2008 Annual Report

Transcription

2008 Annual Report

QCR Holdings, Inc. 2008 Annual Report
dynamic
that drives our results...
The
Our People.
A Relationship Driven Organization.
™
What is a relationship? When our clients are asked to describe the word, and the relationship that they have with our Company, most
often they use a number of synonyms like… Connection - Affinity - Link - Association - Kinship - Rapport - Friendship - Bond.
Our business model is based not on serving customers; rather, our mission is to
create meaningful and lasting relationships with our clients.
We accomplish this by making investments in outstanding people that
demonstrate an unwavering commitment to developing and nurturing longlasting relationships with our clients, and providing them with the best technology,
support and facilities to help them exceed client expectations.
This focus on relationships is at the very core of our competitive advantage and
has been the heartbeat of our rapid growth since 1994. As we commemorate our
15th year of operations, we celebrate the thousands of relationships that we have
created in the Quad Cities, Cedar Rapids and Rockford communities.
We have grown to more than $1.21 billion in loans and leases to businesses and
individuals in these markets and created deposit relationships of more than $1.06
billion. In doing so, our banks have become the trusted choice in their respective
communities. All of this was accomplished by executing on our mission of providing
financial services to businesses and individuals for whom relationships matter.
QCR Holdings, Inc. NET INCOME (In Thousands of Dollars)
$6,709
2008
2007
$5,777
2006
$2,802
2005
$4,810
2004
$5,217
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Key to executing on this mission is that each QCR Holdings bank is given the
autonomy to tailor products, services and decisions unique to the markets that
it serves, facilitating the customized relationship-based service that drives our
competitive advantage.
Our local bankers are supported by a QCRH Group Operations team that delivers
operational services and allows each bank to possess the resources of a much
larger financial institution. They are further aided by a Board of Directors at each
charter that consists of local community leaders who share this drive to make a
difference to our clients and the communities in which they live and work.
Staying true to this core strategy of delivering local decisions that impact our
clients, and delivering support services that do not impact clients, in a centralized
and efficient manner, has created a strong brand for each of our banks. In the
following pages you will experience the brands that our local bankers have created
– providing the foundation for our future success.
2008 was a significant year of change for our Company. We sharpened our
focus on serving the Quad Cities, Cedar Rapids and Rockford communities with
the sale of our credit card merchant acquiring business and our Milwaukee bank
charter. Doing so will allow us to execute on our strategic direction to harvest
our investments in people and facilities and generate significant improvements in
earnings per share for our stockholders.
Our talented bankers will continue to develop new relationships, and strengthen
existing ones, as we take market share from financial institutions that simply serve
customers and as QCR Holdings, Inc. continues to be a place where relationships
matter.
QCR Holdings, Inc. KEY TOTALS (In Millions of Dollars)
Total Assets
12.31.08
12.31.07
12.31.06
$1,606
$1,477
$1,272
Net Loans
12.31.08
$1,197
12.31.07
$1,046
12.31.06
$950
Total Deposits
$1,059
12.31.08
12.31.07
12.31.06
$884
$875
$800
2
3
A Relationship Driven Organization
™
$1,100
$1,400
$1,700
QCR Holdings, Inc. Directors and Senior Managers
Quad City Bank & Trust
|
Cedar Rapids Bank & Trust
QCR Holdings, Inc.
|
Rockford Bank & Trust
|
m2 Lease Funds
Larry J. Helling
Douglas M. Hultquist
QCR Holdings, Inc.
John R. Oakes
Vice President, Controller and Director of
Financial Reporting
Retired Executive, Deere & Company
Vice Chairman, QCR Holdings, Inc. and
Quad City Bank and Trust Company
Victor J. Quinn
Edwin A. Maxwell
Charles E. Box
Todd A. Gipple
John K. Lawson
President and Chief Executive Officer, QCR Holdings, Inc.
James J. Brownson
Chairman of the Board, QCR Holdings, Inc.
President, W.E. Brownson and Company
Anesthesia & Analgesia, P.C.
Linda K. Neuman
Michael A. Bauer
Attorney, Retired Iowa Supreme Court
Ronald G. Peterson
President, First State Bank of Illinois
Todd A. Gipple
Executive Vice President, Chief Operating Officer
and Chief Financial Officer, QCR Holdings, Inc. (nominee May 2009)
Charles A. Ruhl, Jr.
Larry J. Helling
Marc C. Slivken, D.D.S.
President, Ruhl & Ruhl Commercial Company
President and Chief Executive Officer,
Cedar Rapids Bank and Trust Company
F. Taylor Carlin
Executive Management Team
Directors
Retired CEO, Kimberly Park Dental
Chairman of the Board, Rockford Bank and Trust Company
Michael A. Bauer
Chairman, Illinois Commerce Commission
Retired Mayor of Rockford, Illinois
and Chief Financial Officer
Todd A. Gipple
John H. Anderson
and Chief Financial Officer, QCR Holdings, Inc.
Monica B. Glenny, CPA, CMA
President, Datacraft, Inc.
James P. Hamilton
President and Chief Executive Officer, Milestone, Inc.
Mark C. Kilmer
George T. Ralph
President, Republic Companies
John K. Lawson
Directors
Retired Executive, Deere & Company
Charles M. Peters
Larry J. Helling
Gazette Communications, Inc.
Ronald G. Peterson
Charles M. Peters
President, First State Bank of Illinois
Chairman of the Board, Cedar Rapids Bank and Trust Company
President and Chief Executive Officer, Gazette Communications, Inc.
John A. Rife
President, United Life Insurance Company
Dee L. Baird, Ph.D.
Executive Vice President,
Continuing Education and Training Services,
Kirkwood Community College
Donna J. Sorensen, J.D.
President, Sorensen Consulting (nominee May 2009)
John D. Whitcher
Patrick S. Baird
Managing Member, GTR Realty Advisors, LLC
M. Shawn Way
Marie Z. Ziegler
Michael A. Bauer
John R. Engelbrecht
Loren L. Coppock
Directors
President and Chief Executive Officer, m2 Lease Funds, LLC
Ron D. Orndorff
Managing Director, TrueNorth Companies, LLC
Chairman of the Board, m2 Lease Funds, LLC
Retired Chairman and President, M & I Leasing Corporation
Todd A. Gipple
Richard W. Couch
Senior Vice President, Director of Human Resources
James A. Tinker
James J. Brownson
President Emeritus, Mercycare Service Corporation
President, W.E. Brownson Company
Todd A. Gipple
Rockford Bank and Trust Company
Directors
John H. Harris, II
President, Isabel Bloom, LLC
Thomas D. Budd
Senior Vice President, Treasury Management
Rick J. Jennings
Senior Vice President, Senior Trust Officer
Jeffrey M. Lockwood
Executive Vice President, Chief Lending Officer
Peter J. McAndrews
Vice President, Real Estate Loans
Victor J. Quinn
Shellee R. Showalter
Senior Vice President, Chief Financial Officer
Cathie S. Whiteside
Group Operations Management Team
Corporate Strategy and Branding
Todd A. Gipple
Michael J. Wyffels
Vice President, Chief Technology Officer
Beth L. Easterla
Senior Managers
Assistant Vice President, Deposit Operations
and Electronic Banking Manager
Pamela J. Goodwin
Chief Financial Officer
Senior Vice President, Business Development
Lori L. Wazny
1st Vice President, Wealth Management
QCR Holdings, Inc.
Kathleen M. Francque
Christine D. Kennedy
Dale R. Shillady
David C. Howell
Executive Vice President, Operations and Cashier
Director, m2 Lease Funds, LLC
Senior Vice President, Retail Banking, Operations and Cashier
Vice President, Treasury Management
Corporate Strategy and Branding
Donna J. Sorensen, J.D.
Larry J. Helling
Senior Vice President, Chief Credit Officer
Brenda S. Nayonis
Therese K. Gerwe
Cathie S. Whiteside
Michael A. Bauer
President, Point Builders, LLC
Executive Vice President
Anthony A. Moczynski
Senior Vice President, Correspondent Banking
Executive Vice President, Chief Investment Officer
Jill A. DeKeyser
Frederick G. Timko
M. Shawn Way
1st Vice President, Private Banking
M. Randolph Westlund
Michael A. Hatfield
President and Chief Executive Officer
Laura L. Ekizian
Executive Vice President, Chief Credit Officer
John A. Rife
President, Sorensen Consulting
Thomas D. Budd
William M. Tank
Chairman of the Board, Quad City Bank and Trust Company
President, Republic Companies
Senior Managers
Deposit Operations and Information Services
Retired Senior Vice President and Secretary,
M & I – Marshall & Ilsley Corporation
Senior Vice President, Private Banking
John H. Anderson
John A. Rodriguez
President, Smulekoff Investment Co.
President, Smulekoff’s Furniture
President, United Life Insurance Company
Shelly A. Strellner
Larry J. Helling
Mark C. Kilmer
Senior Vice President, Operations and Cashier
Senior Managers
m2 Lease Funds, LLC
Ann M. Lipsky
Todd A. Gipple
Senior Vice President, Credit Administration
John A. Rodriguez
Vice President, Chief Technology Officer
John R. Engelbrecht
Chief Operating Officer
Dana L. Nichols
Jill A. DeKeyser
John H. Anderson
Senior Vice President, Commercial Banking
Michael J. Wyffels
Robert J. Wimmer
Directors & Senior Managers
Vice President, Investor Relations, Deere & Company
Thomas D. Budd
Kathleen M. Francque
President and Chief Executive Officer, AEGON USA, Inc.
J. Mitchell McElree
Senior Vice President,
Director of Finance and Budgeting
Victor J. Quinn
m2 Lease Funds, LLC
Deborah J. Lindberg Gertsen
Senior Vice President, Trust and Investments
Shellee R. Showalter
Director of Funds Management
Aqua-Aerobic Systems, Inc.
Senior Vice President, Retail Banking
Executive Vice President, Deposit Operations
and Information Services
John D. Whitcher
Vice President and General Counsel,
Viking Chemical Company
James D. Klein
John A. Rodriguez
Jill A. DeKeyser
Senior Vice President, Residential Real Estate
Director of Funds Management
Executive Vice President and Chief Lending Officer,
QCR Holdings, Inc.
Vice President and General Counsel,
Viking Chemical Company
Jean M. Hartman
Larry J. Helling
Senior Vice President, Correspondent Banking
Gary M. Becker
Senior Vice President, Commercial Banking
Assistant Vice President, Loan Operations Manager
Patricia L. Ellison
Shawna M. Graham
Senior Vice President, Credit Administration
Senior Vice President, Director of Risk Management
R. Timothy Harding
Senior Vice President, Director of Internal Audit
4
5
™
To Our Shareholders,
Even the best and brightest minds on Wall Street
and in Washington, D.C. could not predict what
we have seen in 2008. As you know from reading
newspapers and watching the news, this has been
the most difficult year in the financial markets in
decades. Before we discuss our financial results
for 2008, it only seems appropriate to list some
of the significant events that occurred outside of
our Company, that served to form the landscape in
which we are operating.
• Key financial companies have failed or have been taken over
such as Bear Stearns, Countrywide, Lehman Brothers, Merrill
Lynch, Washington Mutual, Wachovia, and IndyMac.
• The Midwest experienced a 500 year flood and Cedar
Rapids was the most impacted community.
• AIG is essentially under the control of the government.
• The Treasury announced a capital purchase plan for healthy banks.
• Bank of America and Citigroup continue to ask
for more money from the government.
credit card acquiring business. The resulting gain
on sale, net of taxes and related expenses, was
approximately $3.0 million and $0.65 per share,
which was a significant contributor to 2008 earnings. The current and comparative financial results
associated with the merchant credit card acquiring
business have been reflected as discontinued operations.
On December 31, 2008, we finalized the sale of our
Milwaukee subsidiary, First Wisconsin Bank & Trust,
for approximately $13.7 million which resulted in a
gain, net of taxes and related expenses, of approximately $400 thousand or $0.08 per share. The current and comparative financial results associated
with First Wisconsin Bank & Trust have also been
reflected as discontinued operations.
Our earnings from continuing operations were
$5.0 million and $6.5 million for the years ended December 31, 2008 and 2007, respectively.
our talented employees to continue to perform on
our relationship-based banking model has been a
key to our success.
The Company and all three subsidiary banks continue to be well capitalized as of December 31,
2008 and we have adequate access to liquidity.
While many banks experienced losses and reductions in their regulatory capital during 2008, we
were profitable and actually added nearly $5 million, or 5%, to our stockholders’ equity. We applied
for and received approval for an investment of
$38.24 million in capital under the Treasury Capital Purchase Program. We received this funding in
mid-February of 2009. Given the uncertainty that
our entire country faces over the severity and duration of the current economic recession, we believe
it is prudent to continue to maintain high levels of
capital during these challenging times. Our board
of directors has concluded that the additional capital raised through Treasury’s capital program is cost
Despite the economic recession and its impact on our provision expense, we were able
to achieve solid core earnings for the year. Earnings from continuing operations before
loan loss provision and taxes totaled $15.9 million for 2008, which was an increase of
$4.2 million, or 36%, from $11.7 million for 2007. This continued success in core earnings is a direct result of our bankers’ strong focus on customer relationships.
• Emergency loans were made to the auto industry.
• FNMA and Freddie Mac were placed in
government conservatorship.
• Global equity market capitalization fell 53% from
October 2007 through the end of 2008.
• The NASDAQ Bank Index was down 21.54% in 2008.
Can you imagine predicting all of this a year ago?
With these events as our backdrop, let us now take
a look at our QCR Holdings, Inc. results.
Our earnings for the year ended December 31, 2008
were $6.7 million, or diluted earnings per share for
common shareholders of $1.06, compared to earnings of $5.8 million or $1.02 in diluted earnings per
share for 2007. These results reflect an increase in
earnings of $932 thousand over 2007, or 16%, and
an increase in diluted earnings per share of $0.04.
During 2008, our total assets increased nearly
9%, or $129.1 million, to $1.61 billion from $1.48
billion at December 31, 2007. During this same
period, loans/leases increased at a rate of 15%, or
$157.7 million, to $1.21 billion from $1.06 billion
at December 31, 2007. Total deposits increased by
20%, or $175.0 million to $1.06 billion at December 31, 2008 from $884.0 million at December 31,
2007. Stockholders’ equity increased $4.6 million
to $90.6 million as of December 31, 2008, as compared to $86.1 million at December 31, 2007.
During the third quarter, our wholly owned subsidiary, Quad City Bancard, Inc., sold its merchant
6
Diluted earnings per share from continuing operations decreased from $1.18 to $0.69. The reduction
in 2008 earnings from continuing operations was
due to the significant increase in provision for loan/
lease losses of $6.9 million. Helping to offset this
increased provision expense was a dramatic increase in net interest income of $9.9 million, or 28%,
from $35.0 million for the year ended December
31, 2007 to $44.9 million for the year ending December 31, 2008. Additionally, net interest margin
improved significantly as it increased a total of 40
basis points from 2.92% to 3.32%.
We are pleased with the sustained improvement in
our net interest margin. With the unprecedented
and continued volatility in the interest rate environment, the pressure on margin has been experienced across our industry. Our management
teams and talented bankers have worked very
hard to successfully grow and strengthen our balance sheets and customer base to drive improved
margins and growth in net interest income.
Our focus on relationships fuels the continued
growth in market share that we have experienced
in the Quad Cities, Cedar Rapids, and Rockford
communities. Strategic employee additions and
enhancement in our systems over the years have
helped to drive this growth. A concerted effort by
effective and will be beneficial to our Company, as
well as our clients, stockholders, and employees.
Consistent with the intent of the Treasury Capital Purchase Program, we believe this additional
capital will enhance our capacity to support the
communities we serve through additional lending
opportunities.
Nonperforming assets at December 31, 2008 were
$23.8 million, which was an increase of $16.3 million from $7.5 million at December 31, 2007, resulting in an increase in the level of non-performing
assets at the end of 2008, to 1.48% of total assets,
as compared to 0.51% of total assets at the end of
2007. Of this increase, $12.3 million was attributable to five specific commercial credits. Management has thoroughly reviewed these loans and
has provided specific reserves as appropriate. The
Company’s allowance for loan/lease losses to total
loans/leases increased to 1.47% at December 31,
2008 from 1.23% at September 30, 2008, and from
1.07% at December 31, 2007. Furthermore, the
Company’s provision for loan/lease losses totaled
$9.2 million for 2008 which was an increase of $6.9
million from 2007.
The significant increase in provision expense was
the primary reason for our reduced earnings from
We now know all too well that neither is the case.
Credit has been way too easy and too cheap for too
long. We hope that the government does not continue to believe that the road to recovery is requiring banks to over-lend so that Americans can overspend. That is precisely what caused this malaise,
and encouraging savings and a slow and steady
recovery makes much more sense. We believe that
2009 will be an even greater challenge than 2008,
and as a result, our focus is as follows:
continuing operations in 2008. There were three
specific factors driving this increase. First, we grew
our loan portfolio 15% during 2008. Second, due
to the economic recession and the related uncertainty, management increased the qualitative factors impacting the allowance for loan/lease losses
as we continue to carefully review these factors to
insure the economic risk within our loan portfolio
is appropriately quantified and reserved. Consistent with this approach, throughout the year, we’ve
increased the qualitative factors for the local and
national economy as needed. Third, we experienced some degradation on specific commercial
credits within our portfolio that required specific
reserves. Maintaining credit quality during this
economic downturn is our top priority and management frequently monitors the Company’s loan/
lease portfolio and the level of allowance for loan/
lease losses.
CRBT
RB&T
m2
$ 84
2008
$ 909
$ 468
$ 228
861
384
158
71
2006
827
343
91
56
2008
$ 671
$ 355
$ 192
$ 81
639
290
130
69
2006
633
245
69
54
2008
$ 573
$ 310
$ 180
N/A
507
259
120
N/A
2006
547
244
70
N/A
2008
$8,156
$3,113
$(1,607)
$ 784
8,502
2,385
( 850)
1,421
2006
6,290
1,636
(1,106)
876
- We are obligated to support the communities we serve and our industry
While Mike is retiring as an Officer and Board Member of QCR Holdings, Inc., he will remain a consultant and a board member at Quad City Bank &
Trust and at Rockford Bank & Trust. Please join us
in tipping our caps to Mike for a job well done and
best wishes on a very enjoyable and successful
retirement.
Thank you for your support and confidence. Obviously, we never imagined operating in such an environment. We will work hard and conservatively
to protect your investment in hopes that we will
be well positioned to succeed when the financial
markets return to favor. Our goal is to be a pillar
of strength.
• As John Wooden stated, “Things work out best for those
who make the best of the way things work out.”
The Treasury, FDIC and Federal Reserve have
worked overtime to attempt to solve the financial
crisis. We give them credit for their courage to act.
The Treasury believed that it could not allow the
financial system to fail and while the steps to accomplish this will forever be debated, they had to
move in a significant way. The FDIC has expanded
its deposit guarantee to $250,000 and for some
accounts, the guarantee is unlimited. The Fed has
dropped interest rates to close to zero in hopes
of freeing up credit.
Todd A. Gipple
The best part of our jobs is that we have the
opportunity to work with 360 talented and
hard working individuals who do their best
each day to serve each other and our clients.
As you are aware from previous communications, our
co-founder, Mike Bauer
will be retiring this May.
Needless to say, he never
imagined he would
be leaving at such an
incredible time in the
banking industry. Under Mike’s guidance,
we are well poised to
weather this storm.
Net Income (Loss) (thousands)
2007
- Balance in life is important
• Be extra sensitive to employee morale and
clients needs during these difficult times
Deposits (millions)
2007
- Decisions were made only after we had all the facts
• Put our Treasury capital to good use and guard
all of our capital as a precious commodity
Gross Loans/Leases (millions)
2007
- He gave everyone the ‘benefit of the doubt’
• Continue to improve our strong liquidity position
Assets (millions)
2007
- Outstanding customer service was his mantra
• Relentlessly monitor and manage asset quality
2008 results for our three bank charters and m2
Lease Funds, LLC as compared to 2007 & 2006 are
as follows:
QCBT
- He was always sensitive to the needs of our employees
While many would like you to believe otherwise,
the cause of the financial crisis is not complex.
Financial companies and the supposed “experts”
assumed two things:
As we think about all
Mike has done for our
company over these fifteen years, several thoughts
come to mind:
- Real estate values always go up
- Borrowers always pay their mortgage
7
™
Our Tribute...Our Thanks
to Retiring Co-Founder, Mike Bauer
Since our inception, Quad City Bank & Trust has set its goals on
being the shining example of a relationship-based community bank
with the very best people to drive us there.
“There is not enough space to identify all of Mike’s achievements in banking and in the community. He will be noted for his knowledge of our
business, passion for promoting community banking, formation of strong relationships with employees and clients, and service to the community
in many, many ways.
How does that set us apart? For
years, bankers have used the term
“relationship banking” to differentiate
their brand from the competition; but
it takes a unique business model to
actually see it through to fruition.
I would not have joined this project without Mike as a partner. Mike’s knowledge of the industry and his focus on relationships laid the groundwork
for our successful beginning fifteen years ago. I am forever indebted to Mike for agreeing to ‘take the risk’ with me and form QCRH.”
Doug Hultquist, Co-Founder, QCR Holdings, Inc.
“Mike is without question the most recognized banker in the Quad Cities. His incredible commitment to the community and his positive impact on
the lives of so many clients and co-workers during his long career will be his legacy. I am very fortunate to count myself among those people who
have had an opportunity to work with Mike, and each of us at QCR Holdings, are forever grateful to him for founding this Company and establishing
our relationship based business model and culture.”
To quote our Mission:
It was evident this year that banks
Quad City Bank & Trust will be
like Quad City Bank & Trust, which
the
most relationship driven
are committed to true relationshipcommunity
bank so that our employees,
based strategies, were the ones who
clients,
shareholders
and
rose to the top. At a time of economic
the local community prosper.
uncertainty, our consistent and trusted
reputation provided added-value to our
I am proud to say your Quad City Bank
clients, shareholders, community, and
& Trust team lives our Mission everyday.
ultimately, the phenomenal employees
It not only shines through with each
who put our brand into action.
relationship, but also adds tremendous
The events of the past year have been
value to our bottom line.
challenging for all of us, but day in
And while it is easy for me to point to
and day out, it has been the team of
our employees as the driving force
employees at Quad City Bank & Trust,
behind our strength, we surveyed
and the relationships they’ve built
clients
earlier this year to determine
over the past 15 years that is seeing us
what
makes
through the financial upheaval facing
their bank of choice. The response was
our country.
clear – our clients trust, respect and
Backed by our solid, relationshipadmire the relationships they’ve made
based approach, our talented team
with our team.
has continued to build upon our
We stand not only behind our Mission
financial base. Their efforts resulted in
but a tagline that says it all...Quad City
a successful 2008.
Bank & Trust – where there are always
Net Interest Income grew from
People You Can Bank On.™
$25,308,208 to $29,262,931

Todd Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer, QCR Holdings, Inc.
“Mike has left an indelible imprint on hundreds, if not thousands of employees, clients, community leaders, and non-profit
boards throughout his sterling career. Our nation needs more community heroes like Mike Bauer and we are grateful for
his ever-lasting imprint on our organization!”
Mark Kilmer, Chairman of the Board, Quad City Bank & Trust
I’ve always believed that one of the real treasures in life was to have
a job you like to go to every day. For 40 years I have arrived at work
early, ready to see what is in store. Yes, I’m ready to go back home
each night, and I do enjoy my time away from the bank, but I’ve
always had a job that I found to be challenging and rewarding, and
for that I am grateful.
Banking is a great business, despite the current
environment. I’ve met and worked with some
incredibly talented and dedicated people. I’ve
had the satisfaction of knowing that our banking
business has contributed to the growth and
well-being of our community. Our customers
continually tell us what a great job we do which is
very fulfilling. And, our employees are simply the
best – they appreciate the culture we’ve tried to
create and it enables them to work harder for our
customers and shareholders.
Judy and I are lifelong residents of the Quad Cities.
It has been a great place to live – to raise a family
– to work. Our family has prospered in this setting
and we intend to stay here in retirement.
While the aforementioned results
are impressive on their own, they
are even more noteworthy given the
challenging economic conditions that
prevailed throughout the year.
I sincerely believe Quad City Bank & Trust and
our parent company, QCR Holdings, are poised to
achieve greater success in the years ahead. I am
leaving the company in good hands and I expect
that our future is bright. I will always have a special
place in my heart for our first employees, our initial
customers and our original shareholders. They all
took considerable risk with a new company and
I only hope that they have all been pleased with
their decisions.
Non Interest Income grew 21.6%
John Anderson
Net Income before provision
expense and taxes grew from
$12.5 million to $15.1 million, an
increase of $2.6 million, or 21%
Deposits grew $65.5 million to a total
of $572.6 million, an increase of 13%
Michael A. Bauer
Vice Chairman,
QCR Holdings, Inc. and Quad City Bank & Trust
9
™
Cedar Rapids, Iowa
Cedar Rapids Bank & Trust is committed to relationship banking.
This is our mission statement and it serves as the cornerstone
Flood of 2008
of Cedar Rapids Bank & Trust’s business model.
The “Flood of 2008” gave Cedar Rapids Bank & Trust the
opportunity to learn a great deal about our commitment
to our clients and reaffirm our role as a leader within our
community. The flood overshadowed all other events
with unprecedented water levels that created enormous
damage to the infrastructure of our community and
left thousands of homes and hundreds of businesses
with significant damage. Our community is now in the
recovery stage and is mapping out the plans to make
Cedar Rapids a better place to live and work in future
years.
The flooding will have significant ramifications for the
local economy for many years to come. The impact on
specific individuals and businesses still remains unclear
at this juncture, and it will take many more months to
ascertain the overall impact. During the months since
the flood, CRBT applied for $3.2 million in Federal
Disaster Recovery Community Investment Advances
from the Federal Home Loan Bank of Des Moines. The
low-cost funding has been used to help finance repair
and reconstruction of residences and businesses
damaged by the floods. CRBT also served as a resource
and assisted individuals and businesses with the SBA
loan application process. CRBT helped them understand
their full financial picture and assisted impacted clients
to determine what was in their best long-term interest.
Not only did CRBT support the community financially,
but our staff has contributed countless hours to many
volunteer efforts to help with the rebuilding process
and help individual clients deal with the physical and
emotional devastation that was created. The vast
majority of our clients will be able to withstand the
impact and overcome the challenges. CRBT plans to
play a key role in the planning of our community’s
future and will use our talents and resources to help
Cedar Rapids move forward. In the long run, CRBT will
only be as strong as this community. Although the
flood has created short-term and significant challenges,
we remain optimistic about the future of Cedar Rapids
and Cedar Rapids Bank & Trust.
In the days that led up to the Cedar River cresting at 31.12
feet, CRBT’s disaster recovery team performed extremely
well responding to the challenges presented by the
flood. While we received no water damage to any of
our facilities, we were required to vacate our downtown
main facility for four days due to our proximity to the
flooding. Throughout the disruption, we continued to
provide outstanding client service due to a strong effort
from our staff, which included individuals that were
also personally impacted by the flood. We did have
one employee who experienced significant damage to
her home due to the high water levels. Our employees
rallied to help her deal with the devastation, and she has
now returned to her home.
We continue to measure the relationships we have built
with our clients through the Net Promoter Survey. Our
survey results improved from the previous year and
continue to be at the very top of all comparisons
in our industry. The relationship that we have
with our clients and the community is critical to
our success. Many of the new clients we have
added during the last year came from client
referrals. This reflects the high quality of client
relationships that we have established and will
allow us to grow our client base at a rapid pace
again this year.
It’s clear that as we begin the new
year, a focus on our clients and our
community are more important
than ever. We believe that this
focus will reward shareholders
with increased profitability and
continued growth in the years
to come.
Larry Helling
Photographer: Jack Evans, The Hall-Perrine Foundation
Pilot: Chuck Peters, Gazette Communications, Inc. and Chairman of the Board, Cedar Rapids Bank & Trust
10
11
™
As 2008 comes to a close, we reflect on the results of
our labor with a deep sense of accomplishment.
Our successes have been many and our challenges ongoing.
The changing dynamics in the financial
services industry in and around
Rockford, Illinois, along with focused
business development efforts by our
team, helped fuel our ongoing growth.
Year-over-year, assets increased by $70
million, as we completed our fourth
year of operations at $228 million in
total assets. At the same time our net
interest margin improved significantly,
from 2.64% to 2.84%. We have been
successful in developing relationships
with an ever expanding number of the
most successful business owners and
managers in Northern Illinois. We are
proud to be building a reputation in the
marketplace as a leading provider of
financial services. In 2008 we provided
over $90 million in new financing to
the community and grew core deposits
by $55 million, even in the midst of a
global liquidity scare. My thanks to a
hard-working, knowledgeable and
dedicated staff that makes that level
of growth happen, while never losing
sight of our existing client base.
We have assembled a wonderful
team of talented and dedicated
bankers, second to none in the
market. In November we expanded
our infrastructure to include our Chief
Credit Officer, Anthony Moczynski.
Tony joins the team with more than 20
years of experience, including a number
of years at the Office of the Comptroller
of Currency. He brings a wealth of
experience at a time when the local,
national and world economies are as
fragile as at any time in my lifetime.
He is a welcome addition to our team
and will greatly assist in enhancing our
credit risk management.
We continue to strive to build the
best bank for business, in and around
Rockford. That means doing the right
things for the bank, the client and the
community. In these trying economic
times, that can be challenging. Our
team-based approach to developing
relationships is guided by the belief
that the more we know about a
business or individual, the better we
will be positioned to meet or exceed
their needs. This approach ensures a
long-lasting, mutually satisfying bankclient relationship. Our dedication to
the people of this great community is
without question. We call it home.
The challenges heading into 2009
are many. We intend to continue
delivering outstanding service and
exceptional value to our customers and
improved financial performance to our
shareholders. As always, we appreciate
the support of our parent company,
its staff and management and the
guidance and support of our directors.
Thomas Budd
More than ever, leasing equips America. In fact, equipment leasing is the
largest single source of equipment financing in the world.
m2
Lease Funds was started in 1998 and became a part
of the QCR Holdings family in 2005. Today m2 has over
1,000 leases and leases in virtually every state. As an equipment
leasing generalist, m2 leases all varieties of equipment. Currently the
largest equipment concentrations include manufacturing, printing,
marine, broadcasting, packaging, transportation and construction
equipment.
When m2 began, our strategy was, and still is, to provide competitively
priced, personalized, professional equipment leasing and financing
services for small and mid-sized businesses; to provide fast turnaround
times, and to provide a philosophy that is focused on serving the
client quickly and efficiently.
We at m2 Lease Funds enjoy building relationships with our clients to
do exactly that.
John Engelbrecht
The customer talks, m2 listens, and together we arrive at a customized,
creative solution for their equipment needs. We believe that m2 offers
the quickest approvals and turn around times in the industry. Our
lease agreement is extremely user friendly, brief, and is written in
plain English.
m2 Lease Funds, LLC
m2 is fortunate in that the majority of our business is the result of a
referral. Over time we have established relationships with equipment
vendors, attorneys, accountants and other banks in addition to our
QCR Holdings, Inc. affiliates. Referrals are, of course, the best source
of business and only result by providing prompt, professional service
for every opportunity.
More than ever, leasing equips America. In fact, equipment leasing is
the largest single source of equipment financing in the world. Four
of five U.S. Companies lease equipment including the Fortune 500.
These companies have access to some of the lowest cost financing
alternatives in the world. Yet, they choose leasing for quantitative and
qualitative reasons.
m2 Lease Funds TOTAL LEASES - GROSS
12.31.08
$81,271,454
12.31.07
$68,731,932
12.31.06
12.31.05
$53,765,038
$35,700,299
$32,656,503
$30,000,000
The financial needs of a growing business sometimes require amounts
of capital that exceed its internal capabilities. We can provide a partial
solution as an alternative source of competitively priced funds for
capitalized assets. A mature, profitable company may have a variety
of financial options available to it. The properly structured “true
operating lease” can provide a creative lease structure resulting in
maximum tax deferral and savings.
Today with offices in Iowa, Illinois, Minnesota and Wisconsin, m2
continues to stay true to the strategies and philosophies set forth in
1998.
08.31.05
12
Many businesses have not analyzed how leasing may benefit their
situation, still thinking that leasing is too costly and is the financial
alternative of last resort. When companies do review the after-tax
advantages of leasing, many times they find that leasing is the best
alternative.
$40,000,000
$50,000,000
13
$60,000,000
$70,000,000
$80,000,000
™
Stock Listing Information
The common stock of QCR Holdings, Inc. is traded on the NASDAQ Capital Market under the symbol QCRH.
Quality People. QCR Holdings prides itself in hiring the very best people who value relationships.
Expertise, integrity, flexibility, passion and client focused, are a few of the words used to describe the
employees who deliver our mission each and every day.
Calendar 2008
Quality Results. Utilizing our greatest assets, our people, QCR Holdings entities are able to deliver
quality, personalized service. Each of our entities is built to respond to the needs of their communities with
products and services that best fit their clients. Under this model, we strive for quality results for our clients,
our employees, our shareholders and the communities in which we serve.
Total Metropolitan Statistical Area (MSA) Deposits
QCR Holdings, Inc. Asset Growth
(June 30, 2008 Data) (In Thousands)
(In Thousands)
$7,000,000
2008
2007
High
Low
4th Quarter
$ 14.24
$ 9.44
3rd Quarter
16.20
9.70
2nd Quarter
16.20
12.13
1st Quarter
17.02
14.15
Calendar 2007
High
Low
4th Quarter
$ 16.00
$ 14.25
3rd Quarter
16.43
13.76
2nd Quarter
17.75
15.15
1st Quarter
17.90
15.28
Calendar 2006
High
Low
4th Quarter
$ 18.86
$ 16.77
3rd Quarter
18.17
16.21
2nd Quarter
19.95
16.25
1st Quarter
19.66
17.44
Dividend Information
$129,065
$229,061
2006
2005
2004
Rockford
$100,000
$204,889
$160,044
$5,907,882
$4,460,202
Quad Cities
$4,000,000
$150,000
$172,530
$200,000
Cedar Rapids
$5,000,000
$250,000
$6,329,833
$6,000,000
Common Stock
Record Date Payment Date
Amount
12.22.08
01.07.09
$ .04
06.23.08
07.07.08
.04
12.21.07
01.07.08
.04
06.22.07
07.06.07
.04
Annual Meeting of Stockholders
The Annual Meeting of the Stockholders of QCR
Holdings, Inc. will be held at 10:00 am, May 6, 2009,
at the following location:
i wireless Center
1201 River Drive
Moline, IL 61265
30%
Quad Cities - 7.89%
Rank #4 of 41
5515 Utica Ridge Road
Davenport, IA 52807
John R. Oakes
Vice President, Controller and
Director of Financial Reporting
500 First Avenue NE, Suite 100
Cedar Rapids, IA 52401
Cedar Rapids - 6.17%
Rank #4 of 44
10%
Rank #12 of 27
0%
Rockford - 2.37%
14
2004
2005
2006
2007
15
The SEC maintains an internet site that contains
reports, proxy, and information statements and other
information about issuers that file electronically with
the SEC. The address of that site is: www.sec.gov.
Stock Transfer Agent
Inquiries regarding stock transfer, registration, lost
certificates, or changes in name and address should
be directed to the stock transfer agent and registrar
by writing:
Illinois Stock Transfer Company
209 W. Jackson Boulevard, Suite 903
Chicago, IL 60606
Investor Information
Stockholders, investors, and analysts interested in
additional information may contact:
Cedar Rapids Bank & Trust Locations
Rockford Bank & Trust Locations
Corporate Counsel
Lane & Waterman, Davenport, IA
Barack Ferrazzano Kirschbaum & Nagelberg LLP
Chicago, IL
2008
1700 Division Street
Davenport, IA 52804
5400 Council Street NE
Cedar Rapids, IA 52402
QCR Holdings, Inc.
3551 Seventh Street
Moline, IL 61265
Independent Auditor
McGladrey & Pullen, LLP, Davenport, IA
20%
4500 N. Brady Street
Davenport, IA 52806
Annual Report on Form 10-K
Copies of the QCR Holdings, Inc. annual
report on Form 10-K and exhibits filed with the
Securities and Exchange Commission (SEC), are
available to stockholders without charge by accessing
our internet site at www.qcrh.com or by writing:
QCR Holdings, Inc.
3551 Seventh Street
Moline, IL 61265
309-743-7745
QCR Holdings, Inc. Growth Percentage
2118 Middle Road
Bettendorf, IA 52722
3551 Seventh Street, Suite 100
Moline, IL 61265
Todd A. Gipple
QCR Holdings, Inc. Market Share
Quad City Bank & Trust Locations
™
127 N. Wyman Street
Rockford, IL 61101
4571 Guilford Road
Rockford, IL 61107
m2 Lease Funds, LLC
175 N. Patrick Blvd., Suite 135
Brookfield, WI 53045
Internet Information
Information on subsidiaries’ history,
locations, products and services can be
accessed on the internet at www.qcbt.com,
www.crbt.com, www.rkfdbank.com and
www.m2lease.com
10,205 volunteered
Total hours
to more than 420 organizations.
Abbe Mental Health Center
College
Ballet Quad Cities
& Girls Club
Boy Scouts
Nonprofit Housing
Rapids Kiwanis
American Cancer Society
American Red Cross
Bethany for Children and Families
Breast Cancer Awareness
Cedar Rapids Downtown Rotary
Davenport Kiwanis
Genesis Health Foundation
Gilda’s
Festival of Trees
Handicapped Development Center
Meals on Wheels
Girl Scouts
Heart Walk
Komen QC Race for the Cure
Milestone, Inc.
Cedar Rapids
Cedar
Hamilton College
of Dimes
Boys
Cedar Rapids Museum of Art
Goodwill Business Advisory Committee
Kirkwood College
Big Brothers Big Sisters
Cambridge High School
Club Quad Cities
Achievement
Augustana
Habitat for Humanity
John Deere Classic
Junior
Lend-a-Hand Housing
March
Mississippi Valley Neighborhood Housing Services
Mississippi Valley Regional Blood Center Muscular Dystrophy Association Neighborhood Housing
Services
Marathon
Pleasant Valley High School PTA
Relay for Life
Rockford Rescue Mission
Area Affordable Housing Coalition
Services
St. Ambrose University
Mental Health Center
Putnam Museum and IMAX Theater
Rockford Area Arts Council
The Salvation Army
Student Food Drive
Waste Not Iowa
Quad City
Rockford
Skip-A-Long Child Development
United Way
Young Parents Network
Vera French Community
Youth Football Association
Relationships In Action
A Message From Our
Chairman of the Board
Our
mos
Our
most
asset
is
ou
important
rasset
most
is our peo
asset is our
people.
your independent, outside Chairman of the
Board, let me thank all of our stakeholders
for their continued relationships that
matter in our communities as directors,
shareholders, employees, and customers
of the entity we affectionately call QCR
Holdings. As shareholders you can look
with pride on these areas of “people
commitment” as the focal point which truly
makes QCR Holdings different from all the
rest.
As we look in the rear view mirror at 2008,
one would hardly think that the financial
industry will face any greater challenges in
2009 than those that existed in 2008. Hold
on to your seats as the most challenging
times may be yet to come. Let me assure
you that the directors, management and
staff are steadfastly committed to facing
head on the uncertain times we will face
ahead. You can be confident that the
most important asset you have invested
in, our people, will continue to nurture
those long term relationships to provide
appropriate long term rewards for you, our
shareholders.
James J. Brownson
Chairman of the Board,
QCR Holdings, Inc.
sing hope
Raising money
and raising hope
in the communities
we serve.
ommunit
we serve
Dear Friends at Quad City Bank & Trust,
On behalf of the board, staff and volunteers
of the American Red Cross of the Quad Cities
Area, thank you! Your support of American Red
Cross Day enabled us to raise $103,846 for the
National Disaster Relief Fund! The National
Disaster Relief Fund makes it possible for the
Red Cross to respond immediately to disaster
victims nationwide with critical help such
as shelter, food, clothing and mental health
counseling.
As you know, this has been a critical year for the
Red Cross. From the tornadoes and floods that
affected residents in the Midwest, to Hurricanes
Gustav and Ike along the Gulf Coast, American
Red Cross has relied heavily on the National
Disaster Relief Fund. Without your support, we
would not have been able to bring awareness of
our critical need and raise these much needed
funds to ensure that disaster victims have
immediate emergency aid.
With warm regards,
Betsy Pratt
Chief Executive Officer
support
Our people
provide a flood of support
in times of need.
mes
of
ne
need.
Dear Friends at Cedar Rapids Bank & Trust,
Sue and I would like to take a moment to thank
everyone at Cedar Rapids Bank & Trust for
helping us through the Flood of 2008. Within an
hour of being allowed back in our building after
the flood, our commercial banker, Thad Roffey,
was there to help in our clean-up. Before the day
was over, there were another 5 bank employees
there to help us. Thank you John, Jerry, Nick,
Dan and Cindy. Cedar Rapids Bank & Trust also
provided pizza for all who were helping us.
After the clean-up was finished, we had to decide
if it was possible to stay in business considering
the additional debt we had to take on. After
several meetings of crunching numbers with
Cedar Rapids Bank & Trust bankers, we decided
it was possible to make it work!
Fortunately, we were able to pay back our loan
to Cedar Rapids Bank & Trust; however, we will
never be able to pay you back for all the physical
labor, time invested, and concern for us over the
last 6 months.
Sincerely,
Tom Miller and Sue Warner
Schumacher Carpets
Inspire
Inspiring & investing
in our area schools
and youth.
rea youth
Dear Shawn,
Thank You. Rockford Sharefest 2008 was a huge
success due, in large part, to Rockford Bank &
Trust’s generous participation.
As you stepped up to provide financial support,
major make overs were performed at Flinn
Middle School, Stiles Elementary, and East High
School. Fresh paint for the first time in many
years, new white boards, landscaping, ceiling
fans, window screens and blinds, carpeting, new
lighting and new or repaired bathroom stalls.
More than 3,700 volunteers spent over 30,000
hours in two weeks this summer to bring help
and hope to our students and our community.
Rockford’s Mayor, the Superintendent of
Schools, administrators, the teachers, all of us at
Rockford Sharefest and especially the students
were thrilled with the outcome.
Thank you for your involvement. Rockford Bank
& Trust has made an investment in Rockford’s
Public Schools that is sure to be appreciated by
thousands for years to come.
Thank You!
Mark Bankord
President, Rockford Sharefest Inc.

2008 Annual Report

Transcription

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