QCRH QCR Holdings Inc

QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $27.2 million and diluted earnings per share (“EPS”) of $1.60 for the first quarter of 2023, compared to net income of $30.9 million and diluted EPS of $1.81 for the fourth quarter of 2022.

“In the first quarter, we delivered strong results, highlighted by increased fee income and carefully managed expenses,” said Larry J. Helling, Chief Executive Officer. “In response to the current banking environment, we grew our deposits and significantly increased our balance sheet liquidity. In addition, we continued to improve upon our already strong capital levels.”

Core Deposit Growth and Strengthened Liquidity

During the first quarter of 2023, the Company’s deposits, excluding brokered deposits, grew $19.9 million to a total of $5.9 billion, or 1.4% on an annualized basis. The Company also added short-term brokered deposits of $497.5 million during the quarter to intentionally bolster on-balance sheet liquidity and fully eliminate overnight borrowings from the FHLB. Total uninsured and uncollateralized deposits improved during the first quarter and represented 23.8% of total deposits. The Company maintained approximately $1.5 billion of immediately available liquidity at quarter-end, which was more than the total amount of our uninsured or uncollateralized deposits.

“We have built a strong and diversified deposit franchise over the past 30 years and our first-quarter deposit activity was a reflection of the importance of that franchise,” added Mr. Helling. “We are pleased with our level of uninsured and uncollateralized deposits and our strong liquidity position.”

Net Income of $27.2 Million and Diluted EPS of $1.60

Adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) for the first quarter of 2023 were $28.0 million and $1.65, respectively. For the fourth quarter of 2022, adjusted net income (non-GAAP) was $31.1 million and adjusted diluted EPS (non-GAAP) was $1.83. For the first quarter of 2022, net income and diluted EPS were $23.6 million and $1.49, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $24.4 million and $1.54, respectively. During the first quarter, the Company grew pre-tax/pre-provision adjusted income (non-GAAP) by $2.0 million or 6.4% when excluding the impact of loan discount accretion.

		For the Quarter Ended
		March 31,		December 31,		March 31,
$ in millions (except per share data)		2023		2022		2022
Net Income		$	27.2	$	30.9	$	23.6
Diluted EPS		$	1.60	$	1.81	$	1.49
Adjusted Net Income (non-GAAP)*		$	28.0	$	31.1	$	24.4
Adjusted Diluted EPS (non-GAAP)*		$	1.65	$	1.83	$	1.54

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

Net Interest Income of $56.8 Million

Net interest income for the first quarter of 2023 totaled $56.8 million, compared to $65.2 million for the fourth quarter of 2022 and $45.7 million for the first quarter of 2022. Adjusted net interest income (non-GAAP) during the quarter was $62.0 million, a decrease of $3.0 million from the prior quarter. Acquisition-related net accretion totaled $828 thousand for the first quarter of 2023, compared to $5.7 million in the fourth quarter of 2022.

In the first quarter of 2023, net interest margin (“NIM”) was 3.18% and NIM on a tax-equivalent yield (“TEY”) basis (non-GAAP) was 3.52%, compared to 3.62% and 3.93% in the prior quarter, respectively. Adjusted NIM TEY (non-GAAP) of 3.47% declined by 14 basis points from 3.61% in the fourth quarter.  

“Our adjusted tax-equivalent NIM declined by 14 basis points during the first quarter,” said Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. “With heavy deposit competition and the later stages of the rate cycle, our deposit betas accelerated in the first quarter. We continue to see deposit mix shift from noninterest bearing and lower beta deposits to higher beta deposits, which has shifted our interest rate risk position from asset sensitive to moderately liability sensitive.”  

Noninterest Income Jumps 22% to $25.8 Million

Noninterest income for the first quarter of 2023 totaled $25.8 million, up 22% from $21.2 million for the fourth quarter of 2022. The Company generated $17.0 million of capital markets revenue from swap fees in the quarter, an increase of $5.7 million, or 50% from the fourth quarter. Wealth management revenue of $3.8 million for the quarter also grew more than 6% from the prior quarter.

“Capital markets revenue was $17.0 million in the first quarter, up significantly from the fourth quarter and well ahead of our guidance range,” added Mr. Gipple. “Many of the headwinds that some of our clients had been experiencing in recent quarters have begun to subside and several previously delayed projects funded during the first quarter. Our pipeline for these loans remains healthy and, as a result, we are increasing our capital markets revenue guidance to a range of between $40 and $50 million for the next twelve months.”

Noninterest Expenses Decline 2% to $48.8 Million

Noninterest expense for the first quarter of 2023 remains well-controlled and totaled $48.8 million, down 2% from $49.7 million for the fourth quarter of 2022 and compared to $38.3 million for the first quarter of 2022. The linked-quarter decline was primarily due to lower compensation expense. In addition, we experienced lower professional and data processing fees, insurance and regulatory fees, and advertising and marketing expenses.   Noninterest expenses declined 2% during the first quarter despite the impact of annual merit increases effective at the beginning of the quarter and continued inflationary pressures.   

Annualized Loan and Lease Growth of 3.3% for the Quarter

During the first quarter of 2023, the Company’s loans and leases grew $51.2 million to a total of $6.2 billion, or 3.3% on an annualized basis. “Our loan growth during the quarter was driven primarily by strength in both our traditional and tax credit lending business,” added Mr. Helling. “We experienced more modest loan demand from our client base due to the macro headwinds being created by the higher interest rate environment. Therefore, given the ongoing economic uncertainty, we are now guiding to loan growth in the second quarter in the range of zero to 5%, on an annualized basis net of the planned loan securitization.”

Asset Quality Remains Excellent

“Our asset quality remains excellent as the ratio of nonperforming assets to total assets was 0.29% at quarter-end and compares favorably to historical averages and current peer metrics. We remain cautiously optimistic about the relative economic resiliency of our markets and we are not seeing any meaningful signs of weakness across our footprint,” said Mr. Helling.

Nonperforming assets (“NPAs”) totaled $23.0 million at the end of the first quarter, up from $8.9 million in the fourth quarter of 2022. The increase in NPAs during the quarter was the result of a single credit relationship which was moved to nonaccrual status. In addition, the Company’s criticized loans and classified loans to total loans and leases on March 31, 2023, increased modestly to 3.16% and 1.14%, respectively, as compared to 2.68% and 1.08% as of December 31, 2022.

The Company recorded a total provision for credit losses of $3.9 million during the quarter which included $2.5 million of provision on loans/leases. As of March 31, 2023, the ACL to total loans/leases held for investment was 1.43%, consistent with the prior quarter.

Continued Strong Capital Levels

As of March 31, 2023, the Company’s total risk-based capital ratio was 14.50%, the common equity tier 1 ratio was 9.48% and the tangible common equity to tangible assets ratio (non-GAAP) was 8.21%. By comparison, these respective ratios were 14.28%, 9.29% and 7.93% as of December 31, 2022.

During the first quarter, the Company purchased and retired 152,500 shares of its common stock at an average price of $50.61 per share as the Company executed purchases under the share repurchase plan announced during the second quarter of 2022. The 2022 share repurchase plan authorized approximately 1,500,000 shares to be repurchased and the Company has approximately 778,000 shares remaining under the program.

The Company’s tangible book value per share (non-GAAP) increased by 5.1% during the first quarter. Accumulated other comprehensive income (“AOCI”) improved $9.3 million during the quarter due to an increase in the value of the Company’s available for sale securities portfolio and certain derivatives resulting from the change in interest rates during the first quarter. While the repurchase of shares modestly impacted the Company’s tangible common equity, the change in AOCI and solid earnings more than offset this impact, which led to the sharp increase in tangible book value per share (non-GAAP).

Focus on Three Strategic Long-Term Initiatives

As part of our Company’s ongoing efforts to grow earnings and drive attractive long-term returns for shareholders, we continue to operate under three key strategic long-term initiatives:

• Generate organic loan and lease growth of 9% per year, funded by core deposits;
• Grow fee-based income by at least 6% per year; and
• Limit annual operating expense growth to 5% per year.

Conference Call Details

The Company will host an earnings call/webcast tomorrow, April 27, 2023, at 10:00 a.m. Central Time. Dial-in information for the call is toll-free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be available for replay through May 4, 2023. The replay access information is 877-344-7529 (international 412-317-0088); access code 6451503. A webcast of the teleconference can be accessed on 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 UsQCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny and Springfield communities through its wholly owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018, and Guaranty Bank, also based in Springfield, Missouri, was acquired by the Company and merged with Springfield First Community Bank on April 1, 2022, with the combined entity operating under the Guaranty Bank name. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company offers equipment loans and leases to businesses through its wholly owned subsidiary, m2 Equipment Finance, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 36 locations in Iowa, Missouri, Wisconsin and Illinois. As of March 31, 2023, the Company had $8.0 billion in assets, $6.2 billion in loans and $6.5 billion in deposits. For additional information, please visit the Company’s website at www.qcrh.com.

Special Note Concerning Forward-Looking Statements. This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “bode”, “predict,” “suggest,” “project”, “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should,” “likely,” “might,” “potential,” “continue,” “annualized,” “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.

A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economies(including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threats thereof (including the Russian invasion of Ukraine), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the FASB or the PCAOB; (iv) changes in local, state and federal laws, regulations and governmental policies concerning the Company’s general business and any changes in response to the recent failures of other banks; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out); (vi) increased competition in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies, and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or employees; (x) changes in consumer spending; (xi) unexpected outcomes of existing or new litigation involving the Company; (xii) the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; (xiii) fluctuations in the value of securities held in our securities portfolio; (xiv) concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients; (xv) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversity their exposure; (xvi) the level of non-performing assets on our balance sheets; (xvii) interruptions involving our information technology and communications systems or third-party servicers; (xviii) breaches or failures of our information security controls or cybersecurity-related incidents, and (xixi) the ability of the Company to manage the risks associated with the foregoing as well as anticipated.   These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

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

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
	(dollars in thousands)
CONDENSED BALANCE SHEET
Cash and due from banks	$	64,295		$	59,723		$	86,282		$	92,379		$	50,540
Federal funds sold and interest-bearing deposits		253,997			124,270			71,043			56,532			66,390
Securities, net of allowance for credit losses		877,446			928,102			879,450			879,918			823,311
Loans receivable held for sale (1)		140,633			1,480			3,054			1,186			2,968
Loans/leases receivable held for investment		6,049,389			6,137,391			6,005,556			5,796,717			4,824,900
Allowance for credit losses		(86,573	)		(87,706	)		(90,489	)		(92,425	)		(74,786	)
Intangibles		15,993			16,759			17,546			18,333			8,856
Goodwill		138,474			137,607			137,607			137,607			74,066
Derivatives		130,350			177,631			185,037			97,455			107,326
Other assets		452,900			453,580			434,963			405,239			292,248
Total assets	$	8,036,904		$	7,948,837		$	7,730,049		$	7,392,941		$	6,175,819
Total deposits	$	6,501,663		$	5,984,217		$	5,941,035		$	5,820,657		$	4,839,689
Total borrowings		417,480			825,894			701,491			583,166			443,270
Derivatives		150,401			200,701			209,479			113,305			116,193
Other liabilities		165,866			165,301			140,972			132,675			108,743
Total stockholders' equity		801,494			772,724			737,072			743,138			667,924
Total liabilities and stockholders' equity	$	8,036,904		$	7,948,837		$	7,730,049		$	7,392,941		$	6,175,819
ANALYSIS OF LOAN PORTFOLIO
Loan/lease mix:
Commercial and industrial - revolving	$	307,612		$	296,869		$	332,996		$	322,258		$	263,441
Commercial and industrial - other		1,420,331			1,451,693			1,415,996			1,403,689			1,374,221
Total commercial and industrial		1,727,943			1,748,562			1,748,992			1,725,947			1,637,662
Commercial real estate, owner occupied		616,922			629,367			627,558			628,565			439,257
Commercial real estate, non-owner occupied		982,716			963,239			920,876			889,530			679,898
Construction and land development*		1,208,185			1,192,061			1,149,503			1,080,372			863,116
Multi-family*		969,870			963,803			933,118			860,742			711,682
Direct financing leases		35,373			31,889			33,503			40,050			43,330
1-4 family real estate		532,491			499,529			487,508			473,141			379,613
Consumer		116,522			110,421			107,552			99,556			73,310
Total loans/leases	$	6,190,022		$	6,138,871		$	6,008,610		$	5,797,903		$	4,827,868
Less allowance for credit losses		86,573			87,706			90,489			92,425			74,786
Net loans/leases	$	6,103,449		$	6,051,165		$	5,918,121		$	5,705,478		$	4,753,082
*The LIHTC lending business is a significant part of the Company's Construction and Multi-family loans. For the quarter ended March 31, 2023, the  LIHTC portion of the Construction loans was $760 million, or 63%, and the LIHTC portion of the Multi-family loans was $742 million, or 76%.
ANALYSIS OF SECURITIES PORTFOLIO
Securities mix:
U.S. government sponsored agency securities	$	19,320		$	16,981		$	20,527		$	20,448		$	21,380
Municipal securities		731,689			779,450			724,204			710,638			667,245
Residential mortgage-backed and related securities		63,104			66,215			68,844			81,247			86,381
Asset backed securities		17,967			18,728			19,630			19,956			23,233
Other securities		46,535			46,908			46,443			47,827			25,270
Total securities	$	878,615		$	928,282		$	879,648		$	880,116		$	823,509
Less allowance for credit losses		1,169			180			198			198			198
Net securities	$	877,446		$	928,102		$	879,450		$	879,918		$	823,311
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand deposits	$	1,189,858		$	1,262,981		$	1,315,555		$	1,514,005		$	1,275,493
Interest-bearing demand deposits		4,033,193			3,875,497			3,904,303			3,758,566			3,181,685
Time deposits		679,946			744,593			672,133			540,074			382,268
Brokered deposits		598,666			101,146			49,044			8,012			243
Total deposits	$	6,501,663		$	5,984,217		$	5,941,035		$	5,820,657		$	4,839,689
ANALYSIS OF BORROWINGS
Borrowings mix:
Term FHLB advances	$	135,000		$	-		$	-		$	-		$	-
Overnight FHLB advances		-			415,000			335,000			400,000			290,000
Other short-term borrowings		1,100			129,630			85,180			1,070			1,190
Subordinated notes		232,746			232,662			232,743			133,562			113,890
Junior subordinated debentures		48,634			48,602			48,568			48,534			38,190
Total borrowings	$	417,480		$	825,894		$	701,491		$	583,166		$	443,270
(1) Loans with a fair value of $139.2 million, have been identified for securitization and are included in LHFS at March 31, 2023.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
			For the Quarter Ended
			March 31,			December 31,			September 30,		June 30,		March 31,
				2023			2022			2022		2022		2022
			(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income			$	94,217		$	94,037		$	79,267	$	68,205	$	51,062
Interest expense				37,407			28,819			18,498		8,805		5,329
Net interest income				56,810			65,218			60,769		59,400		45,733
Provision for credit losses (1)				3,928			-			-		11,200		(2,916	)
Net interest income after provision for credit losses			$	52,882		$	65,218		$	60,769	$	48,200	$	48,649
Trust department fees			$	2,906		$	2,644		$	2,537	$	2,497	$	2,963
Investment advisory and management fees				879			918			921		983		1,036
Deposit service fees				2,028			2,142			2,214		2,223		1,555
Gain on sales of residential real estate loans				312			468			641		809		493
Gain on sales of government guaranteed portions of loans				30			50			50		-		19
Capital markets revenue				17,023			11,338			10,545		13,004		6,422
Securities losses, net				(463	)		-			-		-		-
Earnings on bank-owned life insurance				707			755			605		350		346
Debit card fees				1,466			1,500			1,453		1,499		1,007
Correspondent banking fees				391			257			189		244		277
Loan related fee income				651			614			652		682		480
Fair value gain (loss) on derivatives				(427	)		(267	)		904		432		906
Other				339			800			384		59		129
Total noninterest income			$	25,842		$	21,219		$	21,095	$	22,782	$	15,633
Salaries and employee benefits			$	32,003		$	32,594		$	29,175	$	29,972	$	23,627
Occupancy and equipment expense				5,914			6,027			6,033		5,978		3,937
Professional and data processing fees				3,514			3,769			4,477		4,365		3,671
Acquisition costs				-			(424	)		315		1,973		1,851
Post-acquisition compensation, transition and integration costs				207			668			62		4,796		-
FDIC insurance, other insurance and regulatory fees				1,374			1,605			1,497		1,394		1,310
Loan/lease expense				556			411			390		761		267
Net cost of (income from) and gains/losses on operations of other real estate				(67	)		(117	)		19		59		(1	)
Advertising and marketing				1,237			1,562			1,437		1,198		761
Communication and data connectivity				665			587			639		584		403
Supplies				305			337			289		237		246
Bank service charges				605			563			568		610		541
Correspondent banking expense				210			210			218		213		199
Intangibles amortization				766			787			787		787		493
Payment card processing				545			599			477		626		262
Trust expense				214			166			227		195		187
Other				737			353			1,136		500		571
Total noninterest expense			$	48,785		$	49,697		$	47,746	$	54,248	$	38,325
Net income before income taxes			$	29,939		$	36,740		$	34,118	$	16,734	$	25,957
Federal and state income tax expense				2,782			5,834			4,824		1,492		2,333
Net income			$	27,157		$	30,906		$	29,294	$	15,242	$	23,624
Basic EPS			$	1.62		$	1.83		$	1.73	$	0.88	$	1.51
Diluted EPS			$	1.60		$	1.81		$	1.71	$	0.87	$	1.49
Weighted average common shares outstanding				16,776,289			16,855,973			16,900,968		17,345,324		15,625,112
Weighted average common and common equivalent shares outstanding				16,942,132			17,047,976			17,110,691		17,549,107		15,852,256
(1) Provision for credit losses for the quarter ended June 30, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD loans and $1.4 million related to acquired Guaranty Bank OBS exposures.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
	As of and for the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
	(dollars in thousands, except per share data)
COMMON SHARE DATA
Common shares outstanding		16,713,775			16,795,942			16,885,485			17,064,347			15,579,605
Book value per common share (1)	$	47.95		$	46.01		$	43.65		$	43.55		$	42.87
Tangible book value per common share (Non-GAAP) (2)	$	38.71		$	36.82		$	34.46		$	34.41		$	37.55
Closing stock price	$	43.91		$	49.64		$	50.94		$	53.99		$	56.59
Market capitalization	$	733,902		$	833,751		$	860,147		$	921,304		$	881,650
Market price / book value		91.57	%		107.90	%		116.70	%		123.97	%		132.00	%
Market price / tangible book value		113.43	%		134.83	%		147.81	%		156.90	%		150.71	%
Earnings per common share (basic) LTM (3)	$	6.06		$	5.95		$	5.86		$	6.14		$	6.68
Price earnings ratio LTM (3)		7.24	x		8.35	x		8.70	x		8.79	x		8.47	x
TCE / TA (Non-GAAP) (4)		8.21	%		7.93	%		7.68	%		8.11	%		9.60	%
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Beginning balance	$	772,724		$	737,072		$	743,138		$	667,924		$	677,010
Net income		27,157			30,906			29,294			15,242			23,624
Other comprehensive income (loss), net of tax		9,325			9,959			(24,783	)		(24,286	)		(27,340	)
Common stock cash dividends declared		(1,010	)		(1,013	)		(1,012	)		(1,059	)		(938	)
Issuance of 2,071,291 shares of common stock as a result of the acquisition of Guaranty Federal Bancshares		-			-			-			117,214			-
Repurchase and cancellation of shares of common stock as a result of a share repurchase program		(7,719	)		(5,037	)		(10,485	)		(33,016	)		(4,416	)
Other (5)		1,017			837			920			1,119			(16	)
Ending balance	$	801,494		$	772,724		$	737,072		$	743,138		$	667,924
REGULATORY CAPITAL RATIOS (6):
Total risk-based capital ratio		14.50	%		14.28	%		14.38	%		13.40	%		14.50	%
Tier 1 risk-based capital ratio		10.13	%		9.95	%		9.88	%		10.18	%		11.27	%
Tier 1 leverage capital ratio		9.73	%		9.61	%		9.56	%		9.61	%		10.78	%
Common equity tier 1 ratio		9.48	%		9.29	%		9.21	%		9.46	%		10.61	%
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets (annualized)		1.37	%		1.58	%		1.53	%		0.83	%		1.55	%
Return on average total equity (annualized)		13.67	%		16.32	%		15.39	%		7.74	%		13.81	%
Net interest margin		3.18	%		3.62	%		3.46	%		3.53	%		3.30	%
Net interest margin (TEY) (Non-GAAP)(7)		3.52	%		3.93	%		3.71	%		3.74	%		3.50	%
Efficiency ratio (Non-GAAP) (8)		59.02	%		57.50	%		58.32	%		66.01	%		62.45	%
Gross loans and leases / total assets		77.02	%		77.23	%		77.73	%		78.42	%		78.17	%
Gross loans and leases / total deposits		95.21	%		102.58	%		101.14	%		99.61	%		99.76	%
Effective tax rate		9.29	%		15.88	%		14.14	%		8.92	%		8.99	%
Full-time equivalent employees (9)		969			973			956			968			749
AVERAGE BALANCES
Assets	$	7,906,830		$	7,800,229		$	7,652,463		$	7,324,470		$	6,115,127
Loans/leases		6,165,115			6,043,359			5,916,100			5,711,471			4,727,478
Deposits		6,179,644			6,029,455			5,891,198			5,867,444			4,903,354
Total stockholders' equity		794,685			757,419			761,428			788,204			684,126
(1) Includes accumulated other comprehensive income (loss).
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets (Non-GAAP).
(3) LTM : Last twelve months.
(4) TCE / TCA : tangible common equity / total tangible assets. See GAAP to non-GAAP reconciliations.
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.
(6) Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release.
(7) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.
(8) See GAAP to Non-GAAP reconciliations.
(9) Increase at June 30, 2022 due to the acquisition of Guaranty Bank.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
ANALYSIS OF NET INTEREST INCOME AND MARGIN
		For the Quarter Ended
		March 31, 2023							December 31, 2022							March 31, 2022
		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		$	19,275	$	234	4.93	%		$	30,754	$	296	3.82	%		$	4,564	$	2	0.15	%
Interest-bearing deposits at financial institutions			73,584		821	4.53	%			62,581		504	3.20	%			69,328		35	0.20	%
Securities (1)			951,865		10,157	4.27	%			971,930		10,074	4.14	%			802,260		7,682	3.83	%
Restricted investment securities			37,766		513	5.43	%			39,954		628	6.15	%			22,183		281	5.06	%
Loans (1)			6,165,115		88,548	5.82	%			6,043,359		88,088	5.78	%			4,727,478		45,995	3.95	%
Total earning assets (1)		$	7,247,605	$	100,273	5.60	%		$	7,148,578	$	99,590	5.53	%		$	5,625,813	$	53,995	3.88	%
Interest-bearing deposits		$	4,067,405	$	23,776	2.37	%		$	3,968,081	$	17,655	1.77	%		$	3,228,083	$	2,338	0.29	%
Time deposits			869,912		6,003	2.80	%			746,819		3,476	1.85	%			398,897		799	0.81	%
Short-term borrowings			7,573		99	5.28	%			19,591		211	4.28	%			1,951		-	0.05	%
Federal Home Loan Bank advances			296,333		3,521	4.75	%			351,033		3,507	3.91	%			85,778		82	0.38	%
Subordinated debentures			232,679		3,311	5.69	%			232,689		3,312	5.69	%			113,868		1,554	5.46	%
Junior subordinated debentures			48,613		696	5.72	%			48,583		657	5.29	%			38,171		556	5.83	%
Total interest-bearing liabilities		$	5,522,515	$	37,406	2.74	%		$	5,366,796	$	28,818	2.13	%		$	3,866,748	$	5,329	0.56	%
Net interest income (1)				$	62,867						$	70,772						$	48,666
Net interest margin (2)						3.18	%						3.62	%						3.30	%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.52	%						3.93	%						3.50	%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.47	%						3.61	%						3.50	%
(1) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate.
(2) See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented.
(3) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
	(dollars in thousands, except per share data)
ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES ON LOANS/LEASES
Beginning balance	$	87,706		$	90,489		$	92,425		$	74,786		$	78,721
Initial ACL recorded for acquired PCD loans		-			-			-			5,902			-
Reduction of ACL for writedown of LHFS to fair value (1)		(1,709	)		-			-			-			-
Credit loss expense (2)		2,458			1,013			331			12,141			(3,849	)
Loans/leases charged off		(2,275	)		(3,960	)		(2,489	)		(620	)		(456	)
Recoveries on loans/leases previously charged off		393			164			222			216			370
Ending balance	$	86,573		$	87,706		$	90,489		$	92,425		$	74,786
NONPERFORMING ASSETS
Nonaccrual loans/leases (3)	$	22,947		$	8,765		$	17,511		$	23,574		$	2,744
Accruing loans/leases past due 90 days or more		15			5			3			268			4
Total nonperforming loans/leases		22,962			8,770			17,514			23,842			2,748
Other real estate owned		61			133			177			205			-
Other repossessed assets		-			-			340			-			-
Total nonperforming assets	$	23,023		$	8,903		$	18,031		$	24,047		$	2,748
ASSET QUALITY RATIOS
Nonperforming assets / total assets		0.29	%		0.11	%		0.23	%		0.33	%		0.04	%
ACL for loans and leases / total loans/leases held for investment		1.43	%		1.43	%		1.51	%		1.59	%		1.55	%
ACL for loans and leases / nonperforming loans/leases		377.03	%		1000.07	%		516.67	%		387.66	%		2721.47	%
Net charge-offs as a % of average loans/leases		0.03	%		0.06	%		0.04	%		0.01	%		0.00	%
INTERNALLY ASSIGNED RISK RATING (4)
Special mention (rating 6)	$	125,048		$	98,333		$	63,973		$	54,558		$	63,622
Substandard (rating 7)		70,866			66,021			77,317			83,048			54,491
Doubtful (rating 8)		-			-			-			-			-
	$	195,914		$	164,354		$	141,290		$	137,606		$	118,113
Criticized loans (5)	$	195,914		$	164,354		$	141,290		$	137,606		$	118,113
Classified loans (6)		70,866			66,021			77,317			83,048			54,491
Criticized loans as a % of total loans/leases		3.16	%		2.68	%		2.35	%		2.37	%		2.45	%
Classified loans as a % of total loans/leases		1.14	%		1.08	%		1.29	%		1.43	%		1.13	%
(1) Certain loans were identified for securitization and transferred from loans to LHFS. The fair value of the loans was less than its carrying value at the date of transfer, resulting in a charge to the loan ACL.
(2) Credit loss expense on loans/leases for the quarter ended June 30, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD loans.
(3) The increase in nonaccrual loans for the quarter ended June 30, 2022 is due to the addition of $7.3 million related to the acquired Guaranty Bank loan portfolio.
(4) Amounts exclude the government guaranteed portion, if any. The Company assigns internal risk ratings of Pass (Rating 2) for the government guaranteed portion.
(5) Criticized loans are defined as C&I and CRE loans with internally assigned risk ratings of 6, 7, or 8, regardless of performance.
(6) Classified loans are defined as C&I and CRE loans with internally assigned risk ratings of 7 or 8, regardless of performance.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
			For the Quarter Ended
			March 31,				December 31,				March 31,
	SELECT FINANCIAL DATA - SUBSIDIARIES			2023				2022				2022
			(dollars in thousands)
	TOTAL ASSETS
	Quad City Bank and Trust (1)		$	2,548,473			$	2,312,013			$	2,195,894
	m2 Equipment Finance, LLC			317,497				306,396				281,666
	Cedar Rapids Bank and Trust			2,196,560				2,185,500				1,947,737
	Community State Bank			1,286,227				1,297,812				1,184,708
	Guaranty Bank (2)			2,147,776				2,146,474				956,345
	TOTAL DEPOSITS
	Quad City Bank and Trust (1)		$	2,173,343			$	1,730,187			$	1,930,935
	Cedar Rapids Bank and Trust			1,663,138				1,686,959				1,397,976
	Community State Bank			1,086,531				1,071,146				1,013,928
	Guaranty Bank (2)			1,646,730				1,587,477				555,559
	TOTAL LOANS & LEASES
	Quad City Bank and Trust (1)		$	1,872,029			$	1,828,267			$	1,692,218
	m2 Equipment Finance, LLC			321,495				309,930				285,871
	Cedar Rapids Bank and Trust			1,637,252				1,644,989				1,478,514
	Community State Bank			994,454				988,370				912,996
	Guaranty Bank (2)			1,686,287				1,677,245				744,140
	TOTAL LOANS & LEASES / TOTAL DEPOSITS
	Quad City Bank and Trust (1)			86	%			106	%			88	%
	Cedar Rapids Bank and Trust			98	%			98	%			106	%
	Community State Bank			92	%			92	%			90	%
	Guaranty Bank			102	%			106	%			134	%
	TOTAL LOANS & LEASES / TOTAL ASSETS
	Quad City Bank and Trust (1)			73	%			79	%			77	%
	Cedar Rapids Bank and Trust			75	%			75	%			76	%
	Community State Bank			77	%			76	%			77	%
	Guaranty Bank			79	%			78	%			78	%
	ACL ON LOANS/LEASES AS A PERCENTAGE OF LOANS/LEASES
	Quad City Bank and Trust (1)			1.41	%			1.46	%			1.69	%
	m2 Equipment Finance, LLC			3.13	%			3.11	%			3.31	%
	Cedar Rapids Bank and Trust			1.50	%			1.49	%			1.61	%
	Community State Bank			1.38	%			1.38	%			1.55	%
	Guaranty Bank			1.29	%			1.37	%			1.11	%
	RETURN ON AVERAGE ASSETS
	Quad City Bank and Trust (1)			1.23	%			1.36	%			1.86	%
	Cedar Rapids Bank and Trust			3.07	%			2.73	%			2.25	%
	Community State Bank			1.49	%			1.75	%			1.42	%
	Guaranty Bank			1.02	%			2.06	%			1.40	%
	NET INTEREST MARGIN PERCENTAGE (3)
	Quad City Bank and Trust (1)			3.44	%			3.56	%			3.50	%
	Cedar Rapids Bank and Trust (4)			4.03	%			4.37	%			3.60	%
	Community State Bank (5)			3.99	%			4.06	%			3.62	%
	Guaranty Bank (6)			3.49	%			4.58	%			3.38	%
	ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET
	INTEREST MARGIN, NET
	Cedar Rapids Bank and Trust		$	(8	)		$	98			$	51
	Community State Bank			71				505				33
	Guaranty Bank			797				5,118				69
	QCR Holdings, Inc. (7)			(32	)			(33	)			(35	)
(1)	Quad City Bank and Trust figures include m2 Equipment Finance, LLC, as this entity is wholly-owned and consolidated with the Bank. m2 Equipment Finance, LLC is also presented separately for certain (applicable) measurements.
(2)	Increase due to the acquisition of Guaranty Bank on April 1, 2022, merging into Springfield First Community Bank with the combined bank operating under the Guaranty Bank name.
(3)	Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate.
(4)	Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 4.03% for the quarter ended March 31, 2023, 4.28% for the quarter ended December 31, 2022 and 3.54% for the quarter ended March 31, 2022.
(5)	Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.99% for the quarter ended March 31, 2023, 3.73% for the quarter ended December 31, 2022 and 3.62% for the quarter ended March 31, 2022.
(6)	Guaranty Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.39% for the quarter ended March 31, 2023, 3.58% for the quarter ended December 31, 2022 and 3.41% for the quarter ended March 31, 2022.
(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 Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
		As of
		March 31,				December 31,				September 30,				June 30,				March 31,
GAAP TO NON-GAAP RECONCILIATIONS			2023				2022				2022				2022				2022
		(dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)
Stockholders' equity (GAAP)		$	801,494			$	772,724			$	737,072			$	743,138			$	667,924
Less: Intangible assets			154,467				154,366				155,153				155,940				82,922
Tangible common equity (non-GAAP)		$	647,027			$	618,358			$	581,919			$	587,198			$	585,002
Total assets (GAAP)		$	8,036,904			$	7,948,837			$	7,730,049			$	7,392,941			$	6,175,819
Less: Intangible assets			154,467				154,366				155,153				155,940				82,922
Tangible assets (non-GAAP)		$	7,882,437			$	7,794,471			$	7,574,896			$	7,237,001			$	6,092,897
Tangible common equity to tangible assets ratio (non-GAAP)			8.21	%			7.93	%			7.68	%			8.11	%			9.60	%
(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.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
GAAP TO NON-GAAP RECONCILIATIONS		For the Quarter Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
ADJUSTED NET INCOME (1)			2023				2022				2022				2022				2022
		(dollars in thousands, except per share data)
Net income (GAAP)		$	27,157			$	30,906			$	29,294			$	15,242			$	23,624
Less non-core items (post-tax) (2):
Income:
Securities losses, net			(366	)			-				-				-				-
Fair value gain (loss) on derivatives, net			(337	)			(211	)			714				342				715
Total non-core income (non-GAAP)		$	(703	)		$	(211	)		$	714			$	342			$	715
Expense:
Acquisition costs (2)			-				(517	)			321				1,932				1,462
Post-acquisition compensation, transition and integration costs			164				529				48				3,789				-
CECL Day 2 provision for credit losses on acquired non-PCD loans (3)			-				-				-				8,651				-
CECL Day 2 provision for credit losses provision on acquired OBS exposure (3)			-				-				-				1,140				-
Total non-core expense (non-GAAP)		$	164			$	12			$	369			$	15,512			$	1,462
Adjusted net income (non-GAAP) (1)		$	28,024			$	31,129			$	28,949			$	30,412			$	24,371
ADJUSTED EARNINGS PER COMMON SHARE (1)
Adjusted net income (non-GAAP) (from above)		$	28,024			$	31,129			$	28,949			$	30,412			$	24,371
Weighted average common shares outstanding			16,776,289				16,855,973				16,900,968				17,345,324				15,625,112
Weighted average common and common equivalent shares outstanding			16,942,132				17,047,976				17,110,691				17,549,107				15,852,256
Adjusted earnings per common share (non-GAAP):
Basic		$	1.67			$	1.85			$	1.71			$	1.75			$	1.56
Diluted		$	1.65			$	1.83			$	1.69			$	1.73			$	1.54
ADJUSTED RETURN ON AVERAGE ASSETS AND AVERAGE EQUITY (1)
Adjusted net income (non-GAAP) (from above)		$	28,024			$	31,129			$	28,949			$	30,412			$	24,371
Average Assets		$	7,906,830			$	7,800,229			$	7,652,463			$	7,324,470			$	6,115,127
Adjusted return on average assets (annualized) (non-GAAP)			1.42	%			1.60	%			1.51	%			1.66	%			1.59	%
Adjusted return on average equity (annualized) (non-GAAP)			14.11	%			16.44	%			15.21	%			15.43	%			14.25	%
NET INTEREST MARGIN (TEY) (4)
Net interest income (GAAP)		$	56,810			$	65,218			$	60,769			$	59,400			$	45,733
Plus: Tax equivalent adjustment (5)			6,057				5,554				4,459				3,396				2,933
Net interest income - tax equivalent (Non-GAAP)		$	62,867			$	70,772			$	65,228			$	62,796			$	48,666
Less: Acquisition accounting net accretion			828				5,688				1,080				1,695				118
Adjusted net interest income		$	62,039			$	65,084			$	64,148			$	61,101			$	48,548
Average earning assets		$	7,247,605			$	7,148,578			$	6,975,857			$	6,742,095			$	5,625,813
Net interest margin (GAAP)			3.18	%			3.62	%			3.46	%			3.53	%			3.30	%
Net interest margin (TEY) (Non-GAAP)			3.52	%			3.93	%			3.71	%			3.74	%			3.50	%
Adjusted net interest margin (TEY) (Non-GAAP)			3.47	%			3.61	%			3.65	%			3.64	%			3.50	%
EFFICIENCY RATIO (6)
Noninterest expense (GAAP)		$	48,785			$	49,697			$	47,746			$	54,248			$	38,325
Net interest income (GAAP)		$	56,810			$	65,218			$	60,769			$	59,400			$	45,733
Noninterest income (GAAP)			25,842				21,219				21,095				22,782				15,633
Total income		$	82,652			$	86,437			$	81,864			$	82,182			$	61,366
Efficiency ratio (noninterest expense/total income) (Non-GAAP)			59.02	%			57.50	%			58.32	%			66.01	%			62.45	%
(1) Adjusted net income, Adjusted net income attributable to QCR Holdings, Inc. common stockholders, Adjusted earnings per common share and Adjusted return on average assets and average equity are non-GAAP financial measures. The Company's management believes that these measurements are important to investors as they exclude non-core or non-recurring income and expense items, therefore, they provide a more realistic run-rate for future periods. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net income, which is the most directly comparable GAAP financial measure.
(2) Non-core or nonrecurring items (post-tax) are calculated using an estimated effective tax rate of 21% with the exception of acquisition costs which have an estimated effective tax rate of 13.62%.
(3) The CECL Day 2 provision for credit losses on acquired non-PCD loans and OBS exposures resulted from the Guaranty Bank acquisition on April 1, 2022.
(4) Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% effective tax rate.
(5) 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.
(6) 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.