Attached files

file filename
EX-32.2 - EXHIBIT 32.2 - QCR HOLDINGS INCex32-2.htm
EX-31.1 - EXHIBIT 31.1 - QCR HOLDINGS INCex31-1.htm
EX-31.2 - EXHIBIT 31.2 - QCR HOLDINGS INCex31-2.htm
EX-32.1 - EXHIBIT 32.1 - QCR HOLDINGS INCex32-1.htm

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended September 30, 2015

 

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

For the transition period from           to________

 

Commission file number 0-22208

 

QCR HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

 

Delaware

42-1397595

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

                        

3551 7th Street, Moline, Illinois 61265

(Address of principal executive offices, including zip code)

 

(309) 743-7724

(Registrant’s telephone number, including area code)

 

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

 

Yes      [ X ]          No [   ]

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes      [ X ]          No [   ]

 

 

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

Large accelerated filer [   ]

Accelerated filer [ X ]

Non-accelerated filer [   ]

Smaller reporting company [   ]

            

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

 

Yes      [   ]          No [ X ] 

 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: As of November 3, 2015, the Registrant had outstanding 11,741,029 shares of common stock, $1.00 par value per share.

 

 
 

 

  

QCR HOLDINGS, INC. AND SUBSIDIARIES

 

TABLE OF CONTENTS 

 

       

Page

Number(s)

Part I

FINANCIAL INFORMATION

   
         
 

Item 1

Consolidated Financial Statements (Unaudited)

   
         
   

Consolidated Balance Sheets

 

                   3

   

As of September 30, 2015 and December 31, 2014

   
         
   

Consolidated Statements of Income

   
   

For the Three Months Ended September 30, 2015 and 2014

 

                   4

         
   

Consolidated Statements of Income

   
   

For the Nine Months Ended September 30, 2015 and 2014

 

                   5

         
   

Consolidated Statements of Comprehensive Income

   
   

For the Three and Nine Months Ended September 30, 2015 and 2014

 

                   6

         
   

Consolidated Statements of Changes in Stockholders' Equity

   
   

For the Three and Nine Months Ended September 30, 2015 and 2014

 

                   7

         
   

Consolidated Statements of Cash Flows

   
   

For the Nine Months Ended September 30, 2015 and 2014

 

                   9

         
   

Notes to Consolidated Financial Statements

   
         
   

Note 1. Summary of Significant Accounting Policies

 

                 11

   

Note 2. Investment Securities

 

                 13

   

Note 3. Loans/Leases Receivable

 

                 18

   

Note 4. Derivatives and Hedging Activities

 

                 28

   

Note 5. Federal Home Loan Bank Advances

 

                 29

   

Note 6. Other Borrowings and Unused Lines of Credit

 

                 30

   

Note 7. Common Stock Offering and Balance Sheet Restructuring

 

                 32

   

Note 8. Regulatory Capital Requirements and Restrictions on Dividends

 

                 33

   

Note 9. Earnings Per Share

 

                 35

   

Note 10. Fair Value

 

                 35

   

Note 11. Business Segment Information

 

                 39

         
 

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

   
         
   

Introduction

 

                 41

   

General

 

                 41

   

Executive Overview

 

                 41

   

Long-Term Financial Goals

 

                 44

   

Strategic Developments

 

                 45

   

GAAP to Non-GAAP Reconciliations

 

                 46

   

Net Interest Income (Tax Equivalent Basis)

 

                 48

   

Critical Accounting Policies

 

                 53

  

 
1

 

 

   

Results of Operations

   
   

Interest Income

 

                 54

   

Interest Expense

 

                 54

   

Provision for Loan/Lease Losses

 

                 55

   

Noninterest Income

 

                 56

   

Noninterest Expense

 

                 60

   

Income Taxes

 

                 63

   

Financial Condition

 

                 63

   

Investment Securities

 

                 64

   

Loans/Leases

 

                 65

   

Allowance for Estimated Losses on Loans/Leases

 

                 67

   

Nonperforming Assets

 

                 69

   

Deposits

 

                 70

   

Borrowings

 

                 70

   

Stockholders' Equity

 

                 71

   

Liquidity and Capital Resources

 

                 71

   

Special Note Concerning Forward-Looking Statements

 

                 74

         
 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

 

                 75

         
 

Item 4

Controls and Procedures

 

                 78

         

Part II

OTHER INFORMATION

   
         
 

Item 1

Legal Proceedings

 

                 79

         
 

Item 1A

Risk Factors

 

                 79

         
 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

 

                 79

         
 

Item 3

Defaults upon Senior Securities

 

                 80

         
 

Item 4

Mine Safety Disclosures

 

                 80

         
 

Item 5

Other Information

 

                 80

         
 

Item 6

Exhibits

 

                 81

         

Signatures

 

 

                 82

 

Throughout the Notes to the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations, we use certain acronyms and abbreviations, as defined in Note 1.

 

 
2

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of September 30, 2015 and December 31, 2014

 

   

September 30,

   

December 31,

 
   

2015

   

2014

 

ASSETS

               

Cash and due from banks

  $ 41,053,241     $ 38,235,019  

Federal funds sold

    34,330,000       46,780,000  

Interest-bearing deposits at financial institutions

    32,275,631       35,334,682  
                 

Securities held to maturity, at amortized cost

    238,640,598       199,879,574  

Securities available for sale, at fair value

    352,134,351       451,659,630  

Total securities

    590,774,949       651,539,204  
                 

Loans receivable held for sale

    533,225       553,000  

Loans/leases receivable held for investment

    1,755,139,144       1,629,450,070  

Gross loans/leases receivable

    1,755,672,369       1,630,003,070  

Less allowance for estimated losses on loans/leases

    (25,534,344 )     (23,074,365 )

Net loans/leases receivable

    1,730,138,025       1,606,928,705  
                 

Premises and equipment, net

    38,065,241       36,021,128  

Bank-owned life insurance

    55,042,457       53,723,548  

Restricted investment securities

    14,931,025       15,559,575  

Other real estate owned, net

    8,140,283       12,767,636  

Goodwill

    3,222,688       3,222,688  

Core deposit intangible

    1,521,287       1,670,921  

Other assets

    26,359,890       23,174,994  

Total assets

  $ 2,575,854,717     $ 2,524,958,100  
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               

LIABILITIES

               

Deposits:

               

Noninterest-bearing

  $ 585,300,296     $ 511,991,864  

Interest-bearing

    1,270,018,691       1,167,676,149  

Total deposits

    1,855,318,987       1,679,668,013  
                 

Short-term borrowings

    167,564,212       268,351,670  

Federal Home Loan Bank advances

    133,000,000       203,500,000  

Other borrowings

    115,000,000       150,282,492  

Junior subordinated debentures

    40,526,691       40,423,735  

Other liabilities

    43,329,588       38,653,681  

Total liabilities

    2,354,739,478       2,380,879,591  
                 

STOCKHOLDERS' EQUITY

               

Common stock, $1 par value; shares authorized 20,000,000

    11,728,911       8,074,443  

September 2015 - 11,728,911 shares issued and outstanding

               

December 2014 - 8,074,443 shares issued and 7,953,197 outstanding

               

Additional paid-in capital

    122,573,712       61,668,968  

Retained earnings

    86,649,405       77,876,824  

Accumulated other comprehensive income (loss):

               

Securities available for sale

    1,010,014       (1,535,849 )

Interest rate cap derivatives

    (846,803 )     (399,367 )

Less treasury stock, at cost

    -       (1,606,510 )

September 2015 - 0 common shares

               

December 2014 - 121,246 common shares

               

Total stockholders' equity

    221,115,239       144,078,509  

Total liabilities and stockholders' equity

  $ 2,575,854,717     $ 2,524,958,100  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 
3

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended September 30,

 

   

2015

   

2014

 

Interest and dividend income:

               

Loans/leases, including fees

  $ 19,278,335     $ 17,735,190  

Securities:

               

Taxable

    1,639,534       2,327,836  

Nontaxable

    2,021,804       1,531,534  

Interest-bearing deposits at financial institutions

    66,604       66,397  

Restricted investment securities

    127,172       128,153  

Federal funds sold

    7,663       7,532  

Total interest and dividend income

    23,141,112       21,796,642  
                 

Interest expense:

               

Deposits

    1,140,419       1,168,385  

Short-term borrowings

    63,815       64,665  

Federal Home Loan Bank advances

    537,473       1,497,456  

Other borrowings

    944,903       1,279,626  

Junior subordinated debentures

    316,976       311,179  

Total interest expense

    3,003,586       4,321,311  
                 

Net interest income

    20,137,526       17,475,331  
                 

Provision for loan/lease losses

    1,635,263       1,063,323  

Net interest income after provision for loan/lease losses

    18,502,263       16,412,008  
                 

Noninterest income:

               

Trust department fees

    1,531,964       1,355,700  

Investment advisory and management fees

    782,442       726,908  

Deposit service fees

    1,186,701       1,168,961  

Gains on sales of residential real estate loans

    84,609       120,627  

Gains on sales of government guaranteed portions of loans

    759,668       158,736  

Securities gains, net

    56,580       19,429  

Earnings on bank-owned life insurance

    407,018       434,065  

Swap fee income

    62,700       -  

Debit card fees

    289,500       251,600  

Correspondent banking fees

    310,759       295,147  

Participation service fees on commercial loan participations

    201,822       218,268  

Gains on other real estate owned, net

    1,134,093       30,596  

Other

    841,070       381,636  

Total noninterest income

    7,648,926       5,161,673  
                 

Noninterest expense:

               

Salaries and employee benefits

    10,583,361       10,358,783  

Occupancy and equipment expense

    1,863,648       1,798,030  

Professional and data processing fees

    1,742,268       1,530,139  

FDIC and other insurance

    702,136       711,792  

Loan/lease expense

    252,860       184,908  

Advertising and marketing

    460,411       555,076  

Postage and telephone

    220,895       146,759  

Stationery and supplies

    144,967       138,377  

Bank service charges

    392,352       337,067  

Other

    830,433       721,209  

Total noninterest expense

    17,193,331       16,482,140  
                 

Net income before income taxes

    8,957,858       5,091,541  

Federal and state income tax expense

    2,468,871       1,028,876  
                 

Net income

  $ 6,488,987     $ 4,062,665  
                 

Earnings per common share attributable to QCR Holdings, Inc. common shareholders

               

Basic

  $ 0.55     $ 0.51  

Diluted

  $ 0.55     $ 0.50  

Weighted average common shares outstanding

    11,713,993       7,931,944  

Weighted average common and common equivalent shares outstanding

    11,875,930       8,053,985  
                 

Cash dividends declared per common share

  $ -     $ -  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 
4

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Nine Months Ended September 30, 

   

2015

   

2014

 

Interest and dividend income:

               

Loans/leases, including fees

  $ 55,528,578     $ 51,379,586  

Securities:

               

Taxable

    5,317,794       7,484,279  

Nontaxable

    5,642,692       4,434,005  

Interest-bearing deposits at financial institutions

    208,323       228,167  

Restricted investment securities

    377,651       396,648  

Federal funds sold

    18,416       14,544  

Total interest and dividend income

    67,093,454       63,937,229  
                 

Interest expense:

               

Deposits

    3,296,351       3,371,593  

Short-term borrowings

    181,084       177,172  

Federal Home Loan Bank advances

    2,982,834       4,549,412  

Other borrowings

    3,285,231       3,625,751  

Junior subordinated debentures

    937,375       923,386  

Total interest expense

    10,682,875       12,647,314  
                 

Net interest income

    56,410,579       51,289,915  
                 

Provision for loan/lease losses

    5,694,384       3,159,364  

Net interest income after provision for loan/lease losses

    50,716,195       48,130,551  
                 

Noninterest income:

               

Trust department fees

    4,676,535       4,300,456  

Investment advisory and management fees

    2,250,918       2,086,758  

Deposit service fees

    3,404,550       3,306,769  

Gains on sales of residential real estate loans

    266,284       317,085  

Gains on sales of government guaranteed portions of loans

    899,987       860,923  

Securities gains, net

    473,513       40,625  

Earnings on bank-owned life insurance

    1,318,909       1,276,901  

Swap fee income

    1,182,630       62,000  

Debit card fees

    782,500       763,005  

Correspondent banking fees

    915,759       745,794  

Participation service fees on commercial loan participations

    647,598       632,469  

Gains (losses) on other real estate owned, net

    1,204,016       (114,109 )

Other

    1,603,175       1,063,222  

Total noninterest income

    19,626,374       15,341,898  
                 

Noninterest expense:

               

Salaries and employee benefits

    32,709,765       30,298,892  

Occupancy and equipment expense

    5,507,533       5,515,448  

Professional and data processing fees

    4,683,480       4,518,460  

FDIC and other insurance

    2,151,756       2,121,907  

Loan/lease expense

    1,087,747       908,036  

Advertising and marketing

    1,368,152       1,394,211  

Postage and telephone

    683,993       695,555  

Stationery and supplies

    424,330       435,763  

Bank service charges

    1,088,806       959,496  

Losses on debt extinguishment

    6,894,185       -  

Other

    2,193,815       1,970,492  

Total noninterest expense

    58,793,562       48,818,260  
                 

Net income before income taxes

    11,549,007       14,654,189  

Federal and state income tax expense

    1,405,949       2,694,473  
                 

Net income

  $ 10,143,058     $ 11,959,716  
                 

Less: Preferred stock dividends

    -       1,081,877  

Net income attributable to QCR Holdings, Inc. common stockholders

  $ 10,143,058     $ 10,877,839  
                 

Earnings per common share attributable to QCR Holdings, Inc. common shareholders

               

Basic

  $ 1.03     $ 1.37  

Diluted

  $ 1.01     $ 1.35  

Weighted average common shares outstanding

    9,878,882       7,919,201  

Weighted average common and common equivalent shares outstanding

    10,024,441       8,040,418  
                 

Cash dividends declared per common share

  $ 0.04     $ 0.04  

 See Notes to Consolidated Financial Statements (Unaudited)

 

 
5

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three and Nine Months Ended September 30, 2015 and 2014

 

   

Three Months Ended September 30,

 
   

2015

   

2014

 

Net income

  $ 6,488,987     $ 4,062,665  
                 

Other comprehensive income (loss):

               
                 

Unrealized gains (losses) on securities available for sale:

               

Unrealized holding gains (losses) arising during the period before tax

    4,155,252       (1,455,231 )

Less reclassification adjustment for gains included in net income before tax

    56,580       19,429  
      4,098,672       (1,474,660 )

Unrealized gains (losses) on interest rate cap derivatives:

               

Unrealized holding gains (losses) arising during the period before tax

    (419,219 )     87,756  

Less reclassification adjustment for ineffectiveness and caplet amortization before tax

    20,099       (10,968 )
      (439,318 )     98,724  
                 

Other comprehensive income (loss), before tax

    3,659,354       (1,375,936 )

Tax expense (benefit)

    1,402,871       (563,761 )

Other comprehensive income (loss), net of tax

    2,256,483       (812,175 )
                 

Comprehensive income attributable to QCR Holdings, Inc.

  $ 8,745,470     $ 3,250,490  
                 

 

   

Nine Months Ended September 30,

 
   

2015

   

2014

 

Net income

  $ 10,143,058     $ 11,959,716  
                 

Other comprehensive income:

               
                 

Unrealized gains on securities available for sale:

               

Unrealized holding gains arising during the period before tax

    4,598,599       14,691,007  

Less reclassification adjustment for gains included in net income before tax

    473,513       40,625  
      4,125,086       14,650,382  

Unrealized losses on interest rate cap derivatives:

               

Unrealized holding losses arising during the period before tax

    (672,169 )     (163,393 )

Less reclassification adjustment for ineffectiveness and caplet amortization before tax

    30,562       (10,968 )
      (702,731 )     (152,425 )
                 

Other comprehensive income, before tax

    3,422,355       14,497,957  

Tax expense

    1,323,928       5,603,334  

Other comprehensive income, net of tax

    2,098,427       8,894,623  
                 

Comprehensive income attributable to QCR Holdings, Inc.

  $ 12,241,485     $ 20,854,339  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 
6

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

Three and Nine Months Ended September 30, 2015 and 2014

 

                           

Accumulated

                 
           

Additional

           

Other

                 
   

Common

   

Paid-In

   

Retained

   

Comprehensive

   

Treasury

         
   

Stock

   

Capital

   

Earnings

   

Income (Loss)

   

Stock

   

Total

 

Balance December 31, 2014

  $ 8,074,443     $ 61,668,968     $ 77,876,824     $ (1,935,216 )   $ (1,606,510 )   $ 144,078,509  

Net income

    -       -       4,177,889       -       -       4,177,889  

Other comprehensive income, net of tax

    -       -       -       2,220,865       -       2,220,865  

Proceeds from issuance of 5,679 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    5,679       82,641       -       -       -       88,320  

Proceeds from issuance of 9,688 shares of common stock as a result of stock options exercised

    9,688       94,728       -       -       -       104,416  

Stock compensation expense

    -       367,775                               367,775  

Tax benefit of nonqualified stock options exercised

    -       15,651       -       -       -       15,651  

Restricted stock awards

    26,502       (26,502 )     -       -       -       -  

Exchange of 3,272 shares of common stock in connection with restricted stock vested, net

    (3,272 )     (54,188 )     -       -       -       (57,460 )

Balance March 31, 2015

  $ 8,113,040     $ 62,149,073     $ 82,054,713     $ 285,649     $ (1,606,510 )   $ 150,995,965  

Net loss

    -       -       (523,818 )     -       -       (523,818 )

Other comprehensive loss, net of tax

    -       -       -       (2,378,921 )     -       (2,378,921 )

Common cash dividends declared, $0.04 per share

    -       -       (464,706 )     -       -       (464,706 )

Proceeds from issuance of 3,680,000 shares of common stock, net of issuance costs

    3,680,000       59,804,123       -       -       -       63,484,123  

Proceeds from issuance of 8,558 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    8,558       128,927       -       -       -       137,485  

Proceeds from issuance of 17,240 shares of common stock as a result of stock options exercised

    17,240       238,717       -       -       -       255,957  

Tax benefit of nonqualified stock options exercised

    -       15,827       -       -       -       15,827  

Exchange of 630 shares of common stock in connection with stock options exercised

    (630 )     (10,616 )     -       -       -       (11,246 )

Stock compensation expense

    -       186,751       -       -       -       186,751  

Restricted stock awards

    1,616       (1,616 )     -       -       -       -  

Balance June 30, 2015

  $ 11,819,824     $ 122,511,186     $ 81,066,189     $ (2,093,272 )   $ (1,606,510 )   $ 211,697,417  

Net income

    -       -       6,488,987       -       -       6,488,987  

Other comprehensive income, net of tax

    -       -       -       2,256,483       -       2,256,483  

Adjustment to common cash dividends declared

    -       -       (1,393 )     -       -       (1,393 )

Proceeds from issuance of 5,394 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    5,394       81,309       -       -       -       86,703  

Proceeds from issuance of 24,711 shares of common stock as a result of stock options exercised

    24,711       318,732       -       -       -       343,443  

Tax benefit of nonqualified stock options exercised

    -       39,632       -       -       -       39,632  

Retirement of treasury stock, 121,246 shares of common stock

    (121,246 )     (580,886 )     (904,378 )     -       1,606,510       -  

Stock compensation expense

    -       203,967       -       -       -       203,967  

Restricted stock awards

    228       (228 )     -       -       -       -  

Balance September 30, 2015

  $ 11,728,911     $ 122,573,712     $ 86,649,405     $ 163,211     $ -     $ 221,115,239  

 

(Continued)

 

 
7

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - continued

Three and Nine Months Ended September 30, 2015 and 2014

 

                                   

Accumulated

                 
                   

Additional

           

Other

                 
   

Preferred

   

Common

   

Paid-In

   

Retained

   

Comprehensive

   

Treasury

         
   

Stock

   

Stock

   

Capital

   

Earnings

   

Income (Loss)

   

Stock

   

Total

 

Balance December 31, 2013

  $ 29,867     $ 8,005,708     $ 90,154,528     $ 64,637,173     $ (13,643,986 )   $ (1,606,510 )   $ 147,576,780  

Net income

    -       -       -       3,889,215       -       -       3,889,215  

Other comprehensive income, net of tax

    -       -       -       -       5,230,784       -       5,230,784  

Preferred cash dividends declared

    -       -       -       (708,008 )     -       -       (708,008 )

Redemption of 15,000 shares of Series F Noncumulative Perpetual Preferred Stock

    (15,000 )     -       (14,985,000 )     -       -       -       (15,000,000 )

Proceeds from issuance of 6,189 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    -       6,189       78,256       -       -       -       84,445  

Proceeds from issuance of 9,814 shares of common stock as a result of stock options exercised

    -       9,814       85,582       -       -       -       95,396  

Stock compensation expense

    -       -       347,752                               347,752  

Tax benefit of nonqualified stock options exercised

    -       -       18,647       -       -       -       18,647  

Restricted stock awards

    -       27,197       (27,197 )     -       -       -       -  

Exchange of 10,300 shares of common stock in connection with restricted stock vested, net

    -       (10,300 )     (167,684 )     -       -       -       (177,984 )

Balance March 31, 2014

  $ 14,867     $ 8,038,608     $ 75,504,884     $ 67,818,380     $ (8,413,202 )   $ (1,606,510 )   $ 141,357,027  

Net income

    -       -       -       4,007,836       -       -       4,007,836  

Other comprehensive income, net of tax

    -       -       -       -       4,476,014       -       4,476,014  

Common cash dividends declared, $0.04 per share

    -       -       -       (315,053 )     -       -       (315,053 )

Preferred cash dividends declared

    -       -       -       (373,869 )     -       -       (373,869 )

Redemption of 14,867 shares of Series F Noncumulative Perpetual Preferred Stock

    (14,867 )     -       (14,809,055 )     -       -       -       (14,823,922 )

Proceeds from issuance of 8,361 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    -       8,361       119,797       -       -       -       128,158  

Proceeds from issuance of 630 shares of common stock as a result of stock options exercised

    -       630       5,159       -       -       -       5,789  

Stock compensation expense

    -       -       179,265                               179,265  

Tax benefit of nonqualified stock options exercised

    -       -       1,284       -       -       -       1,284  

Restricted stock awards

    -       2,290       (2,290 )     -       -       -       -  

Balance June 30, 2014

  $ -     $ 8,049,889     $ 60,999,044     $ 71,137,294     $ (3,937,188 )   $ (1,606,510 )   $ 134,642,529  

Net income

    -       -       -       4,062,665       -       -       4,062,665  

Other comprehensive loss, net of tax

    -       -       -       -       (812,175 )     -       (812,175 )

Proceeds from issuance of 5,481 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    -       5,481       78,533       -       -       -       84,014  

Proceeds from issuance of 2,400 shares of common stock as a result of stock options exercised

    -       2,400       19,097       -       -       -       21,497  

Tax benefit of nonqualified stock options exercised

                    5,189                               5,189  

Stock compensation expense

    -       -       176,257                               176,257  

Restricted stock awards

    -       289       (289 )     -       -       -       -  

Balance September 30, 2014

  $ -     $ 8,058,059     $ 61,277,831     $ 75,199,959     $ (4,749,363 )   $ (1,606,510 )   $ 138,179,976  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 
8

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended September 30, 2015 and 2014

 

   

2015

   

2014

 

CASH FLOWS FROM OPERATING ACTIVITIES

               

Net income

  $ 10,143,058     $ 11,959,716  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation

    2,283,558       2,092,992  

Provision for loan/lease losses

    5,694,384       3,159,364  

Stock-based compensation expense

    758,493       703,274  

Deferred compensation expense accrued

    767,292       996,941  

Losses (gains) on other real estate owned, net

    (1,204,016 )     114,109  

Amortization of premiums on securities, net

    756,876       1,470,641  

Securities gains, net

    (473,513 )     (40,625 )

Loans originated for sale

    (29,968,289 )     (32,643,486 )

Proceeds on sales of loans

    31,154,335       33,537,484  

Gains on sales of residential real estate loans

    (266,284 )     (317,085 )

Gains on sales of government guaranteed portions of loans

    (899,987 )     (860,923 )

Losses on debt extinguishment

    6,894,185       -  

Amortization of core deposit intangible

    149,634       149,634  

Accretion of acquisition fair value adjustments, net

    (334,990 )     (549,604 )

Increase in cash value of bank-owned life insurance

    (1,318,909 )     (1,276,901 )

Increase in other assets

    (5,211,555 )     (346,977 )

Increase in other liabilities

    4,269,482       712,565  

Net cash provided by operating activities

  $ 23,193,754     $ 18,861,119  
                 

CASH FLOWS FROM INVESTING ACTIVITIES

               

Net decrease in federal funds sold

    12,450,000       9,675,000  

Net decrease (increase) in interest-bearing deposits at financial institutions

    3,059,051       (1,586,856 )

Proceeds from sales of other real estate owned

    6,774,151       1,172,365  

Purchase of derivative instruments

    -       (2,071,650 )

Activity in securities portfolio:

               

Purchases

    (200,249,686 )     (48,493,532 )

Calls, maturities and redemptions

    187,029,003       30,827,423  

Paydowns

    11,859,406       19,147,455  

Sales

    65,889,838       65,754,467  

Activity in restricted investment securities:

               

Purchases

    (2,806,650 )     (1,653,450 )

Redemptions

    3,435,200       3,377,900  

Net increase in loans/leases originated and held for investment

    (129,356,790 )     (115,589,620 )

Purchase of premises and equipment

    (4,327,671 )     (1,587,828 )

Net cash used in investing activities

  $ (46,244,148 )   $ (41,028,326 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES

               

Net increase in deposit accounts

    175,656,866       66,893,213  

Net increase (decrease) in short-term borrowings

    (100,787,458 )     12,893,731  

Activity in Federal Home Loan Bank advances:

               

Term advances

    5,000,000       2,000,000  

Calls and maturities

    (24,000,000 )     (23,850,000 )

Net change in short-term and overnight advances

    24,000,000       (13,000,000 )

Prepayments

    (81,192,185 )     -  

Activity in other borrowings:

               

Proceeds from other borrowings

    -       10,000,000  

Calls, maturities and scheduled principal payments

    (7,350,000 )     -  

Prepayments

    (29,177,000 )     (1,000,000 )

Payment of cash dividends on common and preferred stock

    (782,054 )     (1,964,607 )

Net proceeds from common stock offering, 3,680,000 shares issued

    63,484,123       -  

Redemption of 15,000 shares of Series F Noncumulative Perpetual Preferred Stock, net

    -       (15,000,000 )

Redemption of 14,867 shares of Series F Noncumulative Perpetual Preferred Stock, net

    -       (14,823,922 )

Proceeds from issuance of common stock, net

    1,016,324       394,179  

Net cash provided by financing activities

  $ 25,868,616     $ 22,542,594  
                 

Net increase in cash and due from banks

    2,818,222       375,387  

Cash and due from banks, beginning

    38,235,019       41,950,790  

Cash and due from banks, ending

  $ 41,053,241     $ 42,326,177  

 

(Continued)

 

 
9

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - continued

Nine Months Ended September 30, 2015 and 2014

 

   

2015

   

2014

 

Supplemental disclosure of cash flow information, cash payments for:

               

Interest

  $ 10,880,589     $ 12,445,044  
                 

Income/franchise taxes

  $ 1,985,275     $ 3,457,500  
                 

Supplemental schedule of noncash investing activities:

               

Change in accumulated other comprehensive income, unrealized gains on securities available for sale and derivative instruments, net

  $ 2,098,427     $ 8,894,623  
                 

Exchange of shares of common stock in connection with payroll taxes for restricted stock and in connection with stock options exercised

  $ (68,706 )   $ (177,984 )
                 
Tax benefit of nonqualified stock options exercised   $ 71,110     $ 25,120  
                 

Transfers of loans to other real estate owned

  $ 942,782     $ 2,237,268  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 
10

 

 

Part I

Item 1

QCR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2015

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation: The interim unaudited consolidated financial statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2014, included in QCR Holdings, Inc.’s (the “Company”) Form 10-K filed with the Securities and Exchange Commission on March 12, 2015. Accordingly, footnote disclosures, which would substantially duplicate the disclosures contained in the audited consolidated financial statements, have been omitted.

 

The financial information of the Company included herein has been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. Any differences appearing between the numbers presented in financial statements and management’s discussion and analysis are due to rounding. The results of the interim period ended September 30, 2015, are not necessarily indicative of the results expected for the year ending December 31, 2015.

 

The acronyms and abbreviations identified below are used in the Notes to the Consolidated Financial Statements as well as in Management’s Discussion & Analysis of Financial Condition & Results of Operations. It may be helpful to refer back to this page as you read this report. 

 

Allowance: Allowance for estimated losses on loans/leases

NIM: Net interest margin

AOCI: Accumulated other comprehensive income (loss)

NPA: Nonperforming asset

ASU: Accounting Standards Update

NPL: Nonperforming loan

BOLI: Bank-owned life insurance

OREO: Other real estate owned

Community National: Community National Bancorporation

OTTI: Other-than-temporary impairment

CRBT: Cedar Rapids Bank & Trust Company

Provision: Provision for loan/lease losses

Dodd-Frank Act: Dodd-Frank Wall Street Reform and

QCBT: Quad City Bank & Trust Company

     Consumer Protection Act

RB&T: Rockford Bank & Trust Company

EPS: Earnings per share

SBA: U.S. Small Business Administration