QCR Holdings, Inc. Annual Report 2015

← All annual reports

FY2015 Annual Report · QCR Holdings, Inc.

Loading PDF…

We make financial dreams a reality.

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 QCR Holdings, Inc. 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.

2015 2015 2015 2015 A MESSAGE FROM OUR CHAIRMAN

It is with a great deal of satisfaction and pride that I write

my final Annual Chairman’s message to shareholders. After

twenty two years as a director of Quad City Bank & Trust,

nineteen years as a director of QCR Holdings, Inc., including

the past nine years as Chairman, I will retire from my role

as Chairman of the QCR Holdings Board at the time of the

Annual Meeting in May 2016. In order to assist the new Chair

in an orderly transition, I will remain on the QCR Holdings

Board for one year until my complete retirement in May 2017.

However, the community bank model we affectionately call

QCR Holdings is much more than one individual or group

of individuals. All of our constituents including you, our

shareholders, all of our clients and customers, and all of our

employees who serve our communities, make this company

what it is today. Our Company is in great hands for the future.

As I think back to the origins of QCR Holdings when Mike Bauer and Doug Hultquist asked me to be one

of the original investors and to serve on the board of Quad City Bank & Trust, I have to say from the very

beginning I knew that a new community bank in the Quad Cities would be a successful venture. The

timing, the capital we raised from our shareholders, and most of all, the talented people we assembled to

start this Company, was way beyond any successful measure. That talented management team was able

to duplicate this same successful community bank concept with new opportunities and excellent timing,

additional capital from you our shareholders, and above all, top notch management and employees in

Cedar Rapids, Iowa and Rockford, Illinois. Our acquisition of m2 Lease Funds and Community National

Bank in Waterloo, Iowa complimented our community bank financial model.

Yes, the past 22 years of QCR Holdings has been by most all measures wildly successful. In fact, the balance

sheet restructuring we accomplished in 2015 has paved the way for even more significant growth and

success in the future. Much of our future growth will come from within our current markets but we are

also searching for opportunities to expand our community bank concept to other favorable geographies.

2015 was yet another in a run of successful years in the history of QCR Holdings. None of this would

have been possible without the talented management team and all the employees of QCR Holdings. I

thank all of them and will cherish the many relationships I was able to develop over the years. To you, our

shareholders, I express continued thanks for investing in our company. Like you, as a shareholder, I will

continue to keep a watchful eye on the performance of QCR Holdings. We have had a great past together.

Trust me, the best is yet to come!

James J. Brownson
Chairman of the Board, QCR Holdings, Inc.

Summary of Financial Results 2011 - 2015
(IN THOUSANDS)

Net interest income

Non-interest income

Non-interest expense

2011

2012

2013

2014

2015

$54,145

$57,649

$64,105

$69,071

$76,296

19,085

18,953

26,846

21,158

24,530

(52,616)

(54,591)

(65,465)

(65,430)

(73,358)

Pre-tax pre-provision net income

20,614

22,011

25,486

24,799

27,468

Provision for loan/lease losses

(6,616)

(4,371)

(5,930)

(6,807)

(6,871)

Net income before taxes

13,998

17,640

19,556

17,992

20,597

Income taxes

Net income

(3,868)

(4,534)

(4,618)

(3,039)

(3,669)

10,130

13,106

14,938

14,953

16,928

Less: net income attributable to non controlling interests

438

488

Net income attributable to QCR Holdings, Inc.

$9,692

$12,618

$14,938

$14,953

$16,928

Book Value vs. Fair Market Value
COMMON STOCK (IN MILLIONS)

Total Metropolitan Statistical Area Deposits
(JUNE 30, 2015) (IN THOUSANDS)

$8,000,000

$5,000,000

$2,000,000

FAIR MARKET VALUE
BOOK VALUE

$300

$200

$100

3
9
C
E
D

3
0
C
E
D

3
1
C
E
D

4
1
C
E
D

5
1
C
E
D

Population
(July 1, 2014)

4
8
4
5
4
5
7
$

5
2
7
3
8
4
5
$

3
1
9
8
1
6
5
$

0
4
6
4
1
1
3
$

s
e
i
t
i
C
d
a
u
Q

0
0
0
4
8
3

s
d
p
a
R
r
a
d
e
C

0
0
0
6
6
2

y
e

l
l
a
V
r
a
d
e
C

0
0
0
1
7
1

d
r
o
f
k
c
o
R

0
0
0
0
4
3

Asset Growth
(IN THOUSANDS)

$350,000

$175,000

5
7
9
9
2
1
$

1
1
0
2

0
2
1
7
2
1
$

2
1
0
2

3
2
2
1
0
3
$

*
3
1
0
2

5
0
0
0
3
1
$

4
1
0
2

0
4
2
8
6
$

5
1
0
2

* Includes acquisition of Community National Bank

TO OUR SHAREHOLDERS

2015 marked a great year of change and significant progress for QCR Holdings, Inc. We look much differently today than we did a year
ago. The Company successfully executed several planned initiatives aimed at improving the long-term profitability of the Company and
strengthening its capital base to take advantage of future opportunities.

As will be outlined in the following pages of our Annual Report, our 2015 financial results reflect record earnings across all of our entities. We
continue to believe that the model we are proud to call “The Local Community Bank Advantage” still differentiates us in our market places.
Throughout the year, we welcomed new clients who came to our doors seeking the exceptional, personalized service and advice that our
over 400 employees work so very hard to deliver.

At QCR Holdings, we believe that banking will always be a relationship business and we need to do all we can to identify how best to
develop that relationship so that it can work most effectively. There is no denying that technology is reshaping banking today and we are
committed to being competitive in that space. We made several technology investments in 2015 to do just that, and will continue to do so.
While we recognize a hand-held device is essential in today’s world, we still maintain that nothing can replace the handshake when it comes
to the placement of your valuable assets.

Our model works because it is delivered locally by people that are not only talented bankers, but by bankers who are also talented in
many other aspects of life. Our entire work force donated over 19,710 hours to local non-profit organizations in 2015 – lending their time
and expertise to those less fortunate than themselves. Each of our communities is stronger thanks to their efforts and for that, and their
excellent work in 2015, we thank each of them.

2015 HIGHLIGHTS AND RESULTS

SUCCESSFUL PUBLIC COMMON STOCK OFFERING IN MAY

The Company identified six strategic objectives in conjunction with
the common stock offering:

Bolster capital ratios and bring Tangible Common Equity
(TCE) more in line with industry peers

Restructure funding to improve net interest margin

Significantly shorten the time period to achieve the
targeted 1.0% Return on Average Assets (ROAA)

Better position the Company to identify and cultivate
accretive M&A opportunities

5. Attract additional institutional investors

Improve liquidity in the stock and potentially enhance
trading performance

On May 13, 2015, the Company was pleased to announce the
closing of an underwritten public offering of 3,680,000 shares of
its common stock at a price of $18.25 per share. The net proceeds
to the Company, after deducting the underwriting discount and
offering expenses, totaled $63.5 million. As a result of the successful
execution of the capital raise, we have made great progress on each
of the strategic objectives identified above:

Capital Ratios - As of March 31, 2015, the Company’s total risk-
based capital was 10.30%, the common equity tier 1 ratio was 7.24%
and the tangible common equity to tangible assets ratio was 5.88%.
As of December 31, 2015, these ratios improved to 13.11%, 10.33%
and 8.55% respectively.

Net Interest Margin - Net interest margin for the twelve months
ended December 31, 2015 was 3.37% versus 3.15% at December 31,
2014.

Return on Average Assets (ROAA) - Core ROAA has improved
significantly from 0.48% to 0.96% for the quarters ending December
31, 2014 and December 31, 2015, respectively.

M&A - We continue to actively evaluate accretive M&A
opportunities.

Institutional Ownership - We welcomed 42 new institutional
investors with the May offering. As a result, QCR Holdings, Inc. has
grown from 19% institutional ownership at the end of 2014, to 49%
at the end of 2015.

Liquidity in Stock - Average trading volume in QCRH stock has
improved (7,600 average daily trading volume in 2014 to 31,700
in 2015). Additionally, we have seen a significant increase in stock
price with the closing stock price at December 31, 2014 of $17.86
improving to $24.29 at December 31, 2015.

CONSOLIDATED EARNINGS (in thousands)

Quad City Bank & Trust *

Cedar Rapids Bank & Trust

Rockford Bank & Trust

Parent Co. & Eliminations **

Consolidated Earnings

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

2012

$ 10,732

5,881

593

(4,588)

$ 12,618

2013

$ 10,273

6,736

1,579

(3,650)

2014

$ 10,451

8,006

1,877

(5,381)

2015

$ 11,762

8,108

2,189

(5,131)

$ 14,938

$ 14,953

$ 16,928

PROCEEDS FROM STOCK OFFERING USED TO RESTRUCTURE
BALANCE SHEET SECOND QUARTER 2015

GAINS RECOGNIZED ON DEBT EXTINGUISHMENT IN FOURTH
QUARTER 2015 AND JANUARY 2016

A key component of our improved financial results for 2015 was
the careful execution of our strategy to repay high-cost borrowings.
The Company used the proceeds from the common stock offering
to restructure certain debt obligations and to bolster overall
capital levels, including tangible common equity. Specifically, the
Company repaid $15.3 million of holding company senior debt at
a rate of 3.27%, and $2.7 million of subordinated debt at a rate of
6.00%. Additionally, $85.5 million of FHLB advances and wholesale
structured repurchase agreements at a weighted average rate of
4.36% were prepaid at Quad City Bank & Trust and Cedar Rapids
Bank & Trust. As a result of this planned restructuring, the Company
incurred $6.9 million (pre-tax) in losses for debt extinguishment that
were recognized in the second quarter.

Of the $103.5 million in debt extinguishment, $63.5 million was
funded with the proceeds from the common stock issuance.
Approximately $27.7 million was funded through the maturity of
low-yielding securities. Brokered CDs and overnight FHLB advances
were utilized to fund the remaining $12.3 million. The weighted
average rate on these new borrowings was approximately 0.90%.

The actual results of the Company’s planned balance sheet
restructuring significantly exceeded our initial assumptions that
were presented during the capital raise. Due to the very successful
capital raise and strong liquidity at Quad City Bank & Trust, only 12%
of the debt extinguished was replaced with new debt. As a result,
the margin improvements were better than anticipated and the
earnback on the transaction is expected to be less than two years.

In December 2015, the Company extinguished $2.1 million of
the QCR Holdings Capital Trust II subordinated debentures and
recorded a $300 thousand gain on extinguishment (pre-tax), as
the Company was able to acquire the related security at a discount
through auction.

In January 2016, the Company was provided an additional
opportunity to retire all of its $5.1 million QCR Holdings Capital
Trust IV junior subordinated debentures and recorded a $1.2
million gain on extinguishment (pre-tax), as the Company was able
to acquire the related security also at a discount, through auction.

ADDITIONAL BALANCE SHEET RESTRUCTURING IN FOURTH
QUARTER 2015 AND JANUARY 2016

As a result of the one-time gains realized by the Company and
described above, management executed two additional balance
sheet restructuring transactions.

In the fourth quarter of 2015, additional balance sheet restructuring
took place at Rockford Bank & Trust, in which $8.0 million of
wholesale borrowings were prepaid at a weighted average interest
rate of 3.66%. The Company incurred a $591 thousand (pre-tax) loss
and the restructuring is expected to reduce interest expense by
$252 thousand annually.

In January 2016, the Company executed additional balance sheet
restructuring at Quad City Bank & Trust and Cedar Rapids Bank &
Trust, which included the repayment of $20.0 million of wholesale
borrowings with a weighted average interest rate of 3.92%. The
Company incurred a $1.3 million (pre-tax) loss that was recognized
in the first quarter of 2016 and is expected to reduce interest
expense by $683 thousand annually.

2015 OVERALL FINANCIAL RESULTS

2015 was a very good year for us as we reported record earnings
despite continued headwinds felt from the uncertain economy and
intense in-market competition.

For the year ended December 31, 2015, net income attributable to
QCR Holdings Inc. was $16.9 million, resulting in diluted earnings per
share of $1.61. For the same period in 2014, we reported net income
of $14.9 million, or diluted earnings per share of $1.72 after preferred
stock dividends of $1.1 million.

For the year ending December 31, 2015, the Company reported
core net income (non-GAAP) of $20.9 million, with diluted core
EPS of $1.99. Core net income for the year excludes a number of
non-recurring items, most significantly $4.9 million of after-tax
non-recurring expenses related to the prepayment of wholesale
borrowings.

Our core return on average assets (“ROAA”) has improved
significantly from a year ago. Core ROAA was 0.96% for the fourth
quarter. By comparison, core ROAA was 0.48% for the quarter ending
December 31, 2014. We have nearly achieved our targeted ROAA of
1.00% and we plan to continue to improve profitability through our
other stated initiatives.

We have had solid success growing loans and leases in 2015, with
growth of $168.0 million since December 31, 2014, resulting in a
10.3% growth rate. 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. This solid growth has continued to help us move our
loan and lease to total asset ratio upward to 69% from 65% one
year ago. We intend to keep increasing this ratio as we rotate out of
securities and into loans and leases, with a goal of growing loans and
leases to more than 70% of total assets.

Swap fee income and gains on the sale of government guaranteed
loans were strong in 2015, totaling $3.0 million. It is our intention
to continue our emphasis on these types of transactions as they
provide unique solutions for our clients. Our goal is to grow this line
of income to a combined $4.0 million annually in 2016.

In 2015 we successfully expanded net interest income to $76.3
million for the year ended December 31, 2015, which represents
an increase of 10% over the prior year. Net interest margin for the
twelve months ending 2015 finished at 3.37% versus 3.15% for the
same period in 2014.

Nonperforming loans and leases at December 31, 2015 were $11.7
million, a reduction of $8.4 million (42%) from December 31, 2014.
In addition, the ratio of nonperforming assets (“NPAs”) to total assets
finished 2015 at 0.74%, down from 1.31% at the end of 2014.

We remain committed to a strong capital position – not only
with regard to total capital, but with regard to mix and cost as
well. Comparing December 31, 2014 to December 31, 2015, the
Company’s TCE ratio has grown from 5.52% to 8.55%; while at the
same time, tangible book value has increased from $17.50 per
share to $18.81 per share. Our capital plan is consistent with the
requirements of the new regulatory capital guidelines that went into
effect for the reporting period ending March 31, 2015 under Basel III.

QCR HOLDINGS, INC. STRATEGIC ADVANTAGES

During 2015, 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 for further growth. We will also continue to
collaborate and leverage opportunities across our entire Company to
maximize shareholder value at every opportunity. 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
2015, we were able to increase the total number of banks we serve
to 172 with an average weighted balance of $343 million in total
noninterest bearing deposits at December 31, 2015. This compares
to an average weighted balance of $290 million at December 31,
2014. Our veteran team of bankers provides many layers of expertise
in areas such as trust and investment services and loans and leases.

WEALTH BUILDERS DIVISION

The expertise found across our Company in our Wealth Builders
Division is a significant competitive advantage. Being able to serve
our clients with a continuum of services is crucial to deepening
relationships. With offerings in Trust, Investments, Financial Planning,
and Family Office, we create non-interest income for our banks and
provide great opportunities for cross selling as well. In 2015, assets
under management totaled $2.3 billion and our veteran staff added
325 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 two page lease agreement written in plain English). 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 has a high yielding portfolio that
averaged 8.2% in 2015. Income has grown at a 21% CAGR since 2006.

LIVING THE BRAND

OUR STRATEGIC DIRECTION FOR 2016 AND BEYOND

We continue to believe our people are the key differentiator
in each of our markets. As such, one measure of employee
performance is 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 BANK ENTITY

Quad City Bank & Trust – Under the leadership of President and
CEO, John Anderson, the Company’s first subsidiary bank (1994),
reported total consolidated assets of $1.3 billion at December
31, 2015. The bank continues to have success in growing its
Correspondent Banking and Wealth Management businesses as
outlined above. Quad City Bank & Trust realized record net income
of $11.8 million for the year ended December 31, 2015, which
compares to $10.5 million in 2014.

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 $8.1 million for the year ended December 31,
2015, which was a $102 thousand increase over 2014. Total assets
at December 31, 2015 finished at $867 million, up 3% or $27 million
from the end of 2014. 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 2015 of $2.2 million. By comparison, the bank reported
net income of $1.9 million in 2014. Total assets finished the year at
$367 million, which was an increase of $14 million, or 4% over 2014.
In its 11th year of operation, Rockford Bank & Trust increased net
interest margin from 3.31% in 2014 to 3.41% at the end of 2015.

The Company continues to focus on the following stated
initiatives in an effort to improve profitability and drive increased
shareholder value:

•

Grow loans and leases to more than 70% of assets

Continue to reduce wholesale funding to less than 15% of
assets

Grow gains on the sale of USDA and SBA loans, and fee
income on swaps, to a more significant and consistent
component of core revenue

Grow wealth management net income by 15% annually

Eliminate identified noninterest expenses and manage
annual expense growth

Return asset quality metrics to better than peer levels

Participate as an acquirer in the consolidation taking place
in our markets to further boost ROAA, improve efficiency
ratio and increase EPS

During 2015 we built on many strategies that will position us
for 2016 and beyond. The Strategic Leadership Team of Doug
Hultquist, Todd Gipple, John Anderson, Larry Helling, Tom Budd
and Cathie Whiteside held in-person meetings with all employees
(at each location) in early March 2016. At these meetings a
refreshed QCR Holdings, Inc. Mission was rolled out: We make
financial dreams a reality.

We believe our team is focused on doing whatever it takes to “Be
Exceptional” – no matter what their role and no matter the location
of the entity where they happen to reside. Our thanks goes to
each and every member of our Company for their passion and
commitment that has led to our growth over the past 22 years.

Our work is further supported by dedicated local Board members
in each of our communities. These community leaders are very
passionate about our vision and we recognize that we would
not have achieved the successes through 2015 without their
significant commitment of time and expertise.

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® and truly
believe we can make a difference doing just that.

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

President and Chief Executive Officer,

Co-Founder, QCR Holdings, Inc.

James J. Brownson

Chair of the Board, QCR Holdings, Inc.

President, W.E. Brownson Co.

Patrick S. Baird

Vice Chair of the Board,

QCR Holdings, Inc

Retired President and Chief Executive

Officer, AEGON USA, LLC

Lindsay Y. Corby

Chief Financial Officer,

Byline Bank

Larry J. Helling

President and

Chief Executive Officer,

Cedar Rapids Bank and Trust

John-Paul E. Besong

Retired Executive,

Rockwell Collins

Todd A. Gipple

Executive Vice President,

Chief Operating Officer and

Chief Financial Officer,

QCR Holdings, Inc.

Mark C. Kilmer

President,

The Republic Companies

Linda K. Neuman

Founder and Principal,

Iowa Arbitrators

Associate Justice,

Iowa Supreme Court (Retired)

Michael L. Peterson

President and Owner,

Peterson Genetics, Inc.

Ronald G. Peterson

Retired Executive,

First State Bank of Illinois

George T. Ralph

Owner,

GTR Realty Advisors, LLC

Donna J. Sorensen, J.D.

President,

Sorensen Consulting

Marie Z. Ziegler

Retired Executive,

Deere & Company

We make financial dreams a reality.

QCR HOLDINGS, INC. Executive Management Team

Douglas M. Hultquist

Todd A. Gipple

John H. Anderson

President and Chief Executive Officer,

Executive Vice President,

President and Chief Executive Officer,

Co-Founder, QCR Holdings, Inc.

Chief Operating Officer and

Quad City Bank and Trust Company

Chief Financial Officer,

QCR Holdings, Inc.

Chief Deposit Officer, QCR Holdings, Inc.

Peter J. Benson

Executive Vice President,

Chief Legal Counsel, Trust Officer

Quad City Bank & Trust Company

Stacey J. Bentley

Thomas D. Budd

President and Chief Executive Officer,

Community Bank and Trust Company

Rockford Bank and Trust Company

Charles S. Bullock

Executive Vice President,

Chief Operating Officer,

Rockford Bank and Trust Company

Richard W. Couch

President and Chief Operating Officer,

m2 Lease Funds, LLC

Jill A. DeKeyser

Senior Vice President,

Director of Human Resources

John R. Engelbrecht

Chief Executive Officer,

m2 Lease Funds, LLC

Shawna M. Graham

Larry J. Helling

Senior Vice President,

President and Chief Executive Officer,

Director of Risk Management

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

Dana L. Nichols

Executive Vice President,

Chief Credit Officer

John A. Rodriguez

Executive Vice President, Deposit Operations

and Information Services

M. Randolph Westlund

Executive Vice President,

Chief Investment Officer

Cathie S. Whiteside

Michael J. Wyffels

Executive Vice President, Corporate Strategy,

Senior Vice President,

Human Resources & Branding

Chief Information Officer

Congratulations, Vic Quinn

There is not enough space to elaborate on all of Vic Quinn’s accomplishments in banking

and in our community. Vic is a banking icon and as such, has bestowed a remarkable

impact on the lives of many clients and co-workers during his illustrious career. Vic is the

epitome of a “relationship builder” and Quad City Bank & Trust and QCR Holdings, Inc.

owes a great deal of its success to this humble and hard-working man.

We will be forever grateful to Vic for joining Mike Bauer and me in the creation of this

special place. We wish Vic the very best in his well-deserved retirement and are thrilled

that he will continue to help us grow as a Director of Quad City Bank & Trust.

Doug Hultquist,
President and Chief Executive Officer, Co- Founder, QCR Holdings, Inc.

2015 Company Highlights

325

WEALTH MANAGEMENT
RELATIONSHIPS ADDED HELPING
DRIVE MORE THAN $2.36 BILLION
IN TOTAL ASSETS UNDER
MANAGEMENT

19,710

TOTAL COMPANY WIDE
VOLUNTEER HOURS. AN
INCREASE OF 9% OVER 2014

10%

INCREASE IN LOANS
AND LEASES OVER 2014

$2,593,200,000

In Total Assets at December 31, 2015

$17 million
2015 ANNUAL
EARNINGS

33%

OF TOTAL DEPOSITS ARE
NON-INTEREST BEARING

$7.2 million

INCREASE (10%) IN NET INTEREST
INCOME OVER 2014

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 and Director of Financial Reporting

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

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

TOTAL DEPOSITS
(in millions)

12.31.13

12.31.14

12.31.15

Non-interest bearing demand deposits

$ 543

$ 512

$ 615

Interest bearing demand deposits

Time deposits

Brokered time deposits

716

327

792

307

886

310

TOTAL DEPOSITS

$ 1,648

$ 1,680

$ 1,880

TOTAL ASSETS (in millions)

12.31.15

12.31.14

12.31.13

$2,593

$2,525

$2,395

$2,000

$2,500

$3,000

NET LOANS/LEASES (in millions)

12.31.15

12.31.14

12.31.13

$1,772

$1,607

$1,439

$1,000

$1,500

$2,000

DEPOSIT MARKET SHARE (JUNE 30, 2015)

Quad Cities

12.32%

Rank #2 of 38

Cedar Rapids

9.66%

Rank #4 of 41

Rockford

4.63%

Rank #8 of 26

Waterloo/Cedar Falls

3.84%

Rank #9 of 25

Christopher Woods
President, Three Corners Development, Inc.
Orland Park, Illinois

“Our principal, Robert Ferrino, and all the staff at Madison Construction and Three Corners
Development feel that our friends at Quad City Bank & Trust represent the best of community
banking. John Anderson and his sophisticated team of bankers, such as Beth Dunn, offer
an amazing level of personal, timely service, and a community orientated approach that
exactly mirrors what we look for as we consider new markets and community opportunities.
Quad City Bank & Trust offers a complete suite of Trust, Treasury, Lending, and other financial
products and services that will be instrumental as Mr. Ferrino expands his investments and
enterprises in the Quad Cities, Western Illinois and Eastern Iowa”.

10,284

EMPLOYEE HOURS VOLUNTEERED IN 2015

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.

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

Kathleen M. Francque

Retired Executive, First State Bank of Illinois

Senior Vice President, Correspondent Banking

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

Therese K. Gerwe

Vice President, Treasury Management

Deborah C. Gillum

1st Vice President, Retail Banking

Anne E. Howard

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, Wealth Builders Group

Executive Vice President, Chief Operations Officer and Cashier

Jill L. Dubin

Vice President, CRA Officer

Robert M. Eby

Senior Vice President, Chief Credit Officer

Laura L. Ekizian

Executive Vice President, Chief Relationship Officer

Victor J. Quinn

Executive Vice President,
Client Relations and Business Development

Cathie S. Whiteside

Executive Vice President, Corporate Strategy,
Human Resources, and Branding

Michael J. Wyffels

Senior Vice President, Chief Information Officer

INVESTING IN THE QUAD CITIES AREA

John Anderson

President and Chief Executive Officer,
Quad City Bank & Trust

Living our brand by abiding by our core Mission - “We make financial dreams a reality” - was the driving

force behind everything our Team executed on in 2015. By executing on this Mission, our Team of

exceptional employees at Quad City Bank & Trust are taking steps to make our Vision come true -

which is to be “Ranked in the top quartile Return on Assets (ROA) of our peers by 2020”.

In 2015, Quad City Bank & Trust once again

Additionally, through a strong commitment

captured the Banner in our region of number

to our Community, our Team of employees

one community bank in Deposit Market Share.

have personally reached out and contributed

This is quite a feat to accomplish during our 23

10,284 hours to a variety of local not-for-profits.

year history. How did the Team do this? They

The cumulative effect of these hours helps to

accomplished this goal by continuing to grow

strengthen our community as we deliver our

loans and leases by 13%, they grew deposits

brand of People You Can Bank On®. The selfless

by 15%, which in turn helped to reduce our

contributions by our Team help in growing and

wholesale funding by 33%. They held the line

strengthening our community, for when our

on non-interest expenses and increased non-

community is strong, so is our bank.

interest income by 25%. These accomplishments

have put us on a strong path to achieve our

ROA goal by our targeted time frame.

In previous annual messages you have heard

Without a strong commitment to each of these

me mention our five constituencies, and those

spokes, the “wheel” which drives our success

remain the same today. As a reminder they

cannot move forward. I want to thank our Team

are our: shareholders, clients, community,

for their hard work during another challenging

employees, and regulators.

year. Our Team is the group that makes Quad

“IN 2015, QUAD CITY BANK

& TRUST ONCE AGAIN

CAPTURED THE BANNER IN

OUR REGION OF NUMBER

ONE COMMUNITY BANK IN

DEPOSIT MARKET SHARE.”

City Bank & Trust great. I appreciate their

dedication and willingness to do whatever it

takes to put the customer first, as well as their

significant contributions in our community.

As you will see below, we have chosen to

highlight one of the many organizations that

Quad City Bank & Trust is proud to partner with.

Partnering with Habitat for Humanity not only

includes financial support from the bank and

our employees, but also involves our Team via

their hearts, hands and minds.

“At Habitat for Humanity Quad Cities, we are grateful to have Quad City Bank & Trust as a community partner. Over the last

decade, Quad City Bank & Trust has been a true and faithful friend of Habitat for Humanity Quad Cities, and the families we

serve. Their kindness and generosity have made significant impacts in our Habitat families’ lives, as well as our community.

In addition to their financial support, we are proud of the bank employees who volunteer on a regular basis. Employees have

served on committees and on our board of directors, taught home ownership classes, and have helped on construction sites

or served lunches. Quad City Bank & Trust employees have worked alongside and mentored our families, preparing them to

become successful home owners. This year, bank employees graciously joined hands to adopt a family for Christmas, providing

toys and winter clothing for the children and meaningful gifts for mom and dad. Their actions helped turn a house into a home.

Habitat for Humanity Quad Cities is fortunate to have Quad City Bank

& Trust in our community helping others in need. Through the efforts

of the organization, they have created an unselfish culture of kindness,

generosity and goodness.”

Dougal Nelson
Director of Development, Habitat for Humanity Quad Cities

Pat McGrath
President, McGrath Family Of Dealerships
Cedar Rapids, Iowa

“I view Cedar Rapids Bank & Trust as much more than a bank! Trish Ellison and the
commercial lending department have a very can do attitude, always looking for unique and
creative ways to support the needs of our business. That is a trait rarely seen in the banking
industry, but one that I greatly appreciate.

The team at Cedar Rapids Bank & Trust takes the time to truly understand our business so
that they can proactively explore ways to better serve us and contribute to our continued
success. They are an important part of our McGrath team. We love Cedar Rapids Bank & Trust!”

5,806

EMPLOYEE HOURS VOLUNTEERED IN 2015

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

Patrick S. Baird
Retired President and Chief Executive Officer, AEGON USA, LLC

Robert T. Buckley

Chairman and Chief Executive Officer, Kirk Gross Company

Patrice M. Carroll

President and Chief Executive Officer, ImOn Communications

Loren L. Coppock

Chairman of the Board, TrueNorth Companies, LLC

Todd A. Gipple

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

Ann M. Lipsky

President, Cedar River Finance

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

Vice Chair of the Board, Cedar Rapids Bank and Trust Company
President, Down to Earth Development, LLC

SENIOR MANAGERS

Larry J. Helling

President and Chief Executive Officer

Gary M. Becker

Senior Vice President, Commercial Banking

Kevin D. Bruns

Senior Vice President, Wealth Management

Patricia L. Ellison
Executive Vice President, Chief Credit Officer

James D. Klein

Executive Vice President, Chief Lending Officer

Deborah J. 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

INVESTING IN CEDAR RAPIDS, IOWALarry Helling

President and Chief Executive Officer,
Cedar Rapids Bank & Trust

Challenging our staff to go above and beyond has become the norm at Cedar Rapids Bank & Trust.

As we continue to challenge ourselves to work smarter and attain a new level of success each year,

I’m proud to share that our employees responded in 2015. This marked another year where Cedar

Rapids Bank & Trust achieved unprecedented levels of performance. Accolades included:

• USDA 2015 National Business Lender of the Year for Business & Industry program

• #1 SBA bank in Iowa for the past seven years (based on dollar volume from FY09-FY15)

• CRBT provided a $100,000 challenge grant for the United Way community campaign

• Coolest Places to Work honoree by the Corridor Business Journal

• 100% employee giving to the United Way of East Central Iowa for 15th consecutive year

(I was honored to serve as Campaign Co-Chair for the 2015 campaign)

Such accomplishments epitomize Cedar Rapids Bank & Trust’s commitment to our core beliefs

of Balance, Trust, Excellence and Perspective. However, these core beliefs also raise the bar and

challenge us to avoid becoming complacent. Amid an ever-changing environment, our team of

employees will need to think differently, adapt to the new realities of the markets we serve and

explore new opportunities. This mind-set, executed with our relationship-driven philosophy, will

allow Cedar Rapids Bank & Trust to grow and prosper.

“Cedar Rapids Bank & Trust continues to be a loyal and trusted business partner. Their team

takes a proactive and strategic approach to assist our needs. The customer service you receive is

unparalleled and when coupled with their expertise in lending, it’s truly a “win-win” experience.

CRBT is more than just a banking relationship; you’ve gained an advocate for your business.”

Christopher S. Wheeler // President, Point Builders

“Congratulations on another successful year. Success is indeed measured by all of us differently,

but I want to congratulate you and your team on the extraordinary philanthropic support and

outstanding volunteer commitment to our great community! Time, talent and treasure is an old

adage, but CRB&T stands true to that old adage. From handling my mortgage loan and home

construction project to helping me launch my consulting firm – you’ve been the best partner I

could ask for. Also, a special shout-out to Shelly Strellner, whose expertise is unmatched!”

Brenda K. Duello, CFRE // Vice President of Development & Alumni Relations, Mount Mercy University

“Our relationship with CRBT transcends banking. Whether it’s the unmatched customer service

they deliver, their commitment to serving as an outstanding community trustee or the warm

reception we receive every time we visit the bank, their efforts never go unnoticed. Our private

banker, Shelly, does everything she can to make our lives easy, including offering to come to us

for a signature. We also enjoy the face-to-face visits we have with CRBT employees and always

appreciate that Larry and John still stop in to say hello from time-to-time and simply thank us for

our business.”

David and Mindy Sorg // Cedar Rapids, Iowa

Robert T. Buckley
CEO, Kirk Gross Company
Waterloo, Iowa

“I was honored to have been one of the original founders of Community Bank & Trust in
1997. Since then, we have enjoyed a great banking relationship through the best of times
and challenging times. Community Bank & Trust has always offered us professional and
consulting services to help our company grow.

The people at Community Bank & Trust are what makes the difference. If you are looking for a
business partnership, and not just a lender, I recommend Community Bank & Trust.”

1,192

EMPLOYEE HOURS VOLUNTEERED IN 2015

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

INVESTING IN THE CEDAR VALLEYStacey J. Bentley

President and Chief Executive Officer,
Community Bank & Trust

“Today, we find ourselves strengthened
and positioned for growth.”

The Quest for Growth.

Since the 2013 acquisition by QCR Holdings and merger of our banking operations into

Cedar Rapids Bank & Trust, we have solidified our presence in the Cedar Valley. To further

strengthen our presence in the Cedar Valley, our future plans include investment in new

building structures and a redesign of our logo. Our company is growing and we want the

Cedar Valley to recognize that we have expanded our products and have joined forces with

bankers that bring expertise to our clients and prospective clients.

Our Future.

All the necessary elements for

the success of our bank are in

place and we are building a

differentiated position in the

market. It will always be the case

that our success will be in direct

proportion to our clients – the

people with whom we partner in

business with, every day.

Lastly, I would be remiss if I didn’t

relay these five words, “We have

money to lend” so I encourage

you to give us a call and let us be

partners in your success.

Client Focused. Community Focused.

What hasn’t changed is our commitment

to our clients and to our community.

Changes in consumer behavior – driven

most notably by the confluence of mobile

networks, rapid digitization, customer

analytics and cloud-based computing – are

transforming the competitive landscape.

We are seeing all of this in banking; and like

our clients, we can’t help but be enthused

by constantly evolving technology. Our

focus is to provide our clients with essential

financial products, services and trusted

advisors. Our ultimate goal is for our clients

to succeed.

A Fundamental Repositioning.

Community Bank & Trust strives for market

leadership with clients – and employees.

Without doubt, we have fundamentally

changed our position in the marketplace:

the opportunity before us now is equally

about the experience we provide to clients

and the expertise we can now deliver.

Our partnership with Cedar Rapids Bank

& Trust has enabled us to increase our

resources, elevate our expertise and take

advantage of cutting edge technology,

products, and services.

“Knowledge is truly power. The past decade represented a banking challenge for Main Street.

However, even during those times, Rockford Bank & Trust had the knowledge, tools, and power to

support Equustock’s aggressive growth plan.”

Claire Brant
President, Equustock, LLC
Rockford, Illinois

“Rockford Bank & Trust took the time to understand our company and our vision. In 2009, the Rockford Bank &

Trust leadership recognized Equustock’s potential and developed a banking program that has moved along with

our growth and continues to meet our needs today. Through a combination of traditional and creative strategies,

Rockford Bank & Trust became a true financial partner to the Equustock plan. Since we moved to Rockford Bank &

Trust over 6 years ago, Equustock’s continued success has been fueled by our relationship with Tom Cwynar and the

whole Rockford Bank & Trust team.”

1,923

EMPLOYEE HOURS VOLUNTEERED IN 2015

DIRECTORS

SENIOR MANAGERS

Todd A. Gipple

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

Monica B. Glenny, CPA, CMA

Independent Star Team Builder, Mary Kay Cosmetics

James P. Hamilton

President, MRV Foundation Inc.

Douglas M. Hultquist

President and Chief Executive Officer, Co- Founder,
QCR Holdings, Inc.

Dana S. Kiley, Jr.

President,
CoyleKiley Agency

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

Thomas D. Budd

President and Chief Executive Officer,
Rockford Bank and Trust Company

George T. Ralph

Chair of the Board,
Rockford Bank and Trust Company
Owner, GTR Realty Advisors, LLC

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 Epperson

President, Chartwell Agency

INVESTING IN ROCKFORD, ILLINOISThomas Budd

President and Chief Executive Officer,
Rockford Bank & Trust

On January 3rd, 2015, Rockford Bank and Trust

Company celebrated its 10th anniversary.

Much has changed since our beginnings in 2005. Through all

the changes in our national and local economy, and changes

in our industry and local competitive landscape, we’re proud

to have grown to become a leading community bank in the

Rockford region.

We’ve proven that the community bank model is valued by

our community. We believe in investing in our community

and investing our time and talents in our clients success.

“Rockford Bank & Trust is proud to have
achieved record net income in 2015.”

Communities like Rockford value community banks and, at times, directly rely on them to help

further economic development. During 2015, RB&T partnered with four other local, community

banks to provide bridge financing for a significant industrial project that had encountered a delay

in funding from government sources. The collaboration among competing banks was applauded

by leaders and residents alike and served as an example of the critical role community banks like

RB&T play in supporting the community.

During 2015, the Rockford community continued its resurgence and transformation as a

number of exciting new projects were announced or completed. Several significant projects by

leading Aerospace companies furthered Rockford’s national prominence as a leading employer

in Aerospace related businesses. Rockford’s downtown expanded with the construction of an

indoor sports center, announcement of two proposed downtown hotels, and record attendance

at the downtown city market. Finally, a major expansion plan by one of the local health systems

will enhance health care in the region and further Rockford’s reputation as a regional health

destination.

RB&T is proud to have achieved record net income in 2015. We’ve positioned ourselves as the

team of choice for relationship banking and will build on our reputation in 2016 and beyond. Our

focus for 2016 will be to reach for excellence in our performance for our shareholders, clients,

employees, and our community.

Paul Britten
President and CEO , Britten, Inc.
Traverse City, Michigan

“m2 Lease Funds has been a key financial partner of Britten Studios over

the years. We lease all major equipment to maximize the availability of our

operating cash flow. With m2 on our team, we won’t miss any significant

opportunities to invest in the business and continue to grow.”

505

EMPLOYEE HOURS VOLUNTEERED IN 2015

DIRECTORS AND SENIOR MANAGERS

John R. Engelbrecht

Director, m2 Lease Funds, LLC
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
President and Chief Executive Officer,
Wisconsin Economic Development Corporation

Douglas M. Hultquist

Director, m2 Lease Funds, LLC
President and Chief Executive Officer, Co-Founder
QCR Holdings, Inc.

Christine D. Kennedy

Chief Financial Officer,
m2 Lease Funds, LLC

William M. Tank

Director, m2 Lease Funds, LLC
Retired Executive, QCR Holdings, Inc.

INVESTING IN OUR COMMUNITIESJohn Engelbrecht

Chief Executive Officer,
m2 Lease Funds, LLC

m2 was started in 1998 and became a part of the QCR Holdings family in 2005. In 2012 we

observed the accomplishment of reaching $100 million in assets.

Now we are observing another milestone, this time doubling the

asset size of our Company in 3 ½ years and reaching $200

million in assets in 2015!

This achievement could not have been accomplished without the commitment and hard work

of our growing m2 Team and the QCR Holdings, Inc. Group Operations staff. m2 provides higher

returns and spreads and consequently can provide a better return on assets and equity than our

sister banks. To best utilize QCRH’s capital resources, we believe that m2 should grow to be 10% of

the Holding Company’s assets.

This initiative began in mid-2013 and with our recent performance, we are well on our way to

reaching that goal. It is our plan to reach the 10% goal within 2 years. m2 ended the year with assets

of $202 million; a 14% increase over the preceding year.

Today m2 has thousands of leases, and leases

Unlike our sister bank’s goals of increasing

in virtually every state. As an equipment

market share in their local communities,

leasing generalist, m2 leases all varieties of

m2 does business nationwide; m2 doesn’t

equipment. Currently the largest equipment

have a local community to call home, so

concentrations include manufacturing,

we expand by adding new employees

technology, marine, food processing,

nationally. We recently increased our

packaging, transportation, bakery and

footprint by expanding to Atlanta, Georgia.

construction.

We continue to believe that the m2 business

model of providing quick and responsive

turnarounds in a simple and straight forward

This office joins the offices we already had in

Pennsylvania, Florida, Illinois, Iowa, Wisconsin,

Minnesota, Iowa, North Carolina and South

Carolina.

manner remains sound and for us to grow we

We are cautiously optimistic on the outlook

only need to add more “talent” to our Team.

for 2016. We believe that we have the Team

in place to continue our steady growth and

to continue adding substantial returns for the

Holding Company for 2016 and beyond.

November of 2015 was marked with deep sadness by the
passing of m2 Lease Funds Chairman of the Board, Ron
Orndorff. m2 Lease Funds joined the QCR Holdings, Inc. family
in August of 2005 and happily for us all, Ron served as the
Chairman of the m2 Board of Directors from that day forward.

Ron spent most of his career in the leasing business, working
30 years for M&I Leasing Corporation and retiring as its
Chairman and President. His incredible business acumen and
dedication to the m2 business model were key to the success
of m2 Lease Funds and also key to the dedicated employees he
mentored and supported.

We would like to thank Ron for being a vital part of the success
of m2 Lease Funds and QCR Holdings. We would also like
to express our support and sympathies to Ron’s family. Ron
is survived by his loving wife of 57 years, Lois and their four
children Dianne Dimond (Brad), Susan Gordon (Andrew), David
and Scott (Trish) and eight grandchildren whom he adored.

Ronald D. Orndorff 1935-2015

Year-End 2005-2015

Stock Price ( )

Tangible Book Value Per Common Share ( )

$25

$20

$15

$10

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Total Deposits 2006 / 2015

DECEMBER 31, 2006
Total $875.5 MM

DECEMBER 31, 2015
TOTAL $1,880.7 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
$615.3 MM or 33%

Interest Bearing Demand
$886.3 MM or 47%

CD's
$379.1 MM or 20%

Retail: $310.0 MM or 16%

Brokered: $69.1 MM or 4%

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 **

1. Quad City Bank & Trust

(5 Locations)

2. Cedar Rapids Bank & Trust
(2 Locations)

3. Community Bank & Trust
(3 Locations)

4. Rockford Bank & Trust
(2 Locations)

5. m2 Lease Funds, LLC
(1 Location)

QCR Holdings, Inc. Consolidated Financial Highlights

As of

December 31,
2015

December 31,
2014

(dollars in thousands, except share data)

CONDENSED BALANCE SHEET

Cash, federal funds sold, and interest-bearing deposits

Amount

97,906

Securities

Net loans/leases

Core deposit intangible

Goodwill

Other assets

Total assets

Total deposits

Total borrowings

Other liabilities

Total stockholders' equity

22%

68%

Amount

120,350

651,539

1,606,929

1,671

3,223

141,246

26%

64%

577,109

1,771,882

1,471

3,223

141,607

2,593,198

100%

2,524,958

100%

1,880,666

444,162

42,484

225,886

72%

17%

1,679,668

662,558

38,653

144,079

67%

26%

Total liabilities and stockholders' equity

2,593,198

100%

2,524,958

100%

SELECTED INFORMATION FOR COMMON STOCKHOLDERS' EQUITY

Common stockholders' equity (1)

Common shares outstanding

Book value per common share (1)

Tangible book value per common share (2)

Closing stock price

Market capitalization

Market price / book value

Market price / tangible book value

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

REGULATORY CAPITAL RATIOS:

Total risk-based capital ratio

Tier 1 risk-based capital ratio

Tier 1 leverage capital ratio

Common equity tier 1 ratio

225,886

144,079

11,761,083

19.21

18.81

24.29

285,677

7,953,197

18.12

17.50

17.86

142,044

126.47%

129.15%

8.55%

13.11%

11.88%

9.75%

10.33%

98.59%

102.05%

5.52%

10.91%

9.52%

7.62%

N/A

CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

2015

2014

For the year ended December 31,

Beginning balance

Net income

Other comprehensive income (loss), net of tax

Preferred and common cash dividends declared

Proceeds from issuance of 3,680,000 shares of common stock, net of costs

Redemption of 29,867 shares of Series F Preferred Stock (SBLF)

Other (3)

Ending balance

144,079

147,577

16,928

(189)

(935)

63,484

2,519

14,953

11,709

(1,713)

(29,824)

1,377

225,886

144,079

(1) Includes accumulated other comprehensive income (loss).
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets.
(3) 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,
2015

December 31,
2014

(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

90,003

85,965

13,707

76,296

6,871

69,425

24,530

73,358

20,597

3,669

16,894

69,071

6,807

62,264

21,158

65,430

17,992

3,039

16,928

14,953

1,082

Net income attributable to QCR Holdings, Inc. common stockholders

16,928

13,871

Earnings per share attributable to QCR Holdings, Inc.:

Basic

Diluted

1.64

1.75

1.61

1.72

Weighted average common shares outstanding

Weighted average common and common equivalent shares outstanding

10,345,286

10,499,841

7,925,220

8,048,661

-19%

10%

12%

16%

12%

14%

21%

13%

-100%

22%

-6%

AVERAGE BALANCES

Assets

Loans/leases

Deposits

Total stockholders' equity

KEY PERFORMANCE RATIOS

Return on average assets (1)

Return on average total equity (1)

Price earnings ratio LTM (1)

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

(1) The numerator for this ratio is "Net income".

2,549,921

2,453,678

1,707,523

1,540,382

1,851,584

1,708,777

192,489

142,735

0.66%

8.79%

14.81

3.37%

0.74%

0.22%

1.45%

223.33%

72.76%

406

0.61%

10.48%

10.21

3.15%

1.31%

0.34%

1.42%

114.78%

72.52%

409

QCR Holdings, Inc. Consolidated Financial Highlights

As of

December 31,
2015

December 31,
2014

(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

10,648

1,054

11,705

7,151

246

56%

62%

37%

Amount

18,588

56%

1,421

20,102

12,768

155

61%

39%

Total nonperforming assets

19,102

100%

33,025

100%

Loan/lease mix:

Commercial and industrial loans

648,160

Commercial real estate loans

Direct financing leases

Residential real estate loans

Installment and other consumer loans

Deferred loan/lease origination costs, net of fees

724,369

173,656

170,433

73,669

7,736

36%

40%

10%

523,927

702,140

166,032

158,633

72,607

6,664

32%

43%

10%

Total loans/leases

1,798,023

100%

1,630,003

100%

Less allowance for estimated losses on loans/leases

26,141

23,074

Net loans/leases

1,771,882

1,606,929

ANALYSIS OF SECURITIES DATA

Securities mix:

U.S. government sponsored agency securities

213,537

280,203

80,670

2,699

37%

49%

14%

307,869

229,230

111,423

3,017

47%

35%

17%

577,109

100%

651,539

100%

Noninterest-bearing demand deposits

615,292

886,294

309,974

69,106

33%

47%

16%

511,992

778,570

306,364

82,742

30%

47%

18%

1,880,666

100%

1,679,668

100%

Municipal securities

Residential mortgage-backed and related securities

Other securities

Total securities

ANALYSIS OF DEPOSIT DATA

Deposit mix:

Interest-bearing demand deposits

Time deposits

Brokered deposits

Total deposits

ANALYSIS OF BORROWINGS DATA

Borrowings mix:

FHLB advances

Wholesale structured repurchase agreements

Customer repurchase agreements

Federal funds purchased

Junior subordinated debentures

151,000

110,000

73,873

70,790

38,499

34%

25%

16%

0%
100%

203,500

130,000

137,252

131,100

40,424

20,282
662,558

31%

19%

21%

20%

3%
100%

Other

Total borrowings

0
444,162

QCR Holdings, Inc. Consolidated Financial Highlights

ANALYSIS OF NET INTEREST INCOME AND MARGIN

December 31, 2015

December 31, 2014

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 (1)

Loans (1)

Other

599,648

18,380

1,707,523

99,042

75,670

833

Total earning assets (1)

2,406,213

94,883

Deposits

Borrowings

1,209,736

4,496

472,675

9,210

Total interest-bearing liabilities

1,682,411

13,706

Net interest income / spread (1)

Net interest margin (1)

81,177

(dollars in thousands)

3.07%

4.43%

0.84%

3.94%

0.37%

1.95%

0.81%

3.13%

3.37%

688,827

18,679

1,540,382

90,232

70,414

849

2,319,441

89,942

1,133,228

4,509

568,883

12,385

1,702,111

16,894

73,048

2.71%

4.57%

0.94%

3.88%

0.40%

2.18%

0.99%

2.89%

3.15%

(1) 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, 2015

December 31, 2014

% Change

(dollars in thousands)

6,131

5,715

2,972

3,824

323

1,305

1,718

1,762

1,072

1,190

865

799

297

538

387

300

1,047

2,798

3,847

461

2,041

155

1,722

982

1,064

855

553

812

24,530

21,158

42,968

40,337

7,043

5,523

2,725

882

(1,092)

1,900

936

596

1,486

7,486

703

2,202

7,386

6,192

2,895

666

603

1,985

930

579

1,291

636

1,930

73,358

65,430

-1%

-30%

-36%

1008%

12%

768%

387%

-3%

100%

29%

16%

-5%

-11%

-6%

32%

-281%

-4%

15%

100%

11%

14%

12%

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

Swap fee income

Earnings on cash surrender value of life insurance

Debit card fees

Correspondent banking fees

Participation service fees on commercial loan participations

Securities gains, net

Fee income from early termination of leases

Credit card issuing fees

Lawsuit award

Gain on debt extinguishment

Other

Total noninterest income

ANALYSIS OF NONINTEREST EXPENSE

Salaries and employee benefits

Occupancy and equipment expense

Professional and data processing fees

FDIC, other insurance and regulatory fees

Loan/lease expense

Net cost of operation of other real estate

Advertising and marketing

Postage and communications

Stationery and supplies

Bank service charges

Losses on debt extinguishment

Correspondent banking expense

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 13, 2016 at 8:00 am
Quad City Bank & Trust
3551 7th Street
Moline, IL 61265

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:

Elizabeth A. Grabin
Vice President, Controller and
Director of Financial Reporting

QCR Holdings, Inc.
3551 Seventh Street
Moline, IL 61265
309.743.7724

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

RSM US 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 2015

High

Low

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Calendar 2014

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Calendar 2013

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

$ 24.90

$ 21.00

23.22

22.74

18.19

High

19.58

17.51

16.91

Low

$ 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

14.96

13.18

13.05

DIVIDEND INFORMATION

Record
Date

Payment
Date

Amount
Per Share

12.18.15

01.06.16

06.19.15

07.08.15

12.19.14

01.07.15

06.20.14

07.08.14

12.20.13

01.07.14

06.21.13

07.08.13

$ .04