GlobeNewswire Inc | Apr 27, 2021 04:05PM EDT

April 27, 2021

First Quarter 2021 Highlights

-- Net income of $18.0 million, or $1.12 per diluted share -- Adjusted net income (non-GAAP) of $18.6 million, or $1.16 per diluted share -- NIM increased by 1 basis point and Adjusted NIM (TEY)(non-GAAP) increased by 3 bps to 3.26% and 3.40%, respectively -- Noninterest income continues to be strong at $23.5 million -- Annualized core loan and lease growth (non-GAAP) of 14.0% for the quarter, excluding SBA Paycheck Protection Program (PPP) loans -- Annualized core deposit growth of 3.2% for the quarter -- Provision for credit losses of $6.7 million for the quarter and allowance for credit losses (ACL) to total loans/leases of 1.99%, excluding PPP loans (non-GAAP) -- Nonperforming assets remained stable for the quarter and represent 0.25% of total assets

MOLINE, Ill.,, April 27, 2021 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the Company) today announced net income of $18.0 million and diluted earnings per share (EPS) of $1.12 for the first quarter of 2021, compared to net income of $18.3 million and diluted EPS of $1.14 for the fourth quarter of 2020. Pre-provision, pre-tax adjusted net income (non-GAAP) was $29.0 million in the first quarter of 2021, compared to $30.4 million in the fourth quarter of 2020.

The Company reported adjusted net income (non-GAAP) of $18.6 million and adjusted diluted EPS (non-GAAP) of $1.16 for the first quarter of 2021, compared to adjusted net income (non-GAAP) of $19.1 million and adjusted diluted EPS (non-GAAP) of $1.20 for the fourth quarter of 2020. For the first quarter of 2020, net income and diluted EPS were $11.2 million and $0.70, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS were $12.4 million and $0.77, respectively.

For the Quarter Ended March 31, December 31, March 31,$ in millions (except per 2021 2020 2020 share data)Net Income $ 18.0 $ 18.3 $ 11.2 Diluted EPS $ 1.12 $ 1.14 $ 0.70 Adjusted Net Income $ 18.6 $ 19.1 $ 12.4 (non-GAAP)Adjusted Diluted EPS $ 1.16 $ 1.20 $ 0.77 (non-GAAP)Pre-Provision/Pre-Tax $ 29.0 $ 30.4 $ 22.8 Adjusted Income (non-GAAP)Pre-Provision/Pre-Tax 2.05 % % 1.84 %Adjusted ROAA (non-GAAP) 2.08

Adjusted non-GAAP measurements of financial performance exclude non-recurring income and expense items that management believes are not reflective of the anticipated future operation of the Companys 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.

We are pleased with our financial performance for the first quarter, said Larry J. Helling, Chief Executive Officer. We delivered another quarter of strong net income, driven by robust loan growth, expanded net interest margin and carefully managed expenses. Despite a competitive lending environment, we grew core loans by 14% on an annualized basis, while maintaining disciplined underwriting and excellent credit quality. We continue to attract new clients and deepen ties with existing clients, which validates our relationship-based community banking model.

Annualized Loan and Lease Growth of 14.0% for the Quarter, excluding PPP Loans (non-GAAP)

During the first quarter of 2021, the Companys total loans and leases, excluding PPP loans, increased $139.2 million to a total of $4.1 billion. Core loan and lease growth during the quarter was 14.0% on an annualized basis and was funded by the Companys excess liquidity and core deposit growth. Core deposits (excluding brokered deposits) increased by $37.2 million during the quarter. Core deposit growth was muted during the quarter as the Company was successful in shifting some of its excess deposits off balance sheet. The Company retains the ability to bring these deposits back onto the balance sheet as needed. The Companys wholesale funding portfolio has been reduced to predominately subordinated debt that qualifies as regulatory capital. Additionally, at quarter-end, the percentage of gross loans and leases to total assets was 77.3%, up from 74.8% in the fourth quarter of 2020, driven primarily by the strong loan growth and lower excess liquidity.

Our robust loan growth for the quarter was driven by strength in both our core commercial lending business and in our Specialty Finance Group, added Helling. Given the strong first quarter results, combined with our current pipeline, we are now targeting organic loan growth for the full year 2021 of between 8% and 10%, consistent with our long-term goal of 9%.

Net Interest Income of $42.0 million

Net interest income for the first quarter of 2021 totaled $42.0 million, compared to $43.7 million for the fourth quarter of 2020 and $37.7 million for the first quarter of 2020. Excluding the impact of acquisition-related net accretion and PPP income, net interest income was stable on a linked quarter basis. Acquisition-related net accretion totaled $504 thousand for the first quarter of 2021, down from $1.1 million in the fourth quarter of 2020 and $625 thousand for the first quarter of 2020. Adjusted net interest income (non-GAAP) was $43.7 million for the first quarter of 2021, compared to $45.3 million for the fourth quarter of 2020 and $38.9 million for the first quarter of 2020.

In the first quarter, reported NIM was 3.26% and, on a tax-equivalent yield basis (non-GAAP), NIM was 3.43%, as compared to 3.25% and 3.45% in the fourth quarter of 2020, respectively. Adjusted NIM (non-GAAP), excluding acquisition-related net accretion was 3.40%, up 3 basis points from the fourth quarter. The increase in Adjusted NIM (non-GAAP) during the quarter was due to a 1 basis point decline in the total cost of interest-bearing funds (due to both mix and rate), and a 2 basis point increase in the yield on earning assets (adjusted for acquisition-related net accretion).

For the Quarter Ended March 31, December 31, March 31, 2021 2020 2020 NIM 3.26 % 3.25 % 3.40 %NIM (TEY)(non-GAAP) 3.43 % 3.45 % 3.56 %Adjusted NIM (TEY)(non-GAAP) 3.40 % 3.37 % 3.50 %See GAAP to non-GAAP reconciliations

We expanded our adjusted net interest margin again during the first quarter as our deposit costs were slightly lower due to an improved mix. While our average loan yields also declined during the quarter, we benefited from lower excess liquidity as well, enabling us to grow our margin, said Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer.

Noninterest Income of $23.5 million

Noninterest income for the first quarter of 2021 totaled $23.5 million, compared to $32.0 million for the fourth quarter of 2020. The decrease was primarily due to a $7.8 million reduction in swap fee income from the strong fourth quarter. Wealth management revenue was $3.7 million for the quarter, up $427 thousand from the fourth quarter. In addition, securities gains decreased by $617 thousand and gain on sale of loans decreased by $349 thousand from the prior quarter. Noninterest income increased $8.3 million, or an increase of 55% compared to the first quarter of 2020.

Swap fee income totaled $13.6 million for the quarter, which was effectively right at the lower end of our guidance. The current pipeline of swap loans remains healthy and we believe this source of fee income is sustainable for the long term, added Gipple Our continued expectation is that swap fee income will be approximately $14 to $18 million per quarter for the remainder of 2021.

Noninterest Expenses of $37.2 million

Noninterest expense for the first quarter of 2021 totaled $37.2 million, compared to $46.4 million for the fourth quarter of 2020 and $31.4 million for the first quarter of 2020. The linked-quarter decline was primarily due to lower salary and benefits expense of $5.6 million, driven by lower commission and incentive compensation expense in the quarter due to the lower swap fee income and lower incentive compensation accruals. Occupancy and equipment expense decreased by $809 thousand, advertising and marketing expense decreased by $649 thousand, and professional and data processing fees decreased by $428 thousand. In addition, we experienced a linked-quarter decline in losses on liability extinguishment of $1.5 million.

Asset Quality Remains Strong and NPAs Remained Stable

Nonperforming assets (NPAs) totaled $14.1 million at the end of the first quarter, consistent with the fourth quarter of 2020. The ratio of NPAs to total assets was 0.25% on both March 31, 2021 and December 31, 2020, and improved from 0.31% on March 31, 2020. In addition, the Companys criticized loans and classified loans to total loans and leases were 3.17% and 1.95%, respectively, from 3.24% and 1.55% as of December 31, 2020.

On January 1, 2021, the Company replaced its "incurred loss" model for recognizing credit losses with an "expected loss" model referred to as the CECL model, as per ASU 2016-13. As a result, there was a day one adjustment to our allowance for credit losses on loans/leases, which decreased the allowance by $8.1 million. Additionally, when combined with day one adjustments for held-to maturity investments and off-balance sheet exposures, also required by CECL, the total day one adjustment resulted in a $937 thousand reduction to capital, after-tax.

The Companys provision for credit losses totaled $6.7 million for the first quarter of 2021, down from $7.1 million in the prior quarter. As of March 31, 2021, the ACL on total loans/leases was 1.88%. The ACL on total loans/leases to total loans and leases on December 31, 2020 under CECL would have been 1.79%. Excluding PPP loans of $244 million, the ACL to total loans/leases as of March 31, 2021 was 1.99% (non-GAAP).

Continued Strong Capital Levels

As of March 31, 2021, the Companys total risk-based capital ratio was 15.22%, the common equity tier 1 ratio was 10.83% and the tangible common equity to tangible assets ratio (non-GAAP) was 9.42%. By comparison, these respective ratios were 14.95%, 10.55% and 9.08% as of December 31, 2020.

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.

These initiatives are long-term targets. Due to the impact of the COVID-19 pandemic, among other factors, the Company may not be able to achieve these goals for the full year 2021.

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 Details

The Company will host an earnings call/webcast tomorrow, April 28, 2021, 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 12, 2021. The replay access information is 877-344-7529 (international 412-317-0088); access code 10153920. 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 Equipment Finance, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 23 locations in Iowa, Missouri, Wisconsin and Illinois. As of March 31, 2021, the Company had approximately $5.6 billion in assets, $4.4 billion in loans and $4.6 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 new presidential administration); (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, 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, the Securities Exchange Commission or the PCAOB, including FASBs CECL impairment standards ; (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; (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; and (xiii) 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 Companys financial results, is included in the Companys filings with the Securities and Exchange Commission.

Contacts: Todd A. Gipple Kim K. GarrettPresident Vice PresidentChief Operating Officer Corporate CommunicationsChief Financial Officer Investor Relations Manager(309) 743-7745 (319) 743-7006tgipple@qcrh.com kgarret@qcrh.com

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) As of March 31, December 31, September June 30, March 31, 30, 2021 2020 2020 2020 2020 (dollars in thousands) CONDENSED BALANCE SHEET Cash and due from $ 78,814 $ 61,329 $ 68,932 $ 88,577 $ 169,827banksFederal funds soldand 55,056 95,676 302,668 142,900 206,708interest-bearingdepositsSecurities, net ofallowance for 799,825 838,131 782,088 748,883 684,571credit lossesNet loans/leases 4,279,220 4,166,753 4,168,395 4,079,432 3,662,435Intangibles 10,873 11,381 11,902 13,872 14,421Goodwill 74,066 74,066 74,066 74,248 74,248Derivatives 122,668 222,757 236,381 225,164 195,973Other assets 224,625 212,704 220,128 220,920 213,134Assets held for - - - 10,765 10,758saleTotal assets $ 5,645,147 $ 5,682,797 $ 5,864,560 $ 5,604,761 $ 5,232,075 Total deposits $ 4,631,782 $ 4,599,137 $ 4,672,268 $ 4,349,775 $ 4,170,478Total borrowings 188,601 177,114 226,962 376,250 244,399Derivatives 125,863 229,270 244,510 233,589 203,744Other liabilities 90,182 83,483 148,207 87,539 71,185Liabilities held - - - 1,588 3,130for saleTotal stockholders' 608,719 593,793 572,613 556,020 539,139equityTotal liabilitiesand stockholders' $ 5,645,147 $ 5,682,797 $ 5,864,560 $ 5,604,761 $ 5,232,075equity ANALYSIS OF LOAN PORTFOLIOLoan/lease mix: (1) Commercial andindustrial - $ 168,842 revolvingCommercial and 1,616,144 industrial - otherCommercial realestate, owner 461,272 occupiedCommercial realestate, non-owner 610,582 occupiedConstruction and 607,798 land developmentMulti-family 396,272 Direct financing 60,134 leases1-4 family real 368,927 estateConsumer 71,080 Total loans/leases $ 4,361,051 Less allowance for 81,831 credit lossesNet loans/leases $ 4,279,220 Loan/lease mix: (1) Commercial and $ 1,779,062 $ 1,726,723 $ 1,823,049 $ 1,850,110 $ 1,484,979industrial loansCommercial real 2,174,897 2,107,629 1,999,715 1,869,162 1,783,086estate loansDirect financing 59,229 66,016 73,011 79,105 83,324leasesResidential real 254,900 252,121 245,032 241,069 237,742estate loansInstallment andother consumer 87,053 91,302 102,471 99,150 106,728loansDeferred loan/leaseorigination costs, 5,910 7,338 4,699 1,663 8,809net of feesTotal loans/leases $ 4,361,051 $ 4,251,129 $ 4,247,977 $ 4,140,259 $ 3,704,668Less allowance for 81,831 84,376 79,582 60,827 42,233credit losses (2)Net loans/leases $ 4,279,220 $ 4,166,753 $ 4,168,395 $ 4,079,432 $ 3,662,435 ANALYSIS OFSECURITIES PORTFOLIOSecurities mix: U.S. governmentsponsored agency $ 14,581 $ 15,336 $ 18,437 $ 17,472 $ 19,457securitiesMunicipal 614,649 627,523 569,075 526,192 493,664securitiesResidentialmortgage-backed and 118,051 132,842 134,147 145,672 122,853related securitiesAsset backed 39,815 40,683 40,665 39,797 28,499securitiesOther securities 12,903 21,747 19,764 19,750 20,098Total securities $ 799,999 $ 838,131 $ 782,088 $ 748,883 $ 684,571Less allowance for 174 - - - -credit losses (2)Net securities $ 799,825 $ 838,131 $ 782,088 $ 748,883 $ 684,571 ANALYSIS OF DEPOSITSDeposit mix: Noninterest-bearing $ 1,269,578 $ 1,145,378 $ 1,175,085 $ 1,177,482 $ 829,782demand depositsInterest-bearing 2,916,054 2,987,469 2,938,194 2,488,755 2,440,907demand depositsTime deposits 445,067 460,659 499,021 560,982 617,979Brokered deposits 1,084 5,631 59,968 122,556 281,810Total deposits $ 4,631,782 $ 4,599,137 $ 4,672,268 $ 4,349,775 $ 4,170,478 ANALYSIS OF BORROWINGSBorrowings mix: Term FHLB advances $ - $ - $ 40,000 $ 90,000 $ 55,000Overnight FHLB 25,000 15,000 - 55,000 40,000advances (3)FRB borrowings - - - 100,000 30,000Other short-term 6,840 5,430 30,430 24,818 13,067borrowingsSubordinated notes 118,731 118,691 118,577 68,516 68,455Junior subordinated 38,030 37,993 37,955 37,916 37,877debenturesTotal borrowings $ 188,601 $ 177,114 $ 226,962 $ 376,250 $ 244,399 (1) The Company adopted ASU 2016-13 "CECL", effective January 1, 2021, whichincluded a change in class of receivable and segment categories.(2) The Company adopted ASU 2016-13 "CECL", effective January 1, 2021, whichrequires an allowance for credit losses ("ACL") on loans/leases, off-balancesheet ("OBS")exposures and held to maturity ("HTM") securities, recordedthrough the income statement within the provision for credit losses. The Day 1adjustments to ACL were as follows:loans/leases ($8.1) million, OBS $9.1 million, HTM securities $183thousand. The current quarter provision for credit expense was as follows:loans/leases $6.0 million,OBS $729 thousand,and HTM securities was ($9) thousand.(3) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 0.28%.

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) For the Quarter Ended March 31, December 31, September 30, June 30, March 31, 2021 2020 2020 2020 2020 (dollars in thousands, except per share data) INCOME STATEMENT Interest income $ 47,565 $ 49,851 $ 50,890 $ 48,650 $ 48,982Interest expense 5,590 6,144 6,309 7,694 11,276Net interest 41,975 43,707 44,581 40,956 37,706incomeProvision forcredit losses 6,713 7,080 20,342 19,915 8,367(1)Net interestincome afterprovision for $ 35,262 $ 36,627 $ 24,239 $ 21,041 $ 29,339loan/leaselosses Trust department $ 2,801 $ 2,388 $ 2,280 $ 2,227 $ 2,312feesInvestmentadvisory and 940 926 1,266 1,399 1,727management feesDeposit service 1,408 1,875 1,403 1,286 1,477feesGain on sales ofresidential real 1,337 1,462 1,370 1,196 652estate loansGain on sales ofgovernmentguaranteed - 224 - - -portions ofloansSwap fee income 13,557 21,402 26,688 19,927 6,804Securities - 617 1,802 65 -gains, netEarnings onbank-owned life 471 461 502 612 329insuranceDebit card fees 975 923 946 775 758Correspondent 314 270 220 198 215banking feesOther 1,686 1,469 1,482 941 922Totalnoninterest $ 23,489 $ 32,017 $ 37,959 $ 28,626 $ 15,196income Salaries andemployee $ 24,847 $ 30,446 $ 25,999 $ 21,304 $ 18,519benefitsOccupancy andequipment 4,108 4,917 3,807 3,748 4,032expenseProfessional anddata processing 3,443 3,871 3,758 3,646 3,369feesPost-acquisitioncompensation,transition and - 25 (32 ) 70 151integrationcostsDisposition 8 64 192 (83 ) 517costsFDIC insurance,other insurance 1,065 1,272 1,301 908 683and regulatoryfeesLoan/lease 300 465 403 339 228expenseNet cost of(income from)and gains/losses 39 (4 ) 16 (332 ) 13on operations ofother realestateAdvertising and 627 1,276 750 552 682marketingBank service 523 523 488 501 504chargesLosses onliability - 1,457 1,874 429 147extinguishmentCorrespondent 200 205 205 212 216banking expenseIntangibles 508 521 531 548 549amortizationGoodwill - - - - 500impairmentLoss on sale of - (147 ) 305 - -subsidiaryOther 1,560 1,473 1,241 1,288 1,313Totalnoninterest $ 37,228 $ 46,364 $ 40,838 $ 33,130 $ 31,423expense Net incomebefore income $ 21,523 $ 22,280 $ 21,360 $ 16,537 $ 13,112taxesFederal andstate income tax 3,541 4,009 4,016 2,798 1,884expenseNet income $ 17,982 $ 18,271 $ 17,344 $ 13,739 $ 11,228 Basic EPS $ 1.14 $ 1.16 $ 1.10 $ 0.87 $ 0.71Diluted EPS $ 1.12 $ 1.14 $ 1.09 $ 0.86 $ 0.70 Weighted averagecommon shares 15,803,643 15,775,596 15,767,152 15,747,056 15,796,796outstandingWeighted averagecommon andcommon 16,025,548 15,973,054 15,923,578 15,895,336 16,011,456equivalentsharesoutstanding (1) Includes provision for credit losses for loans/leases totaling $6.0million, HTM securities totaling ($9) thousand and OBS exposures totaling $729thousand.Provision for creditlosses only included provision for loans/leases for years priorto 2021.

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) As of and for the Quarter Ended March 31, December 31, September 30, June 30, March 31, 2021 2020 2020 2020 2020 (dollars in thousands, except per share data) COMMON SHARE DATACommon shares 15,843,732 15,805,711 15,792,357 15,790,611 15,773,736 outstandingBook value per $ 38.42 $ 37.57 $ 36.26 $ 35.21 $ 34.18 common share (1)Tangible bookvalue per common $ 33.06 $ 32.16 $ 30.82 $ 29.63 $ 28.56 share (Non-GAAP)(2)Closing stock $ 47.22 $ 39.59 $ 27.41 $ 31.18 $ 27.07 priceMarket $ 748,141 $ 625,748 $ 432,869 $ 492,351 $ 426,995 capitalizationMarket price / 122.90 % 105.38 % 75.60 % 88.55 % 79.20 %book valueMarket price /tangible book 142.83 % 123.09 % 88.95 % 105.23 % 94.79 %valueEarnings percommon share $ 4.27 $ 3.84 $ 3.69 $ 3.55 $ 3.54 (basic) LTM (3)Price earnings 11.06 x 10.31 x 7.43 x 8.78 x 7.65 x ratio LTM (3)TCE / TA 9.42 % 9.08 % 8.42 % 8.48 % 8.76 %(Non-GAAP) (4) CONDENSEDSTATEMENT OFCHANGES IN STOCKHOLDERS'EQUITYBeginning $ 593,793 $ 572,613 $ 556,020 $ 539,139 $ 535,351 balanceCumulativeeffect from the (937 ) - - - - adoption of ASU2016-13 "CECL"Net income 17,982 18,271 17,344 13,739 11,228 Othercomprehensive (1,751 ) 3,157 (614 ) 3,622 (3,691 )income (loss),net of taxCommon stockcash dividends (949 ) (947 ) (945 ) (945 ) (942 )declaredRepurchase andcancellation of100,932 sharesof common stock - - - - (3,780 )as a result of ashare repurchaseprogramOther (5) 581 699 808 465 973 Ending balance $ 608,719 $ 593,793 $ 572,613 $ 556,020 $ 539,139 REGULATORYCAPITAL RATIOS (6):Total risk-based 15.22 % 14.95 % 14.93 % 13.71 % 13.54 %capital ratioTier 1risk-based 11.61 % 11.34 % 11.25 % 11.07 % 11.16 %capital ratioTier 1 leverage 10.10 % 9.49 % 9.21 % 8.91 % 10.19 %capital ratioCommon equity 10.83 % 10.55 % 10.44 % 10.25 % 10.31 %tier 1 ratio KEY PERFORMANCERATIOS AND OTHER METRICSReturn onaverage assets 1.27 % 1.25 % 1.19 % 0.95 % 0.91 %(annualized)Return onaverage total 11.91 % 12.43 % 12.06 % 9.88 % 8.23 %equity(annualized)Net interest 3.26 % 3.25 % 3.36 % 3.14 % 3.40 %marginNet interestmargin (TEY) 3.43 % 3.45 % 3.51 % 3.27 % 3.56 %(Non-GAAP)(7)Efficiency ratio 56.87 % 61.23 % 49.48 % 47.61 % 59.40 %(Non-GAAP) (8)Gross loans andleases / total 77.25 % 74.81 % 72.43 % 74.01 % 70.95 %assets (9)Gross loans andleases / total 94.15 % 92.43 % 90.92 % 95.18 % 88.83 %deposits (9)Effective tax 16.45 % 17.99 % 18.80 % 16.92 % 14.37 %rateFull-timeequivalent 720 714 687 712 703 employees (10) AVERAGE BALANCES Assets $ 5,668,850 $ 5,842,299 $ 5,820,555 $ 5,800,164 $ 4,948,311 Loans/leases 4,271,782 4,250,951 4,185,275 3,999,523 3,686,410 Deposits 4,628,889 4,742,602 4,726,881 4,732,626 3,954,707 Totalstockholders' 604,012 588,042 575,061 556,047 545,548 equity (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 employeestock purchase plan, as well as stock-based compensation.(6) Ratios for the current quarter are subject to change upon final calculationfor regulatory filings due after earnings release.(7) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.(8) See GAAP toNon-GAAP reconciliations.(9) Excludes assets held for sale as of March 31, 2020 and June 30, 2020.(10) Growth in full-time equivalents from September 30, 2020 to December 31,2020 due to the addition of new positions created to build scale.Decrease from June 30, 2020 to September 30, 2020 due to saleof Bates Companies and interns employed only during the summer.

QCR Holdings, Inc.Consolidated Financial Highlights (Unaudited) ANALYSIS OF NET INTEREST INCOME AND MARGIN For the Quarter Ended March 31, 2021 December 31, 2020 March 31, 2020 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 $ 1,847 $ 1 0.05 % $ 1,216 $ 1 0.08 % $ 5,324 $ 18 1.36 %soldInterest-bearingdeposits at 116,446 37 0.13 % 279,024 82 0.12 % 128,612 361 1.13 %financialinstitutionsSecurities 810,059 7,050 3.48 % 795,696 7,207 3.62 % 619,307 6,080 3.95 %(1)Restrictedinvestment 18,064 219 4.84 % 18,790 236 4.92 % 21,365 258 4.86 %securitiesLoans (1) 4,271,782 42,525 4.04 % 4,250,951 44,956 4.21 % 3,686,410 44,056 4.81 %Total earning $ 5,218,198 $ 49,832 3.86 % $ 5,345,677 $ 52,482 3.91 % $ 4,461,018 $ 50,773 4.58 %assets (1) Interest-bearing $ 2,981,306 $ 1,986 0.27 % $ 3,033,119 $ 2,060 0.27 % $ 2,379,635 $ 5,328 0.90 %depositsTime deposits 448,035 1,441 1.30 % 530,813 1,752 1.31 % 785,135 3,879 1.99 %Short-term 7,141 1 0.07 % 19,115 3 0.17 % 19,315 64 1.33 %borrowingsFederal HomeLoan Bank 13,078 9 0.28 % 33,207 80 0.94 % 111,407 449 1.62 %advancesSubordinated 118,706 1,594 5.37 % 118,612 1,678 5.66 % 68,418 994 5.84 %debenturesJuniorsubordinated 38,007 559 5.88 % 37,969 571 5.88 % 37,853 571 6.07 %debenturesTotalinterest-bearing $ 3,606,273 $ 5,590 0.63 % $ 3,772,835 $ 6,144 0.64 % $ 3,401,763 $ 11,285 1.33 %liabilities Net interest $ 44,242 $ 46,338 $ 39,488 income (1)Net interest 3.26 % 3.25 % 3.40 %margin (2)Net interestmargin (TEY) 3.43 % 3.45 % 3.56 %(Non-GAAP) (1)(2) (3)Adjusted net interest margin 3.40 % 3.37 % 3.50 %(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 March 31, December 31, September 30, June 30, March 31, 2021 2020 2020 2020 2020 (dollars in thousands, except per share data) ROLLFORWARDOF ALLOWANCEFOR CREDIT LOSSES ONLOANS/LEASESBeginning $ 84,376 $ 79,582 $ 60,827 $ 42,233 $ 36,001 balanceAdoption ofASU 2016-13 (8,102 ) - - - - "CECL" - Day1 adjustmentProvisioncharged to 5,993 7,080 20,342 19,915 8,367 expenseLoans/leases (713 ) (2,779 ) (1,819 ) (1,450 ) (2,335 )charged offRecoveries onloans/leases 277 493 232 129 200 previouslycharged offEnding $ 81,831 $ 84,376 $ 79,582 $ 60,827 $ 42,233 balance NONPERFORMING ASSETSNonaccrual $ 13,863 $ 13,940 $ 17,597 $ 12,099 $ 11,628 loans/leasesAccruingloans/leases - 3 86 99 1,419 past due 90days or moreTotalnonperforming 13,863 13,943 17,683 12,198 13,047 loans/leasesOther real 173 20 125 157 3,298 estate ownedOtherrepossessed 50 135 110 25 45 assetsTotalnonperforming $ 14,086 $ 14,098 $ 17,918 $ 12,380 $ 16,390 assets ASSET QUALITY RATIOSNonperformingassets / 0.25 % 0.25 % 0.31 % 0.22 % 0.31 %total assets(1)ACL for loansand leases / 1.88 % 1.98 % 1.87 % 1.47 % 1.14 %total loans/leases (2)ACL for loansand leases /nonperforming 590.28 % 605.15 % 450.05 % 498.66 % 323.70 %loans/leases(2)Netcharge-offsas a % of 0.01 % 0.05 % 0.04 % 0.03 % 0.06 %average loans/leases INTERNALLYASSIGNED RISK RATING (3)Specialmention $ 53,466 $ 71,482 $ 79,587 $ 104,608 $ 34,738 (rating 6)Substandard 84,982 66,081 70,409 39,855 36,612 (rating 7)Doubtful - - - - - (rating 8) $ 138,448 $ 137,563 $ 149,996 $ 144,463 $ 71,350 Criticized $ 138,448 $ 137,563 $ 149,996 $ 144,463 $ 71,350 loans (4)Classified 84,982 66,081 70,409 39,855 36,612 loans (5) Criticizedloans as a % 3.17 % 3.24 % 3.53 % 3.49 % 1.93 %of totalloans/leasesClassifiedloans as a % 1.95 % 1.55 % 1.66 % 0.96 % 0.99 %of totalloans/leases (1) Excludes assets heldfor sale as of March 31, 2020 and June 30, 2020.(2) Prior to adoption of ASU 2016-13 "CECL", upon acquisition and per GAAP,acquired loans were recorded at market value, which eliminates the allowanceandimpacts this ratio. There have been no acquisitions since adoptingASU 2016-13 "CECL", which requires an allowance to be established on acquiredloans.(3) Amounts exclude the government guaranteed portion, if any. The Companyassigns internal risk ratings of Pass (Rating 2) for the government guaranteedportion.(4) Criticized loans are defined as C&I and CRE loans with internally assignedrisk ratings of 6, 7, or 8, regardless of performance.(5) Classified loans are defined as C&I and CRE loans with internally assignedrisk ratings of 7 or 8, regardless of performance.

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) For the Quarter Ended March 31, December 31, March 31, SELECT FINANCIAL DATA - 2021 2020 2020 SUBSIDIARIES (dollars in thousands) TOTAL ASSETS Quad City Bank $ 2,101,634 $ 2,149,469 $ 1,914,785 and Trust (1) m2 Equipment 245,842 243,090 237,198 Finance, LLC Cedar Rapids Bank 1,847,070 1,952,308 1,719,773 and Trust Community State 1,041,861 1,000,670 863,903 Bank - Ankeny Springfield First 818,605 779,955 708,736 Community Bank TOTAL DEPOSITS Quad City Bank $ 1,841,518 $ 1,866,635 $ 1,678,889 and Trust (1) Cedar Rapids Bank 1,362,927 1,378,108 1,247,989 and Trust Community State 912,419 875,400 743,645 Bank - Ankeny Springfield First 602,274 569,036 524,420 Community Bank TOTAL LOANS & LEASES Quad City Bank $ 1,568,131 $ 1,556,762 $ 1,338,915 and Trust (1) m2 Equipment 249,478 244,325 235,144 Finance, LLC Cedar Rapids Bank 1,382,336 1,362,056 1,159,453 and Trust Community State 743,892 707,681 634,253 Bank - Ankeny Springfield First 666,692 624,629 572,046 Community Bank TOTAL LOANS & LEASES / TOTAL DEPOSITS Quad City Bank 85 % 83 % 80 % and Trust (1) Cedar Rapids Bank 101 % 99 % 93 % and Trust Community State 82 % 81 % 85 % Bank - Ankeny Springfield First 111 % 110 % 109 % Community Bank TOTAL LOANS & LEASES / TOTAL ASSETS Quad City Bank 75 % 72 % 70 % and Trust (1) Cedar Rapids Bank 75 % 70 % 67 % and Trust Community State 71 % 71 % 73 % Bank - Ankeny Springfield First 81 % 80 % 81 % Community Bank ACL ON LOANS/ LEASES AS A PERCENTAGE OF LOANS/LEASES Quad City Bank 1.98 % 1.95 % 1.17 % and Trust (1) m2 Equipment 3.73 % 2.63 % 1.50 % Finance, LLC Cedar Rapids Bank 2.05 % 2.35 % 1.35 % and Trust (2) Community State 1.74 % 2.02 % 1.21 % Bank - Ankeny (2) Springfield First Community Bank 1.43 % 1.23 % 0.56 % (2) RETURN ON AVERAGE ASSETS Quad City Bank 1.35 % 1.52 % 1.33 % and Trust (1) Cedar Rapids Bank 2.45 % 0.59 % 1.60 % and Trust Community State 0.81 % 3.25 % 0.50 % Bank - Ankeny Springfield First 1.16 % 3.02 % 1.29 % Community Bank NET INTEREST MARGIN PERCENTAGE (3) Quad City Bank 3.20 % 3.19 % 3.68 % and Trust (1) Cedar Rapids Bank 3.55 % 3.51 % 3.43 % and Trust (4) Community State 3.70 % 3.77 % 3.91 % Bank - Ankeny (5) Springfield First Community Bank 3.55 % 4.03 % 3.83 % (6) ACQUISITION-RELATED AMORTIZATION/ ACCRETION INCLUDED IN NET INTEREST MARGIN, NET Cedar Rapids Bank $ 13 $ 103 $ 49 and Trust Community State 317 132 64 Bank - Ankeny Springfield First 211 880 552 Community Bank QCR Holdings, (37 ) (38 ) (40 ) Inc. (7) Quad City Bank and Trust figures include m2 Equipment Finance, LLC, as(1 ) this entity is wholly-owned and consolidated with the Bank. m2 Equipment Finance, LLCis also presented separately for certain (applicable) measurements. Prior to adoption of ASU 2016-13 "CECL", upon acquisition and per GAAP, acquired loans were recorded at market value, which eliminates the(2 ) allowance andimpacts this ratio. There have been no acquisitions since adopting ASU 2016-13 "CECL", which requires an allowance to be established on acquired loans. Includes nontaxable securities and loans. Interest earned and yields on(3 ) nontaxable securities and loans are determined on a tax equivalent basis usinga 21% tax rate. Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net(4 ) interestmargin (Non-GAAP) would have been 3.55% for the quarter ended March 31, 2021, 3.47% for the quarter ended December 31, 2020 and 3.42% for thequarter ended March 31, 2020. Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net(5 ) interestmargin (Non-GAAP) would have been 3.54% for the quarter ended March 31, 2021, 3.69% for the quarter ended December 31, 2020 and 3.86% for thequarter ended March 31, 2020. Springfield First Community Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net(6 ) interestmargin (Non-GAAP) would have been 3.49% for the quarter ended March 31, 2021, 3.59% for the quarter ended December 31, 2020 and 4.52% for thequarter ended March 31, 2020. Relates to the trust preferred securities acquired as part of the Guaranty(7 ) Bank acquisition in 2017 and the Community National Bank acquisition in 2013.

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) As of March 31, December 31, September 30, June 30, March 31,GAAP TONON-GAAP 2021 2020 2020 2020 2020 RECONCILIATIONS (dollars in thousands, except per share data)TANGIBLE COMMONEQUITY TO TANGIBLE ASSETSRATIO (1) Stockholders' $ 608,719 $ 593,793 $ 572,613 $ 556,020 $ 539,139 equity (GAAP)Less:Intangible 84,939 85,447 85,968 88,120 88,669 assetsTangible commonequity $ 523,780 $ 508,346 $ 486,645 $ 467,900 $ 450,470 (non-GAAP) Total assets $ 5,645,147 $ 5,682,797 $ 5,864,560 $ 5,604,761 $ 5,232,075 (GAAP)Less:Intangible 84,939 85,447 85,968 88,120 88,669 assetsTangible assets $ 5,560,208 $ 5,597,350 $ 5,778,592 $ 5,516,641 $ 5,143,406 (non-GAAP) Tangible commonequity totangible assets 9.42 % 9.08 % 8.42 % 8.48 % 8.76 %ratio(non-GAAP) TANGIBLE COMMONEQUITY TOTANGIBLE ASSETS RATIO EXCLUDINGPPP LOANS (1) Stockholder's $ 608,719 $ 593,793 $ 572,613 $ 556,020 $ 539,139 equity (GAAP)Less: PPP loaninterest income 9,479 7,691 4,934 2,085 - (post-tax) (2)Less:Intangible 84,939 85,447 85,968 88,120 88,669 assetsTangible commonequity,excluding PPP $ 514,301 $ 500,655 $ 481,711 $ 465,815 $ 450,470 loan income(non-GAAP) Total assets $ 5,645,147 $ 5,682,797 $ 5,864,560 $ 5,604,761 $ 5,232,075 (GAAP)Less: PPP loans 243,860 273,146 357,506 358,052 - Less:Intangible 84,939 85,447 85,968 88,120 88,669 assetsTangibleassets,excluding PPP $ 5,316,348 $ 5,324,204 $ 5,421,086 $ 5,158,589 $ 5,143,406 loans(non-GAAP) Tangible commonequity totangible assetsratio, 9.67 % 9.40 % 8.89 % 9.03 % 8.76 %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 interested in changesperiod-to-period in common equity. In compliance with applicable rules of theSEC, this non-GAAP measure is reconciled to stockholders' equity and totalassets, which are the mostdirectlycomparable GAAP financialmeasures.(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 EndedRECONCILIATIONS March 31, December 31, September 30, June 30, March 31,ADJUSTED NET INCOME (1) 2021 2020 2020 2020 2020 (dollars in thousands, except per share data) Net income (GAAP) $ 17,982 $ 18,271 $ 17,344 $ 13,739 $ 11,228 Less non-core items (post-tax) (2):Income: Securities gains(losses), net - 487 1,424 51 - Mark to market gains (losses) 129 - - - - on derivatives, netLoss on syndicated loan - (210 ) - - - Total non-core income $ 129 $ 277 $ 1,424 $ 51 $ - (non-GAAP) Expense: Losses on debt $ - $ 1,151 $ 1,480 $ 339 $ 116 extinguishment, netGoodwill impairment - - - - 500 Disposition costs 7 51 152 (66 ) 408 Acquisition costs (4) - - - - - Separation agreement 734 - - - - Post-acquisitioncompensation, transition and - 20 (25 ) 55 119 integration costsLoss on sale of subsidiary - (102 ) 212 - - Total non-core expense $ 741 $ 1,119 $ 1,819 $ 329 $ 1,143 (non-GAAP) Adjusted net income $ 18,594 $ 19,113 $ 17,739 $ 14,016 $ 12,372 (non-GAAP) (1) PRE-PROVISION/PRE-TAX ADJUSTED INCOME (1)Net income (GAAP) $ 17,982 $ 18,271 $ 17,344 $ 13,739 $ 11,228 Less: Non-core income not 164 351 1,802 65 - tax-effectedPlus: Non-core expense not 937 1,399 2,339 416 1,315 tax-effectedProvision 6,713 7,080 20,342 19,915 8,367 expenseFederal and 3,541 4,009 4,016 2,798 1,884 state income tax expensePre-provision/pre-taxadjusted income (non-GAAP) $ 29,009 $ 30,408 $ 42,239 $ 36,803 $ 22,794 (1) PRE-PROVISION/PRE-TAXADJUSTED RETURN ON AVERAGE ASSETS (NON-GAAP) Pre-provision/pre-tax $ 29,009 $ 30,408 $ 42,239 $ 36,803 $ 22,794 adjusted income (non-GAAP)Average Assets $ 5,668,850 $ 5,842,299 $ 5,820,555 $ 5,800,164 $ 4,948,311 Pre-provision/pre-taxadjusted return on average 2.05 % 2.08 % 2.90 % 2.54 % 1.84 %assets (non-GAAP) ADJUSTED EARNINGS PER COMMON SHARE (1) Adjusted net income $ 18,594 $ 19,113 $ 17,739 $ 14,016 $ 12,372 (non-GAAP) (from above) Weighted average common 15,803,643 15,775,596 15,767,152 15,747,056 15,796,796 shares outstandingWeighted average common andcommon equivalent shares 16,025,548 15,973,054 15,923,578 15,895,336 16,011,456 outstanding Adjusted earnings per common share (non-GAAP):Basic $ 1.18 $ 1.21 $ 1.13 $ 0.89 $ 0.78 Diluted $ 1.16 $ 1.20 $ 1.11 $ 0.88 $ 0.77 ADJUSTED RETURN ON AVERAGE ASSETS (1) Adjusted net income $ 18,594 $ 19,113 $ 17,739 $ 14,016 $ 12,372 (non-GAAP) (from above)Average Assets $ 5,668,850 $ 5,842,299 $ 5,820,555 $ 5,800,164 $ 4,948,311 Adjusted return on averageassets (annualized) 1.31 % 1.31 % 1.22 % 0.97 % 1.00 %(non-GAAP) NET INTEREST MARGIN (TEY) (4) Net interest income (GAAP) $ 41,975 $ 43,707 $ 44,581 $ 40,948 $ 37,698 Plus: Tax equivalent 2,267 2,631 1,942 1,728 1,790 adjustment (3)Net interest income - tax $ 44,242 $ 46,338 $ 46,523 $ 42,676 $ 39,488 equivalent (Non-GAAP)Less: Acquisition accounting 504 1,077 833 736 625 net accretion Adjusted net interest income $ 43,738 $ 45,261 $ 45,690 $ 41,940 $ 38,863 Average earning assets $ 5,218,198 $ 5,345,677 $ 5,278,298 $ 5,252,663 $ 4,461,018 Net interest margin (GAAP) 3.26 % 3.25 % 3.36 % 3.14 % 3.40 %Net interest margin (TEY) 3.43 % 3.45 % 3.51 % 3.27 % 3.56 %(Non-GAAP)Adjusted net interest margin 3.40 % 3.37 % 3.44 % 3.21 % 3.50 %(TEY) (Non-GAAP) EFFICIENCY RATIO (5) Noninterest expense (GAAP) $ 37,228 $ 46,364 $ 40,838 $ 33,122 $ 31,415 Net interest income (GAAP) $ 41,975 $ 43,707 $ 44,581 $ 40,948 $ 37,698 Noninterest income (GAAP) 23,489 32,017 37,959 28,626 15,196 Total income $ 65,464 $ 75,724 $ 82,540 $ 69,574 $ 52,894 Efficiency ratio (noninterestexpense/total income) 56.87 % 61.23 % 49.48 % 47.61 % 59.39 %(Non-GAAP) ALLOWANCE FOR CREDIT LOSSESON LOANS/LEASES TO TOTAL LOANS/LEASES, EXCLUDING PPPLOANS (6) Allowance for credit losses $ 81,831 $ 84,376 $ 79,582 $ 60,827 $ 42,233 on loans and leases Total loans and leases $ 4,361,051 $ 4,251,129 $ 4,247,977 $ 4,140,259 $ 3,704,668 Less: PPP loans 243,860 273,146 357,506 358,052 - Total loans and leases, $ 4,117,191 $ 3,977,983 $ 3,890,471 $ 3,782,207 $ 3,704,668 excluding PPP loans Allowance for credit losseson loans and leases to total 1.99 % 2.12 % 2.05 % 1.61 % 1.14 %loans and leases, excludingPPP loans LOAN GROWTH ANNUALIZED, EXCLUDING PPP LOANSTotal loans and leases $ 4,361,051 $ 4,251,129 $ 4,247,977 $ 4,140,259 $ 3,704,668 Less: PPP loans 243,860 273,146 357,506 358,052 - Total loans and leases, $ 4,117,191 $ 3,977,983 $ 3,890,471 $ 3,782,207 $ 3,704,668 excluding PPP loans Loan growth annualized, 14.00 % 9.00 % 11.45 % 8.37 % 1.57 %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 management believes that thesemeasurements are important to investors as they exclude non-recurring incomeand expense items,therefore, they provide a more realistic run-rate for future periods. Incompliance with applicable rules of the SEC, this non-GAAP measure isreconciled to net income, which isthe most directly 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 notdeductible for tax and gain/loss on sale of assets and liabilities of subsidiary has an estimated effective 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 loans and securities. It is also standard industry practice to measure netinterest margin using tax-equivalent measures. In compliance with applicablerules of the SEC, this non-GAAP measure is reconciled to net interest income, which is the most directlycomparable GAAP financial measure. In addition, the Company calculates netinterest 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.(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 isreconciled to noninterest expense, net interest income and noninterest income,which are the most directly comparable GAAP financial measures. (6) Allowance for credit losses on loans and leases to total loans and leases,excluding PPP loans is a non-GAAP measure. The Company's management utilizesthis ratio to remove from the allowancecalculation the impact of PPP loans which are fully guaranteed bythe federal government and for which these loans have no allowance for creditloss allocation.