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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

 

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to________

 

Commission file number 0-22208

 

QCR HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

Delaware

42-1397595

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

3551 7th Street, Moline, Illinois 61265

 

(Address of principal executive offices, including zip code)

 

(309) 736-3580

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.           

 

Yes  [ X ]          No  [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes  [ X ]          No  [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.      (Check one):

 

Large accelerated filer [  ]            Accelerated filer [ X ]            Non-accelerated filer [  ]     

Smaller reporting company [  ]          Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes  [ X ]          No  [  ]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: As of November 2, 2017, the Registrant had outstanding 13,888,923 shares of common stock, $1.00 par value per share.

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

     

 Page Number(s) 

Part I

FINANCIAL INFORMATION

 
       
 

Item 1

Consolidated Financial Statements (Unaudited)

 
       
   

Consolidated Balance Sheets

                   3

   

As of September 30, 2017 and December 31, 2016

 
       
   

Consolidated Statements of Income

 
   

For the Three Months Ended September 30, 2017 and 2016

                   4

       
   

Consolidated Statements of Income

 
   

For the Nine Months Ended September 30, 2017 and 2016

                   5

       
   

Consolidated Statements of Comprehensive Income

 
   

For the Three and Nine Months Ended September 30, 2017 and 2016

                   6

       
   

Consolidated Statements of Changes in Stockholders' Equity

 
   

For the Three and Nine Months Ended September 30, 2017 and 2016

                   7

       
   

Consolidated Statements of Cash Flows

 
   

For the Nine Months Ended September 30, 2017 and 2016

                   9

       
   

Notes to Consolidated Financial Statements

 
       
   

Note 1.  Summary of Significant Accounting Policies

                 11

   

Note 2.  Investment Securities

                 13

   

Note 3.  Loans/Leases Receivable

                 18

   

Note 4.  Earnings Per Share

                 28

   

Note 5.  Fair Value

                 28

   

Note 6.  Business Segment Information

                 32

   

Note 7.  Regulatory Capital Requirements

                 33

   

Note 8.  Subsequent Event - Acquisition of Guaranty Bank and Trust Company

                 35

       
       
 

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

 
       
   

Introduction

                 36

   

General

                 36

   

Executive Overview

                 37

   

Long-Term Financial Goals

                 39

   

Strategic Developments

                 40

   

GAAP to Non-GAAP Reconciliations

                 41

   

Net Interest Income (Tax Equivalent Basis)

                 43

   

Critical Accounting Policies

                 49

   

Results of Operations

 
   

Interest Income

                 50

   

Interest Expense

                 50

   

Provision for Loan/Lease Losses

                 51

   

Noninterest Income

                 52

   

Noninterest Expense

                 55

   

Income Taxes

                 57

 

 

   

Financial Condition

                57

   

Investment Securities

                 58

   

Loans/Leases

                 59

   

Allowance for Estimated Losses on Loans/Leases

                 62

   

Nonperforming Assets

                 64

   

Deposits

                 65

   

Borrowings

                 65

   

Stockholders' Equity

                 67

   

Liquidity and Capital Resources

                 68

   

Special Note Concerning Forward-Looking Statements

                 70

       
 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

                 71

       
 

Item 4

Controls and Procedures

                 73

       

Part II

OTHER INFORMATION

 
       
 

Item 1

Legal Proceedings

                 74

       
 

Item 1A

Risk Factors

                 74

       
 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

                 74

       
 

Item 3

Defaults upon Senior Securities

                 74

       
 

Item 4

Mine Safety Disclosures

                 74

       
 

Item 5

Other Information

                 74

       
 

Item 6

Exhibits

                 75

       

Signatures

 

                 76

 

Throughout the Notes to the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations, we use certain acronyms and abbreviations, as defined in Note 1.

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of September 30, 2017 and December 31, 2016

 

   

September 30,

   

December 31,

 
   

2017

   

2016

 

ASSETS

               

Cash and due from banks

  $ 56,274,561     $ 70,569,993  

Federal funds sold

    20,568,000       22,257,000  

Interest-bearing deposits at financial institutions

    41,221,383       63,948,925  
                 

Securities held to maturity, at amortized cost

    323,981,227       322,909,056  

Securities available for sale, at fair value

    259,954,422       251,113,139  

Total securities

    583,935,649       574,022,195  
                 

Loans receivable held for sale

    290,320       1,135,500  

Loans/leases receivable held for investment

    2,676,464,491       2,404,351,485  

Gross loans/leases receivable

    2,676,754,811       2,405,486,985  

Less allowance for estimated losses on loans/leases

    (34,982,341 )     (30,757,448 )

Net loans/leases receivable

    2,641,772,470       2,374,729,537  
                 

Bank-owned life insurance

    58,614,100       57,257,051  

Premises and equipment, net

    61,877,754       60,643,508  

Restricted investment securities

    18,585,400       14,997,025  

Other real estate owned, net

    5,134,845       5,523,104  

Goodwill

    13,110,913       13,110,913  

Core deposit intangible

    6,688,613       7,381,213  

Other assets

    42,679,406       37,503,284  

Total assets

  $ 3,550,463,094     $ 3,301,943,748  
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               

LIABILITIES

               

Deposits:

               

Noninterest-bearing

  $ 715,537,518     $ 797,415,090  

Interest-bearing

    2,178,730,964       1,871,846,183  

Total deposits

    2,894,268,482       2,669,261,273  
                 

Short-term borrowings

    16,010,805       39,971,387  

Federal Home Loan Bank advances

    169,055,000       137,500,000  

Other borrowings

    77,500,000       80,000,000  

Junior subordinated debentures

    33,578,744       33,480,202  

Other liabilities

    47,011,435       55,690,087  

Total liabilities

    3,237,424,466       3,015,902,949  
                 

STOCKHOLDERS' EQUITY

               

Preferred stock, $1 par value; shares authorized 250,000 September 2017 and December 2016 - No shares issued or outstanding

    -       -  

Common stock, $1 par value; shares authorized 20,000,000 September 2017 - 13,201,959 shares issued and outstanding December 2016 - 13,106,845 shares issued and outstanding

    13,201,959       13,106,845  

Additional paid-in capital

    158,459,072       156,776,642  

Retained earnings

    142,450,131       118,616,901  

Accumulated other comprehensive (loss):

               

Securities available for sale

    (250,107 )     (1,527,433 )

Interest rate cap derivatives

    (822,427 )     (932,156 )

Total stockholders' equity

    313,038,628       286,040,799  

Total liabilities and stockholders' equity

  $ 3,550,463,094     $ 3,301,943,748  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended September 30,

 

   

2017

   

2016

 

Interest and dividend income:

               

Loans/leases, including fees

  $ 29,245,320     $ 23,001,107  

Securities:

               

Taxable

    1,367,212       1,057,204  

Nontaxable

    2,862,208       2,510,169  

Interest-bearing deposits at financial institutions

    141,331       103,216  

Restricted investment securities

    172,776       132,047  

Federal funds sold

    52,018       12,992  

Total interest and dividend income

    33,840,865       26,816,735  
                 

Interest expense:

               

Deposits

    3,556,189       1,472,031  

Short-term borrowings

    33,248       12,541  

Federal Home Loan Bank advances

    607,751       420,570  

Other borrowings

    724,854       974,634  

Junior subordinated debentures

    362,475       306,182  

Total interest expense

    5,284,517       3,185,958  

Net interest income

    28,556,348       23,630,777  
                 

Provision for loan/lease losses

    2,086,436       1,607,986  

Net interest income after provision for loan/lease losses

    26,469,912       22,022,791  
                 

Noninterest income:

               

Trust department fees

    1,721,401       1,518,600  

Investment advisory and management fees

    968,452       765,977  

Deposit service fees

    1,522,461       1,150,869  

Gains on sales of residential real estate loans, net

    98,409       144,105  

Gains on sales of government guaranteed portions of loans, net

    91,974       218,785  

Swap fee income

    194,256       333,772  

Securities gains (losses), net

    (63,588 )     4,251,773  

Earnings on bank-owned life insurance

    428,002       450,251  

Debit card fees

    754,803       475,182  

Correspondent banking fees

    239,060       253,823  

Other

    746,073       860,264  

Total noninterest income

    6,701,303       10,423,401  
                 

Noninterest expense:

               

Salaries and employee benefits

    13,423,943       11,202,460  

Occupancy and equipment expense

    2,516,274       2,086,331  

Professional and data processing fees

    2,950,839       1,931,329  

Acquisition costs

    407,997       1,036,904  

Post-acquisition transition and integration costs

    522,740       1,009,132  

FDIC insurance, other insurance and regulatory fees

    690,894       582,835  

Loan/lease expense

    257,540       102,678  

Net cost of (income from) operations of other real estate

    (160,640 )     133,055  

Advertising and marketing

    669,923       547,768  

Bank service charges

    460,153       415,401  

Losses on debt extinguishment, net

    -       4,137,310  

Correspondent banking expense

    204,189       205,998  

Other

    1,451,895       1,089,282  

Total noninterest expense

    23,395,747       24,480,483  

Net income before income taxes

    9,775,468       7,965,709  

Federal and state income tax expense

    1,921,533       1,858,208  

Net income

  $ 7,853,935     $ 6,107,501  
                 

Basic earnings per common share

  $ 0.60     $ 0.47  

Diluted earnings per common share

  $ 0.58     $ 0.46  
                 

Weighted average common shares outstanding

    13,151,350       13,066,777  

Weighted average common and common equivalent shares outstanding

    13,507,955       13,269,703  
                 

Cash dividends declared per common share

  $ 0.05     $ 0.04  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Nine Months Ended September 30,

 

   

2017

   

2016

 

Interest and dividend income:

               

Loans/leases, including fees

  $ 84,571,466     $ 62,939,656  

Securities:

               

Taxable

    3,770,022       3,605,948  

Nontaxable

    8,198,173       7,028,387  

Interest-bearing deposits at financial institutions

    559,697       225,775  

Restricted investment securities

    435,096       396,157  

Federal funds sold

    104,778       36,155  

Total interest and dividend income

    97,639,232       74,232,078  
                 

Interest expense:

               

Deposits

    8,779,548       4,106,227  

Short-term borrowings

    76,365       73,672  

Federal Home Loan Bank advances

    1,365,433       1,278,207  

Other borrowings

    2,103,731       2,624,154  

Junior subordinated debentures

    1,042,227       912,706  

Total interest expense

    13,367,304       8,994,966  

Net interest income

    84,271,928       65,237,112  
                 

Provision for loan/lease losses

    6,214,538       4,878,821  

Net interest income after provision for loan/lease losses

    78,057,390       60,358,291  
                 

Noninterest income:

               

Trust department fees

    5,153,609       4,606,590  

Investment advisory and management fees

    2,798,886       2,117,100  

Deposit service fees

    4,297,210       3,028,758  

Gains on sales of residential real estate loans, net

    307,360       288,904  

Gains on sales of government guaranteed portions of loans, net

    1,129,668       2,701,203  

Swap fee income

    635,353       1,358,312  

Securities gains (losses), net

    (25,124 )     4,628,283  

Earnings on bank-owned life insurance

    1,357,049       1,324,380  

Debit card fees

    2,201,125       1,126,581  

Correspondent banking fees

    684,306       800,892  

Other

    2,228,133       2,027,272  

Total noninterest income

    20,767,575       24,008,275  
                 

Noninterest expense:

               

Salaries and employee benefits

    39,662,218       32,920,840  

Occupancy and equipment expense

    7,716,829       5,797,875  

Professional and data processing fees

    7,374,930       4,921,064  

Acquisition costs

    407,997       1,363,987  

Post-acquisition transition and integration costs

    522,740       1,037,018  

FDIC insurance, other insurance and regulatory fees

    1,957,413       1,866,804  

Loan/lease expense

    811,362       419,846  

Net cost of (income from) operations of other real estate

    (118,453 )     513,149  

Advertising and marketing

    1,846,942       1,367,478  

Bank service charges

    1,331,499       1,246,682  

Losses on debt extinguishment, net

    -       4,220,507  

Correspondent banking expense

    604,233       564,763  

Other

    3,955,783       2,938,721  

Total noninterest expense

    66,073,493       59,178,734  

Net income before income taxes

    32,751,472       25,187,832  

Federal and state income tax expense

    6,946,555       6,030,375  

Net income

  $ 25,804,917     $ 19,157,457  
                 

Basic earnings per common share

  $ 1.96     $ 1.55  

Diluted earnings per common share

  $ 1.91     $ 1.52  
                 

Weighted average common shares outstanding

    13,151,672       12,398,491  

Weighted average common and common equivalent shares outstanding

    13,509,566       12,580,042  
                 

Cash dividends declared per common share

  $ 0.15     $ 0.12  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three and Nine Months Ended September 30, 2017 and 2016

 

   

Three Months Ended September 30,

 
   

2017

   

2016

 

Net income

  $ 7,853,935     $ 6,107,501  
                 

Other comprehensive income (loss):

               
                 

Unrealized gains (losses) on securities available for sale:

               

Unrealized holding gains arising during the period before tax

    289,086       3,682,514  

Less reclassification adjustment for gains (losses) included in net income before tax

    (63,588 )     4,251,773  
      352,674       (569,259 )

Unrealized gains (losses) on interest rate cap derivatives:

               

Unrealized holding losses arising during the period before tax

    (8,446 )     (49,573 )

Less reclassification adjustment for ineffectiveness and caplet amortization before tax

    (95,361 )     (33,246 )
      86,915       (16,327 )
                 

Other comprehensive income (loss), before tax

    439,589       (585,586 )

Tax expense (benefit)

    165,012       (224,402 )

Other comprehensive income (loss), net of tax

    274,577       (361,184 )
                 

Comprehensive income

  $ 8,128,512     $ 5,746,317  

 

 

   

Nine Months Ended September 30,

 
   

2017

   

2016

 

Net income

  $ 25,804,917     $ 19,157,457  
                 

Other comprehensive income:

               
                 

Unrealized gains (losses) on securities available for sale:

               

Unrealized holding gains arising during the period before tax

    2,057,586       10,628,032  

Less reclassification adjustment for gains (losses) included in net income before tax

    (25,124 )     4,628,283  
      2,082,710       5,999,749  

Unrealized gains (losses) on interest rate cap derivatives:

               

Unrealized holding losses arising during the period before tax

    (186,000 )     (634,791 )

Less reclassification adjustment for ineffectiveness and caplet amortization before tax

    (354,813 )     (82,281 )
      168,813       (552,510 )
                 

Other comprehensive income, before tax

    2,251,523       5,447,239  

Tax expense

    864,468       2,102,379  

Other comprehensive income, net of tax

    1,387,055       3,344,860  
                 

Comprehensive income

  $ 27,191,972     $ 22,502,317  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

Three and Nine Months Ended September 30, 2017 and 2016

 

                           

Accumulated

         
           

Additional

           

Other

         
   

Common

   

Paid-In

   

Retained

   

Comprehensive

         
   

Stock

   

Capital

   

Earnings

   

Income (Loss)

   

Total

 

Balance December 31, 2016

  $ 13,106,845     $ 156,776,642     $ 118,616,901     $ (2,459,589 )   $ 286,040,799  

Net income

    -       -       9,184,965       -       9,184,965  

Other comprehensive income, net of tax

    -       -       -       410,739       410,739  

Common cash dividends declared, $0.05 per share

    -       -       (656,574 )     -       (656,574 )

Proceeds from issuance of 3,573 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    3,573       83,091       -       -       86,664  

Proceeds from issuance of 44,284 shares of common stock as a result of stock options exercised

    44,284       630,290       -       -       674,574  

Stock compensation expense

    -       388,753                       388,753  

Restricted stock awards - 13,289 shares of common stock

    13,289       (13,289 )     -       -       -  

Exchange of 6,772 shares of common stock in connection with stock options exercised and restricted stock vested

    (6,772 )     (283,518 )     -       -       (290,290 )

Balance March 31, 2017

  $ 13,161,219     $ 157,581,969     $ 127,145,292     $ (2,048,850 )   $ 295,839,630  

Net income

    -       -       8,766,017       -       8,766,017  

Other comprehensive income, net of tax

    -       -       -       701,739       701,739  

Common cash dividends declared, $0.05 per share

    -       -       (657,003 )     -       (657,003 )

Proceeds from issuance of 4,582 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    4,582       170,061       -       -       174,643  

Proceeds from issuance of 8,027 shares of common stock as a result of stock options exercised

    8,027       109,392       -       -       117,419  

Stock compensation expense

    -       168,314                       168,314  

Restricted stock awards - 2,000 shares of common stock

    2,000       (2,000 )     -       -       -  

Exchange of 594 shares of common stock in connection with stock options exercised

    (594 )     (26,730 )     -       -       (27,324 )

Balance June 30, 2017

  $ 13,175,234     $ 158,001,006     $ 135,254,306     $ (1,347,111 )   $ 305,083,435  

Net income

    -       -       7,853,935       -       7,853,935  

Other comprehensive loss, net of tax

    -       -       -       274,577       274,577  

Common cash dividends declared, $0.05 per share

    -       -       (658,110 )     -       (658,110 )

Proceeds from issuance of 2,319 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    2,319       88,052       -       -       90,371  

Proceeds from issuance of 19,906 shares of common stock as a result of stock options exercised

    19,906       73,915       -       -       93,821  

Stock compensation expense

    -       300,599       -       -       300,599  

Restricted stock awards - 4,500 shares of common stock

    4,500       (4,500 )     -       -       -  

Balance September 30, 2017

  $ 13,201,959     $ 158,459,072     $ 142,450,131     $ (1,072,534 )   $ 313,038,628  

 

(Continued)

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - continued

Three and Nine Months Ended September 30, 2017 and 2016

 

                           

Accumulated

         
           

Additional

           

Other

         
   

Common

   

Paid-In

   

Retained

   

Comprehensive

         
   

Stock

   

Capital

   

Earnings

   

Income (Loss)

   

Total

 

Balance December 31, 2015

  $ 11,761,083     $ 123,282,851     $ 92,965,645     $ (2,123,829 )   $ 225,885,750  

Net income

    -       -       6,373,489       -       6,373,489  

Other comprehensive income, net of tax

    -       -       -       2,525,411       2,525,411  

Common cash dividends declared, $0.04 per share

    -       -       (470,873 )     -       (470,873 )

Proceeds from issuance of 5,054 shares of  common stock as a result of stock purchased under the Employee Stock Purchase Plan

    5,054       94,560       -       -       99,614  

Proceeds from issuance of 46,020 shares of common stock as a result of stock options exercised

    46,020       729,473       -       -       775,493  

Tax benefit of nonqualified stock options exercised

            -                       -  

Stock compensation expense

    -       382,761       -       -       382,761  

Tax benefit of nonqualified stock options exercised

    -       22,508       -       -       22,508  

Restricted stock awards - 22,382 shares of common stock

    22,382       (22,382 )     -       -       -  

Exchange of 19,628 shares of common stock in connection with restricted stock vested, net

    (19,628 )     (431,806 )     -       -       (451,434 )

Balance March 31, 2016

  $ 11,814,911     $ 124,057,965     $ 98,868,261     $ 401,582     $ 235,142,719  

Net income

    -       -       6,676,467       -       6,676,467  

Other comprehensive loss, net of tax

    -       -       -       1,180,633       1,180,633  

Common cash dividends declared, $0.04 per share

    -       -       (520,701 )     -       (520,701 )

Proceeds from issuance of 1,215,000 shares of common stock, net of issuance costs

    1,215,000       28,613,916       -       -       29,828,916  

Proceeds from issuance of 6,982 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    6,982       142,887       -       -       149,869  

Proceeds from issuance of 20,975 shares of common stock as a result of stock options exercised

    20,975       230,671       -       -       251,646  

Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds

    -       2,132,415       -       -       2,132,415  

Stock compensation expense

    -       187,569       -       -       187,569  

Tax benefit of nonqualified stock options exercised

    -       87,858       -       -       87,858  

Restricted stock awards - 500 shares of common stock

    (500 )     500       -       -       -  

Balance June 30, 2016

  $ 13,057,368     $ 155,453,781     $ 105,024,027     $ 1,582,215     $ 275,117,391  

Net income

    -       -       6,107,501       -       6,107,501  

Other comprehensive loss, net of tax

    -       -       -       (361,184 )     (361,184 )

Common cash dividends declared, $0.04 per share

    -       -       (521,384 )     -       (521,384 )

Proceeds from issuance of 4,085 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan

    4,085       85,217       -       -       89,302  

Proceeds from issuance of 14,692 shares of common stock as a result of stock options exercised

    14,692       173,890       -       -       188,582  

Stock compensation expense

    -       190,211       -       -       190,211  

Tax benefit of nonqualified stock options exercised

    -       72,694       -       -       72,694  

Exchange of 838 shares of common stock in connection with stock options exercised

    (838 )     (25,115 )     -       -       (25,953 )

Balance September 30, 2016

  $ 13,075,307     $ 155,950,678     $ 110,610,144     $ 1,221,031     $ 280,857,160  

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended September 30, 2017 and 2016

 

   

2017

   

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES

               

Net income

  $ 25,804,917     $ 19,157,457  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation

    2,810,971       2,422,257  

Provision for loan/lease losses

    6,214,538       4,878,821  

Stock-based compensation expense

    857,666       760,541  

Deferred compensation expense accrued

    1,098,741       910,439  

Losses (gains) on other real estate owned, net

    (154,743 )     130,280  

Amortization of premiums on securities, net

    1,330,946       968,553  

Securities losses (gains), net

    25,124       (4,628,283 )

Loans originated for sale

    (40,423,117 )     (57,160,485 )

Proceeds on sales of loans

    42,705,325       59,838,717  

Gains on sales of residential real estate loans

    (307,360 )     (288,904 )

Gains on sales of government guaranteed portions of loans

    (1,129,668 )     (2,701,203 )

Losses on debt extinguishment, net

    -       4,220,507  

Amortization of core deposit intangible

    692,600       210,469  

Accretion of acquisition fair value adjustments, net

    (4,063,435 )     (690,379 )

Increase in cash value of bank-owned life insurance

    (1,357,049 )     (1,324,380 )

Decrease (increase) in other assets

    1,666,921       (2,480,461 )

Increase (decrease) in other liabilities

    (8,610,333 )     1,614,477  

Net cash provided by operating activities

  $ 27,162,044     $ 25,838,423  
                 

CASH FLOWS FROM INVESTING ACTIVITIES

               

Net decrease (increase) in federal funds sold

    1,689,000       (474,000 )

Net decrease (increase) in interest-bearing deposits at financial institutions

    22,727,542       (23,981,295 )

Proceeds from sales of other real estate owned

    829,213       1,913,775  

Activity in securities portfolio:

               

Purchases

    (103,509,208 )     (111,622,489 )

Calls, maturities and redemptions

    40,435,714       109,421,584  

Paydowns

    30,123,674       21,939,878  

Sales

    21,969,870       87,772,898  

Activity in restricted investment securities:

               

Purchases

    (3,788,275 )     (25,700 )

Redemptions

    199,900       1,375,100  

Net increase in loans/leases originated and held for investment

    (269,891,345 )     (144,605,204 )

Purchase of premises and equipment

    (4,045,217 )     (3,871,166 )

Net cash paid for Community State Bank acquisition

    -       (69,905,355 )

Cash prepaid for Guaranty Bank acquisition

    (7,803,420 )     -  

Net cash used in investing activities

  $ (271,062,552 )   $ (132,061,974 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES

               

Net increase in deposit accounts

    225,109,315       227,918,002  

Net decrease in short-term borrowings

    (23,960,582 )     (84,647,299 )

Activity in Federal Home Loan Bank advances:

               

Term advances

    1,600,000       -  

Calls and maturities

    (6,000,000 )     (19,000,000 )

Net change in short-term and overnight advances

    35,955,000       1,300,000  

Prepayments

    -       (10,524,197 )

Activity in other borrowings:

               

Proceeds from other borrowings

    7,000,000       35,000,000  

Calls, maturities and scheduled principal payments

    (9,500,000 )     -  

Prepayments

    -       (50,320,407 )

Retirement of junior subordinated debentures

    -       (3,955,000 )

Payment of cash dividends on common stock

    (1,836,150 )     (1,460,157 )

Net proceeds from the common stock offering, 1,215,000 shares issued

    -       29,828,916  

Proceeds from issuance of common stock, net

    1,237,492       1,554,506  

Net cash provided by financing activities

  $ 229,605,075     $ 125,694,364  

Net increase (decrease) in cash and due from banks

    (14,295,433 )     19,470,813  

Cash and due from banks, beginning

    70,569,993       41,742,321  

Cash and due from banks, ending

  $ 56,274,560     $ 61,213,134  

 

(Continued)

 

 

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - continued

Nine Months Ended September 30, 2017 and 2016

 

   

2017

   

2016

 

Supplemental disclosure of cash flow information, cash payments for:

               

Interest

  $ 13,140,273     $ 9,081,850  

Income/franchise taxes

  $ 10,881,610     $ 9,487,002  
                 

Supplemental schedule of noncash investing activities:

               

Change in accumulated other comprehensive income, unrealized gains on securities available for sale and derivative instruments, net

  $ 1,387,055     $ 3,344,860  

Exchange of shares of common stock in connection with payroll taxes for restricted stock and in connection with stock options exercised

  $ (317,614 )   $ (477,387 )

Tax benefit of nonqualified stock options exercised

  $ N/A     $ 183,060  

Transfers of loans to other real estate owned

  $ 286,212     $ 51,000  

Due from broker for sales of securities

  $ -     $ 32,078,011  

Due to broker for purchases of securities

  $ 1,300,000     $ 15,190,000  

Due to counterparties for prepayment of FHLB advances and other borrowings

  $ -     $ (24,575,903 )

Dividends payable

  $ 658,110     $ 521,384  

Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds

  $ -     $ 2,132,415  

Increase in the fair value of interest rate swap assets and liabilities

  $ 264,721     $ 6,341,738  
                 
                 

Supplemental disclosure of cash flow information for Community State Bank acquisition:

               

Fair value of assets acquired:

               

Cash and due from banks *

  $ -     $ 10,094,645  

Federal funds sold

    -       698,000  

Interest-bearing deposits at financial institutions

    -       14,730,157  

Securities

    -       102,640,029  

Loans/leases receivable held for investment, net

    -       419,029,277  

Premises and equipment, net

    -       20,684,880  

Core deposit intangible

    -       6,352,653  

Restricted investment securities

    -       1,512,900  

Other real estate owned

    -       650,000  

Other assets

    -       4,763,224  

Total assets acquired

  $ -     $ 581,155,765  
                 

Fair value of liabilities assumed:

               

Deposits

  $ -     $ 486,298,262  

FHLB advances

    -       20,368,877  

Other liabilities

    -       4,897,564  

Total liabilities assumed

  $ -     $ 511,564,703  

Net assets acquired

  $ -     $ 69,591,062  
                 

Consideration paid:

               

Cash paid *

  $ -     $ 80,000,000  

Total consideration paid

  $ -     $ 80,000,000  
                 

Goodwill

  $ -     $ 10,408,938  

* Net cash paid at closing totaled $69,905,355

 

See Notes to Consolidated Financial Statements (Unaudited)

 

 

Part I

Item 1

QCR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2017

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation: The interim unaudited consolidated financial statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 10, 2017. Accordingly, footnote disclosures, which would substantially duplicate the disclosures contained in the audited consolidated financial statements, have been omitted.

 

The financial information of the Company included herein has been prepared in accordance with GAAP for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. Any differences appearing between the numbers presented in financial statements and management’s discussion and analysis are due to rounding. The results of the interim period ended September 30, 2017, are not necessarily indicative of the results expected for the year ending December 31, 2017, or for any other period.

 

The acronyms and abbreviations identified below are used throughout this Quarterly Report on Form 10-Q. It may be helpful to refer back to this page as you read this report.

 

 

Allowance: Allowance for estimated losses on loans/leases

 

Guaranty Bank: Guaranty Bank and Trust Company

 

AOCI: Accumulated other comprehensive income (loss)

 

HTM: Held to maturity

 

AFS: Available for sale

 

m2: m2 Lease Funds, LLC

 

ASC: Accounting Standards Codification

 

NIM: Net interest margin

 

ASU: Accounting Standards Update

 

NPA: Nonperforming asset

 

BOLI: Bank-owned life insurance

 

NPL: Nonperforming loan

 

Caps: Interest rate cap derivatives

 

OREO: Other real estate owned

 

Community National: Community National Bancorporation

 

OTTI: Other-than-temporary impairment

 

CRBT: Cedar Rapids Bank & Trust Company

 

PCI: Purchased credit impaired

 

CRE: Commercial real estate

 

Provision: Provision for loan/lease losses

 

CSB: Community State Bank

 

QCBT: Quad City Bank & Trust Company

 

C&I: Commercial and industrial

 

RB&T: Rockford Bank & Trust Company

 

Dodd-Frank Act: Dodd-Frank Wall Street Reform and 

 

ROAA: Return on Average Assets

 

     Consumer Protection Act

 

SBA: U.S. Small Business Administration

 

EPS: Earnings per share

 

SEC: Securities and Exchange Commission

 

Exchange Act: Securities Exchange Act of 1934, as amended

 

TA: Tangible assets

 

FASB: Financial Accounting Standards Board

 

TCE: Tangible common equity

 

FDIC: Federal Deposit Insurance Corporation

 

TDRs: Troubled debt restructurings

 

FHLB: Federal Home Loan Bank

 

TEY: Tax equivalent yield

 

FRB: Federal Reserve Bank of Chicago

 

The Company: QCR Holdings, Inc.

 

GAAP: Generally Accepted Accounting Principles

 

USDA: U.S. Department of Agriculture

 

Guaranty: Guaranty Bankshares, Ltd.

 

 

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries which include four commercial banks: QCBT, CRBT, CSB and RB&T. All are state-chartered commercial banks and all are members of the Federal Reserve system. The Company also engages in direct financing lease contracts through m2, a wholly-owned subsidiary of QCBT. All material intercompany transactions and balances have been eliminated in consolidation.

 

The acquisition of CSB occurred on August 31, 2016; therefore, the financial results of CSB for the periods since acquisition are included in this report.

 

On October 2, 2017, the Company announced the completion of its previously announced acquisition of Guaranty Bank, headquartered in Cedar Rapids, Iowa, from Guaranty. The financial results of Guaranty Bank are not included in this report because the closing was effective October 1, 2017. See Note 8 to the Consolidated Financial Statements for additional information about the acquisition.

 

 

Part I

Item 1

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

 

Recent accounting developments: In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 was originally effective for the Company on January 1, 2017; however, FASB issued ASU 2015-14 which defers the effective date in order to provide additional time for both public and private entities to evaluate the impact. ASU 2014-09 will now be effective for the Company on January 1, 2018 and it is not expected to have a significant impact on the Company’s consolidated financial statements.

 

In January 2016, FASB issued ASU 2016-01, Financial Instruments–Overall. ASU 2016-01 makes targeted adjustments to GAAP by eliminating the AFS classification for equity securities and requiring equity investments to be measured at fair value with changes in fair value recognized in net income. The standard also requires public business entities to use the exit price notion when measuring fair value of financial instruments for disclosure purposes. The standard clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to AFS securities in combination with the entity’s other deferred tax assets. It also requires an entity to present separately (within other comprehensive income) the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. Additionally, the standard eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and it is not expected to have a significant impact on the Company’s consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases. Under ASU 2016-02, lessees will be required to recognize a lease liability measured on a discounted basis and a right-of-use asset for all leases (with the exception of short-term leases). Lessor accounting is largely unchanged under ASU 2016-02. However, the definition of initial direct costs was updated to include only initial direct costs that are considered incremental. This change in definition will change the manner in which the Company recognizes the costs associated with originating leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for all entities. The Company is in the process of analyzing the impact of adoption on the Company’s consolidated financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. Under the standard, assets measured at amortized costs (including loans, leases and AFS securities) will be presented at the net amount expected to be collected. Rather than the “incurred” model that is currently being utilized, the standard will require the use of a forward-looking approach to recognizing all expected credit losses at the beginning of an asset’s life. For public companies, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Companies may choose to early adopt for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is in the process of analyzing the impact of adoption on the Company’s consolidated financial statements.

 

Effective January 1, 2017, the Company adopted ASU 2016-09, Compensation – Stock Compensation. Under the standard, the excess tax benefit (deficiency) related to stock options exercised and restricted stock awards vested is recorded as an adjustment to income tax expense. In the past, this tax benefit (deficiency) was recorded directly to equity. This change in accounting resulted in $191 thousand of reduced income tax in the third quarter of 2017 and $814 thousand of reduced income tax expense in the first nine months of 2017.

 

 

Part I

Item 1

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

 

NOTE 2 – INVESTMENT SECURITIES

 

The amortized cost and fair value of investment securities as of September 30, 2017 and December 31, 2016 are summarized as follows:

 

 

           

Gross

   

Gross

         
   

Amortized

   

Unrealized

   

Unrealized

   

Fair

 
   

Cost

   

Gains

   

(Losses)

   

Value

 

September 30, 2017:

                               

Securities HTM:

                               

Municipal securities

  $ 322,931,227     $ 2,084,997     $ (2,629,646 )   $ 322,386,578  

Other securities

    1,050,000       -       -       1,050,000  
    $ 323,981,227     $ 2,084,997     $ (2,629,646 )   $ 323,436,578  
                                 

Securities AFS:

                               

U.S. govt. sponsored agency securities

  $ 39,340,306     $ 129,768     $ (129,906 )   $ 39,340,168  

Residential mortgage-backed and related securities

    160,329,128       266,806       (1,627,425 )     158,968,509  

Municipal securities

    56,621,412       435,356       (293,708 )     56,763,060  

Other securities

    4,077,128       826,135       (20,578 )     4,882,685  
    $ 260,367,974     $ 1,658,065     $ (2,071,617 )   $ 259,954,422  
                                 

December 31, 2016:

                               

Securities HTM:

                               

Municipal securities

  $ 321,859,056     $ 2,200,577     $ (4,694,734 )   $ 319,364,899  

Other securities

    1,050,000       -       -       1,050,000  
    $ 322,909,056     $ 2,200,577     $ (4,694,734 )   $ 320,414,899  
                                 

Securities AFS:

                               

U.S. govt. sponsored agency securities

  $ 46,281,306     $ 132,886     $ (330,585 )   $ 46,083,607  

Residential mortgage-backed and related securities

    150,465,222       174,993       (2,938,088 )     147,702,127  

Municipal securities

    52,816,541       425,801       (637,916 )     52,604,426  

Other securities

    4,046,332       703,978       (27,331 )     4,722,979  
    $ 253,609,401     $ 1,437,658     $ (3,933,920 )   $ 251,113,139  

 

 

Part I

Item 1

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

 

The Company’s HTM municipal securities consist largely of private issues of municipal debt. The large majority of the municipalities are located within the Midwest. The municipal debt investments are underwritten using specific guidelines with ongoing monitoring.

 

The Company’s residential mortgage-backed and related securities portfolio consists entirely of government sponsored or government guaranteed securities. The Company has not invested in private mortgage-backed securities or pooled trust preferred securities.

 

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2017 and December 31, 2016, are summarized as follows:

 

 

   

Less than 12 Months

   

12 Months or More

   

Total

 
           

Gross

           

Gross

           

Gross

 
   

Fair

   

Unrealized

   

Fair

   

Unrealized

   

Fair

   

Unrealized

 
   

Value

   

Losses

   

Value

   

Losses

   

Value

   

Losses

 

September 30, 2017:

                                               

Securities HTM:

                                               

Municipal securities

  $ 17,779,999     $ (254,147 )   $ 68,663,362     $ (2,375,499 )   $ 86,443,361     $ (2,629,646 )
                                                 

Securities AFS:

                                               

U.S. govt. sponsored agency securities

  $ 23,607,646     $ (129,906 )   $ -     $ -     $ 23,607,646     $ (129,906 )

Residential mortgage-backed and related securities

    111,996,030       (1,255,971 )     12,648,688       (371,454 )     124,644,718       (1,627,425 )

Municipal securities

    18,776,501       (169,253 )     12,872,616       (124,455 )     31,649,117       (293,708 )

Other securities

    928,772       (20,578 )     -       -       928,772       (20,578 )
    $ 155,308,949     $ (1,575,708 )   $ 25,521,304     $ (495,909 )   $ 180,830,253     $ (2,071,617 )
                                                 

December 31, 2016:

                                               

Securities HTM:

                                               

Municipal securities

  $ 122,271,533     $ (4,076,647 )   $ 13,010,803     $ (618,087 )   $ 135,282,336     $ (4,694,734 )
                                                 

Securities AFS:

                                               

U.S. govt. sponsored agency securities

  $ 21,788,139     $ (257,640 )   $ 5,499,012     $ (72,945 )   $ 27,287,151     $ (330,585 )

Residential mortgage-backed and related securities

    121,506,582       (2,641,664 )     7,437,615       (296,424 )     128,944,197       (2,938,088 )

Municipal securities

    34,152,822       (618,462 )     338,099       (19,454 )     34,490,921       (637,916 )

Other securities

    3,177,414       (27,331 )     -       -       3,177,414       (27,331 )
    $ 180,624,957     $ (3,545,097 )   $ 13,274,726     $ (388,823 )   $ 193,899,683     $ (3,933,920 )

 

 

At September 30, 2017, the investment portfolio included 567 securities. Of this number, 203 securities were in an unrealized loss position. The aggregate losses of these securities totaled approximately 0.8% of the total amortized cost of the portfolio. Of these 203 securities, 80 securities had an unrealized loss for twelve months or more. All of the debt securities in unrealized loss positions are considered acceptable credit risks. Based upon an evaluation of the available evidence, including the recent changes in market rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities are temporary. In addition, the Company lacks the intent to sell these securities and it is not more-likely-than-not that the Company will be required to sell these debt securities before their anticipated recovery. At September 30, 2017 and December 31, 2016, equity securities represented less than 1% of the total portfolio.

 

The Company did not recognize OTTI on any debt or equity securities for the three or nine months ended September 30, 2017 and 2016.   

 

 

Part I

Item 1

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

 

All sales of securities for the three and nine months ended September 30, 2017 and 2016 were from securities identified as AFS. Information on proceeds received, as well as pre-tax gross gains and losses from sales on those securities are as follows:

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30, 2017

   

September 30, 2016

   

September 30, 2017

   

September 30, 2016

 
                                 

Proceeds from sales of securities*

  $ 8,415,795     $ 58,775,764     $ 21,969,870     $ 119,850,909  

Pre-tax gross gains from sales of securities

    6,312       4,281,828       65,880       4,815,373  

Pre-tax gross losses from sales of securities

    (69,900 )     (30,055 )     (91,004 )     (187,090 )

 

  *

Proceeds from sales of securities for the nine months ended September 30, 2016 includes $32.1 million receivable from the broker for the sale of securities

 

The amortized cost and fair value of securities as of September 30, 2017 by contractual maturity are shown below. Expected maturities of residential mortgage-backed and related securities may differ from contractual maturities because the residential mortgages underlying the residential mortgage-backed and related securities may be prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following table. “Other securities” AFS are excluded from the maturity categories as there is no fixed maturity date for those securities.

 

 

   

Amortized Cost

   

Fair Value

 

Securities HTM:

               

Due in one year or less

  $ 2,940,492     $ 2,940,378  

Due after one year through five years

    18,268,264       18,374,059  

Due after five years

    302,772,471       302,122,141  
    $ 323,981,227     $ 323,436,578  
                 

Securities AFS:

               

Due in one year or less

  $ 3,135,008     $ 3,143,223  

Due after one year through five years

    26,545,903       26,712,930  

Due after five years

    66,280,807       66,247,075  
      95,961,718       96,103,228  

Residential mortgage-backed and related securities

    160,329,128       158,968,509  

Other securities

    4,077,128       4,882,685  
    $ 260,367,974     $ 259,954,422  

 

Portions of the U.S. government sponsored agency securities and municipal securities contain call options, at the discretion of the issuer, to terminate the security at par and at predetermined dates prior to the stated maturity. These callable securities are summarized as follows:

 

   

Amortized Cost

   

Fair Value

 

Securities HTM:

               

Municipal securities

  $ 170,900,193     $ 171,633,005  
                 

Securities AFS:

               

U.S. govt. sponsored agency securities

    5,048,652       5,033,292  

Municipal securities

    45,727,004       45,640,630  
    $ 50,775,656     $ 50,673,922  

 

 

Part I

Item 1

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

 

As of September 30, 2017, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 119 issuers with fair values totaling $100.4 million and revenue bonds issued by 132 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $278.7 million. The Company held investments in general obligation bonds in 21 states, including six states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in 14 states, including six states in which the aggregate fair value exceeded $5.0 million.

 

As of December 31, 2016, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 116 issuers with fair values totaling $116.5 million and revenue bonds issued by 120 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $255.5 million. The Company held investments in general obligation bonds in 21 states, including five states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in 12 states, including six states in which the aggregate fair value exceeded $5.0 million.

 

The amortized cost and fair values of the Company’s portfolio of general obligation bonds are summarized in the following tables by the issuer’s state:

 

September 30, 2017:

                               

U.S. State:

 

Number of

Issuers

   

Amortized Cost

   

Fair Value

   

Average

Exposure Per

Issuer
(Fair Value)

 
                                 

North Dakota

    7     $ 21,625,068     $ 21,593,895     $ 3,084,842  

Illinois

    21       18,319,644       18,501,854       881,041  

Iowa

    21       17,990,978       17,993,895       856,852  

Missouri

    16       8,956,396       8,983,511       561,469  

Ohio

    9       8,289,069       8,180,432       908,937  

Texas

    10       6,609,101       6,543,660       654,366  

Other

    35       18,520,725       18,626,763       532,193  

Total general obligation bonds

    119     $ 100,310,981     $ 100,424,010     $ 843,899  

 

 

December 31, 2016:

                               

U.S. State:

 

Number of

Issuers

   

Amortized Cost

   

Fair Value

   

Average

Exposure

Per Issuer
(Fair Value)

 
                                 

Iowa

    27     $ 32,258,612     $ 32,231,936     $ 1,193,775  

Illinois

    19       29,214,559       29,308,438       1,542,549  

North Dakota

    7       22,169,050       21,499,075       3,071,296  

Missouri

    14       8,291,192       8,323,245       594,518  

Ohio

    8       6,790,398       6,651,897       831,487  

Other

    41       18,481,496       18,458,044       450,196  

Total general obligation bonds

    116     $ 117,205,307     $ 116,472,635     $ 1,004,074  

 

 

Part I

Item 1

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

 

The amortized cost and fair values of the Company’s portfolio of revenue bonds are summarized in the following tables by the issuer’s state:

 

September 30, 2017:

                               

U.S. State:

 

Number of

Issuers

   

Amortized Cost

   

Fair Value

   

Average

Exposure

Per Issuer
(Fair Value)

 
                                 

Missouri

    55     $ 107,274,712     $ 107,108,520     $ 1,947,428  

Iowa

    28       62,468,124       62,615,875       2,236,281  

Indiana

    23       50,080,705       49,560,095       2,154,787  

Ohio

    5       19,674,376       19,523,478       3,904,696  

Kansas

    6       12,877,308       12,879,871       2,146,645  

North Dakota

    5       11,496,420       11,471,544       2,294,309  

Other

    10       15,370,013       15,566,245       1,556,625  

Total revenue bonds

    132     $ 279,241,658     $ 278,725,628     $ 2,111,558