Fourth Quarter 2018 Highlights

  • Net income of $13.3 million, or $0.84 per diluted share
  • Adjusted net income (non-GAAP) of $14.5 million, or $0.91 per diluted share
  • Annualized organic loan and lease growth of 8.7% for the quarter and 9.8% for the year
  • Annualized organic deposit growth of 19.8% for the quarter and 8.3% for the year
  • Record noninterest income of $15.3 million for the quarter and $41.5 million for the year
  • Nonperforming assets down $13.6 million, or 32.8% from prior quarter
  • Acquisition of the Bates Companies completed on October 1, 2018

MOLINE, Ill., Jan. 24, 2019 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $13.3 million and diluted earnings per share (“EPS”) of $0.84 for the fourth quarter of 2018, compared to net income of $8.8 million and diluted EPS of $0.55 for the third quarter of 2018. The fourth quarter results included $1.2 million of acquisition and post-acquisition compensation, transition and integration costs (after-tax), compared to $1.6 million of similar costs in the third quarter of 2018. Excluding these adjustments, the Company reported adjusted net income (non-GAAP) of $14.5 million and adjusted diluted EPS of $0.91 for the fourth quarter of 2018, compared to adjusted net income (non-GAAP) of $10.4 million and adjusted diluted EPS of $0.65 for the third quarter of 2018. For the fourth quarter of 2017, GAAP net income and adjusted net income (non-GAAP) were the same at $9.9 million and $0.70 per diluted share.

For the year ended December 31, 2018, the Company reported net income of $43.1 million, and diluted EPS of $2.86. Adjusting for acquisition and post-acquisition compensation, transition and integration costs, the Company reported adjusted net income (non-GAAP) of $46.4 million and adjusted diluted EPS of $3.08. By comparison, for the year ended December 31, 2017, the Company reported net income of $35.7 million and diluted EPS of $2.61, and adjusted net income (non-GAAP) of $36.3 million and adjusted diluted EPS of $2.66.

On October 1, 2018, the Company completed its previously announced acquisition of Bates Financial Advisors, Inc., Bates Financial Services, Inc., Bates Securities, Inc., and Bates Financial Group, Inc. (the “Bates Companies”). The Bates Companies are headquartered in Rockford, Illinois and added approximately $700 million in assets under management, as of September 30, 2018.

“We are pleased with our financial performance in 2018, delivering record net income, which translated into a 16% increase in adjusted earnings per share,” said Doug Hultquist, President and CEO of the Company. “Our strong financial results were driven by increases in both loans and deposits and significantly higher noninterest income. And while our net interest margin was adversely impacted by the flattening of the yield curve over the course of 2018, we were able to grow adjusted net interest income by 19% from 2017. We also were pleased to have completed our merger with Springfield Bancshares, an excellent strategic and cultural fit for our company, and the acquisition of the Bates Companies, a nice addition to our wealth management business.”

Mr. Hultquist continued, “We finished the year with strong momentum in the fourth quarter, delivering solid loan and lease production, successfully attracting new deposits and generating record fee income. We were also successful in reducing our nonperforming assets by 33%, as we monetized a number of positions during the quarter. Looking to 2019, we remain optimistic, as we continue to make the investments that we believe will lead to improved profitability and enhanced shareholder value in the years to come.”

Annualized Organic Loan and Lease Growth of 8.7% for the Quarter
and 9.8% for the Year

During the fourth quarter of 2018, the Company’s total assets increased $157.0 million, to a total of $4.9 billion, while total loans and leases grew $79.4 million, or a 2.2% increase, compared to the third quarter of 2018. Loan and lease growth was funded by an increase in core deposits. Core deposits (excluding brokered deposits) increased $187.0 million, or 5.3% on a linked quarter basis. At quarter-end, the percentage of wholesale funds to total assets was 13.8%, which is a solid decline from 15.9% from the third quarter.  Additionally, at quarter-end, the percentage of gross loans and leases to total assets was 75%, a slight decline from the third quarter, as a result of an increase in liquidity due to the strong growth in core deposits.  

“Our loan growth for the quarter was driven by strong loan production, with particular strength in commercial and industrial and owner occupied commercial real estate loans,” added Mr. Hultquist. “However, we continue to experience an elevated level of payoffs, driven by a combination of factors, including business clients experiencing healthy cash flows, clients selling their companies, or real estate developer clients selling their completed projects. Because of the trends that we are experiencing in paydowns, combined with a general sense of caution among a number of our clients, we are adjusting our goal for organic loan growth in 2019 to between 8% and 10%.”

Net Interest Income of $39.6 million

Net interest income for the fourth quarter of 2018 totaled $39.6 million, compared to $38.3 million for the third quarter of 2018 and $31.8 million for the fourth quarter of 2017. The increase in net interest income was due to an increase in average loan balances of $87.2 million, or a 2.4% increase, on a linked quarter basis. Acquisition-related net accretion totaled $2.6 million (pre-tax) for the fourth quarter of 2018, compared to $1.7 million in the third quarter of 2018 and $0.7 million for the fourth quarter of 2017. Adjusted net interest income (non-GAAP) was $38.7 million for the fourth quarter of 2018, compared to $38.2 million for the third quarter of 2018, or an increase of 1.4% on a linked quarter basis.

Net interest income totaled $142.4 million for the year ended December 31, 2018, compared to $116.1 million for the year ended December 31, 2017.

In the fourth quarter, reported net interest margin was 3.48%, and on a tax-equivalent yield basis, net interest margin was 3.63%. This represented an increase in net interest margin and tax-equivalent net interest margin from the third quarter of two basis points and three basis points, respectively. Net interest margin, excluding acquisition-related net accretion was 3.40% in the fourth quarter, for a decline of five basis points from the third quarter of 2018. This decline in adjusted net interest margin was due to increases in the Company’s cost of funds (due to both mix and rate) and excess liquidity due to the strong deposit growth in the quarter, and was partially offset by higher yields on the Company’s loans.

 For the Quarter Ended
 For the Year Ended
 Dec. 31, Sept. 30, Dec. 31, Dec. 31,  Dec. 31,
 2018 2018 2017 2018  2017
NIM3.48% 3.46% 3.41% 3.46%  3.50%
NIM (TEY)(non-GAAP)(1)3.63% 3.60% 3.69% 3.62%  3.78%
Adjusted NIM (TEY)(non-GAAP)(1)3.40% 3.45% 3.61% 3.48%  3.64%
(1) See GAAP to non-GAAP reconciliations.

“Competition for new deposits remains strong, and as a result, our overall cost of funds, excluding acquisition amortization, increased by thirteen basis points during the quarter,” stated Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer. “Excluding the impact of acquisition-related accretion, our adjusted loan yields on a tax-equivalent basis increased by eleven basis points during the fourth quarter.”

Record Noninterest Income of $15.3 million
Led by Swap Fee Income of $7.1 million

Noninterest income for the fourth quarter of 2018 totaled $15.3 million, compared to $8.8 million for the third quarter of 2018. The significant increase was primarily due to $6.0 million in higher swap fee income and a $0.6 million increase in wealth management revenue primarily due to the acquisition of the Bates Companies. Wealth management revenue was $3.9 million for the quarter, a 19.0% increase from the third quarter of 2018. Noninterest income increased 57.3% when comparing the current quarter to the fourth quarter of 2017.

Noninterest income totaled $41.5 million for the year ended December 31, 2018, compared to $30.5 million for the year ended December 31, 2017.

“Noninterest income was up over 73% from the third quarter of 2018, driven primarily by significantly higher swap fee income, which is correlated to our strong production from our Specialty Finance Group in the area of tax credit lending where our clients are locking in long-term fixed rate financing,” added Mr. Gipple. “Additionally, we are pleased with our full year wealth management revenue growth of over 20%, despite a down market for equities, which reflects our success in attracting new assets under management. For 2018, swap fee income and gain on sale of loans combined for over $11 million, well in excess of our annual target of $4 million.”

Noninterest Expenses of $36.4 million

Noninterest expenses for the fourth quarter of 2018 totaled $36.4 million, compared to $30.5 million and $31.4 million for the third quarter of 2018 and fourth quarter of 2017, respectively. The linked quarter increase was due to a number of factors, including a $2.5 million increase in net costs of operations of other real estate.  The Company reduced the carrying value of an OREO property by $2.0 million and also sold an OREO property at a loss of $424 thousand.  There was also a $1.4 million increase in incentives and commissions, driven by the higher swap fee income. Salaries were $1.1 million higher than the third quarter of 2018 as a result of the Bates Companies acquisition and company-wide headcount additions in both business development and operational support.  Additionally, there was a $1.2 million increase in professional and data processing fees.

Asset Quality Improvement

Nonperforming assets (“NPAs”) totaled $27.9 million, a decrease of $13.6 million from the third quarter of 2018, primarily due to a combination of factors, including $4.9 million in net charge-offs on loans, a $3.5 million paydown on a large nonaccrual loan, a $1.3 million reduction in OREO from a sale (including a $0.4 million loss on sale), and a $2.0 million write-down of an OREO property that the Company is actively marketing for sale. The lower NPAs resulted in the ratio of NPAs to total assets improving to 0.56% at December 31, 2018, down from 0.87% at September 30, 2018 and down from 0.81% at December 31, 2017.

The Company’s provision for loan and lease losses totaled $1.6 million for the fourth quarter of 2018, which was down $4.6 million from the prior quarter and down $0.6 million compared to the fourth quarter of 2017. The linked quarter decrease in the provision for loan and lease losses was primarily due to a more favorable outcome than expected on a large credit that was partially charged off. As of December 31, 2018, the Company’s allowance to total loans and leases was 1.07%, which was down from 1.18% at September 30, 2018 and down from 1.16% at December 31, 2017.

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through past acquisitions were recorded at market value; therefore, there was no allowance associated with the acquired loans at the acquisition date. Management continues to evaluate the allowance needed on the acquired loans factoring in the net remaining discount ($11.6 million at December 31, 2018).

Capital Levels

As of December 31, 2018, the Company’s total risk-based capital ratio was 10.72%, the common equity Tier 1 ratio was 8.89%, and the tangible common equity to tangible assets ratio was 7.78%. By comparison, these respective ratios were 10.87%, 8.92% and 7.82% as of September 30, 2018. The decline in capital ratios from September 30, 2018 to December 31, 2018 was the result of the Bates Companies transaction, including the related purchase accounting adjustments, as well as balance sheet growth during the quarter.

Continued Focus on Seven Key Initiatives

The Company continues to focus on the following long-term initiatives in an effort to improve profitability and drive increased shareholder value:

  • Strong organic loan and lease growth in order to maintain loans and leases to total assets ratio in the range of 73% - 78%
  • Grow core deposits to maintain reliance on wholesale funding at less than 15% of assets
  • Generate gains on sale of government guaranteed loans, and fee income on interest rate swaps, as a significant and consistent component of core revenue
  • Grow wealth management net income by 10% annually
  • Carefully manage noninterest expense growth
  • Maintain asset quality metrics at better than peer levels
  • Participate as an acquirer in the consolidation taking place in our industry to further boost return on average assets, improve efficiency ratio, and increase EPS

             
Conference Call Details

The Company will host an earnings call/webcast tomorrow, January 25, 2019, at 10:00 a.m. central time. Dial-in information for the call is toll-free 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be  available for digital replay through February 8, 2019. The replay access information is toll-free 877-344-7529 (international 412-317-0088); access code 10127800. A webcast of the teleconference can be accessed at the Company’s News and Events page at www.qcrh.com. An archived version of the webcast will be available at the same location shortly after the live event has ended.

About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, Springfield and Rockford communities through its wholly owned subsidiary banks which provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, and Rockford Bank & Trust Company, based in Rockford, Illinois, commenced operations in 2005. In 2018, the Company acquired the Bates Companies, a wealth management firm. Quad City Bank & Trust Company also provides correspondent banking services. In addition, Quad City Bank & Trust Company engages in commercial leasing through its wholly owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. In July 2018, QCR Holdings completed a merger with Springfield Bancshares, Inc., the holding company of Springfield First Community Bank of Springfield, Missouri. With this addition of Springfield First Community Bank, the Company has 27 locations in Illinois, Iowa, Wisconsin and Missouri. As of December 31, 2018, QCR Holdings had approximately $4.9 billion in assets, $3.7 billion in loans and $4.0 billion in deposits. For additional information, please visit our website at www.qcrh.com.

Special Note Concerning Forward-Looking Statements. This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
               
A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economies; (ii) the economic impact of any future terrorist threats and attacks, and the response of the United States to any such threats and attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of the acquisition and the possibility that the transaction costs may be greater than anticipated; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x)  unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

Contacts:

Todd A. Gipple
Executive Vice President
Chief Operating Officer
Chief Financial Officer
(309) 743-7745
tgipple@qcrh.com 

Christopher J. Lindell
Executive Vice President
Corporate Communications
(319) 743-7006
clindell@qcrh.com

      
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 As of
 December 31,September 30,June 30,March 31,December 31,
 20182018201820182017
      
 (dollars in thousands)
CONDENSED BALANCE SHEET     
      
Cash and due from banks$85,523$73,407$69,069$61,846$75,722
Federal funds sold and interest-bearing deposits 159,596 129,660 51,667 59,557 85,962
Securities 662,969 650,745 657,997 640,906 652,382
Net loans/leases 3,692,907 3,610,309 3,077,247 3,018,370 2,930,130
Intangibles 17,450 16,137 8,470 8,774 9,079
Goodwill 77,832 73,618 28,091 28,334 28,334
Other assets 253,433 238,856 214,342 208,527 201,056
Total assets$   4,949,710 $   4,792,732 $   4,106,883 $   4,026,314 $   3,982,665
      
Total deposits$3,977,030$3,788,277$3,298,276$3,280,001$3,266,655
Total borrowings 404,969 483,635 380,392 334,802 309,479
Other liabilities 94,573 63,433 58,627 51,083 53,244
Total stockholders' equity 473,138 457,387 369,588 360,428 353,287
Total liabilities and stockholders' equity$   4,949,710 $   4,792,732 $   4,106,883 $   4,026,314 $   3,982,665
      
ANALYSIS OF LOAN PORTFOLIO     
Loan/lease mix:     
Commercial and industrial loans$1,429,410$1,380,543$1,273,000$1,201,086$1,134,516
Commercial real estate loans 1,766,111 1,727,326 1,349,319 1,357,703 1,303,492
Direct financing leases 117,968 126,752 133,197 137,615 141,448
Residential real estate loans 302,979 309,288 257,434 254,484 258,646
Installment and other consumer loans 107,162 100,191 92,952 95,912 118,611
Deferred loan/lease origination costs, net of fees 9,124 9,286 8,890 8,103 7,773
Total loans/leases$3,732,754$3,653,386$3,114,792$3,054,903$2,964,486
Less allowance for estimated losses on loans/leases 39,847 43,077 37,545 36,533 34,356
Net loans/leases$   3,692,907 $   3,610,309 $   3,077,247 $   3,018,370 $   2,930,130
      
ANALYSIS OF SECURITIES PORTFOLIO     
Securities mix:     
U.S. government sponsored agency securities$36,411$36,492$35,667$36,868$38,097
Municipal securities 459,409 453,275 458,510 438,736 445,049
Residential mortgage-backed and related securities 159,249 155,733 158,534 157,333 163,301
Other securities 7,900 5,245 5,286 7,969 5,935
Total securities$   662,969 $   650,745 $   657,997 $   640,906 $   652,382
      
ANALYSIS OF DEPOSITS     
Deposit mix:     
Noninterest-bearing demand deposits$791,101$802,090$746,822$784,815$789,548
Interest-bearing demand deposits 2,204,206 2,094,814 1,865,382 1,789,019 1,855,893
Time deposits 704,903 615,323 519,999 496,644 516,058
Brokered deposits 276,820 276,050 166,073 209,523 105,156
Total deposits$   3,977,030 $   3,788,277 $   3,298,276 $   3,280,001 $   3,266,655
      
ANALYSIS OF BORROWINGS     
Borrowings mix:     
Term FHLB advances$76,327$63,399$46,600$56,600$56,600
Overnight FHLB advances (1) 190,165 295,730 207,500 159,745 135,400
Wholesale structured repurchase agreements 35,000 35,000 35,000 35,000 35,000
Customer repurchase agreements 2,084 3,049 2,186 3,820 7,003
Federal funds purchased 26,690 8,670 15,400 13,040 6,990
Junior subordinated debentures 37,670 37,626 37,581 37,534 37,486
Other borrowings 37,033 40,161 36,125 29,063 31,000
Total borrowings$   404,969 $   483,635 $   380,392 $   334,802 $   309,479
      
(1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 2.63%.
      

  

        
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
        
   For the Quarter Ended
   December 31,September 30,June 30,March 31,December 31,
   20182018201820182017
        
   (dollars in thousands, except per share data)
INCOME STATEMENT      
Interest income $  52,703 $  49,831 $  40,799 $  39,546$  37,878 
Interest expense    13,110    11,517    8,714    7,143   6,085 
Net interest income     39,593    38,314    32,085    32,403   31,793 
Provision for loan/lease losses    1,611    6,206    2,301    2,540   2,255 
Net interest income after provision for loan/lease losses $   37,982  $   32,108  $   29,784  $   29,863 $   29,538  
        
        
Trust department fees $  2,216 $  2,196 $  2,058 $  2,237$  2,034 
Investment advisory and management fees    1,657    1,059    1,058    952   1,071 
Deposit service fees    1,623    1,656    1,610    1,531   1,622 
Gain on sales of residential real estate loans    361    337    102    101   101 
Gain on sales of government guaranteed portions of loans    -     46    -     358   34 
Swap fee income    7,069    1,110    1,649    959   2,460 
Securities gains (losses), net    -     -     -     -    (63)
Earnings on bank-owned life insurance    341    474    399    418   445 
Debit card fees    807    846    844    766   741 
Correspondent banking fees    179    195    213    265   231 
Other      1,026    890    979    954   1,038 
Total noninterest income $   15,279  $   8,809  $   8,912  $   8,541 $   9,714  
        
        
Salaries and employee benefits $  19,779 $  17,433 $  15,804 $  15,978$  16,060 
Occupancy and equipment expense    3,367    3,318    3,133    3,066   3,221 
Professional and data processing fees    3,577    2,396    2,771    2,708   3,382 
Acquisition costs    (4)   1,292    414    93   661 
Post-acquisition transition and integration costs    1,427    494    165    -    3,787 
FDIC insurance, other insurance and regulatory fees    1,065    933    840    756   795 
Loan/lease expense    624    369    260    291   352 
Net cost of (income from) operation of other real estate    2,477    (50)   (70)   132   120 
Advertising and marketing    1,122    984    753    693   778 
Bank service charges    469    462    466    441   439 
Correspondent banking expense    207    205    204    205   203 
CDI amortization    540    542    305    305   308 
Other     1,760    2,122    1,325    1,195   1,245 
Total noninterest expense $   36,410  $   30,500  $   26,370  $   25,863 $   31,351  
        
Net income before taxes $   16,851  $   10,417  $   12,326  $   12,541 $   7,901  
Income tax expense (benefit)    3,535    1,608    1,881    1,991   (2,001)
Net income  $   13,316  $   8,809  $   10,445  $   10,550 $   9,902  
        
Basic EPS $  0.85 $  0.56 $  0.75 $  0.76$  0.72 
Diluted EPS $  0.84 $  0.55 $  0.73 $  0.74$  0.70 
        
Weighted average common shares outstanding    15,641,401    15,625,123    13,919,565    13,888,661   13,845,497 
Weighted average common and common equivalent shares outstanding   15,898,591    15,922,324    14,232,423    14,205,584   14,193,191 
        

 

      
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
   For the Year Ended
   December 31, December 31,
   2018 2017
      
  (dollars in thousands, except per share data)
INCOME STATEMENT    
Interest income $182,879 $135,517 
Interest expense  40,484  19,452 
Net interest income  142,395  116,065 
Provision for loan/lease losses  12,658  8,470 
Net interest income after provision for loan/lease losses $   129,737  $   107,595  
      
Trust department fees $8,707 $7,188 
Investment advisory and management fees  4,726  3,870 
Deposit service fees  6,420  5,919 
Gain on sales of residential real estate loans  901  409 
Gain on sales of government guaranteed portions of loans  405  1,164 
Swap fee income  10,787  3,095 
Securities gains (losses), net  -  (88)
Earnings on bank-owned life insurance  1,632  1,802 
Debit card fees  3,263  2,942 
Correspondent banking fees  852  916 
Other   3,848  3,265 
Total noninterest income $   41,541  $   30,482  
      
Salaries and employee benefits $68,994 $55,722 
Occupancy and equipment expense  12,884  10,938 
Professional and data processing fees  11,452  10,757 
Acquisition costs  1,795  1,069 
Post-acquisition compensation, transition and integration costs  2,086  4,310 
FDIC insurance, other insurance and regulatory fees  3,594  2,752 
Loan/lease expense  1,544  1,164 
Net cost of operation of other real estate  2,489  2 
Advertising and marketing  3,552  2,625 
Bank service charges  1,838  1,771 
Correspondent banking expense  821  807 
CDI amortization  1,692  1,001 
Other   6,402  4,506 
Total noninterest expense $   119,143  $   97,424  
      
Net income before taxes $   52,135  $   40,653  
Income tax expense  9,015  4,946 
Net income  $   43,120  $   35,707  
      
Basic EPS $2.92 $2.68 
Diluted EPS $2.86 $2.61 
      
Weighted average common shares outstanding  14,768,687  13,325,128 
Weighted average common and common equivalent shares outstanding  15,064,730  13,680,472 
      

 

         
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
             
 For the Quarter Ended For the Year Ended



 
 December 31,September 30,June 30,March 31,December 31, December 31,
 December 31,
 20182018201820182017 2018
 2017
         
 (dollars in thousands, except per share data)
 
COMMON SHARE DATA        
Common shares outstanding 15,718,208  15,673,760  13,973,940  13,936,957  13,918,168    
Book value per common share (1)$30.10 $29.18 $26.45 $25.86 $25.38    
Tangible book value per common share (2)$24.04 $23.46 $23.83 $23.20 $22.70    
Closing stock price$32.09 $40.85 $47.45 $44.85 $42.85    
Market capitalization$504,397 $640,273 $663,063 $625,073 $596,393    
Market price / book value 106.61% 139.98% 179.41% 173.43% 168.81%   
Market price / tangible book value 133.49% 174.16% 199.10% 193.33% 188.81%   
Earnings per common share (basic) LTM (3)$2.92 $2.79 $2.83 $2.74 $2.69    
Price earnings ratio LTM (3) 10.98x 14.64x 16.77x 16.37x 15.93x   
TCE / TA (4) 7.78% 7.82% 8.18% 8.10% 8.01%   
         
         
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY    
Beginning balance$457,387 $369,588 $360,428 $353,287 $313,039    
Net income 13,316  8,809  10,445  10,550  9,902    
Other comprehensive income (loss), net of tax 1,943  (612) (1,335) (3,201) (295)   
Common stock cash dividends declared (939) (938) (836) (834) (693)   
Proceeds from issuance of 678,670 shares of
  common stock, net of costs, as a result of the
  acquisition of Guaranty Bank & Trust		 -  -  -  -  30,741    
Proceeds from issuance of 1,689,561 shares of
  common stock, net of costs, as a result of the
  acquisition of Springfield First Community Bank		 -  80,063  -  -  -    
Proceeds from issuance of 23,501 shares of
  common stock, net of costs, as a result of the
  acquisition of Bates Companies		 1,000        
Other (5) 431  477  886  626  593    
Ending balance$   473,138  $   457,387  $   369,588  $   360,428  $   353,287     
         
         
REGULATORY CAPITAL RATIOS (6):        
Total risk-based capital ratio 10.72% 10.87% 11.23% 11.25% 11.15%   
Tier 1 risk-based capital ratio 9.78% 9.83% 10.19% 10.21% 10.14%   
Tier 1 leverage capital ratio 8.76% 8.87% 9.22% 9.08% 8.98%   
Common equity tier 1 ratio 8.89% 8.92% 9.16% 9.14% 9.10%   
         
         
KEY PERFORMANCE RATIOS AND OTHER METRICS        
Return on average assets (annualized) 1.10% 0.75% 1.03% 1.06% 1.01%  0.98% 1.01%
Return on average total equity (annualized) 11.42% 8.08% 11.45% 11.84% 11.67%  10.62% 11.51%
Net interest margin 3.48% 3.46% 3.37% 3.50% 3.41%  3.46% 3.50%
Net interest margin (TEY) (Non-GAAP)(7) 3.63% 3.60% 3.52% 3.64% 3.69%  3.62% 3.78%
Efficiency ratio (Non-GAAP) (8) (12) 66.35% 64.72% 64.32% 63.17% 75.53%  64.77% 66.48%
Gross loans and leases / total assets 75.41% 76.23% 75.84% 75.87% 74.43%  75.41% 74.43%
Gross loans and leases / total deposits 93.86% 96.44% 94.44% 93.14% 90.75%  93.86% 90.75%
Effective tax rate (11) 20.98% 15.44% 15.26% 15.88% -25.33%  17.29% 12.17%
Tax benefit related to stock options exercised and restricted stock awards vested (9) 83  9  200  133  406   425  1,220 
Full-time equivalent employees (10) 755  728  666  639  641   755  641 
         
         
AVERAGE BALANCES         
Assets$4,842,232 $4,677,875 $4,053,684 $3,994,691 $3,923,337  $4,392,121 $3,519,848 
Loans/leases 3,699,885  3,612,648  3,077,517  3,019,376  2,930,711   3,352,357  2,611,888 
Deposits 3,986,236  3,840,077  3,343,003  3,239,562  3,256,481   3,602,221  2,916,577 
Total stockholders' equity 466,271  436,065  365,031  356,525  339,468   405,973  310,210 
         
(1) Includes accumulated other comprehensive income (loss).       
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets.     
(3) LTM : Last twelve months.        
(4) TCE / TCA : tangible common equity / total tangible assets.  See GAAP to non-GAAP reconciliations.    
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation. 
(6) Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release. 
(7) TEY : Tax equivalent yield.  See GAAP to Non-GAAP reconciliations. 
(8) See GAAP to Non-GAAP reconciliations. 
(9) ASC 2016-09 became effective on January 1, 2017 and affects the accounting for stock compensation.  This amount reflects the tax benefit recognized as a result of this new standard.
(10) Full-time equivalent employees increased in the 4th quarter of 2018 due to the acquisition of the Bates Companies and several new positions created to build scale.
       Full-time equivalent employees increased in the 3rd quarter of 2018 due to the acquisition of SFC Bank.  
       Full-time equivalent employees increased in the 2nd quarter of 2018 due primarily to the addition of summer interns and several new positions created to build scale.
       Full-time equivalent employees increased in the 4th quarter of 2017 due to the acquisition of Guaranty Bank & Trust, as well as the filling of open positions throughout the Company.
(11) The effective tax rate for the fourth quarter of 2017 and the full year were impacted by a $2.9 million tax benefit recorded as a result of the Tax Act. 
(12) The efficiency ratio was unusually high in the fourth quarter of 2017 due to one-time acquisition costs and post-acquisition transition and integration costs totaling $4.4 million.

 

             
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
             
ANALYSIS OF NET INTEREST INCOME AND MARGIN
            
             
  For the Quarter Ended
  December 31, 2018 September 30, 2018 December 31, 2017
  Average
Balance		Interest
Earned or
Paid		Average
Yield or Cost		 Average
Balance		Interest
Earned or
Paid		Average
Yield or Cost		 Average
Balance		Interest
Earned or
Paid		Average
Yield or Cost
             
  (dollars in thousands)
             
Fed funds sold $20,426$1152.23% $23,199$1051.80% $20,509$450.87%
Interest-bearing deposits at financial institutions 98,875 5172.07%  61,815 3232.07%  94,404 3141.32%
Securities (1)  671,613 6,2313.68%  667,142 5,9733.55%  635,389 6,1113.82%
Restricted investment securities 22,478 3185.61%  22,683 3305.77%  18,180 1964.28%
Loans (1)  3,699,885 47,2735.07%  3,612,648 44,6484.90%  2,930,711 33,7974.58%
Total earning assets (1)$4,513,277$54,4544.79% $4,387,487$51,3794.65% $3,699,193$40,4634.34%
             
Interest-bearing deposits$2,211,148$6,1101.10% $2,214,480$5,4320.97% $1,903,983$2,7870.58%
Time deposits  956,754 4,4331.84%  825,020 3,2901.58%  546,376 1,4451.05%
Short-term borrowings 20,129 981.93%  21,407 781.45%  31,120 380.48%
Federal Home Loan Bank advances 190,232 9742.03%  209,111 1,2732.42%  143,171 6161.71%
Other borrowings  72,264 9705.33%  74,503 9254.93%  74,199 7754.14%
Junior subordinated debentures 37,644 5255.53%  37,600 5195.48%  35,531 4244.73%
Total interest-bearing liabilities$3,488,171$13,1101.49% $3,382,121$11,5171.35% $2,734,380$6,0850.88%
             
Net interest income / spread (1) $41,3443.30%  $39,8623.30%  $34,3783.46%
Net interest margin (2)  3.48%   3.46%   3.41%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)  3.63%   3.60%   3.69%
             
             
  For the Year Ended    
  December 31, 2018 December 31, 2017  
  Average
Balance		Interest
Earned or
Paid		Average
Yield or Cost		 Average
Balance		Interest
Earned or
Paid		Average
Yield or Cost		    
             
  (dollars in thousands)    
             
Fed funds sold $20,472$3381.65% $17,577$1490.85%    
Interest-bearing deposits at financial institutions 66,275 1,2671.91%  78,842 8741.11%    
Securities (1)  659,017 23,6213.58%  590,761 22,4603.80%    
Restricted investment securities 22,023 1,0934.96%  15,768 6314.00%    
Loans (1)  3,352,357 163,1974.87%  2,611,888 120,6184.62%    
Total earning assets (1)$4,120,144$189,5164.60% $3,314,836$144,7324.37%    
             
Interest-bearing deposits$2,043,314$18,6510.91% $1,622,723$7,9920.49%    
Time deposits  766,020 12,0241.57%  528,834 5,0200.95%    
Short-term borrowings 19,458 2711.39%  22,596 1140.50%    
Federal Home Loan Bank advances 202,715 4,1932.07%  120,206 1,9811.65%    
Other borrowings  69,623 3,3464.81%  73,394 2,8793.92%    
Junior subordinated debentures 37,578 1,9995.32%  34,030 1,4664.31%    
Total interest-bearing liabilities$3,138,708$40,4841.29% $2,401,783$19,4520.81%    
             
Net interest income / spread (1) $149,0323.31%  $125,2803.56%    
Net interest margin (2)  3.46%   3.50%    
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)  3.62%   3.78%    
             
             
(1) Includes nontaxable securities and loans.  Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period prior to March 31, 2018 and 21% for periods including and after March 31, 2018.
(2) See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented.    
(3) TEY : Tax equivalent yield.  See GAAP to Non-GAAP reconciliations.         

 

 
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 
 As of
 December 31,September 30,June 30,March 31,December 31,
 20182018201820182017
      
 (dollars in thousands, except per share data)
ROLLFORWARD OF ALLOWANCE FOR LOAN/LEASE LOSSES     
Beginning balance$  43,077 $  37,545 $  36,533 $  34,356 $  34,982 
Provision charged to expense   1,611    6,206    2,301    2,540    2,255 
Loans/leases charged off   (4,967)   (991)   (1,525)   (436)   (2,979)
Recoveries on loans/leases previously charged off   126    317    236    73    98 
Ending balance$   39,847  $   43,077  $   37,545  $   36,533  $   34,356  
      
      
NONPERFORMING ASSETS      
Nonaccrual loans/leases$  14,260 $  23,576 $  12,554 $  12,759 $  11,441 
Accruing loans/leases past due 90 days or more   632    1,410    20    41    89 
Troubled debt restructures - accruing   3,659    4,240    1,327    5,276    7,113 
Total nonperforming loans/leases   18,551    29,226    13,901    18,076    18,643 
Other real estate owned   9,378    12,204    12,750    12,750    13,558 
Other repossessed assets   8    150    150    200    80 
Total nonperforming assets$   27,937  $   41,580  $   26,801  $   31,026  $   32,281  
      
      
ASSET QUALITY RATIOS     
Nonperforming assets / total assets 0.56% 0.87% 0.65% 0.77% 0.81%
Allowance / total loans/leases (1) 1.07% 1.18% 1.21% 1.20% 1.16%
Allowance / nonperforming loans/leases (1) 214.80% 147.39% 270.09% 202.11% 184.28%
Net charge-offs as a % of average loans/leases 0.13% 0.02% 0.04% 0.01% 0.10%
      
(1) Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminated the allowance and impacts these ratios. 
  

 

            
 QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
            
   For the Quarter Ended For the Year Ended
   December 31, September 30, December 31, December 31, December 31,
 SELECT FINANCIAL DATA - SUBSIDIARIES 2018 2018 2017 2018 2017
    
   (dollars in thousands)
            
 TOTAL ASSETS          
            
 Quad City Bank and Trust (1) $1,623,369  $1,579,327  $1,541,778     
 m2 Lease Funds, LLC  231,662   235,214   218,035     
 Cedar Rapids Bank and Trust  1,379,222   1,354,294   1,307,377     
 Community State Bank - Ankeny  785,364   734,536   670,516     
 Springfield First Community Bank  632,849   623,520   N/A     
 Rockford Bank and Trust  509,622   484,059   461,651     
              
 TOTAL DEPOSITS            
              
 Quad City Bank and Trust (1) $1,308,085  $1,288,387  $1,272,111     
 Cedar Rapids Bank and Trust  1,167,552   1,086,908   1,060,139     
 Community State Bank - Ankeny  627,127   586,929   570,620     
 Springfield First Community Bank  449,983   439,669   N/A     
 Rockford Bank and Trust  431,110   401,565   382,002     
            
 TOTAL LOANS & LEASES          
            
 Quad City Bank and Trust (1) $1,233,117  $1,195,380  $1,136,753     
 m2 Lease Funds, LLC  228,646   232,846   215,236     
 Cedar Rapids Bank and Trust  1,037,469   1,046,053   973,971     
 Community State Bank - Ankeny  582,453   538,723   489,075     
 Springfield First Community Bank  475,801   480,969   N/A     
 Rockford Bank and Trust  403,914   392,262   364,686     
              
 TOTAL LOANS & LEASES / TOTAL DEPOSITS            
              
 Quad City Bank and Trust (1)  94%   93%   89%     
 Cedar Rapids Bank and Trust  89%   96%   92%     
 Community State Bank - Ankeny  93%   92%   86%     
 Springfield First Community Bank  106%   109%   N/A     
 Rockford Bank and Trust  94%   98%   95%     
              
              
 TOTAL LOANS & LEASES / TOTAL ASSETS            
              
 Quad City Bank and Trust (1)  76%   76%   74%     
 Cedar Rapids Bank and Trust  75%   77%   74%     
 Community State Bank - Ankeny  74%   73%   73%     
 Springfield First Community Bank  75%   77%   N/A     
 Rockford Bank and Trust  79%   81%   79%     
              
 ALLOWANCE AS A PERCENTAGE OF LOANS/LEASES            
            
 Quad City Bank and Trust (1)  1.09%   1.11%   1.11%     
 m2 Lease Funds, LLC  1.49%   1.50%   1.54%     
 Cedar Rapids Bank and Trust (2)  1.19%   1.26%   1.22%     
 Community State Bank - Ankeny (2)  1.05%   1.01%   0.89%     
 Springfield First Community Bank  0.21%   0.10%   N/A     
 Rockford Bank and Trust  1.72%   2.71%   1.51%     
            
 RETURN ON AVERAGE ASSETS           
            
 Quad City Bank and Trust (1)  1.22%   1.36%   2.82%   1.31%   1.65% 
 Cedar Rapids Bank and Trust  1.78%   1.47%   0.71%   1.54%   1.12% 
 Community State Bank - Ankeny  0.94%   1.43%   0.96%   1.18%   1.14% 
 Springfield First Community Bank  1.74%   1.51%   N/A   1.64%   N/A 
 Rockford Bank and Trust  1.29%   (2.04)%   0.26%   0.15%   0.64% 
            
 NET INTEREST MARGIN PERCENTAGE (3)          
            
 Quad City Bank and Trust (1)  3.20%   3.38%   3.49%   3.38%   3.61% 
 Cedar Rapids Bank and Trust (5)  3.60%   3.53%   3.80%   3.59%   3.74% 
 Community State Bank - Ankeny (4)  4.73%   4.40%   4.71%   4.48%   4.91% 
 Springfield First Community Bank (6)  4.68%   4.36%   N/A   4.55%   N/A 
 Rockford Bank and Trust  2.87%   3.06%   3.32%   3.08%   3.37% 
            
 ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET          
 INTEREST MARGIN, NET          
            
 Cedar Rapids Bank and Trust $740  $158  $221  $1,350  $200 
 Community State Bank - Ankeny  415   445   575   1,746   4,723 
 Springfield First Community Bank  1,498   1,116   N/A   2,614   N/A 
 QCR Holdings, Inc. (7)  (44)  (45)  (51)  (183)  (149)
            
(1) Quad City Bank and Trust figures include m2 Lease Funds, LLC, as this entity is wholly-owned and consolidated with the Bank.  m2 Lease Funds, LLC is also presented separately for certain (applicable) measurements.
(2) Upon acquisition and per GAAP, acquired loans are recorded at market value, which eliminated the allowance and impacts this ratio.
(3) Includes nontaxable securities and loans.  Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period prior to March 31, 2018 and 21% for periods including and after March 31, 2018.
(4) Community State Bank's net interest margin percentage includes various purchase accounting adjustments.  Excluding those adjustments, net interest margin would have been 4.00% for the quarter ended December 31, 2018, 4.11% for the quarter ended September 30, 2018 and 4.33% for the quarter ended December 31, 2017.
(5) Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments.  Excluding those adjustments, net interest margin would have been 3.36% for the quarter ended December 31, 2018, 3.48% for the quarter ended September 30, 2018 and 3.71% for the quarter ended December 31, 2017.
(6) Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments.  Excluding those adjustments, net interest margin would have been 3.52% for the quarter ended December 31, 2018 and 3.45% for the quarter ended September 30, 2018.
(7) Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013.
            

 

               
QCR HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
  As of    
  December 31, September 30, June 30, March 31, December 31,    
GAAP TO NON-GAAP RECONCILIATIONS 2018 2018 2018 2018 2017    
       
  (dollars in thousands, except per share data)    
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)              
               
Stockholders' equity (GAAP) $473,138  $457,387  $369,588  $360,428  $353,287     
Less: Intangible assets  95,282   89,755   36,561   37,108   37,413     
Tangible common equity (non-GAAP) $377,856  $367,632  $333,027  $323,320  $315,874     
               
Total assets (GAAP) $4,949,710  $4,792,732  $4,106,883  $4,026,314  $3,982,665     
Less: Intangible assets  95,282   89,755   36,561   37,108   37,413     
Tangible assets (non-GAAP) $4,854,428  $4,702,977  $4,070,322  $3,989,206  $3,945,252     
               
Tangible common equity to tangible assets ratio (non-GAAP)  7.78%  7.82%  8.18%  8.10%  8.01%    
               
               
  For the Quarter Ended For the Year Ended
  December 31, September 30, June 30, March 31, December 31, December 31, December 31,
ADJUSTED NET INCOME (2) 2018 2018 2018 2018 2017 2018 2017
               
Net income (GAAP) $13,316  $8,809  $10,445  $10,550  $9,902  $43,120  $35,707 
               
Less nonrecurring items (post-tax) (3):              
Income:              
Securities gains, net $-  $-  $-  $-  $(41) $-  $(57)
Total nonrecurring income (non-GAAP) $-  $-  $-  $-  $(41) $-  $(57)
               
Expense:              
Acquisition costs (4)  29   1,216   327   73   430   1,645   695 
Post-acquisition compensation, transition and integration costs 1,127   390   130   -   2,462   1,647   2,802 
Total nonrecurring expense (non-GAAP) $1,156  $1,606  $457  $73  $2,892  $3,292  $3,497 
               
Adjustment of tax expense related to the Tax Act $-  $-  $-  $-  $2,919  $-  $2,919 
               
Adjusted net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (2) $   14,472   $   10,415   $   10,902   $   10,623   $   9,916   $   46,412   $   36,342  
               
ADJUSTED EARNINGS PER COMMON SHARE (2)              
               
Adjusted net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) $14,472  $10,415  $10,902  $10,623  $9,916  $46,412  $36,342 
               
Weighted average common shares outstanding  15,641,401   15,625,123   13,919,565   13,888,661   13,845,497   14,768,687   13,325,128 
Weighted average common and common equivalent shares outstanding  15,898,591   15,922,324   14,232,423   14,205,584   14,193,191   15,064,730   13,680,472 
               
Adjusted earnings per common share (non-GAAP):              
Basic $   0.93   $   0.67   $   0.78   $   0.76   $   0.72   $   3.14   $   2.73  
Diluted $   0.91   $   0.65   $   0.77   $   0.75   $   0.70   $   3.08   $   2.66  
               
ADJUSTED RETURN ON AVERAGE ASSETS (2)              
               
Adjusted net income attributable to QCR Holdings, Inc. common stockholders (non-GAAP) (from above) $14,472  $10,415  $10,902  $10,623  $9,916  $46,412  $36,342 
               
Average Assets $4,842,232  $4,677,875  $4,053,684  $3,994,691  $3,923,337  $4,392,121  $3,519,848 
               
Adjusted return on average assets (annualized) (non-GAAP)  1.20%  0.89%  1.08%  1.06%  1.01%  1.06%  1.03%
               
ADJUSTED NET INTEREST MARGIN (TEY) (6)              
               
Net interest income (GAAP) $39,593  $38,314  $32,085  $32,403  $31,793  $142,395  $116,065 
               
Plus: Tax equivalent adjustment (5)  1,751   1,548   1,462   1,353   2,585   6,637   9,215 
               
Net interest income - tax equivalent (Non-GAAP) $41,344  $39,862  $33,547  $33,756  $34,378  $149,032  $125,280 
               
Less:  Acquisition accounting net accretion  2,609   1,674   548   699   745   5,527   4,774 
               
Adjusted net interest income $38,735  $38,188  $32,999  $33,057  $33,633  $143,505  $120,506 
               
Average earning assets $4,513,277  $4,387,487  $3,820,333  $3,759,475  $3,699,193  $4,120,144  $3,314,836 
               
Net interest margin (GAAP)  3.48%  3.46%  3.37%  3.50%  3.41%  3.46%  3.50%
Net interest margin (TEY) (Non-GAAP)  3.63%  3.60%  3.52%  3.64%  3.69%  3.62%  3.78%
Adjusted net interest margin (TEY) (Non-GAAP)  3.40%  3.45%  3.46%  3.57%  3.61%  3.48%  3.64%
               
EFFICIENCY RATIO (7)              
               
Noninterest expense (GAAP) $36,410  $30,500  $26,370  $25,863  $31,351  $119,143  $97,424 
               
Net interest income (GAAP) $39,593  $38,314  $32,085  $32,403  $31,793  $142,395  $116,065 
Noninterest income (GAAP)  15,279   8,809   8,912   8,541   9,714   41,541   30,482 
Total income $54,872  $47,123  $40,997  $40,944  $41,507  $183,936  $146,547 
               
Efficiency ratio (noninterest expense/total income) (Non-GAAP)  66.35%  64.72%  64.32%  63.17%  75.53%  64.77%  66.48%
               
(1) This ratio is a non-GAAP financial measure.  The Company's management believes that this measurement is important to many investors in the marketplace who are interested in changes period-to-period in common equity.  In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to stockholders' equity and total assets, which are the most directly comparable GAAP financial measures.
good(2) Adjusted net income, adjusted net income attributable to QCR Holdings, Inc. common stockholders, adjusted earnings per common share and adjusted return on average assets are non-GAAP financial measures.  The Company's management believes that these measurements are important to investors as they exclude non-recurring income and expense items, therefore, they provide a more realistic run-rate for future periods.
In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net income, which is the most directly comparable GAAP financial measure.    
(3) Nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 35% for periods prior to March 31, 2018 and 21% for periods including and after March 31, 2018.  
(4) Acquisition costs were analyzed individually for deductibility.  Presented amounts are tax-effected accordingly.        
(5) Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period prior to March 31, 2018 and 21% for periods including and after March 31, 2018.
(6) Net interest margin (TEY) is a non-GAAP financial measure.  The Company's management utilizes this measurement to take into account the tax benefit associated with certain loans and securities.  It is also standard industry practice to measure net interest margin using tax-equivalent measures.  In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net interest income, which is the most directly comparable GAAP financial measure.  In addition, the Company calculates net interest margin without the impact of acquisition accounting net accretion as this can fluctuate and it's difficult to provide a more realistic run-rate for future periods.
(7) Efficiency ratio is a non-GAAP measure.  The Company's management utilizes this ratio to compare to industry peers.  The ratio is used to calculate overhead as a percentage of revenue.  In compliance with the applicable rules of the SEC, this non-GAAP measure is reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP financial measures.
 

 

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