GlobeNewswire Inc | Jul 26, 2021 04:05PM EDT

July 26, 2021

Second Quarter 2021 Highlights

-- Record net income of $22.3 million, or $1.39 per diluted share -- Adjusted net income (non-GAAP) of $22.5 million, or $1.40 per diluted share -- Net Interest Margin (NIM) increased by 2 basis points and Adjusted NIM (TEY)(non-GAAP) increased by 4 bps to 3.28% and 3.44%, respectively -- Adjusted net interest income (non-GAAP) increased $1.9 million, or 4.4% -- Annualized core loan and lease growth (non-GAAP) of 14.9% for the quarter, excluding SBA Paycheck Protection Program (PPP) loans -- Annualized core deposit growth of 4.9% for the quarter -- Allowance for credit losses (ACL) to total loans/leases of 1.85%, excluding PPP loans (non-GAAP) -- Nonperforming assets improved by 28% for the quarter and now represent only 0.17% of total assets

MOLINE, Ill., July 26, 2021 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the Company) today announced record net income of $22.3 million and diluted earnings per share (EPS) of $1.39 for the second quarter of 2021, compared to net income of $18.0 million and diluted EPS of $1.12 for the first quarter of 2021.

The Company reported adjusted net income (non-GAAP) of $22.5 million and adjusted diluted EPS (non-GAAP) of $1.40 for the second quarter of 2021, compared to adjusted net income (non-GAAP) of $18.6 million and adjusted diluted EPS (non-GAAP) of $1.16 for the first quarter of 2021. For the second quarter of 2020, net income and diluted EPS were $13.7 million and $0.86, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $14.0 million and $0.88, respectively.

For the Quarter Ended June 30, March 31, June 30, $ in millions (except per share data) 2021 2021 2020 Net Income $ 22.3 $ 18.0 $ 13.7 Diluted EPS $ 1.39 $ 1.12 $ 0.86 Adjusted Net Income (non-GAAP) $ 22.5 $ 18.6 $ 14.0 Adjusted Diluted EPS (non-GAAP) $ 1.40 $ 1.16 $ 0.88

_________________________________________________________________________________________________________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 delivered a record quarter of net income, driven by continued strong loan growth, an expanded net interest margin, improved asset quality and careful noninterest expense management, said Larry J. Helling, Chief Executive Officer. "We successfully deployed our liquidity with another quarter of strong loan and lease production, while maintaining disciplined underwriting. Higher average loan balances, combined with an improved net interest margin, enabled us to generate a solid increase in net interest income from the prior quarter.

Annualized Loan and Lease Growth of 14.9% for the Quarter, excluding PPP Loans (non-GAAP)

During the second quarter of 2021, the Companys core loans and leases, excluding PPP loans, increased $153.0 million to a total of $4.3 billion. Core loan and lease growth during the quarter was 14.9% on an annualized basis and was funded by the Companys excess liquidity and core deposit growth. Core deposits (excluding brokered deposits) increased by $57.0 million during the quarter. The Companys wholesale funding portfolio has been reduced to predominately subordinated debt that qualifies as regulatory capital.

Our continued outsized loan growth for the quarter was driven by strength in both our Specialty Finance Group and our core commercial lending and leasing business, added Helling. Given the robust first half results, combined with our current pipeline, we are targeting continued strong organic loan growth for the full year 2021 of between 10% and 12%, which is higher than our long-term goal of 9%.

Net Interest Income of $43.5 million

Net interest income for the second quarter of 2021 totaled $43.5 million, compared to $42.0 million for the first quarter of 2021 and $41.0 million for the second quarter of 2020. Adjusted net interest income (non-GAAP) during the quarter was $45.7 million, an increase of $1.9 million, or 4.4%, from the prior quarter, primarily due to an increase in adjusted net interest margin combined with the strong loan/lease growth. Adjusted net interest income (non-GAAP) was $41.9 million for the second quarter of 2020. Acquisition-related net accretion totaled $291 thousand for the second quarter of 2021, down from $504 thousand in the first quarter of 2021 and $736 thousand for the second quarter of 2020.

In the second quarter, reported NIM was 3.28% and, on a tax-equivalent yield basis (non-GAAP), NIM was 3.46%, as compared to 3.26% and 3.43% in the first quarter of 2021, respectively. Adjusted NIM (non-GAAP), which excludes acquisition-related net accretion was 3.44%, up 4 basis points from the first quarter. The increase in Adjusted NIM (non-GAAP) during the quarter was due to a decline of 3 basis points in the total cost of interest-bearing funds (due to both mix and rate), and a 1 basis point increase in the yield on earning assets (adjusted for acquisition-related net accretion).



For the Quarter Ended June 30, March 31, June 30, 2021 2021 2020NIM 3.28% 3.26% 3.14%NIM (TEY)(non-GAAP) 3.46% 3.43% 3.27%Adjusted NIM (TEY)(non-GAAP) 3.44% 3.40% 3.21%See GAAP to non-GAAP reconciliations

We expanded our adjusted net interest margin again during the second quarter driven by lower deposit costs. Additionally, our average yield on interest earning assets was up slightly during the quarter. Our talented team of bankers continues to have success implementing our relationship-based model, leading to improved cost of funds and minimizing loan yield reductions in this highly competitive environment. With our strong loan and lease growth and margin expansion, net interest income grew by over 4% in the quarter when excluding the impact of acquisition accounting, said Todd A. Gipple, President, Chief Operating Officer and Chief Financial Officer.

Noninterest Income of $19.3 million

Noninterest income for the second quarter of 2021 totaled $19.3 million, compared to $23.5 million for the first quarter of 2021. The decrease was primarily due to a $4.0 million reduction in capital markets revenue from the prior quarter as a few of the Companys swap loans that were scheduled to close in the second quarter will now close in the third quarter. Wealth management revenue was $3.9 million for the quarter, up $146 thousand from the first quarter.

Swap fee income/capital markets revenue totaled $9.6 million for the quarter, which was lower than our guidance. Several of our swap loans that were scheduled to close in the second quarter were temporarily delayed due to factors outside of the Companys control. Most of those loans subsequently closed in July, where we have experienced very strong activity and as of July 23rd we have already generated $10 million in swap fees this month. The current pipeline of swap loans remains healthy and we believe this source of revenue is sustainable long-term, added Gipple. As a result, we expect our third quarter swap fee income/capital markets revenue will be at the upper end of our guidance range of $14 to $18 million.

Noninterest Expenses of $35.7 million

Noninterest expense for the second quarter of 2021 totaled $35.7 million, compared to $37.2 million for the first quarter of 2021 and $33.1 million for the second quarter of 2020. The linked-quarter decline was primarily due to lower salary and benefits expense of $1.8 million, driven by lower incentive compensation and commission expense in the quarter due to the lower capital markets revenue income. Partially offsetting this decrease was a $259 thousand increase in professional and data processing fees and a $226 thousand increase in advertising and marketing expense, both returning to more normalized levels from their lower levels in the first quarter.

Asset Quality Remains Strong and NPAs Improved

Nonperforming assets (NPAs) totaled $10.1 million at the end of the second quarter, a decrease of $4.0 million from the first quarter of 2021. The decrease was primarily due to a reduction in nonaccrual loans as a number of loans returned to performing status or were either monetized or were charged-off during the quarter. The ratio of NPAs to total assets improved to 0.17% on June 30, 2021, compared to 0.25% on March 31, 2021, and 0.22% on June 30, 2020. In addition, the Companys criticized loans and classified loans to total loans and leases decreased to 2.97% and 1.80%, respectively, from 3.17% and 1.95% as of March 31, 2021.

The Company did not record a provision for credit losses in the second quarter of 2021, primarily due to continued strong asset quality and a reduction in nonperforming loans. The provision for credit losses totaled $6.7 million for the first quarter of 2021. As of June 30, 2021, the ACL on total loans/leases was 1.79%, compared to 1.88% as of March 31, 2021. Excluding PPP loans of $148 million, the ACL to total loans/leases as of June 30, 2021, was 1.85% (non-GAAP).

Continued Strong Capital Levels

As of June 30, 2021, the Companys total risk-based capital ratio was 14.77%, the common equity tier 1 ratio was 10.57% and the tangible common equity to tangible assets ratio (non-GAAP) was 9.55%. By comparison, these respective ratios were 14.85%, 10.55% and 9.42% as of March 31, 2021. During the second quarter, the Company resumed share repurchases under its existing share repurchase program and purchased and retired 100,000 shares at an average price of $48.00 per share.

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.

Conference Call Details

The Company will host an earnings call/webcast tomorrow, July 27, 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 August 10, 2021. The replay access information is 877-344-7529 (international 412-317-0088); access code 10158303. 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 offers equipment loans and leases to businesses through its wholly-owned subsidiary, m2 Equipment Finance, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 23 locations in Iowa, Missouri, Wisconsin and Illinois. As of June 30, 2021, the Company had approximately $5.8 billion in assets, $4.4 billion in loans and $4.7 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 June 30, March 31, December 31, September June 30, 30, 2021 2021 2020 2020 2020 (dollars in thousands) CONDENSED BALANCE SHEET Cash and due from $ 55,598 $ 78,814 $ 61,329 $ 68,932 $ 88,577banksFederal funds soldand 88,780 55,056 95,676 302,668 142,900interest-bearingdepositsSecurities, net ofallowance for 810,445 799,825 838,131 782,088 748,883credit lossesNet loans/leases 4,338,811 4,279,220 4,166,753 4,168,395 4,079,432Intangibles 10,365 10,873 11,381 11,902 13,872Goodwill 74,066 74,066 74,066 74,066 74,248Derivatives 193,395 122,668 222,757 236,381 225,164Other assets 233,705 224,625 212,704 220,128 220,920Assets held for - - - - 10,765saleTotal assets $ 5,805,165 $ 5,645,147 $ 5,682,797 $ 5,864,560 $ 5,604,761 Total deposits $ 4,688,935 $ 4,631,782 $ 4,599,137 $ 4,672,268 $ 4,349,775Total borrowings 198,908 188,601 177,114 226,962 376,250Derivatives 196,092 125,863 229,270 244,510 233,589Other liabilities 90,754 90,182 83,483 148,207 87,539Liabilities held - - - - 1,588for saleTotal stockholders' 630,476 608,719 593,793 572,613 556,020equityTotal liabilitiesand stockholders' $ 5,805,165 $ 5,645,147 $ 5,682,797 $ 5,864,560 $ 5,604,761equity ANALYSIS OF LOAN PORTFOLIOLoan/lease mix: (1) Commercial andindustrial - $ 182,882 $ 168,842 revolvingCommercial and 1,505,384 1,616,144 industrial - otherCommercial RealEstate, Owner 427,734 461,272 OccupiedCommercial RealEstate, Non-Owner 618,879 610,582 OccupiedConstruction and 708,289 607,798 Land DevelopmentMulti-family 466,804 396,272 Direct financing 56,153 60,134 leases1-4 family real 382,142 368,927 estateConsumer 69,438 71,080 Total loans/leases $ 4,417,705 $ 4,361,051 Less allowance for 78,894 81,831 credit losses (2)Net loans/leases $ 4,338,811 $ 4,279,220 Loan/lease mix: (1) Commercial and $ 1,680,853 $ 1,779,062 $ 1,726,723 $ 1,823,049 $ 1,850,110industrial loansCommercial real 2,319,423 2,174,897 2,107,629 1,999,715 1,869,162estate loansDirect financing 55,371 59,229 66,016 73,011 79,105leasesResidential real 268,193 254,900 252,121 245,032 241,069estate loansInstallment andother consumer 86,925 87,053 91,302 102,471 99,150loansDeferred loan/leaseorigination costs, 6,940 5,910 7,338 4,699 1,663net of feesTotal loans/leases $ 4,417,705 $ 4,361,051 $ 4,251,129 $ 4,247,977 $ 4,140,259Less allowance for 78,894 81,831 84,376 79,582 60,827credit losses (2)Net loans/leases $ 4,338,811 $ 4,279,220 $ 4,166,753 $ 4,168,395 $ 4,079,432 ANALYSIS OFSECURITIES PORTFOLIOSecurities mix: U.S. governmentsponsored agency $ 14,670 $ 14,581 $ 15,336 $ 18,437 $ 17,472securitiesMunicipal 641,603 614,649 627,523 569,075 526,192securitiesResidentialmortgage-backed and 106,139 118,051 132,842 134,147 145,672related securitiesAsset backed 31,778 39,815 40,683 40,665 39,797securitiesOther securities 16,429 12,903 21,747 19,764 19,750Total securities $ 810,619 $ 799,999 $ 838,131 $ 782,088 $ 748,883Less allowance for 174 174 - - -credit losses (2)Net securities $ 810,445 $ 799,825 $ 838,131 $ 782,088 $ 748,883 ANALYSIS OF DEPOSITSDeposit mix: Noninterest-bearing $ 1,258,885 $ 1,269,578 $ 1,145,378 $ 1,175,085 $ 1,177,482demand depositsInterest-bearing 2,976,696 2,916,054 2,987,469 2,938,194 2,488,755demand depositsTime deposits 452,171 445,067 460,659 499,021 560,982Brokered deposits 1,183 1,084 5,631 59,968 122,556Total deposits $ 4,688,935 $ 4,631,782 $ 4,599,137 $ 4,672,268 $ 4,349,775 ANALYSIS OF BORROWINGSBorrowings mix: Term FHLB advances $ - $ - $ - $ 40,000 $ 90,000Overnight FHLB 40,000 25,000 15,000 - 55,000advances (3)FRB borrowings - - - - 100,000Other short-term 7,070 6,840 5,430 30,430 24,818borrowingsSubordinated notes 113,771 118,731 118,691 118,577 68,516Junior subordinated 38,067 38,030 37,993 37,955 37,916debenturesTotal borrowings $ 198,908 $ 188,601 $ 177,114 $ 226,962 $ 376,250 (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-balance sheet ("OBS") exposures and held to maturity ("HTM")securities, recorded through the income statement within the provision forcredit losses.The Day 1 adjustments to ACL were as follows: loans/leases ($8.1)million, OBS $9.1 million, HTM securities $183 thousand.(3) At the most recent quarter-end, the weighted-average rate of theseovernight borrowings was 0.26%.

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) For the Quarter Ended June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 (dollars in thousands, except per share data) INCOME STATEMENT Interest income $ 48,903 $ 47,565 $ 49,851 $ 50,890 $ 48,650 Interest expense 5,387 5,590 6,144 6,309 7,694 Net interest 43,516 41,975 43,707 44,581 40,956 incomeProvision forcredit losses - 6,713 7,080 20,342 19,915 (1)Net interestincome afterprovision for $ 43,516 $ 35,262 $ 36,627 $ 24,239 $ 21,041 loan/leaselosses Trust department $ 2,848 $ 2,801 $ 2,388 $ 2,280 $ 2,227 feesInvestmentadvisory and 1,039 940 926 1,266 1,399 management feesDeposit service 1,492 1,408 1,875 1,403 1,286 feesGain on sales ofresidential real 1,184 1,337 1,462 1,370 1,196 estate loansGain on sales ofgovernmentguaranteed - - 224 - - portions ofloansSwap fee income/capital markets 9,568 13,557 21,402 26,688 19,927 revenueSecurities gains (88 ) - 617 1,802 65 (losses), netEarnings onbank-owned life 451 471 461 502 612 insuranceDebit card fees 1,084 975 923 946 775 Correspondent 269 314 270 220 198 banking feesOther 1,449 1,686 1,469 1,482 941 Totalnoninterest $ 19,296 $ 23,489 $ 32,017 $ 37,959 $ 28,626 income Salaries andemployee $ 23,044 $ 24,847 $ 30,446 $ 25,999 $ 21,304 benefitsOccupancy andequipment 3,965 4,108 4,917 3,807 3,748 expenseProfessional anddata processing 3,702 3,443 3,871 3,758 3,646 feesPost-acquisitioncompensation,transition and - - 25 (32 ) 70 integrationcostsDisposition - 8 64 192 (83 )costsFDIC insurance,other insurance 986 1,065 1,272 1,301 908 and regulatoryfeesLoan/lease 457 300 465 403 339 expenseNet cost of(income from)and gains/losses (113 ) 39 (4 ) 16 (332 )on operations ofother realestateAdvertising and 853 627 1,276 750 552 marketingBank service 572 523 523 488 501 chargesLosses onliability - - 1,457 1,874 429 extinguishmentCorrespondent 198 200 205 205 212 banking expenseIntangibles 508 508 521 531 548 amortizationLoss (gain) onsale of - - (147 ) 305 - subsidiaryOther 1,503 1,560 1,473 1,241 1,288 Totalnoninterest $ 35,675 $ 37,228 $ 46,364 $ 40,838 $ 33,130 expense Net incomebefore income $ 27,137 $ 21,523 $ 22,280 $ 21,360 $ 16,537 taxesFederal andstate income tax 4,788 3,541 4,009 4,016 2,798 expenseNet income $ 22,349 $ 17,982 $ 18,271 $ 17,344 $ 13,739 Basic EPS $ 1.41 $ 1.14 $ 1.16 $ 1.10 $ 0.87 Diluted EPS $ 1.39 $ 1.12 $ 1.14 $ 1.09 $ 0.86 Weighted averagecommon shares 15,813,932 15,803,643 15,775,596 15,767,152 15,747,056 outstandingWeighted averagecommon andcommon 16,045,239 16,025,548 15,973,054 15,923,578 15,895,336 equivalentsharesoutstanding (1) Includes provision for credit losses related for loans/leases totaling($141) thousand, HTM securities totaling $0 and OBS exposures totaling $141thousand for the sixmonths ended June 30, 2021. For the three months ended March 31,2021, provision for credit losses related for loans/leases totaled $6.0million, HTM securitiestotaled ($9) thousand and OBS exposures totaled $729 thousand.Provision for credit losses only included provision for loans/leases for yearsprior to 2021.

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) For Six Months Ended June 30, June 30, 2021 2020 (dollars in thousands, except per share data) INCOME STATEMENT Interest income $ 96,468 $ 97,632 Interest expense 10,977 18,986 Net interest income 85,491 78,646 Provision for credit losses (1) 6,713 28,282 Net interest income after provision for $ 78,778 $ 50,364 loan/lease losses Trust department fees $ 5,649 $ 4,539 Investment advisory and management fees 1,979 3,126 Deposit service fees 2,900 2,763 Gain on sales of residential real 2,521 1,848 estate loansGain on sales of government guaranteed - - portions of loansSwap fee income/capital markets revenue 23,125 26,731 Securities gains (losses), net (88 ) 65 Earnings on bank-owned life insurance 922 941 Debit card fees 2,059 1,533 Correspondent banking fees 583 413 Other 3,135 1,863 Total noninterest income $ 42,785 $ 43,822 Salaries and employee benefits $ 47,891 $ 39,823 Occupancy and equipment expense 8,073 7,780 Professional and data processing fees 7,145 7,015 Post-acquisition compensation, - 221 transition and integration costsDisposition costs 8 434 FDIC insurance, other insurance and 2,051 1,591 regulatory feesLoan/lease expense 757 567 Net cost of (income from) and gains/losses on operations of other real (74 ) (319 )estateAdvertising and marketing 1,480 1,234 Bank service charges 1,095 1,005 Losses on liability extinguishment - 576 Correspondent banking expense 398 428 Intangibles amortization 1,016 1,097 Goodwill impairment - 500 Other 3,063 2,585 Total noninterest expense $ 72,903 $ 64,537 Net income before income taxes $ 48,660 $ 29,649 Federal and state income tax expense 8,329 4,682 Net income $ 40,331 $ 24,967 Basic EPS $ 2.55 $ 1.58 Diluted EPS $ 2.52 $ 1.56 Weighted average common shares 15,808,788 15,771,926 outstandingWeighted average common and common 16,035,394 15,956,958 equivalent shares outstanding (1) Includes provision for credit losses related for loans/leases totaling $5.9million, HTM securities totaling ($9) thousand and OBS exposures totaling$871 thousand for the six months ended June 30, 2021. Provision forcredit losses only included provision for loans/leases for years prior to 2021.

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) As of and for the Quarter Ended For the Six Months Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, 2021 2021 2020 2020 2020 2021 2020 (dollars in thousands, except per share data) COMMON SHARE DATACommon shares 15,763,522 15,843,732 15,805,711 15,792,357 15,790,611 outstandingBook value per $40.00 $38.42 $37.57 $36.26 $35.21 common share (1)Tangible bookvalue per common $34.64 $33.06 $32.16 $30.82 $29.63 share (Non-GAAP)(2)Closing stock $48.09 $47.22 $39.59 $27.41 $31.18 priceMarket $758,068 $748,141 $625,748 $432,869 $492,351 capitalizationMarket price / 120.24% 122.90% 105.38% 75.60% 88.55% book valueMarket price /tangible book 138.83% 142.83% 123.09% 88.95% 105.23% valueEarnings percommon share $4.81 $4.27 $3.84 $3.69 $3.55 (basic) LTM (3)Price earnings 10.00 x 11.06 x 10.31 x 7.43 x 8.78 x ratio LTM (3)TCE / TA 9.55% 9.42% 9.08% 8.42% 8.48% (Non-GAAP) (4) CONDENSEDSTATEMENT OFCHANGES IN STOCKHOLDERS'EQUITYBeginning $608,719 $593,793 $572,613 $556,020 $539,139 balanceCumulativeeffect from the - (937 ) - - - adoption of ASU2016-13 "CECL"Net income 22,349 17,982 18,271 17,344 13,739 Othercomprehensive 4,179 (1,751 ) 3,157 (614 ) 3,622 income (loss),net of taxCommon stockcash dividends (951 ) (949 ) (947 ) (945 ) (945 ) declaredRepurchase andcancellation of100,000 sharesof common stock (4,800 ) - - - - as a result of ashare repurchaseprogramOther (5) 980 581 699 808 465 Ending balance $ 630,476 $ 608,719 $ 593,793 $ 572,613 $ 556,020 REGULATORYCAPITAL RATIOS (6):Total risk-based 14.77% 14.85% 14.95% 14.93% 13.71% capital ratioTier 1risk-based 11.31% 11.31% 11.34% 11.25% 11.07% capital ratioTier 1 leverage 10.29% 10.10% 9.49% 9.21% 8.91% capital ratioCommon equity 10.57% 10.55% 10.55% 10.44% 10.25% tier 1 ratio KEY PERFORMANCERATIOS AND OTHER METRICSReturn onaverage assets 1.56% 1.27% 1.25% 1.19% 0.95% 1.41% 0.93% (annualized)Return onaverage total 14.33% 11.91% 12.43% 12.06% 9.88% 13.14% 9.30% equity(annualized)Net interest 3.28% 3.26% 3.25% 3.36% 3.14% 3.27% 3.26% marginNet interestmargin (TEY) 3.46% 3.43% 3.45% 3.51% 3.27% 3.45% 3.40% (Non-GAAP)(7)Efficiency ratio 56.80% 56.87% 61.23% 49.48% 47.61% 56.83% 52.70% (Non-GAAP) (8)Gross loans andleases / total 76.10% 77.25% 74.81% 72.43% 74.01% 76.10% 74.01% assets (9)Gross loans andleases / total 94.22% 94.15% 92.43% 90.92% 95.18% 94.22% 95.18% deposits (9)Effective tax 17.64% 16.45% 17.99% 18.80% 16.92% 17.12% 15.79% rateFull-timeequivalent 725 720 714 687 712 725 712 employees (10) AVERAGE BALANCES Assets $5,739,067 $5,668,850 $5,842,299 $5,820,555 $5,800,164 $5,704,151 $5,374,224 Loans/leases 4,412,322 4,271,782 4,250,951 4,185,275 3,999,523 4,342,440 3,842,967 Deposits 4,709,732 4,628,889 4,742,602 4,726,881 4,732,626 4,669,533 4,343,653 Totalstockholders' 624,000 604,012 588,042 575,061 556,047 614,061 536,775 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 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 toNon-GAAP reconciliations.(9) Excludesassets held for sale as of June30, 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 fromJune 30, 2020 to September 30, 2020 due to sale of Bates Companies.

QCR Holdings, Inc.Consolidated Financial Highlights(Unaudited) ANALYSIS OF NET INTEREST INCOME AND MARGIN For the Quarter Ended June 30, 2021 March 31, 2021 June 30, 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 sold $ 1,817 $ 1 0.06% $ 1,847 $ 1 0.05% $ 865 $ 1 0.46%Interest-bearingdeposits at 88,396 35 0.16% 116,446 37 0.13% 533,483 135 0.10%financialinstitutionsSecurities (1) 798,732 7,294 3.66% 810,059 7,050 3.48% 697,559 6,536 3.77%Restrictedinvestment 19,614 238 4.79% 18,064 219 4.84% 21,234 288 5.46%securitiesLoans (1) 4,412,322 43,776 3.98% 4,271,782 42,525 4.04% 3,999,522 43,417 4.37%Total earning $ 5,320,881 $ 51,344 3.87% $ 5,218,198 $ 49,832 3.86% $ 5,252,663 $ 50,377 3.86%assets (1) Interest-bearing $ 2,978,382 $ 2,050 0.28% $ 2,981,306 $ 1,986 0.27% $ 2,840,860 $ 2,429 0.34%depositsTime deposits 440,599 1,184 1.08% 448,035 1,441 1.30% 809,233 3,337 1.66%Short-term 10,883 1 0.05% 7,141 1 0.07% 25,064 22 0.35%borrowingsFederal HomeLoan Bank 21,802 15 0.28% 13,078 9 0.28% 95,616 347 1.46%advancesSubordinated 115,339 1,570 5.45% 118,706 1,594 5.37% 68,480 994 5.84%debenturesJuniorsubordinated 38,044 564 5.86% 38,007 559 5.88% 37,891 572 6.07%debenturesTotalinterest-bearing $ 3,605,049 $ 5,384 0.60% $ 3,606,273 $ 5,590 0.63% $ 3,877,144 $ 7,701 0.80%liabilities Net interest $ 45,960 $ 44,242 $ 42,676 income (1)Net interest 3.28% 3.26% 3.14%margin (2)Net interestmargin (TEY) 3.46% 3.43% 3.27%(Non-GAAP) (1)(2) (3)Adjusted net interest margin 3.44% 3.40% 3.21%(TEY) (Non-GAAP) (1) (2) (3) For the Six Months Ended June 30, 2021 June 30, 2020 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 sold $ 1,830 $ 1 0.05% $ 3,095 $ 18 1.17% Interest-bearingdeposits at 102,343 71 0.14% 331,048 495 0.30% financialinstitutionsSecurities (1) 804,364 14,344 3.57% 658,433 12,616 3.85% Restrictedinvestment 18,843 456 4.81% 21,300 546 5.15% securitiesLoans (1) 4,342,440 86,299 4.01% 3,842,966 87,474 4.58% Total earning $ 5,269,820 $ 101,171 3.87% $ 4,856,842 $ 101,149 4.19% assets (1) Interest-bearing $ 2,979,835 $ 4,036 0.27% $ 2,610,248 $ 7,756 0.60% depositsTime deposits 444,297 2,625 1.19% 797,184 7,216 1.82% Short-term 9,021 3 0.06% 22,190 86 0.78% borrowingsFederal HomeLoan Bank 17,464 25 0.28% 103,512 796 1.55% advancesSubordinated 117,014 3,164 5.41% 68,449 1,988 5.84% debenturesJuniorsubordinated 38,026 1,125 5.87% 37,872 1,144 6.07% debenturesTotalinterest-bearing $ 3,605,657 $ 10,978 0.61% $ 3,639,455 $ 18,986 1.05% liabilities Net interest $ 90,193 $ 82,163 income (1)Net interest 3.27% 3.26% margin (2)Net interestmargin (TEY) 3.45% 3.40% (Non-GAAP) (1)(2) (3)Adjusted net interest margin 3.42% 3.35% (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 30, June 30, 2021 2021 2020 2020 2020 (dollars in thousands, except per share data) ROLLFORWARDOF ALLOWANCEFOR CREDIT LOSSES ONLOANS/LEASESBeginning $ 81,831 $ 84,376 $ 79,582 $ 60,827 $ 42,233 balanceAdoption ofASU 2016-13 - (8,102 ) - - - "CECL" - Day1 adjustmentProvisioncharged to (141 ) 5,993 7,080 20,342 19,915 expenseLoans/leases (3,674 ) (713 ) (2,779 ) (1,819 ) (1,450 )charged offRecoveries onloans/leases 878 277 493 232 129 previouslycharged offEnding $ 78,894 $ 81,831 $ 84,376 $ 79,582 $ 60,827 balance NONPERFORMING ASSETSNonaccrual $ 8,230 $ 13,863 $ 13,940 $ 17,597 $ 12,099 loans/leasesAccruingloans/leases 57 - 3 86 99 past due 90days or moreTotalnonperforming 8,287 13,863 13,943 17,683 12,198 loans/leasesOther real 1,820 173 20 125 157 estate ownedOtherrepossessed - 50 135 110 25 assetsTotalnonperforming $ 10,107 $ 14,086 $ 14,098 $ 17,918 $ 12,380 assets ASSET QUALITY RATIOSNonperformingassets / 0.17 % 0.25 % 0.25 % 0.31 % 0.22 %total assets(1)ACL for loansand leases / 1.79 % 1.88 % 1.98 % 1.87 % 1.47 %total loans/leases (2)ACL for loansand leases /nonperforming 952.02 % 590.28 % 605.15 % 450.05 % 498.66 %loans/leases(2)Netcharge-offsas a % of 0.06 % 0.01 % 0.05 % 0.04 % 0.03 %average loans/leases INTERNALLYASSIGNED RISK RATING (3)Specialmention $ 51,613 $ 53,466 $ 71,482 $ 79,587 $ 104,608 (rating 6)Substandard 79,719 84,982 66,081 70,409 39,855 (rating 7)Doubtful - - - - - (rating 8) $ 131,332 $ 138,448 $ 137,563 $ 149,996 $ 144,463 Criticized $ 131,332 $ 138,448 $ 137,563 $ 149,996 $ 144,463 loans (4)Classified 79,719 84,982 66,081 70,409 39,855 loans (5) Criticizedloans as a % 2.97 % 3.17 % 3.24 % 3.53 % 3.49 %of totalloans/leasesClassifiedloans as a % 1.80 % 1.95 % 1.55 % 1.66 % 0.96 %of totalloans/leases (1) Excludesassets heldfor sale as of 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 allowanceand impacts this ratio. There have been no acquisitions sinceadopting ASU 2016-13 "CECL", which requires an allowance to be established onacquired loans.(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 For the Six Months Ended June 30, March 31, June 30, June 30, June 30, SELECT FINANCIAL 2021 2021 2020 2021 2020 DATA - SUBSIDIARIES (dollars in thousands) TOTAL ASSETS Quad City Bank and $ 2,059,634 $ 2,101,634 $ 1,984,245 Trust (1) m2 Equipment 255,338 245,842 241,114 Finance, LLC Cedar Rapids Bank and 1,913,761 1,847,070 2,021,043 Trust Community State Bank - 1,079,929 1,041,861 903,648 Ankeny Springfield First 850,067 818,605 745,474 Community Bank TOTAL DEPOSITS Quad City Bank and $ 1,810,772 $ 1,841,518 $ 1,707,970 Trust (1) Cedar Rapids Bank and 1,395,721 1,362,927 1,351,784 Trust Community State Bank - 938,428 912,419 778,499 Ankeny Springfield First 608,676 602,274 564,710 Community Bank TOTAL LOANS & LEASES Quad City Bank and $ 1,577,681 $ 1,568,131 $ 1,485,971 Trust (1) m2 Equipment 258,520 249,478 239,351 Finance, LLC Cedar Rapids Bank and 1,360,202 1,382,336 1,380,672 Trust Community State Bank - 786,208 743,892 671,772 Ankeny Springfield First 693,614 666,692 601,843 Community Bank TOTAL LOANS & LEASES / TOTAL DEPOSITS Quad City Bank and 87 % 85 % 87 % Trust (1) Cedar Rapids Bank and 97 % 101 % 102 % Trust Community State Bank - 84 % 82 % 86 % Ankeny Springfield First 114 % 111 % 107 % Community Bank TOTAL LOANS & LEASES / TOTAL ASSETS Quad City Bank and 77 % 75 % 75 % Trust (1) Cedar Rapids Bank and 71 % 75 % 68 % Trust Community State Bank - 73 % 71 % 74 % Ankeny Springfield First 82 % 81 % 81 % Community Bank ACL ON LOANS/ LEASES AS A PERCENTAGE OF LOANS/LEASES Quad City Bank and 1.91 % 1.98 % 1.51 % Trust (1) m2 Equipment 3.61 % 3.73 % 1.99 % Finance, LLC Cedar Rapids Bank and 1.92 % 2.05 % 1.62 % Trust (2) Community State Bank - 1.69 % 1.74 % 1.56 % Ankeny (2) Springfield First 1.35 % 1.43 % 0.94 % Community Bank (2) RETURN ON AVERAGE ASSETS Quad City Bank and 1.64 % 1.35 % 0.68 % 1.50 % 0.95 % Trust (1) Cedar Rapids Bank and 2.39 % 2.45 % 2.36 % 2.42 % 2.01 % Trust Community State Bank - 1.16 % 0.81 % 0.25 % 0.99 % 0.37 % Ankeny Springfield First 1.77 % 1.16 % 1.04 % 1.47 % 1.16 % Community Bank NET INTEREST MARGIN PERCENTAGE (3) Quad City Bank and 3.30 % 3.20 % 2.88 % 3.25 % 3.22 % Trust (1) Cedar Rapids Bank and 3.60 % 3.55 % 3.37 % 3.58 % 3.40 % Trust (4) Community State Bank - 3.66 % 3.70 % 3.77 % 3.68 % 3.84 % Ankeny (5) Springfield First 3.54 % 3.55 % 3.88 % 3.54 % 3.85 % Community Bank (6) ACQUISITION-RELATED AMORTIZATION /ACCRETION INCLUDED IN NET INTEREST MARGIN, NET Cedar Rapids Bank and $ 92 $ 13 $ 62 $ 105 $ 111 Trust Community State Bank - 68 317 72 385 136 Ankeny Springfield First 168 211 641 379 1,193 Community Bank QCR Holdings, (37 ) (37 ) (39 ) (74 ) (79 ) Inc. (7) Quad City Bank and Trust figures include m2 Equipment Finance, LLC, as this(1) entity is wholly-owned and consolidated with the Bank. m2 Equipment Finance, LLC is also presented separately for certain (applicable) measurements. Prior to adoption of ASU 2016-13 "CECL", upon acquisition and per GAAP,(2) acquired loans were recorded at market value, which eliminates the allowance and impacts this ratio. There have been no acquisitions since adopting ASU 2016-13 "CECL", which requires an allowance to be established on acquired loans.(3) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate.(4) Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.67% for the quarter ended June 30, 2021, 3.55% for the quarter ended March 31, 2021 and 3.71% for the quarter ended June 30, 2020.(5) Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.63% for the quarter ended June 30, 2021, 3.54% for the quarter ended March 31, 2021 and 3.35% for the quarter ended June 30, 2020. Springfield First Community Bank's net interest margin percentage includes(6) various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.50% for the quarter ended June 30, 2021, 3.49% for the quarter ended March 31, 2021 and 4.29% for the quarter ended June 30, 2020.(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 2021 2021 2020 2020 2020 RECONCILIATIONS (dollars in thousands, except per share data)TANGIBLE COMMONEQUITY TO TANGIBLE ASSETSRATIO (1) Stockholders' $ 630,476 $ 608,719 $ 593,793 $ 572,613 $ 556,020 equity (GAAP)Less:Intangible 84,431 84,939 85,447 85,968 88,120 assetsTangible commonequity $ 546,045 $ 523,780 $ 508,346 $ 486,645 $ 467,900 (non-GAAP) Total assets $ 5,805,165 $ 5,645,147 $ 5,682,797 $ 5,864,560 $ 5,604,761 (GAAP)Less:Intangible 84,431 84,939 85,447 85,968 88,120 assetsTangible assets $ 5,720,734 $ 5,560,208 $ 5,597,350 $ 5,778,592 $ 5,516,641 (non-GAAP) Tangible commonequity totangible assets 9.55 % 9.42 % 9.08 % 8.42 % 8.48 %ratio(non-GAAP) TANGIBLE COMMONEQUITY TOTANGIBLE ASSETS RATIO EXCLUDINGPPP LOANS (1) Stockholder's $ 630,476 $ 608,719 $ 593,793 $ 572,613 $ 556,020 equity (GAAP)Less: PPP loaninterest income 10,788 9,479 7,691 4,934 2,085 (post-tax) (2)Less:Intangible 84,431 84,939 85,447 85,968 88,120 assetsTangible commonequity,excluding PPP $ 535,257 $ 514,301 $ 500,655 $ 481,711 $ 465,815 loan income(non-GAAP) Total assets $ 5,805,165 $ 5,645,147 $ 5,682,797 $ 5,864,560 $ 5,604,761 (GAAP)Less: PPP loans 147,506 243,860 273,146 357,506 358,052 Less:Intangible 84,431 84,939 85,447 85,968 88,120 assetsTangibleassets,excluding PPP $ 5,573,228 $ 5,316,348 $ 5,324,204 $ 5,421,086 $ 5,158,589 loans(non-GAAP) Tangible commonequity totangible assetsratio, 9.60 % 9.67 % 9.40 % 8.89 % 9.03 %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 Ended For the Six Months EndedRECONCILIATIONS June 30, March 31, December 31, September 30, June 30, June 30, June 30,ADJUSTED NET 2021 2021 2020 2020 2020 2021 2020 INCOME (1) (dollars in thousands, except per share data) Net income $ 22,349 $ 17,982 $ 18,271 $ 17,344 $ 13,739 $ 40,331 $ 24,967 (GAAP) Less non-coreitems (post-tax) (2):Income: Securities gains (69 ) - 487 1,424 51 $ (69 ) $ 51 (losses), netMark to Marketgains (losses) (58 ) 129 - - - 71 $ - on derivatives,netLoss on - - (210 ) - - - $ - syndicated loanTotal non-coreincome $ (127 ) $ 129 $ 277 $ 1,424 $ 51 $ 2 $ 51 (non-GAAP) Expense: Losses on debtextinguishment, $ - $ - $ 1,151 $ 1,480 $ 339 $ - $ 455 netGoodwill - - - - - - 500 impairmentDisposition - 7 51 152 (66 ) 7 343 costsAcquisition - - - - - - - costs (4)Separation - 734 - - - 734 - agreementPost-acquisitioncompensation,transition and - - 20 (25 ) 55 - 175 integrationcostsLoss on sale of - - (102 ) 212 - - - subsidiaryTotal non-coreexpense $ - $ 741 $ 1,119 $ 1,819 $ 329 $ 741 $ 1,472 (non-GAAP)Adjusted netincome $ 22,476 $ 18,594 $ 19,113 $ 17,739 $ 14,016 $ 41,070 $ 26,388 (non-GAAP) (1) ADJUSTEDEARNINGS PER COMMON SHARE (1) Adjusted netincome $ 22,476 $ 18,594 $ 19,113 $ 17,739 $ 14,016 $ 41,070 $ 26,388 (non-GAAP) (fromabove) Weighted averagecommon shares 15,813,932 15,803,643 15,775,596 15,767,152 15,747,056 15,808,788 15,771,926 outstandingWeighted averagecommon andcommon 16,045,239 16,025,548 15,973,054 15,923,578 15,895,336 16,035,394 15,956,958 equivalentsharesoutstanding Adjustedearnings per common share(non-GAAP):Basic $ 1.42 $ 1.18 $ 1.21 $ 1.13 $ 0.89 $ 2.60 $ 1.67 Diluted $ 1.40 $ 1.16 $ 1.20 $ 1.11 $ 0.88 $ 2.56 $ 1.65 ADJUSTED RETURNON AVERAGE ASSETS (1) Adjusted netincome $ 22,476 $ 18,594 $ 19,113 $ 17,739 $ 14,016 $ 41,070 $ 26,388 (non-GAAP) (fromabove) Average Assets $ 5,739,067 $ 5,668,850 $ 5,842,299 $ 5,820,555 $ 5,800,164 $ 5,704,151 $ 5,374,224 Adjusted returnon averageassets 1.57 % 1.31 % 1.31 % 1.22 % 0.97 % 1.44 % 0.98 %(annualized)(non-GAAP) NET INTEREST MARGIN (TEY) (4) Net interest $ 43,516 $ 41,975 $ 43,707 $ 44,581 $ 40,948 $ 85,491 $ 78,646 income (GAAP) Plus: Taxequivalent 2,444 2,267 2,631 1,942 1,728 4,702 3,517 adjustment (3) Net interestincome - tax $ 45,960 $ 44,242 $ 46,338 $ 46,523 $ 42,676 $ 90,193 $ 82,163 equivalent(Non-GAAP) Less:Acquisition 291 504 1,077 833 736 795 1,361 accounting netaccretion Adjusted net $ 45,669 $ 43,738 $ 45,261 $ 45,690 $ 41,940 $ 89,398 $ 80,802 interest income Average earning $ 5,320,881 $ 5,218,198 $ 5,345,677 $ 5,278,298 $ 5,252,663 $ 5,269,820 $ 4,856,842 assets Net interest 3.28 % 3.26 % 3.25 % 3.36 % 3.14 % 3.27 % 3.26 %margin (GAAP)Net interestmargin (TEY) 3.46 % 3.43 % 3.45 % 3.51 % 3.27 % 3.45 % 3.40 %(Non-GAAP)Adjusted netinterest margin 3.44 % 3.40 % 3.37 % 3.44 % 3.21 % 3.42 % 3.35 %(TEY) (Non-GAAP) EFFICIENCY RATIO (5) Noninterest $ 35,675 $ 37,228 $ 46,364 $ 40,838 $ 33,122 $ 72,903 $ 64,537 expense (GAAP) Net interest $ 43,516 $ 41,975 $ 43,707 $ 44,581 $ 40,948 $ 85,491 $ 78,646 income (GAAP)Noninterest 19,296 23,489 32,017 37,959 28,626 42,785 43,822 income (GAAP)Total income $ 62,812 $ 65,464 $ 75,724 $ 82,540 $ 69,574 $ 128,276 $ 122,468 Efficiency ratio(noninterestexpense/total 56.80 % 56.87 % 61.23 % 49.48 % 47.61 % 56.83 % 52.70 %income)(Non-GAAP) ALLOWANCE FORCREDIT LOSSES ONLOANS/LEASES TOTOTAL LOANS/ LEASES,EXCLUDING PPPLOANS (6) Allowance forcredit losses on $ 78,894 $ 81,831 $ 84,376 $ 79,582 $ 60,827 $ 78,894 $ 60,827 loans and leases Total loans and $ 4,417,705 $ 4,361,051 $ 4,251,129 $ 4,247,977 $ 4,140,259 $ 4,417,705 $ 4,140,259 leasesLess: PPP loans 147,506 243,860 273,146 357,506 358,052 147,506 358,052 Total loans andleases, $ 4,270,199 $ 4,117,191 $ 3,977,983 $ 3,890,471 $ 3,782,207 $ 4,270,199 $ 3,782,207 excluding PPPloans Allowance forcredit losses onloans and leasesto total loans 1.85 % 1.99 % 2.12 % 2.05 % 1.61 % 1.85 % 1.61 %and leases,excluding PPPloans LOAN GROWTHANNUALIZED, EXCLUDING PPPLOANSTotal loans and $ 4,417,705 $ 4,361,051 $ 4,251,129 $ 4,247,977 $ 4,140,259 $ 4,417,705 $ 4,140,259 leasesLess: PPP loans 147,506 243,860 273,146 357,506 358,052 147,506 358,052 Total loans andleases, $ 4,270,199 $ 4,117,191 $ 3,977,983 $ 3,890,471 $ 3,782,207 $ 4,270,199 $ 3,782,207 excluding PPPloans Loan growthannualized, 14.87 % 14.00 % 9.00 % 11.45 % 8.37 % 12.90 % 4.99 %excluding PPPloans (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 mostdirectlycomparable GAAP financialmeasure.(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 andliabilities of subsidiary has an estimated effective tax rate of 30.5%.(3) Interest earned and yields on nontaxable securities and loans aredetermined 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 benefit associated with certain loansand securities. It is also standard industry practice to measure net interestmargin using tax-equivalent measures. In compliance with applicable rules of the SEC, this non-GAAPmeasure is reconciled to net interest income, which is the most directlycomparable GAAP financial measure. In addition, the Company calculates net interest margin without theimpact of acquisition accounting net accretion as this can fluctuate and it'sdifficult 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 mostdirectly 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 by the federalgovernment and for which these loans have no allowance for loan and lease lossallocation.