QCR
Annual Report 2014

Plain-text annual report

What is a Community Bank? 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. Since the founding of our Company in 1993, we have continually focused on being the “Relationship Driven Organization®” that is the heart of our QCR Holdings, Inc. business model, a business model that provides each QCR Holdings entity with the autonomy to tailor products, services and decisions unique to the clients and communities that it serves. Further supporting our local Community Banks is a Board of Directors at each banking charter and m2 that consists of community leaders who share this drive to make a difference to our clients and the communities in which they live and work. By staying true to our business model of delivering local decisions that impact clients and communities, and delivering support services that do not directly impact clients in a centralized and efficient manner, we have allowed Quad City Bank & Trust, Cedar Rapids Bank & Trust, Rockford Bank & Trust, and Community Bank & Trust to create a strong “Community Bank” brand in their respective markets and to become the bank of choice for clients that value a strong relationship with their bank. Each member of our QCR Holdings team will continue to focus on creating meaningful and lasting relationships with our clients as we work hard to create significant long-term value for our shareholders. Each of our clients “need” something different from their banking relationship. Our local bankers in the Quad Cities, Cedar Rapids, Rockford, and Waterloo/Cedar Falls communities are empowered to tailor products, services and decisions to the clients and communities that they serve, creating the customized “relationship based” service that drives our Company. Each member of the QCRH team has the experience and talent to build strong relationships with our clients, to understand their unique hopes, challenges and opportunities, and to bring them decisions and solutions that help them achieve their financial dreams. Serving the needs of our Clients and the Communities in which we live and work by developing strong 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. Our local bankers and our leasing subsidiary, m2 Lease Funds, 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 member Community Banks to possess the resources of a much larger financial institution. 1 A MESSAGE FROM OUR CHAIRMAN In past annual Chairman’s messages, I have talked about our unique community banking model at QCR Holdings which uses the centralized core of the Holding Company to provide support services; yet empowers our banking subsidiaries at their local community level to make their own client decisions. This strategy has proven very successful for our shareholders over these past twenty-one years. Community banking has many distinct advantages over our country’s megabanks whose corporate headquarters are located outside of their local communities. The Independent Community Bankers of America Association touts several major advantages of community banks. I thought it appropriate to remind you, our shareholders, about the similar advantages that we share, as outlined in the list below: WE BELIEVE: • • • • • In empowering our banking subsidiaries to make financial decisions affecting their local community with the advice and consent of a local community Board of Directors. In the needs of local families and businesses, not large corporations whose headquarters are located away from our communities. In acquiring core deposits in the communities we serve and in lending to those clients in our communities - not to borrowers in states far away from our communities. Our community bank employees will be located on sites accessible to where our local clients need them as opposed to large cities far away from the local community. Our community bank employees are invested in the communities where they live and work and are integral parts in a multitude of events in their community’s everyday life. • • • Our community banks offer nimble decision making on business loans because decisions are made locally, not at loan committee meetings held in another state. That select client support services can best be provided at the Holding Company centralized location. We believe this model maximizes our talent for the benefit of our communities, clients, and shareholders. As community bankers we can best serve the needs of our local small businesses, as after all, we too are a small business and we understand well the needs of other small businesses. • Most importantly, we believe adherence to the aforementioned beliefs has provided, continues to provide, and will provide in the future, the best return on investment for you, our shareholders. 2014 was another successful year in the short life of QCR Holdings. As always, I want to thank our management team and all of our employees who make our Company what it is today. To our Board, thank you for your unselfish dedication to our Company. To the family of our treasured board member, John Whitcher, please accept our sympathy as we share in the loss of this special man. And to you, our shareholders, continued thanks for investing in QCR Holdings. We are proud of our past performance and will work hard to provide the best possible return in the future. 2 James J. Brownson Chairman of the Board, QCR Holdings, Inc. Summary of Financial Results 2009 - 2014 (in thousands) 2009 2010 2011 2012 2013 2014 Net interest income Non-interest income $50,662 $49,864 $54,145 $57,649 $64,105 $69,071 15,547 15,406 17,462 16,621 25,814 20,998 Non-interest expense (46,937) (48,549) (50,993) (52,259) (64,433) (65,270) Pre-tax pre-provision net income 19,272 16,721 20,614 22,011 25,486 24,799 Provision for loan/lease losses (16,976) (7,464) (6,616) (4,371) (5,930) (6,807) Net income before taxes 2,296 9,257 13,998 17,640 19,556 17,992 Income taxes Net income (247) (2,449) (3,868) (4,534) (4,618) (3,039) 2,049 6,808 10,130 13,106 14,938 14,953 Less: net income attributable to non controlling interests 277 221 438 488 - - Net income attributable to QCR Holdings, Inc. $1,772 $6,587 $9,692 $12,618 $14,938 $14,953 Book Value vs. Fair Market Value COMMON STOCK (IN MILLIONS) Total Metropolitan Statistical Area Deposits (JUNE 30, 2014) (IN THOUSANDS) $8,000,000 $5,000,000 $2,000,000 FAIR MARKET VALUE BOOK VALUE $150 $120 $90 $60 $30 . 3 9 C E D . 8 9 C E D . 3 0 C E D . 8 0 C E D . 3 1 C E D . 4 1 C E D Population (July 1, 2013) , 2 8 3 5 3 9 7 $ , , 2 4 9 4 3 6 5 $ , , 0 3 8 3 4 2 5 $ , , 8 3 6 3 7 9 2 $ , s e i t i C d a u Q 0 0 0 4 8 3 , i s d p a R r a d e C 0 0 0 4 6 2 , y e l l a V r a d e C 0 0 0 9 6 1 , d r o f k c o R 0 0 0 3 4 3 , Asset Growth (IN THOUSANDS) $350,000 $175,000 , 3 2 2 1 0 3 $ , 5 7 9 9 2 1 $ , 0 2 1 7 2 1 $ 1 1 0 2 2 1 0 2 * 3 1 0 2 , 5 0 0 0 3 1 $ 4 1 0 2 9 8 9 6 5 $ , 0 1 0 2 * Includes acquisition of Community National Bank 3 TO OUR SHAREHOLDERS, 2014 marked the 21st anniversary of our Company. We are thankful to our more than 400 employees who are accepting the challenges of change and regulation in our industry and are meeting those challenges head on with hard work, innovation and passion for doing what is right for our clients. As will be outlined in the following pages of our Annual Report, our financial results reflect strong underlying performance across our five main businesses. “The Local Community Bank Advantage” remains 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 that we will meet with them whenever and wherever it is most convenient for them, armed with the financial tools and expertise needed to help them realize their dreams. Our clients continue to value the opportunity to be able to sit one-on-one with their banker and not be placed into queue at an 800 number regional call center. Our clients continue to value that we are active in citizenship throughout the communities in which we do business. Our employees unselfishly donated over 18,000 hours to local non-profit organizations in 2014 alone. CONSOLIDATED EARNINGS (in thousands) Quad City Bank & Trust * $ 8,838 $ 10,732 $ 10,273 $ 10,451 2011 2012 2013 2014 Cedar Rapids Bank & Trust 5,200 5,881 6,736 8,006 Rockford Bank & Trust 412 593 1,579 1,877 Parent Co. & Eliminations ** (4,758) (4,588) (3,650) (5,381) Consolidated Earnings $ 9,692 $ 12,618 $ 14,938 $ 14,953 * Includes m2 Lease Funds. ** Includes earnings from CNB and all other acquisition related activity. 2014 RESULTS AND HIGHLIGHTS IN 2014 WE ACHIEVED SOME NOTABLE MILESTONES: As the financial strength of the Company increased over the last several years, we began to emphasize a return to growth, which was evident in our 2014 results. We had solid success growing loans and leases in 2014, with growth of $168.1 million since December 31, 2013, resulting in a 12% growth rate. This growth was split between commercial and industrial loans ($92.2 million, or 21%, over prior year-end), commercial real estate loans ($30.4 million, or 5%, over prior year-end) and leases ($37.1 million, or 29%, over prior year-end). This growth was purely organic and is the highest growth rate the Company has experienced since pre-recession periods. These results were driven by our employees’ dedication to growing loans and leases and improving the Company’s balance sheet mix, resulting in improved returns for our shareholders. In 2014 we successfully expanded net interest margin four consecutive quarters - finishing the twelve months ending December 31, 2014 at 3.15% versus 3.03% at December 31, 2013. Net interest income grew 8% in 2014. For the year ended December 31, 2014, net interest income was $69.1 million, an increase of $5.0 million over the year ended December 31, 2013. We continue to redeploy funds from the securities portfolio into loans and leases, with a goal of growing loans and leases from our current level of 63% to more than 70% of total assets. We continue to remain focused on improving our funding mix through growth in noninterest bearing deposits and reductions in high-cost wholesale funding. We believe that our execution of these strategies will help move us closer to our return on assets goal of 1.00%. For the year ended December 31, 2014, net income attributable to QCR Holdings Inc. was $14.95 million, resulting in diluted earnings per share of $1.72 after preferred stock dividends of $1.1 million. For the same period in 2013, we reported net income of $14.94 million, or diluted earnings per share of $2.08 after preferred stock dividends of $3.2 million. In the fourth quarter of 2014, the Company placed a very strong emphasis on asset quality and elevated provision expense and charge-offs accordingly. We aggressively addressed a few specific asset quality issues and feel we are well-positioned for 2015. The Company has historically demonstrated better than peer asset quality metrics, both during and subsequent to the credit crisis, and we are focused on reducing nonperforming assets as a percentage of total assets to less than 1.00% as quickly as possible. We remain focused on 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. Our capital plan is consistent with the requirements of the new regulatory capital guidelines that go into effect for the reporting period ending March 31, 2015 under Basel III. REDEMPTION OF $29.9 MILLION OF SMALL BUSINESS LENDING FUND PREFERRED STOCK It was our stated intention to redeem the remaining Small Business Lending Fund (“SBLF”) Preferred Stock during 2014 and we were pleased to execute on this strategy. The Company had originally issued $40.1 million of SBLF Preferred Stock to the United States Department of the Treasury under the Small Business Lending Fund Program in September of 2011, and had previously redeemed $10.2 million of the SBLF Preferred Stock in June of 2012. On March 31, 2014, we redeemed $15.0 million of SBLF Preferred Stock. On June 30, 2014, the Company completely exited the SBLF program with the redemption of the final $14.9 million of SBLF Preferred Stock. The timing of the redemption was critical as the dividend rate on the SBLF Preferred Stock increased from 5% to 9% during the first quarter of 2014, as scheduled. The redemption freed up capital previously used for preferred stock dividends and further helped grow our tangible common equity and support our long-term growth plans. With the redemption of all of the SBLF Preferred Stock, we continue to demonstrate strong execution of our long-term capital plan. When combined with our December 2013 conversion of all $25 million in Series E Convertible Preferred Stock, the Company has significantly changed our mix of capital from preferred equity to common equity. Since June of 2012, we have converted or redeemed $65.1 million of preferred equity and in 2014 have completely eliminated any ongoing preferred dividend commitment. The execution of our capital plan continues to demonstrate our ability to organically reach our intended target for our tangible common equity (“TCE”) ratio of 6.5% through continued earnings and prudent management of capital. Since December of 2013, the Company’s TCE ratio has grown from 4.71% to 5.52%, while at the same time, tangible book value has increased from $14.29 per share to $17.50 per share. We have been able to accomplish these results without a separate common equity issuance that would have been dilutive to earnings per share and tangible book value per share. The Company and our subsidiary banks continue to maintain capital at levels well above the existing minimum requirements administered by the federal regulatory agencies. FILING OF FORM S-3 SHELF REGISTRATION STATEMENT On June 30, 2014, the Company filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”). This registration statement, declared effective by the SEC on July 14, 2014, will allow the Company to issue various types of securities, including common stock, preferred stock, debt securities and/or warrants, from time to time, up to an aggregate amount of $75.0 million. The specific terms and prices will be determined at the time of any future offering and described in a separate prospectus supplement, which would be filed with the SEC at the time of the particular offering, if any. By taking the additional action of filing a shelf registration, we are now in a position to more quickly take advantage of future opportunities for growth and potential acquisitions. 4  QCR HOLDINGS, INC. ENTITY WIDE STRATEGIC INITIATIVES The Company has identified six focus areas for improving shareholder value: - Grow loans and leases to more than 70% of total assets - Improve funding mix by increasing core deposits and reducing wholesale sources of funds - Grow SBA/USDA gains on loan sales to $4 million annually - Grow Wealth Management income by more than 15% annually - Drive down efficiency ratio as we work to achieve a 1% ROAA - Return asset quality to better than peers QCR HOLDINGS, INC. STRATEGIC ADVANTAGES During 2014, we continued to build lasting client relationships across all of our lines of business. Working to become dream makers for our clients continues to be at the core of the work that we do. We will continue to invest wisely in our people, products and technology as we look for opportunities of further growth. We continued to expand resources in the niches below: CORRESPONDENT BANKING DIVISION The Correspondent Banking Division at Quad City Bank & Trust continues to seize opportunities to deliver exceptional customer service to downstream banks in Illinois, Iowa and Wisconsin. During 2014, we were able to increase the total number of banks we serve by 6% and grow non-interest income significantly as well. Our veteran team of bankers provides many layers of expertise in such areas as trust and investment services and loans and leases. This division now services 164 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 2014, assets under management totaled $2.1 billion and our veteran staff welcomed a record number of 425 new relationships. m2 LEASE FUNDS m2 Lease Funds is a wholly owned subsidiary of Quad City Bank & Trust. 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 pre-tax net income in 2014 of $3.5 million and grew total leases $43.7 million, or 30% over 2013. 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, one of our focuses is measuring 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 $1.32 billion at December 31, 2014. The bank continues to have success in growing its Correspondent Banking and Wealth Management businesses, as outlined above. Quad City Bank & Trust realized net income of $10.5 million for the year ended December 31, 2014, compared to $10.3 million in 2013. Cedar Rapids Bank & Trust – President and CEO Larry Helling, one of the founders of Cedar Rapids Bank & Trust (2001) led his team to record net income of $8.0 million for the year ended December 31, 2014, which was a 19% increase over the $6.7 million net income for 2013. Total assets at December 31, 2014 finished at $840.3 million, up 4.5% or $36.1 million from the end of 2013. Included in the growth of revenue and assets for Cedar Rapids Bank & Trust is Community Bank & Trust, located in Waterloo and Cedar Falls. Community Bank & Trust’s three banking locations were merged with Cedar Rapids Bank & Trust in the fourth quarter of 2013. 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 President and CEO, Tom Budd, Rockford Bank & Trust (2005) reported record net income for the year ended 2014 of $1.9 million. By comparison, the bank reported net income of $1.6 million in 2013. Total assets finished the year at $353.4 million, which was an increase of $14.1 million, or 4% over 2013. In its 10th year of operation, Rockford Bank & Trust increased net interest margin from 3.20% in 2013 to 3.31% at the end of 2014. QCR HOLDINGS, INC. STRATEGIC DIRECTION FOR 2015 AND BEYOND We believe we have assembled an extraordinary team that is focused on improved earnings and organic growth. Our growth potential stems from the opportunity to gain market share from our competitors and exploring new niches and growing our existing ones. As a company, we are focused on doing all that we can to achieve a consolidated 1% ROAA that puts us in line with our peers. We will also continue to collaborate and leverage opportunities across our Company to deepen all relationships and foster organic growth. We believe our relationship focus and our drive to do what is right for the client allows us to serve as their trusted advisor. Our clients have come to trust that we will deliver the solutions they need, not the solutions we might have to sell. As you read the words of a few of our clients in this annual report, you will notice a common thread: each of them views us a valued partner. Our thanks go to each and every member of our Company for their passion and commitment that has led to our growth over the past 21 years. Together we have built a special organization that serves our clients and our communities in a personalized way. We are also supported by remarkable local Board members in each of our communities. These community leaders are dedicated professionals whose varied experiences drive our thoughtful discussions and aid in our decision making. Their contributions are priceless and we would not have achieved the successes of 2014 without them all. We recognize specific areas where we need to make meaningful progress in 2015: tangible common equity, ROAA and earnings per share. We will work to enhance liquidity and to return asset quality to better than peers. Credit quality has always been of utmost importance to our entire organization and will remain so. We have accomplished much in our first 21 years and although our team is very proud of those achievements, we look forward to reaching even more milestones that are reflected in our stock price very soon. We are ever mindful of our obligation to each and every one of you, our loyal shareholders, to do better. We are grateful that you recognize the value in what we are building at QCR Holdings, Inc. and thank you for your patience and support. We look forward to helping our clients realize their financial dreams – it’s what we do at our community banks, and what we do locally. We are a relationship driven organization® that believes local truly is the best way to deliver financial services. Douglas M. Hultquist President and Chief Executive Officer, Co-Founder, QCR Holdings, Inc. Todd A. Gipple Executive Vice President, Chief Operating Officer and Chief Financial Officer, QCR Holdings, Inc. 5 QCR Holdings, Inc. Board of Directors Douglas M. Hultquist James J. Brownson Pat S. Baird Lindsay Y. Corby President and Chief Executive Officer, Chair of the Board, QCR Holdings, Inc. Vice Chair of the Board, QCR Holdings, Inc Chief Administrative Officer, Co-Founder, QCR Holdings, Inc. President, W.E. Brownson Co. Retired President and Chief Executive Byline Bank Officer, AEGON USA, LLC Todd A. Gipple Larry J. Helling Mark C. Kilmer Linda K. Neuman Executive Vice President, Chief Operating President and Chief Executive Officer, President, Founder and Principal, Iowa Arbitrators Officer and Chief Financial Officer, Cedar Rapids Bank and Trust Company The Republic Companies Associate Justice, Iowa Supreme Court QCR Holdings, Inc. (Retired) 6 Michael L. Peterson President, Peterson Genetics, Inc. Ronald G. Peterson Retired Executive, First State Bank of Illinois George T. Ralph Managing Member, GTR Realty Advisors, LLC Donna J. Sorensen, J.D. President, Sorensen Consulting January of 2015 was marked with great sadness by the passing of Rockford Bank & Trust Chair and QCR Holdings, Inc. Board member, John D. Whitcher. John was a Director of Rockford Bank & Trust since its formation in January 2005, and was named Chair of the Board in May 2009. John joined the QCRH Board in May 2008 and served as Chair of the Compensation Committee. John’s day-to-day business acumen will be missed along with his incomparable commitment to Rockford Bank & Trust and QCR Holdings. John believed in our relationship driven model and was a tremendous advocate in the Rockford community not only for our model, but for every employee at Rockford Bank & Trust. John was passionate about the work being done and was diligent about making sure everyone stayed at the top of their game. He challenged us when we needed to be challenged and is famous for an often used quote throughout the Company, “Facts are stubborn”. When engaged in a conversation with John, he made every person feel like they were the most important person in the world. When we think about true cheerleaders and advocates for Rockford Bank & Trust and QCR Holdings as a whole, John John D. Whitcher 1954 - 2015 Whitcher was certainly one. We recognize John for being an integral part of our history and we would like to express our deepest sympathies to John’s family. John is survived by his loving wife Susan, sons, Ben and Will, and 400 QCR Holdings employees who were proud to have him as part of their family as well. Marie Z. Ziegler Retired Executive, Deere & Company 7 QCR Holdings, Inc. Executive Management Team Todd A. Gipple Executive Vice President, Chief Operating Officer and Chief Financial Officer Peter J. Benson Executive Vice President, Chief Legal Counsel and Trust Officer Douglas M. Hultquist President and Chief Executive Officer, Co-Founder, QCR Holdings, Inc. John H. Anderson President and Chief Executive Officer, Quad City Bank and Trust Company Chief Deposit Officer, QCR Holdings, Inc. Stacey J. Bentley Thomas D. Budd Charles S. Bullock Richard W. Couch President and Chief Executive Officer, President and Chief Executive Officer, Executive Vice President, Chief Operating President and Chief Operating Officer, Community Bank and Trust Company Rockford Bank and Trust Company Officer, Rockford Bank and Trust Company m2 Lease Funds, LLC 8 John R. Engelbrecht Chief Executive Officer, m2 Lease Funds, LLC Jill A. DeKeyser Senior Vice President, Director of Human Resources 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 & Trust Company William M. Tank Executive Vice President, Chief Credit Officer Dana L. Nichols Executive Vice President, Chief Credit Officer - Elect John A. Rodriguez Executive Vice President, Deposit Operations and Information Services M. Randolph Westlund Cathie S. Whiteside Michael J. Wyffels Executive Vice President, Executive Vice President, Corporate Senior Vice President, Chief Investment Officer Strategy, Human Resources & Branding Chief Information Officer 9 2014 in numbers 425 WEALTH MANAGEMENT RELATIONSHIPS ADDED WITH MORE THAN $2.1 BILLION UNDER MANAGEMENT 18,150 TOTAL COMPANY WIDE VOLUNTEER HOURS 12% INCREASE IN LOANS AND LEASES OVER 2013 $2,525,000,000 In Total Assets at December 31, 2014 $15 million 2014 ANNUAL EARNINGS 31% OF TOTAL DEPOSITS ARE NON-INTEREST BEARING $5 million INCREASE (8%) IN NET INTEREST INCOME OVER 2013 10 TOTAL DEPOSITS (in millions) 12.31.12 12.31.13 12.31.14 Non-interest bearing demand deposits $ 451 $ 543 $ 512 Interest bearing demand deposits Time deposits Brokered time deposits 587 291 45 716 327 62 792 307 69 TOTAL DEPOSITS $ 1,374 $ 1,647 $ 1,680 TOTAL ASSETS (in millions) 12.31.14 12.31.13 12.31.12 $2,525 $2,395 $2,094 $2,000 $2,500 $3,000 NET LOANS/LEASES (in millions) 12.31.14 12.31.13 12.31.12 $1,607 $1,439 $1,267 $1,000 $1,500 $2,000 DEPOSIT MARKET SHARE (JUNE 30, 2014) Quad Cities 10.75% Rank #2 of 39 Cedar Rapids 8.24% Rank #4 of 41 Rockford 4.51% Rank #8 of 26 Waterloo/Cedar Falls 4.29% Rank #9 of 24 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 Elizabeth A. Grabin Vice President, Controller 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, Treasurer 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 Information Officer 11 “For over twenty years, Bowe Machine Company and Quad City Bank & Trust have enjoyed quite a relationship. Thinking back over the years, some of the players have come and gone from both businesses, but I think the values set forth by our predecessors still encompass our daily business approach; honesty, integrity, and transparency. It is quite clear in working with other QCBT officers and staff that these values permeate the entire organization. I can’t say that either business has gotten it right 100% of the time, but I feel that true customer service is shown in times of adversity. Business is easy when conditions are perfect. The rest of the story comes when “you know what” hits the fan. I have witnessed greatness in times of adversity from the people at Quad City Bank & Trust. I am sure my father did not expect greatness when he decided to move our business in 1994, but I believe that he found it. Thank you from all of us at Bowe Machine Company for embodying the true spirit of customer service.” SIMON BOWE President, Bowe Machine Company I N V E S T I N G I N T H E Q U A D C I T I E S A R E A 7,683EMPLOYEE HOURS VOLUNTEERED IN 2014 DIRECTORS 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, Co- Founder, 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. 13 Linda K. Neuman Vice Chair of the Board, Quad City Bank and Trust Company Founder and Principal, Iowa Arbitrators Associate Justice, Iowa Supreme Court (Retired) 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 Chief Executive Officer, Kimberly Park Dental Marie Z. Ziegler Retired Executive, Deere & Company SENIOR MANAGERS 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 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 Executive Vice President, Chief Relationship Officer Cathie S. Whiteside Kathleen M. Francque Senior Vice President, Correspondent Banking Executive Vice President, Corporate Strategy, Human Resources, and Branding Michael J. Wyffels Senior Vice President, Chief Information Officer Quad CitiesQuad City Bank & Trust John Anderson President and Chief Executive Officer, Quad City Bank & Trust At Quad City Bank & Trust, our Team strives to meet the needs of our five constituencies at every touch point throughout each and every day. In this year’s message you will hear from a few of our prized clients first-hand how our Team of professional bankers is helping them realize their dreams. As you read through these client testimonials please keep in mind that our Team not only fulfills the mission of being “People you can bank on®” for our clients, but that each touch point with our clients must also fulfill the objectives of our four other constituencies including: You, our Shareholders, as we work to provide a meaningful return on your investment. Our Community in which we live, by giving back in a way which enriches the community today and in the future. Our Team (employees) by providing a place to work, grow and as we often say, become “Dream Makers”. Our Regulators, by being the community bank that our regulators know and trust, operating in a manner that ensures safety and soundness in a critically important industry that is so vital to our local economy. With all this in mind, enjoy these testimonials and know that as shareholders, you have a team of employees that strive to excel with each and every touch point, with each and every interaction. 14 “We not only consider Quad City Bank & Trust a business partner, we also consider them a valued advisor. We were looking for ways to manage the investment of our short-term and intermediate cash. The professionals from Quad City Bank & Trust developed a plan to assist us and have delivered the results we were looking to achieve.” Sister Joan Lescinski // President, St. Ambrose University, Davenport, Iowa “My wife Linda and I secured a short term loan so we could purchase a home in Bloomington, Illinois while we sold our home in the Quad Cities. We are now living in Bloomington during the summer months and our primary home is in Florida. I was thinking I would close my accounts at Quad City Bank & Trust and move them to a bank in Florida but tremendous recent support from members of your bank have made me rethink this. I have decided to leave my accounts at QCBT. The personal service that your team provides is more important than location, certain bank fees, etc. I’ve had a long standing relationship with QCBT and plan to continue this in the future.” John R. (Jack ) Burns // Ft. Myers, Florida “We at M.A. Ford are very pleased to have Quad City Bank & Trust as our bank. We made the switch to a local bank as we felt they would be better able to listen and respond to our needs. Their customer service, treasury management services, and financing have provided continued support to us as we grow our company and they exhibit confidence in our ability to maintain our financial health. We meet with John and his team regularly to discuss our business and financing needs. Quad City Bank takes customer service very serious and we at M.A.Ford never hesitate to contact them with questions or concerns. Their staff is very professional and friendly to all. As we transitioned from a small family owned business to a 100% ESOP, Quad City Bank was there first; offering the financial backing we needed to see the process through. We could not have done it without them. M.A. Ford Mfg. Co., designs, manufactures, and sells a range of HSS and carbide cutting tools that are sold throughout the world. Quad City Bank & Trust has provided the financial backing so that we can continue to be a partner to all of our customers, vendors, and employees.” Steve Morency // Chief Executive Officer, M.A. Ford 15 “Hupp Electric Motors is a family owned business that started in 1912. Generation after generation, my family has operated successfully with the belief to under promise and over deliver, treat your customer the way you want to be treated and always practice what you preach. CRBT reflects these same company values and embodies a partnership type attitude that I strongly believe in. In this world of e-mails and texting, it is crucial to have a relationship with a banker who truly takes the time to understand your needs. My CRBT banker, Dave Stoltenberg, has gone above and beyond to genuinely get to know me and my business over the years. It’s that type of partnership that has made a difference in the success of my business.” KEVIN HUPP President, Hupp Electric Motors I N V E S T I N G I N C E D A R R A P I D S , I O W A 5,849EMPLOYEE HOURS VOLUNTEERED IN 2014 DIRECTORS David R. Mason, Sr. 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 Attorney and Partner, Redfern, Mason, Larsen and Moore, PLC James A. Mudd, II President and Chief Executive Officer, Mudd Advertising 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 SENIOR MANAGERS James D. Klein Executive Vice President, Chief Lending Officer Deborah J. Lindberg Gertsen Senior Vice President, Trust and Investments J. Mitchell McElree Executive Vice President, Managing Director, Specialty Finance Group 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 Loren L. Coppock Larry J. Helling Chairman of the Board, TrueNorth Companies, LLC President and Chief Executive Officer Todd A. Gipple Executive Vice President, Chief Operating Officer and Chief Financial Officer, QCR Holdings, Inc. Ann M. Lipsky President, Smulekoff Investment Co. Gary M. Becker Senior Vice President, Commercial Banking Kevin D. Bruns Senior Vice President, Wealth Management Patricia L. Ellison Executive Vice President, Chief Credit Officer 17 Cedar RapidsCedar Rapids Bank & TrustLarry Helling President and Chief Executive Officer, Cedar Rapids Bank & Trust Amid a year of national and local economic uncertainty, Cedar Rapids Bank & Trust experienced strong asset growth that resulted in the most profitable year in our history. While this accomplishment did not come without challenges, our staff has continued to make the necessary adjustments to adapt to our changing world. However, one thing that will not change is our continued focus on clients and the relationships that we’re building with them, with their families, with their businesses and ultimately, our community. Since the bank’s inception, one of CRBT’s client service commandments states that “the client is our #1 priority.” I firmly believe that this shared vision, executed by 86 individuals who choose to work at Cedar Rapids Bank & Trust each and every day, is what makes us the financial institution of choice in our market today. At the same time, it also affords me the great opportunity to hear from many clients throughout the year about their positive experiences with our talented employees. Cedar Rapids Bank & Trust remains dedicated to relationship banking. The results of this commitment, combined with our knowledgeable bankers, will allow us to adapt to the new realities of our business, grow our franchise, and best serve our clients, community, and shareholders. 18 “I think every business that serves the public claims to have the best people and the best service. But let’s face it, they can’t all be the best. For CRBT this is not a marketing slogan; it’s a way of doing business and is part of their culture by choice. It is the CRBT people who continue to really make the difference for both my business and my family’s banking needs. They are capable and they are caring. It is hard to imagine in today’s world, but CRBT always makes us feel like we are their best customers. I believe they treat everyone this way and when they say “thank you,” they really mean it.” Roger J. Wetlaufer // President, City Workplace Uniforms & Mats “It has been a pleasure to bank with Cedar Rapids Bank & Trust for the last 10 years. During this time, we have interacted with the main and branch offices on a frequent basis.  Whether it be for a deposit or help with our current or future retirement needs, the staff is always willing to help. They treat us like family and there is always a smile and acknowledgment. We recommend CRBT to our friends and look forward to our continued relationship with them.  Definitely a bank we can bank on!” Rick and Heidi Brown “My experience with CRBT has been long-standing & has transcended many life changes.  My late husband, Art Christoffersen, was a founding member of the CRBT Board of Directors.  Following his death, I became a decision maker in the family business and finances.  Throughout that experience, the CRBT team was a strong & steady force, always accommodating my needs.  I knew I could pick up the phone & contact Larry Helling at any time, for anything.  In addition, Shelly Strellner, in Private Banking, has customer service down to perfection.  I actually felt like I was part of a family, which is an interesting comment when referring to the choice of a bank.  As the years have progressed, it has been this personal relationship that has driven me to change my wealth management from a large out of town firm to CRBT. I certainly evaluated the change from a variety of perspectives. But if you want financial expertise, as well as the personal touch, CRBT is it for me.” Terri Christoffersen 19 “Community Bank & Trust is like having a financial partner, they have always been there to help us with any financial needs that may arise. It is nice to personally know the people you are banking with, and in turn they know you and your business. I would recommend Community Bank & Trust to anyone.” KEN SAMEK President, Hawkeye Alarm & Signal Company I N V E S T I N G I N T H E C E D A R V A L L E Y A R E A 2,252EMPLOYEE HOURS VOLUNTEERED IN 2014 SENIOR MANAGERS Stacey J. Bentley President and Chief Executive Officer Shawna L. Buckley Senior Vice President, Retail Banking Richard L. Jaacks Senior Vice President, Business Development Officer 21 Cedar ValleyCommunity Bank & TrustStacey J. Bentley President and Chief Executive Officer, Community Bank & Trust 2014…OUR YEAR OF TRANSITION. We transitioned our current clients to the new products and services that we are now able to offer with our new partner, Cedar Rapids Bank & Trust. We also transitioned computer systems and re-defined many employee roles and responsibilities. Our 2015 focus will be all about moving forward. Our purpose is clear. We are here to make the financial lives of those who do business with us better. Better by listening to our current clients and connecting them to the financial solutions they need. And better by connecting across our entire company to deliver new solutions to both current and potential clients. 22 While there have been many changes since our humble beginnings, one thing has never changed, and that is our core beliefs. Balance. Our clients, employees, shareholders and Perspective. Life should be more than work and community are equally important. Through this value, work should be fun. As community bankers, we have we build an even sharper results-oriented culture amazing opportunities to give back to the community that is high on reliability and accountability. It is we call home. In 2014, our employees gave 2,252 the harmonization of all of the above where we see volunteer hours in the Cedar Valley area. Through our the prospect of greater value creation for all of our philanthropy and volunteerism, Community Bank & stakeholders. Trust is donating resources, time and energy to support the community where we live and work. Trust. Since our beginning as a community bank, we know our success is measured by the relationships The successful application of these four core beliefs has we build with our clients. Through all of their life created the solid platform for how we have conducted endeavors, we want our clients to know they have our business. Our way of providing clients with financial trust and financial guidance to lead them toward the products and services has served us well. We’ve next adventure in their lives. We recognize and act on capitalized on new opportunities, new technology needs in the Cedar Valley. For example, our employees and new competition, always building on our strong are providing a series of six week financial literacy foundation. We are moving forward. classes each quarter to support the growing Burmese population. Excellence. Being the best requires a commitment to continuous improvement. Our success has been built one client at a time by consistently providing exceptional service. We have a full range of products and services our clients have access to as well as the expertise of professionals who can guide them in selecting accounts, making investment decisions, wealth management options and financing personal and business choices. We continue to adapt and expand our offerings because we understand that our customers drive our business. 23 “Rockford Bank & Trust is my bank—it is a family thing. And, when conversing with colleagues, other business owners, friends, and neighbors—whenever a conversation about one’s banking relationship surfaces, I tell everyone what a great bank I have and why others should call my bank. Some things are a given—like the rules banks have to follow. But my bank has a rule of its own. They may not tell me this, but I know what it is: Act, speak, honor, believe, serve and live in every way that creates Customer Delight, because a delighted customer never ever leaves.” WENDY YOUNG President, Forest City Gear Company I N V E S T I N G I N R O C K F O R D , I L L I N O I S 2,086EMPLOYEE HOURS VOLUNTEERED IN 2014 DIRECTORS Todd A. Gipple SENIOR MANAGERS 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, Chartwell Agency 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, Co- Founder, 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. 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 Karl R. Swanson Executive Vice President, Chief Lending Officer 25 RockfordRockford Bank & TrustThomas Budd President and Chief Executive Officer, Rockford Bank & Trust In 2014, Rockford Bank & Trust completed our tenth year in business. Reflecting on the past ten years, we think of achievements and challenges but also what we have become as an organization, and how we’ve enhanced our community. What makes community banks unique is that everything we do in some way impacts the community in which we operate. At RB&T, we consider how we’ve performed and positioned ourselves for the long term benefit of our key stakeholders; our clients, employees, community and shareholders. The continuing focus on these stakeholders is really what makes community banks like RB&T different. It is also unique that these stakeholders are interconnected and that success of any one is dependent on the success of the others. 26 The true value of banks, or any business, is the quality of its relationship with clients. Establishing, cultivating, and furthering sincere, deep relationships with our clients, based on trust, is what drives our bankers every day. We have to earn our client’s trust by consistently We focus our support not only on the growth and demonstrating that we really understand their long- successes of Rockford like the public schools, but also term dreams and goals and that we are a resource on addressing the challenges our community faces. they can trust and depend on. One of our first client We’re proud of the progress our schools are making relationships recently sold their business, repaid all and our role in improving financial literacy of our their debt, and the owners can now retire. While we’ll youth through the RB&T financial scholars program. miss having the loan, we are so happy for them and We’re also proud of our role in assisting the needy fulfilled that we played a role in helping them achieve through our support of agencies like the Rockford their dream. Rescue Mission and Habitat for Humanity. Our ability to make our client’s dreams come true Community bank shareholders are uniquely can only occur if we provide our bankers the tools connected to our other stakeholders because they and the environment to be client focused. Earning a typically live in the same community as our clients client’s trust includes demonstrating that the bank’s and employees. So, while shareholders primarily are culture produces happy and motivated bankers. focused on financial performance and returns on At RB&T, we’re committed to avoiding silos and their investment, our shareholders also have a vested turf wars that are distracting and lead to disjointed interest in our support of our shared community. client experiences. We value empowerment and Strong financial performance not only provides commitment to doing what’s right regardless of who investment returns to shareholders, it also allows the gets the credit. These values have led to very minimal bank to further its mission and its ability to affect turnover in our staff, which benefits our clients with positive change in the community and the lives of consistency in relationship management. our clients and employees. We’re confident that Community banks have special relationships with their Rockford Bank & Trust to provide a valuable, communities. Our employees, clients and shareholders sustainable asset to our shareholders, community, have shared needs from our community. We not only clients and employees for 2015 and beyond. our progress over the past ten years has positioned want a high quality of living from our community, we also want our community to be successful because it stimulates success for the bank and our client’s businesses. Rockford Bank & Trust knows that by being involved and supporting our community that it will ultimately benefit our other stakeholders. 27 “As a BPO enterprise, our company for many years has used equipment leases as a cost-effective method to finance the acquisition of essential equipment and technology. m2 Lease Funds has proven itself to be one of the most effective leasing firms to help us achieve our leasing needs. m2’s staff of experienced professionals pro- actively manages the entire process from underwriting to funding, in a highly responsive and completely transparent manner. The documentation itself is straightforward and easy to understand. More importantly, m2 Lease Funds has repeatedly demonstrated its ability to craft the appropriate credit solutions and structures to properly fit the specific property or special situations. It is truly a pleasure working with m2 Lease Funds as a financial partner.” BOB KAHLER Chief Financial Officer, CBE Companies, Inc. 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 280EMPLOYEE HOURS VOLUNTEERED IN 2014 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 Brian L. Besler Senior Vice President, Administration 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. 29 m2m2m2m2John Engelbrecht Chief Executive Officer, m2 Lease Funds, LLC It was just over two years ago that m2 Lease Funds observed a milestone of reaching $100 million in assets. Now we are observing another milestone, this time, the closing of more than $100 million in new leases in one year! That represents more than a 40% increase over the preceding year. This achievement could not have been accomplished without the commitment and hard work of our growing m2 Team and the QCR Holdings Group Operations staff. 30  Y 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 . m2 provides higher returns and spreads and We continue to believe that the m2 business model consequently provides a better return on assets of providing quick and responsive turnarounds and equity than our sister banks. To best utilize in a simple and straight forward manner remains QCR Holdings’ capital resources, we believe that m2 sound and for us to grow we only need to add should grow to be 10% of the Holding Company’s more “talent” to our Team. Unlike our sister banks’ assets. This initiative began in mid-2013 and with goals of increasing market share in their local our recent performance, we are well on our way to communities, m2 does business nationwide; m2 reaching that goal. It is our plan to reach the 10% doesn’t have a local community to call home, so we goal within three years. m2 ended the year with expand by adding new employees nationally. We assets of $178 million, a 30% increase over the recently increased our footprint by expanding to preceding year. Atlanta, Georgia. This office joins the offices that we m2 was started in 1998 and became a part of the QCR Holdings family in 2005. Today, m2 has thousands of leases, and leases in virtually every already had in Pennsylvania, Florida, Illinois, Iowa, Wisconsin, Minnesota, North Carolina and South Carolina. state. As an equipment leasing generalist, m2 leases We are optimistic on the outlook for 2015. We all varieties of equipment. Currently the largest believe that we have the Team in place to continue equipment concentrations include manufacturing, our steady growth and to continue adding technology, marine, food processing, packaging, substantial returns for QCR Holdings in 2015 and transportation and construction. beyond. 31 Year-End 2004-2014 Stock Price ( ) Tangible Book Value Per Common Share ( ) $25 $20 $15 $10 $5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Deposits 2006 / 2014 DECEMBER 31, 2006 Total $875.5 MM DECEMBER 31, 2014 TOTAL $1,679.7 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% Non Interest Bearing Demand $512.0 MM or 31% Interest Bearing Demand $792.0 MM or 47% CD's $375.7 MM or 22% Retail: $306.4 MM or 18% Brokered: $69.3 MM or 4% 32 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 Iowa Illinois Iowa Iowa Illinois Iowa 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 312 W. 1st Street Cedar Falls Community Bank & Trust 11 Tower Park Drive Waterloo Illinois Iowa Iowa Iowa * Former location ZIP 52722 52806 61265 52807 52401 61101 52804 52402 53045 61107 50701 50613 50701 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 Aug 1997 / May 2013 ** Aug 1997 / May 2013 ** Aug 1998 / May 2013 ** 1. 2. 3. 4. 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) 33 QCR Holdings, Inc. Consolidated Financial Highlights As of December 31, 2014 December 31, 2013 (dollars in thousands, except share data) CONDENSED BALANCE SHEET Cash, federal funds sold, and interest-bearing deposits Amount $ 120,350 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 % 5% 26% 64% 0% 0% 5% Amount $ 114,431 697,210 1,438,832 1,870 3,223 139,387 % 5% 29% 60% 0% 0% 6% 651,539 1,606,929 1,671 3,223 141,246 $ 2,524,958 100% $ 2,394,953 100% $ 1,679,668 662,558 38,653 144,079 67% 26% 1% 6% $ 1,646,991 563,381 37,004 147,577 68% 24% 2% 6% $ 2,524,958 100% $ 2,394,953 100% $ 144,079 $ 117,753 7,953,197 $ 18.12 $ 17.50 $ 17.86 $ 142,044 7,884,462 $ 14.94 $ 14.29 $ 17.03 $ 134,272 98.59% 102.05% 5.52% 5.60% 10.91% 9.52% 7.62% 114.00% 119.17% 4.71% 5.29% 12.87% 11.45% 7.96% CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY 2014 2013 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 29,867 shares of Series F Preferred Stock (SBLF) Other **** Ending balance $ 147,577 $ 140,434 14,953 11,709 (1,713) - (29,824) 1,377 14,938 (18,351) (3,627) 13,017 - 1,166 $ 144,079 $ 147,577 * Includes accumulated other comprehensive income (loss). **Includes accumulated other comprehensive income (loss) and excludes intangible assets. ***Tangible common equity is defined as total common stockholders' equity 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 accumulated other comprehensive income (loss). Includes accumulated other comprehensive income (loss) and excludes intangible assets. Tangible common equity is defined as total common stockholders’ equity 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. ****Subject to change upon final calculation for regulatory filings due after earnings release. *****Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation. * ** *** **** 34 QCR Holdings, Inc. Consolidated Financial Highlights For the Year Ended December 31, 2014 December 31, 2013 (dollars in thousands, except share data) CONDENSED INCOME STATEMENT Amount 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 Less: Preferred stock dividends $ 85,965 $ 81,872 16,894 69,071 6,807 62,264 20,998 65,270 17,992 3,039 17,767 64,105 5,930 58,175 25,814 64,433 19,556 4,618 $ 14,953 $ 14,938 1,082 3,168 Net income attributable to QCR Holdings, Inc. common stockholders $ 13,871 $ 11,770 Earnings per share attributable to QCR Holdings, Inc.: Basic Diluted $ 1.75 $ 2.13 $ 1.72 $ 2.08 Weighted average common shares outstanding Weighted average common and common equivalent shares outstanding 7,925,220 8,048,661 5,531,948 5,646,926 5% -5% 8% 15% 7% -19% 1% -8% -34% 0% -66% 18% -18% -17% 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 $ 2,453,678 $ 2,330,604 $ 1,540,382 $ 1,425,364 $ 1,708,777 $ 1,594,939 $ 142,735 $ 145,906 $ 132,238 $ 102,525 0.61% 10.49% 10.48% 10.21 x 3.15% 1.31% 0.34% 1.42% 114.78% 72.47% 409 0.64% 11.48% 10.24% 8.00 x 3.03% 1.28% 0.31% 1.47% 104.70% 71.66% 400 * 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". **** Upon acquisition per GAAP, the acquired loans are recorded at market value which eliminated the allowance and impacts these ratios. * ** *** **** 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”. Upon acquisition per GAAP, the acquired loans are recorded at market value which eliminated the allowance and impacts these ratios. 35 QCR Holdings, Inc. Consolidated Financial Highlights As of December 31, 2014 December 31, 2013 (dollars in thousands) ANALYSIS OF LOAN DATA Nonaccrual loans/leases Accruing loans/leases past due 90 days or more Troubled debt restructures - accruing Total nonperforming loans/leases Other real estate owned Other repossessed assets Amount $ 18,588 93 1,421 20,102 12,768 155 % 56% 0% 5% 61% 39% 0% Amount % $ 17,878 59% 84 2,523 20,485 9,729 346 0% 8% 67% 32% 1% Total nonperforming assets $ 33,025 100% $ 30,560 100% Net charge-offs (calendar year-to-date) $ 5,181 $ 4,408 Loan/lease mix: Commercial and industrial loans $ 523,927 Commercial real estate loans Direct financing leases Residential real estate loans Installment and other consumer loans Deferred loan/lease origination costs, net of fees 702,140 166,032 158,633 72,607 6,664 32% 43% 10% 10% 5% 0% $ 431,688 671,753 128,901 147,356 76,034 4,548 30% 46% 9% 10% 5% 0% Total loans/leases $ 1,630,003 100% $ 1,460,280 100% Less allowance for estimated losses on loans/leases 23,074 21,448 Net loans/leases $ 1,606,929 $ 1,438,832 ANALYSIS OF SECURITIES DATA Securities mix: U.S. government sponsored agency securities $ 307,869 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 36 229,230 111,423 3,017 47% 35% 17% 1% $ 356,473 180,361 157,429 2,947 51% 26% 23% 0% $ 651,539 100% $ 697,210 100% 792,052 306,364 69,260 31% 47% 18% 4% $ 542,566 715,643 326,852 61,930 33% 43% 20% 4% $ 1,679,668 100% $ 1,646,991 100% $ 203,500 130,000 137,252 131,100 40,424 $ 20,282 662,558 31% 19% 21% 20% 6% 3% 100% $ 231,350 130,000 98,823 50,470 40,290 $ 12,448 563,381 41% 23% 18% 9% 7% 2% 100% Noninterest-bearing demand deposits $ 511,992 QCR Holdings, Inc. Consolidated Financial Highlights ANALYSIS OF NET INTEREST INCOME AND MARGIN December 31, 2014 December 31, 2013 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 $ 688,827 $ 18,679 1,540,382 90,232 70,414 849 Total earning assets * $ 2,319,441 $ 89,942 Deposits Borrowings $ 1,133,228 $ 4,509 568,883 12,385 Total interest-bearing liabilities $ 1,702,111 $ 16,894 Net interest income / spread * Net interest margin * $ 73,048 (dollars in thousands) 2.71% 4.57% 0.94% 3.88% 0.40% 2.18% 0.99% 2.89% 3.15% $ 700,344 $ 16,140 1,425,364 74,570 67,484 853 $ 2,200,278 $ 84,477 $ 1,076,533 $ 4,715 552,776 13,052 $ 1,629,309 $ 17,767 $ 66,710 2.30% 4.73% 1.14% 3.84% 0.44% 2.36% 1.09% 2.75% 3.03% * Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 35% tax rate for each period presented. For the Year Ended ANALYSIS OF NONINTEREST INCOME December 31, 2014 December 31, 2013 % Change (dollars in thousands) $ 5,715 $ 4,942 2,798 4,483 461 2,041 1,722 982 1,064 855 2,580 4,267 836 2,149 1,786 991 772 769 $ 20,121 $ 19,092 - - - (447) 92 1,232 1,841 2,334 576 (545) 432 2,084 $ 20,998 $ 25,814 $ 40,337 $ 37,510 7,386 6,192 2,895 1,311 1,985 930 579 1,291 6,712 6,425 2,587 1,522 1,727 1,069 562 1,145 $ 62,906 $ 59,259 - 2,364 2,353 2,821 $ 65,270 $ 64,433 16% 8% 5% -45% -5% -4% -1% 38% 11% 5% -100% -100% -100% -18% -79% -41% -19% 8% 10% -4% 12% -14% 15% -13% 3% 13% 6% 100% -16% 1% 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 Debit card fees Correspondent banking fees Participation service fees on commercial loan participations Subtotal Bargain purchase gain on CNB acquisition Gains on sales of certain Community National Bank branches Gain on the sale of certain nonperforming loans 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 Total noninterest expense 37 stock listing information The common stock of QCR Holdings, Inc. is traded on the NASDAQ Global Market under the symbol QCRH. COMMON STOCK Annual Meeting of Stockholders Corporate Counsel The Annual Meeting of the Stockholders of QCR Holdings, Inc. will be held: May 15, 2015 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, Treasurer 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: American Stock Transfer & Trust Company, LLC Operations Center 6201 15th Avenue Brooklyn, NY 11219 Investor Information 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 Stockholders, investors, and analysts interested in additional information may contact: 175 N. Patrick Blvd., Suite 140 Brookfield, WI 53045 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 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 Calendar 2014 High Low 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Calendar 2013 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Calendar 2012 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter $ 18.20 $ 17.50 18.10 17.96 17.48 High 16.96 17.00 16.99 Low $ 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 12.62 10.70 8.50 DIVIDEND INFORMATION Record Date Payment Date Amount Per Share 12.19.14 06.20.14 12.20.13 06.21.13 12.22.12 06.21.12 01.07.15 $ .04 07.08.14 01.07.14 07.08.13 01.07.13 07.06.12 .04 .04 .04 .04 .04 38 

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