QCR Holdings, Inc. Annual Report 2013

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FY2013 Annual Report · QCR Holdings, Inc.

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DRIVING
OUR VISION

WHAT IS A “COMMUNITY BANK”?

Virtually every bank claims to be a “Community Bank”,

and many create a definition to support their banking

model. At QCR Holdings, Inc. we believe that the

definition of a true Community Bank is quite clear – and

that it is based on the needs of the Communities and

Clients that we serve. Further, we have spent the entire

20 year history of our Company focused on being the

Our local bankers are supported by a QCR Holdings

Group Operations team that delivers operational

services in a centralized and efficient manner. The

members of the Group Operations team share the same

passion for building relationships with, and exceeding

the expectations of, their internal “clients” at each of

our entities, allowing each of our Community Banks

to possess the resources of a much larger financial

institution.

“Relationship Driven Organization” that is the heart

Further supporting our local Community Banks is a

of our QCR Holdings, Inc. business model, a business

Board of Directors at each banking charter that consists

model that provides each QCR Holdings entity with the

of community leaders who share this drive to make a

autonomy to tailor products, services and decisions

difference to our Clients and the Communities in which

unique to the Clients and Communities that it serves.

they live and work.

Each of our clients “need” something different from their

By staying true to our business model of delivering local

banking relationship. Our people have the experience

decisions that impact Clients and Communities, and

and talent to build strong relationships with our clients,

delivering support services that do not directly impact

to understand their unique hopes, dreams, challenges

clients in a centralized and efficient manner, we have

& opportunities as well as they do, and to bring them

allowed Quad City Bank & Trust, Cedar Rapids Bank &

decisions and solutions that help them succeed. Our local

Trust, Rockford Bank & Trust, and Community Bank &

bankers in the Quad Cities, Cedar Rapids, Rockford, and

Trust to create a strong “Community Bank” brand in their

Waterloo/Cedar Falls communities are empowered to

respective markets and to become the bank of choice for

tailor products, services and decisions to the Clients and

clients that value a strong relationship with their bank.

Communities that they serve, creating the customized

“relationship based” service that drives our Company.

Each member of our QCR Holdings team will continue to

focus on creating meaningful and lasting relationships

Serving the needs of our Clients and the Communities

with our clients as we work hard to create significant

in which we live and work by developing strong

long-term value for our shareholders.

relationships and using these relationships to help our

Clients succeed and our Communities thrive, is what we

do each day. That is what being a “Community Bank” is

all about.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

A MESSAGE FROM OUR CHAIRMAN
James J. Brownson

AS NOTED IN PAST CHAIRMAN’S MESSAGES, SUCCESSFUL COMMUNITY BANKING IN OUR

RELATIONSHIP DRIVEN ORGANIZATION WILL ALWAYS BE A CORE STRATEGY EMPLOYED IN

BUILDING SHAREHOLDER VALUE AT QCR HOLDINGS. THE FINANCIAL RESULTS OVER THE PAST

TWENTY YEARS CERTAINLY SPEAK TO THE SUCCESS OF OUR BUSINESS MODEL. HOWEVER, AS IN

MANY THINGS IN LIFE, NUMBERS DO NOT ALWAYS TELL THE COMPLETE STORY.

This past January a small group of original investors and

As always, I need to especially thank the “core of the core”

bank management got together for lunch at a locally owned

of our Community Banking model - all of the employees

restaurant here in the Quad Cities to celebrate the twenty year

who make our Company what it is today. Without their

anniversary of our original charter Quad City Bank and Trust

commitment to living our Community Banking brand we

Company. We all remembered that cold day in January 1994,

would just be another bank on another corner. Thank you all

when Quad City Bank & Trust opened its doors. The memories

for making a difference.

were plentiful, warm and happy. We apparently were

overheard by other patrons in the restaurant and after lunch

To all of our shareholders both old and new, I say welcome

was over, one of these patrons came up to us and said “thank

and thank you for investing in our Company where we truly

you”. He could not help but overhear our reminiscing and as

believe we can make a difference in the financial world we

a retired owner of a large locally owned hardware store he

call Community Banking. I just know you are going to enjoy

wanted to tell us how pleased they were to do business with a

the ride.

bank having rock solid ties to the community, with significant

local ownership, and where all decisions were made locally.

On top of that, he told us we had the best possible employees

delivering on that brand promise day after day after day. We

of course thanked the gentleman for his very kind remarks

and from that day forward I knew I wanted to bring that

message to you, our shareholders.

The thanks we received from the gentleman in the Quad Cities

is but a mere example of compliments that are repeated daily

at all of our Community Banks throughout the QCR Holdings

enterprise. As Directors and employees of QCR Holdings

we take great pride in those “thank yous” as we know the

accumulation of all those “thank yous” builds lasting value to

all of our shareholders.

Fiscal year 2013 was a very successful year highlighted by

the addition to our Company of our friends at Community

National Bank in Waterloo. We certainly welcome all the

employees and shareholders from the Waterloo/Cedar Falls

area to our Company and look forward to many years of

successful Community Banking with them.

20th Anniversary Celebration
NASDAQ Closing Bell Ceremony, October 2, 2013

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

QCR Holdings, Inc. will be the premier provider of
financial services to businesses and individuals for whom
relationships matter, in markets where we can excel.

- Our Mission

Summary of Financial Results 2008 - 2013

(in thousands)

Net interest income

Non-interest income

Non-interest expense

2008

2009

2010

2011

2012

2013

$44,623

$50,662

$49,864

$54,145

$57,649

$64,105

13,931

15,547

15,406

17,462

16,621

25,814

(42,334)

(46,937)

(48,549)

(50,993)

(52,259)

(64,433)

Pre-tax pre-provision net income

16,220

19,272

16,721

20,614

22,011

25,486

Provision expense

(9,222)

(16,976)

(7,464)

(6,616)

(4,371)

(5,930)

Income before taxes

6,998

2,296

9,257

13,998

17,640

19,556

Income taxes

(1,735)

(247)

(2,449)

(3,868)

(4,534)

(4,618)

Income from continuing operations

5,263

2,049

6,808

10,130

13,106

14,938

Income from discontinued operations

1,734

Net income

6,997

2,049

6,808

10,130

13,106

14,938

Less: net income attributable to non controlling interests

288

277

221

438

488

Net income attributable to QCR Holdings, Inc.

$6,709

$1,772

$6,587

$9,692

$12,618

$14,938

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

TO OUR SHAREHOLDERS,

QCR Holdings had its busiest (and perhaps best) year yet in its 20 year history and
we continue to believe the business model that we are proud to call “The Local
Community Bank Advantage” propelled this year of record earnings. We believe “The
Local Community Bank Advantage” is a key differentiator in our market places as our
clients seek the exceptional, personalized local service and advice that we can provide.
Our clients continue to value the opportunity to be able to sit one-on-one with their
bankers and not be placed into queue at an 800 number regional call center. We
could not be more proud of our 400 dedicated employees whose mission it is to be
the premier provider of financial services to those whom relationships matter. At QCR
Holdings, we strongly believe that the strength of our Company will depend on the
strength of the communities that we serve, and to that end, our employees are actively
volunteering on a daily basis to make their communities a better place in which to live
and work.

We not only achieved the record earnings that we will discuss below, we achieved
some notable milestones as well:

ACQUISITION OF COMMUNITY NATIONAL BANK

In 2013, we completed our first bank acquisition, proudly welcoming the shareholders,
staff and clients of Community National Bank in Waterloo/Cedar Falls, Iowa to the
QCR Holdings family. On May 13, 2013 we acquired their eight banking locations
and approximately $279 million in assets and $247 million in deposits. To allow us to
focus on the Waterloo/Cedar Falls markets, in the fourth quarter of 2013 QCR Holdings
completed the sale of the two Mason City, Iowa branches and the two Austin, MN
branches of Community National. Subsequent to the sales of these branches, the
Company executed a data conversion and merger of Community National Bank into
Cedar Rapids Bank & Trust. In conjunction with the conversion, Community National
Bank changed its name to Community Bank & Trust and now operates as a division of
Cedar Rapids Bank & Trust. Our 2013 earnings were propelled by acquisition related
gains of $4.1 million (bargain purchase gain of $1.8 million and the gains on the branch
sales of $2.3 million), which were offset by acquisition and data conversion related
costs of $2.3 million for the year.

CONVERSION OF SERIES E PREFERRED STOCK TO COMMON STOCK

On December 23, 2013, we completed the conversion of all 25,000 outstanding
shares of our Series E Non-Cumulative Convertible Perpetual Preferred Stock (“Series E
Preferred”) into shares of common stock. Holders of Series E Preferred stock received,
for each share of Series E Preferred held as of December 23, 2013, the number of shares
of common stock that resulted from dividing $1,000 (the issuance price per share of
the Series E Preferred) by $12.15 (the conversion price per share), for an aggregate
issuance of 2,057,502 shares of common stock. This was a significant accomplishment
and a critical component to our long-term capital plan as it increased our tangible
common equity ratio by approximately 100 basis points and eliminated annual
preferred dividends totaling $1.75 million.

2013 RESULTS AND HIGHLIGHTS

ANNUAL EARNINGS UP 18% FROM PRIOR YEAR

Despite an unsettled backdrop of an uncertain economy and an ever-challenging
regulatory environment, our teams executed on our strategic initiatives for another
record year.

For 2013, our annual earnings were up 18% from the prior year. For the year ended
December 31, 2013, net income attributable to QCR Holdings Inc. was $14.9 million,
resulting in diluted earnings per share of $2.08 after preferred stock dividends of
$3.2 million. For the same period in 2012, we reported net income of $12.6 million,
or diluted earnings per share of $1.85 after preferred stock dividends of $3.5 million.

For 2013, we grew non-interest bearing core deposits 20%, successfully shifting the
deposit mix from more brokered and other time deposits, along with wholesale funding,
which in turn helped to drive down our cost of funds. Non-interest bearing deposits
grew $92 million this year, this on top of 26% growth in 2012.

The ratio of nonperforming assets-to-total assets was 1.28% at December 31, 2013,
which improved from 1.41% at December 31, 2012.

Net interest income grew 11% in 2013. For the year ended December 31, 2013, net
interest income was $64.1 million, an increase of $6.5 million over the year ended
December 31, 2012.

We remain committed to a strong capital position – not only with regard to total capital,
but with regard to mix and cost as well. We remain strongly committed to our long-term
capital plan of self-generating the capital necessary to grow tangible common equity to
a target range of 6.00% to 7.00% and to redeem the remaining Small Business Lending
Fund (“SBLF”) preferred capital without a dilutive common equity raise. We successfully
executed on this plan in the second quarter of 2012 when we partially redeemed $10.2
million of the SBLF preferred stock. We plan to use the excess capital generated from
the Community Bank & Trust branch sales to continue the redemption of our remaining
Small Business Lending Fund preferred capital in 2014.

Tangible common equity grew from 3.56% of total tangible assets at December 31,
2010 to 3.85% at December 31, 2011 to 4.02% at December 31, 2012, and to 4.71% at
December 31, 2013.

QCR HOLDINGS, INC. ENTITY WIDE STRATEGIC INITIATIVES

The Company has identified eight focus areas for improving shareholder value in 2014
that will guide our work:

•
•
•
•
•
•
•
•

Continue to expand our Investor Relations plans
Grow loans
Maintain and improve our Net Interest Margin
Maximize SBA/USDA gains on loan sales
Grow Wealth Management income
Improved liquidity in our stock
Drive down efficiency ratio as we work to achieve a 1% ROAA
Continue to redeem Small Business Lending Fund preferred stock

QCR HOLDINGS, INC. STRATEGIC ADVANTAGES

During 2013, we continued to execute on our strategy of being a relationship driven
organization. With demand for loans and leases curtailed due to the economic climate,
we remained focused on developing relationships with new clients and expanding
relationships with existing clients. We strategically expanded resources where we
identified some very profitable niches that will enhance our earnings in years to come,
thereby allowing us to counter margin compression and weak loan demand.

CORRESPONDENT BANKING DIVISION

The Correspondent Banking Division at Quad City Bank & Trust continues to seize
opportunities to deliver exceptional client service to downstream banks in Illinois,
Iowa and Wisconsin. During 2013, we were able to increase non-interest bearing
deposits significantly (25%) and grow non-interest income as well. We increased total
correspondent banking relationships 10% and when including such services as credit
cards, safekeeping and loans, we now service nearly 160 Correspondent Banks.

WEALTH BUILDERS DIVISION

Being able to service our clients with a continuum of services is crucial to deepening
relationships. The expertise found across our Company in our Wealth Builders Division
is a sizable competitive advantage. With offerings in Trust, Investments, Financial
Planning, and Family Office, we add non-interest income to our banks and provide
great opportunities for cross selling as well. In 2013, total assets under management
eclipsed the $2 billion mark as staff welcomed over 325 new relationships.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

m2 LEASE FUNDS

m2 Lease Funds is a wholly owned subsidiary of Quad City Bank & Trust that thinks
locally but acts nationally. Leasing is an attractive option for many small and medium
sized businesses and m2 prides itself on being easy to do business with (a one page
lease agreement written in plain English) and delivering local, professional and
personalized service. m2 Lease Funds works with all of our banks and nationwide as
well. Leasing can be a favorable option to ownership and has gained good traction in
this economy. m2 reported a record year of pre-tax net income in 2013 of $3.6 million
and grew leases $26.1 million, or 24% over 2012.

LIVING THE BRAND

We continue to believe our people are the key differentiator in each of our markets. We
strive to equip our employees with all of the tools that they will need to serve our clients
in a customized and personal manner. As such, we measure employee performance
utilizing a metric we call “Living the Brand”. “Living the Brand” means living our Brand
Promise – making sure that each employee’s performance is so good that our clients
(internal and external) will always experience great relationships, service and advice. It
is our hope that by placing daily emphasis on our Brand Promise every client will truly
see “People You Can Bank On®” in everything we do.

RESULTS BY ENTITY

Quad City Bank & Trust – Under the leadership of President and CEO, John Anderson,
the Company’s first subsidiary bank (1994), grew total consolidated assets to $1.25
billion at December 31, 2013. The bank continues to have success in growing its
Wealth Management business as assets under management reached $1.4 billion in
2013. Quad City Bank & Trust realized net income of $10.3 million for the year ended
December 31, 2013, which compares to $10.7 million in 2012.

Cedar Rapids Bank & Trust – President and CEO Larry Helling, one of the founders
of Cedar Rapids Bank & Trust (2001), led his team to net income of $6.7 million for
the year ended December 31, 2013, which is a 15% increase over the $5.9 million net
income for 2012. Total assets at December 31, 2013 finished at $804.2 million, up 29%
or $178.5 million from the end of 2012. The majority of net asset growth was directly
attributable to the merger of Community National Bank during the fourth quarter. The
bank continues to have success in generating strong noninterest income from gains
on sales of the government guaranteed portion of SBA and USDA loans.

Rockford Bank & Trust – Led by founder and President and CEO, Tom Budd, Rockford
Bank & Trust (2005) reported record net income for the year ended 2013 of $1.6 million.
By comparison, the bank reported record net income of $593 thousand for 2012. Total
assets finished the year at $339.4 million, which was an increase of $25.6 million, or 8%,
over 2012. The bank experienced strong improvement in asset quality in 2013 which
translated over to lower credit costs and helped drive the improved earnings.

QCR HOLDINGS, INC. STRATEGIC DIRECTION FOR 2014 AND BEYOND

During 2013 our very talented team of employees not only worked very hard to deliver
record earnings, but they also worked hard to bring Community National Bank into
the QCR Holdings family. For the better part of the year, many employees performed
“their regular job” and “their acquisition job “. It was no surprise, and quite a pleasure, to
see our employees come together to merge QCR Holdings and Community National.
We are certain we have the team in place that can execute on more acquisitions as the
right opportunities present themselves.

We believe our staff is geared to generate improved earnings at all entities. As a
company, we are focused on doing all that we can to generate earnings per share
(EPS) – prioritizing EPS over growth in assets and to achieve our goal of a consolidated
1% ROAA. We will continue to work hard to grow your investment and grow the
communities in which we do business. All of our entities maintain an aggressive
commitment to volunteerism as we know our companies can only be as strong as
the communities in which we work and play. Our employees contributed over 15,000
volunteer hours in 2013 and we just couldn’t be more proud of their dedication,
selflessness and citizenship.

CONSOLIDATED EARNINGS
(in thousands)

Quad City Bank & Trust *

$ 6,839

$ 8,838

$ 10,732

$ 10,273

2010

2011

2012

2013

Cedar Rapids Bank & Trust

3,573

5,200

5,881

6,736

Rockford Bank & Trust

811

412

593

1,579

Parent Co. & Eliminations **

(4,636)

(4,758)

(4,588)

(3,650)

Consolidated Earnings

$ 6,587

$ 9,692

$ 12,618

$ 14,938

* Includes m2 Lease Funds.
** Includes earnings from CNB and all other acquisition related activity.

We are also supported by remarkable local Board members in each of our communities.
These community leaders generously lend their time and expertise – serving on our
Boards, our committees, and advocating for us within their local communities. Their
contributions are priceless and we would not have achieved the successes of 2013
without them all.

We recognize specific areas where we need to make meaningful progress in 2014:
earnings per share, ROAA and tangible common equity. Key to moving the needle on
these metrics is maintaining our excellent staff and providing the tools they need to
serve our clients.

Loan demand will likely continue to be a struggle but we believe we have the team in
place to deliver a local solution when demand increases. We have strategically aligned
ourselves to serve as experts on SBA and USDA lending which not only provides
attractive solutions for our clients, but government guarantees and fee income for our
banks.

We will continue to enhance liquidity and to preserve asset quality. Our process for
monitoring credit quality is rigorous and will remain so.

We are hopeful that our positive earnings trends continue to be reflected in our stock
price. While we enjoyed continued positive momentum in 2013, we are mindful of our
obligation to each and every one of you, our loyal shareholders, to do even better. We
thank you for your patience and support.

We are a relationship driven organization® and truly believe “The Local Community Bank
Advantage” is alive and well in each of our markets.

Douglas M. Hultquist
President and Chief Executive Officer, QCR Holdings, Inc.

Todd A. Gipple
Executive Vice President, Chief Operating Officer and
Chief Financial Officer, QCR Holdings, Inc.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

QCR Holdings, Inc.

Board of Directors

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

Douglas M. Hultquist
President and Chief Executive Officer,
QCR Holdings, Inc.

10.

11.

12.

13.

James J. Brownson
Chair of the Board, QCR Holdings, Inc.
President, W.E. Brownson Co.

Pat S. Baird
Vice Chair of the Board, QCR Holdings, Inc.
Retired President and Chief Executive Officer,
AEGON USA, LLC

Lindsay Y. Corby
Principal, BXM Holdings, Inc.

Todd A. Gipple
Executive Vice President, Chief Operating Officer
and Chief Financial Officer, QCR Holdings, Inc.

Larry J. Helling
President and Chief Executive Officer,
Cedar Rapids Bank and Trust Company

Mark C. Kilmer
President, The Republic Companies

John K. Lawson
Retired Executive, Deere & Company

Linda K. Neuman
Attorney, Retired Iowa Supreme Court

Michael L. Peterson
President, Peterson Genetics, Inc.

Ronald G. Peterson
Retired Executive, First State Bank of Illinois

Donna J. Sorensen, J.D.
President, Sorensen Consulting

John D. Whitcher
Vice President and General Counsel,
Viking Chemical Company

14.

Marie Z. Ziegler
Retired Executive, Deere & Company

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

QCR Holdings, Inc.

Executive Management Team

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

10.

11.

12.

13.

14.

15.

16.

Douglas M. Hultquist
President and Chief Executive Officer

Todd A. Gipple
Executive Vice President,
Chief Operating Officer and
Chief Financial Officer

John H. Anderson
President and Chief Executive Officer,
Quad City Bank and Trust Company /
Chief Deposit Officer, QCR Holdings, Inc.

Stacey J. Bentley
President and Chief Executive Officer,
Community Bank and Trust Company

Thomas D. Budd
President and Chief Executive Officer,
Rockford Bank and Trust Company

Charles S. Bullock
Executive Vice President,
Chief Operating Officer,
Rockford Bank and Trust Company

Richard W. Couch
President and Chief Operating Officer,
m2 Lease Funds, LLC

Jill A. DeKeyser
Senior Vice President,
Director of Human Resources

John R. Engelbrecht
Chief Executive Officer, m2 Lease Funds, LLC

Shawna M. Graham
Senior Vice President,
Director of Risk Management

Larry J. Helling
President and Chief Executive Officer,
Cedar Rapids Bank and Trust Company /
Executive Vice President, Chief Lending Officer,
QCR Holdings, Inc.

John R. McEvoy
Executive Vice President,
Chief Operations Officer and Cashier,
Quad City Bank and Trust Company

John A. Rodriguez
Executive Vice President,
Deposit Operations and Information Services

William M. Tank
Executive Vice President, Chief Credit Officer

M. Randolph Westlund
Executive Vice President,
Chief Investment Officer

Cathie S. Whiteside
Executive Vice President,
Corporate Strategy, Human Resources & Branding

17.

Michael J. Wyffels
Senior Vice President, Chief Technology Officer

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

$14.9 MILLION 2013 RECORD EARNINGS

AN 18% INCREASE OVER 2012

ASSET GROWTH
(IN THOUSANDS)

$350,000

$175,000

7
1
0
4
7
1
$

9
0
0
2

9
8
9
6
5
$

0
1
0
2

BOOK VALUE VS. FAIR MARKET VALUE
COMMON STOCK (IN MILLIONS)

TOTAL METROPOLITAN STATISTICAL AREA
(MSA) DEPOSITS (JUNE 30, 2013) (IN THOUSANDS)

$8,000,000

$5,000,000

$2,000,000

FAIR MARKET VALUE
BOOK VALUE

3
2
2
1
0
3
$

$150

$120

$90

$60

$30

5
7
9
9
2
1
$

0
2
1
7
2
1
$

1
1
0
2

2
1
0
2

3
1
0
2

3
9
C
E
D

8
9
C
E
D

3
0
C
E
D

8
0
C
E
D

2
1
C
E
D

3
1
C
E
D

Population
(July 1, 2012)

6
1
3
8
1
7
7
$

2
8
3
9
8
2
5
$

1
5
9
8
6
0
6
$

8
5
6
9
5
9
2
$

s
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0
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N
O
L
L

$6.5 M

2013 NET INTEREST INCOME
INCREASED 11% OVER 2012

2,395,000,000
$

IN TOTAL ASSETS AT DECEMBER 31, 2013

20% INCREASE

NON-INTEREST BEARING
DEPOSITS FINISHED
2013 AT $543 MILLION

329 WEALTH MANAGEMENT

RELATIONSHIPS ADDED
WITH OVER $2.20 BILLION
UNDER MANAGEMENT

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

QCR Holdings, Inc.
Group Operations
Management Team

Todd A. Gipple
Executive Vice President, Chief Operating Officer
and Chief Financial Officer

Jill A. DeKeyser
Senior Vice President,
Director of Human Resources

Beth L. Easterla
Vice President, Deposit Operations and
Electronic Banking Manager

Kathleen M. Francque
Senior Vice President, Correspondent Banking

Pamela J. Goodwin
1st Vice President, Loan Operations Manager

Shawna M. Graham
Senior Vice President,
Director of Risk Management

R. Timothy Harding
Senior Vice President, Director of Internal Audit

John R. McEvoy
Executive Vice President,
Chief Operations Officer and Cashier

John R. Oakes
1st Vice President,
Controller and Director of Financial Reporting

John A. Rodriguez
Executive Vice President,
Deposit Operations and Information Services

Shellee R. Showalter
Senior Vice President,
Director of Investor Services and Compensation

Michael J. Wyffels
Senior Vice President, Chief Technology Officer

TOTAL DEPOSITS
(in millions)

12.31.11

12.31.12

12.31.13

Non-interest bearing demand deposits

$ 357

$ 451

$ 543

Interest bearing demand deposits

Time deposits

Brokered time deposits

510

293

587

291

716

327

TOTAL DEPOSITS

$ 1,205

$ 1,374

$ 1,647

TOTAL ASSETS (in millions)

12.31.13

12.31.12

12.31.11

$2,395

$2,094

$1,967

$1,500

$2,000

$2,500

NET LOANS/LEASES (in millions)

12.31.13

12.31.12

12.31.11

$1,439

$1,267

$1,182

$1,000

$1,250

$1,500

DEPOSIT MARKET SHARE (JUNE 30, 2013)

Quad Cities

10.66%

Rank #3 of 40

Cedar Rapids

7.90%

Rank #4 of 42

Rockford

3.98%

Rank #8 of 26

Waterloo/Cedar Falls

4.97%

Rank #7 of 24

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

“THE QUAD CITY BANK & TRUST TEAM PROVIDES

US A STRONG BUSINESS PARTNER AND BEST

IN THE REGION CUSTOMER SERVICE. I ENJOY

INTERACTING WITH THE ENTIRE TEAM AND

THEIR WELCOMING AND CARING CULTURE. AS

A MATTER OF FACT, ALL AT GENESIS HAVE HAD

A WOW EXPERIENCE AT ALL LEVELS OF THEIR

ORGANIZATION.

I RECENTLY CONTACTED PRESIDENT AND CEO

JOHN ANDERSON WITH AN URGENT GENESIS

NEED AND HE EXCEEDED MY EXPECTATIONS IN

BUSINESS TERMS AND ENSURING THE PROCESS

WAS SIMPLE. HE DID THIS WITH HIS WELL

KNOWN SMILE THAT PERMEATES ALL OF HIS

EMPLOYEES. QUAD CITY BANK AND TRUST IS

PART OF OUR FAMILY IN THE QUAD CITIES.”

MARK ROGERS
Vice President Finance/CFO , Genesis Health System

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

INVESTING IN THE QUAD CITIES AREA

EMPLOYEE HOURS
VOLUNTEERED IN 2013

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

P E O P L E Y O U C A N B A N K O N . ®

JOHN ANDERSON

President and Chief Executive Officer,
Quad City Bank & Trust

DIRECTORS

SENIOR MANAGERS

John H. Anderson
President and Chief Executive Officer,
Quad City Bank and Trust Company

Mark C. Kilmer
Chair of the Board,
Quad City Bank and Trust Company
President, The Republic Companies

Michael A. Bauer
Consultant, Co-Founder of QCR Holdings, Inc.

Douglas M. Hultquist
President and Chief Executive Officer,
QCR Holdings, Inc.

James J. Brownson
President, W.E. Brownson Co.

Todd A. Gipple
Executive Vice President, Chief Operating Officer
and Chief Financial Officer, QCR Holdings, Inc.

John H. Harris, II
Retired Former President, Star Forms, Inc. and
Isabel Bloom, LLC

Larry J. Helling
President and Chief Executive Officer,
Cedar Rapids Bank and Trust Company

Edwin A. Maxwell
Anesthesia & Analgesia, P.C.

Linda K. Neuman
Vice Chair of the Board,
Quad City Bank and Trust Company
Attorney, Retired Iowa Supreme Court

Ronald G. Peterson
Retired Executive, First State Bank of Illinois

Victor J. Quinn
Executive Vice President, Client Relations and
Business Development, Quad City Bank and
Trust Company

Marc C. Slivken, D.D.S.
Retired CEO, Kimberly Park Dental

Marie Z. Ziegler
Retired Executive,
Deere & Company

John H. Anderson
President and Chief Executive Officer

Nick W. Anderson
Vice President and Controller

Cindy M. Carlson
Executive Vice President, Wealth Builders Group

Laura L. Ekizian
Senior Vice President, Private Banking

Kathleen M. Francque
Senior Vice President, Correspondent Banking

Therese K. Gerwe
Vice President, Treasury Management

Deborah C. Gillum
1st Vice President, Retail Banking

Anne E. Howard
Assistant Vice President,
Human Resources Manager

David C. Howell
1st Vice President, Wealth Builders Group

Rick J. Jennings
Senior Vice President, Senior Trust Officer

Jeffrey M. Lockwood
Executive Vice President, Chief Lending Officer

Peter J. McAndrews
1st Vice President, Retail, Real Estate and
Consumer Loans

John R. McEvoy
Executive Vice President, Chief Operations
Officer and Cashier

Victor J. Quinn
Executive Vice President, Client Relations and
Business Development

Shellee R. Showalter
Senior Vice President,
Director of Investor Services and Compensation

Cathie S. Whiteside
Executive Vice President, Corporate Strategy and
Branding

Michael J. Wyffels
Senior Vice President, Chief Technology Officer

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

JANUARY 2014 MARKS THE 20TH ANNIVERSARY OF QUAD CITY BANK & TRUST AND WE COULDN’T BE MORE
PROUD OF WHAT WE HAVE ACCOMPLISHED IN WHAT COULD BE VIEWED AS A VERY SHORT TIME.

QUAD CITY BANK & TRUST WAS FORMED WITH THE MISSION OF PROVIDING LOCALLY DELIVERED, EXCEPTIONAL
CLIENT SERVICE AND ADVICE. IT IS WITHOUT QUESTION THAT OUR EMPLOYEES CONTINUE TO DELIVER ON
THAT MISSION EACH AND EVERY DAY.

For Quad City Bank & Trust, our work is focused around our five
constituencies that we serve and how we serve them:

- OUR SHAREHOLDERS

- OUR COMMUNITY

- OUR CLIENTS

- OUR EMPLOYEES

- OUR REGULATORS

We have assembled a team of dedicated and exceptionally
knowledgeable bankers and each and every one of our valued
team members have helped drive our Community Bank success
in the Quad Cities marketplace. As “People You Can Bank On®”,
Quad City Bank & Trust employees not only work to build great
relationships with their clients, but also within the community in
which we serve.

We know that rewarding our first constituency – Our Shareholders
- is our principal responsibility and a key component to fulfilling
that responsibility is to do our best to serve our other four
constituencies.

A true Community Bank works to serve the needs of its clients
and the community in which it serves. Our employees work
very hard to serve our second constituency – Our Community
– by volunteering in over 50 different organizations. It is with
tremendous pride that we showcase just a few of our team
members below. These team members are filling key volunteer
positions in our local non-profits – all of this in addition to their
work and family responsibilities.

LAURA EKIZIAN
Chairperson, John Deere Classic PGA Tournament

CHRIS JOHNSON
Chairperson, Boys and Girls Club of the Quad Cities

JEFF LOCKWOOD
Chairperson, Vera French Community Mental Health Center

DAVE HOWELL
Chairperson, Arrowhead Ranch

CINDY CARLSON
Chairperson, Figge Art Museum

PAUL SCHMITT
Chairperson, Youth Service Bureau

KEVIN WELLMAN
Chairperson, Better Business Bureau

TOM KING
Chairperson, Habitat for Humanity Quad Cities

CATHIE WHITESIDE
Race Director, Quad Cities Race for the Cure

SHELLEE SHOWALTER
President, Junior Board of Rock Island

These team members represent just a few of the many employees
who spend countless hours serving our wonderful and vital
community organizations. In 2013, our entire Quad Cities based
team donated over 7,145 hours to the growth and well-being of
our community. Simply said, I am so proud of our team.

As a local Community Bank we empower our employees to do
what is right for our third constituency - Our Clients. Each day our
employees are charged with providing service levels for clients that
exceed their expectations. We regularly strive to have our clients
say to others: “You wouldn’t expect your bank to (insert exceptional
client service story here) …but at Quad City Bank & Trust…”

A recent: “You wouldn’t expect your bank to…” story unfolded like this:

Quad City Bank & Trust Executive Vice President and Cashier, John
McEvoy along with Neva Tapia and Brenda Whitney received a
call from one of our clients who had forgotten to retrieve one of
their children’s passport from their bank safe deposit box for an
overseas trip. They did not realize this until Sunday afternoon,
before a 6:00 AM flight the next day. Our dedicated team pulled
together and came up with a plan to aid this family in obtaining
the passport on Sunday evening. This is the type of teamwork
and dedication that has been part of the fabric of our team, and
what our valued clients have come to expect and why our tagline
continues to be “People You Can Bank On®”.

Our Employees are our fourth constituency and are the backbone
of everything we do. Quad City Bank & Trust strives to be the
employer of choice in the region by providing a challenging yet
fun and fulfilling work environment. We pride ourselves in hiring
the best people and giving them the tools needed to do their
jobs well.

Our fifth constituency is Our Regulators – truly our business
partners in every sense of the word. We work hard every day to
build our relationships with each of them to ensure that we are
the best bank that we can be – not only in safety and soundness,
but for profitability and for client ease of doing business with.

Thank you for your support and for being a part of Community
Banking history that has set the stage for all those who follow.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

“THERE ARE VERY FEW
RECOMMENDATIONS
THAT I GIVE TO FRIENDS,
COLLEAGUES, AND CLIENTS
WHEN ASKED.

HOWEVER, WHEN IT COMES TO
BANKING, CHECKING, SAVINGS
AND INVESTMENTS; I STAND
WITH CRBT AND ONLY CRBT.”

RAY DOCHTERMAN
Local 125 Business Manager, Cedar Rapids/Iowa City Building Trades President

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

INVESTING IN CEDAR RAPIDS, IOWA

4,155

EMPLOYEE HOURS
VOLUNTEERED IN 2013

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

P E O P L E Y O U C A N B A N K O N . ®

DIRECTORS

SENIOR MANAGERS

LARRY HELLING

President and Chief Executive Officer,
Cedar Rapids Bank & Trust

Larry J. Helling
President and Chief Executive Officer

Gary M. Becker
Senior Vice President, Commercial Banking

Kevin D. Bruns
Senior Vice President, Wealth Management

Patricia L. Ellison
Senior Vice President, Chief Credit Officer

James D. Klein
Senior Vice President, Retail Banking

Deborah J. Lindberg Gertsen
Senior Vice President, Trust and Investments

J. Mitchell McElree
Executive Vice President,
Managing Director, Specialty Finance Group

Dana L. Nichols
Executive Vice President, Chief Lending Officer

John A. Rodriguez
Executive Vice President, Operations and Cashier

Shelly A. Strellner
Senior Vice President, Private Banking

Timothy J. White
Senior Vice President, Business Development,
Specialty Finance Group

Larry J. Helling
President and Chief Executive Officer,
Cedar Rapids Bank and Trust Company

Donna J. Sorensen, J.D.
Chair of the Board,
Cedar Rapids Bank and Trust Company
President, Sorensen Consulting

Pat S. Baird
Vice Chair of the Board, Cedar Rapids Bank and
Trust Company / Retired President and Chief
Executive Officer, AEGON USA, LLC

Robert T. Buckley
Owner and Chief Executive Officer,
Kirk Gross Company

Patrice M. Carroll
President and Chief Executive Officer,
ImOn Communications

Loren L. Coppock
Chairman of the Board,
TrueNorth Companies, LLC

Todd A. Gipple
Executive Vice President, Chief Operating Officer
and Chief Financial Officer, QCR Holdings, Inc.

Ann M. Lipsky
President, Smulekoff Investment Co /
President, Smulekoff’s Furniture

David R. Mason Sr.
Attorney and Partner,
Redfern, Mason, Larsen and Moore, PLC

James A. Mudd, II
President and Chief Executive Officer,
Mudd Advertising

Chuck M. Peters
President and Chief Executive Officer,
The Gazette Company

Randy A. Ramlo
President and Chief Executive Officer,
United Fire Group, Inc.

Fred G. Timko
President, Down to Earth Development, LLC

A. James Tinker
President Emeritus,
Mercycare Service Corporation

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

Each December, I spend the last days of the year making hundreds of phone calls to some of our best

clients. My purpose is to personally thank them for the trust and confidence that they place in the staff

of Cedar Rapids Bank & Trust every day. It is always a fantastic experience, as I consistently hear about

the wonderful relationships that our employees have built with them and the difference it makes in

their lives.

There is no better way to express how Cedar Rapids Bank & Trust serves our clients and community,

than to share with you a few samples of the client stories that I had the privilege of hearing.

“For many years, I have relied on Gary Becker at CRBT for his years of experience and knowledge in the commercial market.

Gary’s advice is instrumental before making any business decisions. I appreciate that he has a constant working knowledge

of what is going on in the commercial market, as well as what is going on in Cedar Rapids as a whole and how it affects

business. Gary is in the “trenches” of business in CR. He speaks with experience, not theory. It’s that type of expertise that I

value, along with CRBT’s consistency, reliability, and genuine concern for my business.

CRBT is my partner and they are here to help make things happen for me and my businesses! “

MIKE ROSENBERG, OWNER, ROSENBERG & ASSOCIATES

“My experience with CRBT has been truly unique. The team places our relationship, and bringing value to it, as its top

priority. It’s rare when I have a lending partner that not only takes the time to understand my business, but then dissects

it with me in order to make it better. They want to see both my business and me on a positive trajectory. CRBT is an active

ingredient in helping to achieve it. #BankWithTheBest”

RAVI PATEL, PRESIDENT, HAWKEYE HOTELS

“Mid 2013, I had the opportunity to meet Tim White and Ben Weber at CRBT. When looking to move Life Line forward

out of a 28 year old system; I was looking for a company that could offer us a variety of options under one entity. CRBT’s

advice, contacts and just really being there for me, was over the top. Life Line is a family business in a small Iowa town and

I feel CRBT is already a vital piece to our business. We were very pleased to find CRBT and are excited to see how the future

unfolds.”

CONNIE LEICHER, PRESIDENT, LIFE LINE EMERGENCY VEHICLES, INC.

The experience of our team speaks for itself. Stories such as these strengthen our vision that we not

only serve as someone’s “banker,” but also as their trusted advisor who helps guide them through the

good times and the bad. We would not be successful without investing in our client’s overall success.

It’s all intertwined. Going the extra mile is our approach to doing business. This vision has been the key

to our success in 2013 and will allow us to continue achieving new milestones in the future.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

“WHEN I BEGAN MY CAREER IN OUR FAMILY BUSINESS

IN 1970 OUR BANKING RELATIONSHIP WAS FIRMLY

ESTABLISHED WITH A LOCALLY BASED BANK.

THIS WORKED WELL UNTIL THE BANK WAS SOLD AND

RESOLD TO OUT OF STATE REGIONAL AND NATIONAL

INSTITUTIONS; WHILE OUR RELATIONSHIPS WITH OUR

LOCAL BANKING CONTACTS REMAINED SOMEWHAT IN

PLACE, IT WAS APPARENT TO US THE DECISIONS WHICH

AFFECTED OUR COMPANY WERE ULTIMATELY MADE BY

SOMEONE IN ANOTHER STATE WHO DID NOT KNOW US.

WE LIVED WITH THIS BANKING SCENARIO FOR A NUMBER

OF YEARS UNTIL MAKING THE DECISION TO BANK WITH

COMMUNITY BANK & TRUST.

OUR RELATIONSHIP WITH COMMUNITY WAS

TRANSPARENT AND PROFESSIONAL FROM THE

BEGINNING, AND HAS SERVED OUR COMPANY WELL.

WE APPRECIATE AND ENJOY THE PERSONAL ATTENTION

FROM THE STAFF AT COMMUNITY; BANKING WITH

COMMUNITY WAS A GOOD BUSINESS DECISION FOR US.”

STAN POE
Standard Distribution Co.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

INVESTING IN THE CEDAR VALLEY AREA

EMPLOYEE HOURS
VOLUNTEERED IN 2013

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

P E O P L E Y O U C A N B A N K O N . ®

SENIOR MANAGERS

Stacey J. Bentley
President and Chief Executive Officer

Shawna L. Buckley
Vice President, Retail Banking Administration Manager

Richard L. Jaacks
Executive Vice President, Commercial Lending

Mitchell L. West
Senior Vice President, Wealth Management and Trust

STACEY J. BENTLEY

President and Chief Executive Officer,
Community Bank & Trust

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

Let me take this
opportunity to introduce
the newest member of
the QCR Holdings team.

Our History. Community National Bank was

founded in August of 1997 in Waterloo, Iowa. By

Through dedicated hours of preparation, our staff and especially

our clients persevered through the many changes of 2013. This

has been a very busy year focused primarily on retaining client

relationships. Today, Community Bank & Trust employs 41 staff

members and currently has two locations in Waterloo and one

location in Cedar Falls.

Committed to our customers and our community.
Yes, 2013 was a busy year with many changes but what

didn’t change is our commitment to our customers and

our community. Since the founding of our institution, our

success has always been about genuinely connecting with our

customers. Whether a customer is in the lobby or accessing

their account on their computer, smart phone, or a tablet

2000, we had opened four locations in the Cedar

in their business, we are committed to providing the same

Valley. In 2001, we expanded into the Mason City,

Iowa market and again into the Austin, Minnesota

market in 2004. As of July 2012, we had grown

to $269 million in assets, servicing three markets,

eight locations and had over 90 employees.

2013 became an epic year in our bank’s history

high quality experience backed by sincere personal service.

Exceptional service has defined us from the very beginning and

will continue to be our top priority. The reinvestment into our

communities through charitable contributions, sponsorships

and volunteerism is an expression of our longstanding belief in

being not just a business presence, but also an active participant

in the communities we call home. In 2013, our staff volunteered

over 2,000 hours to organizations throughout the Cedar Valley.

as we merged into QCR Holdings in May and

later had the opportunity to sell our Mason City

and Austin markets, allowing us to become more

The resources to make a difference. Our partnership
with QCR Holdings and Cedar Rapids Bank & Trust has enabled

us to increase our resources, allowing us to take advantage of

the technology, products, and services to advance in today’s

focused on the Cedar Valley. October proved to

market. In addition, building relationships with our employees

be a busy month as we deconverted our Mason

City and Austin markets and Community National

Bank formally merged into Cedar Rapids Bank &

Trust to become Community Bank & Trust.

Keeping Community in our name and adding

Trust was important to us in maintaining our

propels the success in building relationships with our clients,

shareholders and our community. This combination is a strong

foundation for growth and success and will drive tangible results.

Our Future: Big Opportunities. As we look to the
future, we have the team in place to make a difference in the

community in which we live, work and play in. Four of our past

directors now serve on either the QCR Holding, Inc. Board of

Directors or the Cedar Rapids Bank & Trust Board of Directors:

presence in the Cedar Valley and solidifying that

Michael Peterson, Robert Buckley, Jim Mudd Jr. and David

we have the premier Trust department, managing

over $208 million in assets.

Mason. There is an unprecedented amount of opportunity ahead

for both this year and the long term, as we look for opportunities

for more growth utilizing the additional resources and enhanced

products and services we are now able to offer.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

“WHEN WE WERE FACED WITH OUR TOUGHEST ECONOMIC

CONDITIONS, ROCKFORD BANK & TRUST CONTINUED TO PARTNER

WITH US AND CREATED TAILORED CLIENT BASED SOLUTIONS TO

PROVIDE EXCELLENT SERVICE TO BRIDGE US TO BETTER YEARS.

WE HAVE JUST COMPLETED A RECORD YEAR THAT WE NEVER

COULD HAVE GOTTEN TO WITHOUT THE FINANCIAL BACKING

OF ROCKFORD BANK & TRUST DURING THE RECENT INCREDIBLY

CHALLENGING TIMES.

AT ONSITE, WE CHOOSE TO PUT PEOPLE FIRST, AND OUR

EXPERIENCE INDICATES THAT IS ROCKFORD BANK & TRUST’S

PHILOSOPHY IN PRACTICE AS WELL. IT IS A TRIBUTE TO THE

ROCKFORD BANK & TRUST CULTURE THAT EVERY PERSON WE HAVE

COME INTO CONTACT WITH HAS PROVIDED EXCEPTIONAL SERVICE

WITH A CHEERFUL “CAN DO” ATTITUDE.

OUR SUCCESSES ARE SWEETER AND OUR SORROWS ARE EASED

BY WORKING WITH FOLKS WHO HAVE ALWAYS GOT THEIR CLIENTS

BEST INTERESTS AT THE CORE OF THEIR BUSINESS PHILOSOPHY.

THIS HAS BEEN OUR EXPERIENCE WITH ROCKFORD BANK & TRUST

FOR OVER 7 YEARS THAT THEY HAVE BEEN OUR BANKING PARTNER.”

JOY PETERSON
Secretary / Treasurer, ONSITE Woodwork Corporation

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

INVESTING IN ROCKFORD, ILLINOIS

1,530

EMPLOYEE HOURS
VOLUNTEERED IN 2013

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

P E O P L E Y O U C A N B A N K O N . ®

DIRECTORS

SENIOR MANAGERS

THOMAS BUDD

President and Chief Executive Officer,
Rockford Bank & Trust

Thomas D. Budd
President and Chief Executive Officer

Charles S. Bullock
Executive Vice President, Chief Operating Officer

Brian J. DeBenedetto
Senior Vice President and Trust Manager

Lori L. Diaz
Senior Vice President, Treasury Management

James M. Hansberry
Executive Vice President, Wealth Management

Anthony A. Moczynski
Senior Vice President, Chief Credit Officer

Brenda S. Nayonis
Senior Vice President, Operations and Cashier

Dale R. Shillady
Senior Vice President, Business Development

Karl R. Swanson
Senior Vice President, Commercial Banking

Thomas D. Budd
President and Chief Executive Officer,
Rockford Bank and Trust Company

John D. Whitcher
Chair of the Board,
Rockford Bank and Trust Company /
Vice President and General Counsel,
Viking Chemical Company

Michael A. Bauer
Consultant, Co-Founder of QCR Holdings, Inc.

Charles E. Box
Former Chairman, Illinois Commerce Commission
Former Mayor, Rockford, Illinois

Charles S. Bullock
Executive Vice President, Chief Operating Officer,
Rockford Bank and Trust Company

Rebecca L. Epperson
President, PR Etc.

Todd A. Gipple
Executive Vice President, Chief Operating Officer
and Chief Financial Officer, QCR Holdings, Inc.

Monica B. Glenny, CPA, CMA
President, Datacraft, Inc.

James P. Hamilton
President, MRV Foundation Inc.

Douglas M. Hultquist
President and Chief Executive Officer,
QCR Holdings, Inc.

Dana S. Kiley, Jr.
Vice President,
Coyle-Varland Insurance Agency, Inc.

George T. Ralph
Vice Chair of the Board,
Rockford Bank and Trust Company /
Managing Member, GTR Realty Advisors, LLC

M. Shawn Way
President and Chief Executive Officer,
Milestone, Inc.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

Rockford Bank & Trust was founded on the principles of serving our

four main constituencies: Shareholders, Employees, Customers, and our

Community. We know that rewarding our shareholders is our primary

responsibility and that we can only be successful in that regard by our

success in serving the other three constituencies.

Community banks have always played an important role in

Poverty in Rockford strikes children as well as adults. In 2013,

supporting the communities in which they operate. In addition

Rockford Bank & Trust committed to a multi-year pledge to the

to it being the right thing to do, supporting the community

Junior League of Rockford’s “Backpack Buddies” program in

is also fundamentally a good business practice. While it may

which hungry children are provided meals to take home from

sound cliché’, it really is true that a community bank, like many

school in their backpack. I’m proud of our staff for the many

other businesses, can only succeed if the community it serves

hours, commitment, and sacrifices they make to support our

has a stable and vibrant environment.

community’s many needs.

During our history, Rockford Bank & Trust has supported

Finally, during 2013, the Rockford community embarked on

numerous organizations through donations, sponsorships,

a multi-decade initiative plan known as Transform Rockford.

and volunteerism. While we attempt to support as many

The initiative seeks to involve all citizens and aspects of our

worthy causes as possible, we have taken a special interest in

community to come together and make transformational

education and the development of our community’s children.

changes to our community for the long term benefit of all.

Rockford’s societal and economic viability is largely dependent

The community banks in Rockford will play a vital role in

on our preparation of the next generation.

contributing time and talents to this transformation process.

In 2013, we made a multi-year commitment to sponsor

Transform Rockford and making a difference in this important

a computer based financial literacy program that was

journey for our community.

Rockford Bank & Trust is committed to fully participating in

implemented in Rockford’s four public high schools. For the fall

2013 semester, over 500 high school students were enrolled

in the Rockford Bank & Trust Financial Scholars program. The

program is one of the most successful in the state of Illinois.

In addition to financial support, a number of our officers have

volunteered their time in the elementary schools through the

United Way’s iRead Program and Money Smart Week programs.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

“QUAD CITY BANK & TRUST HAS ALWAYS BEEN THERE

WHEN WE NEEDED THEM. THEY HAVE BEEN OUR BEST

SUPPORTER AND BUSINESS PARTNER. WHEN WE HAD

A NEED FOR A LONG TERM EQUIPMENT LEASE THEY

REFERRED US TO THEIR AFFILIATE, m2 LEASE FUNDS.

WE WERE VERY PLEASED TO FIND THE SAME HIGH QUALITY,

PERSONAL SERVICE WITH m2 THAT WE HAD BECOME

ACCUSTOMED TO FROM QUAD CITY BANK & TRUST.

I WOULD RECOMMEND BOTH m2 AND QUAD CITY BANK &

TRUST HIGHLY TO ANYONE THAT WANTS A SOPHISTICATED

SERVICE THAT IS DELIVERED ON A VERY PERSONAL AND

KNOWLEDGEABLE BASIS.”

ROLAND D. PULLEY, CFO
PCT Engineered Systems, LLC

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

I N V E S T I N G I N O U R C O M M U N I T I E S

290EMPLOYEE HOURS VOLUNTEERED

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

m2m2m2m2Y O U N E E D A PA R T N E R Y O U C A N T R U S T. I T TA K E S 2

JOHN ENGELBRECHT

Chief Executive Officer,
m2 Lease Funds, LLC

DIRECTORS AND SENIOR MANAGERS

John R. Engelbrecht
Chief Executive Officer, m2 Lease Funds, LLC

Ron D. Orndorff
Chair of the Board, m2 Lease Funds, LLC
Retired Chairman and President, M&I Leasing Corporation

John H. Anderson
Director, m2 Lease Funds, LLC
President and Chief Executive Officer,
Quad City Bank and Trust Company

Richard W. Couch
President and Chief Operating Officer,
m2 Lease Funds, LLC

Michael A. Hatfield
Vice Chair of the Board, m2 Lease Funds, LLC
Retired Senior Vice President and Secretary,
M & I - Marshall & Illsley Corporation

Larry J. Helling
Director, m2 Lease Funds, LLC
President and Chief Executive Officer,
Cedar Rapids Bank and Trust Company

Mark R. Hogan
Director, m2 Lease Funds, LLC
Senior Advisor, BMO/Harris Bank

Douglas M. Hultquist
Director, m2 Lease Funds, LLC
President and Chief Executive Officer, QCR Holdings, Inc.

Christine D. Kennedy
Chief Financial Officer,
m2 Lease Funds, LLC

William M. Tank
Director, m2 Lease Funds, LLC
Executive Vice President, Chief Credit Officer, QCR Holdings, Inc.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

By thinking locally, but acting nationally,
m2 Lease Funds continues to differentiate
itself from its peers.

m2 Lease Funds was started in 1998 and became a

How do we grow? We believe that the m2 business

part of the QCR Holdings family in 2005. Today m2

model of providing quick and responsive turnarounds

has over 3,500 leases located in virtually every state.

in a simple and straight forward manner remains

As an equipment leasing generalist, m2 leases all

sound and for us to grow we only need to add more

varieties of equipment. Currently the largest equipment

“talent” to our Team. Unlike our sister bank’s goals of

concentrations include manufacturing, technology,

increasing market share in their local communities,

marine, healthcare, packaging, transportation and

m2 does business nationwide. m2 doesn’t have a local

software.

On the surface, banking and equipment leasing may

appear to be very similar. However, each requires

different expertise, skill sets and strategies. Although by

asset size m2 Lease Funds is the smallest QCR Holdings

entity, it is a material contributor to the overall Holding

Company’s earnings. m2 provides higher returns and

community to call home, so we expand by adding

new employees nationally. In the past six months we

have added 4 new business development officers.

They are located in Pennsylvania, Florida, Illinois and

another individual in Iowa. They join our other business

producers in Wisconsin, Minnesota, Iowa, North Carolina

and South Carolina.

spreads and consequently provides a better return on

2013 was a good year for m2 as net income improved

assets and equity than our sister banks. To best utilize

by 8% to $3.6 million and assets increased more than

QCRH’s capital resources, we believe that m2 should

25%, ending the year with assets of $136 million. New

grow to be 10% of the Holding Company’s assets. This

equipment purchases (equipment that we lease) were

initiative began in mid-2013 and we are on our way to

up over 40% from the preceding year. After tax return

reaching that goal. It is our plan to reach the 10% goal

on equity was 14.5% and return on assets was 2.13%.

within four years.

We are optimistic on the outlook for 2014. The strategy

for 2014 and beyond is to add, grow, contribute strong

earnings and repeat.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

Stock Price Year-End 2003 - 2013

$25

$20

$15

$10

12.31.03

12.31.04

12.30.05

12.29.06

12.31.07

12.31.08

12.31.09

12.31.10

12.30.11

12.31.12

12.31.13

Total Deposits 2006 / 2013

December 31, 2006 -
Total $875.5 MM

Non Interest Bearing Demand
$124.2 MM or 14%

Interest Bearing Demand
$334.0 MM or 38%

CD's
$417.3 MM or 48%

Retail: $345.8 MM or 40%

Brokered: $71.4 MM or 8%

December 31, 2013 -
Total $1,647.0 MM

Non Interest Bearing Demand
$542.6 MM or 33%

Interest Bearing Demand
$715.6 MM or 43%

CD's
$388.8 MM or 24%

Retail: $326.9 MM or 20%

Brokered: $61.9 MM or 4%

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

QCR Holdings, Inc. - Facility Map

FACILITY

STREET ADDRESS

CITY

Quad City Bank & Trust

2118 Middle Road

Bettendorf

Quad City Bank & Trust

4500 N. Brady Street

Davenport

Quad City Bank & Trust

3551 7th Street

Moline

Quad City Bank & Trust

5405 Utica Ridge Road

Davenport

Cedar Rapids Bank & Trust

500 First Avenue NE, Suite 100

Cedar Rapids

Rockford Bank & Trust

308 W. State Street, Suite 100

Rockford

Quad City Bank & Trust

1700 Division Street

Davenport

Cedar Rapids Bank & Trust

5400 Council Street NE

Cedar Rapids

STATE

Iowa

Illinois

Iowa

Illinois

Iowa

m2 Lease Funds, LLC

175 N. Patrick Blvd. Suite 140

Brookfield

Wisconsin

Rockford Bank & Trust

4571 Guilford Road

Rockford

Community Bank & Trust

422 Commercial Street

Waterloo

Community Bank & Trust

11 Tower Park Drive

Waterloo

Community Bank & Trust

312 W. 1st Street

Cedar Falls

Illinois

Iowa

* Former location

ZIP

52722

52806

61265

52807

52401

61101

52804

52402

53045

61107

50701

50613

DATE OPENED/ ACQUIRED **

Jan 1994

July 1996

Feb 1998

Oct 2000

July 2005 (Sept 2001*)

Feb 2014 (Jan 2005*)

Mar 2005

June 2005

August 2005

Nov 2006

May 2013 **

Quad City Bank & Trust
(5 Locations)

Cedar Rapids Bank & Trust
(2 Locations)

Community Bank & Trust
(3 Locations)

Rockford Bank & Trust
(2 Locations)

5. m2 Lease Funds, LLC

(1 Location)

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

QCR Holdings, Inc. Consolidated Financial Highlights

As of

December 31,
2013

December 31,
2012

(dollars in thousands, except share data)

CONDENSED BALANCE SHEET

Cash, federal funds sold, and interest-bearing deposits

Amount

114,431

Securities

Net loans/leases

Core deposit intangible

Goodwill

Other assets

Total assets

Total deposits

Total borrowings

Other liabilities

Total stockholders' equity

Total liabilities and stockholders' equity

SELECTED INFORMATION FOR COMMON STOCKHOLDERS' EQUITY

Common stockholders' equity *

Common shares outstanding **

Book value per common share *

Tangible book value per common share ***

Closing stock price

Market capitalization

Market price / book value

Market price / tangible book value

Tangible common equity **** / total tangible assets (TCE/TA)

TCE/TA excluding accumulated other comprehensive income

REGULATORY CAPITAL RATIOS:

Total risk-based capital ratio

Tier 1 risk-based capital ratio

Tier 1 leverage capital ratio

29%

60%

Amount

110,488

602,239

1,267,462

3,223

110,318

29%

61%

697,210

1,438,832

1,870

3,223

139,387

2,394,953

100%

2,093,730

100%

1,646,991

563,381

37,004

147,577

68%

24%

1,374,114

547,758

31,424

140,434

66%

26%

2,394,953

100%

2,093,730

100%

117,778

87,271

7,884,462

14.94

14.29

17.03

134,272

4,918,202

17.74

17.08

13.22

65,019

114.00%

119.17%

4.71%

5.29%

12.99%

11.57%

8.04%

74.50%

77.39%

4.02%

3.80%

12.71%

11.27%

8.13%

CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

2013

2012

For the year ended December 31,

Beginning balance

Net income

Other comprehensive income (loss), net of tax

Preferred and common cash dividends declared

Issuance of 834,715 shares of common stock for acquisition of CNB, net

Redemption of 10,223 shares of Series F Preferred Stock (SBLF)

Purchase of noncontrolling interest

Other *****

Ending balance

140,434

144,433

14,938

(18,351)

(3,627)

13,017

1,166

13,106

(48)

(3,877)

(10,223)

(4,782)

1,825

147,577

140,434

Includes accumulated other comprehensive income.

* Includes accumulated other comprehensive income
**Increase is mostly the result of shares issued for conversion of Series E Preferred Stock (2,057,502 shares at $12.15/share) and acquisition of CNB (834,715 shares)
***Includes accumulated other comprehensive income and excludes intangible assets
****Tangible common equity is defined as total common stockholders' equity excluding equity of noncontrolling interests and excluding goodwill and
other intangibles. This ratio is a non-GAAP financial measure. The Company's management believes that this measure is important to many
investors in the marketplace who are interested in changes period to period in common equity exclusive of changes in intangible assets.

Increase is mostly the result of shares issued for conversion of Series E Preferred Stock (2,057,502 shares at $12.15/share) and acquisition of CNB (834,715 shares).

Includes accumulated other comprehensive income and excludes intangible assets.

Tangible common equity is defined as total common stockholders’ equity excluding equity of noncontrolling interests and excluding goodwill and other intangibles. This ratio is a non-GAAP financial measure.
The Company’s management believes that this measure is important to many investors in the marketplace who are interested in changes period to period in common equity exclusive of changes in intangible assets.

*****Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.

*
*

**
**

***
***

****
****

*****
*****

Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

QCR Holdings, Inc. Consolidated Financial Highlights

For the Year Ended

December 31,
2013

December 31,
2012

(dollars in thousands, except per share data)

CONDENSED INCOME STATEMENT

Amount

% Change

Interest income

Interest expense

Net interest income

Provision for loan/lease losses

Net interest income after provision for loan/lease losses

Noninterest income

Noninterest expense

Net income before taxes

Income tax expense

Net income

81,872

77,376

17,767

64,105

5,930

58,175

25,814

64,433

19,556

4,618

19,727

57,649

4,371

53,278

16,621

52,259

17,640

4,534

14,938

13,106

Less: Net income attributable to noncontrolling interests

488

Net income attributable to QCR Holdings, Inc.

14,938

12,618

Less: Preferred stock dividends

3,168

3,496

Net income attributable to QCR Holdings, Inc. common stockholders

11,770

9,122

Earnings per share attributable to QCR Holdings, Inc.:

Basic

Diluted

2.13

1.88

2.08

1.85

Weighted average common shares outstanding

Weighted average common and common equivalent shares outstanding

5,531,948

5,646,926

4,844,776

4,919,559

-10%

11%

36%

55%

23%

11%

14%

-100%

18%

-9%

29%

13%

12%

AVERAGE BALANCES

Assets

Loans/leases

Deposits

Total stockholders' equity

Common stockholders' equity

KEY PERFORMANCE RATIOS

Return on average assets ***

Return on average common equity **

Return on average total equity ***

Price earnings ratio LTM *

Net interest margin (TEY)

Nonperforming assets / total assets

Net charge-offs / average loans/leases

Allowance / total loans/leases ****

Allowance / nonperforming loans ****

Efficiency ratio

Full-time equivalent employees *****

2,330,604

2,025,691

1,425,364

1,219,623

1,594,939

1,310,360

145,906

141,793

102,525

84,159

0.64%

11.48%

10.24%

8.00

3.03%

1.28%

0.31%

1.47%

104.70%

71.66%

400

0.62%

10.84%

8.90%

7.07

3.14%

1.41%

0.27%

1.55%

78.47%

70.36%

356

* LTM: Last twelve months
** The numerator for this ratio is "Net income attributable to QCR Holdings, Inc. common stockholders"
*** The numerator for this ratio is "Net income attributable to QCR Holdings, Inc."
**** Upon acquisition per GAAP, the acquired loans are recorded at market value which eliminated the allowance and impacts these ratios.
***** Community Bank & Trust had 41 full-time equivalent employees at December 31, 2013.

LTM: Last twelve months

The numerator for this ratio is “Net income attributable to QCR Holdings, Inc. common stockholders”

***

The numerator for this ratio is “Net income attributable to QCR Holdings, Inc.”

****

Upon acquisition per GAAP, the acquired loans are recorded at market value which eliminated the allowance and impacts these ratios.

*****

Community Bank & Trust had 41 full-time equivalent employees at December 31, 2013.

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

QCR Holdings, Inc. Consolidated Financial Highlights

As of

December 31,
2013

December 31,
2012

(dollars in thousands)

ANALYSIS OF LOAN DATA

Nonaccrual loans/leases

Accruing loans/leases past due 90 days or more

Troubled debt restructures - accruing

Other real estate owned

Other repossessed assets

Amount

17,878

2,523

9,729

346

59%

32%

Amount

17,932

159

7,300

3,955

212

60%

25%

13%

Total nonperforming assets

30,560

100%

29,558

100%

Net charge-offs (calendar year-to-date)

4,408

3,235

Loan/lease mix:

Commercial and industrial loans

431,688

Commercial real estate loans

Direct financing leases

Residential real estate loans

Installment and other consumer loans

Deferred loan/lease origination costs, net of fees

671,753

128,901

147,356

76,034

4,548

30%

46%

10%

394,244

593,979

103,686

115,582

76,720

3,176

31%

46%

Total loans/leases

1,460,280

100%

1,287,387

100%

Less allowance for estimated losses on loans/leases

21,448

19,925

Net loans/leases

1,438,832

1,267,462

ANALYSIS OF SECURITIES DATA

Securities mix:

U.S. government sponsored agency securities

356,473

180,361

157,429

2,947

51%

26%

23%

338,609

97,615

163,601

2,414

57%

16%

27%

697,210

100%

602,239

100%

Noninterest-bearing demand deposits

542,566

715,643

326,852

61,930

33%

43%

20%

450,660

587,201

290,933

45,320

33%

43%

21%

1,646,991

100%

1,374,114

100%

Municipal securities

Residential mortgage-backed and related securities

Other securities

Total securities

ANALYSIS OF DEPOSIT DATA

Deposit mix:

Interest-bearing demand deposits

Time deposits

Brokered time deposits

Total deposits

ANALYSIS OF BORROWINGS DATA

Borrowings mix:

FHLB advances

Wholesale structured repurchase agreements

Customer repurchase agreements

Federal funds purchased

Junior subordinated debentures

Other

Total borrowings

12,448
563,381

231,350

130,000

98,823

50,470

40,290

41%

23%

18%

2%
100%

202,350

130,000

104,943

66,140

36,085

8,240
547,758

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

37%

24%

19%

12%

1%
100%

QCR Holdings, Inc. Consolidated Financial Highlights

ANALYSIS OF NET INTEREST INCOME AND MARGIN

December 31, 2013

December 31, 2012

For the Year Ended

Average Balance

Interest Earned or
Paid

Average Yield or
Cost

Average Balance

Interest Earned or
Paid

Average Yield or
Cost

Securities *

Loans *

Other

700,344

16,140

1,425,364

74,570

67,484

853

Total earning assets *

2,200,278

84,477

Deposits

Borrowings

1,076,533

4,715

552,776

13,052

Total interest-bearing liabilities

1,629,309

17,767

Net interest income / spread *

Net interest margin *

66,710

(dollars in thousands)

2.30%

4.73%

1.14%

3.84%

0.44%

2.36%

1.09%

2.75%

3.03%

603,568

14,268

1,219,623

73,009

64,100

891

1,896,200

79,259

898,321

6,219

545,080

13,508

1,443,401

19,727

59,532

2.36%

5.26%

1.22%

4.18%

0.69%

2.48%

1.37%

2.81%

3.14%

* Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 34% tax rate for each period presented.

For the Year Ended

ANALYSIS OF NONINTEREST INCOME

December 31, 2013

December 31, 2012

% Change

Trust department fees

Investment advisory and management fees

Deposit service fees

Gain on sales of residential real estate loans

Gain on sales of government guaranteed portions of loans

Earnings on cash surrender value of life insurance

Credit card fees, net of processing costs

Subtotal

Bargain purchase gain on CNB acquisition

Gains on sales of certain Community National Bank branches

Losses on other real estate owned, net

Securities gains

Other **

Total noninterest income

ANALYSIS OF NONINTEREST EXPENSE

Salaries and employee benefits

Occupancy and equipment expense

Professional and data processing fees

FDIC and other insurance

Loan/lease expense

Advertising and marketing

Postage and telephone

Stationery and supplies

Bank service charges

Subtotal

Acquisition and data conversion costs

Other-than-temporary-impairment losses on securities

Other

Total noninterest expense

** Following is a detailed breakdown of Other Noninterest Income:

Gain on sale of credit card loan portfolio

Gain on sale of credit card issuing operations

Gain on sale of certain nonperforming loans

Gain on sale of equity interest

Debit card fees

Fees on interest rate swaps on commercial loans

Miscellaneous
TOTAL

4,942

3,632

(dollars in thousands)

2,580

4,267

836

2,149

1,786

175

2,361

3,486

1,388

1,070

1,609

599

16,735

14,145

1,841

2,334

(545)

432

5,017

(1,333)

105

3,704

25,814

16,621

37,510

33,275

6,712

6,425

2,587

1,522

1,727

1,069

562

1,145

5,635

4,318

2,331

1,042

1,445

960

541

854

59,259

50,401

2,353

2,821

1,796

64,433

52,259

495

$
-

355

576

992

105

580

951

616

2,494
5,017

1,557
3,704

36%

22%

-40%

101%

11%

-71%

18%

100%

-59%

311%

35%

55%

13%

19%

49%

11%

46%

20%

11%

34%

18%

100%

-100%

57%

23%

100%

-100%

-83%

60%
35%

QCR HOLDINGS, INC. 2013 ANNUAL REPORT

stock listing information
The common stock of QCR Holdings, Inc. is traded on the NASDAQ Global Market under the symbol QCRH.

COMMON STOCK

Calendar 2013

High

Low

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Calendar 2012

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Calendar 2011

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

$ 18.20

$ 15.65

16.51

16.50

16.96

High

14.96

13.18

13.05

Low

$ 15.50

$ 11.40

14.98

14.50

12.45

High

12.62

10.70

8.50

Low

$ 9.23

$ 8.42

9.93

9.47

8.67

8.70

7.29

7.22

DIVIDEND INFORMATION

Record Date

Payment Date

Amount
Per Share

12.20.13

06.21.13

12.22.12

06.21.12

12.26.11

06.23.11

01.07.14

07.08.13

01.07.13

07.06.12

01.06.12

07.07.11

$ .04

.04

Annual Meeting of Stockholders

Corporate Counsel

The Annual Meeting of the Stockholders of
QCR Holdings, Inc. will be held:

May 14, 2014 at 10:00 am
St. Ambrose University - Rogalski Center
2100 North Ripley Street
Davenport, IA 52803

Annual Report on Form 10-K

Copies of the QCR Holdings, Inc. annual
report on Form 10-K and exhibits filed with
the Securities and Exchange Commission
(SEC), are available to stockholders without
charge by accessing our internet site at
www.qcrh.com or by writing:

John R. Oakes
1st Vice President, Controller and
Director of Financial Reporting

QCR Holdings, Inc.
3551 Seventh Street
Moline, IL 61265
309.743.7761

The SEC maintains an internet site that
contains reports, proxy, and information
statements and other information about
issuers that file electronically with the SEC.
The address of that site is: www.sec.gov.

Stock Transfer Agent
Inquiries regarding stock transfer, registration,
lost certificates, or changes in name and
address should be directed to the stock
transfer agent and registrar by writing:

ist Shareholder Services
433 S. Carlton Avenue
Wheaton, IL 60187

Investor Information

Stockholders, investors, and analysts interested
in additional information may contact:

Todd A. Gipple
Executive Vice President, Chief Operating
Officer and Chief Financial Officer

QCR Holdings, Inc.
3551 Seventh Street
Moline, IL 61265
309.743.7745

Independent Registered
Public Accounting Firm

McGladrey LLP, Davenport, IA

Lane & Waterman, Davenport, IA
Barack Ferrazzano Kirschbaum & Nagelberg LLP,
Chicago, IL

Quad City Bank & Trust Locations

2118 Middle Road
Bettendorf, IA 52722

4500 N. Brady Street
Davenport, IA 52806

3551 Seventh Street
Moline, IL 61265

5405 Utica Ridge Road
Davenport, IA 52807

1700 Division Street
Davenport, IA 52804

Cedar Rapids Bank & Trust Locations

500 First Avenue NE, Suite 100
Cedar Rapids, IA 52401

5400 Council Street NE
Cedar Rapids, IA 52402

Community Bank & Trust Locations

422 Commercial Street
Waterloo, IA 50701

11 Tower Park Drive
Waterloo, IA 50701

312 W. 1st Street
Cedar Falls, IA 50613

Rockford Bank & Trust Locations

308 W. State Street, Suite 100
Rockford, IL 61101

4571 Guilford Road
Rockford, IL 61107

m2 Lease Funds, LLC

175 N. Patrick Blvd., Suite 140
Brookfield, WI 53045

Internet Information

Information on subsidiaries’ history,
locations, products and services can be
accessed on the internet at:

www.qcbt.com
www.crbt.com
www.communitybt.com
www.rkfdbank.com
www.m2lease.com

QCR HOLDINGS, INC. 2013 ANNUAL REPORT