QCR Holdings, Inc. Annual Report 2014

FY2014 Annual Report · QCR Holdings, Inc.

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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.

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.

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
$

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0
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9
6
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0
0
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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
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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

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.

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.

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)

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

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,

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

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

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

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

716

327

792

307

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

“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.

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.

“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

“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

Cedar RapidsCedar Rapids Bank & TrustLarry 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.

“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

“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

Cedar ValleyCommunity Bank & TrustStacey 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.

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.

“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

RockfordRockford Bank & TrustThomas 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.

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.

“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.

m2m2m2m2John 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.

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.

Year-End 2004-2014

Stock Price ( )

Tangible Book Value Per Common Share ( )

$25

$20

$15

$10

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%

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

312 W. 1st Street

Cedar Falls

Community Bank & Trust

11 Tower Park Drive

Waterloo

Illinois

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 1998 / 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. 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

26%

64%

Amount

114,431

697,210

1,438,832

1,870

3,223

139,387

29%

60%

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%

1,646,991

563,381

37,004

147,577

68%

24%

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.

*
**
***

****

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

% 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%

15%

-19%

-8%

-34%

-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

3.15%

1.31%

0.34%

1.42%

114.78%

72.47%

409

0.64%

11.48%

10.24%

8.00

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.

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

1,421

20,102

12,768

155

56%

61%

39%

Amount

17,878

59%

2,523

20,485

9,729

346

67%

32%

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%

431,688

671,753

128,901

147,356

76,034

4,548

30%

46%

10%

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

229,230

111,423

3,017

47%

35%

17%

356,473

180,361

157,429

2,947

51%

26%

23%

651,539

100%

697,210

100%

792,052

306,364

69,260

31%

47%

18%

542,566

715,643

326,852

61,930

33%

43%

20%

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%

3%
100%

231,350

130,000

98,823

50,470

40,290

12,448
563,381

41%

23%

18%

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)

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%

-45%

-5%

-4%

-1%

38%

11%

-100%

-18%

-79%

-41%

-19%

10%

-4%

12%

-14%

15%

-13%

13%

100%

-16%

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

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