Investor Presentation May 2015 Filed Pursuant to Rule 433 Registration Statement No. 333-197129 Issuer Free Writing Prospectus Dated May 4, 2015 Relating to Preliminary Prospectus Supplement Dated May 4, 2015 |
2 This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, descriptions of the financial condition, results of operations, asset and credit quality trends, profitability, projected earnings, future plans, strategies and expectations of QCR Holdings Inc. (the “Company”). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions of the Company, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “seek,” “target,” “potential,” “focus,” “may,” “could,” “should” or similar expressions. These forward-looking statements express management’s current expectations or forecasts of future events, and by their nature, are subject to risks and uncertainties. Therefore, there are a number of factors that might cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: (i) the effects of future economic, business and market conditions and changes, domestic and foreign, including seasonality; (ii) governmental monetary and fiscal policies; (iii) legislative and regulatory changes, including changes in banking, securities and tax laws and regulations such as the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act and the recently adopted Basel III regulatory capital reforms and their application by the Company’s regulators, and changes in the scope and cost of Federal Deposit Insurance Corporation insurance and other coverages; (iv) changes in accounting policies, rules and practices; (v) the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities, and other interest sensitive assets and liabilities; (vi) the failure of assumptions and estimates underlying the establishment of reserves for possible loan losses and other estimates; (vii) changes in borrowers’ credit risks and payment behaviors; (viii) changes in the availability and cost of credit and capital in the financial markets; FORWARD-LOOKING STATEMENTS |
3 (ix) changes in the prices, values and sales volumes of residential and commercial real estate; (x) the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; (xi) the risks of mergers, acquisitions and divestitures, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (xii) changes in technology or products that may be more difficult, costly, or less effective than anticipated; (xiii) the effects of war or other conflicts, acts of terrorism or other catastrophic events, including hurricanes, storms, droughts, tornados and flooding, that may affect economic conditions generally and in the Company’s markets; (xiv) the failure of assumptions and estimates used in the Company’s reviews of its loan portfolio, the review of its credit grading methods by an independent firm and the Company’s analysis of its capital position; and (xv) such other matters as discussed in this presentation or identified in the Company’s periodic filings with the Securities and Exchange Commission, particularly those matters described under the heading “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2014. You are cautioned not to place undue reliance on forward-looking statements, which reflect the Company’s outlook only and speak only as of the date of this presentation or the dates indicated in the statements. The Company assumes no obligation to update or supplement forward-looking statements. For further information on these and other factors that could impact the Company and the statements contained herein, reference should be made to the Company’s filings with the Securities and Exchange Commission. This presentation is a summary only. The Company is not making any implied or express representation or warranty as to the accuracy or completeness of the information contained herein. This presentation is neither an offer to sell nor a solicitation of an offer to purchase any securities of the Company. Any offer to sell or solicitation of an offer to purchase securities of the Company will be made only pursuant to the preliminary prospectus supplement and accompanying prospectus filed with the Securities and Exchange Commission. FORWARD-LOOKING STATEMENTS - Continued |
4 These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirement of Regulation G, QCR Holdings, Inc. has provided reconciliations within the slides, as necessary, of the non-GAAP financial measure to the most directly comparable GAAP financial measure. NON-GAAP FINANCIAL MEASURES |
5 Offering Overview Offering Summary Issuer QCR Holdings, Inc. Listing: Ticker NASDAQ: QCRH Closing Price (1) $18.77 Offering Type Follow-on offering of common stock Shares Offered 2,800,000 Overallotment 15% Use of Proceeds Repay senior debt and redeem subordinated debt at the parent General corporate purposes, including, supporting the restructure of certain long-term, high cost wholesale funding, supporting organic growth, possible acquisitions of other financial institutions and other long-term strategic opportunities Directed Share Program Yes Joint Book Running Managers Keefe, Bruyette & Woods / Raymond James Co-Managers FIG Partners / D.A. Davidson (1) Market data as of 5/1/15. |
6 • Director, President and Chief Executive Officer • Co-founded the company in 1993 • Began career with KPMG Peat Marwick rising to Partner and served as a Tax Partner of McGladrey & Pullen in the Quad Cities from 1991 to 1993 • Specialized in bank taxation, taxation of closely held businesses, and mergers and acquisitions Todd A. Gipple, CPA • Director, EVP, Chief Financial Officer and Chief Operating Officer • Joined QCR Holdings in January 2000 • Began career with KPMG Peat Marwick and served as a Tax Partner of McGladrey & Pullen in the Quad Cities from 1994 to 2000 • Served as McGladrey’s Tax Partner in Charge of the Mississippi Valley Region and specialized in bank taxation, taxation of closely held businesses, and mergers and acquisitions • Board Member (2009 – present) Douglas M. Hultquist, CPA Today’s Speakers |
7 Corporate Overview NASDAQ – QCRH $2.5 Billion in Assets $1.7 Billion in Loans $1.7 Billion in Deposits 13 Facilities Quad City Bank & Trust (5) Cedar Rapids Bank & Trust (2) Rockford Bank & Trust (2) m2 Lease Funds LLC (1) Community Bank & Trust (3) Shares Outstanding: 8.0 Million Ownership: Insiders & Benefit Plans 23.0% Institutional & Mutual Funds 21.7% QCR Holdings, Inc. - Founded in 1993 Headquartered in Moline, IL Source: Company documents and SNL Financial. Financial data as 3/31/15. Ownership data as of the most recently reported period. |
8 Equity Offering Strategic Highlights • Bolsters capital ratios and brings TCE ratio more in-line with industry peers • Funding restructure significantly improves net interest margin • Shortens the time period to achieve our targeted 1.0% ROAA • Better positions us to continue to identify and cultivate accretive M&A opportunities • Attracts additional institutional investors • Improves liquidity in the stock and may enhance trading performance |
9 Investment Rationale • $2.5B asset bank holding company with critical mass in attractive and target rich markets in Iowa and Illinois - Top 2 bank with 11% market share in the Quad Cities, Iowa/Illinois and Top 4 in Cedar Rapids, Iowa with 8% share - Quad Cities is the International Headquarters for John Deere, major hub for Alcoa and houses Rock Island Arsenal, the largest government-owned weapons manufacturing arsenal in the U.S. - Cedar Rapids is the International Headquarters for Rockwell Collins and U.S. Headquarters for Aegon N.V. • Differentiated business model with three charters allowing banks to customize solutions by market - Lending teams and portfolios differentiated by market based upon areas of underwriting and credit expertise - Supported by a QCRH Group Operations team that delivers operational services in a centralized and efficient manner • Additional products and services in correspondent banking, wealth management, and leasing - Correspondent banking – veteran correspondent banking team with depth of product offerings - Wealth management division with $1.66B in trust accounts and $670MM in brokerage accounts - Commercial leasing business with $182.4MM of loans / leases and ROA of 1.45% (1) • Strong asset quality • Significant opportunity for market share gains and consolidation • Trading at a discount to peers on both a tangible book value and earnings basis with peers trading at approximately 1.5x TBV and 13.0x 2015E earnings (2) Source: FDIC deposit market share data as provided by SNL Financial. Deposit data is as of 6/30/14 as adjusted for acquisitions to the extent discernable. Market data per SNL Financial as of 5/1/15. (1) 2015Q1 m2 net income of $1.0MM as adjusted for 35% tax rate expressed on an annualized basis. (2) Earnings estimates per FactSet consensus estimates and peer group based on Proxy filed 4/1/15 and excludes merger targets. |
10 Correspondent Banking Full Service Institution • Competitively positioned with veteran staff software, systems and processes • More than 160 relationships to date with total non- interest bearing deposits of $291 million at 3/31/15 • Approximately a $64 million portfolio of correspondent bank loans • Provides strong source of non-interest bearing deposits, fee income and high-quality loan participations Wealth Management SBA - USDA Lending m2 Lease Funds, LLC • $1.66B in Trust (and related) accounts and $670M in Brokerage (and related) accounts • Full range of product offerings including Trust Services, Brokerage and RIA, Asset Management, Estate Planning and Financial Planning • Hired 4 new business development officers in 2014 and 2015 to continue to grow AUM • One of the leading SBA loan originators in two of the Company’s primary markets – ramping up in the third • USDA loan origination focus is on the Business & Industry Program providing guarantees to loans originated to communities with populations < 50,000 - Cedar Rapids Bank & Trust ranks 1 st in the state of Iowa for dollar volume of USDA lending and 2 nd in the nation by dollar volume • Quad City Bank & Trust acquired 80% ownership August of 2005 and in September 2012 acquired the remaining 20% ownership • Income has grown at a 20% CAGR since 2006 • Historically strong asset quality • Key niches with lease specialists located in IA, IL, WI, MN, SC, NC, GA, FL and PA: - Marine Equipment, Machinery/Machine Tools, Office Technology, Printing, Telecom, Bakery and Health Care |
11 QCRH Market Overview Source: SNL Financial. Deposit data as of June 30, 2014. Dollars in millions. (1) Weighted average by deposits. Growth rates are estimated for the period 2015- 2020. • Meaningful market share position in each MSA served, with room for continued growth • Each MSA falls within the top 15 largest MSAs in IL and IA by total deposits • All 4 MSAs are projected to have household income growth above the national average Deposit Market Share Overview ($M) Market Rank 2 4 9 10 Weighted Average Income Growth (1) |
12 Distribution of Institutions in Targeted Markets (1) “Capitalizing” on Opportunities in Our Market Source: SNL Financial. (1) Target area includes top 25 MSAs listed in the Appendix to this presentation excluding Chicago, St. Louis and Omaha MSAs. Southern Wisconsin (defined as Milwaukee MSA and south). Excludes mutual institutions. • Leverage renewed capital strength and relationship driven approach to capture greater organic market and relationship share • Selectively pursue accretive acquisition opportunities • Operating markets are highly fragmented: - 945 community banks are headquartered in Illinois, Iowa and Wisconsin (58% are between $100 million and $1.0 billion in assets) - 340 community banks are headquartered in top selected MSAs (1) in Illinois, Iowa and Southern Wisconsin (61% are between $100 million and $1.0 billion in assets) - Heavy fragmentation provides a wealth of opportunities from which to selectively pursue targets • Targets will meet rigorous evaluation standards: - Cultural and strategic fit - Enhances competitive position - Drives market share - Enhances shareholder value • QCRH operating structure attractive to targets Total |
13 Top 25 MSAs / Iowa and Illinois Source: SNL Financial. Deposit data as of June 30, 2014. CAGR for the period 2015- 2020. Projected Median Projected Deposits Number of Number of Total Population Household Median HHI ($ M ) Institutions Branches Population Growth Income CAGR Chicago-Naperville-Elgin, IL-IN-WI $354,011 212 2,994 9,570,110 0.23 % $61,244 1.11 % Saint Louis, MO-IL 93,445 134 920 2,806,626 0.18 54,888 1.17 Omaha-Council Bluffs, NE-IA 28,147 73 331 908,951 0.91 58,352 1.62 Des Moines-West Des Moines, IA 15,023 49 225 614,231 1.18 61,901 1.24 Bloomington, IL 13,715 34 66 193,887 0.69 62,503 1.76 Davenport-Moline-Rock Island, IA-IL 7,935 39 151 385,404 0.31 53,297 1.93 Peoria, IL 6,874 39 159 383,828 0.25 56,481 1.72 Cedar Rapids, IA 5,635 39 105 263,845 0.46 60,871 1.71 Springfield, IL 5,260 29 93 211,874 0.13 57,373 1.77 Rockford, IL 5,244 25 97 342,466 (0.27) 51,750 1.58 Champaign-Urbana, IL 5,034 35 105 236,754 0.37 49,194 1.71 Sioux City, IA-NE-SD 3,970 35 92 168,659 0.18 49,950 1.78 Ottawa-Peru, IL 3,639 33 85 150,509 (0.43) 51,044 1.64 Iowa City, IA 3,479 21 58 165,322 1.26 56,700 2.01 Waterloo-Cedar Falls, IA 2,974 23 70 170,496 0.42 53,367 2.33 Dubuque, IA 2,385 10 42 96,622 0.62 53,699 2.32 Ames, IA 2,090 19 40 93,608 0.79 51,321 1.47 Carbondale-Marion, IL 2,008 20 67 126,617 0.03 39,955 1.76 Kankakee, IL 1,900 18 41 111,203 (0.31) 52,213 1.79 Decatur, IL 1,893 14 40 108,351 (0.33) 46,487 1.77 Quincy, IL-MO 1,870 19 45 77,160 - 47,824 1.69 Paducah, KY-IL 1,844 15 45 97,591 (0.12) 44,754 1.71 Cape Girardeau, MO-IL 1,826 16 48 97,891 0.34 43,529 1.20 Effingham, IL 1,596 11 21 34,311 0.06 56,214 2.35 Fort Madison-Keokuk, IA-IL-MO 1,522 19 46 60,768 (0.22) 44,689 1.25 High $354,011 212 2,994 9,570,110 1.26 % $62,503 2.35 % Low 1,522 10 21 34,311 (0.43) 39,955 1.11 Median 3,559 24 68.5 166,991 0.25 52,755 1.72 MSA |
Financial Highlights XXXXXXXXXXX |
15 Financial Highlights Source: Company documents. Dollars in millions. Total loans/leases includes deferred loan/lease origination costs, net of fees. NCOs/Avg. Loans for Q1 2014 and Q1 2015 are annualized. (1) 2013 profitability metrics include the bargain purchase gain on CNB acquisition of $1.8 million, gains on CNB branch sales of $2.3 million and the $2.3 million of acquisition and data conversion costs related to CNB acquisition. (2) Tangible common equity is defined as total common stockholders’ equity excluding goodwill and other intangibles. (3) Measures not recognized under GAAP and are therefore considered to be non-GAAP financial measures. Please see the Appendix to this presentation for non-GAAP reconciliations. (4) Calculated prior to the impact of preferred dividends. (5) Represents non-interest expenses divided by the sum of net interest income before provision for loan/lease losses and total non-interest income. • Year over year net interest margin expansion of 14bps to 3.25% • Year over year loans and leases growth of $161 million or ~10.8% • EPS improved ~30% year over year, driven by an increase in income and the redemption of the remaining SBLF • Nonperforming assets ratios remain strong 2009 2010 2011 2012 2013 (1) 2014 2014Q1 2015Q1 ($ millions except per share) 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 3/31/14 3/31/15 Balance Sheet Total Assets $1,780 $1,837 $1,967 $2,094 $2,395 $2,525 $2,426 $2,492 Total Loans/Leases 1,244 1,173 1,201 1,287 1,460 1,630 1,493 1,654 Total Deposits 1,089 1,115 1,205 1,374 1,647 1,680 1,672 1,734 Tangible Common Equity (2)(3) 62 65 76 84 113 139 121 146 Consolidated Capital TCE / TA (%) (2)(3) 3.49 % 3.57 % 3.86 % 4.02 % 4.71 % 5.52 % 5.02 % 5.88 % Tieir 1 Risk Based Ratio (%) 11.14 12.12 12.24 11.27 11.45 9.52 10.61 9.11 Total Risk-Based Capital Ratio (%) 12.52 13.70 13.84 12.71 12.87 10.91 12.03 10.41 TBV Per Share (2)(3) $13.62 $14.19 $15.92 $17.08 $14.29 $17.50 $15.34 $18.29 Asset Quality NPAs / Assets (%) 2.27 % 2.73 % 2.06 % 1.41 % 1.28 % 1.31 % 1.18 % 1.21 % NCOs / Avg. Loans (%) 1.00 0.79 0.70 0.27 0.31 0.34 (0.03) 0.22 Reserves / NPLs (%) 74.94 49.49 58.70 78.47 104.7 114.78 121.58 144.35 Profitability Net Income to Common ($2.1) $2.5 $4.4 $9.1 $11.8 $13.9 $3.2 $4.2 ROAA (%) (4) 0.10 % 0.36 % 0.51 % 0.62 % 0.64 % 0.61 % 0.64 % 0.67 % ROAE (%) (4) 1.43 5.03 7.09 8.90 10.24 10.48 10.37 11.28 NIM (%) 3.14 2.92 3.08 3.14 3.03 3.15 3.11 3.25 Efficiency Ratio (%) (5) 70.89 74.38 71.21 70.36 71.66 72.47 74.74 71.71 Diluted EPS ($0.46) $0.53 $0.92. $1.85 $2.08 $1.72 $0.40 $0.52 |
16 Total Consolidated Assets CAGR From 1994-2014: 21.26% Source: Company documents. Dollars in millions. |
17 Loan Growth Trend (1) Strong Commercial Loan Growth Source: Company documents. Dollars in millions. (1) Loan composition excludes deferred loan/lease origination costs, net of fees. (2) Includes Commercial & Industrial, Commercial RE and Direct Financing Leases. • C&I and Direct Financing Lease balances grew approximately 24% and 30%, respectively from 2013 to 2015Q1 • 13% overall loan growth from 2013 to 2015Q1 represented all organic growth • Commercial lending (2) represents more than 85% of the portfolio • 2013 loan growth supplemented by acquisition of Community National Bancorporation |
18 Lease Asset Generation m2 Lease Funds LLC Overview Source: Company documents. Dollars in millions. • National equipment leasing platform • Focus includes commercial equipment and assets, medical equipment, and vehicles classified as heavy equipment • High yield portfolio; average gross yield for Q1 2015 was approximately 8.4% • Historically strong asset quality • Target of 10% of consolidated assets (~7.4% as of 3/31/15) |
19 Classified Loans ($M) & NPAs / Assets Asset Quality Overview Source: Company documents. Dollars in millions. Nonperforming Assets Composition – 2015Q1 • Management continues to focus on maintaining excellent asset quality and resolving problem assets • Potential problem assets in the form of classified loans continued their steady decline in 2015Q1; down more than 51% from 2011 |
20 Average Funding Base - 2010 Evolution of Funding Base Source: Company documents. Dollars in millions. Average Funding Base – 2015Q1 2010 Cost of Funds: 1.79% 2010 Cost of Deposits: 1.13% 2015Q1 Cost of Funds: 0.72% 2015Q1 Cost of Deposits: 0.25% Borrowings 33.4% Noninterest Bearing Deposits 13.7% $1,684M Interest Bearing Demand Deposits 25.3% Time Deposits 27.6% Borrowings 24.8% Noninterest Bearing Deposits 25.2% Interest Bearing Demand Deposits 33.9% Time Deposits 16.1% $2,324M |
21 Funding Restructure Impact Source: Management and company filings. Dollars in millions. (1) Calculated as 3/31/15 amount outstanding multiplied by the Q1 2015 weighted average rate. (2) Net of funding costs required to remain net-neutral on duration. The estimated weighted average cost of the replacement funding is 1.03% resulting in an estimated pre-tax benefit of 3.21%. (3) Represents estimated margin improvement on an annualized basis. (4) Estimated on a standalone basis, excluding the impact of potential earnings on the net proceeds of the capital raise. • Funding restructuring can provide an estimated 13 basis points (3) improvement in net interest margin • Estimated after-tax earnings impact of approximately $2.2 million (4) represents an estimated 9 basis points of ROAA based on Q1 2015 average balances ($ millions) 3/31/15 Amount Outstanding Q1 2015 Weighted Average Rate Estimated Pre-Tax Interest Expense Savings (1) Subordinated Debt (Series A) $2.7 6.00% $0.2 Senior Term Debt $16.5 3ML + 300bps (3.27%) $0.5 Estimated Borrowings Restructure $85.5 4.24% $2.7 (2) Estimated Total $104.7 4.13% $3.4 |
22 Continued Strong Top Line Revenue Growth Trends ($M) Attractive Revenue Mix & Growth Trend Source: Company documents. Dollars in millions. (1) Excludes securities gains, bargain purchase gains, gains on sales of branches and loss on sale of OREO. • Strong fee income streams provide stability and complement to spread revenue • Key Differentiators: - Wealth Management ($2.3B in AUM) - Correspondent banking (160+ relationships) - SBA / USDA guaranteed loans 10.2% Y-o-Y Growth |
23 Net Income to Common Shareholders ($M) Improving Returns for Common Shareholders Source: Company documents. Dollars in millions. Approximately ~54% Net Income to Common CAGR From 2010 – 2014; 31% Growth From 2014Q1 – 2015Q1 |
24 Strategies To Achieve A 1.0% ROAA Source: Management. (1) Includes borrowings and brokered deposits. • Increase loans and leases to more than 70% of total assets (66% as of 3/31/15) • Continued reductions in wholesale funding to less than 15% of assets (26% as of 3/31/15 (1) ) • Increase gain on sale of USDA and SBA loans to a more significant and consistent component of core revenue • Grow wealth management fee income by 15% annually (14.8% CAGR from 2010-2014) • 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 and improve efficiency ratio Strategic Initiatives to Achieve 1.0% ROAA |
Concluding Remarks XXXXXXXXXXX |
26 Concluding Remarks • Critical mass in attractive and target rich markets in Iowa and Illinois • 3 charter model allows subsidiary banks to customize solutions by market • Differentiated product offering includes correspondent banking, wealth management, leasing and SBA/USDA lending • Strong asset quality • Significant opportunity for market share gains and consolidation • Attractively valued relative to peer institutions |
3551 7 th Street Moline, Illinois 61265 www.qcrh.com |
Appendix XXXXXXXXXXX |
29 History of QCR Holdings, Inc. 1993 Founded by Mike Bauer and Doug Hultquist - $14 Million IPO 1994 Quad City Bank & Trust (De Novo) – Currently $1.3 Billion in Assets 1995 Quad City Bancard Formed 2001 Cedar Rapids Bank & Trust (De Novo) – Currently $855 Million in Assets (includes Community Bank & Trust branches) 2005 Rockford Bank & Trust (De Novo) – Currently $355 Million in Assets 2005 Quad City Bank & Trust acquires 80% ownership of m2 Lease Funds, LLC 2007 First Wisconsin Bank & Trust (De Novo) – Milwaukee, WI 2008 Quad City Bancard sells Merchant Acquiring Business 2008 Sale of First Wisconsin Bank & Trust – Milwaukee, WI 2012 Quad City Bank & Trust acquires remaining 20% ownership of m2 Lease Funds, LLC – Currently $183 Million in Assets 2013 Quad City Bank & Trust Sells its credit card portfolio & servicing to Fifth Third Bank – January 31, 2013 2013 QCR Holdings acquires Community National Bancorporation and Community National Bank (CNB) on May 13, 2013 2013 Community National Bank merges with Cedar Rapids Bank & Trust on October 26, 2013 and begins operating as a division of Cedar Rapids Bank & Trust under the name Community Bank & Trust. (QCR Holdings sells Mason City, IA branches of CNB to Clear Lake Bank & Trust on October 4, 2013 and Austin, MN branches of CNB to Eastwood Bank on October 11, 2013.) (Assets included with Cedar Rapids Bank & Trust – above) Source: Company documents. Subsidiary assets as of 3/31/15. |
30 Executive Management Team DOUGLAS M. HULTQUIST, CPA President and Chief Executive Officer 37 Years in Banking / Financial Services TODD A. GIPPLE, CPA Executive Vice President, Chief Operating Officer and Chief Financial Officer 29 Years in Banking / Financial Services JOHN H. ANDERSON President and Chief Executive Officer, Quad City Bank and Trust Company Chief Deposit Officer, QCR Holdings, Inc. 28 Years in Banking / Financial Services PETER J. BENSON Executive Vice President, Chief Legal Counsel 32 years in Corporate and Personal Legal Services STACEY J. BENTLEY President and Chief Executive Officer, Community Bank & Trust 34 Years in Banking / Financial Services THOMAS D. BUDD President and Chief Executive Officer, Rockford Bank and Trust Company 28 Years in Banking / Financial Services CHARLES S. BULLOCK Executive Vice President, Rockford Bank and Trust Company 43 Years in Banking / Financial Services RICH W. COUCH President and Chief Executive Officer, m2 Lease Funds, LLC 27 Years in Banking / Financial Services JILL A. DEKEYSER Senior Vice President, Director of Human Resources 11 Years in Banking / Financial Services JOHN R. ENGELBRECHT, MBA President and Chief Executive Officer, m2 Lease Funds, LLC 40 Years in Banking / Financial Services SHAWNA M. GRAHAM, CBA, CIA, CISA, CRP, MBA, CCBCO Senior Vice President, Director of Risk Management 26 Years in Banking / Financial Services LARRY J. HELLING President and Chief Executive Officer, Cedar Rapids Bank and Trust Company Executive Vice President and Chief Lending Officer, QCR Holdings, Inc. 35 Years in Banking / Financial Services JOHN R. MCEVOY, JR. Executive Vice President, Chief Operations Officer & Cashier Quad City Bank and Trust Company 38 Years in Banking / Financial Services DANA L. NICHOLS Executive Vice President, Chief Credit Officer, 26 Years in Banking / Financial Services JOHN A. RODRIGUEZ, CCM Executive Vice President, Deposit Operations / Information Services 32 Years in Banking / Financial Services M. RANDOLPH WESTLUND, CFA Executive Vice President, Chief Investment Officer 27 Years in Banking / Financial Services CATHIE S. WHITESIDE, MBA Executive Vice President, Corporate Strategy, Human Resources and Branding 7 Years in Banking / Financial Services MICHAEL J. WYFFELS Senior Vice President, Chief Information Officer 25 Years in Banking / Financial Services |
31 • 3 distinct (yet similar) operating charters – able to customize solutions by market • Managed by local veteran bankers, governed by local Board of Directors, local decisions, local solutions, enhanced market specific knowledge • 3 charters supported by QCRH Group Operations team that delivers operational services in a centralized and efficient manner • Credit quality historically better than peers • Historic deposit growth better than peers • Historic loan growth better than peers • Top 5 Deposit market share in Quad Cities and Cedar Rapids • Top 10 Deposit market share in Rockford and Waterloo/Cedar Falls • High touch service delivered locally by knowledgeable advisors • Opportunities in Correspondent Banking, Wealth Management, SBA/USDA lending, and m2 Leasing The Strategic Value of our Separate Charters |
32 Quad City Bank & Trust John H. Anderson, President & CEO Assets: $1.3 Billion (as of 3/31/15) Population: 385,404 Market Deposits: $7.9 Billion Ranked 2 with 10.8% market share and over $850 Million in deposits in Davenport-Moline-Rock Island MSA Finalist 2013 and 2014 – Quad Cities Best Place to Work. Major Employers Rock Island Arsenal Deere & Company Genesis Health Systems HNI Corporation / The Hon Company / Allsteel Trinity Regional Health Systems Tyson Fresh Meats Alcoa Kraft 3M Excelon Highlights – Quad Cities • The Rock Island Arsenal is the largest government-owned military weapons manufacturing arsenal in the United States • Alcoa (Quad Cities) is the world’s premier aerospace supply plant – the hub of Alcoa’s $3B aerospace business – $300MM expansion completed January 2014 creating 150 new jobs • International Headquarters for Deere & Company • Genesis Systems Group, one of North America’s largest robotic integrators, completed a $4.6MM expansion in 2014 • Material Control Systems (MATCON) completed a new $10MM logistics facility and added 150 new jobs • Ranked 16 in the nation for high-tech job growth • Ranked as a Top 50 Military Friendly Community • Top 5 Defense & Aerospace Community • Ranked 15 in the nation for manufacturing job growth What They’re Saying About the Quad Cities Quad City Chamber: June 2014 “The Quad Cities offers unparalleled access to major Midwestern and global markets, making it a prime location for logistics, distribution and warehousing companies. With over 37 million people living within a 300 mile radius, businesses have easy and efficient access to a strong network of suppliers and customers.” Source: FDIC deposit market share data as provided by SNL Financial. Deposit data is as of 6/30/14 as adjusted for acquisitions to the extent discernable. nd th th |
33 Cedar Rapids Bank & Trust Major Employers Rockwell Collins Aegon USA St. Luke’s Hospital Mercy Medical Center Whirlpool Corporation Kirkwood Community College Quaker Food and Snacks Cedar Rapids Community Schools Amana Refrigeration MCI General Mills Archer Daniels Midland • International Headquarters for Rockwell Collins • U.S. Headquarters for Aegon USA • Downtown Revitalization – Double Tree by Hilton Cedar Rapids Convention Complex $144MM, 2 year project resulted in 100,000 sq/ft convention center and 267 room Double Tree Hotel • CRST International constructing 11-story, 113,000 sq/ft, $37MM world headquarters building in downtown, expected to be completed in Q1 2016 • Other downtown projects: PCI Medical Mall, Mercy Cancer Center, Kingston Commons Condominiums, Public Library, City Hall, Fire Station • Top city in Iowa for “Liveability” and 29 th in the country • Top 10 Healthiest Small Cities (Daily Finance, Feb. 2014) • Top 10 National Civic League’s All American Cities 2014 • The largest corn-processing city in the world. • The second largest producer of wind energy in the United States • Top 10 (#6) Best Cities to Move to (MSN Real-estate, January 2014) Cedar Rapids Metro Economic Alliance: June 2014 “Cedar Rapids is the second largest city in Iowa and is considered an economic hub of the state, located in the core of the Interstate 380 Technology Corridor. Relatively low cost of living expenses and high income levels give residents 10% more purchasing power than other Iowans and 13% more than the average U.S. resident.” Highlights - Cedar Rapids What They’re Saying About Cedar Rapids * Includes the assets of Community Bank & Trust Source: FDIC deposit market share data as provided by SNL Financial. Deposit data is as of 6/30/14 as adjusted for acquisitions to the extent discernable. Larry J. Helling, President & CEO Assets: $855 Million* (as of 3/31/15) Population: 263,845 Market Deposits: $5.6 Billion Top 4 bank with 8.2% market share and over $464 Million in deposits in Cedar Rapids MSA 2014 Finalist – Coolest Place to Work in Cedar Rapids |
34 Rockford Bank & Trust Thomas D. Budd, President & CEO Assets: $355 Million (as of 3/31/15) Population: 342,466 Market Deposits: $5.2 Billion Ranked 9 th with 4.5% market share and over $236 Million in deposits in Rockford MSA Major Employers Rockford Public School District Swedish American Health Systems Chrysler (Belvidere Assembly Plant) Rockford Health System Hamilton Sundstrand Wal-Mart Stores OSF St. Anthony Medical Center Winnebago County Woodward, Inc. UPS • AAR (largest aircraft maintenance company in North America, and third largest in the world) will open a new facility at Chicago Rockford Airport generating jobs for 500 people • Rock Valley College building $5.1MM aviation maintenance training center to better serve the region’s aerospace industry and attract business and jobs to Rockford • Logistical Operations Hub – Current home to large-scale UPS and Con-way Freight, recent ground breaking for FedEx facility generating 150 new jobs • Downtown revitalization – 150 room, $54MM hotel and convention center developed by Gorman & Co. • Riverfront sports complex, $18MM, 115,000 sq/ft to be one of the largest in the Midwest • Top 10 in the Most Affordable MSA’s in America • Considered Illinois’ second largest city • 6 th highest concentration of Aerospace production employment in the U.S. • Named lead bank in approved loans to Veteran-owned businesses in Illinois • Top 20 “Best Cities for Manufacturing Jobs” Rockford Chamber of Commerce: June 2014 “Rockford, as part of the greater Chicago region, is part of the third largest multi-modal system in the world and largest in the United States. From the Rockford area, businesses can reach 80% of U.S. households within a 24-hour truck drive. The Rockford Region is within a one hour drive of O’Hare International Airport, one of three truly global airports in the U.S.”. Highlights - Rockford What They’re Saying About Rockford Source: FDIC deposit market share data as provided by SNL Financial. Deposit data is as of 6/30/14 as adjusted for acquisitions to the extent discernable. |
35 Community Bank & Trust Stacey J. Bentley, President & CEO Assets: $120 Million* (as of 3/31/15) Population: 170,496 Market Deposits: $3.0 Billion Top 10 bank with 4.3% market share and over $127 Million in deposits in Waterloo / Cedar Falls MSA Major Employers John Deere Wheaton Franciscan Healthcare Tyson Fresh Meats Allen Memorial Hospital University of Northern Iowa Target Regional Distribution Center Area Education Agency 267 Omega Cabinetry Ltd. CBE Companies, Inc. Bertch Cabinets Highlights – Waterloo/Cedar Falls Greater Cedar Valley Chamber of Commerce: June 2014 “The Cedar Valley location is perfect if your business needs access to some of the great metropolitan hubs of the Midwest. Within five hours of the Cedar Valley, you can reach ten metro areas including Chicago, St. Louis, Milwaukee, Minneapolis, and Omaha.” • John Deere investing $40MM in its tractor testing labs, adding 62,000 sq/ft of additional space • John Deere recently completed $150MM modernization of John Deere Foundry – total investment by Deere in Waterloo in the last decade equals $1B • The city of Waterloo provisionally approved for $12MM in funding for the Techworks Campus Reinvestment District (June 2014). The District projects a capital investment of $74.1MM to include a John Deere training center and hotel. • First Gigabit city in Iowa and one of eight in the U.S. • Cost of living is 11% below the national average • Waterloo-Cedar Falls is a Blue Zones Demonstration Community • Community Bank & Trust became the 1 st Iowa bank designated as a Blue Zone Worksite • The University of Northern Iowa is ranked 2 nd in the “Best Regional Universities Midwest” category for public universities (US News & World Reports, 2013) What They’re Saying About Waterloo-Cedar Falls * Assets also included in the total for Cedar Rapids Bank & Trust Source: FDIC deposit market share data as provided by SNL Financial. Deposit data is as of 6/30/14 as adjusted for acquisitions to the extent discernable. |
36 Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share Non-GAAP Reconciliations Source: Company documents. Dollars in thousands. As of and for the As of and for the Year Ended Quarter Ended December 31, March 31, ($ in thousands, except per share data) 2009 2010 2011 2012 2013 2014 2014 2015 Tangible common equity Total equity 125,595 $ 132,571 $ 144,433 $ 140,434 $ 147,577 $ 144,079 $ 141,357 $ 150,996 $ Less: Preferred Equity 58,578 62,214 63,386 53,163 29,824 - 14,824 - Less: Noncontrolling interests 1,700 1,648 2,052 - - - - - Less: Goodwill and intangible assets 3,294 3,280 3,262 3,252 5,107 4,894 5,055 4,844 Tangible common equity 62,024 $ 65,429 $ 75,733 $ 84,019 $ 112,646 $ 139,185 $ 121,478 $ 146,152 $ Tangible book value per share 13.62 $ 14.19 $ 15.92 $ 17.08 $ 14.29 $ 17.50 $ 15.34 $ 18.29 $ Tangible Assets Total assets 1,779,646 $ 1,836,635 $ 1,966,610 $ 2,093,730 $ 2,394,953 $ 2,524,958 $ 2,426,319 $ 2,491,659 $ Less: Goodwill and intangible assets 3,294 3,280 3,262 3,252 5,107 4,894 5,055 4,844 Tangible assets 1,776,352 $ 1,833,355 $ 1,963,348 $ 2,090,478 $ 2,389,846 $ 2,520,064 $ 2,421,264 $ 2,486,815 $ Tangible common equity to tangible assets 3.49% 3.57% 3.86% 4.02% 4.71% 5.52% 5.02% 5.88% |