GlobeNewswire Inc | Jul 27, 2020 04:05PM EDT

July 27, 2020

EPS of $0.86 Driven by Record Pre-Provision/Pre-Tax Adjusted Net Income

Second Quarter 2020 Highlights

-- Net income of $13.7 million, or $0.86 per diluted share -- Adjusted net income (non-GAAP) of $14.0 million, or $0.88 per diluted share -- Noninterest income of $28.6 million -- Net interest margin was stable, excluding the impact of excess liquidity -- Record pre-provision, pre-tax adjusted net income (non-GAAP) of $36.8 million -- Pre-provision, pre-tax adjusted ROAA (non-GAAP) of 2.54% -- Provision expense of $19.9 million for the quarter, increasing ALLL by 33 bps to 1.47% -- Nonperforming assets to total assets of 0.24%, improving 8 basis points from the prior quarter -- Annualized core loan and lease growth (non-GAAP) of 8.4% for the quarter, excluding SBA Paycheck Protection Program (PPP) loans -- Annualized deposit growth of 17.2% for the quarter -- PPP loan participation of 1,655 totaling $358 million to both new and existing clients

MOLINE, Ill., July 27, 2020 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the Company) today announced net income of $13.7 million and diluted earnings per share (EPS) of $0.86 for the second quarter of 2020, compared to net income of $11.2 million and diluted EPS of $0.70 for the first quarter of 2020. Pre-provision, pre-tax adjusted net income (non-GAAP) increased $14.0 million in the second quarter, compared to the first quarter led by strong loan growth, net interest income, and record swap fee income. Provision expense increased $11.5 million in the second quarter, compared to the first quarter. This increase was due primarily to qualitative factors in response to deteriorating economic prospects as a result of the COVID-19 pandemic.

The Company reported adjusted net income (non-GAAP) of $14.0 million and adjusted diluted EPS (non-GAAP) of $0.88 for the second quarter of 2020, compared to adjusted net income (non-GAAP) of $12.4 million and adjusted diluted EPS (non-GAAP) of $0.77 for the first quarter of 2020. For the second quarter of 2019, net income and diluted EPS were $13.5 million and $0.85, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $14.1 million and $0.88, respectively.

For the Quarter Ended June 30, March 31, June 30, $ in millions (except per share data) 2020 2020 2019 Net Income $ $ $ 13.7 11.2 13.5Diluted EPS $ $ $ 0.86 0.70 0.85Adjusted Net Income (non-GAAP) $ $ $ 14.0 12.4 14.1Adjusted Diluted EPS (non-GAAP) $ $ $ 0.88 0.77 0.88Pre-Provision/Pre-Tax Adjusted Income $ $ $ (non-GAAP) 36.8 22.8 19.3Pre-Provision/Pre-Tax Adjusted ROAA % % % (non-GAAP) 2.54 1.84 1.52See GAAP to non-GAAP reconciliations

We are very pleased with our core operating performance for the second quarter, commented Larry J. Helling, Chief Executive Officer. We delivered record pre-provision, pre-tax adjusted net income, driven by strong loan growth, strong fee income, and careful management of noninterest expenses. In addition to successfully funding over $350 million of PPP loans to both new and existing customers, we grew our core loans by over 8% on an annualized basis. Our core deposit gathering was even stronger during the quarter with the outsized growth in deposits creating significant excess liquidity that led to compression in our net interest margin.

Additionally, asset quality remains strong and our current credit metrics improved during the quarter. We reduced nonperforming assets by 21%, through the sale of an OREO property, Helling said. While we do not currently see meaningful degradation of specific credits in our portfolio, we chose to be prudent and increased our provision for loan losses during the quarter in order to build reserves against future potential credit issues related to COVID-19.

QCRH continues to successfully navigate the challenges presented by the COVID-19 pandemic, including supporting impacted clients through the QCRH Loan Relief Program, enabling clients to defer payments and preserve cash and liquidity. Its difficult to predict the ultimate impact that this Pandemic will have on our clients. However, we believe our banks are well positioned to deal with the Pandemic, Helling said. All of our employees are dedicated to helping our clients weather this storm, and we have seasoned credit teams at all charters experienced in dealing with significant economic downturns.

Annualized Loan and Lease Growth of 8.4%, excluding PPP loans (non-GAAP)

During the second quarter of 2020, the Companys total loans and leases increased by $435.6 million to a total of $4.1 billion. Included in this amount was $358.1 million of PPP loans made to both new and existing customers. Excluding the PPP loans, loan and lease growth during the quarter was 8.4% on an annualized basis (non-GAAP), reflecting healthy demand across all markets. Core deposits (excluding brokered deposits) increased $338.6 million, or 8.7% on a linked quarter basis. Brokered deposits declined by $159.3 million as the Company allowed certain higher cost brokered deposits to run off the balance sheet. Throughout the quarter, deposits grew significantly with average deposit growth of $777.9 million, or 19.7% for the quarter. The Companys correspondent banking portfolio contributed to the majority of this outsized growth as our correspondent bank clients grew liquidity with deposit growth significantly outpacing loans. These outsized liquidity balances temporarily shifted off balance sheet at quarter-end. The percentage of wholesale funds to total assets was 8.9% as of the second quarter, which was down from 10.1% in the first quarter of 2020 as the Companys need for wholesale funding declined due to the strong growth in core deposits. At quarter-end, the percentage of gross loans and leases to total assets was 73.9%, which was up from 70.8% in the first quarter, primarily driven by the increase in PPP loan balances.

Despite the uncertainty caused by the COVID-19 pandemic, we delivered solid loan growth for the quarter in addition to the $358 million of PPP loans that we funded, added Helling. Loan production improved in both our core commercial lending business and our Specialty Finance Group. Excluding our PPP loan production, loan and lease growth for the first six months of 2020 has been 5.0% on an annualized basis, and given our current pipeline, we believe that we will be able to achieve organic loan growth of between 3% and 5% for the full year.

Net Interest Income of $40.9 million

Net interest income for the second quarter of 2020 totaled $40.9 million, compared to $37.7 million for the first quarter of 2020 and $38.0 million for the second quarter of 2019. The increase was primarily due to growth in average interest earning assets of $791.6 million, or 17.7% on a linked quarter basis, of which $404.9 million of the increase was due to excess cash derived from the aforementioned outsized deposit growth. Partially offsetting the impact of the higher average balance of interest earning assets, was a lower reported net interest margin, due to the significant excess liquidity. Acquisition-related net accretion totaled $736 thousand (pre-tax) for the second quarter of 2020, up slightly from the first quarter of 2020 and down from $1.1 million for the second quarter of 2019. Adjusted net interest income (non-GAAP) was $41.9 million for the second quarter of 2020, compared to $38.9 million for the first quarter of 2020 and $38.7 million for the second quarter of 2019.

In the second quarter, NIM was 3.14% and, on a tax-equivalent yield basis (non-GAAP), NIM was 3.27%, a decrease of 26 basis points and 29 basis points from the first quarter of 2020, respectively. Adjusted NIM (non-GAAP), excluding acquisition-related net accretion was 3.21%, down 29 basis points from the first quarter. The decline in adjusted NIM (non-GAAP) during the quarter was entirely due to the significant excess liquidity carried for the quarter. Average excess liquidity of $404.9 million with modest negative arbitrage contributed approximately 30 basis points to the NIM dilution. Excluding the impact of excess liquidity, the Companys NIM was stable as cost of funds declines offset pricing pressure on earning assets.

For the Quarter Ended June 30, March 31, June 30, 2020 2020 2019NIM 3.14 % 3.40 % 3.25 %NIM (TEY)(non-GAAP) 3.27 % 3.56 % 3.40 %Adjusted NIM (TEY)(non-GAAP) 3.21 % 3.50 % 3.31 %See GAAP to non-GAAP reconciliations

Our deposit costs decreased significantly during the quarter as we gathered core deposits and reduced our wholesale funding, allowing us to reduce our total cost of interest-bearing funds by 53 basis points. However, our average loan yields also decreased due to the sharp decline in short-term interest rates, and when combined with the significant excess liquidity that we carried during the quarter, our adjusted NIM was adversely impacted by 29 basis points, stated Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer. Excluding the impact of the excess liquidity, adjusted NIM would have been stable from the first quarter.

Noninterest Income of $28.6 million

Noninterest income for the second quarter of 2020 totaled $28.6 million, compared to $15.2 million for the first quarter of 2020. The increase was primarily due to $19.9 million in swap fee income, up $13.1 million from the first quarter of 2020. Wealth management revenue was $3.6 million for the quarter, down from $4.0 million in the first quarter due to a full quarter of lower fair market values of the assets under management. Noninterest income increased 67.7% when compared to the second quarter of 2019.

Continued strong production from our Specialty Finance Group and our core banks led to a record $19.9 million in swap fee income during the quarter. Swap fee income totaled $26.7 million for the first six months of 2020, putting us on track to exceed last years record amount, added Mr. Gipple. Our current expectation is that for the remainder of 2020, this fee income source will be approximately $30 to $32 million for the six month period.

Noninterest Expenses of $33.1 million

Noninterest expense for the second quarter of 2020 totaled $33.1 million, compared to $31.4 million for the first quarter of 2020. The linked quarter increase was primarily due to increased salary and benefits expense of $2.8 million with increased bonus and commission expense in the quarter driven by the strong financial results and higher than anticipated swap fee income. This was partially offset by a $600 thousand decline in disposition costs, a $285 thousand decline in occupancy and equipment costs and a $345 thousand increase in gains and income from the operations of other real estate. In addition, the first quarter of 2020 included a goodwill impairment charge of $500 thousand.

NPAs at Historical LowsBuilding Reserves for COVID-19

Nonperforming assets (NPAs) totaled $13.3 million, a decrease of $3.6 million from the first quarter of 2020. The decrease was primarily due to the disposition of other real estate owned. The ratio of NPAs to total assets decreased to 0.24% at June 30, 2020, compared to 0.32% at March 31, 2020, and down from 0.45% at June 30, 2019.

The Companys provision for loan and lease losses totaled $19.9 million for the second quarter of 2020, up from $8.4 million in the prior quarter. The linked quarter increase in the provision for loan and lease losses was primarily due to increased qualitative factors in response to the COVID-19 pandemic. As of June 30, 2020, the Companys allowance to total loans and leases was 1.47%, which was up from 1.14% at March 31, 2020, and from 1.05% at June 30, 2019. Excluding the impact of the $358 million in PPP loans, the allowance for estimated losses on loans and leases to total loans and leases was 1.61% (non-GAAP).

In accordance with GAAP for acquisition accounting, 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 of $5.5 million at June 30, 2020.

Strong Capital Levels

As of June 30, 2020, the Companys total risk-based capital ratio was 13.74%, the common equity tier 1 ratio was 10.28%, and the tangible common equity to tangible assets ratio was 8.48% (non-GAAP). By comparison, these respective ratios were 13.54%, 10.31% and 8.76% as of March 31, 2020. The decline in the tangible common equity to tangible assets ratio was primarily the result of asset growth associated with the increase in PPP loans during the quarter. Excluding the impact of the PPP loans, the tangible common equity to tangible assets ratio was 9.03% (non-GAAP).

Focus on Three Strategic Long-Term Initiatives

As part of the Companys ongoing efforts to grow earnings and drive attractive long-term returns for shareholders, it continues to operate under three key strategic long-term initiatives:

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

It should be noted that these initiatives are long-term targets. Due to the impact of the COVID-19 pandemic, the Company may not be able to achieve these goals for the full year 2020.

Supplemental Presentation and Where to Find ItIn addition to this press release, the Company has included a supplemental presentation that provides further information regarding the Companys loan exposures and deferrals. Investors, analysts and other interested persons may find this presentation on the Securities and Exchange Commissions EDGAR filing system atwww.sec.gov/edgar.shtml, or on the Companys website at www.qcrh.com.

Conference Call DetailsThe Company will host an earnings call/webcast tomorrow, July 28, 2020, 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 August 11, 2020. The replay access information is 877-344-7529 (international 412-317-0088); access code 10145663. A webcast of the teleconference can be accessed at the Companys News and Events page at www.qcrh.com. An archived version of the webcast will be available at the same location shortly after the live event has ended.

About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, and Springfield communities through its wholly-owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, and Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company engages in commercial leasing through its wholly-owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 25 locations in Illinois, Iowa, Wisconsin and Missouri. As of June 30, 2020, the Company had approximately $5.6 billion in assets, $4.1 billion in loans and $4.3 billion in deposits. For additional information, please visit the Companys 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 Companys 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 (including the impact of the 2020 presidential election and the impact of tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations); (ii)the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), 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 (including the new current expected credit loss (CECL) impairment standards, that will change how the Company estimates credit losses when implemented); (iv) changes in state and federal laws, regulations and governmental policies concerning the Companys general business; (v) changes in interest rates and prepayment rates of the Companys assets (including the impact of LIBOR phase-out); (vi)increased competition in the financial services sector and the inability to attract new customers; (vii)changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix)the loss of key executives or employees; (x)changes in consumer spending; and (xi) unexpected outcomes of existing or new litigation involving the Company. 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 Companys financial results, is included in the Companys filings with the Securities and Exchange Commission.

Contacts:

Todd A. GipplePresidentChief Operating OfficerChief Financial Officer(309) 743-7745tgipple@qcrh.com

Kim K. GarrettVice PresidentCorporate CommunicationsInvestor Relations Manager(319) 743-7006kgarret@qcrh.com

QCR Holdings, Inc. Consolidated Financial Highlights (Unaudited) Held for Held for Held for Held for Sale Sale Sale Sale As of As of As of As of As of June 30, March 31, December 31, September June 30, June 30, March 31, December September 30, 31, 30, 2020 2020 2019 2019 2019 2020 2020 2019 2019 (dollars in thousands) CONDENSED BALANCE SHEET Cash and due from $ 88,577 $ 169,827 $ 76,254 $ 91,671 $ 87,919 $ - $ - $ - $ 11,031 banksFederal funds soldand 142,900 206,708 157,691 197,263 205,497 - - - 2,415 interest-bearingdepositsSecurities 748,883 684,571 611,341 555,409 643,803 - - - 66,009 Net loans/leases 4,079,432 3,662,435 3,654,204 3,574,154 3,869,415 - - - 362,011 Intangibles 13,872 14,421 14,970 15,529 16,089 - - - - Goodwill 74,248 74,248 74,748 77,748 77,748 - - - - Derivatives 225,164 195,973 87,827 104,388 65,922 - - - - Other assets 220,920 213,134 220,049 210,673 228,459 10,765 10,758 11,966 24,081 Assets held for 10,765 10,758 11,966 465,547 - - - - - saleTotal assets $ 5,604,761 $ 5,232,075 $ 4,909,050 $ 5,292,382 $ 5,194,852 $ 10,765 $ 10,758 $ 11,966 $ 465,547 Total deposits $ 4,349,775 $ 4,170,478 $ 3,911,051 $ 3,802,241 $ 4,322,510 $ - $ - $ - $ 451,546 Total borrowings 376,250 244,399 278,955 320,457 230,953 - - - 16,157 Derivatives 233,589 203,744 88,436 109,242 69,556 - - - - Other liabilities 87,539 71,185 90,254 70,169 67,533 1,588 3,130 5,003 2,827 Liabilities held 1,588 3,130 5,003 470,530 - - - - - for saleTotal stockholders' 556,020 539,139 535,351 519,743 504,300 - - - - equityTotal liabilitiesand stockholders' $ 5,604,761 $ 5,232,075 $ 4,909,050 $ 5,292,382 $ 5,194,852 $ 1,588 $ 3,130 $ 5,003 $ 470,530 equity ANALYSIS OF LOAN PORTFOLIOLoan/lease mix: Commercial and $ 1,850,110 $ 1,484,979 $ 1,507,825 $ 1,469,978 $ 1,548,657 industrial loansCommercial real 1,869,162 1,783,086 1,736,396 1,687,922 1,837,473 estate loansDirect financing 79,105 83,324 87,869 92,307 101,180 leasesResidential real 241,069 237,742 239,904 245,667 293,479 estate loansInstallment andother consumer 99,150 106,728 109,352 106,540 120,947 loansDeferred loan/leaseorigination costs, 1,663 8,809 8,859 7,856 8,783 net of feesTotal loans/leases $ 4,140,259 $ 3,704,668 $ 3,690,205 $ 3,610,270 $ 3,910,519 Less allowance forestimated losses on 60,827 42,233 36,001 36,116 41,104 loans/leasesNet loans/leases $ 4,079,432 $ 3,662,435 $ 3,654,204 $ 3,574,154 $ 3,869,415 ANALYSIS OFSECURITIES PORTFOLIOSecurities mix: U.S. governmentsponsored agency $ 17,472 $ 19,457 $ 20,078 $ 21,268 $ 35,762 securitiesMunicipal 526,192 493,664 447,853 391,329 440,853 securitiesResidentialmortgage-backed and 145,672 122,853 120,587 123,880 159,228 related securitiesAsset backed 39,797 28,499 16,887 10,957 - securitiesOther securities 19,750 20,098 5,936 7,975 7,960 Total securities $ 748,883 $ 684,571 $ 611,341 $ 555,409 $ 643,803 ANALYSIS OF DEPOSITSDeposit mix: Noninterest-bearing $ 1,177,482 $ 829,782 $ 777,224 $ 782,232 $ 795,951 demand depositsInterest-bearing 2,488,755 2,440,907 2,407,502 2,245,557 2,505,956 demand depositsTime deposits 560,982 617,979 571,343 536,352 733,135 Brokered deposits 122,556 281,810 154,982 238,100 287,468 Total deposits $ 4,349,775 $ 4,170,478 $ 3,911,051 $ 3,802,241 $ 4,322,510 ANALYSIS OF BORROWINGSBorrowings mix: Term FHLB advances $ 90,000 $ 55,000 $ 50,000 $ 60,000 $ 46,433 Overnight FHLB 55,000 40,000 109,300 135,800 59,300 advances (1)FRB borrowings 100,000 30,000 - - - Other short-term 24,818 13,067 13,423 18,526 19,191 borrowingsSubordinated notes 68,516 68,455 68,394 68,334 68,274 Junior subordinated 37,916 37,877 37,838 37,797 37,755 debenturesTotal borrowings $ 376,250 $ 244,399 $ 278,955 $ 320,457 $ 230,953 (1) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 0.37%.

QCR Holdings, Inc. Consolidated Financial Highlights (Unaudited) For the Quarter Ended June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019 (dollars in thousands, except per share data) INCOME STATEMENT Interest income $ 48,650 $ 48,982 $ 52,977 $ 56,817 $ 54,181 Interest expense 7,702 11,284 13,058 16,098 16,168 Net interest 40,948 37,698 39,919 40,719 38,013 incomeProvision forloan/lease 19,915 8,367 979 2,012 1,941 lossesNet interestincome afterprovision for $ 21,033 $ 29,331 $ 38,940 $ 38,707 $ 36,072 loan/leaselosses Trust department $ 2,227 $ 2,312 $ 2,365 $ 2,340 $ 2,361 feesInvestmentadvisory and 1,399 1,727 1,589 1,782 1,888 management feesDeposit service 1,286 1,477 1,787 1,813 1,658 feesGain on sales ofresidential real 1,196 652 823 890 489 estate loansGain on sales ofgovernmentguaranteed - - 159 519 39 portions ofloansSwap fee income 19,927 6,804 7,409 9,797 7,891 Securities gains 65 - 26 (3 ) (52 ) (losses), netEarnings onbank-owned life 612 329 533 489 412 insuranceDebit card fees 775 758 766 886 914 Correspondent 198 215 194 189 172 banking feesGain on sale ofassets and - - 12,286 - - liabilities ofsubsidiaryOther 941 922 1,868 1,204 1,293 Totalnoninterest $ 28,626 $ 15,196 $ 29,805 $ 19,906 $ 17,065 income Salaries andemployee $ 21,304 $ 18,519 $ 24,220 $ 24,215 $ 22,749 benefitsOccupancy andequipment 3,748 4,032 4,019 3,860 3,533 expenseProfessional anddata processing 3,646 3,369 3,570 4,030 3,031 feesPost-acquisitioncompensation,transition and 70 151 1,855 884 708 integrationcostsDisposition (83 ) 517 3,325 - - costsFDIC insurance,other insurance 908 683 523 542 926 and regulatoryfeesLoan/lease 339 228 349 221 312 expenseNet cost of(income from)and gains/losses (332 ) 13 232 2,078 1,182 on operations ofother realestateAdvertising and 552 682 1,670 1,056 1,037 marketingBank service 501 504 516 502 508 chargesLosses on debtextinguishment, 429 147 288 148 - netCorrespondent 212 216 216 209 206 banking expenseIntangibles 548 549 560 560 615 amortizationGoodwill - 500 3,000 - - impairmentOther 1,280 1,305 1,951 1,640 1,753 Totalnoninterest $ 33,122 $ 31,415 $ 46,294 $ 39,945 $ 36,560 expense Net incomebefore income $ 16,537 $ 13,112 $ 22,451 $ 18,668 $ 16,577 taxesFederal andstate income tax 2,798 1,884 6,560 3,573 3,073 expenseNet income $ 13,739 $ 11,228 $ 15,891 $ 15,095 $ 13,504 Basic EPS $ 0.87 $ 0.71 $ 1.01 $ 0.96 $ 0.86 Diluted EPS $ 0.86 $ 0.70 $ 0.99 $ 0.94 $ 0.85 Weighted averagecommon shares 15,747,056 15,796,796 15,772,703 15,739,430 15,714,588 outstandingWeighted averagecommon andcommon 15,895,336 16,011,456 16,033,043 15,976,742 15,938,377 equivalentsharesoutstanding

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) For the Six Months Ended June 30, June 30, 2020 2019 (dollars in thousands, except per share data) INCOME STATEMENT Interest income $ 97,632 $ 106,283 Interest expense 18,986 31,362 Net interest income 78,646 74,921 Provision for loan/lease losses 28,282 4,075 Net interest income after provision $ 50,364 $ 70,846 for loan/lease losses Trust department fees 4,539 $ 4,854 Investment advisory and management 3,126 3,624 feesDeposit service fees 2,763 3,212 Gain on sales of residential real 1,848 858 estate loansGain on sales of government - 70 guaranteed portions of loansSwap fee income 26,731 11,089 Securities losses, net 65 (52 )Earnings on bank-owned life 941 952 insuranceDebit card fees 1,533 1,706 Correspondent banking fees 413 388 Other 1,863 2,357 Total noninterest income $ 43,822 $ 29,058 Salaries and employee benefits 39,823 $ 43,628 Occupancy and equipment expense 7,780 7,227 Professional and data processing 7,015 5,781 feesPost-acquisition compensation, 221 842 transition and integration costsDisposition costs 434 - FDIC insurance, other insurance and 1,591 1,890 regulatory feesLoan/lease expense 567 526 Net cost of operation of other real (319 ) 1,480 estateAdvertising and marketing 1,234 1,822 Bank service charges 1,005 991 Losses on debt extinguishment, net 576 - Correspondent banking expense 428 410 Intangibles amortization 1,097 1,147 Goodwill impairment 500 - Other 2,585 3,251 Total noninterest expense $ 64,537 $ 68,995 Net income before taxes $ 29,649 $ 30,909 Income tax expense 4,682 4,487 Net income $ 24,967 $ 26,422 Basic EPS $ 1.58 $ 1.68 Diluted EPS $ 1.56 $ 1.66 Weighted average common shares 15,771,926 15,703,967 outstandingWeighted average common and common 15,956,958 15,930,659 equivalent shares outstanding

QCR Holdings, Inc. Consolidated Financial Highlights (Unaudited) As of and for the Quarter Ended For the Six Months Ended June30, March 31, December 31, September 30, June 30, June 30, June 30, 2020 2020 2019 2019 2019 2020 2019 (dollars in thousands, except per share data) COMMON SHARE DATACommon shares 15,790,611 15,773,736 15,828,098 15,790,462 15,772,939 outstandingBook value percommon share $ 35.21 $ 34.18 $ 33.82 $ 32.91 $ 31.97 (1)Tangible bookvalue per $ 29.63 $ 28.56 $ 28.15 $ 27.01 $ 26.02 common share(2)Closing stock $ 31.18 $ 27.07 $ 43.86 $ 37.98 $ 34.87 priceMarket $ 492,351 $ 426,995 $ 694,220 $ 599,722 $ 550,002 capitalizationMarket price / 88.55 % 79.20 % 129.69 % 115.40 % 109.06 % book valueMarket price /tangible book 105.23 % 94.79 % 155.76 % 140.61 % 134.00 % valueEarnings percommon share $ 3.55 $ 3.54 $ 3.65 $ 3.49 $ 3.10 (basic) LTM(3)Price earnings 8.78 x 7.65 x 12.02 x 10.88 x 11.25 x ratio LTM (3)TCE / TA (4) 8.48 % 8.76 % 9.25 % 8.20 % 8.05 % CONDENSEDSTATEMENT OFCHANGES IN STOCKHOLDERS'EQUITYBeginning $ 539,139 $ 535,351 $ 519,743 $ 504,300 $ 488,407 balanceNet income 13,739 11,228 15,891 15,095 13,504 Othercomprehensive 3,622 (3,691 ) (683 ) 543 2,243 income (loss),net of taxCommon stockcash dividends (945 ) (942 ) (947 ) (944 ) (942 ) declaredProceeds fromissuance of9,400 sharesof commonstock as a - - 399 - - result of theperformancebased targetsmet for BatesCompaniesRepurchase andcancellationof 100,932shares ofcommon stock - (3,780 ) as a result ofa sharerepurchaseprogramOther (5) 465 973 948 749 1,088 Ending balance $ 556,020 $ 539,139 $ 535,351 $ 519,743 $ 504,300 REGULATORYCAPITAL RATIOS (6):Totalrisk-based 13.74 % 13.54 % 13.33 % 12.22 % 12.04 % capital ratioTier 1risk-based 11.11 % 11.16 % 11.04 % 9.94 % 9.76 % capital ratioTier 1leverage 8.91 % 10.19 % 9.53 % 9.02 % 8.96 % capital ratioCommon equity 10.28 % 10.31 % 10.18 % 9.12 % 8.93 % tier 1 ratio KEYPERFORMANCE RATIOS ANDOTHER METRICSReturn onaverage assets 0.95 % 0.91 % 1.23 % 1.16 % 1.06 % 0.93 % 1.05 % (annualized)Return onaverage total 10.29 % 8.23 % 11.93 % 11.70 % 10.84 % 9.30 % 10.78 % equity(annualized)Net interest 3.14 % 3.40 % 3.36 % 3.37 % 3.25 % 3.26 % 3.25 % marginNet interestmargin (TEY) 3.27 % 3.56 % 3.51 % 3.52 % 3.40 % 3.40 % 3.40 % (Non-GAAP)(7)Efficiencyratio 47.61 % 59.39 % 66.40 % 65.89 % 66.38 % 52.70 % 66.35 % (Non-GAAP) (8)Gross loansand leases / 74.01 % 70.95 % 75.36 % 74.80 % 75.28 % 74.01 % 75.28 % total assets(10)Gross loansand leases / 95.18 % 88.83 % 94.35 % 94.95 % 90.47 % 95.18 % 90.47 % total deposits(10)Effective tax 16.92 % 14.37 % 29.22 % 19.14 % 18.54 % 15.79 % 14.52 % rateFull-timeequivalent 712 703 697 766 773 712 773 employees (9) AVERAGE BALANCESAssets $ 5,800,164 $ 4,948,311 $ 5,147,754 $ 5,217,763 $ 5,077,900 $ 5,374,224 $ 5,023,201 Loans/leases 3,999,523 3,686,410 3,868,435 3,962,464 3,839,674 3,842,967 3,799,645 Deposits 4,732,626 3,954,707 4,227,572 4,302,995 4,271,391 4,343,653 4,191,130 Totalstockholders' 534,095 545,678 532,756 516,195 498,263 536,775 490,343 equity (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) Decrease from June 30, 2019 and September 30, 2019 due to sale of subsidiary Rockford Bank & Trust.(10) Excludes assets held for sale as of September 30, 2019, Deccember 31, 2019, March 31, 2020 and June 30, 2020.

QCR Holdings, Inc. Consolidated Financial Highlights (Unaudited) ANALYSIS OF NET INTEREST INCOME AND MARGIN (4) For the Quarter Ended June 30, 2020 March 31, 2020 June 30, 2019 Average Interest Average Average Interest Average Average Interest Average Balance Earned or Yield Balance Earned or Yield Balance Earned or Yield Paid or Cost Paid or Cost Paid or Cost (dollars in thousands) Fed funds $ 865 $ 1 0.46 % $ 5,324 $ 18 1.36 % $ 9,690 $ 56 2.32 % soldInterest-bearingdeposits at 533,483 135 0.10 % 128,612 361 1.13 % 182,651 1,168 2.56 % financialinstitutionsSecurities 697,559 6,536 3.77 % 619,307 6,080 3.95 % 644,999 6,062 3.77 % (1)Restrictedinvestment 21,234 288 5.46 % 21,365 258 4.86 % 21,007 290 5.54 % securitiesLoans (1) 3,999,522 43,417 4.37 % 3,686,410 44,056 4.81 % 3,839,674 48,413 5.06 % Total earning $ 5,252,663 $ 50,377 3.86 % $ 4,461,018 $ 50,773 4.58 % $ 4,698,021 $ 55,989 4.78 % assets (1) Interest-bearing $ 2,840,860 $ 2,429 0.34 % $ 2,379,635 $ 5,328 0.90 % $ 2,461,768 $ 8,271 1.35 % depositsTime deposits 809,233 3,337 1.66 % 785,135 3,879 1.99 % 1,013,391 5,554 2.20 % Short-term 25,064 22 0.35 % 19,315 64 1.33 % 16,145 81 2.01 % borrowingsFederal HomeLoan Bank 95,616 347 1.46 % 111,407 449 1.62 % 76,154 601 3.17 % advancesOther - - 0.00 % - - 0.00 % 10,550 92 3.50 % borrowingsSubordinated 68,480 994 5.84 % 68,418 994 5.84 % 68,239 993 5.84 % debenturesJuniorsubordinated 37,891 572 6.07 % 37,853 571 6.07 % 37,731 576 6.12 % debenturesTotalinterest-bearing $ 3,877,144 $ 7,701 0.80 % $ 3,401,763 $ 11,285 1.33 % $ 3,683,978 $ 16,168 1.76 % liabilities Net interestincome / spread $ 42,676 3.06 % $ 39,488 3.24 % $ 39,821 3.02 % (1)Net interest 3.14 % 3.40 % 3.25 % margin (2)Net interestmargin (TEY) 3.27 % 3.56 % 3.40 % (Non-GAAP) (1)(2) (3)Adjusted net interest margin 3.21 % 3.50 % 3.31 % (TEY) (Non-GAAP) (1) (2) (3) For the Six Months Ended June 30, 2020 June 30, 2019 Average Interest Average Average Interest Average Balance Earned or Yield Balance Earned or Yield Paid or Cost Paid or Cost (dollars in thousands) Fed funds $ 3,095 $ 18 1.17 % $ 12,713 $ 150 2.38 % soldInterest-bearingdeposits at 331,048 495 0.30 % 169,057 2,091 2.49 % financialinstitutionsSecurities 658,433 12,616 3.85 % 652,727 12,158 3.76 % (1)Restrictedinvestment 21,300 546 5.15 % 21,146 598 5.70 % securitiesLoans (1) 3,842,966 87,474 4.58 % 3,799,645 94,795 5.03 % Total earning $ 4,856,842 $ 101,149 4.19 % $ 4,655,288 $ 109,792 4.76 % assets (1) Interest-bearing $ 2,610,248 $ 7,756 0.60 % $ 2,374,939 $ 15,445 1.31 % depositsTime deposits 797,184 7,216 1.82 % 1,012,925 10,859 2.16 % Short-term 22,190 86 0.78 % 15,261 152 2.01 % borrowingsFederal HomeLoan Bank 103,512 796 1.55 % 111,755 1,662 3.00 % advancesOther - - 0.00 % 27,126 539 4.01 % borrowingsSubordinated 68,449 1,988 5.84 % 53,438 1,557 5.88 % debenturesJuniorsubordinated 37,872 1,144 6.07 % 37,709 1,148 6.14 % debenturesTotalinterest-bearing $ 3,639,455 $ 18,986 1.05 % $ 3,633,153 $ 31,362 1.74 % liabilities Net interestincome / spread $ 82,163 3.14 % $ 78,430 3.02 % (1)Net interest 3.26 % 3.25 % margin (2)Net interestmargin (TEY) 3.40 % 3.40 % (Non-GAAP) (1)(2) (3)Adjusted net interest margin 3.35 % 3.30 % (TEY) (Non-GAAP) (1) (2) (3) (1) Includes nontaxable securities and loans. Interest earned and yields onnontaxable 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 Holdings, Inc. Consolidated Financial Highlights (Unaudited) As of June 30, March 31, December 31, September June 30, 30, 2020 2020 2019 2019 2019 (dollars in thousands, except per share data) ROLLFORWARD OFALLOWANCE FOR LOAN/LEASELOSSESBeginning $ 42,233 $ 36,001 $ 36,116 $ 41,104 $ 41,164 balanceReclassificationof allowance - - - (6,122 ) - related to heldfor sale loansProvisioncharged to 19,915 8,367 979 1,584 1,941 expense (2)Loans/leases (1,450 ) (2,335 ) (1,182 ) (741 ) (2,152 ) charged offRecoveries onloans/leases 129 200 88 291 151 previouslycharged offEnding balance $ 60,827 $ 42,233 $ 36,001 $ 36,116 $ 41,104 NONPERFORMING ASSETSNonaccrual loans $ 12,099 $ 11,628 $ 7,902 $ 8,231 $ 13,148 /leasesAccruing loans/leases past due 99 1,419 33 - 58 90 days or moreTroubled debtrestructures - 920 545 979 763 1,313 accruingTotalnonperforming 13,118 13,592 8,914 8,994 14,519 loans/leasesOther real 157 3,298 4,129 4,248 8,637 estate ownedOtherrepossessed 25 45 41 - - assetsTotalnonperforming $ 13,300 $ 16,935 $ 13,084 $ 13,242 $ 23,156 assets ASSET QUALITY RATIOSNonperformingassets / total 0.24 % 0.32 % 0.27 % 0.27 % 0.45 % assets (3)Allowance /total loans/ 1.47 % 1.14 % 0.98 % 1.00 % 1.05 % leases (1)Allowance /nonperforming 463.69 % 310.72 % 403.87 % 401.56 % 283.10 % loans/leases (1)Net charge-offsas a % of 0.03 % 0.06 % 0.03 % 0.01 % 0.05 % average loans/leases (1) Upon acquisition and per GAAP, acquired loans are recorded at market value which eliminates the allowance and impacts these ratios.(2) Excludes provision related to loans included in assets held for sale of $428 thousand for the quarter ending September 30, 2019.(3) Excludesassets held for sale.

QCR Holdings, Inc. Consolidated Financial Highlights (Unaudited) For the Quarter Ended For the Six Months Ended June 30, March 31, June 30, June 30, June 30, SELECT FINANCIAL 2020 2020 2019 2020 2019 DATA - SUBSIDIARIES (dollars in thousands) TOTAL ASSETS Quad City Bank and $ 1,984,245 $ 1,914,785 $ 1,637,115 Trust (1) m2 Lease 241,114 237,198 234,072 Funds, LLC Cedar Rapids Bank and 2,021,043 1,719,773 1,527,521 Trust Community State Bank - 903,648 863,903 806,704 Ankeny Springfield First 745,474 708,736 671,644 Community Bank TOTAL DEPOSITS Quad City Bank and $ 1,707,970 $ 1,678,889 $ 1,434,467 Trust (1) Cedar Rapids Bank and 1,351,784 1,247,989 1,283,151 Trust Community State Bank - 778,499 743,645 705,777 Ankeny Springfield First 564,710 524,420 471,340 Community Bank TOTAL LOANS & LEASES Quad City Bank and $ 1,485,971 $ 1,338,915 $ 1,273,400 Trust (1) m2 Lease 239,351 235,144 230,676 Funds, LLC Cedar Rapids Bank and 1,380,672 1,159,453 1,100,823 Trust Community State Bank - 671,772 634,253 597,486 Ankeny Springfield First 601,843 572,046 515,566 Community Bank TOTAL LOANS & LEASES / TOTAL DEPOSITS Quad City Bank and 87 % 80 % 89 % Trust (1) Cedar Rapids Bank and 102 % 93 % 86 % Trust Community State Bank - 86 % 85 % 85 % Ankeny Springfield First 107 % 109 % 109 % Community Bank TOTAL LOANS & LEASES / TOTAL ASSETS Quad City Bank and 75 % 70 % 78 % Trust (1) Cedar Rapids Bank and 68 % 67 % 72 % Trust Community State Bank - 74 % 73 % 74 % Ankeny Springfield First 81 % 81 % 77 % Community Bank ALLOWANCE AS A PERCENTAGE OF LOANS/ LEASES Quad City Bank and 1.51 % 1.17 % 1.06 % Trust (1) m2 Lease 1.99 % 1.50 % 1.38 % Funds, LLC Cedar Rapids Bank and 1.62 % 1.35 % 1.19 % Trust (2) Community State Bank - 1.56 % 1.21 % 1.09 % Ankeny (2) Springfield First 0.94 % 0.56 % 0.37 % Community Bank (2) RETURN ON AVERAGE ASSETS Quad City Bank and 0.68 % 1.33 % 1.22 % 0.95 % 1.20 % Trust (1) Cedar Rapids Bank and 2.36 % 1.60 % 1.95 % 2.01 % 1.75 % Trust Community State Bank - 0.25 % 0.50 % 1.17 % 0.37 % 1.12 % Ankeny Springfield First 1.04 % 1.29 % 1.37 % 1.16 % 1.24 % Community Bank NET INTEREST MARGIN PERCENTAGE (3) Quad City Bank and 2.88 % 3.68 % 3.29 % 3.22 % 3.26 % Trust (1) Cedar Rapids Bank and 3.37 % 3.43 % 3.41 % 3.40 % 3.41 % Trust (5) Community State Bank - 3.77 % 3.91 % 4.08 % 3.84 % 4.06 % Ankeny (4) Springfield First 3.88 % 3.83 % 4.10 % 3.85 % 4.08 % Community Bank (6) ACQUISITION-RELATED AMORTIZATION /ACCRETION INCLUDED IN NET INTEREST MARGIN, NET Cedar Rapids Bank and $ 62 $ 49 $ 71 $ 111 $ 215 Trust Community State Bank - 72 64 76 $ 136 134 Ankeny Springfield First 641 552 971 $ 1,193 1,881 Community Bank QCR Holdings, (39 ) (40 ) (42 ) $ (79 ) (85 ) Inc. (7) (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 eliminates 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 21% tax rate.(4 ) Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 3.71% for the quarter ended June 30, 2020, 3.86% for the quarter ended March 31, 2020 and 4.01% for the quarter ended June 30, 2019.(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 3.35% for the quarter ended June 30, 2020, 3.42% for the quarter ended March 31, 2020 and 3.39% for the quarter ended June 30, 2019. Springfield First Community Bank's net interest margin percentage includes(6 ) various purchase accounting adjustments. Excluding those adjustments, net interest margin would have been 4.29% for the quarter ended June 30, 2020, 4.52% for the quarter ended March 31, 2020 and 3.39% for the quarter ended June 30, 2019.(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 June 30, March 31, December 31, September 30, June 30, GAAP TONON-GAAP 2020 2020 2019 2019 2019 RECONCILIATIONS (dollars in thousands, except per share data) TANGIBLE COMMONEQUITY TO TANGIBLE ASSETSRATIO (1) Stockholders' $ 556,020 $ 539,139 $ 535,351 $ 519,743 $ 504,300 equity (GAAP)Less:Intangible 88,120 88,669 89,717 93,277 93,837 assetsTangible commonequity $ 467,900 $ 450,470 $ 445,634 $ 426,466 $ 410,463 (non-GAAP) Total assets $ 5,604,761 $ 5,232,075 $ 4,909,050 $ 5,292,382 $ 5,194,852 (GAAP)Less:Intangible 88,120 88,669 89,717 93,277 93,837 assetsTangible assets $ 5,516,641 $ 5,143,406 $ 4,819,333 $ 5,199,105 $ 5,101,015 (non-GAAP) Tangible commonequity totangible assets 8.48 % 8.76 % 9.25 % 8.20 % 8.05 % ratio(non-GAAP) TANGIBLE COMMONEQUITY TOTANGIBLE ASSETS RATIO EXCLUDINGPPP LOANS (1)

Stockholder's $ 556,020 $ 539,139 $ 535,351 $ 519,743 $ 504,300 equity (GAAP) Less: PPPloan interest 2,085 - - - - income(post-tax) (2) Less:Intangible 88,120 88,669 89,717 93,277 93,837 assetsTangible commonequity,excluding PPP $ 465,815 $ 450,470 $ 445,634 $ 426,466 $ 410,463 loan income(non-GAAP) Total assets $ 5,604,761 $ 5,232,075 $ 4,909,050 $ 5,292,382 $ 5,194,852 (GAAP)Less: PPP loans 358,052 - - - - Less:Intangible 88,120 88,669 89,717 93,277 93,837 assetsTangibleassets,excluding PPP $ 5,158,589 $ 5,143,406 $ 4,819,333 $ 5,199,105 $ 5,101,015 loans(non-GAAP) Tangible commonequity totangible assetsratio, 9.03 % 8.76 % 9.25 % 8.20 % 8.05 % excluding PPPloans(non-GAAP) (1) This ratio is a non-GAAP financial measure. The Company's managementbelieves that this measurement is important to many investors in themarketplace who are interestedin changes period-to-period in common equity. In compliance with applicable rules of the SEC, this non-GAAP measure isreconciled to stockholders' equity and total assets,which are the mostdirectly comparable GAAP financial measures.(2) PPP interest income (post-tax) is calculated using an estimated effective tax rate of 21%.

QCR Holdings, Inc. Consolidated Financial Highlights (Unaudited) GAAP TO NON-GAAP For the Quarter Ended For the Six Months Ended RECONCILIATIONS June 30, March 31, December 31, September 30, June 30, June 30, June 30, ADJUSTED NET INCOME 2020 2020 2019 2019 2019 2020 2019 (1) (dollars in thousands, except per share data) Net income (GAAP) $ 13,739 $ 11,228 $ 15,891 $ 15,095 $ 13,504 $ 24,967 $ 26,422 Less non-core items (post-tax) (2):Income: Securities gains 51 - 21 $ (2 ) $ (41 ) $ 51 $ (41 ) (losses), netGain on sale ofassets and - - 8,539 - - - - liabilities ofsubsidiaryTotal non-core $ 51 $ - $ 8,560 $ (2 ) $ (41 ) $ 51 $ (41 ) income (non-GAAP) Expense: Losses on debt $ 339 $ 116 $ 228 $ 117 $ - $ 455 $ - extinguishment, netGoodwill - 500 3,000 - - - 500 - impairmentDisposition costs (66 ) 408 2,627 - - 343 $ - Tax expense onexpected - - 790 - - - - liquidation of RB&TBOLIPost-acquisitioncompensation, 55 119 1,465 698 559 175 665 transition andintegration costsTotal non-core $ 329 $ 1,143 $ 8,110 $ 815 $ 559 $ 1,472 $ 665 expense (non-GAAP)Adjusted net income $ 14,016 $ 12,372 $ 15,441 $ 15,912 $ 14,104 $ 26,388 $ 27,128 (non-GAAP) (1) PRE-PROVISION/PRE-TAX ADJUSTED INCOME (1)Net income (GAAP) $ 13,739 $ 11,228 $ 15,891 $ 15,095 $ 13,504 $ 24,967 $ 26,422 Less: Non-coreincome not 65 - 12,313 (3 ) (52 ) 65 (52 ) tax-effectedPlus: Non-coreexpense not 416 1,315 9,258 1,032 708 1,731 842 tax-effected Provision 19,915 8,367 979 2,012 1,941 28,282 4,075 expense Federal andstate income tax 2,798 1,884 6,560 3,573 3,073 4,682 4,487 expensePre-provision/pre-tax adjusted $ 36,803 $ 22,794 $ 20,375 $ 21,714 $ 19,277 $ 59,597 $ 35,878 income (non-GAAP)(1) PRE-PROVISION/PRE-TAX ADJUSTED RETURN ON AVERAGEASSETS (NON-GAAP) Pre-provision/pre-tax adjusted $ 36,803 $ 22,794 $ 20,375 $ 21,714 $ 19,277 $ 59,597 $ 35,878 income (non-GAAP) Average Assets $ 5,800,164 $ 4,948,311 $ 5,147,754 $ 5,217,763 $ 5,077,900 $ 5,374,224 $ 5,023,201 Pre-provision/pre-tax adjusted 2.54 % 1.84 % 1.58 % 1.66 % 1.52 % 2.22 % 1.43 % return on averageassets (non-GAAP) ADJUSTED EARNINGSPER COMMON SHARE (1) Adjusted net income(non-GAAP) (from $ 14,016 $ 12,372 $ 15,441 $ 15,912 $ 14,104 $ 26,388 $ 27,128 above) Weighted averagecommon shares 15,747,056 15,796,796 15,772,703 15,739,430 15,714,588 15,771,926 15,703,967 outstandingWeighted averagecommon and common 15,895,336 16,011,456 16,033,043 15,976,742 15,938,377 15,956,958 15,930,659 equivalent sharesoutstanding Adjusted earningsper common share (non-GAAP):Basic $ 0.89 $ 0.78 $ 0.98 $ 1.01 $ 0.90 $ 1.67 $ 1.73 Diluted $ 0.88 $ 0.77 $ 0.96 $ 1.00 $ 0.88 $ 1.65 $ 1.70 ADJUSTED RETURN ON AVERAGE ASSETS (1) Adjusted net income(non-GAAP) (from $ 14,016 $ 12,372 $ 15,441 $ 15,912 $ 14,104 $ 26,388 $ 27,128 above) Average Assets $ 5,800,164 $ 4,948,311 $ 5,147,754 $ 5,217,763 $ 5,077,900 $ 5,374,224 $ 5,023,201 Adjusted return onaverage assets 0.97 % 1.00 % 1.20 % 1.22 % 1.11 % 0.98 % 1.08 % (annualized)(non-GAAP) NET INTEREST MARGIN (TEY) (4) Net interest income $ 40,948 $ 37,698 $ 39,919 $ 40,719 $ 38,013 $ 78,646 $ 74,921 (GAAP) Plus: Taxequivalent 1,728 1,790 1,783 1,763 1,808 3,517 3,509 adjustment (3) Net interest income- tax equivalent $ 42,676 $ 39,488 $ 41,702 $ 42,482 $ 39,821 $ 82,163 $ 78,430 (Non-GAAP) Less: Acquisitionaccounting net 736 625 931 1,268 1,076 1,361 2,145 accretion Adjusted net $ 41,940 $ 38,863 $ 40,771 $ 41,214 $ 38,745 $ 80,802 $ 76,285 interest income Average earning $ 5,252,663 $ 4,461,018 $ 4,711,310 $ 4,791,274 $ 4,698,021 $ 4,856,842 $ 4,655,288 assets Net interest margin 3.14 % 3.40 % 3.36 % 3.37 % 3.25 % 3.26 % 3.25 % (GAAP)Net interest margin 3.27 % 3.56 % 3.51 % 3.52 % 3.40 % 3.40 % 3.40 % (TEY) (Non-GAAP)Adjusted netinterest margin 3.21 % 3.50 % 3.43 % 3.41 % 3.31 % 3.35 % 3.30 % (TEY) (Non-GAAP) EFFICIENCY RATIO (5) Noninterest expense $ 33,122 $ 31,415 $ 46,294 $ 39,945 $ 36,560 $ 64,537 $ 68,995 (GAAP) Net interest income $ 40,948 $ 37,698 $ 39,919 $ 40,719 $ 38,013 $ 78,646 $ 74,921 (GAAP)Noninterest income 28,626 15,196 29,805 19,906 17,065 43,822 29,058 (GAAP)Total income $ 69,574 $ 52,894 $ 69,724 $ 60,625 $ 55,078 $ 122,468 $ 103,979 Efficiency ratio(noninterest 47.61 % 59.39 % 66.40 % 65.89 % 66.38 % 52.70 % 66.35 % expense/totalincome) (Non-GAAP) ALLOWANCE FOR LOANAND LEASE LOSSES TOTOTAL LOANS AND LEASES, EXCLUDINGPPP LOANS (6) Allowance for loan $ 60,827 $ 42,233 $ 36,001 $ 36,116 $ 41,104 $ 60,827 $ 41,104 and lease losses Total loans and $ 4,140,259 $ 3,704,668 $ 3,690,205 $ 3,610,270 $ 3,910,519 $ 4,140,259 $ 3,910,519 leasesLess: PPP loans 358,052 - - - - 358,052 - Total loans andleases, excluding $ 3,782,207 $ 3,704,668 $ 3,690,205 $ 3,610,270 $ 3,910,519 $ 3,782,207 $ 3,910,519 PPP loans Allowance for loanand lease losses tototal loans and 1.61 % 1.14 % 0.98 % 1.00 % 1.05 % 1.61 % 1.05 % leases, excludingPPP loans LOAN GROWTHANNUALIZED, EXCLUDING PPP LOANSTotal loans and $ 4,140,259 $ 3,704,668 $ 3,690,205 $ 3,610,270 $ 3,910,519 $ 4,140,259 $ 3,910,519 leasesLess: PPP loans 358,052 - - - - 358,052 - Total loans andleases, excluding $ 3,782,207 $ 3,704,668 $ 3,690,205 $ 3,610,270 $ 3,910,519 $ 3,782,207 $ 3,910,519 PPP loans Loan growthannualized, 8.37 % 1.57 % 8.86 % -30.71 % 13.57 % 4.99 % 9.52 % excluding PPP loans (1) Adjusted net income, Adjusted net income attributable to QCR Holdings, Inc.common stockholders, Adjusted earnings per common share and Adjusted return onaverage assets arenon-GAAP financial measures. The Company's managementbelieves that these measurements are important to investors as they exclude non-recurring income and expense items,therefore, they provide a morerealistic run-rate for future periods. In compliance with applicable rules ofthe SEC, this non-GAAP measure is reconciled to net income, which isthe mostdirectly comparable GAAP financial measure.(2) Nonrecurring items (post-tax) are calculated using an estimated effectivetax rate of 21% with the exception of goodwill impairment which is not deductible for tax and gain on sale of subsidiary which has an estimatedeffective tax rate of 30.5%.(3) Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21%.(4) Net interest margin (TEY) is a non-GAAP financial measure. The Company'smanagement utilizes this measurement to take into account the tax benefitassociated with certain loansand securities. It is also standard industrypractice to measure net interest margin using tax-equivalent measures. Incompliance with applicable rules of the SEC, this non-GAAPmeasure is reconciled to net interest income, which is the most directly comparable GAAPfinancial measure. In addition, the Company calculates net interest marginwithout theimpact of acquisition accounting net accretion as this canfluctuate and it's difficult to provide a more realistic run-rate for futureperiods.(5) Efficiency ratio is a non-GAAP measure. The Company's management utilizesthis ratio to compare to industry peers. The ratio is used to calculateoverhead as a percentage of revenue.In compliance with the applicable rules of the SEC, this non-GAAP measure is reconciled to noninterest expense, netinterest income and noninterest income, which are the mostdirectly comparableGAAP financial measures.(6) Allowance for loan and lease losses to total loans and leases, excludingPPP loans is a non-GAAP measure. The Company's management utilizes this ratioto remove the from the allowance calculation the impact of PPP loans which are fully guaranteed by the federal government and for which these loans haveno allowance for loan and lease loss allocation.