QCR Holdings, Inc. Announces Net Income of $28.4 Million for the Second Quarter of 2023

Second Quarter 2023 Highlights

• Net income of $28.4 million, or $1.69 per diluted share
• Return on average assets of 1.44% and return on average total equity of 13.97%
• Annualized loan and lease growth of 12.2%
• Annualized core deposit growth, excluding brokered deposits, of 23.0%
• Uninsured and uncollateralized deposits further improved to 19.9% of total deposits
• Capital Markets Revenue grew $5.5 million, or 32.1%, to $22.5 million
• Tangible book value (non-GAAP) per share increased $1.28, or 13.2% annualized
• TCE ratio (non-GAAP) grew 7 basis points to 8.28%

MOLINE, Ill., July 26, 2023 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced net income of $28.4 million and diluted earnings per share (“EPS”) of $1.69 for the second quarter of 2023, compared to net income of $27.2 million and diluted EPS of $1.60 for the first quarter of 2023.

“We delivered outstanding second quarter results, highlighted by robust loan and core deposit growth, significant fee income and continued strong asset quality,” said Larry J. Helling, Chief Executive Officer. “In addition, we continued to improve upon our already solid capital levels with exceptional earnings performance.”

Robust Core Deposit Growth and Strengthened Liquidity

During the second quarter of 2023, the Company’s core deposits, which exclude brokered deposits, grew $339.3 million to a total of $6.2 billion, or 23.0% on an annualized basis. Total uninsured and uncollateralized deposits further improved during the second quarter and represented 19.9% of total deposits at quarter-end. The Company maintained approximately $1.5 billion of immediately available liquidity at quarter-end, which exceeds the total amount of uninsured and uncollateralized deposits.

“Our experienced bankers grew core deposits significantly during the quarter building upon our strong and diversified deposit franchise. As a result, our ratio of loans held for investment to deposits further improved to 92.1%,” added Mr. Helling. “We are very pleased with our level of uninsured and uncollateralized deposits and our strong liquidity position.”

Net Income of $28.4 Million and Diluted EPS of $1.69

Both reported and adjusted (non-GAAP) net income and diluted EPS for the second quarter of 2023 were $28.4 million and $1.69, respectively. For the first quarter of 2023, net income and diluted EPS was $27.2 million and $1.60, respectively while adjusted net income (non-GAAP) was $28.0 million and adjusted diluted EPS (non-GAAP) was $1.65. For the second quarter of 2022, net income and diluted EPS were $15.2 million and $0.87, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $30.4 million and $1.73, respectively.

	For the Quarter Ended
	June 30,		March 31,		June 30,
$ in millions (except per share data)	2023		2023		2022
Net Income	$	28.4	$	27.2	$	15.2
Diluted EPS	$	1.69	$	1.60	$	0.87
Adjusted Net Income (non-GAAP)*	$	28.4	$	28.0	$	30.4
Adjusted Diluted EPS (non-GAAP)*	$	1.69	$	1.65	$	1.73

*Adjusted non-GAAP measurements of financial performance exclude non-core and/or nonrecurring income and expense items that management believes are not reflective of the anticipated future operation of the Company’s business. The Company believes these measurements provide a better comparison for analysis and may provide a better indicator of future performance. See GAAP to non-GAAP reconciliations.

Net Interest Income of $53.2 Million

Net interest income for the second quarter of 2023 totaled $53.2 million, compared to $56.8 million for the first quarter of 2023 and $59.4 million for the second quarter of 2022. Adjusted net interest income (non-GAAP) during the quarter was $59.6 million, a decrease of $2.4 million from the prior quarter. Acquisition-related net accretion totaled $134 thousand for the second quarter of 2023, compared to $828 thousand in the first quarter.

In the second quarter of 2023, net interest margin (“NIM”) was 2.93% and NIM on a tax-equivalent yield (“TEY”) basis (non-GAAP) was 3.29%, compared to 3.18% and 3.52% in the prior quarter, respectively. Adjusted NIM TEY (non-GAAP) of 3.28% declined by 19 basis points from 3.47% in the first quarter.  

“Our adjusted tax-equivalent NIM declined 19 basis points during the second quarter which was inside of our guidance range,” said Todd A. Gipple, President and Chief Financial Officer. “With the inverted yield curve and the competitive deposit landscape, our net interest income was pressured despite continued loan growth and the ongoing expansion of loan yields. During the second quarter, we experienced an increase in the cost of funds as our deposit mix continued to shift from noninterest-bearing and lower beta deposits to higher beta deposits.”

Noninterest Income Grew 26% to $32.5 Million

Noninterest income for the second quarter of 2023 totaled $32.5 million, up 25.8% from $25.8 million for the first quarter of 2023. The Company generated $22.5 million of capital markets revenue in the quarter, an increase of $5.5 million, or 32.1% from the first quarter. Wealth management revenue was $3.8 million for the quarter, consistent with the prior quarter.

“Capital markets revenue was $22.5 million in the second quarter, up significantly from the first quarter and well ahead of our guidance range,” added Mr. Gipple. “Capital markets revenue from swaps continues to benefit from stabilization in the supply chain and construction costs. The demand for affordable housing continues to be strong. This source of fee income has been consistent for us over the last several years. Based on decades of stability in the low-income housing tax credit (“LIHTC”) industry and our own experience, we believe that this business is countercyclical and will be very resilient in future recessionary environments.”

Noninterest Expenses Remain Well-Controlled

Noninterest expense for the second quarter of 2023 totaled $49.7 million, which is a modest increase of only 1.9% from $48.8 million for the first quarter of 2023, and compared to $54.2 million for the second quarter of 2022. The linked-quarter increase was primarily due to higher variable compensation, increased Insured Cash Sweep (“ICS”) fees and FDIC insurance rates. These increases were partially offset by well-controlled salaries and employee benefits expenses.  

Exceptional Loan Growth of 12.2% Annualized

During the second quarter of 2023, the Company’s loans and leases grew $189.3 million to a total of $6.4 billion, or 12.2% on an annualized basis. “Our loan growth during the quarter was driven primarily by strength in our LIHTC lending business. Our clients continue to experience strong demand for their projects as the need for affordable housing exceeds supply in the markets they serve,” added Mr. Helling.

“We also experienced modest loan demand in the second quarter from our traditional commercial lending and leasing businesses. As a result, we are increasing our guidance for loan growth for the remainder of the year to be in the range of 9 to 12% on an annualized basis, which would result in a 0 to 3% growth rate on an annualized basis net of planned LIHTC loan securitizations. In the first quarter of 2023, we categorized $139.2 million of LIHTC loans as held for sale as part of a future loan securitization transaction. During the second quarter of 2023, we increased the size of our planned securitizations of LIHTC loans, adding an additional $151.8 of loans for a total of $291.1 million to achieve improved pricing and execution. We now expect to close on the transactions early in the fourth quarter,” said Mr. Helling.

Asset Quality Remains Excellent

“Our asset quality continues to be strong as the ratio of nonperforming assets to total assets was 0.32% at quarter-end and compares favorably to historical averages. We remain cautiously optimistic about the relative economic resiliency of our markets as unemployment is low and business activity is still healthy across our footprint,” said Mr. Helling.

Nonperforming assets (“NPAs”) increased modestly during the quarter to $26.1 million or 32 basis points of total assets. “Approximately half of the total dollar amount of NPAs consist of one relationship and we believe that this credit will be resolved without a loss,” added Mr. Helling. The Company’s criticized loans and classified loans to total loans and leases on June 30, 2023, improved to 2.84% and 1.00%, respectively, as compared to 3.16% and 1.14% as of March 31, 2023.

The Company recorded a total provision for credit losses of $3.6 million during the quarter which included $3.3 million of provision on loans/leases. As of June 30, 2023, the ACL to total loans/leases held for investment was 1.41%.

Continued Strong Capital Levels

As of June 30, 2023, the Company’s total risk-based capital ratio was 14.66%, the common equity tier 1 ratio was 9.71% and the tangible common equity to tangible assets ratio (non-GAAP) was 8.28%. By comparison, these respective ratios were 14.68%, 9.60% and 8.21% as of March 31, 2023. During the quarter, we repurchased a modest number of shares, as our priority has shifted to capital retention, targeting capital levels near the top of our peer group.

The Company’s tangible book value per share (non-GAAP) increased $1.28, or 13.2% annualized during the second quarter. Accumulated other comprehensive income (“AOCI”) declined $6.3 million during the quarter due to a decrease in the value of the Company’s available for sale securities portfolio and certain derivatives resulting from the change in interest rates during the second quarter. While the net decline in AOCI diluted the Company’s tangible common equity, strong earnings more than offset this impact, which led to the increase in tangible book value per share (non-GAAP).

Conference Call Details

The Company will host an earnings call/webcast tomorrow, July 27, 2023, at 10:00 a.m. Central Time. Dial-in information for the call is toll-free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be available for replay through August 3, 2023. The replay access information is 877-344-7529 (international 412-317-0088); access code 5035792. A webcast of the teleconference can be accessed on the Company’s News and Events page at www.qcrh.com. An archived version of the webcast will be available at the same location shortly after the live event has ended.

About Us
QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny and Springfield communities through its wholly owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018, and Guaranty Bank, also based in Springfield, Missouri, was acquired by the Company and merged with Springfield First Community Bank on April 1, 2022, with the combined entity operating under the Guaranty Bank name. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company offers equipment loans and leases to businesses through its wholly owned subsidiary, m2 Equipment Finance, LLC, based in Milwaukee, Wisconsin, and also provides correspondent banking services. The Company has 36 locations in Iowa, Missouri, Wisconsin and Illinois. As of June 30, 2023, the Company had $8.2 billion in assets, $6.4 billion in loans and $6.6 billion in deposits. For additional information, please visit the Company’s website at www.qcrh.com.

Special Note Concerning Forward-Looking Statements. This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “bode”, “predict,” “suggest,” “project”, “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should,” “likely,” “might,” “potential,” “continue,” “annualized,” “target,” “outlook,” as well as the negative forms of those words, or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economies(including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threats thereof (including the Russian invasion of Ukraine), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the FASB or the PCAOB; (iv) changes in local, state and federal laws, regulations and governmental policies concerning the Company’s general business and any changes in response to the recent failures of other banks; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out); (vi) increased competition in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies, and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or employees; (x) changes in consumer spending; (xi) unexpected outcomes of existing or new litigation involving the Company; (xii) the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; (xiii) fluctuations in the value of securities held in our securities portfolio; (xiv) concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients; (xv) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversity their exposure; (xvi) the level of non-performing assets on our balance sheets; (xvii) interruptions involving our information technology and communications systems or third-party servicers; (xviii) breaches or failures of our information security controls or cybersecurity-related incidents, and (xixi) the ability of the Company to manage the risks associated with the foregoing as well as anticipated.   These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

Contact:
Todd A. Gipple                                
President and Chief Financial Officer                        
(309) 743-7745                                
tgipple@qcrh.com

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
		2023			2023			2022			2022			2022
	(dollars in thousands)
CONDENSED BALANCE SHEET
Cash and due from banks	$	84,084		$	64,295		$	59,723		$	86,282		$	92,379
Federal funds sold and interest-bearing deposits		175,012			253,997			124,270			71,043			56,532
Securities, net of allowance for credit losses		882,888			877,446			928,102			879,450			879,918
Loans receivable held for sale (1)		295,057			140,633			1,480			3,054			1,186
Loans/leases receivable held for investment		6,084,263			6,049,389			6,137,391			6,005,556			5,796,717
Allowance for credit losses		(85,797	)		(86,573	)		(87,706	)		(90,489	)		(92,425	)
Intangibles		15,228			15,993			16,759			17,546			18,333
Goodwill		139,027			138,474			137,607			137,607			137,607
Derivatives		170,294			130,350			177,631			185,037			97,455
Other assets		466,617			452,900			453,580			434,963			405,239
Total assets	$	8,226,673		$	8,036,904		$	7,948,837		$	7,730,049		$	7,392,941
Total deposits	$	6,606,720		$	6,501,663		$	5,984,217		$	5,941,035		$	5,820,657
Total borrowings		418,368			417,480			825,894			701,491			583,166
Derivatives		195,841			150,401			200,701			209,479			113,305
Other liabilities		183,055			165,866			165,301			140,972			132,675
Total stockholders' equity		822,689			801,494			772,724			737,072			743,138
Total liabilities and stockholders' equity	$	8,226,673		$	8,036,904		$	7,948,837		$	7,730,049		$	7,392,941
ANALYSIS OF LOAN PORTFOLIO
Loan/lease mix:
Commercial and industrial - revolving	$	304,617		$	307,612		$	296,869		$	332,996		$	322,258
Commercial and industrial - other		1,402,553			1,420,331			1,451,693			1,415,996			1,403,689
Total commercial and industrial		1,707,170			1,727,943			1,748,562			1,748,992			1,725,947
Commercial real estate, owner occupied		609,717			616,922			629,367			627,558			628,565
Commercial real estate, non-owner occupied		963,814			982,716			963,239			920,876			889,530
Construction and land development*		1,307,766			1,208,185			1,192,061			1,149,503			1,080,372
Multi-family*		1,100,794			969,870			963,803			933,118			860,742
Direct financing leases		32,937			35,373			31,889			33,503			40,050
1-4 family real estate		535,405			532,491			499,529			487,508			473,141
Consumer		121,717			116,522			110,421			107,552			99,556
Total loans/leases	$	6,379,320		$	6,190,022		$	6,138,871		$	6,008,610		$	5,797,903
Less allowance for credit losses		85,797			86,573			87,706			90,489			92,425
Net loans/leases	$	6,293,523		$	6,103,449		$	6,051,165		$	5,918,121		$	5,705,478
*The LIHTC lending business is a significant part of the Company's Construction and Multi-family loans. For the quarter ended June 30, 2023, the  LIHTC portion of the Construction loans was $870 million, or 67%, and the LIHTC portion of the Multi-family loans was $820 million, or 75%.
ANALYSIS OF SECURITIES PORTFOLIO
Securities mix:
U.S. government sponsored agency securities	$	18,942		$	19,320		$	16,981		$	20,527		$	20,448
Municipal securities		743,608			731,689			779,450			724,204			710,638
Residential mortgage-backed and related securities		60,958			63,104			66,215			68,844			81,247
Asset backed securities		17,393			17,967			18,728			19,630			19,956
Other securities		43,156			46,535			46,908			46,443			47,827
Total securities	$	884,057		$	878,615		$	928,282		$	879,648		$	880,116
Less allowance for credit losses		1,169			1,169			180			198			198
Net securities	$	882,888		$	877,446		$	928,102		$	879,450		$	879,918
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand deposits	$	1,101,605		$	1,189,858		$	1,262,981		$	1,315,555		$	1,514,005
Interest-bearing demand deposits		4,374,847			4,033,193			3,875,497			3,904,303			3,758,566
Time deposits		765,801			679,946			744,593			672,133			540,074
Brokered deposits		364,467			598,666			101,146			49,044			8,012
Total deposits	$	6,606,720		$	6,501,663		$	5,984,217		$	5,941,035		$	5,820,657
ANALYSIS OF BORROWINGS
Borrowings mix:
Term FHLB advances	$	135,000		$	135,000		$	-		$	-		$	-
Overnight FHLB advances		-			-			415,000			335,000			400,000
Other short-term borrowings		1,850			1,100			129,630			85,180			1,070
Subordinated notes		232,852			232,746			232,662			232,743			133,562
Junior subordinated debentures		48,666			48,634			48,602			48,568			48,534
Total borrowings	$	418,368		$	417,480		$	825,894		$	701,491		$	583,166
(1) Loans with a fair value of $291.0 million, have been identified for securitization and are included in LHFS at June 30, 2023.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
		For the Quarter Ended
		June 30,		March 31,			December 31,			September 30,		June 30,
			2023		2023			2022			2022		2022
		(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income		$	98,377	$	94,217		$	94,037		$	79,267	$	68,205
Interest expense			45,172		37,407			28,819			18,498		8,805
Net interest income			53,205		56,810			65,218			60,769		59,400
Provision for credit losses (1)			3,606		3,928			-			-		11,200
Net interest income after provision for credit losses		$	49,599	$	52,882		$	65,218		$	60,769	$	48,200
Trust department fees		$	2,844	$	2,906		$	2,644		$	2,537	$	2,497
Investment advisory and management fees			986		879			918			921		983
Deposit service fees			2,034		2,028			2,142			2,214		2,223
Gain on sales of residential real estate loans			500		312			468			641		809
Gain on sales of government guaranteed portions of loans			-		30			50			50		-
Capital markets revenue			22,490		17,023			11,338			10,545		13,004
Securities gains (losses), net			12		(463	)		-			-		-
Earnings on bank-owned life insurance			838		707			755			605		350
Debit card fees			1,589		1,466			1,500			1,453		1,499
Correspondent banking fees			356		391			257			189		244
Loan related fee income			770		651			614			652		682
Fair value gain (loss) on derivatives			83		(427	)		(267	)		904		432
Other			18		339			800			384		59
Total noninterest income		$	32,520	$	25,842		$	21,219		$	21,095	$	22,782
Salaries and employee benefits		$	31,459	$	32,003		$	32,594		$	29,175	$	29,972
Occupancy and equipment expense			6,100		5,914			6,027			6,033		5,978
Professional and data processing fees			4,078		3,514			3,769			4,477		4,365
Acquisition costs			-		-			(424	)		315		1,973
Post-acquisition compensation, transition and integration costs			-		207			668			62		4,796
FDIC insurance, other insurance and regulatory fees			1,927		1,374			1,605			1,497		1,394
Loan/lease expense			652		556			411			390		761
Net cost of (income from) and gains/losses on operations of other real estate			-		(67	)		(117	)		19		59
Advertising and marketing			1,735		1,237			1,562			1,437		1,198
Communication and data connectivity			471		665			587			639		584
Supplies			281		305			337			289		237
Bank service charges			621		605			563			568		610
Correspondent banking expense			221		210			210			218		213
Intangibles amortization			765		766			787			787		787
Payment card processing			542		545			599			477		626
Trust expense			337		214			166			227		195
Other			538		737			353			1,136		500
Total noninterest expense		$	49,727	$	48,785		$	49,697		$	47,746	$	54,248
Net income before income taxes		$	32,392	$	29,939		$	36,740		$	34,118	$	16,734
Federal and state income tax expense			3,967		2,782			5,834			4,824		1,492
Net income		$	28,425	$	27,157		$	30,906		$	29,294	$	15,242
Basic EPS		$	1.70	$	1.62		$	1.83		$	1.73	$	0.88
Diluted EPS		$	1.69	$	1.60		$	1.81		$	1.71	$	0.87
Weighted average common shares outstanding			16,701,950		16,776,289			16,855,973			16,900,968		17,345,324
Weighted average common and common equivalent shares outstanding			16,799,527		16,942,132			17,047,976			17,110,691		17,549,107
(1) Provision for credit losses for the quarter ended June 30, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD loans and $1.4 million related to acquired Guaranty Bank OBS exposures.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
		For the Six Months Ended
		June 30,				June 30,
			2023				2022
		(dollars in thousands, except per share data)
INCOME STATEMENT
Interest income		$	192,594			$	119,267
Interest expense			82,579				14,134
Net interest income			110,015				105,133
Provision for credit losses (1)			7,534				8,284
Net interest income after provision for loan/lease losses		$	102,481			$	96,849
Trust department fees		$	5,750			$	5,460
Investment advisory and management fees			1,865				2,019
Deposit service fees			4,062				3,778
Gain on sales of residential real estate loans			812				1,302
Gain on sales of government guaranteed portions of loans			30				19
Swap fee income/capital markets revenue			39,513				19,426
Securities losses, net			(451	)			-
Earnings on bank-owned life insurance			1,545				696
Debit card fees			3,055				2,506
Correspondent banking fees			747				521
Loan related fee income			1,421				1,162
Fair value gain (loss) on derivatives			(344	)			1,338
Other			357				188
Total noninterest income		$	58,362			$	38,415
Salaries and employee benefits		$	63,462			$	53,599
Occupancy and equipment expense			12,014				9,915
Professional and data processing fees			7,592				8,036
Acquisition costs			-				3,824
Post-acquisition compensation, transition and integration costs			207				4,796
FDIC insurance, other insurance and regulatory fees			3,301				2,704
Loan/lease expense			1,208				1,028
Net cost of (income from) and gains/losses on operations of other real estate			(67	)			58
Advertising and marketing			2,972				1,959
Communication			1,136				987
Supplies			586				483
Bank service charges			1,226				1,151
Correspondent banking expense			431				412
Intangibles amortization			1,531				1,280
Payment card processing			1,087				888
Trust expense			551				382
Other			1,275				1,071
Total noninterest expense		$	98,512			$	92,573
Net income before income taxes		$	62,331			$	42,691
Federal and state income tax expense			6,749				3,825
Net income		$	55,582			$	38,866
Basic EPS		$	3.32			$	2.36
Diluted EPS		$	3.29			$	2.33
Weighted average common shares outstanding			16,739,120				16,485,218
Weighted average common and common equivalent shares outstanding			16,870,830				16,700,682
(1) Provision for credit losses for the six months ended June 30, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD loans and $1.4 million related to acquired Guaranty Bank OBS exposures.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
	As of and for the Quarter Ended																For the Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,				June 30,			June 30,
	2023			2023			2022			2022			2022				2023			2022
	(dollars in thousands, except per share data)
COMMON SHARE DATA
Common shares outstanding		16,713,853			16,713,775			16,795,942			16,885,485			17,064,347
Book value per common share (1)	$	49.22		$	47.95		$	46.01		$	43.65		$	43.55
Tangible book value per common share (Non-GAAP) (2)	$	39.99		$	38.71		$	36.82		$	34.46		$	34.41
Closing stock price	$	41.03		$	43.91		$	49.64		$	50.94		$	53.99
Market capitalization	$	685,769		$	733,902		$	833,751		$	860,147		$	921,304
Market price / book value		83.36	%		91.57	%		107.90	%		116.70	%		123.97	%
Market price / tangible book value		102.59	%		113.43	%		134.83	%		147.81	%		156.90	%
Earnings per common share (basic) LTM (3)	$	6.89		$	6.06		$	5.95		$	5.86		$	6.14
Price earnings ratio LTM (3)		5.96 x			7.24 x			8.35 x			8.70 x			8.79 x
TCE / TA (Non-GAAP) (4)		8.28	%		8.21	%		7.93	%		7.68	%		8.11	%
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Beginning balance	$	801,494		$	772,724		$	737,072		$	743,138		$	667,924
Net income		28,425			27,157			30,906			29,294			15,242
Other comprehensive income (loss), net of tax		(6,336	)		9,325			9,959			(24,783	)		(24,286	)
Common stock cash dividends declared		(1,003	)		(1,010	)		(1,013	)		(1,012	)		(1,059	)
Issuance of 2,071,291 shares of common stock as a result of the acquisition of Guaranty Federal Bancshares		-			-			-			-			117,214
Repurchase and cancellation of shares of common stock as a result of a share repurchase program		(967	)		(7,719	)		(5,037	)		(10,485	)		(33,016	)
Other (5)		1,076			1,017			837			920			1,119
Ending balance	$	822,689		$	801,494		$	772,724		$	737,072		$	743,138
REGULATORY CAPITAL RATIOS (6):
Total risk-based capital ratio		14.66	%		14.68	%		14.28	%		14.38	%		13.40	%
Tier 1 risk-based capital ratio		10.36	%		10.27	%		9.95	%		9.88	%		10.18	%
Tier 1 leverage capital ratio		10.06	%		9.73	%		9.61	%		9.56	%		9.61	%
Common equity tier 1 ratio		9.71	%		9.60	%		9.29	%		9.21	%		9.46	%
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets (annualized)		1.44	%		1.37	%		1.58	%		1.53	%		0.83	%			1.42	%		1.16	%
Return on average total equity (annualized)		13.97	%		13.67	%		16.32	%		15.39	%		7.74	%			13.91	%		10.55	%
Net interest margin		2.93	%		3.18	%		3.62	%		3.46	%		3.53	%			3.05	%		3.43	%
Net interest margin (TEY) (Non-GAAP)(7)		3.29	%		3.52	%		3.93	%		3.71	%		3.74	%			3.40	%		3.63	%
Efficiency ratio (Non-GAAP) (8)		58.01	%		59.02	%		57.50	%		58.32	%		66.01	%			58.51	%		64.49	%
Gross loans and leases / total assets		77.54	%		77.02	%		77.23	%		77.73	%		78.42	%			77.54	%		78.42	%
Gross loans and leases / total deposits		96.56	%		95.21	%		102.58	%		101.14	%		99.61	%			96.56	%		99.61	%
Effective tax rate		12.25	%		9.29	%		15.88	%		14.14	%		8.92	%			10.83	%		8.96	%
Full-time equivalent employees (9)		1009			969			973			956			968				1009			968
AVERAGE BALANCES
Assets	$	7,924,597		$	7,906,830		$	7,800,229		$	7,652,463		$	7,324,470			$	7,915,763		$	6,723,137
Loans/leases		6,219,980			6,165,115			6,043,359			5,916,100			5,711,471				6,192,700			5,222,193
Deposits		6,292,481			6,179,644			6,029,455			5,891,198			5,867,444				6,236,374			5,388,062
Total stockholders' equity		816,882			794,685			757,419			761,428			788,204				805,845			736,452
(1) Includes accumulated other comprehensive income (loss).
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets. See GAAP to Non-GAAP reconciliations.
(3) LTM : Last twelve months.
(4) TCE / TCA : tangible common equity / total tangible assets. See GAAP to non-GAAP reconciliations.
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.
(6) Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release.
(7) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.
(8) See GAAP to Non-GAAP reconciliations.
(9) The increase in full-time equivalent employees in the second quarter of 2023 includes 19 summer interns.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
ANALYSIS OF NET INTEREST INCOME AND MARGIN
		For the Quarter Ended
		June 30, 2023							March 31, 2023							June 30, 2022
		Average Balance		Interest Earned or Paid		Average Yield or Cost			Average Balance		Interest Earned or Paid		Average Yield or Cost			Average Balance		Interest Earned or Paid		Average Yield or Cost
		(dollars in thousands)
Fed funds sold		$	16,976	$	223	5.27	%		$	19,275	$	234	4.93	%		$	5,896	$	12	0.83	%
Interest-bearing deposits at financial institutions			90,814		1,123	4.96	%			73,584		821	4.53	%			67,254		169	1.01	%
Investment securities - taxable			342,991		3,693	4.30	%			332,640		3,366	4.05	%			346,440		3,090	3.56	%
Investment securities - nontaxable (1)			577,494		6,217	4.31	%			619,225		6,791	4.39	%			573,868		5,912	4.12	%
Restricted investment securities			35,031		506	5.71	%			37,766		513	5.43	%			37,166		485	5.16	%
Loans (1)			6,219,980		93,159	6.01	%			6,165,115		88,548	5.82	%			5,711,471		61,932	4.35	%
Total earning assets (1)		$	7,283,286	$	104,921	5.78	%		$	7,247,605	$	100,273	5.60	%		$	6,742,095	$	71,600	4.26	%
Interest-bearing deposits		$	3,965,592	$	27,227	2.75	%		$	4,067,405	$	23,776	2.37	%		$	3,791,595	$	4,478	0.47	%
Time deposits			1,190,440		11,219	3.78	%			869,912		6,003	2.80	%			529,675		1,047	0.79	%
Short-term borrowings			1,980		34	6.82	%			7,573		99	5.28	%			1,404		3	0.78	%
Federal Home Loan Bank advances			211,593		2,653	4.96	%			296,333		3,521	4.75	%			286,484		780	1.08	%
Subordinated debentures			232,782		3,303	5.68	%			232,679		3,311	5.69	%			133,529		1,816	5.44	%
Junior subordinated debentures			48,647		738	6.00	%			48,613		696	5.72	%			46,536		680	5.78	%
Total interest-bearing liabilities		$	5,651,034	$	45,174	3.20	%		$	5,522,515	$	37,406	2.74	%		$	4,789,223	$	8,804	0.74	%
Net interest income (1)				$	59,747						$	62,867						$	62,796
Net interest margin (2)						2.93	%						3.18	%						3.53	%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.29	%						3.52	%						3.74	%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.28	%						3.47	%						3.64	%
		For the Six Months Ended
		June 30, 2023							June 30, 2022
		Average Balance		Interest Earned or Paid		Average Yield or Cost			Average Balance		Interest Earned or Paid		Average Yield or Cost
		(dollars in thousands)
Fed funds sold		$	18,119	$	457	5.09	%		$	5,234	$	14	0.53	%
Interest-bearing deposits at financial institutions			82,246		1,945	4.77	%			68,285		204	0.60	%
Investment securities - taxable			337,844		7,059	4.17	%			861,610		16,683	3.87	%
Investment securities - nontaxable (1)			598,244		13,009	4.35	%
Restricted investment securities			36,391		1,018	5.56	%			29,716		766	5.13	%
Loans (1)			6,192,700		181,707	5.92	%			5,222,193		107,927	4.17	%
Total earning assets (1)		$	7,265,544	$	205,195	5.69	%		$	6,187,038	$	125,594	4.09	%
Interest-bearing deposits		$	4,016,217	$	51,003	2.56	%		$	3,511,396	$	6,816	0.39	%
Time deposits			1,031,062		17,222	3.37	%			464,647		1,846	0.80	%
Short-term borrowings			4,642		132	5.75	%			1,676		3	0.36	%
Federal Home Loan Bank advances			253,729		6,174	4.84	%			186,685		863	0.92	%
Subordinated debentures			232,731		6,615	5.68	%			123,753		3,370	5.45	%
Junior subordinated debentures			48,630		1,433	5.86	%			42,376		1,236	5.80	%
Total interest-bearing liabilities		$	5,587,011	$	82,579	2.97	%		$	4,330,533	$	14,134	0.66	%
Net interest income (1)				$	122,616						$	111,460
Net interest margin (2)						3.05	%						3.43	%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.40	%						3.63	%
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3)						3.38	%						3.57	%
(1) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate.
(2) See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented.
(3) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
	As of
	June 30,			March 31,			December 31,			September 30,			June 30,
	2023			2023			2022			2022			2022
	(dollars in thousands, except per share data)
ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES ON LOANS/LEASES
Beginning balance	$	86,573		$	87,706		$	90,489		$	92,425		$	74,786
Initial ACL recorded for acquired PCD loans		-			-			-			-			5,902
Change in ACL for writedown of LHFS to fair value (1)		(2,277	)		(1,709	)		-			-			-
Credit loss expense (2)		3,313			2,458			1,013			331			12,141
Loans/leases charged off		(1,947	)		(2,275	)		(3,960	)		(2,489	)		(620	)
Recoveries on loans/leases previously charged off		135			393			164			222			216
Ending balance	$	85,797		$	86,573		$	87,706		$	90,489		$	92,425
NONPERFORMING ASSETS
Nonaccrual loans/leases	$	26,062		$	22,947		$	8,765		$	17,511		$	23,574
Accruing loans/leases past due 90 days or more		83			15			5			3			268
Total nonperforming loans/leases		26,145			22,962			8,770			17,514			23,842
Other real estate owned		-			61			133			177			205
Other repossessed assets		-			-			-			340			-
Total nonperforming assets	$	26,145		$	23,023		$	8,903		$	18,031		$	24,047
ASSET QUALITY RATIOS
Nonperforming assets / total assets		0.32	%		0.29	%		0.11	%		0.23	%		0.33	%
ACL for loans and leases / total loans/leases held for investment		1.41	%		1.43	%		1.43	%		1.51	%		1.59	%
ACL for loans and leases / nonperforming loans/leases		328.16	%		377.03	%		1000.07	%		516.67	%		387.66	%
Net charge-offs as a % of average loans/leases		0.03	%		0.03	%		0.06	%		0.04	%		0.01	%
INTERNALLY ASSIGNED RISK RATING (3)
Special mention (rating 6)	$	116,910		$	125,048		$	98,333		$	63,973		$	54,558
Substandard (rating 7)/Classified loans		63,956			70,866			66,021			77,317			83,048
Doubtful (rating 8)/Classified loans		-			-			-			-			-
Criticized loans (4)	$	180,866		$	195,914		$	164,354		$	141,290		$	137,606
Classified loans as a % of total loans/leases		1.00	%		1.14	%		1.08	%		1.29	%		1.43	%
Criticized loans as a % of total loans/leases		2.84	%		3.16	%		2.68	%		2.35	%		2.37	%
(1) Certain loans were identified for securitization and transferred from loans to LHFS. The fair value of the loans was less than its carrying value at the date of transfer, resulting in a charge to the loan ACL.
(2) Credit loss expense on loans/leases for the quarter ended June 30, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD loans.
(3) Amounts exclude the government guaranteed portion, if any. The Company assigns internal risk ratings of Pass (Rating 2) for the government guaranteed portion.
(4) Criticized loans are defined as C&I and CRE loans with internally assigned risk ratings of 6, 7, or 8, regardless of performance.
(5) Classified loans are defined as C&I and CRE loans with internally assigned risk ratings of 7 or 8, regardless of performance.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
				For the Quarter Ended												For the Six Months Ended
				June 30,				March 31,				June 30,				June 30,				June 30,
		SELECT FINANCIAL DATA - SUBSIDIARIES		2023				2023				2022				2023				2022
				(dollars in thousands)
		TOTAL ASSETS
		Quad City Bank and Trust (1)		$	2,611,832			$	2,548,473			$	2,122,852
		m2 Equipment Finance, LLC			322,838				317,497				289,451
		Cedar Rapids Bank and Trust			2,389,623				2,196,560				1,985,199
		Community State Bank			1,332,966				1,286,227				1,221,406
		Guaranty Bank			2,179,844				2,147,776				2,037,364
		TOTAL DEPOSITS
		Quad City Bank and Trust (1)		$	2,166,249			$	2,173,343			$	1,787,564
		Cedar Rapids Bank and Trust			1,791,861				1,663,138				1,495,665
		Community State Bank			1,073,907				1,086,531				1,006,836
		Guaranty Bank			1,653,299				1,646,730				1,539,978
		TOTAL LOANS & LEASES
		Quad City Bank and Trust (1)		$	1,925,162			$	1,872,029			$	1,737,812
		m2 Equipment Finance, LLC			328,479				321,495				293,435
		Cedar Rapids Bank and Trust			1,728,280				1,637,252				1,536,224
		Community State Bank			1,025,844				994,454				931,031
		Guaranty Bank			1,700,034				1,686,287				1,592,836
		TOTAL LOANS & LEASES / TOTAL DEPOSITS
		Quad City Bank and Trust (1)			89	%			86	%			97	%
		Cedar Rapids Bank and Trust			96	%			98	%			103	%
		Community State Bank			96	%			92	%			92	%
		Guaranty Bank			103	%			102	%			103	%
		TOTAL LOANS & LEASES / TOTAL ASSETS
		Quad City Bank and Trust (1)			74	%			73	%			82	%
		Cedar Rapids Bank and Trust			72	%			75	%			77	%
		Community State Bank			77	%			77	%			76	%
		Guaranty Bank			78	%			79	%			78	%
		ACL ON LOANS/LEASES AS A PERCENTAGE OF LOANS/LEASES
		Quad City Bank and Trust (1)			1.44	%			1.41	%			1.68	%
		m2 Equipment Finance, LLC			3.46	%			3.13	%			3.31	%
		Cedar Rapids Bank and Trust			1.41	%			1.50	%			1.58	%
		Community State Bank			1.27	%			1.38	%			1.57	%
		Guaranty Bank			1.22	%			1.29	%			1.53	%
		RETURN ON AVERAGE ASSETS
		Quad City Bank and Trust (1)			0.82	%			1.23	%			1.56	%			1.02	%			1.71	%
		Cedar Rapids Bank and Trust			3.52	%			3.07	%			2.72	%			3.30	%			2.48	%
		Community State Bank			1.42	%			1.49	%			1.12	%			1.46	%			1.27	%
		Guaranty Bank (7) (8)			0.97	%			1.02	%			0.20	%			0.99	%			0.56	%
		NET INTEREST MARGIN PERCENTAGE (2)
		Quad City Bank and Trust (1)			3.28	%			3.44	%			3.74	%			3.36	%			3.62	%
		Cedar Rapids Bank and Trust (3)			3.69	%			4.03	%			3.66	%			3.86	%			3.63	%
		Community State Bank (4)			3.90	%			3.99	%			3.67	%			3.94	%			3.65	%
		Guaranty Bank (5)			3.10	%			3.49	%			4.20	%			3.30	%			3.94	%
		ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET
		INTEREST MARGIN, NET
		Cedar Rapids Bank and Trust		$	-			$	(8	)		$	4			$	(8	)		$	55
		Community State Bank			(1	)			71				28			$	70				61
		Guaranty Bank			168				797				1,698			$	965				1,767
		QCR Holdings, Inc. (6)			(33	)			(32	)			(35	)		$	(65	)			(70	)
(1)		Quad City Bank and Trust amounts include m2 Equipment Finance, LLC, as this entity is wholly-owned and consolidated with the Bank. m2 Equipment Finance, LLC is also presented separately for certain (applicable) measurements.
(2)		Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% federal tax rate.
(3)		Cedar Rapids Bank and Trust's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.69% for the quarter ended June 30, 2023, 4.03% for the quarter ended March 31, 2023 and 3.62% for the quarter ended June 30, 2022.
(4)		Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.90% for the quarter ended June 30, 2023, 3.99% for the quarter ended March 31, 2023 and 3.66% for the quarter ended June 30, 2022.
(5)		Guaranty Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.11% for the quarter ended June 30, 2023, 3.39% for the quarter ended March 31, 2023 and 3.82% for the quarter ended June 30, 2022.
(6)		Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013.
(7)		Decrease for quarter ended and six months ended June 30, 2022 due to CECL Day 2 provision for credit losses of $12.4 million related to the acquisition of Guaranty Bank.
(8)		Adjusted ROAA excluding non-core adjustments for the Guaranty Bank acquisition (non-GAAP) would have been 2.12% for the quarter ended June 30, 2022 and 1.89% for the six months ended June 30, 2022.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
		As of
		June 30,				March 31,				December 31,				September 30,				June 30,
GAAP TO NON-GAAP RECONCILIATIONS		2023				2023				2022				2022				2022
		(dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)
Stockholders' equity (GAAP)		$	822,689			$	801,494			$	772,724			$	737,072			$	743,138
Less: Intangible assets			154,255				154,467				154,366				155,153				155,940
Tangible common equity (non-GAAP)		$	668,434			$	647,027			$	618,358			$	581,919			$	587,198
Total assets (GAAP)		$	8,226,673			$	8,036,904			$	7,948,837			$	7,730,049			$	7,392,941
Less: Intangible assets			154,255				154,467				154,366				155,153				155,940
Tangible assets (non-GAAP)		$	8,072,418			$	7,882,437			$	7,794,471			$	7,574,896			$	7,237,001
Tangible common equity to tangible assets ratio (non-GAAP)			8.28	%			8.21	%			7.93	%			7.68	%			8.11	%
(1) This ratio is a non-GAAP financial measure. The Company's management believes that this measurement is important to many investors in the marketplace who are interested in changes period-to-period in common equity. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to stockholders' equity and total assets, which are the most directly comparable GAAP financial measures.

QCR Holding, Inc.
Consolidated Financial Highlights
(Unaudited)
GAAP TO NON-GAAP RECONCILIATIONS		For the Quarter Ended																				For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,					June 30,
ADJUSTED NET INCOME (1)			2023				2023				2022				2022				2022				2023					2022
		(dollars in thousands, except per share data)
Net income (GAAP)		$	28,425			$	27,157			$	30,906			$	29,294			$	15,242			$	55,582				$	38,866
Less non-core items (post-tax) (2):
Income:
Securities gains (losses), net			9				(366	)			-				-				-				(356	)				-
Fair value gain (loss) on derivatives, net			66				(337	)			(211	)			714				342				(272	)				1,057
Total non-core income (non-GAAP)		$	75			$	(703	)		$	(211	)		$	714			$	342			$	(628	)			$	1,057
Expense:
Acquisition costs (2)			-				-				(517	)			321				1,932				-					3,394
Post-acquisition compensation, transition and integration costs			-				164				529				48				3,789				164					3,789
Separation agreement			-				-				-				-				-				-					-
CECL Day 2 provision for credit losses on acquired non-PCD loans (3)			-				-				-				-				8,651				-					8,651
CECL Day 2 provision for credit losses provision on acquired OBS exposure (3)			-				-				-				-				1,140				-					1,140
Total non-core expense (non-GAAP)		$	-			$	164			$	12			$	369			$	15,512			$	164				$	16,974
Adjusted net income (non-GAAP) (1)		$	28,350			$	28,024			$	31,129			$	28,949			$	30,412			$	56,374				$	54,783
ADJUSTED EARNINGS PER COMMON SHARE (1)
Adjusted net income (non-GAAP) (from above)		$	28,350			$	28,024			$	31,129			$	28,949			$	30,412			$	56,374				$	54,783
Weighted average common shares outstanding			16,701,950				16,776,289				16,855,973				16,900,968				17,345,324				16,739,120					16,485,218
Weighted average common and common equivalent shares outstanding			16,799,527				16,942,132				17,047,976				17,110,691				17,549,107				16,870,830					16,700,682
Adjusted earnings per common share (non-GAAP):
Basic		$	1.70			$	1.67			$	1.85			$	1.71			$	1.75			$	3.37				$	3.32
Diluted		$	1.69			$	1.65			$	1.83			$	1.69			$	1.73			$	3.34				$	3.28
ADJUSTED RETURN ON AVERAGE ASSETS AND AVERAGE EQUITY (1)
Adjusted net income (non-GAAP) (from above)		$	28,350			$	28,024			$	31,129			$	28,949			$	30,412			$	56,374				$	54,783
Average Assets		$	7,924,597			$	7,906,830			$	7,800,229			$	7,652,463			$	7,324,470			$	7,915,763				$	6,723,137
Adjusted return on average assets (annualized) (non-GAAP)			1.43	%			1.42	%			1.60	%			1.51	%			1.66	%			1.42	%				1.63	%
Adjusted return on average equity (annualized) (non-GAAP)			13.88	%			14.11	%			16.44	%			15.21	%			15.43	%			13.99	%				14.88	%
NET INTEREST MARGIN (TEY) (4)
Net interest income (GAAP)		$	53,205			$	56,810			$	65,218			$	60,769			$	59,400			$	110,015				$	105,133
Plus: Tax equivalent adjustment (5)			6,542				6,057				5,554				4,459				3,396				12,601					6,327
Net interest income - tax equivalent (Non-GAAP)		$	59,747			$	62,867			$	70,772			$	65,228			$	62,796			$	122,616				$	111,460
Less: Acquisition accounting net accretion			134				828				5,688				1,080				1,695				962					1,813
Adjusted net interest income		$	59,613			$	62,039			$	65,084			$	64,148			$	61,101			$	121,654				$	109,647
Average earning assets		$	7,283,286			$	7,247,605			$	7,148,578			$	6,975,857			$	6,742,095			$	7,265,544				$	6,187,038
Net interest margin (GAAP)			2.93	%			3.18	%			3.62	%			3.46	%			3.53	%			3.05	%				3.43	%
Net interest margin (TEY) (Non-GAAP)			3.29	%			3.52	%			3.93	%			3.71	%			3.74	%			3.40	%				3.63	%
Adjusted net interest margin (TEY) (Non-GAAP)			3.28	%			3.47	%			3.61	%			3.65	%			3.64	%			3.38	%				3.57	%
EFFICIENCY RATIO (6)
Noninterest expense (GAAP)		$	49,727			$	48,785			$	49,697			$	47,746			$	54,248			$	98,512				$	92,573
Net interest income (GAAP)		$	53,205			$	56,810			$	65,218			$	60,769			$	59,400			$	110,015				$	105,133
Noninterest income (GAAP)			32,520				25,842				21,219				21,095				22,782				58,362					38,415
Total income		$	85,725			$	82,652			$	86,437			$	81,864			$	82,182			$	168,377				$	143,548
Efficiency ratio (noninterest expense/total income) (Non-GAAP)			58.01	%			59.02	%			57.50	%			58.32	%			66.01	%			58.51	%				64.49	%
(1) Adjusted net income, adjusted earnings per common share, adjusted return on average assets and average equity are non-GAAP financial measures. The Company's management believes that these measurements are important to investors as they exclude non-core or non-recurring income and expense items, therefore, they provide a more realistic run-rate for future periods.
In compliance with applicable rules of the SEC, these non-GAAP measures are reconciled to net income, which is the most directly comparable GAAP financial measure.
(2) Non-core or nonrecurring items (post-tax) are calculated using an estimated effective federal tax rate of 21% with the exception of acquisition costs which have an estimated effective federal tax rate of 13.62%.
(3) The CECL Day 2 provision for credit losses on acquired non-PCD loans and OBS exposures resulted from the Guaranty Bank acquisition on April 1, 2022.
(4) Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% effective federal tax rate.
(5) Net interest margin (TEY) is a non-GAAP financial measure. The Company's management utilizes this measurement to take into account the tax benefit associated with certain loans and securities. It is also standard industry practice to measure net interest margin using tax-equivalent measures. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net interest income, which is the most directly comparable GAAP financial measure. In addition, the Company calculates net interest margin without the impact of acquisition accounting net accretion as this can fluctuate and it's difficult to provide a more realistic run-rate for future periods.
(6) Efficiency ratio is a non-GAAP measure. The Company's management utilizes this ratio to compare to industry peers. The ratio is used to calculate overhead as a percentage of revenue. In compliance with the applicable rules of the SEC, this non-GAAP measure is reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP financial measures.