreased 3% for the quarter ended September 30, 2023, compared to the same quarter of the prior year.

A comparison of yields, spread and margin on a tax equivalent and GAAP basis is as follows:

	GAAP						Tax Equivalent Basis
	For the Quarter Ended						For the Quarter Ended
	September 30,		June 30,		September 30,		September 30,		June 30,		September 30,
	2023		2023		2022		2023		2023		2022
Average Yield on Interest-Earning Assets	5.73	%	5.40	%	4.55	%	6.10	%	5.78	%	4.76	%
Average Cost of Interest-Bearing Liabilities	3.54	%	3.20	%	1.43	%	3.54	%	3.20	%	1.43	%
Net Interest Spread	2.19	%	2.21	%	3.10	%	2.56	%	2.58	%	3.33	%
NIM (TEY) (Non-GAAP)	3.31	%	3.29	%	3.46	%	3.31	%	3.29	%	3.71	%
NIM Excluding Acquisition Accounting Net Accretion	2.89	%	2.91	%	3.47	%	3.28	%	3.28	%	3.65	%

	GAAP				Tax Equivalent Basis
	For the Nine Months Ended				For the Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2023		2022		2023		2022
Average Yield on Interest-Earning Assets	4.54	%	4.10	%	5.83	%		4.33	%
Average Cost of Interest-Bearing Liabilities	3.17	%	0.95	%	3.17	%		0.95	%
Net Interest Spread	1.37	%	3.16	%	2.66	%		3.38	%
NIM (TEY) (Non-GAAP)	3.49	%	3.44	%	3.37	%		3.66	%
NIM Excluding Acquisition Accounting Net Accretion	2.47	%	3.37	%	3.34	%		3.60	%

Acquisition accounting net accretion can fluctuate mostly depending on the payoff activity of the acquired loans.  In evaluating net interest income and NIM, it’s important to understand the impact of acquisition accounting net accretion when comparing periods. The above table reports NIM with and without the acquisition accounting net accretion to allow for more appropriate comparisons.  A comparison of acquisition accounting net accretion included in NIM is as follows:

		For the Quarter Ended						For the Nine Months Ended
		September 30,		June 30,		September 30,		September 30,		September 30,
		2023		2023		2022		2023		2022
		(dollars in thousands)						(dollars in thousands)
Acquisition Accounting Net Accretion in NIM	$	539	$	134	$	1,080	$	1,501	$	2,893

The Company’s management closely monitors and manages NIM.  From a profitability standpoint, an important challenge for the Company’s subsidiary banks and leasing company is focusing on quality growth in conjunction with the improvement of their NIMs.  Management continually addresses this issue with pricing and other balance sheet strategies which include better loan pricing, reducing reliance on very rate-sensitive funding, closely managing deposit rate changes and finding additional ways to manage cost of funds through derivatives.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

The Company’s average balances, interest income/expense, and rates earned/paid on major balance sheet categories, as well as the components of change in net interest income, are presented in the following tables:

	For the Three Months Ended September 30,
	2023								2022
				Interest		Average						Interest		Average
	Average			Earned		Yield or			Average			Earned		Yield or
	Balance			or Paid		Cost			Balance			or Paid		Cost
	(dollars in thousands)
ASSETS
Interest earning assets:
Federal funds sold	$	21,526		$	284		5.23	%	$	16,224		$	100		2.45	%
Interest-bearing deposits at financial institutions		86,807			1,205		5.51	%		54,799			381		2.76	%
Investment securities - taxable		344,657			3,788		4.38	%		354,366			3,304		3.71	%
Investment securities - nontaxable (1)		600,693			6,974		4.64	%		591,730			6,299		4.26	%
Restricted investment securities		43,590			659		5.91	%		42,638			674		6.18	%
Gross loans/leases receivable (1) (2) (3)		6,476,512			103,428		6.34	%		5,916,100			72,969		4.89	%
Total interest earning assets		7,573,785			116,338		6.10	%		6,975,857			83,727		4.76	%
Noninterest-earning assets:
Cash and due from banks		76,135								88,477
Premises and equipment		118,757								115,816
Less allowance		(85,778)								(92,164)
Other		604,914								474,477
Total assets	$	8,287,813							$	7,562,463
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits	$	4,264,208			33,562		3.12	%	$	3,862,556			10,889		1.12	%
Time deposits		999,488			10,003		3.97	%		593,490			1,681		1.12	%
Short-term borrowings		1,514			20		5.28	%		11,376			84		2.94	%
FHLB advances		425,870			5,724		5.26	%		418,239			2,584		2.42	%
Other borrowings		—			—		—	%		4,239			53		4.93	%
Subordinated notes		232,890			3,307		5.68	%		181,177			2,518		5.56	%
Junior subordinated debentures		48,678			697		5.59	%		48,551			689		5.56	%
Total interest-bearing liabilities		5,972,648			53,313		3.54	%		5,119,628			18,498		1.43	%
Noninterest-bearing demand deposits		1,078,643								1,435,152
Other noninterest-bearing liabilities		398,788								246,255
Total liabilities		7,450,079								6,801,035
Stockholders' equity		837,734								761,428
Total liabilities and stockholders' equity	$	8,287,813							$	7,562,463
Net interest income				$	63,025							$	65,229
Net interest spread							2.56	%							3.33	%
Net interest margin							2.89	%							3.46	%
Net interest margin (TEY)(Non-GAAP)							3.31	%							3.71	%
Adjusted net interest margin (TEY)(Non-GAAP)							3.28	%							3.65	%
Ratio of average interest-earning assets to average interest-bearing liabilities		126.81	%							136.26	%

(1) Interest earned and yields on nontaxable investment securities and nontaxable loans are determined on a tax equivalent basis using a 21% federal tax rate.

(2) Loan/lease fees are not material and are included in interest income from loans/leases receivable in accordance with accounting and regulatory guidance.

(3) Non-accrual loans/leases are included in the average balance for gross loans/leases receivable in accordance with accounting and regulatory guidance.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Analysis of Changes of Interest Income/Interest Expense

For the Three Months Ended September 30, 2023

	Inc./(Dec.)		Components
	from		of Change (1)
	Prior Period (1)		Rate		Volume
	2023 vs. 2022
	(dollars in thousands)
INTEREST INCOME
Federal funds sold	$	184	$	143	$	41
Interest-bearing deposits at financial institutions		824		520		304
Investment securities - taxable		484		1,045		(561)
Investment securities - nontaxable (2)		676		577		98
Restricted investment securities		(15)		(88)		73
Gross loans/leases receivable (2) (3)		30,459		23,084		7,375
Total change in interest income		32,612		25,281		7,330
INTEREST EXPENSE
Interest-bearing deposits		22,673		21,426		1,248
Time deposits		8,322		6,559		1,763
Short-term borrowings		(64)		247		(311)
Federal Home Loan Bank advances		3,140		3,092		48
Other borrowings		(53)		(27)		(26)
Subordinated notes		789		55		734
Junior subordinated debentures		8		4		2
Total change in interest expense		34,815		31,356		3,458
Total change in net interest income	$	(2,203)	$	(6,075)	$	3,872

(1) The column “Inc./(Dec.) from Prior Period” is segmented into the changes attributable to variations in volume and the changes attributable to changes in interest rates. The variations attributable to simultaneous volume and rate changes have been proportionately allocated to rate and volume.

(2) Interest earned and yields on nontaxable investment securities and nontaxable loans are determined on a tax equivalent basis using a 21% federal tax rate.

(3) Loan/lease fees are not material and are included in interest income from loans/leases receivable in accordance with accounting and regulatory guidance.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

	For the Nine Months Ended September 30,
	2023								2022
				Interest		Average						Interest		Average
	Average			Earned		Yield or			Average			Earned		Yield or
	Balance			or Paid		Cost			Balance			or Paid		Cost
	(dollars in thousands)
ASSETS
Interest earning assets:
Federal funds sold	$	19,267		$	741		5.14	%	$	8,937		$	114		1.70	%
Interest-bearing deposits at financial institutions		83,783			3,151		5.03	%		63,740			584		1.23	%
Investment securities - taxable		340,140			10,847		4.24	%		331,222			8,792		3.53	%
Investment securities - nontaxable (1)		599,070			19,892		4.43	%		558,860			17,494		4.17	%
Restricted investment securities		38,817			1,677		5.70	%		34,071			1,439		5.57	%
Gross loans/leases receivable (1) (2) (3)		6,288,343			285,136		6.06	%		5,456,037			180,896		4.43	%
Total interest earning assets		7,369,420			321,444		5.83	%		6,452,867			209,319		4.33	%
Noninterest-earning assets:
Cash and due from banks		72,767								80,157
Premises and equipment, net		118,408								103,409
Less allowance for estimated losses on loans/leases		(86,840)								(84,360)
Other		567,386								453,915
Total assets	$	8,041,141							$	7,005,988
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits	$	4,099,789			84,565		2.76	%	$	3,629,735			17,704		0.65	%
Time deposits		1,020,421			27,225		3.57	%		508,067			3,527		0.93	%
Short-term borrowings		3,588			152		5.66	%		4,945			87		2.37	%
Federal Home Loan Bank advances		311,740			11,898		5.03	%		264,718			3,447		1.72	%
Other borrowings		—			—		—	%		1,429			53		4.90	%
Subordinated notes		232,784			9,922		5.68	%		143,104			5,888		5.49	%
Junior subordinated debentures		48,646			2,130		5.77	%		44,457			1,926		5.71	%
Total interest-bearing liabilities		5,716,968			135,892		3.17	%		4,596,455			32,632		0.95	%
Noninterest-bearing demand deposits		1,151,873								1,419,815
Other noninterest-bearing liabilities		355,709								244,849
Total liabilities		7,224,550								6,261,119
Stockholders' equity		816,591								744,869
Total liabilities and stockholders' equity	$	8,041,141							$	7,005,988
Net interest income				$	185,552							$	176,687
Net interest spread							2.66	%							3.38	%
Net interest margin							3.00	%							3.44	%
Net interest margin (TEY)(Non-GAAP)							3.37	%							3.66	%
Adjusted net interest margin (TEY)(Non-GAAP)							3.34	%							3.60	%
Ratio of average interest earning assets to average interest-bearing liabilities		128.90	%							140.39	%

(1) Interest earned and yields on nontaxable investment securities and nontaxable loans are determined on a tax equivalent basis using a 21% federal tax rate.

(2) Loan/lease fees are not material and are included in interest income from loans/leases receivable in accordance with accounting and regulatory guidance.

(3) Non-accrual loans/leases are included in the average balance for gross loans/leases receivable in accordance with accounting and regulatory guidance.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Analysis of Changes of Interest Income/Interest Expense
For the nine months ended September 30, 2023
	Inc./(Dec.)		Components
	from		of Change (1)
	Prior Period (1)		Rate		Volume
	2023 vs. 2022
	(dollars in thousands)
INTEREST INCOME
Federal funds sold	$	627	$	399	$	228
Interest-bearing deposits at other financial institutions		2,567		2,329		238
Investment securities - taxable		2,055		1,812		243
Investment securities - nontaxable (2)		2,398		1,113		1,285
Restricted investment securities		238		34		204
Gross loans/leases receivable (2) (3)		104,240		73,689		30,551
Total change in interest income		112,125		79,376		32,749
INTEREST EXPENSE
Interest-bearing demand deposits		66,861		64,296		2,565
Time deposits		23,698		17,486		6,212
Short-term borrowings		65		108		(43)
Federal Home Loan Bank advances		8,451		7,737		714
Other borrowings		(53)		(27)		(26)
Subordinated notes		4,034		211		3,823
Junior subordinated debentures		204		21		182
Total change in interest expense		103,260		89,832		13,427
Total change in net interest income	$	8,865	$	(10,456)	$	19,322

(1) The column “Inc./(Dec.) from Prior Period” is segmented into the changes attributable to variations in volume and the changes attributable to changes in interest rates. The variations attributable to simultaneous volume and rate changes have been proportionately allocated to rate and volume.

(2) Interest earned and yields on nontaxable investment securities and nontaxable loans are determined on a tax equivalent basis using a 21% federal tax rate.

(3) Loan/lease fees are not material and are included in interest income from loans/leases receivable in accordance with accounting and regulatory guidance.

The Company’s operating results are also impacted by various sources of noninterest income, including trust department fees, investment advisory and management fees, deposit service fees, capital markets revenue, gains from the sales of residential real estate loans and government guaranteed loans, earnings on BOLI and other income.  Offsetting these items, the Company incurs noninterest expenses, which include salaries and employee benefits, occupancy and equipment expense, professional and data processing fees, FDIC and other insurance expense, loan/lease expense and other administrative expenses.

The Company’s operating results are also affected by economic and competitive conditions, particularly changes in interest rates, income tax rates, government policies and actions of regulatory authorities.

RESULTS OF OPERATIONS

INTEREST INCOME

Interest income increased $29.3 million, comparing the third quarter of 2023 to the same period of 2022, and increased $102.6 million when comparing the first nine months of 2023 to the same period of 2022.  Interest income (tax equivalent) increased $32.6 million, comparing the third quarter of 2023 to the same period of 2022, and increased $112.1 million when comparing the first nine months of 2023 to the same period of 2022. This was primarily due to the GFED acquisition, but also due to continued loan growth and repricing of the Company’s floating rate loan portfolio with rapidly rising interest rates.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

The Company intends to continue to grow quality loans and leases as well as its private placement tax-exempt securities portfolio to maximize yield while minimizing credit and interest rate risk.

INTEREST EXPENSE

Interest expense increased $34.8 million, comparing the third quarter of 2023 to the same period of 2022, and increased $103.3 million when comparing the first nine months of 2023 to the same period of 2022.  The increase is primarily due to the GFED acquisition in conjunction with a significant increase in cost of funds given the sharp rising rate environment. The Company’s cost of funds was 3.54% for the quarter ended September 30, 2023, which was up from 1.43% for the quarter ended September 30, 2022.  The Company’s cost of funds was 3.17% for the nine months ended September 30, 2023, which was up from 0.95% for the nine months ended September 30, 2022.  The Company has also experienced a shift of the composition of our deposits from noninterest and lower interest beta deposits to higher beta deposits.

PROVISION FOR CREDIT LOSSES

The ACL is established through provision expense to provide an estimated ACL. The following table shows the components of the provision for credit losses for the three and nine months ended September 30, 2023 and 2022.

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2023		2022		2023		2022
	(dollars in thousands)				(dollars in thousands)
Provision for credit losses - loans and leases	$	3,260	$	331	$	9,031	$	8,623
Provision for credit losses - off-balance sheet exposures		546		(331)		1,320		(339)
Provision for credit losses - held to maturity securities		—		—		—		—
Provision for credit losses - available for sale securities		—		—		989		—
Total provision for credit losses	$	3,806	$	—	$	11,340	$	8,284

The Company had total provision for credit losses on loans and leases of $3.3 million for the third quarter of 2023, which was up from $331 thousand for the same period of 2022, primarily driven by loan growth during the quarter.  The provision related to OBS was $546 thousand for the third quarter of 2023 compared to a negative $331 thousand for the for the third quarter of 2022. The increase was due to an increase in the balance of OBS exposures. There was no provision related to HTM securities for the third quarter of 2023 or 2022.  There was no provision related to AFS securities for the third quarter of 2023 or 2022.

Provision for loans and leases for the first nine months of 2023 totaled $9.0 million, up from $8.6 million in the first nine months of 2022.  The increase in provision on loans and leases was driven by loan growth and higher criticized loan balances. The provision related to OBS was $1.3 million for the first nine months of 2023, compared to a negative $339 thousand for the for the first nine months of 2022. The increase was due to an increase in the balance of OBS exposures.  There was no provision related to HTM securities for the first nine months of 2023 or 2022. The provision related to AFS securities was $989 thousand in the first nine months of 2023 as compared to no provision for the first nine months of 2022.  The increase was entirely due to an impairment of one subordinated debt investment in a failed bank in the first quarter of 2023.  This was a legacy investment acquired as part of the 2022 GFED acquisition and an allowance was established for the entire balance of the investment.

The ACL for loans and leases is established based on a number of factors, including the Company's historical loss experience, delinquencies and charge-off trends, economic and other forecasts, the local, state and national economies and risk associated with the loans/leases and securities in the portfolio, as described in more detail in the “Critical Accounting Policies and Critical Accounting Estimates” section of this discussion.

The Company had an ACL for loans/leases held for investment of 1.39% of total gross loans/leases held for investment at September 30, 2023, compared to 1.41% at June 30, 2023 and 1.51% at September 30, 2022.  Management has evaluated the allowance needed on the loans acquired prior to the adoption of ASU 2016-13 on January 1, 2021, factoring in the

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remaining discount, which was $4.6 million and $11.8 million at September 30, 2023 and September 30, 2022, respectively.

Additional discussion of the Company's allowance can be found in the “Financial Condition” section of this Report.

NONINTEREST INCOME

The following table sets forth the various categories of noninterest income for the three and nine months ended September 30, 2023 and 2022.

	Three Months Ended
	September 30,		September 30,
	2023		2022		$ Change		% Change
	(dollars in thousands)
Trust fees	$	2,863	$	2,537	$	326	12.8	%
Investment advisory and management fees		947		921		26	2.8
Deposit service fees		2,107		2,214		(107)	(4.8)
Gains on sales of residential real estate loans, net		476		641		(165)	(25.7)
Gains on sales of government guaranteed portions of loans, net		—		50		(50)	(100.0)
Capital markets revenue		15,596		10,545		5,051	47.9
Earnings on bank-owned life insurance		1,807		605		1,202	198.7
Debit card fees		1,584		1,453		131	9.0
Correspondent banking fees		450		189		261	138.1
Loan related fee income		800		652		148	22.7
Fair value gain (loss) on derivatives		(336)		904		(1,240)	(137.2)
Other		299		384		(85)	(22.1)
Total noninterest income	$	26,593	$	21,095	$	5,498	26.1	%

	Nine Months Ended
	September 30,		September 30,
	2023		2022		$ Change		% Change
	(dollars in thousands)
Trust fees	$	8,613	$	7,997	$	616	7.7	%
Investment advisory and management fees		2,812		2,940		(128)	(4.4)
Deposit service fees		6,169		5,992		177	3.0
Gains on sales of residential real estate loans, net		1,288		1,943		(655)	(33.7)
Gains on sales of government guaranteed portions of loans, net		30		69		(39)	(56.5)
Capital markets revenue		55,109		29,971		25,138	83.9
Securities losses, net		(451)		—		(451)	(100.0)
Earnings on bank-owned life insurance		3,352		1,301		2,051	157.6
Debit card fees		4,639		3,959		680	17.2
Correspondent banking fees		1,197		710		487	68.6
Loan related fee income		2,221		1,814		407	22.4
Fair value gain (loss) on derivatives		(680)		2,242		(2,922)	(130.3)
Other		656		572		84	14.7
Total noninterest income	$	84,955	$	59,510	$	25,445	42.8	%

The Company continues to be successful in expanding its wealth management client base and new assets under management. Trust fees continue to be a significant contributor to noninterest income. Assets under management decreased $556.2 million since June 30, 2023 due to market fluctuation but have increased by $529.3 million since September 30, 2022.  Income is generated primarily from fees charged based on assets under administration for corporate and personal trusts and for custodial services. Trust fees are primarily determined based on the market value of the investments within the fully-managed trusts. Trust fees increased 13%, comparing the  third quarter of 2023 to the same period of the prior year, and increased 8% when comparing the first nine months of 2023 to the first nine months of 2022 due to market volatility.  The Company expects trust fees to be negatively impacted during periods of significantly lower market valuations and positively impacted during periods of significantly higher market valuations.

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Investment advisory and management fees increased 3% comparing the third quarter of 2023 to the same period of the prior year, and they decreased 4% when comparing the first nine months of 2023 to the first nine months of 2022. Similar to trust fees, investment advisory and management fees are largely determined based on the market value of the investments managed. As a result, fee income from this line of business fluctuates with market valuations.

Deposit service fees decreased 5% comparing the third quarter of 2023 to the same period of the prior year.  The decrease was primarily due to a decrease in NSF and service charge fee income. Deposit service fees increased 3% when comparing the first nine months of 2023 to the first nine months of 2022. This increase was primarily due to the GFED acquisition. The Company continues to be successful in expanding its core deposit base.

Gains on sales of residential real estate loans, net, decreased 26% when comparing the third quarter of 2023 to the same period of the prior year, and they decreased 34% when comparing the first nine months of 2023 to the first nine months of 2022. The decreases were due to decreased volume of residential real estate purchases and the refinancing of residential real estate loans with the sharp increase in mortgage rates.

The Company has grown its interest rate swap program significantly over the past several years.  The Company’s interest rate swap program consists of back-to-back interest rate swaps with two types of commercial borrowers: (1) traditional commercial loans of a certain minimum size and sophistication, and (2) LIHTC permanent loans.  Most of the growth has been in the latter category as the Company has grown relationships with strong LIHTC developers with many years of experience.  The LIHTC industry is strong and growing with an increased need for affordable housing.  The interest rate swaps allow commercial borrowers to pay a fixed interest rate while the Company receives a variable interest rate as well as an upfront nonrefundable fee dependent upon the pricing.

Capital markets revenue totaled $15.6 million for the second quarter of 2023, compared to $10.5 million for the third quarter of 2022.  Capital markets revenue totaled $55.1 million for the first nine months of 2023 compared to $30.0 million for the first nine months of 2022. The increase was primarily due to higher capital markets revenue from swap fees due to improvements in the supply chain and resetting of deal stacks for the current interest rate environment.  In the traditional commercial portfolio, the pricing is more competitive and the duration is shorter as compared to the LIHTC permanent loans.  The mix of loans with interest rate swaps continued to be heavily weighted towards LIHTC permanent loans. The demand for low-income housing remains healthy and the economics associated with these tax credit projects continue to be favorable. Future levels of swap fees are dependent upon the needs of our traditional commercial and LIHTC borrowers, and the size of the related nonrefundable swap fee may fluctuate depending on the interest rate environment. The Company has one LIHTC securitization that closed in October and one LIHTC securitization scheduled to close prior to the end of November. LIHTC securitizations will continue on an ongoing basis, as a tool to provide capacity for continued LIHTC loan production and the corresponding capital markets revenue generated from this business.

There were no securities gains or losses for the three months ended September 30, 2023 and September 30, 2022.  Securities losses totaled $451 thousand for the nine months ended September 30, 2023.  There were no securities gains or losses for the nine months ended September 30, 2022.  The Company sold $29 million of securities during the first quarter of 2023.  The securities sold were part of a strategy to partially deleverage the balance sheet with an anticipated rapid earn back of the modest loss before the end of the calendar year.

Earnings on BOLI increased 199% comparing the third quarter of 2023 to the third quarter of 2022, and increased 158% comparing the first nine months of 2023 to the first nine months of 2022. The increase was primarily due to income of $1.1 million on death benefit proceeds of a former executive that were received in the third quarter of 2023. There were no purchases of BOLI in the first nine months of 2023.  BOLI purchases totaled $10.0 million in 2022 related to the GFED acquisition.  Notably, a portion of the Company's BOLI is variable rate whereby returns are determined by the performance of the equity markets.  Management intends to continue to review its BOLI investments to be consistent with policy and regulatory limits in conjunction with the rest of its earning assets in an effort to maximize returns while minimizing risk.

Debit card fees are the interchange fees paid on certain debit card customer transactions. Debit card fees increased 9% comparing the third quarter of 2023 to the same period of the prior year, and increased 17% comparing the first nine

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months of 2023 to the first nine months of 2022. The increase was primarily due to the GFED acquisition.  The fees can vary based on customer debit card usage, so fluctuations from period to period may occur. As an opportunity to maximize fees, the Company offers a deposit product with a higher interest rate that incentivizes debit card activity.

Correspondent banking fees increased 138% comparing the third quarter of 2023 to the same period of the prior year, and increased 69% comparing the first nine months of 2023 to the first nine months of 2022. The increase was primarily due to a shift of correspondent banking balances from non-interest bearing accounts to interest bearing accounts, in light of increasing rates. Fees from correspondent banks generally increase when non-interest bearing account balances decrease. Correspondent banking continues to be a core strategy for the Company, as this line of business provides a high level of deposits that can be used to fund loan growth as well as a steady source of fee income. The Company now serves approximately 180 banks in Iowa, Illinois, Missouri and Wisconsin.  

Loan-related fee income increased 23% comparing the third quarter of 2023 to the same period of the prior year, and increased 22% comparing the first nine months of 2023 to the first nine months of 2022.  The increase was primarily due to the increase in loan growth.

Fair value loss on derivatives was $336 thousand in the third quarter of 2023, as compared to $904 thousand in gains in the same period of the prior year.  Fair value loss on derivatives was $680 thousand in the first nine months of 2023 as compared to $2.2 million in fair value gain on derivatives in the first nine months of 2022.  The decrease was due to the rapidly rising interest rate environment.  The Company uses cap instruments to manage interest rate risk related to the variability of interest payments due to changes in interest rates.  See Note 4 to the Consolidated Financial Statements for additional information.

Other noninterest income decreased 22% comparing the third quarter of 2023 to the same period of the prior year. Other noninterest income increased 15% comparing the first nine months of 2023 to the first nine months of 2022. Included in other noninterest income is income on equity investments.  Income on equity investments is largely determined based on the market value of the investments managed. As a result, income fluctuates with market valuations.

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NONINTEREST EXPENSE

The following tables set forth the various categories of noninterest expense for the three and nine months ended September 30, 2023 and 2022.

	Three Months Ended
	September 30,		September 30,
	2023		2022		$ Change		% Change
	(dollars in thousands)
Salaries and employee benefits	$	32,098	$	29,175	$	2,923	10.0	%
Occupancy and equipment expense		6,228		6,033		195	3.2
Professional and data processing fees		4,456		4,477		(21)	(0.5)
Acquisition costs		—		315		(315)	(100.0)
Post-acquisition compensation, transition and integration costs		—		62		(62)	(100.0)
FDIC insurance, other insurance and regulatory fees		1,721		1,497		224	15.0
Loan/lease expense		826		390		436	111.8
Net cost of and gains/losses on operations of real estate		3		19		(16)	(84.2)
Advertising and marketing		1,429		1,437		(8)	(0.6)
Communication and data connectivity		478		639		(161)	(25.2)
Supplies		335		289		46	15.9
Bank service charges		605		568		37	6.5
Correspondent banking expense		232		218		14	6.4
Intangibles amortization		691		787		(96)	(12.2)
Payment card processing		733		477		256	53.7
Trust expense		432		227		205	90.3
Other		814		1,136		(322)	(28.3)
Total noninterest expense	$	51,081	$	47,746	$	3,335	7.0	%

	Nine Months Ended
	September 30,		September 30,
	2023		2022		$ Change		% Change
	(dollars in thousands)
Salaries and employee benefits	$	95,560	$	82,774	$	12,786	15.4	%
Occupancy and equipment expense		18,242		15,948		2,294	14.4
Professional and data processing fees		12,048		12,513		(465)	(3.7)
Acquisition costs		—		4,139		(4,139)	(100.0)
Post-acquisition compensation, transition and integration costs		207		4,858		(4,651)	(95.7)
FDIC insurance, other insurance and regulatory fees		5,022		4,201		821	19.5
Loan/lease expense		2,034		1,418		616	43.4
Net cost of (income from) and gains/losses on operations of other real estate		(64)		77		(141)	(183.1)
Advertising and marketing		4,401		3,396		1,005	29.6
Communication and data connectivity		1,614		1,626		(12)	(0.7)
Supplies		921		772		149	19.3
Bank service charges		1,831		1,719		112	6.5
Correspondent banking expense		663		630		33	5.2
Intangibles amortization		2,222		2,067		155	7.5
Payment card processing		1,820		1,365		455	33.3
Trust expense		983		609		374	61.4
Other		2,089		2,207		(118)	(5.3)
Total noninterest expense	$	149,593	$	140,319	$	9,274	6.6	%

Management places a strong emphasis on overall cost containment and is committed to improving the Company's general efficiency.

Salaries and employee benefits, which is the largest component of noninterest expense, increased from the third quarter of 2022 to the third quarter of 2023 by 10%, and increased from the first nine months of 2022 to the first nine months of 2023

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by 15%.  The increased expense was primarily related to higher variable compensation and to the GFED acquisition, which resulted in an increase of 165 full-time equivalent employees.  

Occupancy and equipment expense increased 3% comparing the third quarter of 2023 to the same period of the prior year, and increased 14% comparing the first nine months of 2023 to the first nine months of 2022. The increase was due to higher depreciation expense and computer hardware expense related to the GFED acquisition.

Professional and data processing fees remained stable comparing the third quarter of 2023 to the same period in 2022, and decreased 4% comparing the first nine months of 2023 to the first nine months of 2022.  Generally, professional and data processing fees can fluctuate depending on certain one-time project costs.  Management will continue to focus on minimizing such one-time costs and driving recurring costs down through contract negotiation or managed reduction in activity where costs are determined on a usage basis.

There were no acquisition costs incurred in the third quarter of 2023 or in the first nine months of 2023.  Acquisition costs totaled $315 thousand the third quarter of 2022 and $4.1 million the first nine months of 2022. The acquisition costs, comprised primarily of legal, accounting and other professional fees, related to the acquisition of GFED.

There were no post-acquisition compensation, transition and integration costs in the third quarter of 2023, whereas such costs totaled $207 thousand in the first nine months of 2023. Post-acquisition compensation, transition and integration costs totaled $62 thousand in the third quarter of 2022 and totaled $4.9 million in the nine months ended September 30, 2022.  These costs were comprised primarily of IT integration and data conversion costs related to the acquisition of GFED.

FDIC insurance, other insurance and regulatory fee expense increased 15%, comparing the third quarter of 2023 to the third quarter of 2022, and increased 20% comparing the first nine months of 2023 to the first nine months of 2022.  The increase in expense was due to a 30% increase in the asset size of the Company and an increase in announced FDIC rates for 2023, which increased the Company’s insurance rates and expenses.

Loan/lease expense increased 112% when comparing the third quarter of 2023 to the same quarter of 2022, and increased 43% comparing the first nine months of 2023 to the first nine months of 2022. Generally, loan/lease expense has a direct relationship with the level of NPLs; however, it may deviate depending upon the individual NPLs. NPLs have increased 97% since September 30, 2022.

Net income from and gains/losses on operations of other real estate includes gains/losses on the sale of OREO, write-downs of OREO and all income/expenses associated with OREO. Net cost of and gains/losses on operations of other real estate for the third quarter of 2023 totaled $3 thousand, compared to net cost of and gains/losses on operations of other real estate of $19 thousand for the third quarter of 2022. Net income from and gains/losses on operations of other real estate totaled $64 thousand for the first nine months of 2023, compared to net cost of and gains/losses on operations of other real estate of $77 thousand for the first nine months of 2022. The gain on sale of OREO for the nine months ended September 30, 2023 was related to the sale of three properties.

Advertising and marketing expense remained stable comparing the third quarter of 2023 to the third quarter of 2022, and increased 30% comparing the first nine months of 2023 to the first nine months of 2022. The increase in expense was primarily due to the GFED acquisition and increased marketing of our deposit products.

Communication and data connectivity expense decreased 25% comparing the third quarter of 2023 to the third quarter of 2022 primarily due to a reduction in long distance charges, cell phone and air card expenses as the Company continues to improve operational efficiencies.  Communication and data connectivity expense remained stable comparing the first nine months of 2023 to the first nine months of 2022.  

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Supplies expense increased 16% comparing the third quarter of 2023 to the third quarter of 2022, and increased 19% comparing the first nine months of 2023 to the first nine months of 2022. This increase is primarily due to an increase in supply stock and the GFED acquisition.

Bank service charges, a large portion of which includes indirect costs incurred to provide services to QCBT's correspondent banking customer portfolio, increased 7% when comparing the third quarter of 2023 to the same quarter of 2022, and increased 7% comparing the first nine months of 2023 to the first nine months of 2022.  As transaction volumes continue to increase, the associated expenses are expected to also increase.

Correspondent banking expense increased 6% when comparing the third quarter of 2023 to the same quarter of 2022, and increased 5% comparing the first nine months of 2023 to the first nine months of 2022.  These are direct costs incurred to provide services to QCBT's correspondent banking customer portfolio, including safekeeping and cash management services.

Intangibles amortization expense decreased 12% when comparing the third quarter of 2023 to the same quarter of 2022, and increased 8% comparing the first nine months of 2023 to the first nine months of 2022. The year-to-date increase is due to the GFED acquisition.  These expenses will naturally decrease as intangibles become fully amortized unless there is an addition to intangible assets.

Payment card processing expense increased 54% when comparing the third quarter of 2023 to the same quarter of 2022 due to one-time charges and adjustments, and increased 33% comparing the first nine months of 2023 to the first nine months of 2022 due to the GFED acquisition as they have a large client base.

Trust expense increased 90% when comparing the third quarter of 2023 to the same quarter of 2022, and increased 61% comparing the first nine months of 2023 to the first nine months of 2022. The increase was due to new relationships added in 2023 totaling $576.8 million of new assets under management as well as costs for a conversion to a new core system.

Other noninterest expense decreased 28% when comparing the third quarter of 2023 to the third quarter of 2022.  The decrease was primarily due to a higher loss on disposal of fixed assets in the third quarter of 2022. Other noninterest expense decreased 5% comparing the first nine months of 2023 to the first nine months of 2022. Included in other noninterest expense are items such as meals and entertainment, subscriptions, loss on disposal of fixed assets, sales and use tax and expenses related to wealth management.

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INCOME TAXES

In the third quarter of 2023, the Company incurred income tax expense of $1.8 million. During the first nine months of the year, the Company incurred income tax expense of $8.6 million. The Company benefitted in the third quarter of 2023 from a full quarter of strong growth in tax-exempt loan and bond portfolios that was added during the late portion of the second quarter and throughout the third quarter.  As a result, this has helped drive the Company’s effective tax rate lower. Refer to the reconciliation of the expected income tax rate to the effective tax rate that is included in Note 5 to the Consolidated Financial Statements for additional detail.

FINANCIAL CONDITION

Following is a table that represents the major categories of the Company’s balance sheet.

	As of
	September 30, 2023				June 30, 2023				December 31, 2022				September 30, 2022
	(dollars in thousands)
	Amount		%		Amount		%		Amount		%		Amount		%
Cash, federal funds sold, and interest-bearing deposits	$	184,915	2	%	$	259,096	3	%	$	183,993	2	%	$	157,325	2	%
Securities		896,394	10	%		882,888	11	%		928,102	12	%		879,450	11	%
Net loans/leases		6,518,638	77	%		6,293,523	77	%		6,051,165	76	%		5,918,121	77	%
Derivatives		291,295	3	%		170,294	2	%		177,631	2	%		185,037	2	%
Other assets		648,815	8	%		620,872	7	%		607,946	8	%		590,116	8	%
Total assets	$	8,540,057	100	%	$	8,226,673	100	%	$	7,948,837	100	%	$	7,730,049	100	%
Total deposits	$	6,494,852	76	%	$	6,606,720	81	%	$	5,984,217	75	%	$	5,941,035	76	%
Total borrowings		712,126	8	%		418,368	5	%		825,894	10	%		701,491	9	%
Derivatives		320,220	4	%		195,841	2	%		200,701	3	%		209,479	3	%
Other liabilities		184,476	2	%		183,055	2	%		165,301	2	%		140,972	2	%
Total stockholders' equity		828,383	10	%		822,689	10	%		772,724	10	%		737,072	10	%
Total liabilities and stockholders' equity	$	8,540,057	100	%	$	8,226,673	100	%	$	7,948,837	100	%	$	7,730,049	100	%

During the third quarter of 2023, the Company's total assets increased $313.4 million, or 4%, from June 30, 2023, to a total of $8.5 billion. The Company’s net loans/leases increased $225.1 million in the third quarter of 2023. The increase in net loans/leases was driven primarily by strength in our low-income housing tax credit lending business.  The Company also experienced improved loan demand from its traditional commercial lending/leasing businesses.

INVESTMENT SECURITIES

The composition of the Company’s securities portfolio is managed to meet liquidity needs while prioritizing the impact on interest rate risk, maximizing return and minimizing credit risk. Over the years, the Company has further invested in tax-exempt municipal securities made up of 89% general obligation bonds and 11% revenue bonds. The majority are privately placed tax-exempt debt issuances by municipalities located in the Midwest (with some in or near the Company's existing markets) and diversified across many issuers. The Company monitors the investments and concentration closely. Of the general obligation and revenue bonds in the Company's portfolio, the majority are unrated bonds that represent small, private issuances that require a thorough underwriting process before investment and are generated by our specialty finance group.

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Following is a breakdown of the Company's securities portfolio by type:

	As of
	September 30, 2023					June 30, 2023					December 31, 2022					September 30, 2022
	Amount			%		Amount			%		Amount			%		Amount			%
	(dollars in thousands)
U.S. treasuries and govt. sponsored agency securities	$	16,002		2	%	$	18,942		2	%	$	16,981		2	%	$	20,527		2	%
Municipal securities		764,017		85	%		743,608		84	%		779,270		84	%		724,006		83	%
Residential mortgage-backed and related securities		57,946		6	%		60,957		7	%		66,215		7	%		68,844		8	%
Asset-backed securities		16,326		2	%		17,393		2	%		18,728		2	%		19,630		2	%
Other securities		42,283		5	%		42,168		5	%		46,908		5	%		46,443		5	%
	$	896,574		100	%	$	883,068		100	%	$	928,102		100	%	$	879,450		100	%
Securities as a % of total assets		10.50	%				10.73	%				11.68	%				11.38	%
Net unrealized losses as a % of Amortized Cost		(16.86)	%				(9.81)	%				(11.26)	%				(10.27)	%
Duration (in years)		5.5					5.7					5.5					9.0
Quarterly yield on investment securities (tax equivalent)		4.55	%				4.31	%				3.99	%				4.05	%

Due to increases in intermediate and long-term interest rates during 2023, which directly impact the fair value of the Company’s AFS portfolio, the AFS portfolio declined $59.7 million, or 17.5%, from December 31, 2022 to September 30, 2023, primarily attributable to an increase in unrealized losses.  

The Company has not invested in non-agency commercial or residential mortgage-backed securities or pooled trust preferred securities. See Note 2 to the Consolidated Financial Statements for additional information regarding the Company's investment securities.

LOANS/LEASES

Total loans/leases grew 10.2% on an annualized basis during the first nine months of 2023.  The mix of the loan/lease types within the Company's loan/lease portfolio is presented in the following table.

	As of
	September 30, 2023				June 30, 2023				December 31, 2022				September 30, 2022
	Amount		%		Amount		%		Amount		%		Amount		%
	(dollars in thousands)
C&I - revolving	$	299,588	5	%	$	304,617	5	%	$	296,869	5	%	$	332,996	5	%
C&I - other *		1,487,568	22	%		1,402,553	21			1,451,693	23			1,415,996	24
CRE - owner occupied		610,618	9	%		609,717	10			629,367	10			627,558	10
CRE - non-owner occupied		955,552	14	%		963,814	15			963,239	16			920,876	15
Construction and land development		1,394,054	21	%		1,307,766	21			1,192,061	19			1,149,503	19
Multi-family		1,156,980	18	%		1,100,794	17			963,803	16			933,118	16
Direct financing leases		34,401	1	%		32,937	1			31,889	1			33,503	1
1-4 family real estate		539,931	8	%		535,405	8			499,529	8			487,508	8
Consumer		127,615	2	%		121,717	2			110,421	2			107,552	2
Total loans/leases	$	6,606,307	100	%	$	6,379,320	100	%	$	6,138,871	100	%	$	6,008,610	100	%
Less allowance		(87,669)				(85,797)				(87,706)				(90,489)
Net loans/leases	$	6,518,638			$	6,293,523			$	6,051,165			$	5,918,121

As CRE loans have historically been the Company's largest portfolio segment, management places a strong emphasis on monitoring the composition of the Company's CRE loan portfolio. For example, management tracks the level of owner-occupied CRE loans relative to non-owner-occupied loans because owner-occupied loans are generally considered to have less risk. As of September 30, 2023 and June 30, 2023, approximately 14% and 15% of the CRE loan portfolio (as defined below) was owner-occupied, respectively.

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Following is a listing of significant industries within the Company's CRE loan portfolio.  These include loans in the following portfolio segments as of September 30, 2023:  CRE owner occupied, CRE non-owner occupied, certain construction and land development, multifamily and certain 1-4 family real estate. Within the CRE Loan portfolio, there is minimal office exposure, totaling $188.9 million or 2.9% of total loans at September 30, 2023.

	As of September 30,				As of June 30,				As of December 31,				As of September 30,
	2023				2023				2022				2022
	Amount		%		Amount		%		Amount		%		Amount		%
	(dollars in thousands)
Lessors of Residential Buildings	$	2,213,149	51	%	$	2,091,510	50	%	$	1,861,197	48	%	$	1,745,720	48	%
Lessors of Nonresidential Buildings		610,919	14	%		591,128	14	%		537,940	13	%		618,190	17	%
Hotels		128,177	3	%		131,832	3	%		145,662	4	%		121,310	3	%
New Multifamily Housing Construction		83,142	2	%		80,338	2	%		82,905	2	%		40,787	1	%
New Housing For-Sale Builders		81,054	2	%		76,592	2	%		71,991	2	%		64,895	2	%
Other *		1,201,135	28	%		1,211,059	29	%		1,216,679	31	%		1,020,214	29	%
Total CRE Loans	$	4,317,576	100	%	$	4,182,459	100	%	$	3,916,374	100	%	$	3,611,116	100	%

*     “Other” consists of all other industries. None of these had concentrations greater than $60.7 million, or approximately 1.4% of total CRE loans in the most recent period presented.

The Company’s construction and land development loan portfolio includes the following:

	As of
	September 30, 2023				June 30, 2023				December 31, 2022				September 30, 2022
	Amount		%		Amount		%		Amount		%		Amount		%
	(dollars in thousands)
LIHTC	$	921,359	66	%	$	870,084	67	%	$	743,075	62	%	$	705,487	61	%
Construction (commercial)		389,947	28			359,202	27			352,941	30			353,007	32
Land development		67,186	5			61,973	5			66,825	6			70,830	6
Construction (residential)		15,562	1			16,507	1			29,220	2			20,179	2
Total construction and land development	$	1,394,054	100	%	$	1,307,766	100	%	$	1,192,061	100	%	$	1,149,503	100	%

The Company's 1-4 family real estate loan portfolio includes the following:

● Certain loans that do not meet the criteria for sale into the secondary market. These are often structured as adjustable rate mortgages with maturities ranging from three to seven years to avoid long-term interest rate risk.

● A limited amount of 15-year, 20-year and 30-year fixed rate residential real estate loans that meet certain credit guidelines.

The remaining 1-4 family real estate loans originated by the Company were sold on the secondary market to avoid the interest rate risk associated with longer term fixed rate loans. Loans originated for this purpose were classified as held for sale and are included in the residential real estate loans above. The Company has not originated any subprime, Alt-A, no documentation, or stated income residential real estate loans throughout its history.

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Following is a listing of significant equipment types within the m2 loan and lease portfolio:

	As of September 30,				As of June 30,				As of December 31,				As of September 30,
	2023				2023				2022				2022
	Amount		%		Amount		%		Amount		%		Amount		%
	(dollars in thousands)
Trucks, Vans and Vocational Vehicles	$	77,383	23	%	$	74,534	23	%	$	70,821	23	%	$	69,328	23	%
Freightliners		25,081	7	%		27,171	8	%		26,433	9	%		22,256	7	%
Trailers		24,360	7	%		25,406	8	%		23,186	7	%		22,074	7	%
Tractor		20,822	6	%		20,410	6	%		17,740	6	%		17,297	6	%
Manufacturing - General		19,424	6	%		18,263	6	%		17,493	6	%		17,079	6	%
Construction - General		18,104	5	%		17,882	5	%		16,256	5	%		15,845	5	%
Food Processing Equipment		14,164	4	%		13,838	4	%		14,304	5	%		14,566	5	%
Marine - Travelifts		13,646	4	%		13,375	4	%		14,653	5	%		13,930	5	%
Computer Equipment		13,006	4	%		9,388	3	%		7,736	2	%		7,874	3	%
Aesthetic Equipment		10,235	3	%		9,684	3	%		8,311	3	%		7,190	2	%
Computer Hardware		8,953	3	%		12,794	4	%		9,617	3	%		8,945	3	%
Other *		95,863	28	%		85,733	26	%		83,382	26	%		84,370	28	%
Total m2 loans and leases	$	341,041	100	%	$	328,478	100	%	$	309,932	100	%	$	300,754	100	%

*     “Other” consists of all other equipment types. None of these had concentrations greater than 3% of total m2 loan and lease portfolio in the most recent period presented.

See Note 3 to the Consolidated Financial Statements for additional information regarding the Company's loan and lease portfolio.

ALLOWANCE FOR CREDIT LOSSES ON LOANS/LEASES AND OFF-BALANCE SHEET EXPOSURES

The adequacy of the ACL was determined by management based on factors that included the overall composition of the loan/lease portfolio, types of loans/leases, historical loss experience, loan/lease delinquencies, potential substandard and doubtful credits, economic conditions, collateral positions, government guarantees and other factors that, in management's judgment, deserved evaluation. To ensure that an adequate ACL was maintained, provisions were made based on a number of factors, including the increase in loans/leases and a detailed analysis of the loan/lease portfolio. The loan/lease portfolio is reviewed and analyzed quarterly with specific detailed reviews completed on all credits risk-rated less than “fair quality”, as described in Note 1 to the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and carrying aggregate exposure in excess of $250 thousand. The adequacy of the allowance is monitored by the credit administration staff and reported to management and the board of directors.

Changes in the ACL for loans/leases for the three and nine months ended September 30, 2023 and 2022 are presented as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(dollars in thousands)				(dollars in thousands)
Balance, beginning	$	85,797	$	92,425	$	87,706	$	78,721
Initial ACL recorded for PCD loans		—		—		—		5,902
Change in ACL for writedown of LHFS to fair value		175		—		(3,811)		—
Provision		3,260		331		9,031		8,623
Charge-offs		(1,816)		(2,489)		(6,038)		(3,565)
Recoveries		253		222		781		808
Balance, ending	$	87,669	$	90,489	$	87,669	$	90,489

Changes in the ACL for OBS exposures for the three and nine months ended September 30, 2023 and 2022 are presented as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(dollars in thousands)				(dollars in thousands)
Balance, beginning	$	6,326	$	6,878	$	5,552	$	6,886
Provisions (credited) to expense		546		(331)		1,320		(339)
Balance, ending	$	6,872	$	6,547	$	6,872	$	6,547

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The Company's levels of criticized and classified loans are reported in the following table.

	As of
Internally Assigned Risk Rating *	September 30, 2023			June 30, 2023			December 31, 2022			September 30, 2022
	(dollars in thousands)
Special Mention (Rating 6)	$	127,202		$	116,910		$	98,333		$	63,973
Substandard (Rating 7)/Classified loans		69,369			63,956			66,021			77,317
Doubtful (Rating 8)/Classified loans		—			—			—			—
Criticized Loans	$	196,571		$	180,866		$	164,354		$	141,290
Criticized Loans as a % of Total Loans/Leases		2.98	%		2.84	%		2.68	%		2.35	%
Classified Loans as a % of Total Loans/Leases		1.05	%		1.00	%		1.08	%		1.29	%

*      Amounts above include the government guaranteed portion, if any. For the calculation of ACL, the Company assigns internal risk ratings of Pass (Rating 2) for the government guaranteed portion.

Criticized loans increased 8% and classified loans increased 9% from June 30, 2023 to September 30, 2023 due to the downgrade of four large relationships that are still performing. The Company continues its strong focus on maintaining credit quality in an effort to limit NPLs.

	As of
	September 30, 2023		June 30, 2023		December 31, 2022		September 30, 2022
ACL for loans/leases / Total loans/leases held for investment	1.39	%	1.41	%	1.43	%	1.51	%
ACL for loans/leases / NPLs	253.61	%	328.16	%	1,000.07	%	516.67	%

Although management believes that the ACL at September 30, 2023 was at a level adequate to absorb losses on existing loans/leases, there can be no assurance that such losses will not exceed the estimated amounts or that the Company will not be required to make additional provisions in the future. Unpredictable future events could adversely affect cash flows for both commercial and individual borrowers, which could cause the Company to experience increases in problem assets, delinquencies and losses on loans/leases, and require further increases in the provision for credit losses.  Asset quality is a priority for the Company and its subsidiaries. The ability to grow profitably is in part dependent upon the ability to maintain that quality. The Company continually focuses efforts at its subsidiary banks and equipment financing company with the intention to improve the overall quality of the Company's loan/lease portfolio.

See Note 3 to the Consolidated Financial Statements for additional information regarding the Company's ACL.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

NONPERFORMING ASSETS

The table below presents the amount of NPAs and related ratios.

	As of September 30,			As of June 30,			As of December 31,			As of September 30,
	2023			2023			2022			2022
	(dollars in thousands)
Nonaccrual loans/leases (1)	$	34,568		$	26,062		$	8,765		$	17,511
Accruing loans/leases past due 90 days or more		—			83			5			3
Total NPLs		34,568			26,145			8,770			17,514
Other repossessed assets		—			—			—			340
OREO		120			—			133			177
Total NPAs	$	34,688		$	26,145		$	8,903		$	18,031
NPLs to total loans/leases		0.52	%		0.41	%		0.14	%		0.29	%
NPAs to total loans/leases plus repossessed property		0.53	%		0.41	%		0.15	%		0.30	%
NPAs to total assets		0.41	%		0.32	%		0.11	%		0.23	%
Nonaccrual loans/leases to total loans/leases		0.52	%		0.41	%		0.14	%		0.29	%
ACL to nonaccrual loans		253.61	%		329.20	%		1,000.64	%		516.76	%

(1) Includes government guaranteed portion of loans, as applicable.

NPAs at September 30, 2023 were $34.7 million, up $8.5 million from June 30, 2023, and $16.7 million from September 30, 2022.  The increase in NPAs during the quarter was driven by three client relationships from unrelated industries. Approximately one-third of total NPAs consist of one credit and the Company believes this credit will be resolved without a loss. The ratio of NPAs to total assets was 0.41% at September 30, 2023, up from 0.32% at June 30, 2023, and up from 0.23% at September 30, 2022.

The majority of the NPAs consist of nonaccrual loans/leases. For nonaccrual loans/leases, management has thoroughly reviewed these loans/leases and has provided specific allowances as appropriate.

OREO is carried at the lower of carrying amount or fair value less costs to sell.

The Company's lending/leasing practices remain unchanged and asset quality remains a priority for management.

DEPOSITS

Deposits decreased $111.9 million during the third quarter of 2023. During the third quarter of 2023, the Company’s deposits, excluding brokered deposits, decreased $9.0 million to a total of $6.2 billion, or 0.1%. The Company reduced $102.8 million of brokered deposits in the third quarter.

The table below presents the composition of the Company's deposit portfolio.

	As of
	September 30, 2023				June 30, 2023				December 31, 2022				September 30, 2022
	Amount		%		Amount		%		Amount		%		Amount		%
	(dollars in thousands)
Noninterest bearing demand deposits	$	1,027,791	16	%	$	1,101,605	17	%	$	1,262,981	21	%	$	1,315,555	22	%
Interest bearing demand deposits		4,416,725	68	%		4,374,847	65	%		3,875,497	65	%		3,904,303	66	%
Time deposits		788,692	12	%		765,801	12	%		744,593	12	%		672,133	11	%
Brokered deposits		261,644	4	%		364,467	6	%		101,146	2	%		49,044	1	%
	$	6,494,852	100	%	$	6,606,720	100	%	$	5,984,217	100	%	$	5,941,035	100	%

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Estimated total uninsured and uncollateralized deposits represented 20.1% of total consolidated deposits at September 30, 2023. The Company maintained approximately $3.0 billion of available liquidity sources at September 30, 2023, which includes $1.1 billion of immediately available liquidity.

The Company actively participates in the ICS/CDARS program, which is a trusted resource that provides FDIC insurance coverage for clients that maintain larger deposit balances.  Deposits in the ICS/CDARS program totaled $2.1 billion, or 31.6% of all deposits, as of September 30, 2023.

The Company’s correspondent bank deposit portfolio and funds managed consists of the following:

● Noninterest-bearing deposits which represent correspondent banks’ operating cash used for processing transactions with the Federal Reserve,

● Money market deposits which represent excess liquidity, and

● EBA balances of the correspondent banks at the FRB.

Management will continue to focus on growing its core deposit portfolio, including its correspondent banking business at QCBT, as well as shifting the mix from brokered and other higher cost deposits to lower cost core deposits. With the significant success achieved by QCBT in growing its correspondent banking business, QCBT has developed procedures to proactively monitor this industry concentration of deposits and loans. Other deposit-related industry concentrations and large accounts are monitored by the internal asset liability management committees.

BORROWINGS

The subsidiary banks purchase federal funds for short-term funding needs from the FRB or from their correspondent banks. The table below presents the composition of the Company's short-term borrowings.

	As of
	September 30, 2023		June 30, 2023		December 31, 2022		September 30, 2022
	(dollars in thousands)
Federal funds purchased	$	470	$	1,850	$	129,630	$	85,180

The Company's federal funds purchased fluctuate based on the short-term funding needs of the Company's subsidiary banks.  

As a result of their memberships in the FHLB of Des Moines, the subsidiary banks have the ability to borrow funds for short or long-term purposes under a variety of programs. The subsidiary banks can utilize FHLB advances for loan matching as a hedge against the possibility of changing interest rates and when these advances provide a less costly or more readily available source of funds than customer deposits.  

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

The table below presents the Company's FHLB advances.

	As of
	September 30, 2023		June 30, 2023		December 31, 2022		September 30, 2022
	(dollars in thousands)
Term FHLB advances	$	135,000	$	135,000	$	—	$	—
Overnight FHLB advances		295,000		—		415,000		335,000
	$	430,000	$	135,000	$	415,000	$	335,000

The Company had an increase in overnight FHLB advances of $295.0 million from June 30, 2023 to September 30, 2023.  The increase was primarily due to the need to fund strong loan growth. The Company had no change in term FHLB advances from June 30, 2023 to September 30, 2023.  

It is management's intention to reduce its reliance on wholesale funding, including FHLB advances and brokered deposits. Replacement of this funding with core deposits helps to reduce interest expense as wholesale funding tends to be higher cost. However, the Company may choose to utilize advances and/or brokered deposits to supplement funding needs, as this is a way for the Company to effectively and efficiently manage interest rate risk.

The table below presents the maturity schedule including weighted average interest cost for the Company's combined wholesale funding portfolio (defined as FHLB advances and brokered deposits).

	September 30, 2023				December 31, 2022
			Weighted				Weighted
			Average				Average
Maturity:	Amount Due		Interest Rate		Amount Due		Interest Rate
	(dollars in thousands)
Year ending December 31:
2023	$	429,252	5.44	%	$	516,146	4.69	%
2024		127,392	5.23			—	—
2025		—	—			—	—
2026		45,000	5.01			—	—
2027		45,000	4.82			—	—
Thereafter		45,000	4.64			—	—
Total Wholesale Funding	$	691,644	5.28	%	$	516,146	4.69	%

During the first nine months of 2023, wholesale funding increased $175.5 million due to intentionally bolstering on-balance sheet liquidity and funding strong loan growth.

The Company renewed its revolving credit note in the second quarter of 2023.  At renewal, the line amount totaled $50.0 million.  Interest on the revolving line of credit is calculated at the greater of: (a) the effective Prime Rate less 0.50% and (b) 3.00% per annum.  The collateral on the revolving line of credit is 100% of the outstanding stock of the Company’s bank subsidiaries.  There was no outstanding balance on the revolving line of credit at September 30, 2023.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

STOCKHOLDERS' EQUITY

The table below presents the composition of the Company's stockholders' equity.

	As of
	September 30, 2023			June 30, 2023			December 31, 2022			September 30, 2022
	(dollars in thousands)
Common stock	$	16,732		$	16,714		$	16,796		$	16,885
Additional paid in capital		369,833			368,860			370,712			372,086
Retained earnings		523,142			499,024			450,114			422,958
AOCI		(81,324)			(61,909)			(64,898)			(74,857)
Total stockholders' equity	$	828,383		$	822,689		$	772,724		$	737,072
TCE / TA ratio (non-GAAP)		8.05	%		8.28	%		7.93	%		7.68	%

*     TCE/TA ratio is defined as total common stockholders' equity excluding goodwill and other intangibles divided by total assets. This ratio is a non-GAAP financial measure. See GAAP to Non-GAAP Reconciliations.

AOCI decreased $19.4 million during the third quarter of 2023 due to a decrease in the value of the Company’s AFS securities portfolio and certain derivatives resulting from the change in interest rates during the third quarter.

On May 19, 2022, the board of directors of the Company approved a share repurchase program under which the Company is authorized to repurchase, from time to time as the Company deems appropriate, up to 1,500,000 shares of its outstanding common stock, or approximately 10% of the outstanding shares as of December 31, 2021. As of September 30, 2023, the Company had purchased 745,000 shares under the program and all shares purchased have been retired.  No shares were repurchased during the third quarter of 2023.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity measures the ability of the Company to meet maturing obligations and its existing commitments, to withstand fluctuations in deposit levels, to fund its operations, and to provide for customer credit needs. The Company monitors liquidity risk through contingency planning stress testing on a regular basis. The Company seeks to avoid an over-concentration of funding sources and to establish and maintain contingent funding facilities that can be drawn upon if normal funding sources become unavailable. One source of liquidity is cash and short-term assets, such as interest-bearing deposits in other banks and federal funds sold, which totaled $184.9 million at September 30, 2023. The Company’s liquidity sources as of September 30, 2023 are summarized as follows:

	As of
	September 30, 2023
	(dollars in billions)
Excess cash	$	0.1
Borrowing capacity at FHLB		0.7
Borrowing capacity at FRB		0.2
Secured line of credit with upstream counterparty		0.1
Immediately available liquidity	$	1.1
Fed funds lines of credit		0.5
Brokered deposit capacity limited by Company policy		1.4
Total available liquidity excluding unpledged AFS/HTM securities	$	3.0

Including unpledged AFS and HTM securities of approximately $867.8 million, the Company’s total liquidity is strong at over 45% of total assets.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

The subsidiary banks have a variety of sources of short-term liquidity available to them, including federal funds purchased from correspondent banks, FHLB advances, wholesale structured repurchase agreements, brokered deposits, lines of credit, borrowing at the Federal Reserve Discount Window, sales of securities AFS, and loan/lease participations or sales. The Company also generates liquidity from the regular principal payments and prepayments made on its loan/lease portfolio, and on the regular monthly payments on its securities portfolio.

During the third quarter of 2023, the Company’s core deposits, excluding brokered deposits, remained static at a total of $6.2 billion.  Total uninsured and uncollateralized deposits represented 20.1% of total consolidated deposits. The Company maintained approximately $1.1 billion of immediately available liquidity at quarter-end.

The Company has increased pledging of loans to FHLB and the Fed in an effort to strengthen this contingent source of liquidity.

At September 30, 2023, the subsidiary banks had 25 unsecured lines of credit totaling $450.8 million with upstream correspondent banks.  The subsidiary banks also had availability of $144.3 million with the FRB which was secured. At September 30, 2023, the Company had the full $595.1 million available.

At December 31, 2022, the subsidiary banks had 27 unsecured lines of credit totaling $470.8 million with upstream correspondent banks.  The subsidiary banks also had availability of $31.0 million with the FRB which was secured. At December 31, 2022, $372.8 million of the $501.8 million was available.

At September 30, 2023, the subsidiary banks had availability of $730.1 million with the FHLB which was secured by loans totaling $2.2 billion.   At December 31, 2022, the subsidiary banks had availability of $551.6 million with the FHLB which was secured by loans totaling $1.7 billion.

As of September 30, 2023, the Company had $401.2 million in actual correspondent banking deposits spread over 180 relationships. While the Company believes that these funds are relatively stable, there is the potential for large fluctuations that can impact liquidity. Seasonality and the liquidity needs of these correspondent banks can impact balances. Management closely monitors these fluctuations and runs stress scenarios to measure the impact on liquidity and interest rate risk with various levels of correspondent deposit run-off.

Investing activities used cash of $426.5 million during the first nine months of 2023, compared to $404.4 million for the same period of 2022. The net decrease in federal funds sold was $36.6 million for the first nine months of 2023, compared to a net increase of $15.8 million for the same period of 2022. The net decrease in interest-bearing deposits at financial institutions was $7.0 million for the first nine months of 2023, compared to a net decrease of $49.6 million for the same period of 2022. Proceeds from calls, maturities, and paydowns of securities were $87.7 million for the first nine months of 2023, compared to $57.9 million for the same period of 2022. Purchases of securities used cash of $102.7 million for the first nine months of 2023, compared to $173.3 million for the same period of 2022. Proceeds from sales of securities were $30.6 million for the first nine months of 2023, compared to $111.4 million for the same period of 2022. The net increase in loans/leases used cash of $479.8 million for the first nine months of 2023 compared to $524.9 million for the same period of 2022.

Financing activities provided cash of $385.7 million for the first nine months of 2023, compared to $376.6 million for same period of 2022. Net increases in deposits totaled $510.6 million for the first nine months of 2023, compared to net decreases in deposits of $58.3 million for the same period of 2022. During the first nine months of 2023, the Company's short-term borrowings decreased $129.2 million, compared to an increase in short-term borrowings of $81.4 million for the same period of 2022. There were long-term FHLB advances of $135.0 million during the first nine months of 2023 compared to no long-term FHLB advances during the same period of 2022. There were no maturities and principal payments on FHLB term advances in the first nine months of 2023. There was a $16.0 million prepayment of FHLB term advances in the first nine months of 2022. Net decrease in overnight advances totaled $120.0 million for the first nine months of 2023 as compared to net increase of $320.0 million for the same period of 2022. There were no proceeds from subordinated notes in the first nine months of 2023.  Proceeds from subordinated notes totaled $100.0 million in the first

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

nine months of 2022. Repurchase and cancellation of shares totaled $8.7 million in the first nine months of 2023, as compared to $47.9 million for the same period of 2022.

Total cash provided by operating activities was $85.3 million for the first nine months of 2023, compared to $76.6 million for the same period of 2022.

Throughout its history, the Company has secured additional capital through various sources, including the issuance of common and preferred stock, as well as trust preferred securities and subordinated notes.

The Company has one LIHTC securitization that closed in October and one LIHTC securitization scheduled to close prior to the end of November. LIHTC securitizations will continue to be an ongoing tool in managing liquidity and capital.

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and subsidiary banks' financial statements. Refer to Note 9 of the Consolidated Financial Statements for additional information regarding regulatory capital.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This document (including information incorporated by reference) contains, and future oral and written statements of the Company and its management may contain, forward-looking statements, within the meaning of such term in 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,” “bode,” “predict,” “suggest,”  “project,” “appear,” “plan,” “intend,” “estimate,” “annualize,” “may,” “will,” “would,” “could,” “should,” “likely,” “might,” “potential,” “continue,” “target,” “outlook,” as well as the negative forms of those words 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.

The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors that could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, the following:

● The strength of the local, state, and national and international economies (including effects of inflationary pressures and supply chain constraints).

● 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 threats thereof (including the Russian invasion of Ukraine and the Israeli-Palestinian conflict) and 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.

● Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the FASB, the SEC or the PCAOB.

● Changes in local, state and federal laws, regulations and governmental policies concerning the Company’s general business and any other changes in response to the recent failures of other banks.

● Changes in the interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out and the recent potential additional rate increases by the Federal Reserve).

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

● Increased competition in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies, and the inability to attract new customers.

● Changes in technology and the ability to develop and maintain secure and reliable electronic systems.

● 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.

● The loss of key executives or employees.

● Changes in consumer spending.

● Unexpected outcomes of existing or new litigation involving the Company.

● The economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards.

● Fluctuations in the value of securities held in our securities portfolio.

● Concentrations within our securities portfolio, large loans to certain borrowers, and large deposits from certain clients.

● The concentration of large deposits from certain clients who have balances above current FDIC insurance limits and who may withdraw deposits to diversify their exposure.

● The level of non-performing assets on our balance sheet.

● Interruptions involving our information technology and communications systems or third-party servicers.

● Breaches or failures of our information security controls or cybersecurity-related incidents.

● 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. For a discussion of the factors that could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries, see the “Risk Factors” section included under Item 1A of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

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Part I

Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company, like other financial institutions, is subject to direct and indirect market risk. Direct market risk exists from changes in interest rates. The Company's net income is dependent on its net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest-earning assets. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.

In an attempt to manage the Company's exposure to changes in interest rates, management monitors the Company's interest rate risk. Each subsidiary bank has an asset/liability management committee of the board of directors that meets quarterly to review the bank's interest rate risk position and profitability, and to make or recommend adjustments for consideration by the full board of each bank.

Internal asset/liability management teams, consisting of members of the subsidiary banks’ management, meet bi-weekly to manage the mix of assets and liabilities to maximize earnings and liquidity and minimize interest rate and other risks. Management also reviews the subsidiary banks' securities portfolios, formulates investment strategies, and oversees the timing and implementation of transactions to assure attainment of the board's objectives in an effective manner. Notwithstanding the Company's interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income.

In adjusting the Company's asset/liability position, the board of directors and management attempt to manage the Company's interest rate risk while maintaining or enhancing net interest margins. At times, depending on the level of general interest rates, the relationship between long-term and short-term interest rates, market conditions and competitive factors, the board of directors and management may decide to increase the Company's interest rate risk position somewhat in order to increase its net interest margin. The Company's results of operations and net portfolio values remain vulnerable to increases in interest rates and to fluctuations in the difference between long-term and short-term interest rates.

One method used to quantify interest rate risk is a short-term earnings at risk summary, which is a detailed and dynamic simulation model used to quantify the estimated exposure of net interest income to sustained interest rate changes. This simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all interest sensitive assets and liabilities reflected on the Company's consolidated balance sheet. This sensitivity analysis demonstrates net interest income exposure annually over a five-year horizon, assuming no balance sheet growth, no balance sheet mix change, and various interest rate scenarios including no change in rates; 100, 200, 300, and 400 basis point upward and downward shifts; where interest-bearing assets and liabilities reprice at their earliest possible repricing date.

The model assumes parallel and pro rata shifts in interest rates over a twelve-month period for the 100, 200 and 300 basis point upward and downward shifts. For the 400 basis point upward shift, the model assumes a parallel and pro rata shift in interest rates over a twenty-four month period.

Further, in recent years, the Company added additional interest rate scenarios where interest rates experience a parallel and instantaneous shift (a “shock”) upward and downward of 100, 200, 300, and 400 basis points. The Company will run additional interest rate scenarios on an as-needed basis.

The asset/liability management committees of the subsidiary bank boards of directors have established policy limits of a 10% decline in net interest income for the 200-basis point upward and downward parallel shift. For the 300-basis point upward and downward shock, the established policy limit is a 30% decline in net interest income. The increased policy limit is appropriate as the shock scenario is extreme and unlikely and warrants a higher limit than the more realistic and traditional parallel/pro-rata shift scenarios.

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Item 3

Application of the simulation model analysis for select interest rate scenarios at the most recent quarter-end available is presented in the following table:  

	NET INTEREST INCOME EXPOSURE in YEAR 1
			As of September 30,		As of December 31,		As of December 31,
INTEREST RATE SCENARIO	POLICY LIMIT		2023		2022		2021
300 basis point downward shock	(30.0)	%	(0.2)	%	(6.1)	%	n/a
200 basis point downward shift	(10.0)	%	1.5	%	(0.2)	%	n/a
200 basis point upward shift	(10.0)	%	(2.1)	%	(1.3)	%	3.1	%
300 basis point upward shock	(30.0)	%	(5.2)	%	(2.3)	%	11.6	%

With the shift in funding from non-interest bearing and lower beta deposits to higher beta deposits, the Company’s balance sheet is now moderately liability sensitive. Notably, management is conservative with the repricing assumptions on loans and deposits.  For example, management does not model any delay in loan and deposit betas despite historical experience and practice of delays in deposit betas.  Additionally, management does not model mix shift or growth in its standard scenarios which can be impactful.  As an alternative, management runs separate scenarios to capture the impact on delayed beta performance and various shifts in mix of loans and deposits. Finally, management models a variety of scenarios including some that stress key assumptions to help capture and isolate the impact of the management’s more conservative approach to the assumptions in the base model.

The simulation is within the board-established policy limits for all four scenarios. Additionally, for all of the various interest rate scenarios modeled and measured by management (as described above), the results at September 30, 2023 were within established risk tolerances as established by policy or by best practice (if the interest rate scenario didn't have a specific policy limit).

Interest rate risk is considered to be one of the most significant market risks affecting the Company. For that reason, the Company engages the assistance of a national consulting firm and its risk management system to monitor and control the Company's interest rate risk exposure.  Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company's business activities.

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Item 4

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. An evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act of 1934) as of September 30, 2023. Based on that evaluation, the Company's management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed in the reports filed and submitted under the Exchange Act was recorded, processed, summarized and reported as and when required.

Changes in Internal Control over Financial Reporting. There have been no significant changes to the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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Part II

QCR HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1           Legal Proceedings

There are no material pending legal proceedings to which the Company or any of its subsidiaries is a party other than ordinary routine litigation incidental to their respective businesses.

Item 1A        Risk Factors

There have been no material changes in the risk factors applicable to the Company from those disclosed in Part I, Item 1.A, “Risk Factors”, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.  Please refer to that section of the Company’s Form 10-K for disclosures regarding the risks and uncertainties related to the Company’s business.

Item 2           Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

On May 19, 2022, the board of directors of the Company approved a share repurchase program under which the Company is authorized to repurchase, from time to time as the Company deems appropriate, up to 1,500,000 shares of its outstanding common stock, or approximately 10% of the outstanding shares as of December 31, 2021. The repurchase program does not have an expiration date. There were no shares repurchased under the share repurchase program during the third quarter of 2023.

			Total number of shares	Maximum number
			purchased as part of	of shares that may yet
	Total number of	Average price	publicly announced	be purchased under
Period	shares purchased	paid per share	plans or programs	the plans or programs
July 1-31, 2023	—	—	—	755,000
August 1-31, 2023	—	—	—	755,000
September 1-30, 2023	—	—	—	755,000
Total	—	$ -	—	755,000

Item 3           Defaults Upon Senior Securities

None

Item 4           Mine Safety Disclosures

Not applicable

Item 5           Other Information

During the fiscal quarter ended September 30, 2023, none of the Company’s directors or executive officers adopted or terminated a contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule10b5-1(c) or any non-Rule 10b5-1 trading arrangement.  

68

Part II

QCR HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 6           Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Inline XBRL Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022; (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2023 and September 30, 2022; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and September 30, 2022; (iv) Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2023 and September 30, 2022; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and September 30, 2022; and (vi) Notes to the Consolidated Financial Statements.
104	Inline XBRL cover page interactive data file pursuant to Rule 406 of Regulation S-T for the interactive data files referenced in Exhibit 101.

69

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

QCR HOLDINGS, INC.

(Registrant)

Date	November 8, 2023	/s/ Larry J. Helling
		Larry J. Helling
		Chief Executive Officer
Date	November 8, 2023	/s/ Todd A. Gipple
		Todd A. Gipple
		President
		Chief Financial Officer
Date	November 8, 2023	/s/ Nick W. Anderson
		Nick W. Anderson
		Chief Accounting Officer
		(Principal Accounting Officer)

70

EX-31.1

Exhibit 31.1

I, Larry J. Helling, certify that:

1.          I have reviewed this quarterly report on Form 10-Q of QCR Holdings, Inc.;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     November 8, 2023	/s/ Larry J. Helling
	Larry J. Helling
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Todd A. Gipple, certify that:

1.          I have reviewed this quarterly report on Form 10-Q of QCR Holdings, Inc.;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    November 8, 2023	/s/ Todd A. Gipple
	Todd A. Gipple
	President
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of QCR Holdings, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Larry J. Helling, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

ugust 8

/s/ Larry J. Helling

Larry J. Helling

Chief Executive Officer

November 8, 2023

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of QCR Holdings, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Todd A. Gipple, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

ugsut

/s/ Todd A. Gipple

Todd A. Gipple

President

Chief Financial Officer

November 8, 2023

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Nov. 01, 2023
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Entity File Number	0-22208
Entity Registrant Name	QCR HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	42-1397595
Entity Address, Address Line One	3551 7th Street
Entity Address, City or Town	Moline
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	61265
City Area Code	309
Local Phone Number	736-3580
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, $1.00 Par Value
Trading Symbol	QCRH
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding (in shares)		16,732,384
Entity Central Index Key	0000906465
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Assets
Cash and due from banks	$ 104,265	$ 59,723
Federal funds sold	20,300	56,910
Interest-bearing deposits at financial institutions	60,350	67,360
Securities held to maturity, at amortized cost, net of allowance for credit losses	615,115	587,142
Securities available for sale, at fair value	281,279	340,960
Total securities	896,394	928,102
Loans receivable held for sale	278,893	1,480
Loans/leases receivable held for investment	6,327,414	6,137,391
Gross loans/leases receivable	6,606,307	6,138,871
Less allowance for credit losses	(87,669)	(87,706)
Net loans/leases receivable	6,518,638	6,051,165
Bank-owned life insurance	107,389	106,580
Premises and equipment, net	118,943	117,948
Restricted investment securities	43,748	42,501
Other real estate owned, net	120	133
Goodwill	139,027	137,607
Intangibles	14,537	16,759
Derivatives	291,295	177,631
Other assets	225,051	186,418
Total assets	8,540,057	7,948,837
Liabilities and Stockholders' Equity
Noninterest-bearing	1,027,791	1,262,981
Interest-bearing	5,467,061	4,721,236
Total deposits	6,494,852	5,984,217
Short-term borrowings	470	129,630
Federal Home Loan Bank advances	430,000	415,000
Subordinated notes	232,958	232,662
Junior subordinated debentures	48,698	48,602
Derivatives	320,220	200,701
Other liabilities	184,476	165,301
Total liabilities	7,711,674	7,176,113
Stockholders' Equity:
Preferred stock, $1 par value; shares authorized 250,000 September 2023 and December 2022 - no shares issued or outstanding
Common stock, $1 par value; shares authorized 20,000,000 September 2023 - 16,731,646 shares issued and outstanding December 2022 - 16,795,942 shares issued and outstanding	16,732	16,796
Additional paid-in capital	369,833	370,712
Retained earnings	523,142	450,114
Accumulated other comprehensive loss:
Securities available for sale	(55,061)	(44,677)
Derivatives	(26,263)	(20,221)
Total stockholders' equity	828,383	772,724
Total liabilities and stockholders' equity	$ 8,540,057	$ 7,948,837

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parentheticals) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, authorized (in shares)	250,000	250,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, issued (in shares)	16,731,646	16,795,942
Common stock, outstanding (in shares)	16,731,646	16,795,942

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest and dividend income:
Taxable	$ 73,396	$ 58,143	$ 208,449	$ 147,366
Nontaxable	23,725	11,712	60,582	26,489
Securities:
Taxable	3,788	3,304	10,847	8,792
Nontaxable	5,510	4,955	15,715	13,750
Interest-bearing deposits at financial institutions	1,206	380	3,151	584
Restricted investment securities	659	673	1,677	1,439
Federal funds sold	284	100	741	114
Total interest and dividend income	108,568	79,267	301,162	198,534
Interest expense:
Deposits	43,575	12,570	111,800	21,231
Short-term borrowings	10	84	142	87
Federal Home Loan Bank advances	5,724	2,584	11,898	3,447
Other borrowings		53		53
Subordinated notes	3,307	2,518	9,922	5,888
Junior subordinated debentures	697	689	2,130	1,926
Total interest expense	53,313	18,498	135,892	32,632
Net interest income	55,255	60,769	165,270	165,902
Provision for credit losses	3,806		11,340	8,284
Net interest income after provision for credit losses	51,449	60,769	153,930	157,618
Noninterest income:
Revenue	135,161	100,362	386,117	258,044
Gains on sales of residential real estate loans, net	476	641	1,288	1,943
Gains on sales of government guaranteed portions of loans, net		50	30	69
Capital markets revenue	15,596	10,545	55,109	29,971
Securities losses, net			(451)
Earnings on bank-owned life insurance	1,807	605	3,352	1,301
Loan related fee income	800	652	2,221	1,814
Fair value gain (loss) on derivatives	(336)	904	(680)	2,242
Other	299	384	656	572
Total noninterest income	26,593	21,095	84,955	59,510
Noninterest expense:
Salaries and employee benefits	32,098	29,175	95,560	82,774
Occupancy and equipment expense	6,228	6,033	18,242	15,948
Professional and data processing fees	4,456	4,477	12,048	12,513
Acquisition costs		315		4,139
Post-acquisition compensation, transition and integration costs		62	207	4,858
FDIC insurance, other insurance and regulatory fees	1,721	1,497	5,022	4,201
Loan/lease expense	826	390	2,034	1,418
Net cost of (income from) and gains/losses on operations of other real estate	3	19	(64)	77
Advertising and marketing	1,429	1,437	4,401	3,396
Communication and data connectivity	478	639	1,614	1,626
Supplies	335	289	921	772
Bank service charges	605	568	1,831	1,719
Correspondent banking expense	232	218	663	630
Intangibles amortization	691	787	2,222	2,067
Payment card processing	733	477	1,820	1,365
Trust expense	432	227	983	609
Other	814	1,136	2,089	2,207
Total noninterest expense	51,081	47,746	149,593	140,319
Net income before income taxes	26,961	34,118	89,292	76,809
Federal and state income tax expense	1,840	4,824	8,589	8,649
Net income	$ 25,121	$ 29,294	$ 80,703	$ 68,160
Basic earnings per common share	$ 1.50	$ 1.73	$ 4.82	$ 4.25
Diluted earnings per common share	$ 1.49	$ 1.71	$ 4.79	$ 4.20
Weighted average common shares outstanding	16,717,303	16,900,968	16,731,847	16,030,371
Weighted average common and common equivalent shares outstanding	16,847,951	17,110,691	16,863,203	16,243,921
Cash dividends declared per common share	$ 0.06	$ 0.06	$ 0.18	$ 0.18
Trust fees
Noninterest income:
Revenue	$ 2,863	$ 2,537	$ 8,613	$ 7,997
Investment advisory and management fees
Noninterest income:
Revenue	947	921	2,812	2,940
Deposit service fees
Noninterest income:
Revenue	2,107	2,214	6,169	5,992
Debit card fees
Noninterest income:
Revenue	1,584	1,453	4,639	3,959
Correspondent banking fees
Noninterest income:
Revenue	$ 450	$ 189	$ 1,197	$ 710

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Net Income (Loss)	$ 25,121	$ 29,294	$ 80,703	$ 68,160
Other comprehensive loss:
Unrealized holding losses arising during the period before tax	(19,072)	(23,069)	(14,808)	(76,814)
Less reclassification adjusted for impairment losses included in net income before tax			(989)
Less reclassification adjustment for sales losses included in net income before tax			(451)
Unrealized gains (losses) on securities available for sale	(19,072)	(23,069)	(13,368)	(76,814)
Unrealized holding losses arising during the period before tax	(7,019)	(8,955)	(9,152)	(23,769)
Less reclassification adjustment for caplet amortization before tax	(224)	(261)	(638)	(723)
Unrealized losses on derivatives	(6,795)	(8,694)	(8,514)	(23,046)
Other comprehensive loss, before tax	(25,867)	(31,763)	(21,882)	(99,860)
Tax benefit	(6,452)	(6,980)	(5,456)	(23,451)
Other comprehensive loss, net of tax	(19,415)	(24,783)	(16,426)	(76,409)
Comprehensive income (loss)	$ 5,706	$ 4,511	$ 64,277	$ (8,249)

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital.	Retained Earnings.	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 31, 2021	$ 15,613	$ 273,768	$ 386,077	$ 1,552	$ 677,010
Net Income (Loss)			23,624		23,624
Other comprehensive income (loss), net of tax				(27,340)	(27,340)
Common cash dividends declared			(939)		(939)
Repurchase and cancellation of shares of common stock	(77)	(1,338)	(3,000)		(4,415)
Stock-based compensation expense		751			751
Issuance of common stock under employee benefit plans	44	(811)			(767)
Balance at Mar. 31, 2022	15,580	272,370	405,762	(25,788)	667,924
Balance at Dec. 31, 2021	15,613	273,768	386,077	1,552	677,010
Net Income (Loss)					68,160
Other comprehensive income (loss), net of tax					(76,409)
Balance at Sep. 30, 2022	16,885	372,086	422,958	(74,857)	737,072
Balance at Mar. 31, 2022	15,580	272,370	405,762	(25,788)	667,924
Net Income (Loss)			15,242		15,242
Other comprehensive income (loss), net of tax				(24,286)	(24,286)
Common cash dividends declared			(1,059)		(1,059)
Issuance of shares of common stock as a result of the acquisition	2,071	115,143			117,214
Repurchase and cancellation of shares of common stock	(603)	(13,258)	(19,155)		(33,016)
Stock-based compensation expense		545			545
Issuance of common stock under employee benefit plans	16	558			574
Balance at Jun. 30, 2022	17,064	375,358	400,790	(50,074)	743,138
Net Income (Loss)			29,294		29,294
Other comprehensive income (loss), net of tax				(24,783)	(24,783)
Common cash dividends declared			(1,012)		(1,012)
Repurchase and cancellation of shares of common stock	(190)	(4,181)	(6,114)		(10,485)
Stock-based compensation expense		382			382
Issuance of common stock under employee benefit plans	11	527			538
Balance at Sep. 30, 2022	16,885	372,086	422,958	(74,857)	737,072
Balance at Dec. 31, 2022	16,796	370,712	450,114	(64,898)	772,724
Net Income (Loss)			27,157		27,157
Other comprehensive income (loss), net of tax				9,325	9,325
Common cash dividends declared			(1,010)		(1,010)
Repurchase and cancellation of shares of common stock	(153)	(3,356)	(4,210)		(7,719)
Stock-based compensation expense		953			953
Issuance of common stock under employee benefit plans	71	(7)			64
Balance at Mar. 31, 2023	16,714	368,302	472,051	(55,573)	801,494
Balance at Dec. 31, 2022	16,796	370,712	450,114	(64,898)	772,724
Net Income (Loss)					80,703
Other comprehensive income (loss), net of tax					(16,426)
Balance at Sep. 30, 2023	16,732	369,833	523,142	(81,324)	828,383
Balance at Mar. 31, 2023	16,714	368,302	472,051	(55,573)	801,494
Net Income (Loss)			28,425		28,425
Other comprehensive income (loss), net of tax				(6,336)	(6,336)
Common cash dividends declared			(1,003)		(1,003)
Repurchase and cancellation of shares of common stock	(23)	(495)	(449)		(967)
Stock-based compensation expense		673			673
Issuance of common stock under employee benefit plans	23	380			403
Balance at Jun. 30, 2023	16,714	368,860	499,024	(61,909)	822,689
Net Income (Loss)			25,121		25,121
Other comprehensive income (loss), net of tax				(19,415)	(19,415)
Common cash dividends declared			(1,003)		(1,003)
Stock-based compensation expense		527			527
Issuance of common stock under employee benefit plans	18	446			464
Balance at Sep. 30, 2023	$ 16,732	$ 369,833	$ 523,142	$ (81,324)	$ 828,383

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (Parentheticals) - $ / shares	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Cash dividends declared per common share	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.06
Repurchase and cancellation of common stock as a result of share repurchase program (in shares)	22,500	152,500	190,000	602,500	77,500
Issuance of shares of common stock as a result of the acquisition, net of issuance cost (in shares)				2,071,291

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$ 80,703	$ 68,160
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		6,132	5,699
Provision for credit losses		11,340	8,284
Stock-based compensation expense		2,153	1,678
Deferred compensation expense accrued		4,188	3,027
Gains on other real estate owned, net		(84)	(19)
Amortization of premiums on securities, net		964	939
Caplet amortization		638	723
Fair value (gain) loss on derivatives	$ (904)	680	(2,242)
Securities losses, net		451
Loans originated for sale		(55,271)	(82,009)
Proceeds on sales of loans		57,171	88,010
Gains on sales of residential real estate loans	(641)	(1,288)	(1,943)
Gains on sales of government guaranteed portions of loans	(50)	(30)	(69)
Losses on sales and disposals of premises and equipment		386	520
Amortization of intangibles	787	2,222	2,067
Accretion of acquisition fair value adjustments, net		(1,501)	(2,893)
Increase in cash value of bank-owned life insurance		(2,221)	(1,301)
Gain on bank-owned life insurance death benefits		(1,131)
Increase in other assets		(34,126)	(33,840)
Decrease in other liabilities		13,973	21,843
Net cash provided by operating activities		85,349	76,634
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold		36,610	(15,840)
Net decrease in interest-bearing deposits at financial institutions		7,010	49,593
Proceeds from sales of other real estate owned		295	223
Activity in securities portfolio:
Purchases		(102,669)	(173,331)
Calls, maturities and redemptions		76,011	30,597
Paydowns		11,660	27,311
Sales		30,556	111,375
Activity in restricted investment securities:
Purchases		(4,908)	(19,885)
Redemptions		3,661	2,159
Net increase in loans/leases originated and held for investment		(479,757)	(524,877)
Purchase of premises and equipment		(8,023)	(27,119)
Proceeds from sales of premises and equipment		510	413
Purchase of bank-owned life insurance			(10,000)
Proceeds from bank-owned life insurance death benefits		2,543
Net cash acquired from acquisition			144,973
Net cash used in investing activities		(426,501)	(404,408)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposit accounts		510,635	(58,310)
Net increase (decrease) in short-term borrowings		(129,160)	81,380
Activity in Federal Home Loan Bank advances:
Term advances		135,000
Net change in short-term and overnight advances		(120,000)	320,000
Prepayments			(16,000)
Activity in other borrowings:
Proceeds from other borrowings			10,000
Calls, maturities and scheduled principal payments			(10,000)
Proceeds from subordinated notes			100,000
Payment of cash dividends on common stock		(3,026)	(2,933)
Proceeds from issuance of common stock, net		931	345
Repurchase and cancellation of shares		(8,686)	(47,916)
Net cash provided by financing activities		385,694	376,566
Net increase in cash and due from banks		44,542	48,792
Cash and due from banks, beginning		59,723	37,490
Cash and due from banks, ending	86,282	104,265	86,282
Supplemental disclosure of cash flow information, cash payments (receipts) for:
Interest		(258,779)	32,046
Income/franchise taxes		2,214	107
Supplemental schedule of noncash investing activities:
Change in accumulated other comprehensive income (loss), unrealized gains (losses) on securities available for sale and derivative instruments, net		(16,426)	(76,409)
Increase in fair value of fair value hedges		3,997
Transfers of loans to other real estate owned		218	326
Increase (decrease) in the fair value of back-to-back interest rate swap assets and liabilities		110,641	(48,195)
Dividends payable		1,003	1,012
Transfer of loans to loans held for sale		277,995
Measurement period adjustment to goodwill		$ 1,420
Fair value of assets acquired:
Cash and due from banks	171,844		171,844
Interest-bearing deposits at financial institutions	17,134		17,134
Securities	143,017		143,017
Loans receivable, net	801,697		801,697
Bank-owned life insurance	32,100		32,100
Premises and equipment, net	16,257		16,257
Restricted investment securities	2,220		2,220
Other real estate owned	55		55
Intangibles	10,264		10,264
Other assets	23,685		23,685
Total assets acquired	1,218,273		1,218,273
Fair value of liabilities assumed:
Deposits	1,076,573		1,076,573
FHLB advances	16,000		16,000
Subordinated debentures	19,621		19,621
Junior subordinated debentures	10,310		10,310
Other liabilities	15,225		15,225
Total liabilities assumed	1,137,729		1,137,729
Net assets acquired	$ 80,544		80,544
Consideration paid:
Cash paid			26,871
Common stock			117,214
Total consideration paid			144,085
Goodwill			63,541
Net cash paid			$ 144,973

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Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation:  The interim unaudited Consolidated Financial Statements contained herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2022, included in the Company's Annual Report on Form 10-K filed with the SEC on March 1, 2023. Accordingly, footnote disclosures, which would substantially duplicate the disclosures contained in the audited Consolidated Financial Statements, have been omitted.

The financial information of the Company included herein has been prepared in accordance with GAAP for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. Any differences appearing between the numbers presented in financial statements and management's discussion and analysis are due to rounding. The results of the interim period ended September 30, 2023 are not necessarily indicative of the results expected for the year ending December 31, 2023, or for any other period.

The acronyms and abbreviations identified below are used throughout this Quarterly Report on Form 10-Q. It may be helpful to refer back to this page as you read this report.

ACL: Allowance for credit losses	GFED: Guaranty Federal Bancshares, Inc.
Allowance: Allowance for credit losses	HTM: Held to maturity
AOCI: Accumulated other comprehensive income (loss)	LIBOR: London Inter-Bank Offered Rate
ASC: Accounting Standards Codification	LIHTC: Low-income housing tax credit
ASU: Accounting Standards Update	m2: m2 Equipment Finance, LLC
BOLI: Bank-owned life insurance	NIM: Net interest margin
Caps: Interest rate cap derivatives	NPA: Nonperforming asset
CECL: Current Expected Credit Losses	NPL: Nonperforming loan
Community National: Community National Bancorporation	OBS: Off-balance sheet
Company: QCR Holdings, Inc.	OREO: Other real estate owned
COVID-19: Coronavirus Disease 2019	OTTI: Other-than-temporary impairment
CRBT: Cedar Rapids Bank & Trust Company	PCAOB: Public Company Accounting Oversight Board
CRE: Commercial real estate	PCD: Purchase credit deteriorated loan
CSB: Community State Bank	PCI: Purchased credit impaired
C&I: Commercial and industrial	PPP: Paycheck Protection Program
EBA: Excess balance account	Provision: Provision for credit losses
EPS: Earnings per share	QCBT: Quad City Bank & Trust Company
Exchange Act: Securities Exchange Act of 1934, as	ROAA: Return on average assets
amended	ROAE: Return on average equity
FASB: Financial Accounting Standards Board	SEC: Securities and Exchange Commission
FDIC: Federal Deposit Insurance Corporation	SFCB: Springfield First Community Bank
Federal Reserve: Board of Governors of the Federal	SFG: Specialty Finance Group
Reserve System	SOFR: Secured Overnight Financing Rate
FHLB: Federal Home Loan Bank	TA: Tangible Assets
FRB: Federal Reserve Bank of Chicago	TBV: Tangible book value
Guaranty: Guaranty Bank, formerly known as Springfield First	TCE: Tangible common equity
Community Bank	TDRs: Troubled debt restructurings
	TEY: Tax equivalent yield

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries which include the accounts of four commercial banks:  QCBT, CRBT, CSB and GB. All four banks are state-chartered commercial banks and all are members of the Federal Reserve system. The Company also engages in direct financing lease contracts through m2, a wholly owned subsidiary of QCBT. The company also engages in wealth management services through its banking subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

The acquisition of GFED, the holding company of GB, headquartered in Springfield, Missouri, occurred on April 1, 2022 and on April 2, 2022, GB was merged into SFCB, the Company’s Springfield-based charter.  The combined bank changed its name to Guaranty Bank. The financial results for the periods since the acquisition and merger are included in this report.  See Note 2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information about the acquisition and merger.

Recent accounting developments: In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform,” which provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. ASU 2020-04 is effective March 12, 2020 through December 31, 2022. An entity may elect to apply ASU 2020-04 for contract modifications as of January 1, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.  In December 2022, in response to the postponement of the cessation date of LIBOR, the FASB issued ASU 2022-06 which defers the sunset date of the ASU 2020-4 guidance to December 31, 2024, after which entities will no longer be permitted to apply the relief.

Management has assessed the impacts of ASU 2020-04 and the related opportunities and risks involved in the LIBOR transition. Specifically, management has identified all of the financial instruments with LIBOR exposure, which include certain commercial loans, interest rate swaps, interest rate caps, and certain securities.  In all cases, management has determined a plan of transition from LIBOR to a different index.  This transition occurred prior to the expiration of published LIBOR rates on June 30, 2023 and did not have a significant impact on the Company’s financial statements.

In April 2022, the FASB issued ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures.”  Under the standard, the accounting guidance on troubled debt restructurings for creditors in ASC 310-40 is eliminated and guidance on “vintage disclosures” is amended to require disclosure of current-period gross write-offs by year of origination.  The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.  For public companies that have adopted ASC 326, the changes take effect in reporting periods beginning after December 15, 2022.  This standard was adopted on January 1, 2023 and did not have a significant impact on the Company’s financial statements.

In March 2023, the FASB issued ASU 2023-02, “Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a Consensus of the Emerging Issues Task Force).” Under the standard, the accounting guidance expands use of the proportional amortization method of accounting to equity investments in tax credit programs beyond those in LIHTC programs.  The ASU also prescribes specific information reporting entities must disclose about tax credit investments each period. The ASU is effective for reporting periods beginning after December 31, 2023, for public business entities, with all other entities having an extra year to adopt.  Entities will have the option of applying the ASU using either a modified retrospective or retrospective adoption approach.  For some changes related to existing LIHTC investments, prospective application is permitted. The standard is not expected to have a significant impact on the Company’s financial statements.

Reclassifications: Certain amounts in the prior year’s Consolidated Financial Statements have been reclassified, with no effect on net income or stockholders’ equity, to conform with the current period presentation.

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Note 2 - INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

INVESTMENT SECURITIES

NOTE 2– INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of September 30, 2023 and December 31, 2022 are summarized as follows:

			Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
	Cost		(Losses)		Gains		(Losses)		Value
	(dollars in thousands)
September 30, 2023:
Securities HTM:
Municipal securities	$	614,245	$	(180)	$	2,448	$	(92,718)	$	523,795
Other securities		1,050		—		—		(26)		1,024
	$	615,295	$	(180)	$	2,448	$	(92,744)	$	524,819
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	19,130	$	—	$	13	$	(3,141)	$	16,002
Residential mortgage-backed and related securities		66,433		—		—		(8,487)		57,946
Municipal securities		207,318		—		—		(57,546)		149,772
Asset-backed securities		16,226		—		144		(44)		16,326
Other securities		46,531		(989)		2		(4,311)		41,233
	$	355,638	$	(989)	$	159	$	(73,529)	$	281,279

			Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
	Cost		(Losses)		Gains		(Losses)		Value
	(dollars in thousands)
December 31, 2022:
Securities HTM:
Municipal securities	$	586,272	$	(180)	$	5,292	$	(56,798)	$	534,586
Other securities		1,050		—		—		—		1,050
	$	587,322	$	(180)	$	5,292	$	(56,798)	$	535,636
Securities AFS:
U.S. govt. sponsored agency securities	$	19,745	$	—	$	19	$	(2,783)	$	16,981
Residential mortgage-backed and related securities		73,438		—		—		(7,223)		66,215
Municipal securities		239,812		—		66		(46,700)		193,178
Asset-backed securities		18,885		—		48		(205)		18,728
Other securities		48,631		—		27		(2,800)		45,858
	$	400,511	$	—	$	160	$	(59,711)	$	340,960

The Company's HTM municipal securities consist largely of private issues of municipal debt. The large majority of the municipalities are located within the Midwest. The municipal debt investments are underwritten using specific guidelines with ongoing monitoring.

The Company's residential mortgage-backed and related securities portfolio consists entirely of government sponsored or government guaranteed securities. The Company has not invested in private mortgage-backed securities or pooled trust preferred securities.

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2023 and December 31, 2022, are summarized in the tables below. Securities available-for-sale, for which an allowance for credit losses has been provided, are not included in these disclosures.

	Less than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
September 30, 2023:
Securities HTM:
Municipal securities	$	235,313	$	(20,751)	$	237,690	$	(71,967)	$	473,003	$	(92,718)
Other securities		523		(26)		—		—		523		(26)
	$	235,836	$	(20,777)	$	237,690	$	(71,967)	$	473,526	$	(92,744)
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	1,649	$	(1)	$	13,377	$	(3,140)	$	15,026	$	(3,141)
Residential mortgage-backed and related securities		77		(1)		57,869		(8,486)		57,946		(8,487)
Municipal securities		1,067		(38)		148,159		(57,508)		149,226		(57,546)
Asset-backed securities		—		—		10,521		(44)		10,521		(44)
Other securities		3,823		(427)		34,190		(3,884)		38,013		(4,311)
	$	6,616	$	(467)	$	264,116	$	(73,062)	$	270,732	$	(73,529)

	Less than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
December 31, 2022:
Securities HTM:
Municipal securities	$	347,651	$	(56,798)	$	—	$	—	$	347,651	$	(56,798)
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	5,138	$	(326)	$	10,591	$	(2,457)	$	15,729	$	(2,783)
Residential mortgage-backed and related securities		48,469		(3,327)		17,690		(3,896)		66,159		(7,223)
Municipal securities		178,172		(42,661)		9,809		(4,039)		187,981		(46,700)
Asset-backed securities		13,684		(205)		—		—		13,684		(205)
Other securities		35,206		(2,404)		4,122		(396)		39,328		(2,800)
	$	280,669	$	(48,923)	$	42,212	$	(10,788)	$	322,881	$	(59,711)

At September 30, 2023, the investment portfolio included 644 securities. Of this number, 621 securities were in an unrealized loss position. The aggregate losses of these securities totaled approximately 17.1% of the total amortized cost of the portfolio. Of these 621 securities, there were 480 securities that had an unrealized loss for twelve months or more due to the current rate environment.  

For the quarter ended March 31, 2023, the Company’s impairment evaluation determined that one publicly traded debt security experienced a decline in fair value due to credit quality, rather than market factors. As a result, the Company recognized a credit loss expense of $989 thousand in the first quarter and established an ACL on the related AFS security. For the quarters ended June 30, 2023 and September 30, 2023, there has been no change to the ACL on the related AFS security.  

The following table presents the activity in the allowance for credit losses for held to maturity and available for sale securities by major security type for the three and nine months ended September 30, 2023 and 2022.

	Three Months Ended						Nine Months Ended
	September 30, 2023				September 30, 2022		September 30, 2023				September 30, 2022
	Securities HTM		Securities AFS		Securities HTM		Securities HTM			Securities AFS	Securities HTM
	Municipal		Corporate		Municipal		Municipal			Corporate	Municipal
	securities		securities		securities		securities			securities	securities
	(dollars in thousands)
Allowance for credit losses:
Beginning balance	$	180	$	989	$	198	$	180	$	—	$	198
Provision for credit loss expense		—		—		—		—		989		—
Balance, ending	$	180	$	989	$	198	$	180	$	989	$	198

There were no sales of securities for the three months ended September 30, 2023 and 2022. All sales of securities for the nine months ended September 30, 2023 and 2022 were securities identified as AFS.

	Nine Months Ended
	September 30, 2023		September 30, 2022
Proceeds from sales of securities	$	30,568	$	111,375
Gross gains from sales of securities		56		—
Gross losses from sales of securities		(507)		—

The amortized cost and fair value of securities as of September 30, 2023 by contractual maturity are shown below. Expected maturities of residential mortgage-backed and related securities and asset-backed securities may differ from contractual maturities because the residential mortgages underlying the securities may be prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following table.

	Amortized Cost		Fair Value
	(dollars in thousands)
Securities HTM:
Due in one year or less	$	1,907	$	1,882
Due after one year through five years		27,159		27,700
Due after five years		586,229		495,237
	$	615,295	$	524,819
Securities AFS:
Due in one year or less	$	3,160	$	3,146
Due after one year through five years		14,338		12,239
Due after five years		255,481		191,622
		272,979		207,007
Residential mortgage-backed and related securities		66,433		57,946
Asset-backed securities		16,226		16,326
	$	355,638	$	281,279

Portions of the U.S. government sponsored agency securities and municipal securities as of September 30, 2023, contain call options, which, at the discretion of the issuer, terminate the security at par and at predetermined dates prior to the stated maturity, summarized as follows:

	Amortized Cost		Fair Value
	(dollars in thousands)
Securities HTM:
Municipal securities	$	230,493	$	194,222
Securities AFS:
Municipal securities		205,747		148,235
Other securities		45,577		40,277
	$	251,324	$	188,512

As of September 30, 2023, the Company's municipal securities portfolios were comprised of general obligation bonds issued by 81 issuers with fair values totaling $80.4 million and revenue bonds, issued by 166 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $593.2 million. The Company also held investments in general obligation bonds in 18 states, including seven states in which the aggregate fair value exceeded $5.0 million, and in revenue bonds in 30 states, including 14 states in which the aggregate fair value exceeded $5.0 million.

As of December 31, 2022, the Company's municipal securities portfolios were comprised of general obligation bonds issued by 118 issuers with fair values totaling $110.6 million and revenue bonds, issued by 181 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $617.2 million. The Company also held investments in general obligation bonds in 22 states, including seven states in which the aggregate fair value exceeded $5.0 million, and in revenue bonds in 29 states, including 12 states in which the aggregate fair value exceeded $5.0 million.

Both general obligation and revenue bonds are diversified across many issuers. As of September 30, 2023 and as of December 31, 2022, the Company held revenue bonds of two issuers, both located in Ohio, of which the aggregate book or market value exceeded 5% of the Company’s stockholders’ equity. The issuers’ financial conditions are strong and the sources of repayment are diversified. The Company monitors the investments and concentration closely. Of the general obligation and revenue bonds in the Company's portfolio, the majority are unrated bonds that represent small, private issuances. All unrated bonds were underwritten according to the Company’s loan underwriting standards and have an average loan risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services such as water, sewer, education, and medical facilities.

The Company's municipal securities are owned by the four charters, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. The investments of each charter are monitored individually, and as of September 30, 2023, all were within policy limitations approved by the Company’s board of directors. Policy limits are calculated as a percentage of each charter's total risk-based capital.

As of September 30, 2023, the Company's standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credit ratings than those assigned by a nationally recognized statistical rating organization, or in the case of unrated bonds, the rating assigned using the credit underwriting standards.

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Note 3 - LOANS/LEASES RECEIVABLE

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

LOANS/LEASES RECEIVABLE

NOTE 3 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of September 30, 2023 and December 31, 2022 is presented as follows:

	September 30, 2023		December 31, 2022
	(dollars in thousands)
C&I:
C&I - revolving	$	299,588	$	296,869
C&I - other * / **		1,487,568		1,451,693
		1,787,156		1,748,562
CRE - owner occupied		610,618		629,367
CRE - non-owner occupied		955,552		963,239
Construction and land development**		1,394,054		1,192,061
Multi-family**		1,156,980		963,803
Direct financing leases***		34,401		31,889
1-4 family real estate****		539,931		499,529
Consumer		127,615		110,421
		6,606,307		6,138,871
Allowance for credit losses		(87,669)		(87,706)
	$	6,518,638	$	6,051,165
*** Direct financing leases:
Net minimum lease payments to be received	$	38,729	$	34,754
Estimated unguaranteed residual values of leased assets		165		165
Unearned lease/residual income		(4,493)		(3,030)
		34,401		31,889
Plus deferred lease origination costs, net of fees		100		226
		34,501		32,115
Less allowance for credit losses		(1,081)		(970)
	$	33,420	$	31,145

*      Includes equipment financing agreements outstanding at m2, totaling $306.6 million and $278.0 million as of September 30, 2023 and December 31, 2022, respectively.

**     As of September 30, 2023, there were C&I – other, construction and land development and multi-family loans held for sale in preparation for securitization totaling $278.0 million. The balances in these loan classes as of September 30, 2023 were $359 thousand, $12.7 million and $265.0 million, respectively. There were no loans held for sale in preparation for securitization at December 31, 2022.

***   Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal.

**** Includes residential real estate held for sale totaling $898 thousand and $1.5 million as of September 30, 2023 and December 31, 2022, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $31.3 million and $24.3 million at September 30, 2023 and December 31, 2022, respectively, and was included in other assets on the consolidated balance sheets.

Changes in discounts on acquired loans for the three and nine months ended September 30, 2023 and 2022, respectively, are presented as follows:

	For the Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	Performing		Performing			Performing	Performing
	Loans		Loans		Loans		Loans
	(dollars in thousands)
Balance at the beginning of the period	$	(5,104)	$	(12,989)	$	(6,088)	$	(1,533)
Discount added at acquisition		—		—		—		(13,381)
Accretion recognized		540		1,148		1,524		3,073
Balance at the end of the period	$	(4,564)	$	(11,841)	$	(4,564)	$	(11,841)

The aging of the loan/lease portfolio by classes of loans/leases as of September 30, 2023 and December 31, 2022 is presented as follows:

	As of September 30, 2023
										Accruing Past
				30-59 Days			60-89 Days			Due 90 Days or			Nonaccrual
Classes of Loans/Leases	Current			Past Due			Past Due			More			Loans/Leases			Total
	(dollars in thousands)
C&I:
C&I - revolving	$	299,588		$	—		$	—		$	—		$	—	$		299,588
C&I - other		1,464,582			6,609			6,155			—			10,222			1,487,568
CRE - owner occupied		606,998			133			—			—			3,487			610,618
CRE - non-owner occupied		950,286			88			—			—			5,178			955,552
Construction and land development		1,389,601			—			—			—			4,453			1,394,054
Multi-family		1,148,808			—			—			—			8,172			1,156,980
Direct financing leases		33,694			315			151			—			241			34,401
1-4 family real estate		537,271			—			405			—			2,255			539,931
Consumer		126,983			20			52			—			560			127,615
	$	6,557,811		$	7,165		$	6,763		$	—		$	34,568		$	6,606,307
As a percentage of total loan/lease portfolio		99.27	%		0.11	%		0.10	%		—	%		0.52	%		100.00	%

	As of December 31, 2022
										Accruing Past
				30-59 Days			60-89 Days			Due 90 Days or			Nonaccrual
Classes of Loans/Leases	Current			Past Due			Past Due			More			Loans/Leases			Total
	(dollars in thousands)
C&I
C&I - revolving	$	296,869		$	—		$	—		$	—		$	—		$	296,869
C&I - other		1,442,629			4,800			1,124			5			3,135			1,451,693
CRE - owner occupied		625,611			1,166			—			—			2,590			629,367
CRE - non-owner occupied		962,444			421			—			—			374			963,239
Construction and land development		1,191,929			—			—			—			132			1,192,061
Multi-family		963,803			—			—			—			—			963,803
Direct financing leases		31,557			141			56			—			135			31,889
1-4 family real estate		495,936			1,030			517			—			2,046			499,529
Consumer		110,041			27			—			—			353			110,421
	$	6,120,819		$	7,585		$	1,697		$	5		$	8,765		$	6,138,871
As a percentage of total loan/lease portfolio		99.71	%		0.12	%		0.03	%		0.00	%		0.14	%		100.00	%

NPLs by classes of loans/leases as of September 30, 2023 and December 31, 2022 are presented as follows:

	As of September 30, 2023
	Accruing Past		Nonaccrual		Nonaccrual
	Due 90 Days or		Loans/Leases		Loans/Leases				Percentage of
Classes of Loans/Leases	More		with an ACL		without an ACL		Total NPLs		Total NPLs
	(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	-	%
C&I - other		—		7,521		2,701		10,222	29.57
CRE - owner occupied		—		1,225		2,262		3,487	10.09
CRE - non-owner occupied		—		2,040		3,138		5,178	14.98
Construction and land development		—		1,930		2,523		4,453	12.88
Multi-family		—		—		8,172		8,172	23.64
Direct financing leases		—		152		89		241	0.70
1-4 family real estate		—		1,861		394		2,255	6.52
Consumer		—		560		—		560	1.62
	$	—	$	15,289	$	19,279	$	34,568	100.00	%

	As of December 31, 2022
	Accruing Past		Nonaccrual		Nonaccrual
	Due 90 Days or		Loans/Leases		Loans/Leases				Percentage of
Classes of Loans/Leases	More		with an ACL		without an ACL		Total NPLs		Total NPLs
		(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	-	%
C&I - other		5		2,775		360		3,140	35.80
CRE - owner occupied		—		1,738		852		2,590	29.53
CRE - non-owner occupied		—		68		306		374	4.26
Construction and land development		—		132		—		132	1.51
Multi-family		—		—		—		—	-
Direct financing leases		—		80		55		135	1.54
1-4 family real estate		—		1,641		405		2,046	23.33
Consumer		—		353		—		353	4.03
	$	5	$	6,787	$	1,978	$	8,770	100.00	%

The Company did not recognize any interest income on nonaccrual loans during the three and nine months ended September 30, 2023 and 2022.

Changes in the ACL loans/leases by portfolio segment for the three and nine months ended September 30, 2023 and 2022, respectively, are presented as follows:

	Three Months Ended September 30, 2023
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other*		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	4,101	$	27,162	$	8,731	$	11,968	$	15,888	$	11,229	$	5,213	$	1,505	$	85,797
Change in ACL for writedown of LHFS to fair value		—		—		—		—		—		175		—		—		175
Provision		368		1,111		192		(313)		992		875		(45)		80		3,260
Charge-offs		—		(1,734)		(14)		—		(38)		—		—		(30)		(1,816)
Recoveries		—		215		3		26		—		—		—		9		253
Balance, ending	$	4,469	$	26,754	$	8,912	$	11,681	$	16,842	$	12,279	$	5,168	$	1,564	$	87,669

	Nine Months Ended September 30, 2023
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other**		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	4,457	$	27,753	$	9,965	$	11,749	$	14,262	$	13,186	$	4,963	$	1,371	$	87,706
Change in ACL for writedown of LHFS to fair value		—		(5)		—		—		(147)		(3,659)		—		—		(3,811)
Provision		12		3,986		(834)		(99)		2,777		2,752		200		237		9,031
Charge-offs		—		(5,709)		(222)		—		(50)		—		—		(57)		(6,038)
Recoveries		—		729		3		31		—		—		5		13		781
Balance, ending	$	4,469	$	26,754	$	8,912	$	11,681	$	16,842	$	12,279	$	5,168	$	1,564	$	87,669

*   Included within the C&I – Other column are ACL on leases with a beginning balance of $1.0 million, provision of $165 thousand, charge-offs of $133 thousand and recoveries of $43 thousand. ACL on leases was $1.1 million as of September 30, 2023.

**   Included within the C&I – Other column are ACL on leases with a beginning balance of $970 thousand, provision of $224 thousand, charge-offs of $186 thousand and recoveries of $73 thousand. ACL on leases was $1.1 million as of September 30, 2023.

	Three Months Ended September 30, 2022
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other*		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	5,179	$	28,093	$	11,065	$	12,049	$	16,388	$	12,783	$	5,513	$	1,355	$	92,425
Provision		1		1,652		(606)		(161)		(693)		437		(276)		(23)		331
Charge-offs		—		(1,915)		—		—		(562)		—		(5)		(7)		(2,489)
Recoveries		—		176		—		—		—		43		—		3		222
Balance, ending	$	5,180	$	28,006	$	10,459	$	11,888	$	15,133	$	13,263	$	5,232	$	1,328	$	90,489

	Nine Months Ended September 30, 2022
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other***		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	3,907	$	25,982	$	8,501	$	8,549	$	16,972	$	9,339	$	4,541	$	930	$	78,721
Initial ACL recorded for PCD loans		600		7		2,481		1,076		1,100		481		137		20		5,902
Provision**		673		4,185		(529)		2,328		(2,377)		3,400		559		384		8,623
Charge-offs		—		(2,790)		—		(193)		(562)		—		(5)		(15)		(3,565)
Recoveries		—		622		6		128		—		43		—		9		808
Balance, ending	$	5,180	$	28,006	$	10,459	$	11,888	$	15,133	$	13,263	$	5,232	$	1,328	$	90,489

*    Included within the C&I – Other column are ACL on leases with adoption impact of $1.6 million, provision of $91 thousand, charge-offs of $708 thousand and recoveries of $65 thousand. ACL on leases was $1.0 million as of September 30, 2022.

**    Provision for the nine months ended September 30, 2022, included $11.0 million related to the acquired Guaranty Bank non-PCD loans.

***   Included within the C&I - Other column are ACL on leases with a beginning balance of $1.5 million, provision of $249 thousand, charge-offs of    $931 thousand and recoveries of $173 thousand. ACL on leases was $1.0 million as of September 30, 2022.

The composition of the ACL loans/leases by portfolio segment based on evaluation method are as follows:

	As of September 30, 2023
	Amortized Cost of Loans Receivable						Allowance for Credit Losses
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Credit Losses		Credit Losses		Total		Credit Losses		Credit Losses		Total
	(dollars in thousands)
C&I :
C&I - revolving	$	3,358	$	296,230	$	299,588	$	944	$	3,525	$	4,469
C&I - other*		19,468		1,502,501		1,521,969		2,380		24,374		26,754
		22,826		1,798,731		1,821,557		3,324		27,899		31,223
CRE - owner occupied		23,952		586,666		610,618		2,844		6,068		8,912
CRE - non-owner occupied		20,456		935,096		955,552		836		10,845		11,681
Construction and land development		4,453		1,389,601		1,394,054		307		16,535		16,842
Multi-family		9,539		1,147,441		1,156,980		427		11,852		12,279
1-4 family real estate		2,906		537,025		539,931		253		4,915		5,168
Consumer		717		126,898		127,615		72		1,492		1,564
	$	84,849	$	6,521,458	$	6,606,307	$	8,063	$	79,606	$	87,669

*   Included within the C&I – Other category are leases individually evaluated of $241 thousand with a related allowance for credit losses of $55 thousand and leases collectively evaluated of $34.2 million with a related allowance for credit losses of $1.0 million.

	As of December 31, 2022
	Amortized Cost of Loans Receivable						Allowance for Credit Losses
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Credit Losses		Credit Losses		Total		Credit Losses		Credit Losses		Total
	(dollars in thousands)
C&I :
C&I - revolving	$	3,386	$	293,483	$	296,869	$	961	$	3,496	$	4,457
C&I - other*		9,358		1,474,224		1,483,582		1,445		26,308		27,753
		12,744		1,767,707		1,780,451		2,406		29,804		32,210
CRE - owner occupied		24,880		604,487		629,367		2,853		7,112		9,965
CRE - non-owner occupied		21,588		941,651		963,239		869		10,880		11,749
Construction and land development		10,394		1,181,667		1,192,061		13		14,249		14,262
Multi-family		1,302		962,501		963,803		395		12,791		13,186
1-4 family real estate		3,177		496,352		499,529		317		4,646		4,963
Consumer		741		109,680		110,421		75		1,296		1,371
	$	74,826	$	6,064,045	$	6,138,871	$	6,928	$	80,778	$	87,706

*   Included within the C&I – Other category are leases individually evaluated of $135 thousand with a related allowance for credit losses of $24 thousand and leases collectively evaluated of $31.8 million with a related allowance for credit losses of $946 thousand.

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses as of September 30, 2023 and December 31, 2022:

	As of September 30, 2023
					Non
	Commercial		Owner-occupied		Owner-Occupied		Owner Occupied
	Assets		CRE		Real Estate		Real Estate		Securities		Equipment		Other		Total
	(dollars in thousands)
C & I:
C&I - revolving	$	3,253	$	—	$	—	$	—	$	—	$	105	$	—	$	3,358
C&I - other*		631		—		—		—		5,533		12,916		388		19,468
		3,884		—		—		—		5,533		13,021		388		22,826
CRE - owner occupied		—		23,888		—		64		—		—		—		23,952
CRE - non-owner occupied		—		—		20,456		—		—		—		—		20,456
Construction and land development		—		150		4,303		—		—		—		—		4,453
Multi-family		—		—		9,539		—		—		—		—		9,539
1-4 family real estate		—		—		27		2,879		—		—		—		2,906
Consumer		—		—		119		526		—		—		72		717
	$	3,884	$	24,038	$	34,444	$	3,469	$	5,533	$	13,021	$	460	$	84,849

*   Included within the C&I – Other category are leases individually evaluated of $241 thousand with primary collateral of equipment.

	As of December 31, 2022
					Non
	Commercial		Owner-occupied		Owner-Occupied		Owner Occupied
	Assets		CRE		Real Estate		Real Estate		Securities		Equipment		Other		Total
	(dollars in thousands)
C & I:
C&I - revolving	$	3,281	$	—	$	—	$	—	$	—	$	105	$	—	$	3,386
C&I - other*		1,589		210		—		—		108		7,289		162		9,358
		4,870		210		—		—		108		7,394		162		12,744
CRE - owner occupied		—		24,814		—		66		—		—		—		24,880
CRE - non-owner occupied		—		—		21,588		—		—		—		—		21,588
Construction and land development		—		—		10,394		—		—		—		—		10,394
Multi-family		—		—		1,302		—		—		—		—		1,302
1-4 family real estate		—		—		33		3,144		—		—		—		3,177
Consumer		—		—		120		608		—		—		13		741
	$	4,870	$	25,024	$	33,437	$	3,818	$	108	$	7,394	$	175	$	74,826

*   Included within the C&I – Other category are leases individually evaluated of $135 thousand with primary collateral of equipment.

For certain C&I loans, all CRE loans, certain construction and land development loans, all multifamily loans, certain 1-4 family residential loans and certain consumer loans, the Company’s credit quality indicator consists of internally assigned risk ratings.  Each such loan is assigned a risk rating upon origination. The risk rating is reviewed every 15 months, at a minimum, and on an as-needed basis depending on the specific circumstances of the loan.

For certain C&I loans (including equipment financing agreements and direct financing leases), certain construction and land development, certain 1-4 family real estate loans, and certain consumer loans, the Company’s credit quality indicator is performance determined by delinquency status.  Delinquency status is updated daily by the Company’s loan system.

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of September 30, 2023:

	As of September 30, 2023
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	272,848	$	272,848
Special Mention (Rating 6)		—		—		—		—		—		—		23,632		23,632
Substandard (Rating 7)		—		—		—		—		—		—		3,108		3,108
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	299,588	$	299,588
C&I - other
Pass (Ratings 1 through 5)	$	372,511	$	318,783	$	156,021	$	85,298	$	69,736	$	139,089	$	—	$	1,141,438
Special Mention (Rating 6)		12,149		8,936		4,225		3,757		801		321		—		30,189
Substandard (Rating 7)		101		123		250		—		3,152		5,675		—		9,301
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	384,761	$	327,842	$	160,496	$	89,055	$	73,689	$	145,085	$	—	$	1,180,928
CRE - owner occupied
Pass (Ratings 1 through 5)	$	71,080	$	130,033	$	148,170	$	112,315	$	30,875	$	62,220	$	11,670	$	566,363
Special Mention (Rating 6)		5,046		720		8,873		5,820		470		386		871		22,186
Substandard (Rating 7)		1,945		711		1,044		16,045		1,186		1,138		—		22,069
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	78,071	$	131,464	$	158,087	$	134,180	$	32,531	$	63,744	$	12,541	$	610,618
CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	107,668	$	290,689	$	199,435	$	131,797	$	74,778	$	84,855	$	6,412	$	895,634
Special Mention (Rating 6)		12,623		59		250		17,277		2,385		6,868		—		39,462
Substandard (Rating 7)		3,919		1,331		—		157		14,996		—		53		20,456
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	124,210	$	292,079	$	199,685	$	149,231	$	92,159	$	91,723	$	6,465	$	955,552
Construction and land development
Pass (Ratings 1 through 5)	$	353,940	$	491,807	$	286,614	$	187,894	$	8,686	$	8,083	$	26,905	$	1,363,929
Special Mention (Rating 6)		—		—		10,109		—		—		—		—		10,109
Substandard (Rating 7)		413		2,773		1,267		—		—		—		—		4,453
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	354,353	$	494,580	$	297,990	$	187,894	$	8,686	$	8,083	$	26,905	$	1,378,491
Multi-family
Pass (Ratings 1 through 5)	$	246,633	$	224,208	$	239,039	$	230,271	$	110,450	$	95,149	$	96	$	1,145,846
Special Mention (Rating 6)		1,595		—		—		—		—		—		—		1,595
Substandard (Rating 7)		—		—		8,208		1,331		—		—		—		9,539
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	248,228	$	224,208	$	247,247	$	231,602	$	110,450	$	95,149	$	96	$	1,156,980
1-4 family real estate
Pass (Ratings 1 through 5)	$	55,287	$	48,557	$	53,234	$	26,292	$	11,171	$	6,963	$	3,606	$	205,110
Special Mention (Rating 6)		29		—		—		—		—		—		—		29
Substandard (Rating 7)		25		—		—		—		2		—		—		27
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	55,341	$	48,557	$	53,234	$	26,292	$	11,173	$	6,963	$	3,606	$	205,166
Consumer
Pass (Ratings 1 through 5)	$	89	$	416	$	373	$	447	$	24	$	727	$	8,279	$	10,355
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		43		280		—		—		—		93		—		416
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	132	$	696	$	373	$	447	$	24	$	820	$	8,279	$	10,771
Total	$	1,245,096	$	1,519,426	$	1,117,112	$	818,701	$	328,712	$	411,567	$	357,480	$	5,798,094

	As of September 30, 2023
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - other
Performing	$	113,677	$	116,539	$	47,024	$	15,549	$	3,665	$	326	$	—	$	296,780
Nonperforming		616		6,437		2,442		293		67		5		—		9,860
Total C&I - other	$	114,293	$	122,976	$	49,466	$	15,842	$	3,732	$	331	$	—	$	306,640
Construction and land development
Performing	$	13,912	$	1,306	$	274	$	10	$	2	$	59	$	—	$	15,563
Nonperforming		—		—		—		—		—		—		—		—
Total Construction and land development	$	13,912	$	1,306	$	274	$	10	$	2	$	59	$	—	$	15,563
Direct financing leases
Performing	$	12,138	$	12,548	$	3,706	$	3,248	$	2,075	$	445	$	—	$	34,160
Nonperforming		—		16		22		187		16		—		—		241
Total Direct financing leases	$	12,138	$	12,564	$	3,728	$	3,435	$	2,091	$	445	$	—	$	34,401
1-4 family real estate
Performing	$	56,490	$	58,926	$	80,455	$	69,330	$	15,705	$	51,527	$	80	$	332,513
Nonperforming		—		219		642		418		327		646		—		2,252
Total 1-4 family real estate	$	56,490	$	59,145	$	81,097	$	69,748	$	16,032	$	52,173	$	80	$	334,765
Consumer
Performing	$	15,252	$	10,104	$	2,562	$	2,973	$	710	$	1,310	$	83,653	$	116,564
Nonperforming		—		5		21		13		—		187		54		280
Total Consumer	$	15,252	$	10,109	$	2,583	$	2,986	$	710	$	1,497	$	83,707	$	116,844
Total	$	212,085	$	206,100	$	137,148	$	92,021	$	22,567	$	54,505	$	83,787	$	808,213

* Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual and accruing loans/leases that are greater than or equal to 90 days past due.

The following table shows the gross charge-offs of loans and leases by class of receivable and year of origination for the three and nine months ended September 30, 2023:

	Three Months Ended September 30, 2023														Nine Months Ended September 30, 2023
	Gross Charge-off by Origination Year														Gross Charge-off by Origination Year
Classes of Loans/Leases	2023		2022		2021		2020		2019		Prior		Total		2023		2022		2021		2020		2019		Prior		Total
	(dollars in thousands)														(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
C&I - other		41		1,130		192		204		5		29		1,601		41		2,990		1,063		1,053		238		138		5,523
CRE - owner occupied		—		—		—		—		—		14		14		—		—		208		—		—		14		222
CRE - non-owner occupied		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Construction and land development		—		38		—		—		—		—		38		—		50		—		—		—		—		50
Multi-family		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Direct financing leases		—		34		55		41		3		—		133		—		71		55		41		18		1		186
1-4 family real estate		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Consumer		—		22		7		1		—		—		30		—		41		10		1		5		—		57
	$	41	$	1,224	$	254	$	246	$	8	$	43	$	1,816	$	41	$	3,152	$	1,336	$	1,095	$	261	$	153	$	6,038

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of December 31, 2022:

	As of December 31, 2022
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	275,888	$	275,888
Special Mention (Rating 6)		—		—		—		—		—		—		17,595		17,595
Substandard (Rating 7)		—		—		—		—		—		—		3,386		3,386
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	296,869	$	296,869
C&I - other
Pass (Ratings 1 through 5)	$	496,445	$	279,412	$	127,803	$	87,054	$	59,675	$	105,184	$	—	$	1,155,573
Special Mention (Rating 6)		9,542		679		901		723		—		308		—		12,153
Substandard (Rating 7)		187		125		661		4,535		310		106		—		5,924
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	506,174	$	280,216	$	129,365	$	92,312	$	59,985	$	105,598	$	—	$	1,173,650
CRE - owner occupied
Pass (Ratings 1 through 5)	$	146,211	$	182,440	$	142,596	$	33,571	$	27,088	$	45,993	$	13,460	$	591,359
Special Mention (Rating 6)		6,190		—		6,379		484		—		1,346		269		14,668
Substandard (Rating 7)		3,750		171		16,336		1,396		1,197		490		—		23,340
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	156,151	$	182,611	$	165,311	$	35,451	$	28,285	$	47,829	$	13,729	$	629,367
CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	310,163	$	221,953	$	173,478	$	89,337	$	56,898	$	40,923	$	7,510	$	900,262
Special Mention (Rating 6)		2,824		882		18,920		—		12,917		6,198		—		41,741
Substandard (Rating 7)		5,651		—		157		15,217		—		—		211		21,236
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	318,638	$	222,835	$	192,555	$	104,554	$	69,815	$	47,121	$	7,721	$	963,239
Construction and land development
Pass (Ratings 1 through 5)	$	479,016	$	330,434	$	240,778	$	31,607	$	30,300	$	—	$	29,647	$	1,141,782
Special Mention (Rating 6)		1,465		9,200		—		—		—		—		—		10,665
Substandard (Rating 7)		132		10,262		—		—		—		—		—		10,394
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	480,613	$	349,896	$	240,778	$	31,607	$	30,300	$	—	$	29,647	$	1,162,841
Multi-family
Pass (Ratings 1 through 5)	$	237,839	$	254,056	$	224,920	$	134,378	$	99,695	$	7,875	$	2,227	$	960,990
Special Mention (Rating 6)		—		44		—		1,467		—		—		—		1,511
Substandard (Rating 7)		—		—		1,302		—		—		—		—		1,302
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	237,839	$	254,100	$	226,222	$	135,845	$	99,695	$	7,875	$	2,227	$	963,803
1-4 family real estate
Pass (Ratings 1 through 5)	$	61,953	$	57,731	$	33,737	$	12,687	$	5,813	$	6,002	$	5,855	$	183,778
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		28		—		—		5		—		—		—		33
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	61,981	$	57,731	$	33,737	$	12,692	$	5,813	$	6,002	$	5,855	$	183,811
Consumer
Pass (Ratings 1 through 5)	$	511	$	801	$	493	$	122	$	254	$	621	$	10,226	$	13,028
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		282		—		12		—		112		—		—		406
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	793	$	801	$	505	$	122	$	366	$	621	$	10,226	$	13,434
Total	$	1,762,189	$	1,348,190	$	988,473	$	412,583	$	294,259	$	215,046	$	366,274	$	5,387,014

	As of December 31, 2022
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - other
Performing	$	170,180	$	69,694	$	25,540	$	8,066	$	1,804	$	79	$	—	$	275,363
Nonperforming		1,110		1,320		155		95		—		—		—		2,680
Total C&I - other	$	171,290	$	71,014	$	25,695	$	8,161	$	1,804	$	79	$	—	$	278,043
Direct financing leases
Performing	$	14,578	$	5,172	$	5,700	$	4,398	$	1,536	$	370	$	—	$	31,754
Nonperforming		—		32		88		7		8		—		—		135
Total Direct financing leases	$	14,578	$	5,204	$	5,788	$	4,405	$	1,544	$	370	$	—	$	31,889
Construction and land development
Performing	$	28,785	$	360	$	10	$	3	$	62	$	—	$	—	$	29,220
Nonperforming		—		—		—		—		—		—		—		—
Total Construction and land development	$	28,785	$	360	$	10	$	3	$	62	$	—	$	—	$	29,220
1-4 family real estate
Performing	$	69,094	$	92,762	$	75,153	$	17,089	$	11,381	$	48,136	$	90	$	313,705
Nonperforming		267		524		487		279		8		448		—		2,013
Total 1-4 family real estate	$	69,361	$	93,286	$	75,640	$	17,368	$	11,389	$	48,584	$	90	$	315,718
Consumer
Performing	$	14,685	$	3,844	$	3,717	$	1,123	$	1,140	$	1,325	$	70,974	$	96,808
Nonperforming		7		—		—		—		3		59		110		179
Total Consumer	$	14,692	$	3,844	$	3,717	$	1,123	$	1,143	$	1,384	$	71,084	$	96,987
Total	$	298,706	$	173,708	$	110,850	$	31,060	$	15,942	$	50,417	$	71,174	$	751,857

* Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual and accruing loans/leases that are greater than or equal to 90 days past due.

The following table shows the amortized cost basis of the loans and leases modified to borrowers experiencing financial difficulty by class of receivable and type of concession granted for the three and nine months ended September 30, 2023.

	For the three months ended				For the nine months ended
	September 30, 2023				September 30, 2023
	Amortized Cost				Amortized Cost
	Payment		% of Class of		Payment		% of Class of
Classes of Loans/Leases	Delay		Receivable		Delay		Receivable
	(dollars in thousands)
Direct Financing Leases	$	90	—	%	$	325	1	%

At September 30, 2023, there were no commitments to extend credit to any of the borrowers experiencing financial difficulty.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three and nine months ended September 30, 2023, that had been modified in the twelve-month period prior to the default.

The Company closely monitors the performance of the loans and leases that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. None of these loan or lease modifications were past due as of September 30, 2023.

Changes in the ACL for OBS exposures for the three and nine months ended September 30, 2023 and 2022 are presented as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(dollars in thousands)
Balance, beginning	$	6,326	$	6,878	$	5,552	$	6,886
Provisions (credited) to expense		546		(331)		1,320		(339)
Balance, ending	$	6,872	$	6,547	$	6,872	$	6,547

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

DERIVATIVES AND HEDGING ACTIVITIES

NOTE 4 – DERIVATIVES AND HEDGING ACTIVITIES

Derivatives are summarized as follows as of September 30, 2023 and December 31, 2022:

	September 30, 2023		December 31, 2022
	(dollars in thousands)
Assets:
Hedged Derivatives
Cash Flow Hedges
Interest rate caps	$	5,196	$	8,327
Interest rate swaps		3,334		477
Fair Value Hedges
Interest rate swaps		3,977		—
Unhedged Derivatives
Interest rate caps		1,533		2,213
Interest rate swaps		277,255		166,614
	$	291,295	$	177,631
Liabilities:
Hedged Derivatives
Cash Flow Hedges
Interest rate swaps		(42,095)		(33,824)
Interest rate collars		(870)		(263)
Unhedged Derivatives
Interest rate swaps		(277,255)		(166,614)
	$	(320,220)	$	(200,701)

The Company uses interest rate swap, cap and collar instruments to manage interest rate risk related to the variability of interest payments due to changes in interest rates.  

The Company has entered into interest rate caps to hedge against the risk of rising interest rates on liabilities.  The liabilities consist of $300.0 million of deposits and the benchmark rates hedged vary at 1-month SOFR, 3-month SOFR and the Prime Rate. The interest rate caps are designated as cash flow hedges in accordance with ASC 815.  An initial premium of $3.5 million was paid upfront for the caps executed.  The details of the interest rate caps are as follows:  

			Balance Sheet					Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Strike Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Deposits	1/1/2020	1/1/2023	Derivatives - Assets	$	25,000	1.75	%	$	-	$	(50)
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		25,000	1.75	%		157		714
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		50,000	1.57	%		474		1,566
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		25,000	1.80	%		237		783
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		25,000	1.75	%		1,010		1,264
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		50,000	1.57	%		2,212		2,700
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		25,000	1.80	%		1,106		1,350
				$	225,000			$	5,196	$	8,327

The Company has entered into interest rate swaps to hedge against the risk of rising rates on its variable rate trust preferred securities. All of the interest rate swaps are designated as cash flow hedges in accordance with ASC 815.  The details of the interest rate swaps are as follows:

				Balance Sheet							Fair Value as of
Hedged Item	Effective Date		Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
		(dollars in thousands)
QCR Holdings Statutory Trust II	9/30/2018		9/30/2028	Derivatives - Assets	$	10,000	8.51	%	5.85	%	$	710	$	464
QCR Holdings Statutory Trust III	9/30/2018		9/30/2028	Derivatives - Assets		8,000	8.51	%	5.85	%		568		372
QCR Holdings Statutory Trust V	7/7/2018		7/7/2028	Derivatives - Assets		10,000	7.12	%	4.54	%		691		459
Community National Statutory Trust II	9/20/2018		9/20/2028	Derivatives - Assets		3,000	7.83	%	5.17	%		212		140
Community National Statutory Trust III	9/15/2018		9/15/2028	Derivatives - Assets		3,500	7.42	%	4.75	%		247		163
Guaranty Bankshares Statutory Trust I	9/15/2018		9/15/2028	Derivatives - Assets		4,500	7.42	%	4.75	%		318		209
Guaranty Statutory Trust II*	5/23/2019		2/23/2026	Derivatives - Assets		10,310	7.09	%	4.09	%		588		477
					$	49,310					$	3,334	$	2,284
* Acquired on 4/1/2022 with GFED acquisition.

The Company has entered into interest rate swaps to hedge against the risk of declining interest rates on floating rate loans.    The interest rate swaps are designated as cash flow hedges in accordance with ASC 815.  The details of the interest rate swaps are as follows:

			Balance Sheet							Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities	$	35,000	1.40	%	5.31	%	$	(6,776)	$	(5,646)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities		50,000	1.40	%	5.31	%		(9,680)		(8,066)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities		40,000	1.40	%	5.31	%		(7,755)		(6,464)
Loans	10/1/2022	7/1/2031	Derivatives - Liabilities		25,000	1.30	%	5.31	%		(4,877)		(4,018)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		15,000	1.91	%	5.31	%		(1,301)		(1,144)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		50,000	1.91	%	5.31	%		(4,335)		(3,812)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		35,000	1.91	%	5.31	%		(3,035)		(2,669)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		50,000	1.91	%	5.31	%		(4,336)		(3,812)
				$	300,000					$	(42,095)	$	(35,631)

The Company uses interest rate collars in an effort to manage future interest rate exposure on variable rate loans.  The collar hedging strategy stabilizes interest rate fluctuations by setting both a floor and a cap.  The collar is designated as a cash flow hedge in accordance with ASC 815. The details of the interest rate collars are as follows:

										Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Cap Strike Rate		Floor Strike Rate		September 30, 2023		December 31, 2022
Loans	10/1/2022	10/1/2026	Derivatives - Liabilities	$	50,000	4.40	%	2.44	%	$	(870)	$	(263)

The Company has entered into interest rate swaps to hedge against the risk of rising rates on loans.  The interest rate swaps are designated as fair value hedges in accordance with ASC 815. The details of the interest rate swaps are as follows:

			Balance Sheet							Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Loans	7/12/2023	2/1/2026	Derivatives - Assets	$	25,000	5.31	%	4.38	%	$	204	$	N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		30,000	5.31	%	4.21	%		304		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		32,500	5.31	%	4.08	%		409		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		32,500	5.31	%	3.98	%		488		N/A
Loans	7/12/2023	2/1/2028	Derivatives - Assets		30,000	5.31	%	3.90	%		532		N/A
Loans	7/12/2023	2/1/2026	Derivatives - Assets		15,000	5.31	%	4.38	%		123		N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		15,000	5.31	%	4.21	%		152		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		15,000	5.31	%	4.08	%		189		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		15,000	5.31	%	3.98	%		225		N/A
Loans	7/12/2023	2/1/2028	Derivatives - Assets		15,000	5.31	%	3.90	%		267		N/A
Loans	7/12/2023	8/1/2025	Derivatives - Assets		15,000	5.31	%	4.60	%		90		N/A
Loans	7/12/2023	2/1/2026	Derivatives - Assets		20,000	5.31	%	4.38	%		163		N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		20,000	5.31	%	4.21	%		203		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		20,000	5.31	%	4.08	%		252		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		25,000	5.31	%	3.98	%		376		N/A
				$	325,000					$	3,977	$	N/A

Changes in fair values of derivative financial instruments accounted for as cash flow hedges, to the extent that they are included in the assessment of effectiveness, are recorded as a component of AOCI.  Changes in fair values of derivative financial instruments accounted for as fair value hedges, to the extent that they are included in the assessment of effectiveness, are recorded as a component of interest income/expense.

For derivative instruments that are designated as unhedged, the change in fair value of the derivative instrument is recognized into current earnings. The details of the unhedged interest rate caps are as follows:

		Balance Sheet					Fair Value as of
Effective Date	Maturity Date	Location	Notional Amount		Strike Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
1/1/2020	1/3/2023	Derivatives - Assets	$	25,000	1.90	%	$	-	$	3
2/1/2020	2/1/2024	Derivatives - Assets		25,000	1.90	%		310		822
3/1/2020	3/3/2025	Derivatives - Assets		25,000	1.90	%		1,223		1,388
			$	75,000			$	1,533	$	2,213

The Company has also entered into interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Company enters into an interest rate swap with a customer while at the same time entering into an equal and offsetting interest rate swap with a third-party financial institution. Additionally, the Company receives an upfront, non-refundable fee from the counterparty, dependent upon the pricing that is recognized upon receipt from the counterparty.  Because the Company acts as an intermediary for the customer, changes in the fair value of the underlying derivative contracts, for the most part, offset each other and do not significantly impact the Company’s results of operations.

Interest rate swaps that are not designated as hedging instruments are summarized as follows:

		September 30, 2023			December 31, 2022
	Notional Amount		Estimated Fair Value		Notional Amount		Estimated Fair Value
	(dollars in thousands)
Non-Hedging Interest Rate Derivatives Assets:
Interest rate swap contracts	$	2,967,392	$	277,255	$	2,528,949	$	166,614
Non-Hedging Interest Rate Derivatives Liabilities:
Interest rate swap contracts	$	2,967,392	$	277,255	$	2,528,949	$	166,614

The effect of cash flow hedging and fair value accounting on the consolidated statements of income for the three and nine months ended September 30, 2023 and 2022 are as follows:

	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
	Interest and		Interest		Interest and		Interest
	Dividend Income		Expense		Dividend Income		Expense
	(dollars in thousands)
Income and expense line items presented in the consolidated statements of income	$	108,568	$	53,313	$	79,267	$	18,498
The effects of cash flow hedging:
Gain on interest rate caps on deposits		-		(2,066)		-		(263)
Gain on interest rate swaps on junior subordinated debentures		-		(328)		-		73
Loss on interest rate swaps and collars on loans		(2,495)		-		(426)		-
The effects of fair value hedging:
Gain on interest rate swaps on loans		828		-		-		-

	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Interest and		Interest		Interest and		Interest
	Dividend Income		Expense		Dividend Income		Expense
	(dollars in thousands)
Income and expense line items presented in the consolidated statements of income	$	301,162	$	135,892	$	198,534	$	32,632
The effects of cash flow hedging:
Gain on interest rate caps on deposits		-		(5,522)		-		199
Gain on interest rate swaps on junior subordinated debentures		-		(830)		-		536
Loss on interest rate swaps and collars on loans		(6,757)		-		715		-
The effects of fair value hedging:
Gain on interest rate swaps on loans		828		-		-		-

The Company’s hedged interest rate swaps and non-hedged interest rate swaps are collateralized with cash and investment securities with carrying values as follows:

	September 30, 2023		December 31, 2022
	(dollars in thousands)
Cash	$	1,275	$	1,272
Municipal securities		3,945		8,227
Residential mortgage-backed and related securities		5,778		29,257
	$	10,998	$	38,756

The Company may be exposed to credit risk in the event of non-performance by the counterparties to its interest rate derivative agreements.  The Company assesses the credit risk of its financial institution counterparties by monitoring publicly available credit ratings and financial information.  Additionally, the Company manages financial institution counterparty credit risk by entering into interest rate derivatives only with primary and highly rated counterparties, and uses ISDA master agreements, central clearing mechanisms and counterparty limits.  The agreements contain bilateral collateral agreements with the amount of collateral to be posted generally governed by the settlement value of outstanding swaps. The Company manages the risk of default by its borrower/customer counterparties through its normal loan underwriting and credit monitoring policies and procedures. The Company underwrites the combination of the base loan amount and potential swap exposure and focuses on high quality borrowers with strong collateral values. The majority of the Company’s swapped loan portfolio consists of loans on projects, with loan-to-values, including the potential swap exposure, below 65%.  The Company does not currently anticipate any losses from failure of interest rate derivative counterparties to honor their obligations.

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Note 5 - INCOME TAXES

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

INCOME TAXES

NOTE 5 – INCOME TAXES

A reconciliation of the expected federal income tax expense to the income tax expense included in the consolidated statements of income is as follows for the three and nine months ended September 30, 2023 and 2022:

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2023				2022				2023				2022
			% of				% of				% of				% of
			Pretax				Pretax				Pretax				Pretax
	Amount		Income		Amount		Income		Amount		Income		Amount		Income
	(dollars in thousands)
Computed "expected" tax expense	$	5,661	21.0	%	$	7,165	21.0	%	$	18,751	21.0	%	$	16,130	21.0	%
Tax exempt income, net		(3,705)	(13.7)			(3,003)	(8.8)			(10,103)	(11.3)			(7,701)	(10.0)
Bank-owned life insurance		(376)	(1.4)			(127)	(0.4)			(700)	(0.8)			(273)	(0.4)
State income taxes, net of federal benefit, current year		955	3.5			1,616	4.7			3,383	3.8			3,889	5.1
Provision adjustment from accounting method change		—	—			—	—			—	—			(1,181)	(1.5)
Tax credits		(202)	(0.7)			(359)	(1.1)			(411)	(0.5)			(890)	(1.2)
Income from tax credit equity investments		(449)	(1.7)			(337)	(1.0)			(1,340)	(1.5)			(939)	(1.2)
Acquisition costs		—	—			78	0.2			—	—			450	0.6
Excess tax benefit on stock options exercised and restricted stock awards vested		(7)	(0.0)			(46)	(0.1)			(451)	(0.5)			(520)	(0.7)
Other		(37)	(0.2)			(163)	(0.4)			(540)	(0.6)			(316)	(0.4)
Federal and state income tax expense	$	1,840	6.8	%	$	4,824	14.1	%	$	8,589	9.6	%	$	8,649	11.3	%

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Note 6 - EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

EARNINGS PER SHARE

NOTE 6 - EARNINGS PER SHARE

The following information was used in the computation of EPS on a basic and diluted basis:

		Three months ended			Nine months ended
		September 30,			September 30,
		2023		2022		2023		2022
	(dollars in thousands, except share data)
Net income	$	25,121	$	29,294	$	80,703	$	68,160
Basic EPS	$	1.50	$	1.73	$	4.82	$	4.25
Diluted EPS	$	1.49	$	1.71	$	4.79	$	4.20
Weighted average common shares outstanding		16,717,303		16,900,968		16,731,847		16,030,371
Weighted average common shares issuable upon exercise of stock options
and under the employee stock purchase plan		130,648		209,723		131,356		213,550
Weighted average common and common equivalent shares outstanding		16,847,951		17,110,691		16,863,203		16,243,921

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Note 7 - FAIR VALUE

9 Months Ended

Sep. 30, 2023

FAIR VALUE

FAIR VALUE

NOTE 7 – FAIR VALUE

Accounting guidance on fair value measurement uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follows:

● Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in markets;

● Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and

● Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis comprise the following at September 30, 2023 and December 31, 2022:

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
	(dollars in thousands)
September 30, 2023:
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	16,002	$	—	$	16,002	$	—
Residential mortgage-backed and related securities		57,946		—		57,946		—
Municipal securities		149,772		—		149,772		—
Asset-backed securities		16,326		—		16,326		—
Other securities		41,233		—		41,233		—
Derivatives		291,295		—		291,295		—
Total assets measured at fair value	$	572,574	$	—	$	572,574	$	—
Derivatives	$	320,220	$	—	$	320,220	$	—
Total liabilities measured at fair value	$	320,220	$	—	$	320,220	$	—
December 31, 2022:
Securities AFS:
U.S. govt. sponsored agency securities	$	16,981	$	—	$	16,981	$	—
Residential mortgage-backed and related securities		66,215		—		66,215		—
Municipal securities		193,178		—		193,178		—
Asset-backed securities		18,728		—		18,728		—
Other securities		45,858		—		45,858		—
Derivatives		177,631		—		177,631		—
Total assets measured at fair value	$	518,591	$	—	$	518,591	$	—
Derivatives	$	200,701	$	—	$	200,701	$	—
Total liabilities measured at fair value	$	200,701	$	—	$	200,701	$	—

The securities AFS portfolio consists of securities whereby the Company obtains fair values from an independent pricing service. The fair values are determined by pricing models that consider observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2 inputs).

Interest rate caps, swaps and collars are used for the purpose of hedging interest rate risk on various financial assets and liabilities, further described in Note 4 to the Consolidated Financial Statements. Interest rate swaps are also executed for select commercial customers.  The fair values are determined by pricing models that consider observable market data for derivative instruments with similar structures (Level 2 inputs).

Certain financial assets are measured at fair value on a non-recurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when a loan/lease is collaterally dependent).

Assets measured at fair value on a non-recurring basis comprised the following at September 30, 2023 and December 31, 2022:

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
September 30, 2023:
Loans/leases evaluated individually	$	35,197	$	—	$	—	$	35,197
Loans receivable held for sale in preparation for securitization		277,995		—		—		277,995
OREO		120		—		—		120
	$	313,312	$	—	$	—	$	313,312
December 31, 2022:
Loans/leases evaluated individually	$	30,765	$	—	$	—	$	30,765
OREO		144		—		—		144
	$	30,909	$	—	$	—	$	30,909

Loans/leases evaluated individually are valued at the lower of cost or fair value and are classified as Level 3 in the fair value hierarchy. Fair value is measured based on the value of the collateral securing these loans/leases. Collateral may be comprised of real estate and/or business assets, including equipment, inventory and/or accounts receivable, and is determined based on appraisals by qualified licensed appraisers hired by the Company. Appraised and reported values are discounted based on management's historical knowledge, changes in market conditions from the time of valuation, and/or management's expertise and knowledge of the client and client's business.

Loans receivable held for sale in preparation for securitization are valued at the lower of cost or fair value in the aggregate by type and are classified as Level 3 in the fair value hierarchy.  Fair value is estimated considering the loans have a floating interest rate with a spread that is commensurate with current market pricing, in addition to factoring in a discount for credit risk.

OREO in the table above consists of property acquired through foreclosures and settlements of loans.  Property acquired is carried at the estimated fair value of the property, less disposal costs, and is classified as a Level 3 in the fair value hierarchy.  The estimated fair value of the property are generally determined based on appraisals by qualified licensed appraisers hired by the Company.  Appraised and reported values are discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the property.

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level Fair Value Measurements
	Fair Value		Fair Value
	September 30,		December 31,
	2023		2022		Valuation Technique	Unobservable Input	Range
	(dollars in thousands)
Loans/leases evaluated individually	$	35,197	$	30,765	Appraisal of collateral	Appraisal adjustments	-10.00	%	to	-30.00	%
Loans receivable held for sale in preparation for securitization		277,995		—	Market prices for similar loans	Market price adjustments			n/a
OREO		130		144	Appraisal of collateral	Appraisal adjustments	0.00	%	to	-35.00	%

For the loans/leases evaluated individually, the Company records carrying value at fair value less disposal or selling costs. The amounts reported in the tables above are fair values before the adjustment for disposal or selling costs.

For the loans receivable held for sale in preparation for securitization, the Company records carrying value at fair value factoring in a discount for credit risk.

There have been no changes in valuation techniques used for any assets or liabilities measured at fair value during the three and nine months ended September 30, 2023 and 2022.

The following table presents the carrying values and estimated fair values of financial assets and liabilities carried on the Company's consolidated balance sheets, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis:

	Fair Value	As of September 30, 2023				As of December 31, 2022
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Value		Fair Value		Value		Fair Value
		(dollars in thousands)
Cash and due from banks	Level 1	$	104,265	$	104,265	$	59,723	$	59,723
Federal funds sold	Level 2		20,300		20,300		56,910		56,910
Interest-bearing deposits at financial institutions	Level 2		60,350		60,350		67,360		67,360
Investment securities:
HTM	Level 2		615,115		524,819		587,142		535,636
AFS	Level 2		281,279		281,279		340,960		340,960
Loans/leases receivable, net	Level 3		310,585		313,192		28,486		30,765
Loans/leases receivable, net	Level 2		6,208,053		5,907,226		6,022,679		5,896,443
Derivatives	Level 2		291,295		291,295		177,631		177,631
Deposits:
Nonmaturity deposits	Level 2		5,522,283		5,522,283		5,199,633		5,199,633
Time deposits	Level 2		972,569		966,026		784,584		766,294
Short-term borrowings	Level 2		470		470		129,630		129,630
FHLB advances	Level 2		430,000		429,450		415,000		415,000
Subordinated notes	Level 2		232,958		249,002		232,662		250,613
Junior subordinated debentures	Level 2		48,698		40,204		48,602		41,545
Derivatives	Level 2		320,220		320,220		200,701		200,701

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Note 8 - BUSINESS SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2023

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION

NOTE 8 – BUSINESS SEGMENT INFORMATION

Selected financial and descriptive information is required to be disclosed for reportable operating segments, applying a “management perspective” as the basis for identifying reportable segments. The management perspective is determined by the view that management takes of the segments within the Company when making operating decisions, allocating resources, and measuring performance. The segments of the Company have been defined by the structure of the Company's internal organization, focusing on the financial information that the Company's operating decision-makers routinely use to make decisions about operating matters.

The Company’s Commercial Banking business is geographically divided by markets into the operating segments which are the four subsidiary banks wholly owned by the Company:  QCBT, CRBT, CSB, and GB. Each of these operating segments offers similar products and services, but is managed separately due to different pricing, product demand, and consumer markets. Each offers commercial, consumer, and mortgage loans and deposit services.

The Company's All Other segment includes the corporate operations of the parent and operations of all other consolidated subsidiaries and/or defined operating segments that fall below the segment reporting thresholds.  

Selected financial information on the Company's business segments is presented as follows as of and for the three and nine months ended September 30, 2023 and 2022:

	Commercial Banking										Intercompany		Consolidated
	QCBT		CRBT		CSB		GB		All other		Eliminations		Total
	(dollars in thousands)
Three Months Ended September 30, 2023
Total revenue	$	38,165	$	43,592	$	19,225	$	34,498	$	31,878	$	(32,197)	$	135,161
Net interest income		17,198		16,852		11,136		13,743		(3,958)		284		55,255
Provision for credit losses		2,686		503		275		342		—		—		3,806
Net income (loss) from continuing operations		5,856		13,175		4,740		6,801		25,641		(31,092)		25,121
Goodwill		3,223		14,980		9,888		110,936		—		—		139,027
Intangibles		—		950		1,579		12,008		—		—		14,537
Total assets		2,433,084		2,442,263		1,417,249		2,242,638		1,146,137		(1,141,314)		8,540,057
Three Months Ended September 30, 2022
Total revenue	$	26,583	$	34,157	$	14,127	$	25,523	$	36,283	$	(36,311)	$	100,362
Net interest income		18,117		17,160		10,183		18,196		(3,242)		355		60,769
Provision for loan/lease losses		554		(35)		(269)		(250)		—		—		—
Net income (loss) from continuing operations		7,758		14,475		4,106		9,196		29,542		(35,783)		29,294
Goodwill		3,223		14,980		9,888		109,516		—		—		137,607
Intangibles		—		1,344		2,184		14,018		—		—		17,546
Total assets		2,218,166		2,108,614		1,270,426		2,107,407		1,045,774		(1,020,338)		7,730,049
Nine Months Ended September 30, 2023
Total revenue	$	106,664	$	138,018	$	53,126	$	90,443	$	101,472	$	(103,606)	$	386,117
Net interest income		50,590		50,254		32,683		42,716		(11,911)		938		165,270
Provision for loan/lease losses		7,879		2,499		965		(3)		—		—		11,340
Net income (loss) from continuing operations		17,710		48,928		14,113		17,344		82,266		(99,658)		80,703
Goodwill		3,223		14,980		9,888		110,936		—		—		139,027
Intangibles		—		950		1,579		12,008		—		—		14,537
Total assets		2,433,084		2,442,263		1,417,249		2,242,638		1,146,137		(1,141,314)		8,540,057
Nine Months Ended September 30, 2022
Total revenue	$	72,785	$	91,083	$	37,534	$	57,036	$	91,989	$	(92,383)	$	258,044
Net interest income		53,971		46,576		29,365		42,789		(7,845)		1,046		165,902
Provision for loan/lease losses		(88)		(971)		(554)		9,897		—		—		8,284
Net income (loss) from continuing operations		26,153		38,860		11,606		13,327		68,982		(90,768)		68,160
Goodwill		3,223		14,980		9,888		109,516		—		—		137,607
Intangibles		—		1,344		2,184		14,018		—		—		17,546
Total assets		2,218,166		2,108,614		1,270,426		2,107,407		1,045,774		(1,020,338)		7,730,049

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Note 9 - REGULATORY CAPITAL REQUIREMENTS

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

REGULATORY CAPITAL REQUIREMENTS

NOTE 9 – REGULATORY CAPITAL REQUIREMENTS

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and the subsidiary banks' financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain OBS items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the subsidiary banks to maintain minimum amounts and ratios (set forth in the following table) of total common equity Tier 1 and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets, each as defined by regulation.  Management believes, as of September 30, 2023 and December 31, 2022, that the Company and the subsidiary banks met all capital adequacy requirements to which they are subject.

Under the regulatory framework for prompt corrective action, to be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and common equity Tier 1 ratios as set forth in the following tables. The Company and the subsidiary banks’ actual capital amounts and ratios as of September 30, 2023 and

December 31, 2022 are presented in the following tables (dollars in thousands).  As of September 30, 2023 and December 31, 2022, each of the subsidiary banks met such capital requirements to be “well capitalized”.

										For Capital					To Be Well
										Adequacy Purposes					Capitalized Under
					For Capital					With Capital					Prompt Corrective
	Actual				Adequacy Purposes					Conservation Buffer					Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
	( dollars in thousands)
As of September 30, 2023:
Company:
Total risk-based capital	$	1,135,262	14.54	%	$	624,805	>	8.00	%	$	820,057	>	10.50	%	$	781,007	>	10.00	%
Tier 1 risk-based capital		807,582	10.34			468,604	>	6.00			663,856	>	8.50			624,805	>	8.00
Tier 1 leverage		807,582	9.92			325,480	>	4.00			325,480	>	4.00			406,850	>	5.00
Common equity Tier 1		758,884	9.72			351,453	>	4.50			546,705	>	7.00			507,654	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	295,319	12.90	%	$	183,095	>	8.00	%	$	240,313	>	10.50	%	$	228,869	>	10.00	%
Tier 1 risk-based capital		266,688	11.65			137,321	>	6.00			194,539	>	8.50			183,095	>	8.00
Tier 1 leverage		266,688	11.10			96,111	>	4.00			96,111	>	4.00			120,139	>	5.00
Common equity Tier 1		266,688	11.65			102,991	>	4.50			160,208	>	7.00			148,765	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	358,150	17.05	%	$	168,021	>	8.00	%	$	220,527	>	10.50	%	$	210,026	>	10.00	%
Tier 1 risk-based capital		331,423	15.78			126,016	>	6.00			178,522	>	8.50			168,021	>	8.00
Tier 1 leverage		331,423	14.60			90,799	>	4.00			90,799	>	4.00			113,498	>	5.00
Common equity Tier 1		331,423	15.78			94,512	>	4.50			147,018	>	7.00			136,517	>	6.50
Community State Bank:
Total risk-based capital	$	177,296	13.57	%	$	104,554	>	8.00	%	$	137,227	>	10.50	%	$	130,693	>	10.00	%
Tier 1 risk-based capital		152,596	11.68			78,416	>	6.00			111,089	>	8.50			104,554	>	8.00
Tier 1 leverage		152,596	11.24			54,303	>	4.00			54,303	>	4.00			67,879	>	5.00
Common equity Tier 1		152,596	11.68			58,812	>	4.50			91,485	>	7.00			84,950	>	6.50
Guaranty Bank:
Total risk-based capital	$	258,732	12.53	%	$	165,160	>	8.00	%	$	216,772	>	10.50	%	$	206,450	>	10.00	%
Tier 1 risk-based capital		236,071	11.43			123,870	>	6.00			175,482	>	8.50			165,160	>	8.00
Tier 1 leverage		236,071	11.22			84,130	>	4.00			84,130	>	4.00			105,162	>	5.00
Common equity Tier 1		236,071	11.43			92,902	>	4.50			144,515	>	7.00			134,192	>	6.50

										For Capital					To Be Well
										Adequacy Purposes					Capitalized Under
					For Capital					With Capital					Prompt Corrective
	Actual				Adequacy Purposes					Conservation Buffer					Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
	( dollars in thousands)
As of December 31, 2022:
Company:
Total risk-based capital	$	1,055,177	14.28	%	$	591,132	>	8.00	%	$	775,861	>	10.50	%	$	738,915	>	10.00	%
Tier 1 risk-based capital		734,977	9.95			443,349	>	6.00			628,078	>	8.50			591,132	>	8.00
Tier 1 leverage		734,977	9.61			305,959	>	4.00			305,959	>	4.00			382,449	>	5.00
Common equity Tier 1		686,375	9.29			332,512	>	4.50			517,241	>	7.00			480,295	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	275,337	13.07	%	$	168,588	>	8.00	%	$	221,272	>	10.50	%	$	210,735	>	10.00	%
Tier 1 risk-based capital		248,978	11.81			126,441	>	6.00			179,125	>	8.50			168,588	>	8.00
Tier 1 leverage		248,978	11.01			90,419	>	4.00			90,419	>	4.00			133,023	>	5.00
Common equity Tier 1		248,978	11.81			94,831	>	4.50			147,514	>	7.00			136,978	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	308,153	14.84	%	$	166,168	>	8.00	%	$	218,096	>	10.50	%	$	207,711	>	10.00	%
Tier 1 risk-based capital		282,258	13.59			124,626	>	6.00			176,554	>	8.50			166,168	>	8.00
Tier 1 leverage		282,258	13.17			85,707	>	4.00			85,707	>	4.00			107,134	>	5.00
Common equity Tier 1		282,258	13.59			93,470	>	4.50			145,397	>	7.00			135,012	>	6.50
Community State Bank:
Total risk-based capital	$	142,974	12.04	%	$	94,981	>	8.00	%	$	124,662	>	10.50	%	$	118,726	>	10.00	%
Tier 1 risk-based capital		128,130	10.79			71,236	>	6.00			100,917	>	8.50			94,981	>	8.00
Tier 1 leverage		128,130	10.09			50,799	>	4.00			50,799	>	4.00			63,499	>	5.00
Common equity Tier 1		128,130	10.79			53,427	>	4.50			83,108	>	7.00			77,172	>	6.50
Guaranty Bank:
Total risk-based capital	$	243,106	12.24	%	$	158,903	>	8.00	%	$	208,560	>	10.50	%	$	198,629	>	10.00	%
Tier 1 risk-based capital		218,647	11.01			119,177	>	6.00			168,834	>	8.50			158,903	>	8.00
Tier 1 leverage		218,647	10.90			80,229	>	4.00			80,229	>	4.00			100,286	>	5.00
Common equity Tier 1		218,647	11.01			89,383	>	4.50			139,040	>	7.00			129,109	>	6.50

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Note 10 - COMMITMENTS

9 Months Ended

Sep. 30, 2023

COMMITMENTS

COMMITMENTS

NOTE 10 - COMMITMENTS

The Company entered into a construction contract in 2023 for the construction of a new CRBT facility in Cedar Rapids, Iowa.  The Company will pay the contractor a contract price of approximately $17.0 million, subject to additions and deductions as provided in the contract documents. As of September 30, 2023, the Company has paid $1.2 million of the contract price, resulting in a remaining future commitment of $15.8 million. Construction is anticipated to be completed in 2024.  

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Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies

Basis of presentation

Basis of presentation:  The interim unaudited Consolidated Financial Statements contained herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2022, included in the Company's Annual Report on Form 10-K filed with the SEC on March 1, 2023. Accordingly, footnote disclosures, which would substantially duplicate the disclosures contained in the audited Consolidated Financial Statements, have been omitted.

The financial information of the Company included herein has been prepared in accordance with GAAP for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. Any differences appearing between the numbers presented in financial statements and management's discussion and analysis are due to rounding. The results of the interim period ended September 30, 2023 are not necessarily indicative of the results expected for the year ending December 31, 2023, or for any other period.

The acronyms and abbreviations identified below are used throughout this Quarterly Report on Form 10-Q. It may be helpful to refer back to this page as you read this report.

ACL: Allowance for credit losses	GFED: Guaranty Federal Bancshares, Inc.
Allowance: Allowance for credit losses	HTM: Held to maturity
AOCI: Accumulated other comprehensive income (loss)	LIBOR: London Inter-Bank Offered Rate
ASC: Accounting Standards Codification	LIHTC: Low-income housing tax credit
ASU: Accounting Standards Update	m2: m2 Equipment Finance, LLC
BOLI: Bank-owned life insurance	NIM: Net interest margin
Caps: Interest rate cap derivatives	NPA: Nonperforming asset
CECL: Current Expected Credit Losses	NPL: Nonperforming loan
Community National: Community National Bancorporation	OBS: Off-balance sheet
Company: QCR Holdings, Inc.	OREO: Other real estate owned
COVID-19: Coronavirus Disease 2019	OTTI: Other-than-temporary impairment
CRBT: Cedar Rapids Bank & Trust Company	PCAOB: Public Company Accounting Oversight Board
CRE: Commercial real estate	PCD: Purchase credit deteriorated loan
CSB: Community State Bank	PCI: Purchased credit impaired
C&I: Commercial and industrial	PPP: Paycheck Protection Program
EBA: Excess balance account	Provision: Provision for credit losses
EPS: Earnings per share	QCBT: Quad City Bank & Trust Company
Exchange Act: Securities Exchange Act of 1934, as	ROAA: Return on average assets
amended	ROAE: Return on average equity
FASB: Financial Accounting Standards Board	SEC: Securities and Exchange Commission
FDIC: Federal Deposit Insurance Corporation	SFCB: Springfield First Community Bank
Federal Reserve: Board of Governors of the Federal	SFG: Specialty Finance Group
Reserve System	SOFR: Secured Overnight Financing Rate
FHLB: Federal Home Loan Bank	TA: Tangible Assets
FRB: Federal Reserve Bank of Chicago	TBV: Tangible book value
Guaranty: Guaranty Bank, formerly known as Springfield First	TCE: Tangible common equity
Community Bank	TDRs: Troubled debt restructurings
	TEY: Tax equivalent yield

Principles of consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries which include the accounts of four commercial banks:  QCBT, CRBT, CSB and GB. All four banks are state-chartered commercial banks and all are members of the Federal Reserve system. The Company also engages in direct financing lease contracts through m2, a wholly owned subsidiary of QCBT. The company also engages in wealth management services through its banking subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

The acquisition of GFED, the holding company of GB, headquartered in Springfield, Missouri, occurred on April 1, 2022 and on April 2, 2022, GB was merged into SFCB, the Company’s Springfield-based charter.  The combined bank changed its name to Guaranty Bank. The financial results for the periods since the acquisition and merger are included in this report.  See Note 2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information about the acquisition and merger.

Recent accounting developments

Recent accounting developments: In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform,” which provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. ASU 2020-04 is effective March 12, 2020 through December 31, 2022. An entity may elect to apply ASU 2020-04 for contract modifications as of January 1, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.  In December 2022, in response to the postponement of the cessation date of LIBOR, the FASB issued ASU 2022-06 which defers the sunset date of the ASU 2020-4 guidance to December 31, 2024, after which entities will no longer be permitted to apply the relief.

Management has assessed the impacts of ASU 2020-04 and the related opportunities and risks involved in the LIBOR transition. Specifically, management has identified all of the financial instruments with LIBOR exposure, which include certain commercial loans, interest rate swaps, interest rate caps, and certain securities.  In all cases, management has determined a plan of transition from LIBOR to a different index.  This transition occurred prior to the expiration of published LIBOR rates on June 30, 2023 and did not have a significant impact on the Company’s financial statements.

In April 2022, the FASB issued ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures.”  Under the standard, the accounting guidance on troubled debt restructurings for creditors in ASC 310-40 is eliminated and guidance on “vintage disclosures” is amended to require disclosure of current-period gross write-offs by year of origination.  The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.  For public companies that have adopted ASC 326, the changes take effect in reporting periods beginning after December 15, 2022.  This standard was adopted on January 1, 2023 and did not have a significant impact on the Company’s financial statements.

In March 2023, the FASB issued ASU 2023-02, “Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a Consensus of the Emerging Issues Task Force).” Under the standard, the accounting guidance expands use of the proportional amortization method of accounting to equity investments in tax credit programs beyond those in LIHTC programs.  The ASU also prescribes specific information reporting entities must disclose about tax credit investments each period. The ASU is effective for reporting periods beginning after December 31, 2023, for public business entities, with all other entities having an extra year to adopt.  Entities will have the option of applying the ASU using either a modified retrospective or retrospective adoption approach.  For some changes related to existing LIHTC investments, prospective application is permitted. The standard is not expected to have a significant impact on the Company’s financial statements.

Reclassifications

Reclassifications: Certain amounts in the prior year’s Consolidated Financial Statements have been reclassified, with no effect on net income or stockholders’ equity, to conform with the current period presentation.

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Note 2 - INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Amortized cost and fair value of investment securities

			Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
	Cost		(Losses)		Gains		(Losses)		Value
	(dollars in thousands)
September 30, 2023:
Securities HTM:
Municipal securities	$	614,245	$	(180)	$	2,448	$	(92,718)	$	523,795
Other securities		1,050		—		—		(26)		1,024
	$	615,295	$	(180)	$	2,448	$	(92,744)	$	524,819
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	19,130	$	—	$	13	$	(3,141)	$	16,002
Residential mortgage-backed and related securities		66,433		—		—		(8,487)		57,946
Municipal securities		207,318		—		—		(57,546)		149,772
Asset-backed securities		16,226		—		144		(44)		16,326
Other securities		46,531		(989)		2		(4,311)		41,233
	$	355,638	$	(989)	$	159	$	(73,529)	$	281,279

			Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
	Cost		(Losses)		Gains		(Losses)		Value
	(dollars in thousands)
December 31, 2022:
Securities HTM:
Municipal securities	$	586,272	$	(180)	$	5,292	$	(56,798)	$	534,586
Other securities		1,050		—		—		—		1,050
	$	587,322	$	(180)	$	5,292	$	(56,798)	$	535,636
Securities AFS:
U.S. govt. sponsored agency securities	$	19,745	$	—	$	19	$	(2,783)	$	16,981
Residential mortgage-backed and related securities		73,438		—		—		(7,223)		66,215
Municipal securities		239,812		—		66		(46,700)		193,178
Asset-backed securities		18,885		—		48		(205)		18,728
Other securities		48,631		—		27		(2,800)		45,858
	$	400,511	$	—	$	160	$	(59,711)	$	340,960

Securities have been in a continuous unrealized loss position

	Less than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
September 30, 2023:
Securities HTM:
Municipal securities	$	235,313	$	(20,751)	$	237,690	$	(71,967)	$	473,003	$	(92,718)
Other securities		523		(26)		—		—		523		(26)
	$	235,836	$	(20,777)	$	237,690	$	(71,967)	$	473,526	$	(92,744)
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	1,649	$	(1)	$	13,377	$	(3,140)	$	15,026	$	(3,141)
Residential mortgage-backed and related securities		77		(1)		57,869		(8,486)		57,946		(8,487)
Municipal securities		1,067		(38)		148,159		(57,508)		149,226		(57,546)
Asset-backed securities		—		—		10,521		(44)		10,521		(44)
Other securities		3,823		(427)		34,190		(3,884)		38,013		(4,311)
	$	6,616	$	(467)	$	264,116	$	(73,062)	$	270,732	$	(73,529)

	Less than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
December 31, 2022:
Securities HTM:
Municipal securities	$	347,651	$	(56,798)	$	—	$	—	$	347,651	$	(56,798)
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	5,138	$	(326)	$	10,591	$	(2,457)	$	15,729	$	(2,783)
Residential mortgage-backed and related securities		48,469		(3,327)		17,690		(3,896)		66,159		(7,223)
Municipal securities		178,172		(42,661)		9,809		(4,039)		187,981		(46,700)
Asset-backed securities		13,684		(205)		—		—		13,684		(205)
Other securities		35,206		(2,404)		4,122		(396)		39,328		(2,800)
	$	280,669	$	(48,923)	$	42,212	$	(10,788)	$	322,881	$	(59,711)

Activity in allowance for credit losses

	Three Months Ended						Nine Months Ended
	September 30, 2023				September 30, 2022		September 30, 2023				September 30, 2022
	Securities HTM		Securities AFS		Securities HTM		Securities HTM			Securities AFS	Securities HTM
	Municipal		Corporate		Municipal		Municipal			Corporate	Municipal
	securities		securities		securities		securities			securities	securities
	(dollars in thousands)
Allowance for credit losses:
Beginning balance	$	180	$	989	$	198	$	180	$	—	$	198
Provision for credit loss expense		—		—		—		—		989		—
Balance, ending	$	180	$	989	$	198	$	180	$	989	$	198

Realized gain (loss) on investments

	Nine Months Ended
	September 30, 2023		September 30, 2022
Proceeds from sales of securities	$	30,568	$	111,375
Gross gains from sales of securities		56		—
Gross losses from sales of securities		(507)		—

Investments classified by maturity date

	Amortized Cost		Fair Value
	(dollars in thousands)
Securities HTM:
Due in one year or less	$	1,907	$	1,882
Due after one year through five years		27,159		27,700
Due after five years		586,229		495,237
	$	615,295	$	524,819
Securities AFS:
Due in one year or less	$	3,160	$	3,146
Due after one year through five years		14,338		12,239
Due after five years		255,481		191,622
		272,979		207,007
Residential mortgage-backed and related securities		66,433		57,946
Asset-backed securities		16,226		16,326
	$	355,638	$	281,279

Schedule of investment in callable securities

	Amortized Cost		Fair Value
	(dollars in thousands)
Securities HTM:
Municipal securities	$	230,493	$	194,222
Securities AFS:
Municipal securities		205,747		148,235
Other securities		45,577		40,277
	$	251,324	$	188,512

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Note 3 - LOANS/LEASES RECEIVABLE (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Composition of the loan/lease portfolio

	September 30, 2023		December 31, 2022
	(dollars in thousands)
C&I:
C&I - revolving	$	299,588	$	296,869
C&I - other * / **		1,487,568		1,451,693
		1,787,156		1,748,562
CRE - owner occupied		610,618		629,367
CRE - non-owner occupied		955,552		963,239
Construction and land development**		1,394,054		1,192,061
Multi-family**		1,156,980		963,803
Direct financing leases***		34,401		31,889
1-4 family real estate****		539,931		499,529
Consumer		127,615		110,421
		6,606,307		6,138,871
Allowance for credit losses		(87,669)		(87,706)
	$	6,518,638	$	6,051,165
*** Direct financing leases:
Net minimum lease payments to be received	$	38,729	$	34,754
Estimated unguaranteed residual values of leased assets		165		165
Unearned lease/residual income		(4,493)		(3,030)
		34,401		31,889
Plus deferred lease origination costs, net of fees		100		226
		34,501		32,115
Less allowance for credit losses		(1,081)		(970)
	$	33,420	$	31,145

*      Includes equipment financing agreements outstanding at m2, totaling $306.6 million and $278.0 million as of September 30, 2023 and December 31, 2022, respectively.

**     As of September 30, 2023, there were C&I – other, construction and land development and multi-family loans held for sale in preparation for securitization totaling $278.0 million. The balances in these loan classes as of September 30, 2023 were $359 thousand, $12.7 million and $265.0 million, respectively. There were no loans held for sale in preparation for securitization at December 31, 2022.

***   Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal.

**** Includes residential real estate held for sale totaling $898 thousand and $1.5 million as of September 30, 2023 and December 31, 2022, respectively.

Schedule of changes in remaining discounts on acquired loans

	For the Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	Performing		Performing			Performing	Performing
	Loans		Loans		Loans		Loans
	(dollars in thousands)
Balance at the beginning of the period	$	(5,104)	$	(12,989)	$	(6,088)	$	(1,533)
Discount added at acquisition		—		—		—		(13,381)
Accretion recognized		540		1,148		1,524		3,073
Balance at the end of the period	$	(4,564)	$	(11,841)	$	(4,564)	$	(11,841)

Aging of the loan/lease portfolio by classes of loans/leases

	As of September 30, 2023
										Accruing Past
				30-59 Days			60-89 Days			Due 90 Days or			Nonaccrual
Classes of Loans/Leases	Current			Past Due			Past Due			More			Loans/Leases			Total
	(dollars in thousands)
C&I:
C&I - revolving	$	299,588		$	—		$	—		$	—		$	—	$		299,588
C&I - other		1,464,582			6,609			6,155			—			10,222			1,487,568
CRE - owner occupied		606,998			133			—			—			3,487			610,618
CRE - non-owner occupied		950,286			88			—			—			5,178			955,552
Construction and land development		1,389,601			—			—			—			4,453			1,394,054
Multi-family		1,148,808			—			—			—			8,172			1,156,980
Direct financing leases		33,694			315			151			—			241			34,401
1-4 family real estate		537,271			—			405			—			2,255			539,931
Consumer		126,983			20			52			—			560			127,615
	$	6,557,811		$	7,165		$	6,763		$	—		$	34,568		$	6,606,307
As a percentage of total loan/lease portfolio		99.27	%		0.11	%		0.10	%		—	%		0.52	%		100.00	%

	As of December 31, 2022
										Accruing Past
				30-59 Days			60-89 Days			Due 90 Days or			Nonaccrual
Classes of Loans/Leases	Current			Past Due			Past Due			More			Loans/Leases			Total
	(dollars in thousands)
C&I
C&I - revolving	$	296,869		$	—		$	—		$	—		$	—		$	296,869
C&I - other		1,442,629			4,800			1,124			5			3,135			1,451,693
CRE - owner occupied		625,611			1,166			—			—			2,590			629,367
CRE - non-owner occupied		962,444			421			—			—			374			963,239
Construction and land development		1,191,929			—			—			—			132			1,192,061
Multi-family		963,803			—			—			—			—			963,803
Direct financing leases		31,557			141			56			—			135			31,889
1-4 family real estate		495,936			1,030			517			—			2,046			499,529
Consumer		110,041			27			—			—			353			110,421
	$	6,120,819		$	7,585		$	1,697		$	5		$	8,765		$	6,138,871
As a percentage of total loan/lease portfolio		99.71	%		0.12	%		0.03	%		0.00	%		0.14	%		100.00	%

NPLs by classes of loans/leases

	As of September 30, 2023
	Accruing Past		Nonaccrual		Nonaccrual
	Due 90 Days or		Loans/Leases		Loans/Leases				Percentage of
Classes of Loans/Leases	More		with an ACL		without an ACL		Total NPLs		Total NPLs
	(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	-	%
C&I - other		—		7,521		2,701		10,222	29.57
CRE - owner occupied		—		1,225		2,262		3,487	10.09
CRE - non-owner occupied		—		2,040		3,138		5,178	14.98
Construction and land development		—		1,930		2,523		4,453	12.88
Multi-family		—		—		8,172		8,172	23.64
Direct financing leases		—		152		89		241	0.70
1-4 family real estate		—		1,861		394		2,255	6.52
Consumer		—		560		—		560	1.62
	$	—	$	15,289	$	19,279	$	34,568	100.00	%

	As of December 31, 2022
	Accruing Past		Nonaccrual		Nonaccrual
	Due 90 Days or		Loans/Leases		Loans/Leases				Percentage of
Classes of Loans/Leases	More		with an ACL		without an ACL		Total NPLs		Total NPLs
		(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	-	%
C&I - other		5		2,775		360		3,140	35.80
CRE - owner occupied		—		1,738		852		2,590	29.53
CRE - non-owner occupied		—		68		306		374	4.26
Construction and land development		—		132		—		132	1.51
Multi-family		—		—		—		—	-
Direct financing leases		—		80		55		135	1.54
1-4 family real estate		—		1,641		405		2,046	23.33
Consumer		—		353		—		353	4.03
	$	5	$	6,787	$	1,978	$	8,770	100.00	%

Allowance for credit losses on financing receivables

Changes in the ACL loans/leases by portfolio segment for the three and nine months ended September 30, 2023 and 2022, respectively, are presented as follows:

	Three Months Ended September 30, 2023
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other*		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	4,101	$	27,162	$	8,731	$	11,968	$	15,888	$	11,229	$	5,213	$	1,505	$	85,797
Change in ACL for writedown of LHFS to fair value		—		—		—		—		—		175		—		—		175
Provision		368		1,111		192		(313)		992		875		(45)		80		3,260
Charge-offs		—		(1,734)		(14)		—		(38)		—		—		(30)		(1,816)
Recoveries		—		215		3		26		—		—		—		9		253
Balance, ending	$	4,469	$	26,754	$	8,912	$	11,681	$	16,842	$	12,279	$	5,168	$	1,564	$	87,669

	Nine Months Ended September 30, 2023
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other**		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	4,457	$	27,753	$	9,965	$	11,749	$	14,262	$	13,186	$	4,963	$	1,371	$	87,706
Change in ACL for writedown of LHFS to fair value		—		(5)		—		—		(147)		(3,659)		—		—		(3,811)
Provision		12		3,986		(834)		(99)		2,777		2,752		200		237		9,031
Charge-offs		—		(5,709)		(222)		—		(50)		—		—		(57)		(6,038)
Recoveries		—		729		3		31		—		—		5		13		781
Balance, ending	$	4,469	$	26,754	$	8,912	$	11,681	$	16,842	$	12,279	$	5,168	$	1,564	$	87,669

*   Included within the C&I – Other column are ACL on leases with a beginning balance of $1.0 million, provision of $165 thousand, charge-offs of $133 thousand and recoveries of $43 thousand. ACL on leases was $1.1 million as of September 30, 2023.

**   Included within the C&I – Other column are ACL on leases with a beginning balance of $970 thousand, provision of $224 thousand, charge-offs of $186 thousand and recoveries of $73 thousand. ACL on leases was $1.1 million as of September 30, 2023.

	Three Months Ended September 30, 2022
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other*		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	5,179	$	28,093	$	11,065	$	12,049	$	16,388	$	12,783	$	5,513	$	1,355	$	92,425
Provision		1		1,652		(606)		(161)		(693)		437		(276)		(23)		331
Charge-offs		—		(1,915)		—		—		(562)		—		(5)		(7)		(2,489)
Recoveries		—		176		—		—		—		43		—		3		222
Balance, ending	$	5,180	$	28,006	$	10,459	$	11,888	$	15,133	$	13,263	$	5,232	$	1,328	$	90,489

	Nine Months Ended September 30, 2022
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other***		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	3,907	$	25,982	$	8,501	$	8,549	$	16,972	$	9,339	$	4,541	$	930	$	78,721
Initial ACL recorded for PCD loans		600		7		2,481		1,076		1,100		481		137		20		5,902
Provision**		673		4,185		(529)		2,328		(2,377)		3,400		559		384		8,623
Charge-offs		—		(2,790)		—		(193)		(562)		—		(5)		(15)		(3,565)
Recoveries		—		622		6		128		—		43		—		9		808
Balance, ending	$	5,180	$	28,006	$	10,459	$	11,888	$	15,133	$	13,263	$	5,232	$	1,328	$	90,489

*    Included within the C&I – Other column are ACL on leases with adoption impact of $1.6 million, provision of $91 thousand, charge-offs of $708 thousand and recoveries of $65 thousand. ACL on leases was $1.0 million as of September 30, 2022.

**    Provision for the nine months ended September 30, 2022, included $11.0 million related to the acquired Guaranty Bank non-PCD loans.

***   Included within the C&I - Other column are ACL on leases with a beginning balance of $1.5 million, provision of $249 thousand, charge-offs of    $931 thousand and recoveries of $173 thousand. ACL on leases was $1.0 million as of September 30, 2022.

The composition of the ACL loans/leases by portfolio segment based on evaluation method are as follows:

	As of September 30, 2023
	Amortized Cost of Loans Receivable						Allowance for Credit Losses
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Credit Losses		Credit Losses		Total		Credit Losses		Credit Losses		Total
	(dollars in thousands)
C&I :
C&I - revolving	$	3,358	$	296,230	$	299,588	$	944	$	3,525	$	4,469
C&I - other*		19,468		1,502,501		1,521,969		2,380		24,374		26,754
		22,826		1,798,731		1,821,557		3,324		27,899		31,223
CRE - owner occupied		23,952		586,666		610,618		2,844		6,068		8,912
CRE - non-owner occupied		20,456		935,096		955,552		836		10,845		11,681
Construction and land development		4,453		1,389,601		1,394,054		307		16,535		16,842
Multi-family		9,539		1,147,441		1,156,980		427		11,852		12,279
1-4 family real estate		2,906		537,025		539,931		253		4,915		5,168
Consumer		717		126,898		127,615		72		1,492		1,564
	$	84,849	$	6,521,458	$	6,606,307	$	8,063	$	79,606	$	87,669

*   Included within the C&I – Other category are leases individually evaluated of $241 thousand with a related allowance for credit losses of $55 thousand and leases collectively evaluated of $34.2 million with a related allowance for credit losses of $1.0 million.

	As of December 31, 2022
	Amortized Cost of Loans Receivable						Allowance for Credit Losses
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Credit Losses		Credit Losses		Total		Credit Losses		Credit Losses		Total
	(dollars in thousands)
C&I :
C&I - revolving	$	3,386	$	293,483	$	296,869	$	961	$	3,496	$	4,457
C&I - other*		9,358		1,474,224		1,483,582		1,445		26,308		27,753
		12,744		1,767,707		1,780,451		2,406		29,804		32,210
CRE - owner occupied		24,880		604,487		629,367		2,853		7,112		9,965
CRE - non-owner occupied		21,588		941,651		963,239		869		10,880		11,749
Construction and land development		10,394		1,181,667		1,192,061		13		14,249		14,262
Multi-family		1,302		962,501		963,803		395		12,791		13,186
1-4 family real estate		3,177		496,352		499,529		317		4,646		4,963
Consumer		741		109,680		110,421		75		1,296		1,371
	$	74,826	$	6,064,045	$	6,138,871	$	6,928	$	80,778	$	87,706

*   Included within the C&I – Other category are leases individually evaluated of $135 thousand with a related allowance for credit losses of $24 thousand and leases collectively evaluated of $31.8 million with a related allowance for credit losses of $946 thousand.

Schedule of loans receivable by collateral type

	As of September 30, 2023
					Non
	Commercial		Owner-occupied		Owner-Occupied		Owner Occupied
	Assets		CRE		Real Estate		Real Estate		Securities		Equipment		Other		Total
	(dollars in thousands)
C & I:
C&I - revolving	$	3,253	$	—	$	—	$	—	$	—	$	105	$	—	$	3,358
C&I - other*		631		—		—		—		5,533		12,916		388		19,468
		3,884		—		—		—		5,533		13,021		388		22,826
CRE - owner occupied		—		23,888		—		64		—		—		—		23,952
CRE - non-owner occupied		—		—		20,456		—		—		—		—		20,456
Construction and land development		—		150		4,303		—		—		—		—		4,453
Multi-family		—		—		9,539		—		—		—		—		9,539
1-4 family real estate		—		—		27		2,879		—		—		—		2,906
Consumer		—		—		119		526		—		—		72		717
	$	3,884	$	24,038	$	34,444	$	3,469	$	5,533	$	13,021	$	460	$	84,849

*   Included within the C&I – Other category are leases individually evaluated of $241 thousand with primary collateral of equipment.

	As of December 31, 2022
					Non
	Commercial		Owner-occupied		Owner-Occupied		Owner Occupied
	Assets		CRE		Real Estate		Real Estate		Securities		Equipment		Other		Total
	(dollars in thousands)
C & I:
C&I - revolving	$	3,281	$	—	$	—	$	—	$	—	$	105	$	—	$	3,386
C&I - other*		1,589		210		—		—		108		7,289		162		9,358
		4,870		210		—		—		108		7,394		162		12,744
CRE - owner occupied		—		24,814		—		66		—		—		—		24,880
CRE - non-owner occupied		—		—		21,588		—		—		—		—		21,588
Construction and land development		—		—		10,394		—		—		—		—		10,394
Multi-family		—		—		1,302		—		—		—		—		1,302
1-4 family real estate		—		—		33		3,144		—		—		—		3,177
Consumer		—		—		120		608		—		—		13		741
	$	4,870	$	25,024	$	33,437	$	3,818	$	108	$	7,394	$	175	$	74,826

*   Included within the C&I – Other category are leases individually evaluated of $135 thousand with primary collateral of equipment.

Schedule of financing receivable credit quality indicators based on internally assigned Risk rating

	As of September 30, 2023
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	272,848	$	272,848
Special Mention (Rating 6)		—		—		—		—		—		—		23,632		23,632
Substandard (Rating 7)		—		—		—		—		—		—		3,108		3,108
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	299,588	$	299,588
C&I - other
Pass (Ratings 1 through 5)	$	372,511	$	318,783	$	156,021	$	85,298	$	69,736	$	139,089	$	—	$	1,141,438
Special Mention (Rating 6)		12,149		8,936		4,225		3,757		801		321		—		30,189
Substandard (Rating 7)		101		123		250		—		3,152		5,675		—		9,301
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	384,761	$	327,842	$	160,496	$	89,055	$	73,689	$	145,085	$	—	$	1,180,928
CRE - owner occupied
Pass (Ratings 1 through 5)	$	71,080	$	130,033	$	148,170	$	112,315	$	30,875	$	62,220	$	11,670	$	566,363
Special Mention (Rating 6)		5,046		720		8,873		5,820		470		386		871		22,186
Substandard (Rating 7)		1,945		711		1,044		16,045		1,186		1,138		—		22,069
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	78,071	$	131,464	$	158,087	$	134,180	$	32,531	$	63,744	$	12,541	$	610,618
CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	107,668	$	290,689	$	199,435	$	131,797	$	74,778	$	84,855	$	6,412	$	895,634
Special Mention (Rating 6)		12,623		59		250		17,277		2,385		6,868		—		39,462
Substandard (Rating 7)		3,919		1,331		—		157		14,996		—		53		20,456
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	124,210	$	292,079	$	199,685	$	149,231	$	92,159	$	91,723	$	6,465	$	955,552
Construction and land development
Pass (Ratings 1 through 5)	$	353,940	$	491,807	$	286,614	$	187,894	$	8,686	$	8,083	$	26,905	$	1,363,929
Special Mention (Rating 6)		—		—		10,109		—		—		—		—		10,109
Substandard (Rating 7)		413		2,773		1,267		—		—		—		—		4,453
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	354,353	$	494,580	$	297,990	$	187,894	$	8,686	$	8,083	$	26,905	$	1,378,491
Multi-family
Pass (Ratings 1 through 5)	$	246,633	$	224,208	$	239,039	$	230,271	$	110,450	$	95,149	$	96	$	1,145,846
Special Mention (Rating 6)		1,595		—		—		—		—		—		—		1,595
Substandard (Rating 7)		—		—		8,208		1,331		—		—		—		9,539
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	248,228	$	224,208	$	247,247	$	231,602	$	110,450	$	95,149	$	96	$	1,156,980
1-4 family real estate
Pass (Ratings 1 through 5)	$	55,287	$	48,557	$	53,234	$	26,292	$	11,171	$	6,963	$	3,606	$	205,110
Special Mention (Rating 6)		29		—		—		—		—		—		—		29
Substandard (Rating 7)		25		—		—		—		2		—		—		27
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	55,341	$	48,557	$	53,234	$	26,292	$	11,173	$	6,963	$	3,606	$	205,166
Consumer
Pass (Ratings 1 through 5)	$	89	$	416	$	373	$	447	$	24	$	727	$	8,279	$	10,355
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		43		280		—		—		—		93		—		416
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	132	$	696	$	373	$	447	$	24	$	820	$	8,279	$	10,771
Total	$	1,245,096	$	1,519,426	$	1,117,112	$	818,701	$	328,712	$	411,567	$	357,480	$	5,798,094

	As of December 31, 2022
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	275,888	$	275,888
Special Mention (Rating 6)		—		—		—		—		—		—		17,595		17,595
Substandard (Rating 7)		—		—		—		—		—		—		3,386		3,386
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	296,869	$	296,869
C&I - other
Pass (Ratings 1 through 5)	$	496,445	$	279,412	$	127,803	$	87,054	$	59,675	$	105,184	$	—	$	1,155,573
Special Mention (Rating 6)		9,542		679		901		723		—		308		—		12,153
Substandard (Rating 7)		187		125		661		4,535		310		106		—		5,924
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	506,174	$	280,216	$	129,365	$	92,312	$	59,985	$	105,598	$	—	$	1,173,650
CRE - owner occupied
Pass (Ratings 1 through 5)	$	146,211	$	182,440	$	142,596	$	33,571	$	27,088	$	45,993	$	13,460	$	591,359
Special Mention (Rating 6)		6,190		—		6,379		484		—		1,346		269		14,668
Substandard (Rating 7)		3,750		171		16,336		1,396		1,197		490		—		23,340
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	156,151	$	182,611	$	165,311	$	35,451	$	28,285	$	47,829	$	13,729	$	629,367
CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	310,163	$	221,953	$	173,478	$	89,337	$	56,898	$	40,923	$	7,510	$	900,262
Special Mention (Rating 6)		2,824		882		18,920		—		12,917		6,198		—		41,741
Substandard (Rating 7)		5,651		—		157		15,217		—		—		211		21,236
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	318,638	$	222,835	$	192,555	$	104,554	$	69,815	$	47,121	$	7,721	$	963,239
Construction and land development
Pass (Ratings 1 through 5)	$	479,016	$	330,434	$	240,778	$	31,607	$	30,300	$	—	$	29,647	$	1,141,782
Special Mention (Rating 6)		1,465		9,200		—		—		—		—		—		10,665
Substandard (Rating 7)		132		10,262		—		—		—		—		—		10,394
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	480,613	$	349,896	$	240,778	$	31,607	$	30,300	$	—	$	29,647	$	1,162,841
Multi-family
Pass (Ratings 1 through 5)	$	237,839	$	254,056	$	224,920	$	134,378	$	99,695	$	7,875	$	2,227	$	960,990
Special Mention (Rating 6)		—		44		—		1,467		—		—		—		1,511
Substandard (Rating 7)		—		—		1,302		—		—		—		—		1,302
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	237,839	$	254,100	$	226,222	$	135,845	$	99,695	$	7,875	$	2,227	$	963,803
1-4 family real estate
Pass (Ratings 1 through 5)	$	61,953	$	57,731	$	33,737	$	12,687	$	5,813	$	6,002	$	5,855	$	183,778
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		28		—		—		5		—		—		—		33
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	61,981	$	57,731	$	33,737	$	12,692	$	5,813	$	6,002	$	5,855	$	183,811
Consumer
Pass (Ratings 1 through 5)	$	511	$	801	$	493	$	122	$	254	$	621	$	10,226	$	13,028
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		282		—		12		—		112		—		—		406
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	793	$	801	$	505	$	122	$	366	$	621	$	10,226	$	13,434
Total	$	1,762,189	$	1,348,190	$	988,473	$	412,583	$	294,259	$	215,046	$	366,274	$	5,387,014

Schedule of financing receivable credit quality indicators based on delinquency status

	As of September 30, 2023
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - other
Performing	$	113,677	$	116,539	$	47,024	$	15,549	$	3,665	$	326	$	—	$	296,780
Nonperforming		616		6,437		2,442		293		67		5		—		9,860
Total C&I - other	$	114,293	$	122,976	$	49,466	$	15,842	$	3,732	$	331	$	—	$	306,640
Construction and land development
Performing	$	13,912	$	1,306	$	274	$	10	$	2	$	59	$	—	$	15,563
Nonperforming		—		—		—		—		—		—		—		—
Total Construction and land development	$	13,912	$	1,306	$	274	$	10	$	2	$	59	$	—	$	15,563
Direct financing leases
Performing	$	12,138	$	12,548	$	3,706	$	3,248	$	2,075	$	445	$	—	$	34,160
Nonperforming		—		16		22		187		16		—		—		241
Total Direct financing leases	$	12,138	$	12,564	$	3,728	$	3,435	$	2,091	$	445	$	—	$	34,401
1-4 family real estate
Performing	$	56,490	$	58,926	$	80,455	$	69,330	$	15,705	$	51,527	$	80	$	332,513
Nonperforming		—		219		642		418		327		646		—		2,252
Total 1-4 family real estate	$	56,490	$	59,145	$	81,097	$	69,748	$	16,032	$	52,173	$	80	$	334,765
Consumer
Performing	$	15,252	$	10,104	$	2,562	$	2,973	$	710	$	1,310	$	83,653	$	116,564
Nonperforming		—		5		21		13		—		187		54		280
Total Consumer	$	15,252	$	10,109	$	2,583	$	2,986	$	710	$	1,497	$	83,707	$	116,844
Total	$	212,085	$	206,100	$	137,148	$	92,021	$	22,567	$	54,505	$	83,787	$	808,213

* Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual and accruing loans/leases that are greater than or equal to 90 days past due.

	As of December 31, 2022
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - other
Performing	$	170,180	$	69,694	$	25,540	$	8,066	$	1,804	$	79	$	—	$	275,363
Nonperforming		1,110		1,320		155		95		—		—		—		2,680
Total C&I - other	$	171,290	$	71,014	$	25,695	$	8,161	$	1,804	$	79	$	—	$	278,043
Direct financing leases
Performing	$	14,578	$	5,172	$	5,700	$	4,398	$	1,536	$	370	$	—	$	31,754
Nonperforming		—		32		88		7		8		—		—		135
Total Direct financing leases	$	14,578	$	5,204	$	5,788	$	4,405	$	1,544	$	370	$	—	$	31,889
Construction and land development
Performing	$	28,785	$	360	$	10	$	3	$	62	$	—	$	—	$	29,220
Nonperforming		—		—		—		—		—		—		—		—
Total Construction and land development	$	28,785	$	360	$	10	$	3	$	62	$	—	$	—	$	29,220
1-4 family real estate
Performing	$	69,094	$	92,762	$	75,153	$	17,089	$	11,381	$	48,136	$	90	$	313,705
Nonperforming		267		524		487		279		8		448		—		2,013
Total 1-4 family real estate	$	69,361	$	93,286	$	75,640	$	17,368	$	11,389	$	48,584	$	90	$	315,718
Consumer
Performing	$	14,685	$	3,844	$	3,717	$	1,123	$	1,140	$	1,325	$	70,974	$	96,808
Nonperforming		7		—		—		—		3		59		110		179
Total Consumer	$	14,692	$	3,844	$	3,717	$	1,123	$	1,143	$	1,384	$	71,084	$	96,987
Total	$	298,706	$	173,708	$	110,850	$	31,060	$	15,942	$	50,417	$	71,174	$	751,857

* Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual and accruing loans/leases that are greater than or equal to 90 days past due.

Schedule of Gross Charge Offs of loans and Leases by Class of Receivable and Year of Origination

	Three Months Ended September 30, 2023														Nine Months Ended September 30, 2023
	Gross Charge-off by Origination Year														Gross Charge-off by Origination Year
Classes of Loans/Leases	2023		2022		2021		2020		2019		Prior		Total		2023		2022		2021		2020		2019		Prior		Total
	(dollars in thousands)														(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
C&I - other		41		1,130		192		204		5		29		1,601		41		2,990		1,063		1,053		238		138		5,523
CRE - owner occupied		—		—		—		—		—		14		14		—		—		208		—		—		14		222
CRE - non-owner occupied		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Construction and land development		—		38		—		—		—		—		38		—		50		—		—		—		—		50
Multi-family		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Direct financing leases		—		34		55		41		3		—		133		—		71		55		41		18		1		186
1-4 family real estate		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Consumer		—		22		7		1		—		—		30		—		41		10		1		5		—		57
	$	41	$	1,224	$	254	$	246	$	8	$	43	$	1,816	$	41	$	3,152	$	1,336	$	1,095	$	261	$	153	$	6,038

Schedule of loans and leases modified to borrowers experiencing financial difficulty by class of receivable and type of concession granted

The following table shows the amortized cost basis of the loans and leases modified to borrowers experiencing financial difficulty by class of receivable and type of concession granted for the three and nine months ended September 30, 2023.

	For the three months ended				For the nine months ended
	September 30, 2023				September 30, 2023
	Amortized Cost				Amortized Cost
	Payment		% of Class of		Payment		% of Class of
Classes of Loans/Leases	Delay		Receivable		Delay		Receivable
	(dollars in thousands)
Direct Financing Leases	$	90	—	%	$	325	1	%

Unfunded Loan Commitment

Notes Tables

Financing receivable credit quality indicators

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(dollars in thousands)
Balance, beginning	$	6,326	$	6,878	$	5,552	$	6,886
Provisions (credited) to expense		546		(331)		1,320		(339)
Balance, ending	$	6,872	$	6,547	$	6,872	$	6,547

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Summary of derivatives

	September 30, 2023		December 31, 2022
	(dollars in thousands)
Assets:
Hedged Derivatives
Cash Flow Hedges
Interest rate caps	$	5,196	$	8,327
Interest rate swaps		3,334		477
Fair Value Hedges
Interest rate swaps		3,977		—
Unhedged Derivatives
Interest rate caps		1,533		2,213
Interest rate swaps		277,255		166,614
	$	291,295	$	177,631
Liabilities:
Hedged Derivatives
Cash Flow Hedges
Interest rate swaps		(42,095)		(33,824)
Interest rate collars		(870)		(263)
Unhedged Derivatives
Interest rate swaps		(277,255)		(166,614)
	$	(320,220)	$	(200,701)

Summary of impact of AOCI

	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
	Interest and		Interest		Interest and		Interest
	Dividend Income		Expense		Dividend Income		Expense
	(dollars in thousands)
Income and expense line items presented in the consolidated statements of income	$	108,568	$	53,313	$	79,267	$	18,498
The effects of cash flow hedging:
Gain on interest rate caps on deposits		-		(2,066)		-		(263)
Gain on interest rate swaps on junior subordinated debentures		-		(328)		-		73
Loss on interest rate swaps and collars on loans		(2,495)		-		(426)		-
The effects of fair value hedging:
Gain on interest rate swaps on loans		828		-		-		-

	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Interest and		Interest		Interest and		Interest
	Dividend Income		Expense		Dividend Income		Expense
	(dollars in thousands)
Income and expense line items presented in the consolidated statements of income	$	301,162	$	135,892	$	198,534	$	32,632
The effects of cash flow hedging:
Gain on interest rate caps on deposits		-		(5,522)		-		199
Gain on interest rate swaps on junior subordinated debentures		-		(830)		-		536
Loss on interest rate swaps and collars on loans		(6,757)		-		715		-
The effects of fair value hedging:
Gain on interest rate swaps on loans		828		-		-		-

Schedule of hedged interest rate swaps and non-hedged interest rate swaps are collateralized by investment securities with carrying values

	September 30, 2023		December 31, 2022
	(dollars in thousands)
Cash	$	1,275	$	1,272
Municipal securities		3,945		8,227
Residential mortgage-backed and related securities		5,778		29,257
	$	10,998	$	38,756

Interest rate caps

Notes Tables

Schedule of interest rate caps

			Balance Sheet					Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Strike Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Deposits	1/1/2020	1/1/2023	Derivatives - Assets	$	25,000	1.75	%	$	-	$	(50)
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		25,000	1.75	%		157		714
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		50,000	1.57	%		474		1,566
Deposits	1/1/2020	1/1/2024	Derivatives - Assets		25,000	1.80	%		237		783
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		25,000	1.75	%		1,010		1,264
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		50,000	1.57	%		2,212		2,700
Deposits	1/1/2020	1/1/2025	Derivatives - Assets		25,000	1.80	%		1,106		1,350
				$	225,000			$	5,196	$	8,327

Changes in the fair value of the underlying derivative contracts

		Balance Sheet					Fair Value as of
Effective Date	Maturity Date	Location	Notional Amount		Strike Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
1/1/2020	1/3/2023	Derivatives - Assets	$	25,000	1.90	%	$	-	$	3
2/1/2020	2/1/2024	Derivatives - Assets		25,000	1.90	%		310		822
3/1/2020	3/3/2025	Derivatives - Assets		25,000	1.90	%		1,223		1,388
			$	75,000			$	1,533	$	2,213

Interest rate swaps

Notes Tables

Schedule of interest rate caps

				Balance Sheet							Fair Value as of
Hedged Item	Effective Date		Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
		(dollars in thousands)
QCR Holdings Statutory Trust II	9/30/2018		9/30/2028	Derivatives - Assets	$	10,000	8.51	%	5.85	%	$	710	$	464
QCR Holdings Statutory Trust III	9/30/2018		9/30/2028	Derivatives - Assets		8,000	8.51	%	5.85	%		568		372
QCR Holdings Statutory Trust V	7/7/2018		7/7/2028	Derivatives - Assets		10,000	7.12	%	4.54	%		691		459
Community National Statutory Trust II	9/20/2018		9/20/2028	Derivatives - Assets		3,000	7.83	%	5.17	%		212		140
Community National Statutory Trust III	9/15/2018		9/15/2028	Derivatives - Assets		3,500	7.42	%	4.75	%		247		163
Guaranty Bankshares Statutory Trust I	9/15/2018		9/15/2028	Derivatives - Assets		4,500	7.42	%	4.75	%		318		209
Guaranty Statutory Trust II*	5/23/2019		2/23/2026	Derivatives - Assets		10,310	7.09	%	4.09	%		588		477
					$	49,310					$	3,334	$	2,284
* Acquired on 4/1/2022 with GFED acquisition.

			Balance Sheet							Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities	$	35,000	1.40	%	5.31	%	$	(6,776)	$	(5,646)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities		50,000	1.40	%	5.31	%		(9,680)		(8,066)
Loans	7/1/2021	7/1/2031	Derivatives - Liabilities		40,000	1.40	%	5.31	%		(7,755)		(6,464)
Loans	10/1/2022	7/1/2031	Derivatives - Liabilities		25,000	1.30	%	5.31	%		(4,877)		(4,018)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		15,000	1.91	%	5.31	%		(1,301)		(1,144)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		50,000	1.91	%	5.31	%		(4,335)		(3,812)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		35,000	1.91	%	5.31	%		(3,035)		(2,669)
Loans	4/1/2022	4/1/2027	Derivatives - Liabilities		50,000	1.91	%	5.31	%		(4,336)		(3,812)
				$	300,000					$	(42,095)	$	(35,631)

			Balance Sheet							Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Receive Rate		Pay Rate		September 30, 2023		December 31, 2022
(dollars in thousands)
Loans	7/12/2023	2/1/2026	Derivatives - Assets	$	25,000	5.31	%	4.38	%	$	204	$	N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		30,000	5.31	%	4.21	%		304		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		32,500	5.31	%	4.08	%		409		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		32,500	5.31	%	3.98	%		488		N/A
Loans	7/12/2023	2/1/2028	Derivatives - Assets		30,000	5.31	%	3.90	%		532		N/A
Loans	7/12/2023	2/1/2026	Derivatives - Assets		15,000	5.31	%	4.38	%		123		N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		15,000	5.31	%	4.21	%		152		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		15,000	5.31	%	4.08	%		189		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		15,000	5.31	%	3.98	%		225		N/A
Loans	7/12/2023	2/1/2028	Derivatives - Assets		15,000	5.31	%	3.90	%		267		N/A
Loans	7/12/2023	8/1/2025	Derivatives - Assets		15,000	5.31	%	4.60	%		90		N/A
Loans	7/12/2023	2/1/2026	Derivatives - Assets		20,000	5.31	%	4.38	%		163		N/A
Loans	7/12/2023	8/1/2026	Derivatives - Assets		20,000	5.31	%	4.21	%		203		N/A
Loans	7/12/2023	2/1/2027	Derivatives - Assets		20,000	5.31	%	4.08	%		252		N/A
Loans	7/12/2023	8/1/2027	Derivatives - Assets		25,000	5.31	%	3.98	%		376		N/A
				$	325,000					$	3,977	$	N/A

Changes in the fair value of the underlying derivative contracts

		September 30, 2023			December 31, 2022
	Notional Amount		Estimated Fair Value		Notional Amount		Estimated Fair Value
	(dollars in thousands)
Non-Hedging Interest Rate Derivatives Assets:
Interest rate swap contracts	$	2,967,392	$	277,255	$	2,528,949	$	166,614
Non-Hedging Interest Rate Derivatives Liabilities:
Interest rate swap contracts	$	2,967,392	$	277,255	$	2,528,949	$	166,614

Interest rate collars

Notes Tables

Schedule of interest rate caps

										Fair Value as of
Hedged Item	Effective Date	Maturity Date	Location	Notional Amount		Cap Strike Rate		Floor Strike Rate		September 30, 2023		December 31, 2022
Loans	10/1/2022	10/1/2026	Derivatives - Liabilities	$	50,000	4.40	%	2.44	%	$	(870)	$	(263)

XML

Note 5 - INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Reconciliation of the expected federal income tax expense

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2023				2022				2023				2022
			% of				% of				% of				% of
			Pretax				Pretax				Pretax				Pretax
	Amount		Income		Amount		Income		Amount		Income		Amount		Income
	(dollars in thousands)
Computed "expected" tax expense	$	5,661	21.0	%	$	7,165	21.0	%	$	18,751	21.0	%	$	16,130	21.0	%
Tax exempt income, net		(3,705)	(13.7)			(3,003)	(8.8)			(10,103)	(11.3)			(7,701)	(10.0)
Bank-owned life insurance		(376)	(1.4)			(127)	(0.4)			(700)	(0.8)			(273)	(0.4)
State income taxes, net of federal benefit, current year		955	3.5			1,616	4.7			3,383	3.8			3,889	5.1
Provision adjustment from accounting method change		—	—			—	—			—	—			(1,181)	(1.5)
Tax credits		(202)	(0.7)			(359)	(1.1)			(411)	(0.5)			(890)	(1.2)
Income from tax credit equity investments		(449)	(1.7)			(337)	(1.0)			(1,340)	(1.5)			(939)	(1.2)
Acquisition costs		—	—			78	0.2			—	—			450	0.6
Excess tax benefit on stock options exercised and restricted stock awards vested		(7)	(0.0)			(46)	(0.1)			(451)	(0.5)			(520)	(0.7)
Other		(37)	(0.2)			(163)	(0.4)			(540)	(0.6)			(316)	(0.4)
Federal and state income tax expense	$	1,840	6.8	%	$	4,824	14.1	%	$	8,589	9.6	%	$	8,649	11.3	%

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Note 6 - EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2023

EARNINGS PER SHARE

Schedule of computation of earnings per share on a basic and diluted basis

		Three months ended			Nine months ended
		September 30,			September 30,
		2023		2022		2023		2022
	(dollars in thousands, except share data)
Net income	$	25,121	$	29,294	$	80,703	$	68,160
Basic EPS	$	1.50	$	1.73	$	4.82	$	4.25
Diluted EPS	$	1.49	$	1.71	$	4.79	$	4.20
Weighted average common shares outstanding		16,717,303		16,900,968		16,731,847		16,030,371
Weighted average common shares issuable upon exercise of stock options
and under the employee stock purchase plan		130,648		209,723		131,356		213,550
Weighted average common and common equivalent shares outstanding		16,847,951		17,110,691		16,863,203		16,243,921

XML

Note 7 - FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of assets measured at fair value

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
	(dollars in thousands)
September 30, 2023:
Securities AFS:
U.S. treasuries and govt. sponsored agency securities	$	16,002	$	—	$	16,002	$	—
Residential mortgage-backed and related securities		57,946		—		57,946		—
Municipal securities		149,772		—		149,772		—
Asset-backed securities		16,326		—		16,326		—
Other securities		41,233		—		41,233		—
Derivatives		291,295		—		291,295		—
Total assets measured at fair value	$	572,574	$	—	$	572,574	$	—
Derivatives	$	320,220	$	—	$	320,220	$	—
Total liabilities measured at fair value	$	320,220	$	—	$	320,220	$	—
December 31, 2022:
Securities AFS:
U.S. govt. sponsored agency securities	$	16,981	$	—	$	16,981	$	—
Residential mortgage-backed and related securities		66,215		—		66,215		—
Municipal securities		193,178		—		193,178		—
Asset-backed securities		18,728		—		18,728		—
Other securities		45,858		—		45,858		—
Derivatives		177,631		—		177,631		—
Total assets measured at fair value	$	518,591	$	—	$	518,591	$	—
Derivatives	$	200,701	$	—	$	200,701	$	—
Total liabilities measured at fair value	$	200,701	$	—	$	200,701	$	—

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
September 30, 2023:
Loans/leases evaluated individually	$	35,197	$	—	$	—	$	35,197
Loans receivable held for sale in preparation for securitization		277,995		—		—		277,995
OREO		120		—		—		120
	$	313,312	$	—	$	—	$	313,312
December 31, 2022:
Loans/leases evaluated individually	$	30,765	$	—	$	—	$	30,765
OREO		144		—		—		144
	$	30,909	$	—	$	—	$	30,909

Schedule of assets measured at fair value, valuation techniques

	Quantitative Information about Level Fair Value Measurements
	Fair Value		Fair Value
	September 30,		December 31,
	2023		2022		Valuation Technique	Unobservable Input	Range
	(dollars in thousands)
Loans/leases evaluated individually	$	35,197	$	30,765	Appraisal of collateral	Appraisal adjustments	-10.00	%	to	-30.00	%
Loans receivable held for sale in preparation for securitization		277,995		—	Market prices for similar loans	Market price adjustments			n/a
OREO		130		144	Appraisal of collateral	Appraisal adjustments	0.00	%	to	-35.00	%

Schedule of assets and liabilities measured at fair value

	Fair Value	As of September 30, 2023				As of December 31, 2022
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Value		Fair Value		Value		Fair Value
		(dollars in thousands)
Cash and due from banks	Level 1	$	104,265	$	104,265	$	59,723	$	59,723
Federal funds sold	Level 2		20,300		20,300		56,910		56,910
Interest-bearing deposits at financial institutions	Level 2		60,350		60,350		67,360		67,360
Investment securities:
HTM	Level 2		615,115		524,819		587,142		535,636
AFS	Level 2		281,279		281,279		340,960		340,960
Loans/leases receivable, net	Level 3		310,585		313,192		28,486		30,765
Loans/leases receivable, net	Level 2		6,208,053		5,907,226		6,022,679		5,896,443
Derivatives	Level 2		291,295		291,295		177,631		177,631
Deposits:
Nonmaturity deposits	Level 2		5,522,283		5,522,283		5,199,633		5,199,633
Time deposits	Level 2		972,569		966,026		784,584		766,294
Short-term borrowings	Level 2		470		470		129,630		129,630
FHLB advances	Level 2		430,000		429,450		415,000		415,000
Subordinated notes	Level 2		232,958		249,002		232,662		250,613
Junior subordinated debentures	Level 2		48,698		40,204		48,602		41,545
Derivatives	Level 2		320,220		320,220		200,701		200,701

XML

Note 8 - BUSINESS SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of business segment information

	Commercial Banking										Intercompany		Consolidated
	QCBT		CRBT		CSB		GB		All other		Eliminations		Total
	(dollars in thousands)
Three Months Ended September 30, 2023
Total revenue	$	38,165	$	43,592	$	19,225	$	34,498	$	31,878	$	(32,197)	$	135,161
Net interest income		17,198		16,852		11,136		13,743		(3,958)		284		55,255
Provision for credit losses		2,686		503		275		342		—		—		3,806
Net income (loss) from continuing operations		5,856		13,175		4,740		6,801		25,641		(31,092)		25,121
Goodwill		3,223		14,980		9,888		110,936		—		—		139,027
Intangibles		—		950		1,579		12,008		—		—		14,537
Total assets		2,433,084		2,442,263		1,417,249		2,242,638		1,146,137		(1,141,314)		8,540,057
Three Months Ended September 30, 2022
Total revenue	$	26,583	$	34,157	$	14,127	$	25,523	$	36,283	$	(36,311)	$	100,362
Net interest income		18,117		17,160		10,183		18,196		(3,242)		355		60,769
Provision for loan/lease losses		554		(35)		(269)		(250)		—		—		—
Net income (loss) from continuing operations		7,758		14,475		4,106		9,196		29,542		(35,783)		29,294
Goodwill		3,223		14,980		9,888		109,516		—		—		137,607
Intangibles		—		1,344		2,184		14,018		—		—		17,546
Total assets		2,218,166		2,108,614		1,270,426		2,107,407		1,045,774		(1,020,338)		7,730,049
Nine Months Ended September 30, 2023
Total revenue	$	106,664	$	138,018	$	53,126	$	90,443	$	101,472	$	(103,606)	$	386,117
Net interest income		50,590		50,254		32,683		42,716		(11,911)		938		165,270
Provision for loan/lease losses		7,879		2,499		965		(3)		—		—		11,340
Net income (loss) from continuing operations		17,710		48,928		14,113		17,344		82,266		(99,658)		80,703
Goodwill		3,223		14,980		9,888		110,936		—		—		139,027
Intangibles		—		950		1,579		12,008		—		—		14,537
Total assets		2,433,084		2,442,263		1,417,249		2,242,638		1,146,137		(1,141,314)		8,540,057
Nine Months Ended September 30, 2022
Total revenue	$	72,785	$	91,083	$	37,534	$	57,036	$	91,989	$	(92,383)	$	258,044
Net interest income		53,971		46,576		29,365		42,789		(7,845)		1,046		165,902
Provision for loan/lease losses		(88)		(971)		(554)		9,897		—		—		8,284
Net income (loss) from continuing operations		26,153		38,860		11,606		13,327		68,982		(90,768)		68,160
Goodwill		3,223		14,980		9,888		109,516		—		—		137,607
Intangibles		—		1,344		2,184		14,018		—		—		17,546
Total assets		2,218,166		2,108,614		1,270,426		2,107,407		1,045,774		(1,020,338)		7,730,049

XML

Note 9 - REGULATORY CAPITAL REQUIREMENTS (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of the company and the subsidiary banks actual capital amounts and ratios

										For Capital					To Be Well
										Adequacy Purposes					Capitalized Under
					For Capital					With Capital					Prompt Corrective
	Actual				Adequacy Purposes					Conservation Buffer					Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
	( dollars in thousands)
As of September 30, 2023:
Company:
Total risk-based capital	$	1,135,262	14.54	%	$	624,805	>	8.00	%	$	820,057	>	10.50	%	$	781,007	>	10.00	%
Tier 1 risk-based capital		807,582	10.34			468,604	>	6.00			663,856	>	8.50			624,805	>	8.00
Tier 1 leverage		807,582	9.92			325,480	>	4.00			325,480	>	4.00			406,850	>	5.00
Common equity Tier 1		758,884	9.72			351,453	>	4.50			546,705	>	7.00			507,654	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	295,319	12.90	%	$	183,095	>	8.00	%	$	240,313	>	10.50	%	$	228,869	>	10.00	%
Tier 1 risk-based capital		266,688	11.65			137,321	>	6.00			194,539	>	8.50			183,095	>	8.00
Tier 1 leverage		266,688	11.10			96,111	>	4.00			96,111	>	4.00			120,139	>	5.00
Common equity Tier 1		266,688	11.65			102,991	>	4.50			160,208	>	7.00			148,765	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	358,150	17.05	%	$	168,021	>	8.00	%	$	220,527	>	10.50	%	$	210,026	>	10.00	%
Tier 1 risk-based capital		331,423	15.78			126,016	>	6.00			178,522	>	8.50			168,021	>	8.00
Tier 1 leverage		331,423	14.60			90,799	>	4.00			90,799	>	4.00			113,498	>	5.00
Common equity Tier 1		331,423	15.78			94,512	>	4.50			147,018	>	7.00			136,517	>	6.50
Community State Bank:
Total risk-based capital	$	177,296	13.57	%	$	104,554	>	8.00	%	$	137,227	>	10.50	%	$	130,693	>	10.00	%
Tier 1 risk-based capital		152,596	11.68			78,416	>	6.00			111,089	>	8.50			104,554	>	8.00
Tier 1 leverage		152,596	11.24			54,303	>	4.00			54,303	>	4.00			67,879	>	5.00
Common equity Tier 1		152,596	11.68			58,812	>	4.50			91,485	>	7.00			84,950	>	6.50
Guaranty Bank:
Total risk-based capital	$	258,732	12.53	%	$	165,160	>	8.00	%	$	216,772	>	10.50	%	$	206,450	>	10.00	%
Tier 1 risk-based capital		236,071	11.43			123,870	>	6.00			175,482	>	8.50			165,160	>	8.00
Tier 1 leverage		236,071	11.22			84,130	>	4.00			84,130	>	4.00			105,162	>	5.00
Common equity Tier 1		236,071	11.43			92,902	>	4.50			144,515	>	7.00			134,192	>	6.50

										For Capital					To Be Well
										Adequacy Purposes					Capitalized Under
					For Capital					With Capital					Prompt Corrective
	Actual				Adequacy Purposes					Conservation Buffer					Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
	( dollars in thousands)
As of December 31, 2022:
Company:
Total risk-based capital	$	1,055,177	14.28	%	$	591,132	>	8.00	%	$	775,861	>	10.50	%	$	738,915	>	10.00	%
Tier 1 risk-based capital		734,977	9.95			443,349	>	6.00			628,078	>	8.50			591,132	>	8.00
Tier 1 leverage		734,977	9.61			305,959	>	4.00			305,959	>	4.00			382,449	>	5.00
Common equity Tier 1		686,375	9.29			332,512	>	4.50			517,241	>	7.00			480,295	>	6.50
Quad City Bank & Trust:
Total risk-based capital	$	275,337	13.07	%	$	168,588	>	8.00	%	$	221,272	>	10.50	%	$	210,735	>	10.00	%
Tier 1 risk-based capital		248,978	11.81			126,441	>	6.00			179,125	>	8.50			168,588	>	8.00
Tier 1 leverage		248,978	11.01			90,419	>	4.00			90,419	>	4.00			133,023	>	5.00
Common equity Tier 1		248,978	11.81			94,831	>	4.50			147,514	>	7.00			136,978	>	6.50
Cedar Rapids Bank & Trust:
Total risk-based capital	$	308,153	14.84	%	$	166,168	>	8.00	%	$	218,096	>	10.50	%	$	207,711	>	10.00	%
Tier 1 risk-based capital		282,258	13.59			124,626	>	6.00			176,554	>	8.50			166,168	>	8.00
Tier 1 leverage		282,258	13.17			85,707	>	4.00			85,707	>	4.00			107,134	>	5.00
Common equity Tier 1		282,258	13.59			93,470	>	4.50			145,397	>	7.00			135,012	>	6.50
Community State Bank:
Total risk-based capital	$	142,974	12.04	%	$	94,981	>	8.00	%	$	124,662	>	10.50	%	$	118,726	>	10.00	%
Tier 1 risk-based capital		128,130	10.79			71,236	>	6.00			100,917	>	8.50			94,981	>	8.00
Tier 1 leverage		128,130	10.09			50,799	>	4.00			50,799	>	4.00			63,499	>	5.00
Common equity Tier 1		128,130	10.79			53,427	>	4.50			83,108	>	7.00			77,172	>	6.50
Guaranty Bank:
Total risk-based capital	$	243,106	12.24	%	$	158,903	>	8.00	%	$	208,560	>	10.50	%	$	198,629	>	10.00	%
Tier 1 risk-based capital		218,647	11.01			119,177	>	6.00			168,834	>	8.50			158,903	>	8.00
Tier 1 leverage		218,647	10.90			80,229	>	4.00			80,229	>	4.00			100,286	>	5.00
Common equity Tier 1		218,647	11.01			89,383	>	4.50			139,040	>	7.00			129,109	>	6.50

XML

Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	Sep. 30, 2023 subsidiary
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of subsidiaries commercial banks	4

XML

Note 2 - INVESTMENT SECURITIES (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($) item issuer security state	Dec. 31, 2022 USD ($) state issuer
Number of securities | security	644
Available-for-sale, unrealized loss positions, qualitative disclosure, number of positions | item	621
Aggregate losses of securities (as a percent)	17.10%
Available-for-sale, unrealized loss positions, qualitative disclosure, number of positions, greater than or equal to one year | item	480
Gain on sale	$ 56
Number Of Charters Owning Municipal Securities | item	4
Debt Securities, Available-for-Sale, Allowance for Credit Loss	$ 989
General Obligation Bonds
Number of issuers | issuer	81	118
Other investments	$ 80,400	$ 110,600
Number of states holding investments | state	18	22
General Obligation Bonds | Aggregate Fair Value Exceeding 5 Million
Number of states holding investments	7	7
General Obligation Bonds | Aggregate Fair Value Exceeding 5 Million | Minimum
Other investments	$ 5,000	$ 5,000
Revenue Bonds
Number of issuers | issuer	166	181
Other investments	$ 593,200	$ 617,200
Number of states holding investments | state	30	29
Revenue Bonds | Aggregate Fair Value Exceeding 5 Million
Number of states holding investments | state	14	12
Revenue Bonds | Aggregate Fair Value Exceeding 5 Million | Minimum
Other investments	$ 5,000	$ 5,000
Revenue Bonds | Aggregate Book Or Market Value Exceeded 5% of The Company Equity [Member]
Number of issuers | issuer	2	2
Percentage threshold	5.00%	5.00%
Other securities
Debt Securities, Available-for-Sale, Allowance for Credit Loss	$ 989

XML

Note 2 - INVESTMENT SECURITIES - Amortized Cost and Fair Value of Investment Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Securities HTM:
Securities HTM, Amortized cost	$ 615,295		$ 587,322
Securities HTM, Allowance for Credit (Losses)	(180)		(180)
Securities HTM, Gross Unrealized Gains	2,448		5,292
Securities HTM, Gross Unrealized (Losses)	(92,744)		(56,798)
Securities HTM, Fair Value	524,819		535,636
Securities AFS:
Securities AFS, Amortized Cost	355,638		400,511
Securities AFS, Allowance for Credit (Losses)	(989)
Securities AFS, Gross Unrealized Gains	159		160
Securities AFS, Gross Unrealized (Losses)	(73,529)		(59,711)
Securities AFS, Fair Value	281,279		340,960
U.S. treasuries and govt. sponsored agency securities
Securities AFS:
Securities AFS, Amortized Cost	19,130		19,745
Securities AFS, Gross Unrealized Gains	13		19
Securities AFS, Gross Unrealized (Losses)	(3,141)		(2,783)
Securities AFS, Fair Value	16,002		16,981
Residential mortgage-backed and related securities
Securities AFS:
Securities AFS, Amortized Cost	66,433		73,438
Securities AFS, Gross Unrealized (Losses)	(8,487)		(7,223)
Securities AFS, Fair Value	57,946		66,215
Municipal securities.
Securities HTM:
Securities HTM, Amortized cost	614,245		586,272
Securities HTM, Allowance for Credit (Losses)	(180)	$ (180)	(180)	$ (198)	$ (198)	$ (198)
Securities HTM, Gross Unrealized Gains	2,448		5,292
Securities HTM, Gross Unrealized (Losses)	(92,718)		(56,798)
Securities HTM, Fair Value	523,795		534,586
Securities AFS:
Securities AFS, Amortized Cost	207,318		239,812
Securities AFS, Gross Unrealized Gains			66
Securities AFS, Gross Unrealized (Losses)	(57,546)		(46,700)
Securities AFS, Fair Value	149,772		193,178
Asset-backed securities
Securities AFS:
Securities AFS, Amortized Cost	16,226		18,885
Securities AFS, Gross Unrealized Gains	144		48
Securities AFS, Gross Unrealized (Losses)	(44)		(205)
Securities AFS, Fair Value	16,326		18,728
Corporate Debt Securities [Member]
Securities AFS:
Securities AFS, Allowance for Credit (Losses)	(989)	$ (989)
Other securities
Securities HTM:
Securities HTM, Amortized cost	1,050		1,050
Securities HTM, Gross Unrealized (Losses)	(26)
Securities HTM, Fair Value	1,024		1,050
Securities AFS:
Securities AFS, Amortized Cost	46,531		48,631
Securities AFS, Allowance for Credit (Losses)	(989)
Securities AFS, Gross Unrealized Gains	2		27
Securities AFS, Gross Unrealized (Losses)	(4,311)		(2,800)
Securities AFS, Fair Value	$ 41,233		$ 45,858

XML

Note 2 - INVESTMENT SECURITIES - Securities in a Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Securities HTM:
Securities HTM, Less than 12 Months, Fair Value	$ 235,836
Securities HTM, Less than 12 Months, Gross Unrealized Losses	(20,777)
Securities HTM, 12 Months or More, Fair Value	237,690
Securities HTM, 12 Months or More, Gross Unrealized Losses	(71,967)
Securities HTM, Total, Fair Value	473,526
Securities HTM, Total, Gross Unrealized Losses	(92,744)
Securities AFS:
Securities AFS, Less than 12 Months, Fair Value	6,616	$ 280,669
Securities AFS, Less than 12 Months, Gross Unrealized Losses	(467)	(48,923)
Securities AFS, 12 Months or More, Fair Value	264,116	42,212
Securities AFS, 12 Months or More, Gross Unrealized Losses	(73,062)	(10,788)
Securities AFS, Total, Fair Value	270,732	322,881
Securities AFS, Total, Gross Unrealized Losses	(73,529)	(59,711)
Municipal securities.
Securities HTM:
Securities HTM, Less than 12 Months, Fair Value	235,313	347,651
Securities HTM, Less than 12 Months, Gross Unrealized Losses	(20,751)	(56,798)
Securities HTM, 12 Months or More, Fair Value	237,690
Securities HTM, 12 Months or More, Gross Unrealized Losses	(71,967)
Securities HTM, Total, Fair Value	473,003	347,651
Securities HTM, Total, Gross Unrealized Losses	(92,718)	(56,798)
Securities AFS:
Securities AFS, Less than 12 Months, Fair Value	1,067	178,172
Securities AFS, Less than 12 Months, Gross Unrealized Losses	(38)	(42,661)
Securities AFS, 12 Months or More, Fair Value	148,159	9,809
Securities AFS, 12 Months or More, Gross Unrealized Losses	(57,508)	(4,039)
Securities AFS, Total, Fair Value	149,226	187,981
Securities AFS, Total, Gross Unrealized Losses	(57,546)	(46,700)
U.S. treasuries and govt. sponsored agency securities
Securities AFS:
Securities AFS, Less than 12 Months, Fair Value	1,649	5,138
Securities AFS, Less than 12 Months, Gross Unrealized Losses	(1)	(326)
Securities AFS, 12 Months or More, Fair Value	13,377	10,591
Securities AFS, 12 Months or More, Gross Unrealized Losses	(3,140)	(2,457)
Securities AFS, Total, Fair Value	15,026	15,729
Securities AFS, Total, Gross Unrealized Losses	(3,141)	(2,783)
Residential mortgage-backed and related securities
Securities AFS:
Securities AFS, Less than 12 Months, Fair Value	77	48,469
Securities AFS, Less than 12 Months, Gross Unrealized Losses	(1)	(3,327)
Securities AFS, 12 Months or More, Fair Value	57,869	17,690
Securities AFS, 12 Months or More, Gross Unrealized Losses	(8,486)	(3,896)
Securities AFS, Total, Fair Value	57,946	66,159
Securities AFS, Total, Gross Unrealized Losses	(8,487)	(7,223)
Asset-backed securities
Securities AFS:
Securities AFS, Less than 12 Months, Fair Value		13,684
Securities AFS, Less than 12 Months, Gross Unrealized Losses		(205)
Securities AFS, 12 Months or More, Fair Value	10,521
Securities AFS, 12 Months or More, Gross Unrealized Losses	(44)
Securities AFS, Total, Fair Value	10,521	13,684
Securities AFS, Total, Gross Unrealized Losses	(44)	(205)
Other securities
Securities HTM:
Securities HTM, Less than 12 Months, Fair Value	523
Securities HTM, Less than 12 Months, Gross Unrealized Losses	(26)
Securities HTM, Total, Fair Value	523
Securities HTM, Total, Gross Unrealized Losses	(26)
Securities AFS:
Securities AFS, Less than 12 Months, Fair Value	3,823	35,206
Securities AFS, Less than 12 Months, Gross Unrealized Losses	(427)	(2,404)
Securities AFS, 12 Months or More, Fair Value	34,190	4,122
Securities AFS, 12 Months or More, Gross Unrealized Losses	(3,884)	(396)
Securities AFS, Total, Fair Value	38,013	39,328
Securities AFS, Total, Gross Unrealized Losses	$ (4,311)	$ (2,800)

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Note 2 - INVESTMENT SECURITIES - Activity in Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2023	Sep. 30, 2023
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 180	$ 180
Balance, ending		180
Balance, ending		989
Municipal securities.
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning balance	180	180
Balance, ending		180
Other securities
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Balance, ending		989
Corporate securities
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Provision for credit loss expense	$ 989	989
Balance, ending		$ 989

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Note 2 - INVESTMENT SECURITIES - Sales of Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
INVESTMENT SECURITIES
Proceeds from sales of securities	$ 0	$ 0	$ 30,568	$ 111,375
Gross gains from sales of securities			56
Gross losses from sales of securities			$ (507)

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Note 2 - INVESTMENT SECURITIES - Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Securities HTM:
Securities held to maturity, due in one year or less, amortized cost	$ 1,907
Securities held to maturity, due in one year or less, fair value	1,882
Securities held to maturity, due after one year through five years, amortized cost	27,159
Securities held to maturity, due after one year through five years, fair value	27,700
Securities held to maturity, due after five years, amortized cost	586,229
Securities held to maturity, due after five years, fair value	495,237
Securities HTM, Amortized cost	615,295	$ 587,322
Securities held to maturity, fair value	524,819	535,636
Securities AFS:
Securities available for sale, due in one year or less, amortized cost	3,160
Securities available for sale, Due in one year or less, fair value	3,146
Securities available for sale, due after one year through five years, amortized cost	14,338
Securities available for sale, Due after one year through five years, fair value	12,239
Securities available for sale, due after five years, amortized cost	255,481
Securities available for sale, due after five years, fair value	191,622
Securities available for sale, single maturity, amortized cost	272,979
Securities available for sale, single maturity, fair value	207,007
Securities AFS, Amortized Cost	355,638	400,511
Available-for-sale Securities, Debt Securities, Total	281,279	340,960
Callable Securities [Member]
Securities AFS:
Securities AFS, Amortized Cost	251,324
Available-for-sale Securities, Debt Securities, Total	188,512
Municipal securities.
Securities HTM:
Securities HTM, Amortized cost	614,245	586,272
Securities held to maturity, fair value	523,795	534,586
Securities AFS:
Securities AFS, Amortized Cost	207,318	239,812
Available-for-sale Securities, Debt Securities, Total	149,772	193,178
Municipal securities. | Callable Securities [Member]
Securities HTM:
Securities held to maturity, callable, amortized cost	230,493
Securities held to maturity, callable, fair value	194,222
Securities AFS:
Securities available for sale, callable, amortized cost	205,747
Securities available for sale, callable, fair value	148,235
Asset-backed securities
Securities AFS:
Securities AFS, Amortized Cost	16,226	18,885
Available-for-sale Securities, Debt Securities, Total	16,326	18,728
Securities available for sale, callable, amortized cost	16,226
Securities available for sale, callable, fair value	16,326
Residential mortgage-backed and related securities
Securities AFS:
Securities AFS, Amortized Cost	66,433	73,438
Available-for-sale Securities, Debt Securities, Total	57,946	66,215
Securities available for sale, callable, amortized cost	66,433
Securities available for sale, callable, fair value	57,946
Other securities
Securities HTM:
Securities HTM, Amortized cost	1,050	1,050
Securities held to maturity, fair value	1,024	1,050
Securities AFS:
Securities AFS, Amortized Cost	46,531	48,631
Available-for-sale Securities, Debt Securities, Total	41,233	$ 45,858
Other securities | Callable Securities [Member]
Securities AFS:
Securities available for sale, callable, amortized cost	45,577
Securities available for sale, callable, fair value	$ 40,277

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Note 3 - LOANS/LEASES RECEIVABLE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Loans/leases receivable	$ 6,606,307		$ 6,606,307			$ 6,138,871
Accrued interest on loans	31,300		31,300			24,300
Allowance for credit losses on loans	87,669	$ 90,489	87,669	$ 90,489	$ 85,797	87,706	$ 92,425	$ 78,721
Charged off	1,816	2,489	6,038	3,565
Recoveries	253	222	781	808
Residential real estate
Residential real estate loan held for sale	898		898			1,500
C&I
Loans/leases receivable	1,787,156		1,787,156			1,748,562
C&I | C&I - other
Loans/leases receivable	1,487,568		1,487,568			1,451,693
Residential real estate loan held for sale	359		359
Charged off	1,601		5,523
C&I | C&I - other including lease
Loans/leases receivable	1,521,969		1,521,969			1,483,582
Allowance for credit losses on loans	26,754	28,006	26,754	28,006	27,162	27,753	28,093	25,982
Charged off	1,734	1,915	5,709	2,790
Recoveries	215	176	729	622
C&I | m2 Lease Funds, LLC | C&I - other
Loans/leases receivable	306,600		306,600
C&I | m2 Lease Funds, LLC | C&I - other
Loans/leases receivable						278,000
Direct financing leases
Loans/leases receivable	34,401		34,401			31,889
Allowance for credit losses on loans	1,081		1,081			970
Charged off	133		186
Direct financing leases | C&I - other including lease
Allowance for credit losses on loans	1,100	1,000	1,100	1,000	1,000	970	1,600	1,500
Charged off	(133)	708	186	(931)
Recoveries	43	65	73	173
Consumer
Loans/leases receivable	127,615		127,615			110,421
Allowance for credit losses on loans	1,564	1,328	1,564	1,328	1,505	1,371	1,355	930
Charged off	30	7	57	15
Recoveries	9	3	13	9
Construction and land development
Loans/leases receivable	1,394,054		1,394,054			1,192,061
Residential real estate loan held for sale	12,700		12,700
Allowance for credit losses on loans	16,842	15,133	16,842	15,133	15,888	14,262	16,388	16,972
Charged off	38	562	50	562
Multi-family
Loans/leases receivable	1,156,980		1,156,980			963,803
Residential real estate loan held for sale	265,000		265,000
Allowance for credit losses on loans	12,279	13,263	12,279	13,263	$ 11,229	13,186	$ 12,783	$ 9,339
Recoveries		$ 43		$ 43
C&I - other, construction and land development and multi-family loans
Residential real estate loan held for sale	$ 278,000		$ 278,000			$ 0

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Note 3 -LOANS/LEASES RECEIVABLE - Composition of the Loan Lease Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Gross loans/leases receivable	$ 6,606,307		$ 6,138,871
Less allowance for credit losses	(87,669)	$ (85,797)	(87,706)	$ (90,489)	$ (92,425)	$ (78,721)
Net loans/leases receivable	6,518,638		6,051,165
C&I
Gross loans/leases receivable	1,787,156		1,748,562
C&I | C&I - revolving
Gross loans/leases receivable	299,588		296,869
Less allowance for credit losses	(4,469)	(4,101)	(4,457)	(5,180)	(5,179)	(3,907)
C&I | C&I - other
Gross loans/leases receivable	1,487,568		1,451,693
CRE | CRE - owner occupied
Gross loans/leases receivable	610,618		629,367
CRE | Non-owner occupied
Gross loans/leases receivable	955,552		963,239
Less allowance for credit losses	(11,681)	(11,968)	(11,749)	(11,888)	(12,049)	(8,549)
Construction and land development
Gross loans/leases receivable	1,394,054		1,192,061
Less allowance for credit losses	(16,842)	(15,888)	(14,262)	(15,133)	(16,388)	(16,972)
Multi-family
Gross loans/leases receivable	1,156,980		963,803
Less allowance for credit losses	(12,279)	(11,229)	(13,186)	(13,263)	(12,783)	(9,339)
Direct financing leases
Net minimum lease payments to be received	38,729		34,754
Estimated unguaranteed residual values of leased assets	165		165
Unearned lease/residual income	(4,493)		(3,030)
Gross loans/leases receivable	34,401		31,889
Plus deferred lease origination costs, net of fees	100		226
Gross loans/leases receivable after originated cost	34,501		32,115
Less allowance for credit losses	(1,081)		(970)
Net loans/leases receivable	33,420		31,145
1-4 family real estate
Gross loans/leases receivable	539,931		499,529
Less allowance for credit losses	(5,168)	(5,213)	(4,963)	(5,232)	(5,513)	(4,541)
Consumer
Gross loans/leases receivable	127,615		110,421
Less allowance for credit losses	$ (1,564)	$ (1,505)	$ (1,371)	$ (1,328)	$ (1,355)	$ (930)

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Note 3 - LOANS/LEASES RECEIVABLE - Remaining Discount on Acquired loans (Details) - Performing Loans - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Financing Receivable, Allowance for Credit Loss [Line Items]
Balance at the beginning of the period	$ (5,104)	$ (12,989)	$ (6,088)	$ (1,533)
Discount added at acquisition				(13,381)
Accretion recognized	540	1,148	1,524	3,073
Balance at the end of the period	$ (4,564)	$ (11,841)	$ (4,564)	$ (11,841)

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Note 3 - LOANS/LEASES RECEIVABLE - Aging of the Loan Lease Portfolio (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Loans/leases receivable	$ 6,606,307	$ 6,138,871
Accruing Past Due 90 Days or More		5
Nonaccrual Loans/Leases	$ 34,568	$ 8,765
Accruing past due 90 days or more as a percentage of total loan/lease portfolio		0.00%
Nonaccrual Loans/Leases as a percentage of total loan/lease portfolio	0.52%	0.14%
Loans and leases as a percentage of total loan/lease portfolio	100.00%	100.00%
Current
Loans/leases receivable	$ 6,557,811	$ 6,120,819
Current as a percentage of total loan/lease portfolio	99.27%	99.71%
30-59 Days Past Due
Loans/leases receivable	$ 7,165	$ 7,585
Past due as a percentage of total loan/lease portfolio	0.11%	0.12%
60 to 89 Days Past Due
Loans/leases receivable	$ 6,763	$ 1,697
Past due as a percentage of total loan/lease portfolio	0.10%	0.03%
C&I
Loans/leases receivable	$ 1,787,156	$ 1,748,562
C&I | C&I - revolving
Loans/leases receivable	299,588	296,869
C&I | C&I - other
Loans/leases receivable	1,487,568	1,451,693
Accruing Past Due 90 Days or More		5
Nonaccrual Loans/Leases	10,222	3,135
C&I | Current | C&I - revolving
Loans/leases receivable	299,588	296,869
C&I | Current | C&I - other
Loans/leases receivable	1,464,582	1,442,629
C&I | 30-59 Days Past Due | C&I - other
Loans/leases receivable	6,609	4,800
C&I | 60 to 89 Days Past Due | C&I - other
Loans/leases receivable	6,155	1,124
CRE | Owner occupied
Loans/leases receivable	610,618	629,367
Nonaccrual Loans/Leases	3,487	2,590
CRE | Non-owner occupied
Loans/leases receivable	955,552	963,239
Nonaccrual Loans/Leases	5,178	374
CRE | Current | Owner occupied
Loans/leases receivable	606,998	625,611
CRE | Current | Non-owner occupied
Loans/leases receivable	950,286	962,444
CRE | 30-59 Days Past Due | Owner occupied
Loans/leases receivable	133	1,166
CRE | 30-59 Days Past Due | Non-owner occupied
Loans/leases receivable	88	421
Construction and land development
Loans/leases receivable	1,394,054	1,192,061
Nonaccrual Loans/Leases	4,453	132
Construction and land development | Current
Loans/leases receivable	1,389,601	1,191,929
Multi-family
Loans/leases receivable	1,156,980	963,803
Nonaccrual Loans/Leases	8,172
Multi-family | Current
Loans/leases receivable	1,148,808	963,803
Direct financing leases
Loans/leases receivable	34,401	31,889
Nonaccrual Loans/Leases	241	135
Direct financing leases | Current
Loans/leases receivable	33,694	31,557
Direct financing leases | 30-59 Days Past Due
Loans/leases receivable	315	141
Direct financing leases | 60 to 89 Days Past Due
Loans/leases receivable	151	56
1-4 family real estate
Loans/leases receivable	539,931	499,529
Nonaccrual Loans/Leases	2,255	2,046
1-4 family real estate | Current
Loans/leases receivable	537,271	495,936
1-4 family real estate | 30-59 Days Past Due
Loans/leases receivable		1,030
1-4 family real estate | 60 to 89 Days Past Due
Loans/leases receivable	405	517
Consumer
Loans/leases receivable	127,615	110,421
Nonaccrual Loans/Leases	560	353
Consumer | Current
Loans/leases receivable	126,983	110,041
Consumer | 30-59 Days Past Due
Loans/leases receivable	20	$ 27
Consumer | 60 to 89 Days Past Due
Loans/leases receivable	$ 52

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Note 3 - LOANS/LEASES RECEIVABLE - Loans Leases Nonperforming Loans Leases (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Accruing Past Due 90 Days or More		$ 5
Nonaccrual Loans/Leases	$ 34,568	8,765
Loans/leases receivable	$ 6,606,307	$ 6,138,871
Percentage of Total NPLs	100.00%	100.00%
Nonperforming loans
Accruing Past Due 90 Days or More		$ 5
Nonaccrual Loans/Leases	$ 15,289	6,787
Nonaccrual Loans/Leases without an Allowance for Credit Losses	19,279	1,978
Loans/leases receivable	$ 34,568	$ 8,770
Percentage of Total NPLs	100.00%	100.00%
C&I
Loans/leases receivable	$ 1,787,156	$ 1,748,562
C&I | C&I - other
Accruing Past Due 90 Days or More		5
Nonaccrual Loans/Leases	10,222	3,135
Loans/leases receivable	1,487,568	1,451,693
C&I | C&I - revolving
Loans/leases receivable	299,588	296,869
C&I | Nonperforming loans | C&I - other
Loans/leases receivable	9,860	2,680
CRE | Owner occupied
Nonaccrual Loans/Leases	3,487	2,590
Loans/leases receivable	610,618	629,367
CRE | Non-owner occupied
Nonaccrual Loans/Leases	5,178	374
Loans/leases receivable	955,552	963,239
CRE | Nonperforming loans | C&I - other
Accruing Past Due 90 Days or More		5
Nonaccrual Loans/Leases	7,521	2,775
Nonaccrual Loans/Leases without an Allowance for Credit Losses	2,701	360
Loans/leases receivable	$ 10,222	$ 3,140
Percentage of Total NPLs	29.57%	35.80%
CRE | Nonperforming loans | Owner occupied
Nonaccrual Loans/Leases	$ 1,225	$ 1,738
Nonaccrual Loans/Leases without an Allowance for Credit Losses	2,262	852
Loans/leases receivable	$ 3,487	$ 2,590
Percentage of Total NPLs	10.09%	29.53%
CRE | Nonperforming loans | Non-owner occupied
Nonaccrual Loans/Leases	$ 2,040	$ 68
Nonaccrual Loans/Leases without an Allowance for Credit Losses	3,138	306
Loans/leases receivable	$ 5,178	$ 374
Percentage of Total NPLs	14.98%	4.26%
Construction and land development
Nonaccrual Loans/Leases	$ 4,453	$ 132
Loans/leases receivable	1,394,054	1,192,061
Construction and land development | Nonperforming loans
Nonaccrual Loans/Leases	1,930	132
Nonaccrual Loans/Leases without an Allowance for Credit Losses	2,523
Loans/leases receivable	$ 4,453	$ 132
Percentage of Total NPLs	12.88%	1.51%
Multi-family
Nonaccrual Loans/Leases	$ 8,172
Loans/leases receivable	1,156,980	$ 963,803
Multi-family | Nonperforming loans
Nonaccrual Loans/Leases without an Allowance for Credit Losses	8,172
Loans/leases receivable	$ 8,172
Percentage of Total NPLs	23.64%
Direct financing leases
Nonaccrual Loans/Leases	$ 241	135
Loans/leases receivable	34,401	31,889
Direct financing leases | Nonperforming loans
Nonaccrual Loans/Leases	152	80
Nonaccrual Loans/Leases without an Allowance for Credit Losses	89	55
Loans/leases receivable	$ 241	$ 135
Percentage of Total NPLs	0.70%	1.54%
1-4 family real estate
Nonaccrual Loans/Leases	$ 2,255	$ 2,046
Loans/leases receivable	539,931	499,529
1-4 family real estate | Nonperforming loans
Nonaccrual Loans/Leases	1,861	1,641
Nonaccrual Loans/Leases without an Allowance for Credit Losses	394	405
Loans/leases receivable	$ 2,255	$ 2,046
Percentage of Total NPLs	6.52%	23.33%
Consumer
Nonaccrual Loans/Leases	$ 560	$ 353
Loans/leases receivable	127,615	110,421
Consumer | Nonperforming loans
Nonaccrual Loans/Leases	560	353
Loans/leases receivable	$ 560	$ 353
Percentage of Total NPLs	1.62%	4.03%

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Note 3 - LOANS/LEASES RECEIVABLE - Allowance for Estimated Losses on Loans Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Balance, beginning	$ 85,797	$ 92,425	$ 87,706	$ 78,721
Change in ACL for writedown of LHFS to fair value	175		(3,811)
Initial ACL recorded for PCD loans				5,902
Provisions (credited) to expense	3,260	331	9,031	8,623
Charged off	(1,816)	(2,489)	(6,038)	(3,565)
Recoveries	253	222	781	808
Balance, ending	87,669	90,489	87,669	90,489
Guaranty Bank
Provisions (credited) to expense		11,000		11,000
C&I | C&I - revolving
Balance, beginning	4,101	5,179	4,457	3,907
Initial ACL recorded for PCD loans				600
Provisions (credited) to expense	368	1	12	673
Balance, ending	4,469	5,180	4,469	5,180
C&I | C&I - other including lease
Balance, beginning	27,162	28,093	27,753	25,982
Change in ACL for writedown of LHFS to fair value			(5)
Initial ACL recorded for PCD loans				7
Provisions (credited) to expense	1,111	1,652	3,986	4,185
Charged off	(1,734)	(1,915)	(5,709)	(2,790)
Recoveries	215	176	729	622
Balance, ending	26,754	28,006	26,754	28,006
CRE | Owner occupied
Balance, beginning	8,731	11,065	9,965	8,501
Initial ACL recorded for PCD loans				2,481
Provisions (credited) to expense	192	(606)	(834)	(529)
Charged off	(14)		(222)
Recoveries	3		3	6
Balance, ending	8,912	10,459	8,912	10,459
CRE | Non-owner occupied
Balance, beginning	11,968	12,049	11,749	8,549
Initial ACL recorded for PCD loans				1,076
Provisions (credited) to expense	(313)	(161)	(99)	2,328
Charged off				(193)
Recoveries	26		31	128
Balance, ending	11,681	11,888	11,681	11,888
Construction and land development
Balance, beginning	15,888	16,388	14,262	16,972
Change in ACL for writedown of LHFS to fair value			(147)
Initial ACL recorded for PCD loans				1,100
Provisions (credited) to expense	992	(693)	2,777	(2,377)
Charged off	(38)	(562)	(50)	(562)
Balance, ending	16,842	15,133	16,842	15,133
Multi-family
Balance, beginning	11,229	12,783	13,186	9,339
Change in ACL for writedown of LHFS to fair value	175		(3,659)
Initial ACL recorded for PCD loans				481
Provisions (credited) to expense	875	437	2,752	3,400
Recoveries		43		43
Balance, ending	12,279	13,263	12,279	13,263
Direct financing leases
Balance, beginning			970
Charged off	(133)		(186)
Balance, ending	1,081		1,081
Direct financing leases | C&I - other including lease
Balance, beginning	1,000	1,600	970	1,500
Provisions (credited) to expense	165	91	224	249
Charged off	133	(708)	(186)	931
Recoveries	43	65	73	173
Balance, ending	1,100	1,000	1,100	1,000
1-4 family real estate
Balance, beginning	5,213	5,513	4,963	4,541
Initial ACL recorded for PCD loans				137
Provisions (credited) to expense	(45)	(276)	200	559
Charged off		(5)		(5)
Recoveries			5
Balance, ending	5,168	5,232	5,168	5,232
Consumer
Balance, beginning	1,505	1,355	1,371	930
Initial ACL recorded for PCD loans				20
Provisions (credited) to expense	80	(23)	237	384
Charged off	(30)	(7)	(57)	(15)
Recoveries	9	3	13	9
Balance, ending	$ 1,564	$ 1,328	$ 1,564	$ 1,328

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Note 3 - LOANS/LEASES RECEIVABLE - Composition Of Allowance For Credit Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	$ 84,849		$ 74,826
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	6,521,458		6,064,045
Gross loans/leases receivable	6,606,307		6,138,871
Allowance for Credit Losses, Individually Evaluated for Credit Losses	8,063		6,928
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	79,606		80,778
Allowance for Credit Losses, Total	87,669	$ 85,797	87,706	$ 90,489	$ 92,425	$ 78,721
Construction Loans [Member]
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	4,453
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	1,389,601
Gross loans/leases receivable	1,394,054
Allowance for Credit Losses, Individually Evaluated for Credit Losses	307
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	16,535
Allowance for Credit Losses, Total	16,842
C&I
Gross loans/leases receivable	1,787,156		1,748,562
C&I | Commercial And Industrial [Member]
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	22,826		12,744
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	1,798,731		1,767,707
Gross loans/leases receivable	1,821,557		1,780,451
Allowance for Credit Losses, Individually Evaluated for Credit Losses	3,324		2,406
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	27,899		29,804
Allowance for Credit Losses, Total	31,223		32,210
C&I | C&I - revolving
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	3,358		3,386
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	296,230		293,483
Gross loans/leases receivable	299,588		296,869
Allowance for Credit Losses, Individually Evaluated for Credit Losses	944		961
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	3,525		3,496
Allowance for Credit Losses, Total	4,469	4,101	4,457	5,180	5,179	3,907
C&I | C&I - other including lease
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	19,468		9,358
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	1,502,501		1,474,224
Gross loans/leases receivable	1,521,969		1,483,582
Allowance for Credit Losses, Individually Evaluated for Credit Losses	2,380		1,445
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	24,374		26,308
Allowance for Credit Losses, Total	26,754	27,162	27,753	28,006	28,093	25,982
CRE | Owner occupied
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	23,952		24,880
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	586,666		604,487
Gross loans/leases receivable	610,618		629,367
Allowance for Credit Losses, Individually Evaluated for Credit Losses	2,844		2,853
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	6,068		7,112
Allowance for Credit Losses, Total	8,912	8,731	9,965	10,459	11,065	8,501
CRE | Non-owner occupied
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	20,456		21,588
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	935,096		941,651
Gross loans/leases receivable	955,552		963,239
Allowance for Credit Losses, Individually Evaluated for Credit Losses	836		869
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	10,845		10,880
Allowance for Credit Losses, Total	11,681	11,968	11,749	11,888	12,049	8,549
Construction and land development
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses			10,394
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses			1,181,667
Gross loans/leases receivable	1,394,054		1,192,061
Allowance for Credit Losses, Individually Evaluated for Credit Losses			13
Allowance for Credit Losses, Collectively Evaluated for Credit Losses			14,249
Allowance for Credit Losses, Total	16,842	15,888	14,262	15,133	16,388	16,972
Multi-family
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	9,539		1,302
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	1,147,441		962,501
Gross loans/leases receivable	1,156,980		963,803
Allowance for Credit Losses, Individually Evaluated for Credit Losses	427		395
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	11,852		12,791
Allowance for Credit Losses, Total	12,279	11,229	13,186	13,263	12,783	9,339
1-4 family real estate
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	2,906		3,177
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	537,025		496,352
Gross loans/leases receivable	539,931		499,529
Allowance for Credit Losses, Individually Evaluated for Credit Losses	253		317
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	4,915		4,646
Allowance for Credit Losses, Total	5,168	5,213	4,963	5,232	5,513	4,541
Consumer
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	717		741
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	126,898		109,680
Gross loans/leases receivable	127,615		110,421
Allowance for Credit Losses, Individually Evaluated for Credit Losses	72		75
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	1,492		1,296
Allowance for Credit Losses, Total	1,564	1,505	1,371	1,328	1,355	930
Direct financing leases
Gross loans/leases receivable	34,401		31,889
Allowance for Credit Losses, Total	1,081		970
Direct financing leases | C&I - other including lease
Amortized Cost of Loans Receivable, Individually Evaluated for Credit Losses	241		135
Amortized Cost of Loans Receivable, Collectively Evaluated for Credit Losses	34,200		31,800
Allowance for Credit Losses, Individually Evaluated for Credit Losses	55		24
Allowance for Credit Losses, Collectively Evaluated for Credit Losses	1,000		946
Allowance for Credit Losses, Total	$ 1,100	$ 1,000	$ 970	$ 1,000	$ 1,600	$ 1,500

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Note 3 - LOANS/LEASES RECEIVABLE - Amortized Cost Basis of Collateral (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Loans/leases receivable	$ 6,606,307	$ 6,138,871
Collateral Dependent Loans
Loans/leases receivable	84,849	74,826
Commercial Assets
Loans/leases receivable	3,884	4,870
Owner occupied
Loans/leases receivable	24,038	25,024
Non Owner-Occupied Real Estate
Loans/leases receivable	34,444	33,437
Owner Occupied Real Estate
Loans/leases receivable	3,469	3,818
Securities
Loans/leases receivable	5,533	108
Equipment
Loans/leases receivable	13,021	7,394
Other
Loans/leases receivable	460	175
C&I
Loans/leases receivable	1,787,156	1,748,562
C&I | Collateral Dependent Loans
Loans/leases receivable	22,826	12,744
C&I | Commercial Assets
Loans/leases receivable	3,884	4,870
C&I | Owner occupied
Loans/leases receivable		210
C&I | Securities
Loans/leases receivable	5,533	108
C&I | Equipment
Loans/leases receivable	13,021	7,394
C&I | Other
Loans/leases receivable	388	162
C&I | C&I - revolving
Loans/leases receivable	299,588	296,869
C&I | C&I - revolving | Collateral Dependent Loans
Loans/leases receivable	3,358	3,386
C&I | C&I - revolving | Commercial Assets
Loans/leases receivable	3,253	3,281
C&I | C&I - revolving | Equipment
Loans/leases receivable	105	105
C&I | C&I - other including lease
Loans/leases receivable	1,521,969	1,483,582
C&I | C&I - other including lease | Collateral Dependent Loans
Loans/leases receivable	19,468	9,358
C&I | C&I - other including lease | Commercial Assets
Loans/leases receivable	631	1,589
C&I | C&I - other including lease | Owner occupied
Loans/leases receivable		210
C&I | C&I - other including lease | Securities
Loans/leases receivable	5,533	108
C&I | C&I - other including lease | Equipment
Loans/leases receivable	12,916	7,289
C&I | C&I - other including lease | Other
Loans/leases receivable	388	162
CRE | Owner occupied
Loans/leases receivable	610,618	629,367
CRE | Owner occupied | Collateral Dependent Loans
Loans/leases receivable	23,952	24,880
CRE | Owner occupied | Owner occupied
Loans/leases receivable	23,888	24,814
CRE | Owner occupied | Owner Occupied Real Estate
Loans/leases receivable	64	66
CRE | Non-owner occupied
Loans/leases receivable	955,552	963,239
CRE | Non-owner occupied | Collateral Dependent Loans
Loans/leases receivable	20,456	21,588
CRE | Non-owner occupied | Non Owner-Occupied Real Estate
Loans/leases receivable	20,456	21,588
Construction and land development
Loans/leases receivable	1,394,054	1,192,061
Construction and land development | Collateral Dependent Loans
Loans/leases receivable	4,453	10,394
Construction and land development | Owner occupied
Loans/leases receivable	150
Construction and land development | Non Owner-Occupied Real Estate
Loans/leases receivable	4,303	10,394
Direct financing leases
Loans/leases receivable	34,401	31,889
Direct financing leases | C&I - other including lease | Commercial Assets
Loans/leases receivable	241	135
Multi-family
Loans/leases receivable	1,156,980	963,803
Multi-family | Collateral Dependent Loans
Loans/leases receivable	9,539	1,302
Multi-family | Non Owner-Occupied Real Estate
Loans/leases receivable	9,539	1,302
1-4 family real estate
Loans/leases receivable	539,931	499,529
1-4 family real estate | Collateral Dependent Loans
Loans/leases receivable	2,906	3,177
1-4 family real estate | Non Owner-Occupied Real Estate
Loans/leases receivable	27	33
1-4 family real estate | Owner Occupied Real Estate
Loans/leases receivable	2,879	3,144
Consumer
Loans/leases receivable	127,615	110,421
Consumer | Collateral Dependent Loans
Loans/leases receivable	717	741
Consumer | Non Owner-Occupied Real Estate
Loans/leases receivable	119	120
Consumer | Owner Occupied Real Estate
Loans/leases receivable	526	608
Consumer | Other
Loans/leases receivable	$ 72	$ 13

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Note 3 - LOANS/LEASES RECEIVABLE - Loans by Internally Assigned Risk Rating (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Gross loans/leases receivable	$ 6,606,307	$ 6,138,871
Internally Assigned Risk Rating
2023	1,245,096	1,762,189
2022	1,519,426	1,348,190
2021	1,117,112	988,473
2020	818,701	412,583
2019	328,712	294,259
Prior	411,567	215,046
Revolving Loans Amortized Cost Basis	357,480	366,274
Gross loans/leases receivable	5,798,094	5,387,014
C&I
Gross loans/leases receivable	1,787,156	1,748,562
C&I | C&I - revolving
Gross loans/leases receivable	299,588	296,869
C&I | C&I - other
Gross loans/leases receivable	1,487,568	1,451,693
C&I | Internally Assigned Risk Rating | C&I - revolving
Revolving Loans Amortized Cost Basis	299,588	296,869
Gross loans/leases receivable	299,588	296,869
C&I | Internally Assigned Risk Rating | C&I - other
2023	384,761	506,174
2022	327,842	280,216
2021	160,496	129,365
2020	89,055	92,312
2019	73,689	59,985
Prior	145,085	105,598
Gross loans/leases receivable	1,180,928	1,173,650
C&I | Pass (Ratings 1 through 5) | C&I - revolving
Revolving Loans Amortized Cost Basis	272,848	275,888
Gross loans/leases receivable	272,848	275,888
C&I | Pass (Ratings 1 through 5) | C&I - other
2023	372,511	496,445
2022	318,783	279,412
2021	156,021	127,803
2020	85,298	87,054
2019	69,736	59,675
Prior	139,089	105,184
Gross loans/leases receivable	1,141,438	1,155,573
C&I | Special Mention (Rating 6) | C&I - revolving
Revolving Loans Amortized Cost Basis	23,632	17,595
Gross loans/leases receivable	23,632	17,595
C&I | Special Mention (Rating 6) | C&I - other
2023	12,149	9,542
2022	8,936	679
2021	4,225	901
2020	3,757	723
2019	801
Prior	321	308
Gross loans/leases receivable	30,189	12,153
C&I | Substandard (Rating 7) | C&I - revolving
Revolving Loans Amortized Cost Basis	3,108	3,386
Gross loans/leases receivable	3,108	3,386
C&I | Substandard (Rating 7) | C&I - other
2023	101	187
2022	123	125
2021	250	661
2020		4,535
2019	3,152	310
Prior	5,675	106
Gross loans/leases receivable	9,301	5,924
CRE | Owner occupied
Gross loans/leases receivable	610,618	629,367
CRE | Non-owner occupied
Gross loans/leases receivable	955,552	963,239
CRE | Internally Assigned Risk Rating | Owner occupied
2023	78,071	156,151
2022	131,464	182,611
2021	158,087	165,311
2020	134,180	35,451
2019	32,531	28,285
Prior	63,744	47,829
Revolving Loans Amortized Cost Basis	12,541	13,729
Gross loans/leases receivable	610,618	629,367
CRE | Internally Assigned Risk Rating | Non-owner occupied
2023	124,210	318,638
2022	292,079	222,835
2021	199,685	192,555
2020	149,231	104,554
2019	92,159	69,815
Prior	91,723	47,121
Revolving Loans Amortized Cost Basis	6,465	7,721
Gross loans/leases receivable	955,552	963,239
CRE | Pass (Ratings 1 through 5) | Owner occupied
2023	71,080	146,211
2022	130,033	182,440
2021	148,170	142,596
2020	112,315	33,571
2019	30,875	27,088
Prior	62,220	45,993
Revolving Loans Amortized Cost Basis	11,670	13,460
Gross loans/leases receivable	566,363	591,359
CRE | Pass (Ratings 1 through 5) | Non-owner occupied
2023	107,668	310,163
2022	290,689	221,953
2021	199,435	173,478
2020	131,797	89,337
2019	74,778	56,898
Prior	84,855	40,923
Revolving Loans Amortized Cost Basis	6,412	7,510
Gross loans/leases receivable	895,634	900,262
CRE | Special Mention (Rating 6) | Owner occupied
2023	5,046	6,190
2022	720
2021	8,873	6,379
2020	5,820	484
2019	470
Prior	386	1,346
Revolving Loans Amortized Cost Basis	871	269
Gross loans/leases receivable	22,186	14,668
CRE | Special Mention (Rating 6) | Non-owner occupied
2023	12,623	2,824
2022	59	882
2021	250	18,920
2020	17,277
2019	2,385	12,917
Prior	6,868	6,198
Gross loans/leases receivable	39,462	41,741
CRE | Substandard (Rating 7) | Owner occupied
2023	1,945	3,750
2022	711	171
2021	1,044	16,336
2020	16,045	1,396
2019	1,186	1,197
Prior	1,138	490
Gross loans/leases receivable	22,069	23,340
CRE | Substandard (Rating 7) | Non-owner occupied
2023	3,919	5,651
2022	1,331
2021		157
2020	157	15,217
2019	14,996
Revolving Loans Amortized Cost Basis	53	211
Gross loans/leases receivable	20,456	21,236
Construction and land development
Gross loans/leases receivable	1,394,054	1,192,061
Construction and land development | Internally Assigned Risk Rating
2023	354,353	480,613
2022	494,580	349,896
2021	297,990	240,778
2020	187,894	31,607
2019	8,686	30,300
Prior	8,083
Revolving Loans Amortized Cost Basis	26,905	29,647
Gross loans/leases receivable	1,378,491	1,162,841
Construction and land development | Pass (Ratings 1 through 5)
2023	353,940	479,016
2022	491,807	330,434
2021	286,614	240,778
2020	187,894	31,607
2019	8,686	30,300
Prior	8,083
Revolving Loans Amortized Cost Basis	26,905	29,647
Gross loans/leases receivable	1,363,929	1,141,782
Construction and land development | Special Mention (Rating 6)
2023		1,465
2022		9,200
2021	10,109
Gross loans/leases receivable	10,109	10,665
Construction and land development | Substandard (Rating 7)
2023	413	132
2022	2,773	10,262
2021	1,267
Gross loans/leases receivable	4,453	10,394
Multi-family
Gross loans/leases receivable	1,156,980	963,803
Multi-family | Internally Assigned Risk Rating
2023	248,228	237,839
2022	224,208	254,100
2021	247,247	226,222
2020	231,602	135,845
2019	110,450	99,695
Prior	95,149	7,875
Revolving Loans Amortized Cost Basis	96	2,227
Gross loans/leases receivable	1,156,980	963,803
Multi-family | Pass (Ratings 1 through 5)
2023	246,633	237,839
2022	224,208	254,056
2021	239,039	224,920
2020	230,271	134,378
2019	110,450	99,695
Prior	95,149	7,875
Revolving Loans Amortized Cost Basis	96	2,227
Gross loans/leases receivable	1,145,846	960,990
Multi-family | Special Mention (Rating 6)
2023	1,595
2022		44
2020		1,467
Gross loans/leases receivable	1,595	1,511
Multi-family | Substandard (Rating 7)
2021	8,208	1,302
2020	1,331
Gross loans/leases receivable	9,539	1,302
1-4 family real estate
Gross loans/leases receivable	539,931	499,529
1-4 family real estate | Internally Assigned Risk Rating
2023	55,341	61,981
2022	48,557	57,731
2021	53,234	33,737
2020	26,292	12,692
2019	11,173	5,813
Prior	6,963	6,002
Revolving Loans Amortized Cost Basis	3,606	5,855
Gross loans/leases receivable	205,166	183,811
1-4 family real estate | Pass (Ratings 1 through 5)
2023	55,287	61,953
2022	48,557	57,731
2021	53,234	33,737
2020	26,292	12,687
2019	11,171	5,813
Prior	6,963	6,002
Revolving Loans Amortized Cost Basis	3,606	5,855
Gross loans/leases receivable	205,110	183,778
1-4 family real estate | Special Mention (Rating 6)
2023	29
Gross loans/leases receivable	29
1-4 family real estate | Substandard (Rating 7)
2023	25	28
2020		5
2019	2
Gross loans/leases receivable	27	33
Consumer
Gross loans/leases receivable	127,615	110,421
Consumer | Internally Assigned Risk Rating
2023	132	793
2022	696	801
2021	373	505
2020	447	122
2019	24	366
Prior	820	621
Revolving Loans Amortized Cost Basis	8,279	10,226
Gross loans/leases receivable	10,771	13,434
Consumer | Pass (Ratings 1 through 5)
2023	89	511
2022	416	801
2021	373	493
2020	447	122
2019	24	254
Prior	727	621
Revolving Loans Amortized Cost Basis	8,279	10,226
Gross loans/leases receivable	10,355	13,028
Consumer | Substandard (Rating 7)
2023	43	282
2022	280
2021		12
2019		112
Prior	93
Gross loans/leases receivable	$ 416	$ 406

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Note 3 - LOANS/LEASES RECEIVABLE - Leases By Delinquency Status (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Gross loans/leases receivable	$ 6,606,307	$ 6,138,871
Delinquency
2023	212,085	298,706
2022	206,100	173,708
2021	137,148	110,850
2020	92,021	31,060
2019	22,567	15,942
Prior	54,505	50,417
Revolving Loans Amortized Cost Basis	83,787	71,174
Gross loans/leases receivable	808,213	751,857
Nonperforming loans
Gross loans/leases receivable	34,568	8,770
Construction Loans [Member]
Gross loans/leases receivable	1,394,054
C&I
Gross loans/leases receivable	1,787,156	1,748,562
C&I | C&I - other
Gross loans/leases receivable	1,487,568	1,451,693
C&I | C&I - other | Delinquency
2023	114,293	171,290
2022	122,976	71,014
2021	49,466	25,695
2020	15,842	8,161
2019	3,732	1,804
Prior	331	79
Gross loans/leases receivable	306,640	278,043
C&I | C&I - other | Performing Loans
2023	113,677	170,180
2022	116,539	69,694
2021	47,024	25,540
2020	15,549	8,066
2019	3,665	1,804
Prior	326	79
Gross loans/leases receivable	296,780	275,363
C&I | C&I - other | Nonperforming loans
2023	616	1,110
2022	6,437	1,320
2021	2,442	155
2020	293	95
2019	67
Prior	5
Gross loans/leases receivable	9,860	2,680
Direct financing leases
Gross loans/leases receivable	34,401	31,889
Direct financing leases | Delinquency
2023	12,138	14,578
2022	12,564	5,204
2021	3,728	5,788
2020	3,435	4,405
2019	2,091	1,544
Prior	445	370
Gross loans/leases receivable	34,401	31,889
Direct financing leases | Performing Loans
2023	12,138	14,578
2022	12,548	5,172
2021	3,706	5,700
2020	3,248	4,398
2019	2,075	1,536
Prior	445	370
Gross loans/leases receivable	34,160	31,754
Direct financing leases | Nonperforming loans
2022	16	32
2021	22	88
2020	187	7
2019	16	8
Gross loans/leases receivable	241	135
Construction and land development
Gross loans/leases receivable	1,394,054	1,192,061
Construction and land development | Delinquency
2023	13,912	28,785
2022	1,306	360
2021	274	10
2020	10	3
2019	2	62
Prior	59
Gross loans/leases receivable	15,563	29,220
Construction and land development | Performing Loans
2023	13,912	28,785
2022	1,306	360
2021	274	10
2020	10	3
2019	2	62
Prior	59
Gross loans/leases receivable	15,563	29,220
Construction and land development | Nonperforming loans
Gross loans/leases receivable	4,453	132
1-4 family real estate
Gross loans/leases receivable	539,931	499,529
1-4 family real estate | Delinquency
2023	56,490	69,361
2022	59,145	93,286
2021	81,097	75,640
2020	69,748	17,368
2019	16,032	11,389
Prior	52,173	48,584
Revolving Loans Amortized Cost Basis	80	90
Gross loans/leases receivable	334,765	315,718
1-4 family real estate | Performing Loans
2023	56,490	69,094
2022	58,926	92,762
2021	80,455	75,153
2020	69,330	17,089
2019	15,705	11,381
Prior	51,527	48,136
Revolving Loans Amortized Cost Basis	80	90
Gross loans/leases receivable	332,513	313,705
1-4 family real estate | Nonperforming loans
Gross loans/leases receivable	2,255	2,046
1-4 family real estate | One To Four Family [Member] | Nonperforming loans
2023		267
2022	219	524
2021	642	487
2020	418	279
2019	327	8
Prior	646	448
Gross loans/leases receivable	2,252	2,013
Consumer
Gross loans/leases receivable	127,615	110,421
Consumer | Delinquency
2023	15,252	14,692
2022	10,109	3,844
2021	2,583	3,717
2020	2,986	1,123
2019	710	1,143
Prior	1,497	1,384
Revolving Loans Amortized Cost Basis	83,707	71,084
Gross loans/leases receivable	116,844	96,987
Consumer | Performing Loans
2023	15,252	14,685
2022	10,104	3,844
2021	2,562	3,717
2020	2,973	1,123
2019	710	1,140
Prior	1,310	1,325
Revolving Loans Amortized Cost Basis	83,653	70,974
Gross loans/leases receivable	116,564	96,808
Consumer | Nonperforming loans
Gross loans/leases receivable	560	353
Consumer | Consumer. | Nonperforming loans
2023		7
2022	5
2021	21
2020	13
2019		3
Prior	187	59
Revolving Loans Amortized Cost Basis	54	110
Gross loans/leases receivable	$ 280	$ 179

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Note 3 - LOANS/LEASES RECEIVABLE - Schedule of Gross Charge Offs of loans and Leases by Class of Receivable and Year of Origination (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
2023	$ 41		$ 41
2022	1,224		3,152
2021	254		1,336
2020	246		1,095
2019	8		261
Prior	43		153
Total	1,816	$ 2,489	6,038	$ 3,565
Construction and land development
2022	38		50
Total	38	562	50	562
Direct financing leases
2022	34		71
2021	55		55
2020	41		41
2019	3		18
Prior			1
Total	133		186
1-4 family real estate
Total		5		5
Consumer
2022	22		41
2021	7		10
2020	1		1
2019			5
Total	30	$ 7	57	15
C&I - other | C&I
2023	41		41
2022	1,130		2,990
2021	192		1,063
2020	204		1,053
2019	5		238
Prior	29		138
Total	1,601		5,523
CRE - owner occupied | CRE
2021			208
Prior	14		14
Total	$ 14		$ 222
Non-owner occupied | CRE
Total				$ 193

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Note 3 - LOANS/LEASES RECEIVABLE - Financial Difficulty by Class of Receivables and Type of Concession Granted (Details) - Direct financing leases - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Direct financing leases, amortized cost of payment delay	$ 90	$ 325
Direct financing leases, percentage of class of receivable		1.00%

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Note 3 - LOANS/LEASES RECEIVABLE - Adoption of ASU 2016-13 (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Balance, beginning	$ 85,797	$ 92,425	$ 87,706	$ 78,721
Provisions (credited) to expense	3,260	331	9,031	8,623
Balance, ending	87,669	90,489	87,669	90,489
Guaranty Bank
Provisions (credited) to expense		11,000		11,000
Unfunded Loan Commitment
Balance, beginning	6,326	6,878	5,552	6,886
Provisions (credited) to expense	546	(331)	1,320	(339)
Balance, ending	$ 6,872	$ 6,547	$ 6,872	$ 6,547

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Deposits	$ 6,494,852	$ 5,984,217
Cash Flow Hedges
Deposits	300,000
Interest rate caps | Cash Flow Hedges
Initial premium paid upfront for the two caps	$ 3,500

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES - Summary of Derivatives (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Derivative Assets	$ 291,295	$ 177,631
Derivative Liabilities	(320,220)	(200,701)
Hedged Derivatives | Cash Flow Hedges
Derivative Assets	3,334	2,284
Derivative Liabilities	(42,095)	(35,631)
Interest rate caps | Hedged Derivatives | Cash Flow Hedges
Derivative Assets	5,196	8,327
Interest rate caps | Unhedged Derivatives
Derivative Assets	1,533	2,213
Interest rate swaps | Hedged Derivatives | Cash Flow Hedges
Derivative Assets	3,334	477
Derivative Liabilities	(42,095)	(33,824)
Interest rate swaps | Hedged Derivatives | Fair Value Hedges
Derivative Assets	3,977
Interest rate swaps | Unhedged Derivatives
Derivative Assets	277,255	166,614
Derivative Liabilities	(277,255)	(166,614)
Interest rate collars | Hedged Derivatives | Cash Flow Hedges
Derivative Liabilities	$ (870)	$ (263)

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES - Summary of Interest Rate Cap Derivatives (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Derivative Assets	$ 291,295	$ 177,631
Derivative Liabilities	(320,220)	(200,701)
Hedged Derivatives | Cash Flow Hedges
Notional Amount	49,310
Derivative Assets	3,334	2,284
Derivative Liabilities	(42,095)	(35,631)
Hedged Derivatives | Cash Flow Hedges | Deposits, one
Notional Amount	$ 25,000
Derivative Liabilities		(50)
Hedged Derivatives | Cash Flow Hedges | Deposits, one | London Interbank Offered Rate (LIBOR)
Derivative, Basis Spread on Variable Rate	1.75%
Hedged Derivatives | Cash Flow Hedges | Deposits, two
Notional Amount	$ 25,000
Derivative Assets	$ 157	714
Hedged Derivatives | Cash Flow Hedges | Deposits, two | London Interbank Offered Rate (LIBOR)
Derivative, Basis Spread on Variable Rate	1.75%
Hedged Derivatives | Cash Flow Hedges | Deposits, three
Notional Amount	$ 50,000
Derivative Assets	$ 474	1,566
Hedged Derivatives | Cash Flow Hedges | Deposits, three | London Interbank Offered Rate (LIBOR)
Derivative, Basis Spread on Variable Rate	1.57%
Hedged Derivatives | Cash Flow Hedges | Deposits, four
Notional Amount	$ 25,000
Derivative Assets	$ 237	783
Hedged Derivatives | Cash Flow Hedges | Deposits, four | London Interbank Offered Rate (LIBOR)
Derivative, Basis Spread on Variable Rate	1.80%
Hedged Derivatives | Cash Flow Hedges | Deposits, five
Notional Amount	$ 25,000
Derivative Assets	$ 1,010	1,264
Hedged Derivatives | Cash Flow Hedges | Deposits, five | London Interbank Offered Rate (LIBOR)
Derivative, Basis Spread on Variable Rate	1.75%
Hedged Derivatives | Cash Flow Hedges | Deposits, six
Notional Amount	$ 50,000
Derivative Assets	$ 2,212	2,700
Hedged Derivatives | Cash Flow Hedges | Deposits, six | London Interbank Offered Rate (LIBOR)
Derivative, Basis Spread on Variable Rate	1.57%
Hedged Derivatives | Cash Flow Hedges | Deposits, seven
Notional Amount	$ 25,000
Derivative Assets	$ 1,106	1,350
Hedged Derivatives | Cash Flow Hedges | Deposits, seven | London Interbank Offered Rate (LIBOR)
Derivative, Basis Spread on Variable Rate	1.80%
Hedged Derivatives | Cash Flow Hedges | Interest rate swaps
Derivative Assets	$ 3,334	477
Derivative Liabilities	(42,095)	(33,824)
Hedged Derivatives | Cash Flow Hedges | QCR Holdings Statutory Trust II
Notional Amount	$ 10,000
Receive Rate	8.51%
Pay Rate	5.85%
Derivative Assets	$ 710	464
Hedged Derivatives | Cash Flow Hedges | QCR Holdings Statutory Trust III
Notional Amount	$ 8,000
Receive Rate	8.51%
Pay Rate	5.85%
Derivative Assets	$ 568	372
Hedged Derivatives | Cash Flow Hedges | QCR Holdings Statutory Trust V
Notional Amount	$ 10,000
Receive Rate	7.12%
Pay Rate	4.54%
Derivative Assets	$ 691	459
Hedged Derivatives | Cash Flow Hedges | Community National Statutory Trust II
Notional Amount	$ 3,000
Receive Rate	7.83%
Pay Rate	5.17%
Derivative Assets	$ 212	140
Hedged Derivatives | Cash Flow Hedges | Community National Statutory Trust III
Notional Amount	$ 3,500
Receive Rate	7.42%
Pay Rate	4.75%
Derivative Assets	$ 247	163
Hedged Derivatives | Cash Flow Hedges | Guaranty Bankshares Statutory Trust I
Notional Amount	$ 4,500
Receive Rate	7.42%
Pay Rate	4.75%
Derivative Assets	$ 318	209
Hedged Derivatives | Cash Flow Hedges | Guaranty Statutory Trust II
Notional Amount	$ 10,310
Receive Rate	7.09%
Pay Rate	4.09%
Derivative Assets	$ 588	477
Hedged Derivatives | Cash Flow Hedges | Loans, one
Receive Rate	1.40%
Pay Rate	5.31%
Derivative Liabilities	$ (6,776)	(5,646)
Hedged Derivatives | Cash Flow Hedges | Loans, two
Receive Rate	1.40%
Pay Rate	5.31%
Derivative Liabilities	$ (9,680)	(8,066)
Hedged Derivatives | Cash Flow Hedges | Loans, three
Receive Rate	1.40%
Pay Rate	5.31%
Derivative Liabilities	$ (7,755)	(6,464)
Hedged Derivatives | Cash Flow Hedges | Loans, four
Receive Rate	1.30%
Pay Rate	5.31%
Derivative Liabilities	$ (4,877)	(4,018)
Hedged Derivatives | Cash Flow Hedges | Loan five
Receive Rate	1.91%
Pay Rate	5.31%
Derivative Liabilities	$ (1,301)	(1,144)
Hedged Derivatives | Cash Flow Hedges | Loan six
Receive Rate	1.91%
Pay Rate	5.31%
Derivative Liabilities	$ (4,335)	(3,812)
Hedged Derivatives | Cash Flow Hedges | Loan seven
Receive Rate	1.91%
Pay Rate	5.31%
Derivative Liabilities	$ (3,035)	(2,669)
Hedged Derivatives | Cash Flow Hedges | Loan eight
Receive Rate	1.91%
Pay Rate	5.31%
Derivative Liabilities	$ (4,336)	(3,812)
Hedged Derivatives | Cash Flow Hedges | Interest rate caps
Notional Amount	225,000
Derivative Assets	5,196	8,327
Derivative Assets (Liabilities)		8,327
Hedged Derivatives | Derivative Assets.
Notional Amount	325,000
Fair Value - Asset	3,977
Hedged Derivatives | Derivative Assets. | Loan nine
Notional Amount	$ 25,000
Receive Rate	5.31%
Pay Rate	4.38%
Fair Value - Asset	$ 204
Hedged Derivatives | Derivative Assets. | Loan ten
Notional Amount	$ 30,000
Receive Rate	5.31%
Pay Rate	4.21%
Fair Value - Asset	$ 304
Hedged Derivatives | Derivative Assets. | Loan eleven
Notional Amount	$ 32,500
Receive Rate	5.31%
Pay Rate	4.08%
Fair Value - Asset	$ 409
Hedged Derivatives | Derivative Assets. | Loan twelve
Notional Amount	$ 32,500
Receive Rate	5.31%
Pay Rate	3.98%
Fair Value - Asset	$ 488
Hedged Derivatives | Derivative Assets. | Loan thirteen
Notional Amount	$ 30,000
Receive Rate	5.31%
Pay Rate	3.90%
Fair Value - Asset	$ 532
Hedged Derivatives | Derivative Assets. | Loan fourteen
Notional Amount	$ 15,000
Receive Rate	5.31%
Pay Rate	4.38%
Fair Value - Asset	$ 123
Hedged Derivatives | Derivative Assets. | Loan fifteen
Notional Amount	$ 15,000
Receive Rate	5.31%
Pay Rate	4.21%
Fair Value - Asset	$ 152
Hedged Derivatives | Derivative Assets. | Loan sixteen
Notional Amount	$ 15,000
Receive Rate	5.31%
Pay Rate	4.08%
Fair Value - Asset	$ 189
Hedged Derivatives | Derivative Assets. | Loan seventeen
Notional Amount	$ 15,000
Receive Rate	5.31%
Pay Rate	3.98%
Fair Value - Asset	$ 225
Hedged Derivatives | Derivative Assets. | Loan eighteen
Notional Amount	$ 15,000
Receive Rate	5.31%
Pay Rate	3.90%
Fair Value - Asset	$ 267
Hedged Derivatives | Derivative Assets. | Loan nineteen
Notional Amount	$ 15,000
Receive Rate	5.31%
Pay Rate	4.60%
Fair Value - Asset	$ 90
Hedged Derivatives | Derivative Assets. | Loan twenty
Notional Amount	$ 20,000
Receive Rate	5.31%
Pay Rate	4.38%
Fair Value - Asset	$ 163
Hedged Derivatives | Derivative Assets. | Loan twenty one
Notional Amount	$ 20,000
Receive Rate	5.31%
Pay Rate	4.21%
Fair Value - Asset	$ 203
Hedged Derivatives | Derivative Assets. | Loan twenty two
Notional Amount	$ 20,000
Receive Rate	5.31%
Pay Rate	4.08%
Fair Value - Asset	$ 252
Hedged Derivatives | Derivative Assets. | Loan twenty three
Notional Amount	$ 25,000
Receive Rate	5.31%
Pay Rate	3.98%
Fair Value - Asset	$ 376
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges
Notional Amount	300,000
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges | Loans, one
Notional Amount	35,000
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges | Loans, two
Notional Amount	50,000
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges | Loans, three
Notional Amount	40,000
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges | Loans, four
Notional Amount	25,000
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges | Loan five
Notional Amount	15,000
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges | Loan six
Notional Amount	50,000
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges | Loan seven
Notional Amount	35,000
Hedged Derivatives | Derivative Liabilities | Cash Flow Hedges | Loan eight
Notional Amount	50,000
Unhedged Derivatives
Notional Amount	75,000
Unhedged Derivatives | Deposits, one
Notional Amount	25,000
Unhedged Derivatives | Deposits, two
Notional Amount	25,000
Unhedged Derivatives | Deposits, five
Notional Amount	25,000
Unhedged Derivatives | Interest rate swaps
Derivative Assets	277,255	166,614
Derivative Liabilities	(277,255)	(166,614)
Unhedged Derivatives | Interest rate caps
Derivative Assets	$ 1,533	$ 2,213

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES - Interest Rate Collars (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Derivative Liabilities	$ (320,220)	$ (200,701)
Cash Flow Hedges | Hedged Derivatives
Notional Amount	49,310
Derivative Liabilities	(42,095)	(35,631)
Cash Flow Hedges | Hedged Derivatives | Interest rate collars
Notional Amount	$ 50,000
Cap Strike Rate	4.40%
Floor Strike Rate	2.44%
Derivative Liabilities	$ (870)	$ (263)

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES - Significantly Impact of operations (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Derivative Assets	$ 291,295	$ 177,631
Derivative Liabilities.	320,220	200,701
Unhedged Derivatives | Interest rate swaps
Derivative Asset, Notional Amount	2,967,392	2,528,949
Derivative Assets	277,255	166,614
Derivative Liability, Notional Amount	2,967,392	2,528,949
Derivative Liabilities.	$ 277,255	$ 166,614

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES - Cash flow hedging and fair value (Details) - Unhedged Derivatives - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest And Dividend Income
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Income and expense line items presented in the consolidated statements of income	$ 108,568	$ 79,267	$ 301,162	$ 198,534
Interest Expense
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Income and expense line items presented in the consolidated statements of income	53,313	18,498	135,892	32,632
Gain on interest rate caps on deposits | Cash Flow Hedges | Interest Expense
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain Loss From Components Excluded From Assessment Of Cash Flow Hedge Effectiveness Net	(2,066)	(263)	(5,522)	199
Loss on interest rate swaps and collars on loans | Cash Flow Hedges | Interest And Dividend Income
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain Loss From Components Excluded From Assessment Of Cash Flow Hedge Effectiveness Net	(2,495)	(426)	(6,757)	715
Gain on interest rate swaps on fixed rate loans | Fair Value Hedges | Interest And Dividend Income
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain Loss From Components Excluded From Assessment Of Cash Flow Hedge Effectiveness Net	828		828
Gain on interest rate swaps on junior subordinated debentures | Cash Flow Hedges | Interest Expense
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain Loss From Components Excluded From Assessment Of Cash Flow Hedge Effectiveness Net	$ (328)	$ 73	$ (830)	$ 536

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Note 4 - DERIVATIVES AND HEDGING ACTIVITIES - Hedged Interest Rate Swaps and Non-hedged Interest Rate Swaps (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Derivative [Line Items]
Swapped loan portfolio loan-to-value percentage, including the potential swap exposure	65.00%
Interest rate swaps
Derivative [Line Items]
Interest rate swaps collateralized by investment securities	$ 10,998	$ 38,756
Interest rate swaps | Cash
Derivative [Line Items]
Interest rate swaps collateralized by investment securities	1,275	1,272
Interest rate swaps | Municipal securities.
Derivative [Line Items]
Interest rate swaps collateralized by investment securities	3,945	8,227
Interest rate swaps | Residential mortgage-backed and related securities
Derivative [Line Items]
Interest rate swaps collateralized by investment securities	$ 5,778	$ 29,257

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Note 5 - INCOME TAXES - Reconciliation of the Expected Federal Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
INCOME TAXES
Computed "expected" tax expense	$ 5,661	$ 7,165	$ 18,751	$ 16,130
Tax exempt income, net	(3,705)	(3,003)	(10,103)	(7,701)
Bank-owned life insurance	(376)	(127)	(700)	(273)
State income taxes, net of federal benefit, current year	955	1,616	3,383	3,889
Provision adjustment from accounting method change				1,181
Tax Credits	(202)	(359)	(411)	(890)
Income from tax credit equity investments	(449)	(337)	(1,340)	(939)
Acquisition costs		78		450
Excess tax benefit on stock options exercised and restricted stock awards vested	(7)	(46)	(451)	(520)
Other	37	163	540	316
Federal and state income tax expense	$ 1,840	$ 4,824	$ 8,589	$ 8,649
Computed "expected" tax expense (in percentage)	21.00%	21.00%	21.00%	21.00%
Tax exempt income, net (in percentage)	(13.70%)	(8.80%)	(11.30%)	(10.00%)
Bank-owned life insurance (in percentage)	(1.40%)	(0.40%)	(0.80%)	(0.40%)
State income taxes, net of federal benefit, current year (in percentage)	3.50%	4.70%	3.80%	5.10%
Provision adjustment from accounting method change (in percentage)				(1.50%)
Tax credits (in percentage)	(0.70%)	(1.10%)	(0.50%)	(1.20%)
Income from tax credit equity investments (in percentage)	(1.70%)	(1.00%)	(1.50%)	(1.20%)
Acquisition costs (in percentage)		0.20%		0.60%
Excess tax benefit on stock options exercised and restricted stock awards vested (in percentage)	(0.00%)	(0.10%)	(0.50%)	(0.70%)
Other (in percentage)	(0.20%)	(0.40%)	(0.60%)	(0.40%)
Federal and state income tax expense (in percentage)	6.80%	14.10%	9.60%	11.30%

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Note 6 - EARNINGS PER SHARE - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
EARNINGS PER SHARE
Net Income (Loss)	$ 25,121	$ 28,425	$ 27,157	$ 29,294	$ 15,242	$ 23,624	$ 80,703	$ 68,160
Basic EPS	$ 1.50			$ 1.73			$ 4.82	$ 4.25
Diluted EPS	$ 1.49			$ 1.71			$ 4.79	$ 4.20
Weighted average common shares outstanding	16,717,303			16,900,968			16,731,847	16,030,371
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan (in shares)	130,648			209,723			131,356	213,550
Weighted average common and common equivalent shares outstanding	16,847,951			17,110,691			16,863,203	16,243,921

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Note 7 - FAIR VALUE (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Securities available for sale, at fair value	$ 281,279	$ 340,960
Derivatives	291,295	177,631
Derivatives	320,220	200,701
Fair Value, Measurements, Recurring
Derivatives	291,295	177,631
Assets Fair Value	572,574	518,591
Derivatives	320,220	200,701
Liabilities Fair Value	320,220	200,701
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Derivatives	291,295	177,631
Assets Fair Value	572,574	518,591
Derivatives	320,220	200,701
Liabilities Fair Value	320,220	200,701
Fair Value, Measurements, Nonrecurring
Assets Fair Value	313,312	30,909
Loans receivable held for sale in preparation for securitization	277,995
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Assets Fair Value	313,312	30,909
Loans receivable held for sale in preparation for securitization	277,995
U.S. treasuries and govt. sponsored agency securities
Securities available for sale, at fair value	16,002	16,981
U.S. treasuries and govt. sponsored agency securities | Fair Value, Measurements, Recurring
Securities available for sale, at fair value	16,002	16,981
U.S. treasuries and govt. sponsored agency securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Securities available for sale, at fair value	16,002	16,981
Residential mortgage-backed and related securities
Securities available for sale, at fair value	57,946	66,215
Residential mortgage-backed and related securities | Fair Value, Measurements, Recurring
Securities available for sale, at fair value	57,946	66,215
Residential mortgage-backed and related securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Securities available for sale, at fair value	57,946	66,215
Municipal securities.
Securities available for sale, at fair value	149,772	193,178
Municipal securities. | Fair Value, Measurements, Recurring
Securities available for sale, at fair value	149,772	193,178
Municipal securities. | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Securities available for sale, at fair value	149,772	193,178
Asset-backed securities
Securities available for sale, at fair value	16,326	18,728
Asset-backed securities | Fair Value, Measurements, Recurring
Securities available for sale, at fair value	16,326	18,728
Asset-backed securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Securities available for sale, at fair value	16,326	18,728
Other securities
Securities available for sale, at fair value	41,233	45,858
Other securities | Fair Value, Measurements, Recurring
Securities available for sale, at fair value	41,233	45,858
Other securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Securities available for sale, at fair value	41,233	45,858
Impaired Loans Leases | Fair Value, Measurements, Nonrecurring
Assets Fair Value	35,197	30,765
Impaired Loans Leases | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Assets Fair Value	35,197	30,765
Other Real Estate Owned | Fair Value, Measurements, Nonrecurring
Assets Fair Value	120	144
Other Real Estate Owned | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Assets Fair Value	$ 120	$ 144

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Note 7 - FAIR VALUE - Quantitative Information About Level Fair Value Measurements (Details) - Fair Value, Inputs, Level 3 - Valuation Technique, Appraisal of Collateral - Measurement Input, Appraised Value $ in Thousands	Sep. 30, 2023 USD ($) item	Dec. 31, 2022 USD ($)
Loans receivable held for sale in preparation for securitization | $	$ 277,995
Loans receivable held-for-sale, Valuation Technique	us-gaap:MarketApproachValuationTechniqueMember	us-gaap:MarketApproachValuationTechniqueMember
Loans receivable held-for-sale, Measurement Input	us-gaap:MeasurementInputComparabilityAdjustmentMember	us-gaap:MeasurementInputComparabilityAdjustmentMember
Impaired Loans Leases
Fair value | $	$ 35,197	$ 30,765
Valuation technique	Valuation Technique, Appraisal of Collateral	Valuation Technique, Appraisal of Collateral
Unobservable input	Measurement Input, Appraised Value	Measurement Input, Appraised Value
Impaired Loans Leases | Minimum
Impaired loans/leases, measurement input	(0.1000)
Impaired Loans Leases | Maximum
Impaired loans/leases, measurement input	(0.3000)
Other Real Estate Owned
Fair value | $	$ 130	$ 144
Valuation technique, OREO	Valuation Technique, Appraisal of Collateral	Valuation Technique, Appraisal of Collateral
Unobservable input, OREO	Measurement Input, Appraised Value	Measurement Input, Appraised Value
Other Real Estate Owned | Minimum
OREO, measurement input	0.0000
Other Real Estate Owned | Maximum
OREO, measurement input	(0.3500)

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Note 7 - FAIR VALUE - Carrying Values and Estimated Fair Values of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Interest-bearing deposits at financial institutions	$ 60,350	$ 67,360
Securities held to maturity, fair value	524,819	535,636
Securities available for sale, at fair value	281,279	340,960
Derivatives	291,295	177,631
Subordinated notes	232,958	232,662
Derivatives	320,220	200,701
Fair Value, Inputs, Level 1 | Carrying Value
Cash and due from banks	104,265	59,723
Fair Value, Inputs, Level 1 | Estimated Fair Value
Cash and due from banks	104,265	59,723
Fair Value, Inputs, Level 2 | Carrying Value
Federal funds sold	20,300	56,910
Securities held to maturity, fair value	615,115	587,142
Securities available for sale, at fair value	281,279	340,960
Loans/leases receivable, net	6,208,053	6,022,679
Short-term borrowings	470	129,630
FHLB advances	430,000	415,000
Subordinated notes	232,958	232,662
Junior subordinated debentures	48,698	48,602
Fair Value, Inputs, Level 2 | Carrying Value | Non-maturity Deposits
Deposits	5,522,283	5,199,633
Fair Value, Inputs, Level 2 | Carrying Value | Time Deposits
Deposits	972,569	784,584
Fair Value, Inputs, Level 2 | Carrying Value | Interest rate caps
Derivatives	291,295	177,631
Fair Value, Inputs, Level 2 | Carrying Value | Interest rate swaps
Derivatives	320,220	200,701
Fair Value, Inputs, Level 2 | Carrying Value | Interest-bearing Deposits
Interest-bearing deposits at financial institutions	60,350	67,360
Fair Value, Inputs, Level 2 | Estimated Fair Value
Federal funds sold	20,300	56,910
Securities held to maturity, fair value	524,819	535,636
Securities available for sale, at fair value	281,279	340,960
Loans/leases receivable, net	5,907,226	5,896,443
Short-term borrowings	470	129,630
FHLB advances	429,450	415,000
Subordinated notes	249,002	250,613
Junior subordinated debentures	40,204	41,545
Fair Value, Inputs, Level 2 | Estimated Fair Value | Non-maturity Deposits
Deposits	5,522,283	5,199,633
Fair Value, Inputs, Level 2 | Estimated Fair Value | Time Deposits
Deposits	966,026	766,294
Fair Value, Inputs, Level 2 | Estimated Fair Value | Interest rate caps
Derivatives	291,295	177,631
Fair Value, Inputs, Level 2 | Estimated Fair Value | Interest rate swaps
Derivatives	320,220	200,701
Fair Value, Inputs, Level 2 | Estimated Fair Value | Interest-bearing Deposits
Interest-bearing deposits at financial institutions	60,350	67,360
Fair Value, Inputs, Level 3 | Carrying Value
Loans/leases receivable, net	310,585	28,486
Fair Value, Inputs, Level 3 | Estimated Fair Value
Loans/leases receivable, net	313,192	30,765
Fair Value, Measurements, Recurring
Derivatives	291,295	177,631
Derivatives	320,220	200,701
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Derivatives	291,295	177,631
Derivatives	320,220	$ 200,701
Fair Value, Measurements, Nonrecurring
Loans, net	277,995
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Loans, net	$ 277,995

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Note 8 - BUSINESS SEGMENT INFORMATION - (Details)	Sep. 30, 2023 subsidiary
Number of subsidiaries commercial banks	4
Commercial Banking
Number of subsidiaries commercial banks	4

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Note 8 - BUSINESS SEGMENT INFORMATION - Selected Financial Information on the Company's Business Segments (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Total revenue	$ 135,161			$ 100,362			$ 386,117	$ 258,044
Net interest income	55,255			60,769			165,270	165,902
Provision for credit losses	3,806						11,340	8,284
Net income (loss) from continuing operations	25,121	$ 28,425	$ 27,157	29,294	$ 15,242	$ 23,624	80,703	68,160
Goodwill	139,027			137,607			139,027	137,607	$ 137,607
Intangibles	14,537			17,546			14,537	17,546	16,759
Total assets	8,540,057			7,730,049			8,540,057	7,730,049	$ 7,948,837
Intersegment Eliminations [Member]
Total revenue	(32,197)			(36,311)			(103,606)	(92,383)
Net interest income	284			355			938	1,046
Net income (loss) from continuing operations	(31,092)			(35,783)			(99,658)	(90,768)
Total assets	(1,141,314)			(1,020,338)			(1,141,314)	(1,020,338)
Commercial Banking | QCBT | Operating Segments [Member]
Total revenue	38,165			26,583			106,664	72,785
Net interest income	17,198			18,117			50,590	53,971
Provision for credit losses	2,686			554			7,879	(88)
Net income (loss) from continuing operations	5,856			7,758			17,710	26,153
Goodwill	3,223			3,223			3,223	3,223
Total assets	2,433,084			2,218,166			2,433,084	2,218,166
Commercial Banking | CRBT | Operating Segments [Member]
Total revenue	43,592			34,157			138,018	91,083
Net interest income	16,852			17,160			50,254	46,576
Provision for credit losses	503			(35)			2,499	(971)
Net income (loss) from continuing operations	13,175			14,475			48,928	38,860
Goodwill	14,980			14,980			14,980	14,980
Intangibles	950			1,344			950	1,344
Total assets	2,442,263			2,108,614			2,442,263	2,108,614
Commercial Banking | CSB | Operating Segments [Member]
Total revenue	19,225			14,127			53,126	37,534
Net interest income	11,136			10,183			32,683	29,365
Provision for credit losses	275			(269)			965	(554)
Net income (loss) from continuing operations	4,740			4,106			14,113	11,606
Goodwill	9,888			9,888			9,888	9,888
Intangibles	1,579			2,184			1,579	2,184
Total assets	1,417,249			1,270,426			1,417,249	1,270,426
Commercial Banking | Guaranty Bank | Operating Segments [Member]
Total revenue	34,498			25,523			90,443	57,036
Net interest income	13,743			18,196			42,716	42,789
Provision for credit losses	342			(250)			(3)	9,897
Net income (loss) from continuing operations	6,801			9,196			17,344	13,327
Goodwill	110,936			109,516			110,936	109,516
Intangibles	12,008			14,018			12,008	14,018
Total assets	2,242,638			2,107,407			2,242,638	2,107,407
Other Segments | Operating Segments [Member]
Total revenue	31,878			36,283			101,472	91,989
Net interest income	(3,958)			(3,242)			(11,911)	(7,845)
Net income (loss) from continuing operations	25,641			29,542			82,266	68,982
Total assets	$ 1,146,137			$ 1,045,774			$ 1,146,137	$ 1,045,774

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Note 9 - REGULATORY CAPITAL REQUIREMENTS - Capital Requirements (Details) $ in Thousands	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Total risk-based capital, actual, amount	$ 1,135,262	$ 1,055,177
Total risk-based capital, actual, ratio	0.1454	0.1428
Total risk-based capital for capital adequacy purposes, amount	$ 624,805	$ 591,132
Total risk-based capital for capital adequacy purposes, ratio	0.0800	0.0800
Total risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 820,057	$ 775,861
Total risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.1050	0.1050
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 781,007	$ 738,915
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.1000	0.1000
Tier 1 risk-based capital, actual, amount	$ 807,582	$ 734,977
Tier 1 risk-based capital, actual, ratio	0.1034	0.0995
Tier 1 risk-based capital for capital adequacy purposes, amount	$ 468,604	$ 443,349
Tier 1 risk-based capital for capital adequacy purposes, ratio	0.0600	0.0600
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 663,856	$ 628,078
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.0850	0.0850
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 624,805	$ 591,132
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.0800	0.0800
Tier 1 leverage, actual, amount	$ 807,582	$ 734,977
Tier 1 leverage, actual, ratio	0.0992	0.0961
Tier 1 leverage for capital adequacy purposes, amount	$ 325,480	$ 305,959
Tier 1 leverage for capital adequacy purposes, ratio	0.0400	0.0400
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, amount	$ 325,480	$ 305,959
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, ratio	0.0400	0.0400
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount	$ 406,850	$ 382,449
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio	0.0500	0.0500
Common equity Tier 1, actual, amount	$ 758,884	$ 686,375
Common equity Tier 1, actual ratio	0.0972	0.0929
Common equity Tier 1 for capital adequacy purposes, amount	$ 351,453	$ 332,512
Common equity Tier 1 for capital adequacy purposes, ratio	4.50%	4.50%
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, amount	$ 546,705	$ 517,241
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, ratio	7.00%	7.00%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount	$ 507,654	$ 480,295
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio	6.50%	6.50%
QCBT
Total risk-based capital, actual, amount	$ 295,319	$ 275,337
Total risk-based capital, actual, ratio	0.1290	0.1307
Total risk-based capital for capital adequacy purposes, amount	$ 183,095	$ 168,588
Total risk-based capital for capital adequacy purposes, ratio	0.0800	0.0800
Total risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 240,313	$ 221,272
Total risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.1050	0.1050
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 228,869	$ 210,735
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.1000	0.1000
Tier 1 risk-based capital, actual, amount	$ 266,688	$ 248,978
Tier 1 risk-based capital, actual, ratio	0.1165	0.1181
Tier 1 risk-based capital for capital adequacy purposes, amount	$ 137,321	$ 126,441
Tier 1 risk-based capital for capital adequacy purposes, ratio	0.0600	0.0600
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 194,539	$ 179,125
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.0850	0.0850
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 183,095	$ 168,588
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.0800	0.0800
Tier 1 leverage, actual, amount	$ 266,688	$ 248,978
Tier 1 leverage, actual, ratio	0.1110	0.1101
Tier 1 leverage for capital adequacy purposes, amount	$ 96,111	$ 90,419
Tier 1 leverage for capital adequacy purposes, ratio	0.0400	0.0400
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, amount	$ 96,111	$ 90,419
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, ratio	0.0400	0.0400
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount	$ 120,139	$ 133,023
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio	0.0500	0.0500
Common equity Tier 1, actual, amount	$ 266,688	$ 248,978
Common equity Tier 1, actual ratio	0.1165	0.1181
Common equity Tier 1 for capital adequacy purposes, amount	$ 102,991	$ 94,831
Common equity Tier 1 for capital adequacy purposes, ratio	4.50%	4.50%
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, amount	$ 160,208	$ 147,514
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, ratio	7.00%	7.00%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount	$ 148,765	$ 136,978
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio	6.50%	6.50%
CRBT
Total risk-based capital, actual, amount	$ 358,150	$ 308,153
Total risk-based capital, actual, ratio	0.1705	0.1484
Total risk-based capital for capital adequacy purposes, amount	$ 168,021	$ 166,168
Total risk-based capital for capital adequacy purposes, ratio	0.0800	0.0800
Total risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 220,527	$ 218,096
Total risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.1050	0.1050
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 210,026	$ 207,711
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.1000	0.1000
Tier 1 risk-based capital, actual, amount	$ 331,423	$ 282,258
Tier 1 risk-based capital, actual, ratio	0.1578	0.1359
Tier 1 risk-based capital for capital adequacy purposes, amount	$ 126,016	$ 124,626
Tier 1 risk-based capital for capital adequacy purposes, ratio	0.0600	0.0600
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 178,522	$ 176,554
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.0850	0.0850
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 168,021	$ 166,168
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.0800	0.0800
Tier 1 leverage, actual, amount	$ 331,423	$ 282,258
Tier 1 leverage, actual, ratio	0.1460	0.1317
Tier 1 leverage for capital adequacy purposes, amount	$ 90,799	$ 85,707
Tier 1 leverage for capital adequacy purposes, ratio	0.0400	0.0400
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, amount	$ 90,799	$ 85,707
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, ratio	0.0400	0.0400
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount	$ 113,498	$ 107,134
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio	0.0500	0.0500
Common equity Tier 1, actual, amount	$ 331,423	$ 282,258
Common equity Tier 1, actual ratio	0.1578	0.1359
Common equity Tier 1 for capital adequacy purposes, amount	$ 94,512	$ 93,470
Common equity Tier 1 for capital adequacy purposes, ratio	4.50%	4.50%
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, amount	$ 147,018	$ 145,397
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, ratio	7.00%	7.00%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount	$ 136,517	$ 135,012
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio	6.50%	6.50%
CSB
Total risk-based capital, actual, amount	$ 177,296	$ 142,974
Total risk-based capital, actual, ratio	0.1357	0.1204
Total risk-based capital for capital adequacy purposes, amount	$ 104,554	$ 94,981
Total risk-based capital for capital adequacy purposes, ratio	0.0800	0.0800
Total risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 137,227	$ 124,662
Total risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.1050	0.1050
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 130,693	$ 118,726
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.1000	0.1000
Tier 1 risk-based capital, actual, amount	$ 152,596	$ 128,130
Tier 1 risk-based capital, actual, ratio	0.1168	0.1079
Tier 1 risk-based capital for capital adequacy purposes, amount	$ 78,416	$ 71,236
Tier 1 risk-based capital for capital adequacy purposes, ratio	0.0600	0.0600
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 111,089	$ 100,917
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.0850	0.0850
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 104,554	$ 94,981
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.0800	0.0800
Tier 1 leverage, actual, amount	$ 152,596	$ 128,130
Tier 1 leverage, actual, ratio	0.1124	0.1009
Tier 1 leverage for capital adequacy purposes, amount	$ 54,303	$ 50,799
Tier 1 leverage for capital adequacy purposes, ratio	0.0400	0.0400
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, amount	$ 54,303	$ 50,799
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, ratio	0.0400	0.0400
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount	$ 67,879	$ 63,499
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio	0.0500	0.0500
Common equity Tier 1, actual, amount	$ 152,596	$ 128,130
Common equity Tier 1, actual ratio	0.1168	0.1079
Common equity Tier 1 for capital adequacy purposes, amount	$ 58,812	$ 53,427
Common equity Tier 1 for capital adequacy purposes, ratio	4.50%	4.50%
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, amount	$ 91,485	$ 83,108
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, ratio	7.00%	7.00%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount	$ 84,950	$ 77,172
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio	6.50%	6.50%
Guaranty Bank
Total risk-based capital, actual, amount	$ 258,732	$ 243,106
Total risk-based capital, actual, ratio	0.1253	0.1224
Total risk-based capital for capital adequacy purposes, amount	$ 165,160	$ 158,903
Total risk-based capital for capital adequacy purposes, ratio	0.0800	0.0800
Total risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 216,772	$ 208,560
Total risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.1050	0.1050
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 206,450	$ 198,629
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.1000	0.1000
Tier 1 risk-based capital, actual, amount	$ 236,071	$ 218,647
Tier 1 risk-based capital, actual, ratio	0.1143	0.1101
Tier 1 risk-based capital for capital adequacy purposes, amount	$ 123,870	$ 119,177
Tier 1 risk-based capital for capital adequacy purposes, ratio	0.0600	0.0600
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, amount	$ 175,482	$ 168,834
Tier 1 risk-based capital for capital adequacy purposes with capital conservation buffer, ratio	0.0850	0.0850
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount	$ 165,160	$ 158,903
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio	0.0800	0.0800
Tier 1 leverage, actual, amount	$ 236,071	$ 218,647
Tier 1 leverage, actual, ratio	0.1122	0.1090
Tier 1 leverage for capital adequacy purposes, amount	$ 84,130	$ 80,229
Tier 1 leverage for capital adequacy purposes, ratio	0.0400	0.0400
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, amount	$ 84,130	$ 80,229
Tier 1 leverage for capital adequacy purposes with capital conservation buffer, ratio	0.0400	0.0400
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount	$ 105,162	$ 100,286
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio	0.0500	0.0500
Common equity Tier 1, actual, amount	$ 236,071	$ 218,647
Common equity Tier 1, actual ratio	0.1143	0.1101
Common equity Tier 1 for capital adequacy purposes, amount	$ 92,902	$ 89,383
Common equity Tier 1 for capital adequacy purposes, ratio	4.50%	4.50%
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, amount	$ 144,515	$ 139,040
Common equity Tier 1 for capital adequacy purposes with capital conservation buffer, ratio	7.00%	7.00%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount	$ 134,192	$ 129,109
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio	6.50%	6.50%

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Note 10 - COMMITMENTS (Details) $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($)
COMMITMENTS
Contract price	$ 17.0
Construction payment	1.2
Construction remaining future commitment	$ 15.8

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 25,121	$ 28,425	$ 27,157	$ 29,294	$ 15,242	$ 23,624	$ 80,703	$ 68,160

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false