Qcr Holdings, Inc. · NASDAQ:QCRH
Qcr — Debt Investor Presentation (August 2022)
44 slides from Qcr's debt investor presentation, Aug 18, 2022
Slide 1: Subordinated Note Issuance Investor Presentation August 2022
Subordinated Note Issuance Investor Presentation August 2022
Slide 2: Forward-Looking Statements
2 This document (including information incorporated by reference) contains, and future oral and written statements of QCR Holdings, Inc. (the “Company”) and its management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995
Slide 3: Private Placement Disclaimer
3 The information contained herein is a summary and it is not complete. It has been prepared for use only in connection with the private placement (the “Placement”) of securities (the “Securities”) of the Company, the holding company of Quad City Bank and Trust Company, Cedar Rapids Bank and Trust C
Slide 4: Summary Term Sheet
4 Summary Term Sheet Issuer: Security Type: Offering Type: Offering Structure: Size: Term: Security Rating: Redemption: Use of Proceeds: Sole Placement Agent: Kroll: BBB- Optional Redemption 5 years after issuance date General corporate purposes, which may include, but are not limited to, possible s
Slide 5: QCR Holdings Financial Highlights and Branch Map
5 1) ROAA, ROAE and Efficiency Ratio annualized and adjusted to exclude non-core and/or non-recurring income and expense items, primarily related to the closing of the Guaranty Bank acquisition 2) Tax equivalent yield Note: Financial data as of 6/30/22; Source: Company documents, S&P Capital IQ Pro;
Slide 6: QCR Investor Highlights
6 Business Model Performance Outlook Local charter autonomy attracts the best bankers and clients High-performing niche businesses Right people, infrastructure and balance sheet to sustain performance Attractive and growing mid-size metro markets Diverse and growing fee revenue streams Long runway i
Slide 7: Selected Executive Management Biographies
7 Larry J. Helling – Chief Executive Officer & Director Larry J. Helling was named Chief Executive Officer of QCR Holdings in May of 2019 in addition to his duties as Chief Executive Officer of Cedar Rapids Bank & Trust (CRBT). Prior to leading the creation of CRBT in 2001, he spent 18 years in exec
Slide 8: Bank CEO Biographies
John Anderson – CEO of Quad City Bank & Trust As CEO, John is the driving force in the direction and continued growth of Quad City Bank & Trust. He began his career with Davenport Bank & Trust and later moved to Brenton Bank, where he served as Chairman, President and CEO of the Davenport operation.
Slide 9: Company History
Company History $2.4 $2.5 $2.6 $2.9 $3.5 $4.4 $4.9 $5.7 $6.1 $7.4 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Q2 9 Acquisition: Community National Bancorporation May 2013 $288M in Assets Acquisition: Community State Bank August 2016 $582M in Assets Acquisition: Guaranty Bankshares, Ltd. October
Slide 10: Market Overview and Deposit Market Share
Market Overview and Deposit Market Share 10 (1) Reflects numbers pre-merger with GFED MSAs include Davenport-Moline-Rock Island, IA-IL, Cedar Rapids, IA, Waterloo-Cedar Falls-IA, Des Moines/West Des Moines-IA, Springfield, MO. All banks reflect pro forma data from acquisitions. Source: S&P Capital I
Slide 11: Overview of Multi-Charter Model
11 Overview of Multi-Charter Model Location and deposit data as of 6/30/22 and includes pro forma data for Guaranty Bank. Cedar Rapids Bank & Trust includes Community Bank & Trust in the Cedar Valley. Source: S&P Capital IQ Pro, Company Documents States/Region: Iowa/Illinois Quad Cities # Locations:
Slide 12: A Consistent Track Record of Asset Growth
A Consistent Track Record of Asset Growth 12 $2.9 $3.5 $4.4 $4.9 $5.7 $7.4 71.9% 73.8% 75.0% 75.2% 74.8% 76.8% 78.5% 2016 2017 2018 2019 2020 2021 6/30/2022 Total Assets Total Loans & Leases/Total Assets $6.1 (1) Rockford Bank & Trust assets were removed from this data. (2) Includes $289.5 million o
Slide 13: Our Strategy for Long-Term Success
Our Strategy for Long-Term Success 13 We’ve set a simple and focused strategy for our future. 9-6-5 is our plan to continue to grow earnings and drive attractive long-term returns for our shareholders. 9 – Grow loans by at least 9% per year, funded with core deposits 6 – Grow fee income no less than
Slide 14: Experienced Acquiror Delivering Results
14 Experienced Acquiror Delivering Results Demonstrated Strong Results in Prior M&A $5.5 $9.4 $14.6 Net Income CAGR: 27.6% Springfield First Community Bank Community State Bank $462 $545 $429 $667 $752 $650 $725 $883 $590 Total Loans Total Assets Core Deposits CAGR 11.9% CAGR 12.8% CAGR 8.3% $445 $5
Slide 15: A Successful, Strategic Acquiror
15 A Successful, Strategic Acquiror • Closed $1.3 billion asset acquisition on April 1, 2022, with subsidiary now operating as Guaranty Bank • Successful integration, with bank exceeding forecasted transaction metrics • Combined bank is ranked #4 in deposit market share in an attractive Springfield
Slide 16: Historical Profitability
66.5% 64.8% 66.3% 54.1% 55.2% 64.5% 55.6% 56.4% 56.4% 55.9% 51.5% 57.3% 63.4% 62.5% 64.8% 52.5% 54.6% 59.0% 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% 2017 2018 2019 2020 2021 2022 YTD QCRH Peer Median QCRH Adjusted Efficiency Ratio 3.78% 3.62% 3.45% 3.44% 3.49% 3.63% 3.74% 3.76% 3.76% 3.39% 3.21% 3.12% 3.
Slide 17: Deposit Growth Driven by Core Deposits
Deposit Growth Driven by Core Deposits 17 25% 20% 20% 25% 18% 26% 60% 57% 62% 65% 67% 65% 13% 16% 15% 10% 9% 9% 3% 2% 2% $2.9 $3.5 $3.9 $4.6 $4.9 $5.8 2017 2018 2019 2020 2021 6/30/2022 Noninterest-bearing Deposits Interest-bearing Deposits Time Deposits Brokered Deposits Note: Core deposits are def
Slide 18: Loan Growth Driven by Commercial Lending
38% 39% 39% 40% 34% 30% 44% 47% 47% 49% 55% 59% 5% 3% 3% 2% 1% 1% 9% 8% 8% 6% 5% 8% 4% 3% 3% 3% 2% 2% $2.6 $3.3 $3.7 $4.3 $4.7 $5.8 2017 2018 2019 2020 2021 6/30/2022 Commercial & Industrial Commercial RE Direct Fin. Leases Residential RE Consumer & Other Loan Growth Driven by Commercial Lending 18
Slide 19: How is QCR different? Our niches drive results
How is QCR different? Our niches drive results. 19 • Fiduciary services • Investment management services • Financial planning • Brokerage services • 6/30/22 AUM: $4.5B • Competitive deposit products with nearly $1.3B in total liquidity • Safekeeping and cash management services • 189 correspondent b
Slide 20: A Complex and Profitable Business: Specialty Finance Group
A Complex and Profitable Business: Specialty Finance Group 20 With decades of experience, our team has navigated the complexity of the municipal and tax credit financing space – creating a sustainable and profitable business at QCRH. Our SFG business is a unique niche that offers: • A strong pipelin
Slide 21: Specialty Finance Group: Fee Income and Loan Growth
Specialty Finance Group: A Complex and Profitable Business 21 $0.8 $9.1 $26.5 $67.9 $60.5 $20.6 $0 $10 $20 $30 $40 $50 $60 $70 $80 2017 2018 2019 2020 2021 2022Q2 Fee Income Fee Income Growth ($M) $657.3 $863.3 $1,157.7 $1,632.3 $2,182.6 $2,413.0 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2017 2018
Slide 22: SFG: Municipal and Tax Credit Financing Solutions
SFG: Providing Municipal and Tax Credit Financing Solutions 22 $18.9 $79.9 $229.4 $564.5 $1,097.1 $1,355.9 $122.8 $205.7 $231.6 $274.5 $280.3 $234.4 $372.0 $394.6 $395.0 $472.6 $469.4 $505.5 $143.5 $183.2 $301.7 $320.7 $335.8 $317.1 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2017 2018 2019 2020 2021
Slide 23: A Broad Scope of Wealth Management Services
A Broad Scope of Wealth Management Services 23 The ultimate relationship business, our wealth management structure and extensive scope of services cater to our clients’ needs. Wealth Management & Trust Services • Investment management • Financial planning • Trust services • Fiduciary services • Tax
Slide 24: Diverse and Growing Client Relationships
Diverse and Growing Client Relationships 24 $9.9 $11.4 $12.0 $12.6 $15.3 $7.5 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 2017 2018 2019 2020 2021 2022Q2 Revenue * All data excludes Bates and Rockford Bank & Trust (bank sold in 2019). 6/30/2022 revenue is annualized. Revenue ($M)* $2.5 $2
Slide 25: Correspondent Banking
Correspondent Banking 25 Our strong Correspondent Banking business provides significant liquidity to fund growth. $200.5 $123.9 $157.7 $277.4 $336.0 $291.4 $187.2 $182.0 $322.9 $425.9 $219.9 $240.7 $255.3 $294.0 $631.9 $1,333.7 $1,261.2 $793.2 $643.0 $599.9 $1,112.5 $2,037.0 $1,817.1 $1,325.3 $0 $50
Slide 26: Income Composition
Net Interest Income 68% Capital Markets 18% Wealth Management 5% Card Fees 2% Correspondent Banking 0.3% Other 6% Income Composition 26 75% 79% 77% 66% 59% 73% 25% 21% 23% 34% 41% 27% $130 $167 $234 $281 $279 $287 $0 $50 $100 $150 $200 $250 $300 $350 2017 2018 2019 2020 2021 6/30/2022* Net Interest
Slide 27: Industry Diversification / Concentration
Industry Diversification / Concentration 27 Loans by Sector $ in thousands % 6/30/2022 of Total Industry Sector Balance Loans Real Estate and Rental and Leasing $2,955,192 51.0% Construction $383,843 6.6% m2 Equipment Financing $284,953 4.9% Consumer $271,278 4.7% Manufacturing $246,428 4.3% Health
Slide 28: Commercial Real Estate Concentration Detail
Commercial Real Estate Concentration Detail 28 CRE - Owner Occupied CRE - Non-owner occupied Industry Balance ($000) % of Total Loans Real Estate Other 414,484 7.1% Other Non-Residential Real Estate 65,590 1.1% Farm Land Under Production 63,838 1.1% Real Estate - Farm 27,410 0.5% Warehouse with or w
Slide 29: Strong Credit Culture Supported by High Levels of Reserves
Strong Credit Culture Supported by High Levels of Reserves 29 145% 184% 215% 404% 605% 388% 180% 183% 214% 194% 347% 724% 482% 2016 2017 2018 2019 2020 2021 2022Q2 QCRH Proxy Peers 1.28% 1.16% 1.07% 0.98% 1.98% 1.68% 1.59% 1.08% 1.04% 1.03% 0.95% 1.53% 1.46% 1.44% 2016 2017 2018 2019 2020 2021 2022Q
Slide 30: Asset Quality
Asset Quality 30 NPAs / Assets (%) NCOs / Average Loans (%) Focused on maintaining excellent asset quality and resolving problem assets, resulting in: • Better than peer historical loss rates • Conservative allowance for credit losses • Strategy to aggressively manage problem credits June 30th incre
Slide 31: Top Relationships
Top Relationships $ in thousasnds Industry Balance Rate Depositor 1 Municipal - General $165,058 0.32% Depositor 2 Municipal - Education $73,181 0.77% Depositor 3 Municipal - General $64,152 0.53% Depositor 4 Municipal - Education $59,106 0.55% Depositor 5 Individual $50,036 0.77% Depositor 6 Munici
Slide 32: Investment Portfolio
$800 $821 $803 $845 $926 3.66% 3.82% 3.70% 3.83% 3.91% 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2 Book Value of Securities ($ millions) Total Yield on Securities (%) Investment Portfolio 32 Muni 81% MBS 9% Corp 5% Agency 3% ABS 2% Other 0% Total Securities (Book Value): $926 Million Investment Portfolio Com
Slide 33: Interest Rate Sensitivity and NII
Interest Rate Sensitivity and NII 33 (8.0%) (3.0%) 2.0% 7.0% 12.0% 17.0% 22.0% -100bps Shock Base +100bps Shock +200bps Shock +300bps Shock +400bps Shock Year 1 Net Interest Income Changes - Parallel Shock Year 2 Net Interest Income Changes - Parallel Shock QCRH is asset-sensitive and poised to bene
Slide 34: Strong Capital Position
Strong Capital Position 34 QCRH is well-positioned for long-term success: • Significantly improved capital position • Sale of Rockford Bank & Trust in 2019 strengthened TCE • Sub-debt raises in Feb. 2019 and Sept. 2020 bolstered total risk-based capital • Lowest dividend payout ratio in peer group r
Slide 35: Liquidity, Capital, and Long-Term Debt Composition
Liquidity, Capital, and Long-Term Debt Composition 35 Maturity Balance Sheet Notional Borrowing Date Location Amount ($000) QCR Holdings Capital Trust V 7/7/2028 Other Liabilities $10,000 Community National Trust III 9/15/2028 Other Liabilities $3,500 Guaranty Bankshares Statutory Trust I 9/15/2028
Slide 36: Details of an Additional Issuance
Details of an Additional Issuance 36 ▪ Parallel with this proposed issuance, the Company is negotiating the issuance of an additional $50 million of fixed-to-floating rate subordinated notes with a 15 year maturity (callable after 10 years) structure to a single investor ▪ The fixed rate is expected
Slide 37: Summary
Summary Unique Operating Model Provides Competitive Advantage ▪ Local charter autonomy attracts the best bankers and clients ▪ Leading market position in attractive and growing mid-size metro markets Consistent Top Tier Financial Performance ▪ Upper quartile returns compared to proxy peers (1.35% re
Slide 38: QCR Holdings, Inc. Appendix
38 QCR Holdings, Inc. APPENDIX
Slide 39: Interest Coverage and Double Leverage
Interest Coverage and Double Leverage 39 $ in thousands Key Assumptions Subordinated Debt Issuance Amount $100,000 % Down Streamed to the Banks 0% Illustrative Coupon (10NC5 issuance) 5.500% Illustrative Coupon Single Investor (15NC10 issuance) 5.950% ($ in thousands) Consolidated Pro Forma Double L
Slide 40: Pro Forma Capital Ratios
Pro Forma Capital Ratios 40 June 30, 2022 Subordinated Debt June 30, 2022 ($ in thousands) Actual Issuance Pro Forma¹ Total Common Equity Capital $743,138 - $743,138 ( - ) Unrealized Gain/(Loss) on AFS Sec., net (50,074) - (50,074) ( - ) Deferred Tax Asset Adjustments 456 - 456 ( - ) Intangible Asse
Slide 41: Non-GAAP Reconciliation
Non-GAAP Reconciliation 41 For the Quarter Ended For the Six Months Ended, For the Year Ended December 31, ($ in thousands) June 30, 2022 June 30, 2022 2021 2020 2019 2018 2017 Adjusted Net Income Net Income (GAAP) $15,242 $38,866 $98,905 $60,582 $57,408 $43,120 $35,707 Less: non-core items (post-ta
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation 42 For the Quarter Ended For the Six Months Ended, For the Year Ended December 31, ($ in thousands) June 30, 2022 June 30, 2022 2021 2020 2019 2018 2017 Net Interest Margin (TEY) Net interest income (GAAP) $59,400 $105,133 $178,233 $166,950 $155,559 $142,395 $116,065 Plus: Ta
Slide 43: Non-GAAP Reconciliation
Non-GAAP Reconciliation 43 For the Quarter Ended For the Year Ended December 31, ($ in thousands) June 30, 2022 2021 2020 2019 2018 2017 Tangible Common Equity to Tangible Assets Ratio Stockholders' equity (GAAP) $743,138 $677,010 $593,793 $535,351 $473,138 $353,287 Less: Intangible assets $155,940
Slide 44: Contact Information
3551 Seventh Street Moline, IL 61265 www.QCRH.com © Copyright 2022 QCR Holdings, Inc. All Rights Reserved
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