10-Q

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 June 30, 2016

[ ]      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 7^th Street, Moline, Illinois 61265

(Address of principal executive offices, including zip code)

(309) 743-7724

(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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.      (Check one):               

Large accelerated filer [ ] Accelerated filer [ X ] Non-accelerated filer [ ] Smaller reporting company [ ]

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

Yes [ ]          No [ X ]   

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: As of August 1, 2016, the Registrant had outstanding 13,062,382 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 As of June 30, 2016 and December 31, 2015		3
		Consolidated Statements of Income (Loss) For the Three Months Ended June 30, 2016 and 2015		4
		Consolidated Statements of Income For the Six Months Ended June 30, 2016 and 2015		5
		Consolidated Statements of Comprehensive Income (Loss) For the Three and Six Months Ended June 30, 2016 and 2015		6
		Consolidated Statements of Changes in Stockholders' Equity For the Three and Six Months Ended June 30, 2016 and 2015		7
		Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2016 and 2015		8
		Notes to Consolidated Financial Statements
		Note 1.	Summary of Significant Accounting Policies	10
		Note 2.	Investment Securities	12
		Note 3.	Loans/Leases Receivable	17
		Note 4.	Borrowings	27
		Note 5.	Earnings Per Share	27
		Note 6.	Fair Value	28
		Note 7.	Business Segment Information	31
		Note 8.	Regulatory Capital Requirements	33
		Note 9.	Acquisition of Community State Bank and Common Stock Offering	35
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations
		Introduction		36
		General		36
		Executive Overview		36
		Long-Term Financial Goals		38
		Strategic Developments		39
		GAAP to Non-GAAP Reconciliations		41
		Net Interest Income (Tax Equivalent Basis)		43
		Critical Accounting Policies		48

1

		Results of Operations
		Interest Income	49
		Interest Expense	49
		Provision for Loan/Lease Losses	50
		Noninterest Income	51
		Noninterest Expense	54
		Income Taxes	56
		Financial Condition	57
		Investment Securities	57
		Loans/Leases	59
		Allowance for Estimated Losses on Loans/Leases	61
		Nonperforming Assets	63
		Deposits	64
		Borrowings	64
		Stockholders' Equity	66
		Liquidity and Capital Resources	66
		Special Note Concerning Forward-Looking Statements	69
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	70
	Item 4	Controls and Procedures	72
Part II	OTHER INFORMATION
	Item 1	Legal Proceedings	73
	Item 1A	Risk Factors	73
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	73
	Item 3	Defaults upon Senior Securities	73
	Item 4	Mine Safety Disclosures	73
	Item 5	Other Information	73
	Item 6	Exhibits	74
Signatures			75

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.

2

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of June 30, 2016 and December 31, 2015

	June 30,			December 31,
	2016			2015
ASSETS
Cash and due from banks	$	49,581,154		$	41,742,321
Federal funds sold		20,825,000			19,850,000
Interest-bearing deposits at financial institutions		47,607,304			36,313,965
Securities held to maturity, at amortized cost		280,345,532			253,674,159
Securities available for sale, at fair value		230,613,784			323,434,982
Total securities		510,959,316			577,109,141
Loans receivable held for sale		1,558,500			565,850
Loans/leases receivable held for investment		1,921,214,897			1,797,456,825
Gross loans/leases receivable		1,922,773,397			1,798,022,675
Less allowance for estimated losses on loans/leases		(28,097,490	)		(26,140,906	)
Net loans/leases receivable		1,894,675,907			1,771,881,769
Bank-owned life insurance		56,359,784			55,485,655
Premises and equipment, net		38,751,532			37,350,352
Restricted investment securities		16,693,125			14,835,925
Other real estate owned, net		6,179,102			7,150,658
Goodwill		3,222,688			3,222,688
Core deposit intangible		1,371,653			1,471,409
Other assets		37,207,723			26,784,392
Total assets	$	2,683,434,288		$	2,593,198,275
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$	615,764,311		$	615,292,211
Interest-bearing		1,357,829,473			1,265,373,973
Total deposits		1,973,593,784			1,880,666,184
Short-term borrowings		51,561,748			144,662,716
Federal Home Loan Bank advances		196,900,000			151,000,000
Other borrowings		100,000,000			110,000,000
Junior subordinated debentures		33,412,643			38,499,052
Other liabilities		52,848,722			42,484,573
Total liabilities		2,408,316,897			2,367,312,525
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value; shares authorized 250,000		-			-
June 2016 and December 2015 - No shares issued or outstanding
Common stock, $1 par value; shares authorized 20,000,000		13,057,368			11,761,083
June 2016 - 13,057,368 shares issued and outstanding
December 2015 - 11,761,083 shares issued and outstanding
Additional paid-in capital		155,453,781			123,282,851
Retained earnings		105,024,027			92,965,645
Accumulated other comprehensive income (loss):
Securities available for sale		2,730,155			(1,324,408	)
Interest rate cap derivatives		(1,147,940	)		(799,421	)
Total stockholders' equity		275,117,391			225,885,750
Total liabilities and stockholders' equity	$	2,683,434,288		$	2,593,198,275

See Notes to Consolidated Financial Statements (Unaudited)

3

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

Three Months Ended June 30,

	2016		2015
Interest and dividend income:
Loans/leases, including fees	$	20,238,179	$	18,245,724
Securities:
Taxable		1,192,541		1,735,495
Nontaxable		2,276,203		1,890,320
Interest-bearing deposits at financial institutions		62,242		64,665
Restricted investment securities		133,546		108,161
Federal funds sold		10,573		6,247
Total interest and dividend income		23,913,284		22,050,612
Interest expense:
Deposits		1,344,398		1,083,487
Short-term borrowings		18,065		53,244
Federal Home Loan Bank advances		415,933		1,001,646
Other borrowings		824,437		1,108,442
Junior subordinated debentures		301,638		312,957
Total interest expense		2,904,471		3,559,776
Net interest income		21,008,813		18,490,836
Provision for loan/lease losses		1,197,850		2,348,665
Net interest income after provision for loan/lease losses		19,810,963		16,142,171
Noninterest income:
Trust department fees		1,512,083		1,511,176
Investment advisory and management fees		692,738		758,433
Deposit service fees		946,810		924,642
Gains on sales of residential real estate loans, net		84,413		95,535
Gains on sales of government guaranteed portions of loans, net		1,603,890		69,346
Swap fee income		167,582		393,723
Securities gains, net		18,030		-
Earnings on bank-owned life insurance		480,520		433,152
Debit card fees		343,748		255,000
Correspondent banking fees		244,939		285,379
Participation service fees on commercial loan participations		246,010		223,827
Fee income from early termination of leases		66,043		76,722
Credit card issuing fees		139,073		135,649
Other		216,522		298,650
Total noninterest income		6,762,401		5,461,234
Noninterest expense:
Salaries and employee benefits		10,917,473		11,091,952
Occupancy and equipment expense		1,884,556		1,865,552
Professional and data processing fees		1,542,322		1,470,695
Acquisition costs		354,969		-
FDIC insurance, other insurance and regulatory fees		649,604		730,563
Loan/lease expense		154,349		208,552
Net cost of operations of other real estate		277,911		(47,876	)
Advertising and marketing		433,451		489,504
Postage and communications		256,567		214,142
Stationery and supplies		157,924		136,808
Bank service charges		415,350		358,996
Losses on debt extinguishment, net		-		6,894,185
Correspondent banking expense		181,776		165,091
Other		517,501		523,470
Total noninterest expense		17,743,753		24,101,634
Net income (loss) before income taxes		8,829,611		(2,498,229	)
Federal and state income tax expense (benefit)		2,153,144		(1,974,411	)
Net income (loss)	$	6,676,467	$	(523,818	)
Basic earnings (loss) per common share	$	0.54	$	(0.05	)
Diluted earnings (loss) per common share	$	0.53	$	(0.05	)
Weighted average common shares outstanding		12,335,077		9,946,744
Weighted average common and common equivalent shares outstanding		12,516,474		9,946,744
Cash dividends declared per common share	$	0.04	$	0.04

See Notes to Consolidated Financial Statements (Unaudited)

4

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Six Months Ended June 30,

	2016		2015
Interest and dividend income:
Loans/leases, including fees	$	39,938,549	$	36,250,243
Securities:
Taxable		2,548,744		3,678,260
Nontaxable		4,518,218		3,620,888
Interest-bearing deposits at financial institutions		122,559		141,719
Restricted investment securities		264,110		250,479
Federal funds sold		23,163		10,753
Total interest and dividend income		47,415,343		43,952,342
Interest expense:
Deposits		2,634,196		2,155,932
Short-term borrowings		61,131		117,269
Federal Home Loan Bank advances		857,637		2,445,361
Other borrowings		1,649,520		2,340,328
Junior subordinated debentures		606,524		620,399
Total interest expense		5,809,008		7,679,289
Net interest income		41,606,335		36,273,053
Provision for loan/lease losses		3,270,835		4,059,121
Net interest income after provision for loan/lease losses		38,335,500		32,213,932
Noninterest income:
Trust department fees		3,087,990		3,144,571
Investment advisory and management fees		1,351,123		1,468,476
Deposit service fees		1,877,889		1,825,998
Gains on sales of residential real estate loans, net		144,799		181,675
Gains on sales of government guaranteed portions of loans, net		2,482,418		140,319
Swap fee income		1,024,540		1,119,930
Securities gains, net		376,510		416,933
Earnings on bank-owned life insurance		874,129		911,891
Debit card fees		651,399		493,000
Correspondent banking fees		547,069		605,000
Participation service fees on commercial loan participations		456,719		445,776
Fee income from early termination of leases		77,793		161,560
Credit card issuing fees		275,728		269,810
Other		356,768		498,073
Total noninterest income		13,584,874		11,683,012
Noninterest expense:
Salaries and employee benefits		21,718,380		22,126,404
Occupancy and equipment expense		3,711,544		3,659,723
Professional and data processing fees		2,989,735		2,941,212
Acquisition costs		354,969		-
FDIC insurance, other insurance and regulatory fees		1,283,969		1,449,620
Loan/lease expense		317,168		511,475
Net cost of operations of other real estate		380,094		28,975
Advertising and marketing		819,710		907,741
Postage and communications		473,657		463,098
Stationery and supplies		322,795		279,363
Bank service charges		831,281		696,454
Losses on debt extinguishment, net		83,197		6,894,185
Correspondent banking expense		358,765		340,794
Other		1,052,987		1,006,751
Total noninterest expense		34,698,251		41,305,795
Net income before income taxes		17,222,123		2,591,149
Federal and state income tax expense (benefit)		4,172,167		(1,062,922	)
Net income	$	13,049,956	$	3,654,071
Basic earnings per common share	$	1.08	$	0.41
Diluted earnings per common share	$	1.07	$	0.40
Weighted average common shares outstanding		12,064,349		8,961,327
Weighted average common and common equivalent shares outstanding		12,235,212		9,098,697
Cash dividends declared per common share	$	0.08	$	0.04

See Notes to Consolidated Financial Statements (Unaudited)

5

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three and Six Months Ended June 30, 2016 and 2015

	Three Months Ended June 30,
	2016			2015
Net income (loss)	$	6,676,467		$	(523,818	)
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale:
Unrealized holding gains (losses) arising during the period before tax		2,081,800			(3,954,857	)
Less reclassification adjustment for gains included in net income before tax		18,030			-
		2,063,770			(3,954,857	)
Unrealized gains (losses) on interest rate cap derivatives:
Unrealized holding gains (losses) arising during the period before tax		(159,691	)		119,433
Less reclassification adjustment for ineffectiveness and caplet amortization before tax		20,154			9,561
		(179,845	)		109,872
Other comprehensive income (loss), before tax		1,883,925			(3,844,985	)
Tax expense (benefit)		703,292			(1,466,064	)
Other comprehensive income (loss), net of tax		1,180,633			(2,378,921	)
Comprehensive income (loss)	$	7,857,100		$	(2,902,739	)

	Six Months Ended June 30,
	2016			2015
Net income	$	13,049,956		$	3,654,071
Other comprehensive income (loss):
Unrealized gains on securities available for sale:
Unrealized holding gains arising during the period before tax		6,945,518			443,347
Less reclassification adjustment for gains included in net income before tax		376,510			416,933
		6,569,008			26,414
Unrealized losses on interest rate cap derivatives:
Unrealized holding losses arising during the period before tax		(549,627	)		(252,950	)
Less reclassification adjustment for ineffectiveness and caplet amortization before tax		35,591			10,463
		(585,218	)		(263,413	)
Other comprehensive income (loss), before tax		5,983,790			(236,999	)
Tax expense (benefit)		2,277,746			(78,943	)
Other comprehensive income (loss), net of tax		3,706,044			(158,056	)
Comprehensive income	$	16,756,000		$	3,496,015

See Notes to Consolidated Financial Statements (Unaudited)

6

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

Three and Six Months Ended June 30, 2016 and 2015

										Accumulated
				Additional						Other
	Common			Paid-In			Retained			Comprehensive			Treasury
	Stock			Capital			Earnings			Income (Loss)			Stock		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 30,331 shares of common stock as a result of stock options exercised		30,331			382,639			-			-			-		412,970
Stock compensation expense		-			382,761											382,761
Tax benefit of nonqualified stock options exercised		-			22,508			-			-			-		22,508
Restricted stock awards		22,382			(22,382	)		-			-			-		-
Exchange of 3,939 shares of common stock in connection with restricted stock vested, net		(3,939	)		(84,972	)		-			-			-		(88,911	)
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 income, net of tax		-			-			-			1,180,633			-		1,180,633
Common cash dividends declared, $0.04 per share		-			-			(520,701	)		-			-		(520,701	)
Proceeds from the 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 acquistion 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	)		500			-			-			-		-
Balance June 30, 2016	$	13,057,368		$	155,453,781		$	105,024,027		$	1,582,215		$	-	$	275,117,391

										Accumulated
							Additional			Other
	Common			Paid-In			Retained			Comprehensive			Treasury
	Stock			Capital			Earnings			Income (Loss)			Stock			Total
Balance December 31, 2014	$	8,074,443		$	61,668,968		$	77,876,824		$	(1,935,216	)	$	(1,606,510	)	$	144,078,509
Net income		-			-			4,177,889			-			-			4,177,889
Other comprehensive income, net of tax		-			-			-			2,220,865			-			2,220,865
Proceeds from issuance of 5,679 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan		5,679			82,641			-			-			-			- 88,320
Proceeds from issuance of 9,688 shares of common stock as a result of stock options exercised		9,688			94,728			-			-			-			104,416
Stock compensation expense		-			367,775			-			-			-			367,775
Tax benefit of nonqualified stock options exercised		-			15,651			-			-			-			15,651
Exchange of 3,272 shares of common stock in connection with restricted stock vested, net		(3,272	)		(54,188	)		-			-			-			(57,460	)
Restricted stock awards		26,502			(26,502	)		-			-			-			-
Balance March 31, 2015	$	8,113,040		$	62,149,073		$	82,054,713		$	285,649		$	(1,606,510	)	$	150,995,965
Net loss		-			-			(523,818	)		-			-			(523,818	)
Other comprehensive loss, net of tax		-			-			-			(2,378,921	)		-			(2,378,921	)
Common cash dividends declared, $0.04 per share		-			-			(464,706	)		-			-			(464,706	)
Proceeds from issuance of 3,680,000 shares of common stock, net of issuance costs		3,680,000			59,804,123			-			-			-			63,484,123
Proceeds from issuance of 8,558 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan		8,558			128,927			-			-			-			137,485
Proceeds from issuance of 17,240 shares of common stock as a result of stock options exercised		17,240			238,717			-			-			-			255,957
Tax benefit of nonqualified stock options exercised		-			15,827			-			-			-			15,827
Exchange of 630 shares of common stock in connection with stock options exercised		(630	)		(10,616	)		-			-			-			(11,246	)
Stock compensation expense		-			186,751			-			-			-			186,751
Restricted stock awards		1,616			(1,616	)		-			-			-			-
Balance June 30, 2015	$	11,819,824		$	122,511,186		$	81,066,189		$	(2,093,272	)	$	(1,606,510	)	$	211,697,417

See Notes to Consolidated Financial Statements (Unaudited)

7

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30, 2016 and 2015

	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	13,049,956		$	3,654,071
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,552,176			1,520,380
Provision for loan/lease losses		3,270,835			4,059,121
Stock-based compensation expense		570,330			554,526
Deferred compensation expense accrued		623,831			767,292
Losses (gains) on other real estate owned, net		157,739			(69,923	)
Amortization of premiums on securities, net		611,900			485,085
Securities gains, net		(376,510	)		(416,933	)
Loans originated for sale		(43,526,263	)		(15,205,967	)
Proceeds on sales of loans		45,160,830			14,532,761
Gains on sales of residential real estate loans		(144,799	)		(181,675	)
Gains on sales of government guaranteed portions of loans		(2,482,418	)		(140,319	)
Losses on debt extinguishment, net		83,197			6,894,185
Amortization of core deposit intangible		99,756			99,756
Accretion of acquisition fair value adjustments, net		(61,065	)		(267,414	)
Increase in cash value of bank-owned life insurance		(874,129	)		(911,891	)
Increase in other assets		(4,330,548	)		(4,767,394	)
Increase (decrease) in other liabilities		1,386,323			(1,722,759	)
Net cash provided by operating activities	$	14,771,141		$	8,882,902
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in federal funds sold		(975,000	)		24,225,000
Net increase in interest-bearing deposits at financial institutions		(11,293,339	)		(12,348,141	)
Proceeds from sales of other real estate owned		864,817			1,723,317
Activity in securities portfolio:
Purchases		(97,132,279	)		(181,272,218	)
Calls, maturities and redemptions		96,704,276			177,366,721
Paydowns		13,321,512			8,003,250
Sales		61,075,145			54,966,923
Activity in restricted investment securities:
Purchases		(1,857,200	)		(1,338,650	)
Redemptions		-			3,431,700
Net increase in loans/leases originated and held for investment		(124,972,098	)		(85,814,353	)
Purchase of premises and equipment		(2,953,356	)		(3,927,981	)
Net cash used in investing activities	$	(67,217,522	)	$	(14,984,432	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts		92,920,820			157,102,985
Net decrease in short-term borrowings		(93,100,968	)		(99,776,818	)
Activity in Federal Home Loan Bank advances:
Term advances		-			5,000,000
Maturities		(9,000,000	)		(22,000,000	)
Net change in short-term and overnight advances		64,900,000			21,500,000
Prepayments		(10,524,197	)		(81,192,185	)
Activity in other borrowings:
Maturities and scheduled principal payments		-			(7,350,000	)
Prepayments		(10,759,000	)		(29,177,000	)
Retirement of junior subordinated debentures		(3,955,000	)		-
Payment of cash dividends on common stock		(939,456	)		(315,954	)
Net proceeds from the common stock offering, 3,680,000 shares issued		-			63,484,123
Net proceeds from the common stock offering, 1,215,000 shares issued		29,828,916			-
Proceeds from issuance of common stock, net		914,099			586,178
Net cash provided by financing activities	$	60,285,214		$	7,861,329
Net increase in cash and due from banks		7,838,833			1,759,799
Cash and due from banks, beginning		41,742,321			38,235,019
Cash and due from banks, ending	$	49,581,154		$	39,994,818

(Continued)

8

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - continued

Six Months Ended June 30, 2016 and 2015

	2016			2015
Supplemental disclosure of cash flow information, cash payments for:
Interest	$	5,852,789		$	7,903,945
Income/franchise taxes	$	4,869,300		$	1,940,275
Supplemental schedule of noncash investing activities:
Change in accumulated other comprehensive income, unrealized gains (losses) on securities available for sale and derivative instruments, net	$	3,706,044		$	(158,056	)
Exchange of shares of common stock in connection with payroll taxes for restricted stock and in connection with stock options exercised	$	(88,911	)	$	(68,706	)
Tax benefit of nonqualified stock options exercised	$	110,366		$	31,478
Transfers of loans to other real estate owned	$	51,000		$	837,782
Due to broker for purchases of securities	$	(1,500,000	)	$	-
Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds	$	2,132,415		$	-

See Notes to Consolidated Financial Statements (Unaudited)

9

Part I

Item 1

QCR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2016

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, 2015, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2016. 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 U.S. 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 June 30, 2016, are not necessarily indicative of the results expected for the year ending December 31, 2016, 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	GAAP: Generally Accepted Accounting Principles
AOCI: Accumulated other comprehensive income (loss)	HTM: Held to maturity
AFS: Available for sale	m2: m2 Lease Funds, LLC
ASU: Accounting Standards Update	MD&A: Management's Discussion & Analysis
BOLI: Bank-owned life insurance	NIM: Net interest margin
Caps: Interest rate cap derivatives	NPA: Nonperforming asset
Community National: Community National Bancorporation	NPL: Nonperforming loan
CNB: Community National Bank	OREO: Other real estate owned
CRBT: Cedar Rapids Bank & Trust Company	OTTI: Other-than-temporary impairment
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	The Company: QCR Holdings, Inc.
FRB: Federal Reserve Bank of Chicago	USDA: U.S. Department of Agriculture

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

On May 23, 2016, the Company announced the signing of a definitive agreement to acquire CSB, headquartered in Ankeny, Iowa, from Van Diest Investment Company. The transaction is expected to close during the third quarter of 2016, subject to certain customary closing conditions. The financial results of CSB are not recognized in this Report. See Note 9 to the Consolidated Financial Statements for additional information about the planned acquisition.

10

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. The Company is in the process of analyzing the impact of adoption.

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 March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation. ASU 2016-09 aims to simplify the accounting for companies that issue share-based payment awards to their employees. Simplification includes the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows of share-based payment awards. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, 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.

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.

11

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Reclassifications: Certain amounts in the prior year’s consolidated financial statements have been reclassified, with no effect on net income or stockholders’ equity, to conform with the current period presentation.

NOTE 2 – INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of June 30, 2016 and December 31, 2015 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
June 30, 2016:
Securities HTM:
Municipal securities	$	279,295,532	$	6,194,753	$	(731,170	)	$	284,759,115
Other securities		1,050,000		-		-			1,050,000
	$	280,345,532	$	6,194,753	$	(731,170	)	$	285,809,115
Securities AFS:
U.S. govt. sponsored agency securities	$	87,068,743	$	1,332,981	$	(80,276	)	$	88,321,448
Residential mortgage-backed and related securities		114,990,076		1,855,710		(80,276	)		116,765,510
Municipal securities		22,463,188		945,994		(16,365	)		23,392,817
Other securities		1,684,787		449,222		-			2,134,009
	$	226,206,794	$	4,583,907	$	(176,917	)	$	230,613,784
December 31, 2015:
Securities HTM:
Municipal securities	$	252,624,159	$	3,190,558	$	(1,173,432	)	$	254,641,285
Other securities		1,050,000		-		-			1,050,000
	$	253,674,159	$	3,190,558	$	(1,173,432	)	$	255,691,285
Securities AFS:
U.S. govt. sponsored agency securities	$	216,281,416	$	104,524	$	(2,848,561	)	$	213,537,379
Residential mortgage-backed and related securities		81,442,479		511,095		(1,283,439	)		80,670,135
Municipal securities		26,764,981		872,985		(59,378	)		27,578,588
Other securities		1,108,124		540,919		(163	)		1,648,880
	$	325,597,000	$	2,029,523	$	(4,191,541	)	$	323,434,982

12

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 commercial 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 June 30, 2016 and December 31, 2015, 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
June 30, 2016:
Securities HTM:
Municipal securities	$	5,805,354	$	(384,457	)	$	14,508,402	$	(346,713	)	$	20,313,756	$	(731,170	)
Securities AFS:
U.S. govt. sponsored agency securities	$	5,825,476	$	(80,276	)	$	-	$	-		$	5,825,476	$	(80,276	)
Residential mortgage-backed and related securities		4,337,187		(7,492	)		8,829,330		(72,784	)		13,166,517		(80,276	)
Municipal securities		380,749		(206	)		850,050		(16,159	)		1,230,799		(16,365	)
Other securities		-		-			-		-			-		-
	$	10,543,412	$	(87,974	)	$	9,679,380	$	(88,943	)	$	20,222,792	$	(176,917	)
December 31, 2015:
Securities HTM:
Municipal securities	$	14,803,408	$	(294,438	)	$	19,927,581	$	(878,994	)	$	34,730,989	$	(1,173,432	)
Securities AFS:
U.S. govt. sponsored agency securities	$	112,900,327	$	(1,397,591	)	$	64,476,661	$	(1,450,970	)	$	177,376,988	$	(2,848,561	)
Residential mortgage-backed and related securities		40,356,921		(730,466	)		19,836,637		(552,973	)		60,193,558		(1,283,439	)
Municipal securities		2,220,800		(31,807	)		848,329		(27,571	)		3,069,129		(59,378	)
Other securities		411		(163	)		-		-			411		(163	)
	$	155,478,459	$	(2,160,027	)	$	85,161,627	$	(2,031,514	)	$	240,640,086	$	(4,191,541	)

At June 30, 2016, the investment portfolio included 447 securities. Of this number, 30 securities were in an unrealized loss position. The aggregate losses of these securities totaled less than 1% of the total amortized cost of the portfolio. Of these 30 securities, 17 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 does not intend 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 June 30, 2016 and December 31, 2015, 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 six months ended June 30, 2016 and 2015.   

13

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

All sales of securities for the three and six months ended June 30, 2016 and 2015, respectively, 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				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016			June 30, 2015
Proceeds from sales of securities	$	5,548,294	$	-	$	61,075,145		$	54,966,923
Pre-tax gross gains from sales of securities		18,030		-		533,545			569,551
Pre-tax gross losses from sales of securities		-		-		(157,035	)		(152,618	)

The amortized cost and fair value of securities as of June 30, 2016 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	$	4,972,563	$	4,993,619
Due after one year through five years		20,232,407		20,415,409
Due after five years		255,140,562		260,400,087
	$	280,345,532	$	285,809,115
Securities AFS:
Due in one year or less	$	2,133,829	$	2,141,186
Due after one year through five years		54,381,038		55,669,426
Due after five years		53,017,064		53,903,653
	$	109,531,931	$	111,714,265
Residential mortgage-backed and related securities		114,990,076		116,765,510
Other securities		1,684,787		2,134,009
	$	226,206,794	$	230,613,784

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	$	153,065,142	$	156,170,970
Securities AFS:
U.S. govt. sponsored agency securities		23,616,009		23,718,901
Municipal securities		13,844,290		14,296,378
	$	37,460,299	$	38,015,279

14

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

As of June 30, 2016, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 77 issuers with fair values totaling $69.0 million and revenue bonds issued by 99 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $239.1 million. The Company held investments in general obligation bonds in 19 states, including four states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in nine states, including four states in which the aggregate fair value exceeded $5.0 million.

As of December 31, 2015, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 82 issuers with fair values totaling $67.8 million and revenue bonds issued by 92 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $214.4 million. The Company held investments in general obligation bonds in 19 states, including four states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in nine states, including four 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:

June 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		13	$	19,441,057	$	19,965,926	$	1,535,840
Illinois		9		10,127,747		10,527,337		1,169,704
Missouri		12		7,349,505		7,519,474		626,623
North Dakota		6		16,208,320		16,872,189		2,812,032
Other		37		13,738,908		14,133,036		381,974
Total general obligation bonds		77	$	66,865,537	$	69,017,962	$	896,337

December 31, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		15	$	19,974,939	$	20,247,108	$	1,349,807
Illinois		9		10,928,700		11,264,348		1,251,594
North Dakota		5		10,890,000		11,050,235		2,210,047
Missouri		12		7,924,800		7,986,856		665,571
Other		41		16,965,393		17,229,485		420,231
Total general obligation bonds		82	$	66,683,832	$	67,778,032	$	826,561

15

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:

June 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		41	$	89,033,470	$	90,174,695	$	2,199,383
Iowa		26		73,076,794		74,933,480		2,882,057
Indiana		18		40,009,789		40,615,477		2,256,415
Kansas		5		13,172,824		13,315,662		2,663,132
North Dakota		4		8,161,630		8,359,661		2,089,915
Other		5		11,438,676		11,734,995		2,346,999
Total revenue bonds		99	$	234,893,183	$	239,133,970	$	2,415,495

December 31, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		41	$	78,593,590	$	79,015,378	$	1,927,204
Iowa		26		70,773,660		71,659,410		2,756,131
Indiana		17		40,018,381		40,210,320		2,365,313
Kansas		3		11,748,679		11,821,055		3,940,352
Other		5		11,570,998		11,735,678		2,347,136
Total revenue bonds		92	$	212,705,308	$	214,441,841	$	2,330,890

Both general obligation and revenue bonds are diversified across many issuers. As of June 30, 2016 and December 31, 2015, the Company did not hold general obligation or revenue bonds of any single issuer, the aggregate book or market value of which exceeded 4% of the Company’s stockholders’ equity. Of the general obligation and revenue bonds in the Company’s portfolio, the majority are unrated bonds that represent small, private issuances. All unrated bonds were underwritten according to loan underwriting standards and have an average loan risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services such as water, sewer, education, and medical facilities.

The Company’s municipal securities are owned by each of the three charters, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. Each charter is monitored individually, and as of June 30, 2016, all were well within policy limitations approved by the board of directors. Policy limits are calculated as a percentage of total risk-based capital.

As of June 30, 2016, the Company’s standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credit ratings than those assigned by a nationally recognized statistical rating organization, or in the case of unrated bonds, the rating assigned using the credit underwriting standards.

16

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NOTE 3 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of June 30, 2016 and December 31, 2015 is presented as follows:

	As of June 30,			As of December 31,
	2016			2015
C&I loans	$	706,261,186		$	648,159,892
CRE loans
Owner-occupied CRE		258,688,445			252,523,164
Commercial construction, land development, and other land		48,948,825			49,083,844
Other non owner-occupied CRE		476,741,839			422,761,757
		784,379,109			724,368,765
Direct financing leases *		169,927,481			173,655,605
Residential real estate loans **		180,482,005			170,432,530
Installment and other consumer loans		73,658,172			73,669,493
		1,914,707,953			1,790,286,285
Plus deferred loan/lease origination costs, net of fees		8,065,444			7,736,390
		1,922,773,397			1,798,022,675
Less allowance		(28,097,490	)		(26,140,906	)
	$	1,894,675,907		$	1,771,881,769
* Direct financing leases:
Net minimum lease payments to be received	$	190,107,687		$	195,476,230
Estimated unguaranteed residual values of leased assets		1,085,154			1,165,706
Unearned lease/residual income		(21,265,360	)		(22,986,331	)
		169,927,481			173,655,605
Plus deferred lease origination costs, net of fees		6,339,871			6,594,582
		176,267,352			180,250,187
Less allowance		(3,226,194	)		(3,395,088	)
	$	173,041,158		$	176,855,099

*Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management’s expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal. There were no losses related to residual values for the three and six months ended June 30, 2016 and 2015.

**Includes residential real estate loans held for sale totaling $1,558,500 and $565,850 as of June 30, 2016, and December 31, 2015, respectively.

17

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The aging of the loan/lease portfolio by classes of loans/leases as of June 30, 2016 and December 31, 2015 is presented as follows:

	As of June 30, 2016
Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due*			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total
C&I	$	687,859,076		$	400,711		$	13,225,353		$	-		$	4,776,046		$	706,261,186
CRE
Owner-Occupied CRE		257,503,344			141,571			-			-			1,043,530			258,688,445
Commercial Construction, Land Development, and Other Land		48,759,844			-			-			-			188,981			48,948,825
Other Non Owner-Occupied CRE		473,256,279			530,808			1,384,387			84,500			1,485,865			476,741,839
Direct Financing Leases		165,927,453			1,036,764			1,230,235			-			1,733,029			169,927,481
Residential Real Estate		179,075,229			-			215,561			-			1,191,215			180,482,005
Installment and Other Consumer		72,831,797			446,971			59,391			1,868			318,145			73,658,172
	$	1,885,213,022		$	2,556,825		$	16,114,927		$	86,368		$	10,736,811		$	1,914,707,953
As a percentage of total loan/lease portfolio		98.46	%		0.13	%		0.84	%		0.00	%		0.56	%		100.00	%

	As of December 31, 2015
Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total
C&I	$	640,725,241		$	1,636,860		$	5,816		$	-		$	5,791,975		$	648,159,892
CRE
Owner-Occupied CRE		251,612,752			182,949			-			-			727,463			252,523,164
Commercial Construction, Land Development, and Other Land		48,890,040			-			-			-			193,804			49,083,844
Other Non Owner-Occupied CRE		420,819,874			614,732			219,383			-			1,107,768			422,761,757
Direct Financing Leases		170,021,289			1,490,818			439,314			2,843			1,701,341			173,655,605
Residential Real Estate		166,415,118			2,800,589			200,080			-			1,016,743			170,432,530
Installment and Other Consumer		73,134,197			412,052			14,127			-			109,117			73,669,493
	$	1,771,618,511		$	7,138,000		$	878,720		$	2,843		$	10,648,211		$	1,790,286,285
As a percentage of total loan/lease portfolio		98.96	%		0.40	%		0.05	%		0.00	%		0.59	%		100.00	%

* Inflated due to a small number of loans that were not renewed timely. Since June 30, 2016, these loans were renewed without issue.

18

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NPLs by classes of loans/leases as of June 30, 2016 and December 31, 2015 are presented as follows:

	As of June 30, 2016
Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases *		Accruing TDRs		Total NPLs		Percentage of Total NPLs
C&I	$	-	$	4,776,046	$	171,108	$	4,947,154		39.34	%
CRE
Owner-Occupied CRE		-		1,043,530		-		1,043,530		8.30	%
Commercial Construction, Land Development, and Other Land		-		188,981		-		188,981		1.50	%
Other Non Owner-Occupied CRE		84,500		1,485,865		-		1,570,365		12.49	%
Direct Financing Leases		-		1,733,029		1,059,919		2,792,948		22.21	%
Residential Real Estate		-		1,191,215		393,799		1,585,014		12.60	%
Installment and Other Consumer		1,868		318,145		128,151		448,164		3.56	%
	$	86,368	$	10,736,811	$	1,752,977	$	12,576,156		100.00	%

*Nonaccrual loans/leases included $2,351,137 of TDRs, including $767,261 in C&I loans, $1,422,722 in CRE loans, $34,850 in direct financing leases, $113,031 in residential real estate loans, and $13,273 in installment loans.

	As of December 31, 2015
Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases **		Accruing TDRs		Total NPLs		Percentage of Total NPLs
C&I	$	-	$	5,791,975	$	173,087	$	5,965,062		50.96	%
CRE							$	-
Owner-Occupied CRE		-		727,463		-	$	727,463		6.22	%
Commercial Construction, Land Development, and Other Land		-		193,804		-	$	193,804		1.66	%
Other Non Owner-Occupied CRE		-		1,107,768		-	$	1,107,768		9.46	%
Direct Financing Leases		2,843		1,701,341		-	$	1,704,184		14.56	%
Residential Real Estate		-		1,016,743		402,044	$	1,418,787		12.12	%
Installment and Other Consumer		-		109,117		478,625	$	587,742		5.02	%
	$	2,843	$	10,648,211	$	1,053,756	$	11,704,810		100.00	%

**Nonaccrual loans/leases included $1,533,657 of TDRs, including $1,164,423 in C&I loans, $193,804 in CRE loans, $42,098 in direct financing leases, $119,305 in residential real estate loans, and $14,027 in installment loans.

19

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Changes in the allowance by portfolio segment for the three and six months ended June 30, 2016 and 2015, respectively, are presented as follows:

	Three Months Ended June 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,991,979		$	10,090,567		$	3,287,231		$	1,836,622		$	1,189,043		$	27,395,442
Provisions (credits) charged to expense		(241,600	)		919,596			460,997			194,988			(136,131	)		1,197,850
Loans/leases charged off		(48,983	)		(23,101	)		(534,716	)		(17,523	)		(9,892	)		(634,215	)
Recoveries on loans/leases previously charged off		23,110			-			12,682			900			101,721			138,413
Balance, ending	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490

	Three Months Ended June 30, 2015
	C&I			CRE		Direct Financing Leases			Residential Real Estate		Installment and Other Consumer			Total
Balance, beginning	$	9,093,650		$	8,838,204	$	3,310,973		$	1,597,754	$	1,042,693		$	23,883,274
Provisions charged to expense		604,731			1,081,753		473,982			122,381		65,818			2,348,665
Loans/leases charged off		(45,337	)		-		(465,098	)		-		(25,255	)		(535,690	)
Recoveries on loans/leases previously charged off		367,822			9,699		32,446			-		39,784			449,751
Balance, ending	$	10,020,866		$	9,929,656	$	3,352,303		$	1,720,135	$	1,123,040		$	26,146,000

	Six Months Ended June 30, 2016
	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,484,080		$	9,375,117		$	3,395,088		$	1,790,150		$	1,096,471		$	26,140,906
Provisions (credits) charged to expense		498,231			1,635,046			939,242			257,644			(59,328	)		3,270,835
Loans/leases charged off		(292,549	)		(23,101	)		(1,135,654	)		(33,707	)		(17,488	)		(1,502,499	)
Recoveries on loans/leases previously charged off		34,744			-			27,518			900			125,086			188,248
Balance, ending	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490

	Six Months Ended June 30, 2015
	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate		Installment and Other Consumer			Total
Balance, beginning	$	8,750,317		$	8,353,386		$	3,442,915		$	1,525,952	$	1,001,795		$	23,074,365
Provisions charged to expense		993,372			1,917,647			877,434			194,183		76,485			4,059,121
Loans/leases charged off		(245,638	)		(351,076	)		(1,012,590	)		-		(34,049	)		(1,643,353	)
Recoveries on loans/leases previously charged off		522,815			9,699			44,544			-		78,809			655,867
Balance, ending	$	10,020,866		$	9,929,656		$	3,352,303		$	1,720,135	$	1,123,040		$	26,146,000

20

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The allowance by impairment evaluation and by portfolio segment as of June 30, 2016 and December 31, 2015 is presented as follows:

	As of June 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	1,242,430		$	123,079		$	555,819		$	198,020		$	138,490		$	2,257,838
Allowance for nonimpaired loans/leases		9,482,076			10,863,983			2,670,375			1,816,967			1,006,251			25,839,652
	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490
Impaired loans/leases	$	4,454,638		$	2,616,301		$	2,678,521		$	1,585,013		$	446,297		$	11,780,770
Nonimpaired loans/leases		701,806,548			781,762,808			167,248,960			178,896,992			73,211,875			1,902,927,183
	$	706,261,186		$	784,379,109		$	169,927,481		$	180,482,005		$	73,658,172		$	1,914,707,953
Allowance as a percentage of impaired loans/leases		27.89	%		4.70	%		20.75	%		12.49	%		31.03	%		19.17	%
Allowance as a percentage of nonimpaired loans/leases		1.35	%		1.39	%		1.60	%		1.02	%		1.37	%		1.36	%
Total allowance as a percentage of total loans/leases		1.52	%		1.40	%		1.90	%		1.12	%		1.55	%		1.46	%

	As of December 31, 2015
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	2,592,270		$	76,934		$	306,193		$	185,801		$	143,089		$	3,304,287
Allowance for nonimpaired loans/leases		7,891,810			9,298,183			3,088,895			1,604,349			953,382			22,836,619
	$	10,484,080		$	9,375,117		$	3,395,088		$	1,790,150		$	1,096,471		$	26,140,906
Impaired loans/leases	$	5,286,482		$	2,029,035		$	1,701,341		$	1,418,787		$	587,742		$	11,023,387
Nonimpaired loans/leases		642,873,410			722,339,730			171,954,264			169,013,743			73,081,751			1,779,262,898
	$	648,159,892		$	724,368,765		$	173,655,605		$	170,432,530		$	73,669,493		$	1,790,286,285
Allowance as a percentage of impaired loans/leases		49.04	%		3.79	%		18.00	%		13.10	%		24.35	%		29.98	%
Allowance as a percentage of nonimpaired loans/leases		1.23	%		1.29	%		1.80	%		0.95	%		1.30	%		1.28	%
Total allowance as a percentage of total loans/leases		1.62	%		1.29	%		1.96	%		1.05	%		1.49	%		1.45	%

21

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Information for impaired loans/leases is presented in the tables below. The recorded investment represents customer balances net of any partial charge-offs recognized on the loan/lease. The unpaid principal balance represents the recorded balance outstanding on the loan/lease prior to any partial charge-offs.

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the six months ended June 30, 2016 are presented as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	639,448	$	780,390	$	-	$	3,197,308	$	5,343	$	5,343
CRE
Owner-Occupied CRE		-		93,774		-		163,216		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		-		-		-
Other Non Owner-Occupied CRE		1,516,555		1,516,555		-		1,243,616		-		-
Direct Financing Leases		1,652,661		1,652,661		-		1,398,419		31,500		31,500
Residential Real Estate		672,061		711,262		-		627,715		2,051		2,051
Installment and Other Consumer		231,730		231,730		-		281,740		-		-
	$	4,712,455	$	4,986,372	$	-	$	6,912,014	$	38,894	$	38,894
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	3,815,190	$	3,819,029	$	1,242,430	$	1,775,881	$	-	$	-
CRE
Owner-Occupied CRE		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		188,981		200,981		79,911		191,384		-		-
Other Non Owner-Occupied CRE		910,765		910,765		43,168		595,714		-		-
Direct Financing Leases		1,025,860		1,025,860		555,819		866,749		-		-
Residential Real Estate		912,952		948,530		198,020		872,297		3,906		3,906
Installment and Other Consumer		214,567		214,567		138,490		212,806		2,968		2,968
	$	7,068,315	$	7,119,732	$	2,257,838	$	4,514,831	$	6,874	$	6,874
Total Impaired Loans/Leases:
C&I	$	4,454,638	$	4,599,419	$	1,242,430	$	4,973,189	$	5,343	$	5,343
CRE
Owner-Occupied CRE		-		93,774		-		163,216		-		-
Commercial Construction, Land Development, and Other Land		188,981		200,981		79,911		191,384		-		-
Other Non Owner-Occupied CRE		2,427,320		2,427,320		43,168		1,839,330		-		-
Direct Financing Leases		2,678,521		2,678,521		555,819		2,265,168		31,500		31,500
Residential Real Estate		1,585,013		1,659,792		198,020		1,500,012		5,957		5,957
Installment and Other Consumer		446,297		446,297		138,490		494,546		2,968		2,968
	$	11,780,770	$	12,106,104	$	2,257,838	$	11,426,845	$	45,768	$	45,768

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

22

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the three months ended June 30, 2016 and 2015, respectively, are presented as follows:

	Three Months Ended June 30, 2016						Three Months Ended June 30, 2015
Classes of Loans/Leases	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	2,524,056	$	3,519	$	3,519	$	320,187	$	1,860	$	1,860
CRE
Owner-Occupied CRE		121,444		-		-		550,374		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		222,926		-		-
Other Non Owner-Occupied CRE		1,311,540		-		-		2,474,448		-		-
Direct Financing Leases		1,510,987		19,897		19,897		582,316		1,878		1,878
Residential Real Estate		621,354		1,013		1,013		969,580		-		-
Installment and Other Consumer		229,207		-		-		705,750		475		475
	$	6,318,588	$	24,429	$	24,429	$	5,825,581	$	4,213	$	4,213
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	2,292,483	$	-	$	-	$	4,912,917	$	-	$	-
CRE
Owner-Occupied CRE		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		190,174		-		-		139,250		-		-
Other Non Owner-Occupied CRE		658,220		-		-		1,657,506		-		-
Direct Financing Leases		995,446		-		-		561,840		-		-
Residential Real Estate		919,271		1,948		1,948		869,073		1,967		1,967
Installment and Other Consumer		218,742		1,468		1,468		608,277		2,252		2,252
	$	5,274,336	$	3,416	$	3,416	$	8,748,863	$	4,219	$	4,219
Total Impaired Loans/Leases:
C&I	$	4,816,539	$	3,519	$	3,519	$	5,233,104	$	1,860	$	1,860
CRE
Owner-Occupied CRE		121,444		-		-		550,374		-		-
Commercial Construction, Land Development, and Other Land		190,174		-		-		362,176		-		-
Other Non Owner-Occupied CRE		1,969,760		-		-		4,131,954		-		-
Direct Financing Leases		2,506,433		19,897		19,897		1,144,156		1,878		1,878
Residential Real Estate		1,540,625		2,961		2,961		1,838,653		1,967		1,967
Installment and Other Consumer		447,949		1,468		1,468		1,314,027		2,727		2,727
	$	11,592,924	$	27,845	$	27,845	$	14,574,444	$	8,432	$	8,432

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

23

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Loans/leases, by classes of financing receivable, considered to be impaired as of December 31, 2015 are presented as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	234,636	$	346,072	$	-
CRE
Owner-Occupied CRE		256,761		350,535		-
Commercial Construction, Land Development, and Other Land		-		228,818		-
Other Non Owner-Occupied CRE		1,578,470		1,578,470		-
Direct Financing Leases		871,884		871,884		-
Residential Real Estate		613,486		649,064		-
Installment and Other Consumer		377,304		377,304		-
	$	3,932,541	$	4,402,147	$	-
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	5,051,846	$	5,055,685	$	2,592,270
CRE
Owner-Occupied CRE		-		-		-
Commercial Construction, Land Development, and Other Land		193,804		205,804		76,934
Other Non Owner-Occupied CRE		-		-		-
Direct Financing Leases		829,457		829,457		306,193
Residential Real Estate		805,301		805,301		185,801
Installment and Other Consumer		210,438		210,438		143,089
	$	7,090,846	$	7,106,685	$	3,304,287
Total Impaired Loans/Leases:
C&I	$	5,286,482	$	5,401,757	$	2,592,270
CRE
Owner-Occupied CRE		256,761		350,535		-
Commercial Construction, Land Development, and Other Land		193,804		434,622		76,934
Other Non Owner-Occupied CRE		1,578,470		1,578,470		-
Direct Financing Leases		1,701,341		1,701,341		306,193
Residential Real Estate		1,418,787		1,454,365		185,801
Installment and Other Consumer		587,742		587,742		143,089
	$	11,023,387	$	11,508,832	$	3,304,287

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

24

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

For C&I and CRE loans, the Company’s credit quality indicator consists of internally assigned risk ratings. Each commercial loan is assigned a risk rating upon origination. The risk rating is reviewed every 15 months, at a minimum, and on an as-needed basis depending on the specific circumstances of the loan.

For direct financing leases, residential real estate loans, and installment and other consumer loans, the Company’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the Company’s loan system.

For each class of financing receivable, the following presents the recorded investment by credit quality indicator as of June 30, 2016 and December 31, 2015:

	As of June 30, 2016
			CRE
					Non Owner-Occupied
Internally Assigned Risk Rating	C&I		Owner-Occupied CRE		Commercial Construction, Land Development, and Other Land		Other CRE		Total		As a % of Total
Pass (Ratings 1 through 5)	$	678,225,838	$	247,914,237	$	44,672,408	$	458,961,143	$	1,429,773,626		95.92	%
Special Mention (Rating 6)		6,381,586		2,114,505		1,780,000		5,954,788		16,230,879		1.09	%
Substandard (Rating 7)		21,653,762		8,659,703		2,496,417		11,825,908		44,635,790		2.99	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	706,261,186	$	258,688,445	$	48,948,825	$	476,741,839	$	1,490,640,295		100.00	%

	As of June 30, 2016
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	167,134,533	$	178,896,991	$	73,210,008	$	419,241,532		98.86	%
Nonperforming		2,792,948		1,585,014		448,164		4,826,126		1.14	%
	$	169,927,481	$	180,482,005	$	73,658,172	$	424,067,658		100.00	%

	As of December 31, 2015
			CRE
					Non Owner-Occupied
Internally Assigned Risk Rating	C&I		Owner-Occupied CRE		Commercial Construction, Land Development, and Other Land		Other CRE		Total		As a % of Total
Pass (Ratings 1 through 5)	$	616,200,797	$	238,119,608	$	46,929,876	$	406,027,442	$	1,307,277,723		95.24	%
Special Mention (Rating 6)		18,031,845		8,630,658		1,780,000		8,846,286		37,288,789		2.72	%
Substandard (Rating 7)		13,927,250		5,772,898		373,968		7,888,029		27,962,145		2.04	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	648,159,892	$	252,523,164	$	49,083,844	$	422,761,757	$	1,372,528,657		100.00	%

	As of December 31, 2015
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	171,951,421	$	169,013,743	$	73,081,751	$	414,046,915		99.11	%
Nonperforming		1,704,184		1,418,787		587,742		3,710,713		0.89	%
	$	173,655,605	$	170,432,530	$	73,669,493	$	417,757,628		100.00	%

*Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing TDRs.

25

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

As of June 30, 2016 and December 31, 2015, TDRs totaled $4,104,114 and $2,587,413, respectively.

For each class of financing receivable, the following presents the number and recorded investment of TDRs, by type of concession, that were restructured during the three and six months ended June 30, 2016. There were no TDRs that were restructured during the three and six months ended June 30, 2015. The difference between the pre-modification recorded investment and the post-modification recorded investment would be any partial charge-offs at the time of the restructuring.

	For the three months ended June 30, 2016
Classes of Loans/Leases	Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance
CONCESSION - Extension of Maturity
C&I		1	$	52,286	$	52,286	$	-
		1	$	52,286	$	52,286	$	-
CONCESSION - Significant Payment Delay
C&I		1	$	62,140	$	62,140	$	-
Direct Financing Leases		4		494,692		494,692		-
		5	$	556,832	$	556,832	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-
		1	$	1,233,740	$	1,233,740	$	-
TOTAL		7	$	1,842,858	$	1,842,858	$	-

	For the six months ended June 30, 2016
Classes of Loans/Leases	Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance
CONCESSION - Extension of Maturity
C&I		1	$	52,286	$	52,286	$	-
Direct Financing Leases		4		410,653		410,653		-
		5	$	462,939	$	462,939	$	-
CONCESSION - Significant Payment Delay
C&I		1	$	62,140	$	62,140	$	-
Direct Financing Leases		5		540,631		540,631		-
		6	$	602,771	$	602,771	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-
		1	$	1,233,740	$	1,233,740	$	-
TOTAL		12	$	2,299,450	$	2,299,450	$	-

Of the TDRs reported above, one with a post-modification recorded balance of $1,233,740 was on nonaccrual as of June 30, 2016.

For the three and six months ended June 30, 2016 and 2015, none of the Company’s TDRs had redefaulted within 12 months subsequent to restructure where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status.

26

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NOTE 4 – BORROWINGS

During the first quarter of 2016, the Company extinguished $5.1 million of the QCR Holdings Capital Trust IV junior subordinated debentures (the full balance outstanding) and recorded a $1.2 million gain on extinguishment (pre-tax), as the Company was able to acquire the related security at a discount through auction. This gain is included in the statements of income within losses on debt extinguishment. The interest rate on these debentures floated at 3-month LIBOR plus 1.80% and had a rate of 2.42% at the time of extinguishment. QCR Holdings Capital Trust IV was dissolved after the extinguishment.

Also during the first quarter of 2016, the Company executed balance sheet restructuring strategies at QCBT and CRBT, which included the repayment of $10.0 million of wholesale structured repurchase agreements and $10.0 million of FHLB advances with a combined weighted average interest rate of 3.92%. As a result of this restructuring, the Company incurred $1.3 million (pre-tax) in losses on debt extinguishment that are included in the statements of income. The weighted average duration of this combined debt was 2.17 years, with $10.0 million maturing in 2017 and $10.0 maturing in 2018. This funding was replaced with short-term borrowings at an average interest rate of 0.50%.

As of December 31, 2015, the Company maintained a $40.0 million revolving line of credit note, with interest calculated at the effective LIBOR rate plus 2.50% per annum (3.10% at December 31, 2015). At December 31, 2015, the Company had not borrowed on this revolving credit note and had the full amount available. At the renewal date in June 2016, the note was amended to provide a $10.0 million revolving line of credit note and a $30.0 million term note commitment with a 5-year term. Interest on both facilities is calculated at the effective LIBOR rate plus 2.50% per annum (3.13% at June 30, 2016). At June 30, 2016, the Company had not borrowed on either of these facilities and had the full amounts available. Similar to the previous revolving note agreement, the amended agreement contains covenants that place restrictions on additional debt and stipulate minimum capital and various operating ratios.

NOTE 5 - EARNINGS PER SHARE

The following information was used in the computation of EPS on a basic and diluted basis:

	Three months ended					Six months ended
	June 30,					June 30,
	2016		2015			2016		2015
Net income (loss)	$	6,676,467	$	(523,818	)	$	13,049,956	$	3,654,071
Basic EPS	$	0.54	$	(0.05	)	$	1.08	$	0.41
Diluted EPS	$	0.53	$	(0.05	)	$	1.07	$	0.40
Weighted average common shares outstanding*		12,335,077		9,946,744			12,064,349		8,961,327
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan**		181,397		-			170,863		137,370
Weighted average common and common equivalent shares outstanding**		12,516,474		9,946,744			12,235,212		9,098,697

*The increase in the weighted average common shares outstanding was primarily due to the common stock issuance discussed in Note 9 to the Consolidated Financial Statements.

**In accordance with U.S. GAAP, the common equivalent shares are not considered in the calculation of diluted EPS in periods when the numerator is a net loss.

27

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NOTE 6 – FAIR VALUE

Accounting guidance on fair value measurement uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follows:

● Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in markets;

● Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and

● Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis comprise the following at June 30, 2016 and December 31, 2015:

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2016:
Securities AFS:
U.S. govt. sponsored agency securities	$	88,321,448	$	-	$	88,321,448	$	-
Residential mortgage-backed and related securities		116,765,510		-		116,765,510		-
Municipal securities		23,392,817		-		23,392,817		-
Other securities		2,134,009		1,353		2,132,656		-
Interest rate caps		270,806		-		270,806		-
Interest rate swaps - assets		9,867,856		-		9,867,856		-
Total assets measured at fair value	$	240,752,446	$	1,353	$	240,751,093	$	-
Interest rate swaps - liabilities	$	9,867,856	$	-	$	9,867,856	$	-
Total liabilities measured at fair value	$	9,867,856	$	-	$	9,867,856	$	-
December 31, 2015:
Securities AFS:
U.S. govt. sponsored agency securities	$	213,537,379	$	-	$	213,537,379	$	-
Residential mortgage-backed and related securities		80,670,135		-		80,670,135		-
Municipal securities		27,578,588		-		27,578,588		-
Other securities		1,648,880		411		1,648,469		-
Interest rate caps		856,024		-		856,024		-
Interest rate swaps - assets		3,044,525		-		3,044,525		-
Total assets measured at fair value	$	327,335,531	$	411	$	327,335,120	$	-
Interest rate swaps - liabilities	$	3,044,525	$	-	$	3,044,525	$	-
Total liabilities measured at fair value	$	3,044,525	$	-	$	3,044,525	$	-

There were no transfers of assets or liabilities between Levels 1, 2, and 3 of the fair value hierarchy for the three and six months ended June 30, 2016 or 2015.

A small portion of the securities available for sale portfolio consists of common stock issued by various unrelated bank holding companies. The fair values used by the Company are obtained from an independent pricing service and represent quoted market prices for the identical securities (Level 1 inputs).

The remainder of the securities available for sale portfolio consists of securities whereby the Company obtains fair values from an independent pricing service. The fair values are determined by pricing models that consider observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2 inputs).

28

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Interest rate caps are used for the purpose of hedging interest rate risk. The fair values are determined by pricing models that consider observable market data for derivative instruments with similar structures (Level 2 inputs).

Interest rate swaps are executed for select commercial customers. The interest rate swaps are further described in Note 1 of the Company’s annual report filed on form 10-K as of December 31, 2015. The fair values are determined by comparing the contract rate on the swap with the then-current market rate for the remaining term of the transaction (Level 2 inputs).

Certain financial assets are measured at fair value on a non-recurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Assets measured at fair value on a non-recurring basis comprise the following at June 30, 2016 and December 31, 2015:

			Fair Value Measurements at Reporting Date Using
	Fair Value		Level 1		Level 2		Level 3
June 30, 2016:
Impaired loans/leases	$	5,669,757	$	-	$	-	$	5,669,757
OREO		6,673,430		-		-		6,673,430
	$	12,343,187	$	-	$	-	$	12,343,187
December 31, 2015:
Impaired loans/leases	$	4,545,966	$	-	$	-	$	4,545,966
OREO		7,722,711		-		-		7,722,711
	$	12,268,677	$	-	$	-	$	12,268,677

Impaired loans/leases are evaluated and valued at the time the loan/lease is identified as impaired, at the lower of cost or fair value, and are classified as Level 3 in the fair value hierarchy.  Fair value is measured based on the value of the collateral securing these loans/leases.  Collateral may be real estate and/or business assets, including equipment, inventory and/or accounts receivable, and is determined based on appraisals by qualified licensed appraisers hired by the Company.  Appraised and reported values are discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business.  

OREO in the table above consists of property acquired through foreclosures and settlements of loans.  Property acquired is carried at the estimated fair value of the property, less disposal costs, and is classified as Level 3 in the fair value hierarchy. The estimated fair value of the property is determined based on appraisals by qualified licensed appraisers hired by the Company.  Appraised and reported values are discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the property.

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level Fair Value Measurements
	Fair Value June 30, 2016		Fair Value December 31, 2015		Valuation Technique	Unobservable Input	Range
Impaired loans/leases	$	5,669,757	$	4,545,966	Appraisal of collateral	Appraisal adjustments	-10.00%	to	-50.00%
OREO		6,673,430		7,722,711	Appraisal of collateral	Appraisal adjustments	0.00%	to	-35.00%

29

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

For the impaired loans/leases and OREO, the Company records carrying value at fair value less disposal or selling costs. The amounts reported in the tables above are fair values before the adjustment for disposal or selling costs.

There have been no changes in valuation techniques used for any assets measured at fair value during the three and six months ended June 30, 2016 and 2015.

The following table presents the carrying values and estimated fair values of financial assets and liabilities carried on the Company’s consolidated balance sheets, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis:

	Fair Value	As of June 30, 2016				As of December 31, 2015
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Value		Fair Value		Value		Fair Value
Cash and due from banks	Level 1	$	49,581,154	$	49,581,154	$	41,742,321	$	41,742,321
Federal funds sold	Level 2		20,825,000		20,825,000		19,850,000		19,850,000
Interest-bearing deposits at financial institutions	Level 2		47,607,304		47,607,304		36,313,965		36,313,965
Investment securities:
HTM	Level 2		280,345,532		285,809,115		253,674,159		255,691,285
AFS	See Previous Table		240,481,640		240,481,640		323,434,982		323,434,982
Loans/leases receivable, net	Level 3		5,249,775		5,669,757		4,209,228		4,545,966
Loans/leases receivable, net	Level 2		1,889,426,132		1,897,957,225		1,767,672,541		1,764,178,772
Interest rate caps	Level 2		270,806		270,806		856,024		856,024
Interest rate swaps - assets	Level 2		9,867,856		9,867,856		3,044,525		3,044,525
Deposits:
Nonmaturity deposits	Level 2		1,554,404,101		1,554,404,101		1,516,599,081		1,516,599,081
Time deposits	Level 2		419,189,683		420,107,000		364,067,103		364,192,000
Short-term borrowings	Level 2		51,561,748		51,561,748		144,662,716		144,662,716
FHLB advances	Level 2		196,900,000		198,373,000		151,000,000		153,143,000
Other borrowings	Level 2		100,000,000		106,692,000		110,000,000		116,061,000
Junior subordinated debentures	Level 2		33,412,643		24,627,848		38,499,052		27,642,093
Interest rate swaps - liabilities	Level 2		9,867,856		9,867,856		3,044,525		3,044,525

30

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NOTE 7 – BUSINESS SEGMENT INFORMATION

Selected financial and descriptive information is required to be disclosed for reportable operating segments, applying a “management perspective” as the basis for identifying reportable segments. The management perspective is determined by the view that management takes of the segments within the Company when making operating decisions, allocating resources, and measuring performance. The segments of the Company have been defined by the structure of the Company’s internal organization, focusing on the financial information that the Company’s operating decision-makers routinely use to make decisions about operating matters.

The Company’s primary segment, Commercial Banking, is geographically divided by markets into the secondary segments comprised of the three subsidiary banks wholly owned by the Company: QCBT, CRBT, and RB&T. Each of these secondary segments offers similar products and services, but is managed separately due to different pricing, product demand, and consumer markets. Each offers commercial, consumer, and mortgage loans and deposit services.

The Company’s Wealth Management segment represents the trust and asset management and investment management and advisory services offered at the Company’s three subsidiary banks in aggregate. This segment generates income primarily from fees charged based on assets under administration for corporate and personal trusts, custodial services, and investments managed. No assets of the subsidiary banks have been allocated to the Wealth Management segment.

The Company’s All Other segment includes the operations of all other consolidated subsidiaries and/or defined operating segments that fall below the segment reporting thresholds. This segment includes the corporate operations of the parent company.

31

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Selected financial information on the Company’s business segments is presented as follows as of and for the three and six months ended June 30, 2016 and 2015.

	Commercial Banking							Wealth					Intercompany			Consolidated
	QCBT		CRBT			RB&T		Management		All Other			Eliminations			Total
Three Months Ended June 30, 2016
Total revenue	$	14,162,914	$	10,438,092		$	3,918,629	$	2,204,821	$	8,244,495		$	(8,293,266	)	$	30,675,685
Net interest income	$	11,207,759	$	7,135,725		$	2,945,417	$	-	$	(280,088	)	$	-		$	21,008,813
Net income	$	3,898,343	$	3,144,986		$	772,169	$	386,202	$	6,676,467		$	(8,201,700	)	$	6,676,467
Total assets	$	1,390,025,232	$	904,367,275		$	402,157,473	$	-	$	328,099,700		$	(341,215,392	)	$	2,683,434,288
Provision	$	747,850	$	150,000		$	300,000	$	-	$	-		$	-		$	1,197,850
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,371,653		$	-	$	-	$	-		$	-		$	1,371,653
Three Months Ended June 30, 2015
Total revenue	$	12,930,582	$	8,777,259		$	3,627,740	$	2,269,609	$	718,325		$	(811,669	)	$	27,511,846
Net interest income	$	9,741,899	$	6,522,511		$	2,684,330	$	-	$	(457,904	)	$	-		$	18,490,836
Net income (loss)	$	229,577	$	(316,567	)	$	529,567	$	438,530	$	(523,818	)	$	(881,107	)	$	(523,818	)
Total assets	$	1,299,556,911	$	860,403,296		$	363,049,771	$	-	$	268,874,722		$	(248,915,854	)	$	2,542,968,846
Provision	$	1,673,665	$	500,000		$	175,000	$	-	$	-		$	-		$	2,348,665
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,571,165		$	-	$	-	$	-		$	-		$	1,571,165
Six Months Ended June 30, 2016
Total revenue	$	27,679,846	$	21,277,313		$	7,712,876	$	4,439,113	$	15,104,270		$	(15,213,201	)	$	61,000,217
Net interest income	$	22,169,206	$	14,160,713		$	5,857,391	$	-	$	(580,975	)	$	-		$	41,606,335
Net income	$	6,730,039	$	6,079,717		$	1,389,954	$	833,972	$	13,049,955		$	(15,033,681	)	$	13,049,956
Total assets	$	1,390,025,232	$	904,367,275		$	402,157,473	$	-	$	328,099,700		$	(341,215,392	)	$	2,683,434,288
Provision	$	1,970,835	$	700,000		$	600,000	$	-	$	-		$	-		$	3,270,835
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,371,653		$	-	$	-	$	-		$	-		$	1,371,653
Six Months Ended June 30, 2015
Total revenue	$	25,732,000	$	18,302,906		$	7,169,330	$	4,613,047	$	6,334,768		$	(6,516,697	)	$	55,635,354
Net interest income	$	19,016,937	$	12,880,808		$	5,318,412	$	-	$	(943,104	)	$	-		$	36,273,053
Net income	$	2,792,190	$	1,751,739		$	1,048,224	$	897,860	$	3,654,071		$	(6,490,013	)	$	3,654,071
Total assets	$	1,299,556,911	$	860,403,296		$	363,049,771	$	-	$	268,874,722		$	(248,915,854	)	$	2,542,968,846
Provision	$	2,556,121	$	1,100,000		$	403,000	$	-	$	-		$	-		$	4,059,121
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,571,165		$	-	$	-	$	-		$	-		$	1,571,165

32

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NOTE 8 – REGULATORY CAPITAL REQUIREMENTS

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and subsidiary banks’ financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the subsidiary banks to maintain minimum amounts and ratios (set forth in the following table) of total common equity Tier 1 and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets, each as defined by regulation. Management believes, as of June 30, 2016 and December 31, 2015, that the Company and the subsidiary banks met all capital adequacy requirements to which they are subject.

Under the regulatory framework for prompt corrective action, to be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and common equity Tier 1 ratios as set forth in the following tables. The Company and the subsidiary banks’ actual capital amounts and ratios as of June 30, 2016 and December 31, 2015 are also presented in the following table (dollars in thousands). As of June 30, 2016 and December 31, 2015, each of the subsidiary banks met the requirements to be “well capitalized”.

						For Capital						To Be Well
						Adequacy Purposes						Capitalized Under
						With Capital						Prompt Corrective
	Actual					Conservation Buffer*						Action Provisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio
As of June 30, 2016:
Company:
Total risk-based capital	$	322,562		14.29	%	$	194,670	>		8.625	%	$	225,705	>		10.0	%
Tier 1 risk-based capital		294,265		13.04	%		149,529	>		6.625			180,564	>		8.0
Tier 1 leverage		294,265		11.18	%		105,263	>		4.000			131,578	>		5.0
Common equity Tier 1		264,422		11.72	%		115,674	>		5.125			146,708	>		6.5
Quad City Bank & Trust:
Total risk-based capital	$	143,744		12.76	%	$	97,131	>		8.625	%	$	112,616	>		10.0	%
Tier 1 risk-based capital		131,003		11.63	%		74,608	>		6.625			90,093	>		8.0
Tier 1 leverage		131,003		9.42	%		55,618	>		4.000			69,523	>		5.0
Common equity Tier 1		131,003		11.63	%		57,716	>		5.125			73,200	>		6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	110,325		13.82	%	$	68,850	>		8.625	%	$	79,826	>		10.0	%
Tier 1 risk-based capital		100,331		12.57	%		52,885	>		6.625			63,861	>		8.0
Tier 1 leverage		100,331		11.20	%		35,830	>		4.000			44,788	>		5.0
Common equity Tier 1		100,331		12.57	%		40,911	>		5.125			51,887	>		6.5
Rockford Bank & Trust:
Total risk-based capital	$	40,108		11.87	%	$	29,154	>		8.625	%	$	33,801	>		10.0	%
Tier 1 risk-based capital		35,877		10.61	%		22,393	>		6.625			27,041	>		8.0
Tier 1 leverage		35,877		9.50	%		15,099	>		4.000			18,874	>		5.0
Common equity Tier 1		35,877		10.61	%		17,323	>		5.125			21,971	>		6.5

33

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

												To Be Well Capitalized Under
						For Capital						Prompt Corrective
	Actual					Adequacy Purposes*						Action Provisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio
As of December 31, 2015:
Company:
Total risk-based capital	$	280,273		13.11	%	$	170,969	>		8.0	%	$	213,711	>		10.0	%
Tier 1 risk-based capital		253,891		11.88	%		128,227	>		6.0			170,969	>		8.0
Tier 1 leverage		253,891		9.75	%		104,163	>		4.0			130,203	>		5.0
Common equity Tier 1		220,800		10.33	%		96,170	>		4.5			138,912	>		6.5
Quad City Bank & Trust:
Total risk-based capital	$	135,477		12.50	%	$	86,726	>		8.0	%	$	108,407	>		10.0	%
Tier 1 risk-based capital		123,498		11.39	%		65,044	>		6.0			86,726	>		8.0
Tier 1 leverage		123,498		8.87	%		55,718	>		4.0			69,648	>		5.0
Common equity Tier 1		123,498		11.39	%		48,783	>		4.5			70,465	>		6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	105,285		14.39	%	$	58,537	>		8.0	%	$	73,172	>		10.0	%
Tier 1 risk-based capital		96,118		13.14	%		43,903	>		6.0			58,537	>		8.0
Tier 1 leverage		96,118		10.96	%		35,079	>		4.0			43,848	>		5.0
Common equity Tier 1		96,118		13.14	%		32,927	>		4.5			47,562	>		6.5
Rockford Bank & Trust:
Total risk-based capital	$	38,544		11.96	%	$	25,772	>		8.0	%	$	32,216	>		10.0	%
Tier 1 risk-based capital		34,514		10.71	%		19,329	>		6.0			25,772	>		8.0
Tier 1 leverage		34,514		9.59	%		14,401	>		4.0			18,001	>		5.0
Common equity Tier 1		34,514		10.71	%		14,497	>		4.5			20,940	>		6.5

*The minimums under Basel III phase in higher by .625% (the capital conservation buffer) annually until 2019. The fully phased-in minimums are 10.5% (Total risk-based capital), 8.5% (Tier 1 risk-based capital), and 7.0% (Common equity Tier 1). At December 31, 2015, the New Basel III minimums mirrored the minimums required for capital adequacy purposes. The first phase-in of the Basel III capital conservation buffer occured in 2016.

34

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NOTE 9 – ACQUISITION OF COMMUNITY STATE BANK AND COMMON STOCK OFFERING

On May 23, 2016, the Company announced the signing of a definitive agreement to acquire CSB, headquartered in Ankeny, Iowa, from Van Diest Investment Company. CSB is an Iowa-chartered bank that operates ten banking locations throughout the Des Moines metropolitan area. As of June 30, 2016, CSB had $571 million in assets, $433 million in loans and $481 million in deposits.

In the acquisition, the Company will acquire from Van Diest Investment Company 100% of the outstanding common stock of CSB for cash consideration of $80 million. The transaction is subject to certain customary closing conditions and is expected to close during the third quarter of 2016. The Company intends to maintain CSB as an independent banking charter.

In connection with the planned acquisition, during the second quarter the Company sold 1,215,000 shares of its common stock at a price of $24.75 per share, for approximate gross proceeds of $30 million, before deducting anticipated expenses. The shares were offered to institutional investors in a registered direct offering conducted without an underwriter or placement agent. The offering was a take-down of a previously filed shelf registration and closed on May 23, 2016.

Cash received from the common stock offering will be used to help finance the purchase price of the pending acquisition. Additionally, the Company plans to draw approximately $5 million on its $10 million revolving line of credit and fully fund the $30 million term facility it has available. Both of these facilities are described further in Note 4 to the Consolidated Financial Statements. Cash dividends of approximately $15 million from QCBT and CRBT will be used to finance the remainder of the purchase price.

During the second quarter of 2016, the Company incurred $355 thousand of expenses related to the planned acquisition, comprised primarily of legal and investment banking costs.

35

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

This section reviews the financial condition and results of operations of the Company and its subsidiaries for the three and six months ending June 30, 2016. Some tables may include additional periods to comply with disclosure requirements or to illustrate trends. When reading this discussion, also refer to the Consolidated Financial Statements and related notes in this report. The page locations and specific sections and notes that are referred to are presented in the table of contents.

Additionally, a comprehensive list of the acronyms and abbreviations used throughout this discussion is included in Note 1 to the Consolidated Financial Statements.

GENERAL

QCR Holdings, Inc. is the parent company of QCBT, CRBT, and RB&T.

QCBT and CRBT are Iowa-chartered commercial banks, and RB&T is an Illinois-chartered commercial bank. All are members of the Federal Reserve system with depository accounts insured to the maximum amount permitted by law by the FDIC.

● QCBT commenced operations in 1994 and provides full-service commercial and consumer banking, and trust and asset management services to the Quad City area and adjacent communities through its five offices that are located in Bettendorf and Davenport, Iowa and Moline, Illinois. QCBT also provides leasing services through its wholly-owned subsidiary, m2, located in Brookfield, Wisconsin. In addition, QCBT owns 100% of Quad City Investment Advisors, LLC, which is an investment management and advisory company.

● CRBT commenced operations in 2001 and provides full-service commercial and consumer banking, and trust and asset management services to Cedar Rapids, Iowa and adjacent communities through its main office located on First Avenue in downtown Cedar Rapids, Iowa and its branch facility located on Council Street in northern Cedar Rapids. Cedar Falls and Waterloo, Iowa and adjacent communities are served through three additional CRBT offices (two in Waterloo and one in Cedar Falls).

● RB&T commenced operations in January 2005 and provides full-service commercial and consumer banking, and trust and asset management services to Rockford, Illinois and adjacent communities through its main office located on Guilford Road at Alpine Road in Rockford and its branch facility in downtown Rockford.

EXECUTIVE OVERVIEW

The Company reported net income of $6.7 million for the quarter ended June 30, 2016, and diluted EPS of $0.53. By comparison, for the quarter ended March 31, 2016, the Company reported net income of $6.4 million, and diluted EPS of $0.53. For the second quarter of 2015, the Company reported a net loss of $524 thousand, and diluted EPS of ($0.05).

36

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

For the six months ended June 30, 2016, the Company reported net income of $13.0 million, and diluted EPS of $1.07. By comparison, for the six months ended June 30, 2015, the Company reported net income of $3.7 million, and diluted EPS of $0.40.

The second quarter of 2016 was highlighted by several significant items:

● Loan and lease growth at an annualized rate of 13.9% through the first six months of the year;

● Strong swap fee income and gains on the sale of government guaranteed portions of loans, totaling $3.5 million year-to-date;

● NIM improvement of 3 basis points quarter-over-quarter; and

● ROAA improvement to 1.01% for the current quarter.

Following is a table that represents the various net income measurements for the Company. 

	For the three months ended							For the six months ended
	June 30, 2016		March 31, 2016		June 30, 2015			June 30, 2016		June 30, 2015
Net income (loss)	$	6,676,467	$	6,373,489	$	(523,818	)	$	13,049,956	$	3,654,071
Diluted earnings (loss) per common share	$	0.53	$	0.53	$	(0.05	)	$	1.07	$	0.40
Weighted average common and common equivalent shares outstanding*		12,516,474		11,953,949		9,946,744			12,235,212		9,098,697

*The increase in the weighted average common and common equivalent shares outstanding was primarily due to the common stock issuance discussed in Note 9 to the Consolidated Financial Statements.

Following is a table that represents the major income and expense categories for the Company.

	For the three months ended							For the six months ended
	June 30, 2016		March 31, 2016		June 30, 2015			June 30, 2016		June 30, 2015
Net interest income	$	21,008,813	$	20,597,522	$	18,490,836		$	41,606,335	$	36,273,053
Provision expense		1,197,850		2,072,985		2,348,665			3,270,835		4,059,121
Noninterest income		6,762,401		6,822,473		5,461,234			13,584,874		11,683,012
Noninterest expense		17,743,753		16,954,498		24,101,634			34,698,251		41,305,795
Federal and state income tax expense (benefit)		2,153,144		2,019,023		(1,974,411	)		4,172,167		(1,062,922	)
Net income (loss)	$	6,676,467	$	6,373,489	$	(523,818	)	$	13,049,956	$	3,654,071

In comparing quarter-over-quarter, following are some noteworthy changes in the Company’s financial results:

● Net interest income increased 2% compared to the first quarter of 2016 and increased 14% from the same period in 2015.

● Provision decreased 42% compared to the first quarter of 2016. Provision decreased 49% from the same period of 2015. Both decreases were primarily due to continued strong asset quality.

● Noninterest income decreased less than 1% compared to the first quarter of 2016. Noninterest income increased 24% from the second quarter of 2015. Noninterest income fluctuations are primarily driven by swap fee income and gains on the sale of government guaranteed portions of loans (totaling $1.8 million for the quarter ended June 30, 2016 compared to $1.7 million and $463 thousand for the quarters ending March 31, 2016 and June 30, 2015, respectively).

37

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

● Noninterest expense increased 5% compared to the first quarter of 2016. The second quarter of 2016 included higher commissions and incentive accruals directly related to the swap fee income and gains on the sale of government guaranteed loans. Noninterest expense decreased 26% from the second quarter of 2015. The second quarter of 2015 included several nonrecurring expense items totaling approximately $7.7 million, $6.9 million of which related to the extinguishment of debt.

● Federal and state income tax expense increased 7% compared to the first quarter of 2016. Federal and state income tax increased significantly compared to the second quarter of 2015. See the Income Taxes section of this report for additional details.

LONG-TERM FINANCIAL GOALS

As previously stated, the Company has established certain financial goals by which it manages its business and measures its performance. The goals are periodically updated to reflect changes in business developments. While the Company is determined to work prudently to achieve these goals, there is no assurance that they will be met. Moreover, the Company’s ability to achieve these goals will be affected by the factors discussed under “Forward Looking Statements” as well as the factors detailed in the “Risk Factors” section included under Item 1A. of Part I of the Company’s Form 10-K. The Company’s long-term financial goals are as follows:

● Improve balance sheet efficiency by targeting a gross loans and leases to total assets ratio in the range of 70 – 75%;

● Improve profitability (measured by NIM and ROAA);

● Continue to improve asset quality by reducing NPAs to total assets to below 0.75% and maintain charge-offs as a percentage of average loans/leases of under 0.25% annually;

● Reduce reliance on wholesale funding to less than 15% of total assets;

● Grow noninterest bearing deposits to more than 30% of total assets;

● Increase the commercial lease portfolio so that it represents 10% of total assets;

● Grow gains on sales of government guaranteed portions of loans and swap fee income to more than $4 million annually; and

● Grow wealth management segment net income by 15% annually.

38

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

The following table shows the evaluation of the Company’s long-term financial goals.

			For the Quarter Ending
			June 30, 2016	March 31, 2016	June 30, 2015
Goal	Key Metric	Target**	(dollars in thousands)
Balance sheet efficiency	Gross loans and leases to total assets	70 - 75%	72%	71%	67%
Profitability	NIM	> 3.50%	3.62%	3.59%	3.33%
	ROAA	> 1.00%	1.01%	0.98%	-0.08%
Asset quality	NPAs to total assets	< 0.75%	0.70%	0.71%	1.07%
	Net charge-offs to average loans and leases*	< 0.25% annually	0.12%	0.16%	0.12%
Lower reliance on wholesale funding	Wholesale funding to total assets	< 15%	18%	17%	22%
Funding mix	Noninterest bearing deposits as a percentage of total assets	> 30%	23%	24%	25%
Commercial leasing	Leases as a percentage of total assets	10%	6%	7%	7%
Consistent, high quality noninterest income revenue streams	Gains on sales of government guaranteed portions of loans and swap fee income*	> $4 million annually	$7.1 million	$6.9 million	$2.5 million
	Grow wealth management segment net income*	> 15% annually	2%	10%	8%

* Ratios and amounts provided for these measurements represent year-to-date actual amounts for the respective period, that are then annualized for comparison.

** Targets will be re-evaluated and adjusted as needed.

STRATEGIC DEVELOPMENTS

The Company took the following actions to support its corporate strategy and the long-term financial goals shown above.

● Loan and lease growth year-to-date was 6.9%, or an annualized rate of 13.9%. This exceeded the Company’s target organic growth rate of 10-12%. A majority of this growth was in the C&I and CRE loan categories. This loan and lease growth has continued to help move the loan and lease to total asset ratio upward to 72%, from 71% in the prior quarter and 67% a year ago.

● The Company intends to participate as an acquirer in the consolidation taking place in our markets to further boost ROAA and improve the Company’s efficiency ratio. In the second quarter of 2016, the Company announced the acquisition of Community State Bank, headquartered in Ankeny, Iowa. Refer to Note 9 of the Consolidated Financial Statements for more details.

● The Company continued to focus on reducing the NPAs to total assets ratio and decreased this ratio from 0.74% at December 31, 2015 to 0.70% at June 30, 2016. Although NPAs remained relatively flat from the prior quarter, the Company remains committed to further improving asset quality ratios in 2016.

● Management continued to focus on reducing the Company’s reliance on wholesale funding. The modest restructuring executed in the first quarter of 2016 (as described in Note 4 of the Consolidated Financial Statements) has further reduced the Company’s reliance on long-term wholesale funding. In the second quarter of 2016, the Company utilized overnight FHLB advances as a cost-effective alternative funding source. Management continues to closely evaluate opportunities for continued reduction in wholesale funding.

39

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

● Correspondent banking continues to be a core line of business for the Company. The Company is competitively positioned with experienced staff, software systems and processes to continue growing in the three states currently served – Iowa, Illinois and Wisconsin. The Company acts as the correspondent bank for 176 downstream banks with average total noninterest bearing deposits of $299.8 million during the second quarter of 2016. This line of business provides a strong source of noninterest bearing deposits, fee income and high-quality loan participations.

● The Company provides commercial leasing services through its wholly-owned subsidiary, m2 Lease Funds, which has lease specialists in Iowa, Wisconsin, Minnesota, South Carolina, Georgia, Florida, Colorado, Texas and Pennsylvania. Historically, this portfolio has been high yielding, with an average gross yield in 2016 approximating 8.2%. This portfolio has also shown strong asset quality throughout its history.

● SBA and USDA lending is a specialty lending area on which the Company has focused. Once these loans are originated, the government-guaranteed portion of the loan can be sold to the secondary market for premiums. The Company intends to make this a more significant and consistent source of noninterest income.

● As a result of the historically low interest rate environment, the Company is focused on executing interest rate swaps on select commercial loans. The interest rate swaps allow the commercial borrowers to pay a fixed interest rate while the Company receives a variable interest rate as well as an upfront fee dependent on the pricing. Management believes that these swaps help position the Company more favorably for rising rate environments. The Company will continue to review opportunities to execute these swaps at all of its subsidiary banks, as the circumstances are appropriate for the borrower and the Company.

● Wealth management is another core line of business for the Company and includes a full range of products, including trust services, brokerage and investment advisory services, asset management, estate planning and financial planning. As of June 30, 2016 the Company had $1.76 billion of total financial assets in trust (and related) accounts and $702 million of total financial assets in brokerage (and related) accounts. Continued growth in assets under management will help to drive trust and investment advisory fees. The Company offers trust and investment advisory services to the correspondent banks that it serves. As management focuses on growing fee income, expanding market share will continue to be a primary strategy.

40

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

GAAP TO NON-GAAP RECONCILIATIONS

The following table presents certain non-GAAP financial measures related to the “tangible common equity to tangible assets ratio”, “core net income”, “core net income attributable to QCR Holdings, Inc. common stockholders”, “core earnings per common share” and “core return on average assets”. The table also reconciles the GAAP performance measures to the corresponding non-GAAP measures.

The tangible common equity to tangible assets ratio has been a focus for investors and management believes that this ratio may assist investors in analyzing the Company’s capital position without regard to the effects of intangible assets.

The table below also includes several “core” measurements of financial performance. The Company's management believes that these measures are important to investors as they exclude non-recurring income and expense items; therefore,they provide a better comparison for analysis and may provide a better indicator of future run-rates.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

41

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

	As of
	June 30,			March 31,			December 31,
GAAP TO NON-GAAP RECONCILIATIONS	2016			2016			2015
	(dollars in thousands, except per share data)
TCE / TA RATIO
Stockholders' equity (GAAP)	$	275,117		$	235,143		$	225,886
Less: Intangible assets		4,595			4,645			4,694
TCE (non-GAAP)	$	270,522		$	230,498		$	221,192
Total assets (GAAP)	$	2,683,434		$	2,640,673		$	2,593,198
Less: Intangible assets		4,595			4,645			4,694
TA (non-GAAP)	$	2,678,839		$	2,636,028		$	2,588,504
TCE / TA ratio (non-GAAP)		10.10	%		8.74	%		8.55	%

	For the Quarter Ended									For the Six Months Ended
	June 30,			March 31,			December 31,			June 30,			June 30,
CORE NET INCOME	2016			2016			2015			2016			2015
Net income (GAAP)	$	6,676		$	6,373		$	6,785		$	13,050		$	3,654
Less nonrecurring items (post-tax) (*):
Income:
Securities gains, net	$	12		$	233		$	211		$	245		$	274
Total nonrecurring income (non-GAAP)	$	12		$	233		$	211		$	245		$	274
Expense:
Losses on debt extinguishment	$	-		$	54		$	189		$	54		$	4,481
Acquisition costs		231			-			-			231			-
Other non-recurring expenses		-			-			-			-			513
Accrual adjustments		-			-			(487	)		-			-
Total nonrecurring expense (non-GAAP)	$	231		$	54		$	(298	)	$	285		$	4,994
Core net income (non-GAAP)	$	6,895		$	6,194		$	6,276		$	13,090		$	8,374
CORE EPS
Core net income (non-GAAP) (from above)	$	6,895		$	6,194		$	6,276		$	13,090		$	8,374
Weighted average common shares outstanding		12,335,077			11,793,620			11,744,495			12,064,349			8,961,327
Weighted average common and common equivalent shares outstanding		12,516,474			11,953,949			11,926,038			12,235,212			9,098,697
Core EPS (non-GAAP):
Basic	$	0.56		$	0.53		$	0.53		$	1.09		$	0.93
Diluted	$	0.55		$	0.52		$	0.53		$	1.07		$	0.92
CORE ROAA
Core net income (non-GAAP) (from above)	$	6,895		$	6,194		$	6,276		$	13,090		$	8,374
Average Assets	$	2,640,678		$	2,602,350		$	2,611,276		$	2,621,514		$	2,512,334
Core ROAA (annualized) (non-GAAP)		1.04	%		0.95	%		0.96	%		1.00	%		0.67	%

* Nonrecurring items (after-tax) are calculated using an estimated effective tax rate of 35%.

42

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

NET INTEREST INCOME - (TAX EQUIVALENT BASIS)

Net interest income, on a tax equivalent basis, increased 14% to $22.4 million for the quarter ended June 30, 2016, compared to the same quarter of the prior year. For the six months ended June 30, 2016, net interest income, on a tax equivalent basis, increased 15% to $44.3 million, compared to the same period of 2015. Net interest income improved due to several factors:

● The Company’s strategy to redeploy funds from the taxable securities portfolio into higher yielding loans and leases;

● Organic loan and lease growth has been strong over the past twelve months, as evidenced by average gross loan/lease growth of 13% in that period; and

● The Company’s balance sheet restructuring and deleveraging strategy executed throughout 2015 and the first quarter of 2016.

A comparison of yields, spread and margin from the second quarter of 2016 to the second quarter of 2015 is as follows (on a tax equivalent basis):

● The average yield on interest-earning assets increased 16 basis points.

● The average cost of interest-bearing liabilities decreased 15 basis points.

● The net interest spread increased 31 basis points from 3.08% to 3.39%.

● The NIM improved 29 basis points from 3.33% to 3.62%.

A comparison of yields, spread and margin from the first half of 2016 to the first half of 2015 is as follows (on a tax equivalent basis):

● The average yield on interest-earning assets increased 13 basis points.

● The average cost of interest-bearing liabilities decreased 21 basis points.

● The net interest spread increased 34 basis points from 3.04% to 3.38%.

● The NIM improved 32 basis points from 3.29% to 3.61%.

The Company’s management closely monitors and manages NIM. From a profitability standpoint, an important challenge for the Company’s subsidiary banks and leasing company is the improvement of their NIM. Management continually addresses this issue with pricing and other balance sheet management strategies.

The Company continues to place an emphasis on shifting its balance sheet mix. With a stated goal of increasing loans/leases as a percentage of assets to a range of 70-75%, the Company funded its loan/lease growth with a mixture of short-term borrowings and cash from the investment securities portfolio. Cash from called securities and the targeted sales of securities was redeployed into the loan portfolio, resulting in a significant increase in yield, while minimizing any extension of duration. Additionally, the Company has recognized net gains on these sales due to the current rate environment. As rates rise, the Company should also have less market volatility in the investment securities portfolio, as this becomes a smaller portion of the balance sheet.

The Company continues to monitor and evaluate both prepayment and debt restructuring opportunities within the wholesale funding portion of the balance sheet, as executing on such a strategy could potentially increase NIM more quickly than holding the debt until maturity.

43

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

The Company’s average balances, interest income/expense, and rates earned/paid on major balance sheet categories, as well as the components of change in net interest income, are presented in the following tables:

	For the three months ended June 30,
	2016								2015
				Interest		Average						Interest		Average
	Average			Earned		Yield or			Average			Earned		Yield or
	Balance			or Paid		Cost			Balance			or Paid		Cost
	(dollars in thousands)
ASSETS
Interest earning assets:
Federal funds sold	$	14,174		$	11		0.31	%	$	19,523		$	6		0.12	%
Interest-bearing deposits at financial institutions		50,747			62		0.49	%		45,229			65		0.58	%
Investment securities (1)		505,697			4,573		3.64	%		608,688			4,548		3.00	%
Restricted investment securities		14,171			134		3.80	%		15,083			108		2.87	%
Gross loans/leases receivable (1) (2) (3)		1,899,932			20,497		4.34	%		1,686,068			18,541		4.41	%
Total interest earning assets	$	2,484,721		$	25,277		4.09	%	$	2,374,591		$	23,268		3.93	%
Noninterest-earning assets:
Cash and due from banks	$	50,461							$	42,810
Premises and equipment		38,178								38,666
Less allowance		(27,811	)							(24,405	)
Other		95,129								86,508
Total assets	$	2,640,678							$	2,518,170
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits	$	941,856			600		0.26	%	$	784,148			450		0.23	%
Time deposits		425,216			744		0.70	%		384,895			634		0.66	%
Short-term borrowings		50,122			18		0.14	%		160,479			53		0.13	%
FHLB advances ..		128,956			416		1.30	%		173,742			1,002		2.31	%
Junior subordinated debentures		33,396			302		3.64	%		40,475			313		3.10	%
Other borrowings		100,008			824		3.31	%		129,802			1,108		3.42	%
Total interest-bearing liabilities	$	1,679,554		$	2,904		0.70	%	$	1,673,541		$	3,560		0.85	%
Noninterest-bearing demand deposits	$	666,044							$	629,744
Other noninterest-bearing liabilities		39,689								33,074
Total liabilities	$	2,385,287							$	2,336,359
Stockholders' equity		255,391								181,811
Total liabilities and stockholders' equity	$	2,640,678							$	2,518,170
Net interest income				$	22,373							$	19,708
Net interest spread							3.39	%							3.08	%
Net interest margin							3.62	%							3.33	%
Ratio of average interest-earning assets to average interest-bearing liabilities		147.94	%							141.89	%

(1) Interest earned and yields on nontaxable investment securities and nontaxable loans are determined on a tax equivalent basis using a 35% tax rate.

(2) Loan/lease fees are not material and are included in interest income from loans/leases receivable in accordance with accounting and regulatory guidance.

(3) Non-accrual loans/leases are included in the average balance for gross loans/leases receivable in accordance with accounting and regulatory guidance.

44

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Analysis of Changes of Interest Income/Interest Expense

For the three months ended June 30, 2016

	Inc./(Dec.)			Components
	from			of Change (1)
	Prior Period			Rate			Volume
	2016 vs. 2015
	(dollars in thousands)
INTEREST INCOME
Federal funds sold	$	5		$	16		$	(11	)
Interest-bearing deposits at financial institutions		(3	)		(36	)		33
Investment securities (2)		25			3,459			(3,434	)
Restricted investment securities		26			66			(40	)
Gross loans/leases receivable (2) (3) (4)		1,956			(1,921	)		3,877
Total change in interest income	$	2,009		$	1,584		$	425
INTEREST EXPENSE
Interest-bearing deposits	$	150		$	54		$	96
Time deposits		110			42			68
Short-term borrowings		(35	)		30			(65	)
Federal Home Loan Bank advances		(586	)		(369	)		(217	)
Junior subordinated debentures		(11	)		213			(224	)
Other borrowings		(284	)		(35	)		(249	)
Total change in interest expense	$	(656	)	$	(65	)	$	(591	)
Total change in net interest income	$	2,665		$	1,649		$	1,016

(1) The column "Inc./(Dec.) from Prior Period" is segmented into the changes attributable to variations in volume and the changes attributable to changes in interest rates. The variations attributable to simultaneous volume and rate changes have been proportionately allocated to rate and volume.

(2) Interest earned and yields on nontaxable investment securities and nontaxable loans are determined on a tax equivalent basis using a 35% tax rate.

(3) Loan/lease fees are not material and are included in interest income from loans/leases receivable in accordance with accounting and regulatory guidance.

(4) Non-accrual loans/leases are included in the average balance for gross loans/leases receivable in accordance with accounting and regulatory guidance.

45

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

	For the six months ended June 30,
	2016								2015
				Interest		Average						Interest		Average
	Average			Earned		Yield or			Average			Earned		Yield or
	Balance			or Paid		Cost			Balance			or Paid		Cost
	(dollars in thousands)
ASSETS
Interest earning assets:
Federal funds sold	$	15,703		$	23		0.29	%	$	16,606		$	11		0.13	%
Interest-bearing deposits at financial institutions		45,691			123		0.54	%		57,602			142		0.50	%
Investment securities (1)		528,034			9,257		3.53	%		617,261			9,037		2.95	%
Restricted investment securities		14,156			264		3.75	%		15,513			250		3.25	%
Gross loans/leases receivable (1) (2) (3)		1,866,941			40,454		4.36	%		1,660,887			36,893		4.48	%
Total interest earning assets	$	2,470,525		$	50,121		4.08	%	$	2,367,867		$	46,333		3.95	%
Noninterest-earning assets:
Cash and due from banks	$	48,176							$	43,547
Premises and equipment		37,963								38,373
Less allowance		(27,256	)							(23,911	)
Other		92,107								86,458
Total assets	$	2,621,514							$	2,512,334
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits	$	933,551			1,214		0.26	%	$	785,749			892		0.23	%
Time deposits		412,410			1,420		0.69	%		379,630			1,264		0.67	%
Short-term borrowings		68,331			61		0.18	%		170,697			117		0.14	%
FHLB advances		128,696			858		1.34	%		190,109			2,446		2.59	%
Junior subordinated debentures		34,023			606		3.58	%		40,458			620		3.09	%
Other borrowings		100,873			1,650		3.29	%		139,408			2,340		3.38	%
Total interest-bearing liabilities	$	1,677,884		$	5,809		0.70	%	$	1,706,051		$	7,679		0.91	%
Noninterest-bearing demand deposits	$	660,625							$	607,617
Other noninterest-bearing liabilities		39,687								33,691
Total liabilities	$	2,378,195							$	2,347,359
Stockholders' equity		243,319								164,975
Total liabilities and stockholders' equity	$	2,621,514							$	2,512,334
Net interest income				$	44,312							$	38,654
Net interest spread							3.38	%							3.04	%
Net interest margin							3.61	%							3.29	%
Ratio of average interest-earning assets to average interest-bearing liabilities		147.24	%							138.79	%

(1) Interest earned and yields on nontaxable investment securities and nontaxable loans are determined on a tax equivalent basis using a 35% tax rate.

(2) Loan/lease fees are not material and are included in interest income from loans/leases receivable in accordance with accounting and regulatory guidance.

(3) Non-accrual loans/leases are included in the average balance for gross loans/leases receivable in accordance with accounting and regulatory guidance.

46

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Analysis of Changes of Interest Income/Interest Expense

For the six months ended June 30, 2016

	Inc./(Dec.)			Components
	from			of Change (1)
	Prior Period			Rate			Volume
	2016 vs. 2015
	(dollars in thousands)
INTEREST INCOME
Federal funds sold	$	12		$	14		$	(2	)
Interest-bearing deposits at financial institutions		(19	)		29			(48	)
Investment securities (2)		220			3,146			(2,926	)
Restricted investment securities		14			65			(51	)
Gross loans/leases receivable (2) (3) (4)		3,561			(2,680	)		6,241
Total change in interest income	$	3,788		$	574		$	3,214
INTEREST EXPENSE
Interest-bearing deposits	$	322		$	139		$	183
Time deposits		156			42			114
Short-term borrowings		(56	)		76			(132	)
Federal Home Loan Bank advances		(1,588	)		(952	)		(636	)
Junior subordinated debentures		(14	)		192			(206	)
Other borrowings		(690	)		(64	)		(626	)
Total change in interest expense	$	(1,870	)	$	(567	)	$	(1,303	)
Total change in net interest income	$	5,658		$	1,141		$	4,517

(1) The column "Inc./(Dec.) from Prior Period" is segmented into the changes attributable to variations in volume and the changes attributable to changes in interest rates. The variations attributable to simultaneous volume and rate changes have been proportionately allocated to rate and volume.

(2) Interest earned and yields on nontaxable investment securities and nontaxable loans are determined on a tax equivalent basis using a 35% tax rate.

(3) Loan/lease fees are not material and are included in interest income from loans/leases receivable in accordance with accounting and regulatory guidance.

(4) Non-accrual loans/leases are included in the average balance for gross loans/leases receivable in accordance with accounting and regulatory guidance.

47

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

CRITICAL ACCOUNTING POLICIES

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The financial information contained within these statements is, to a significant extent, financial information that is based on approximate measures of the financial effects of transactions and events that have already occurred. Certain critical accounting policies are described below.

ALLOWANCE FOR LOAN AND LEASE LOSSES

Based on its consideration of accounting policies that involve the most complex and subjective decisions and assessments, management has identified its most critical accounting policy to be that related to the allowance.

The Company’s allowance methodology incorporates a variety of risk considerations, both quantitative and qualitative, in establishing an allowance that management believes is appropriate at each reporting date. Quantitative factors include the Company’s historical loss experience, delinquency and charge-off trends, collateral values, changes in NPLs, and other factors. Quantitative factors also incorporate known information about individual loans/leases, including borrowers’ sensitivity to interest rate movements.

Qualitative factors include the general economic environment in the Company’s markets, including economic conditions throughout the Midwest, and in particular, the state of certain industries. Size and complexity of individual credits in relation to loan/lease structures, existing loan/lease policies and pace of portfolio growth are other qualitative factors that are considered in the methodology.

Management may report a materially different amount for the provision in the statement of income to change the allowance if its assessment of the above factors were different. This discussion and analysis should be read in conjunction with the Company’s financial statements and the accompanying notes presented elsewhere herein, as well as the section entitled “Financial Condition” of this Management’s Discussion and Analysis that discusses the allowance.

Although management believes the level of the allowance as of June 30, 2016 was adequate to absorb losses in the loan/lease portfolio, a decline in local economic conditions, or other factors, could result in increasing losses that cannot be reasonably predicted at this time.

OTHER–THAN-TEMPORARY IMPAIRMENT

The Company’s assessment of OTTI of its investment securities portfolio is another critical accounting policy due to the level of judgment required by management. Investment securities are evaluated to determine whether declines in fair value below their cost are other-than-temporary.

In estimating OTTI losses, management considers a number of factors including, but not limited to, (1) the length of time and extent to which the fair value has been less than amortized cost, (2) the financial condition and near-term prospects of the issuer, (3) the current market conditions, and (4) the Company’s lack of intent to sell the security prior to recovery and whether it is not more-likely-than-not that the Company will be required to sell the security prior to recovery. The discussion regarding the Company’s assessment of OTTI should be read in conjunction with the Company’s financial statements and the accompanying notes presented elsewhere herein.

48

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

RESULTS OF OPERATIONS

INTEREST INCOME

Interest income increased 8%, comparing the second quarter of 2016 to the same period of 2015 and comparing the first half of 2016 to the same period of 2015.

A portion of this growth was the result of the Company’s strategy to redeploy funds from the securities portfolio into higher yielding loans and leases. In addition, organic loan and lease growth has been strong over the past twelve months.

Overall, the Company’s average earning assets increased 5%, comparing the second quarter of 2016 to the second quarter of 2015. During the same time period, average gross loans and leases increased 13%, while average investment securities decreased 17%.

The securities portfolio yield continued to increase (from 3.00% for the second quarter of 2015 to 3.64% for the second quarter of 2016) as the Company continued to sell low-yielding investments taking advantage of favorable market opportunities. Call activity picked up in the second quarter of 2016, resulting in the call of some lower-yielding callable agency securities. Additionally, the Company continued to take actions to diversify its securities portfolio, including increasing its portfolio of tax-exempt municipal securities, in an effort to increase tax equivalent interest income without additional income tax expense.

The Company intends to continue to grow quality loans and leases as well as diversify its securities portfolio to maximize yield while minimizing credit and interest rate risk.

INTEREST EXPENSE

Interest expense for the second quarter of 2016 decreased 18% from the second quarter of 2015. For the first six months of 2016, interest expense decreased 24% compared to the first six months of 2015. The Company has been successful in maintaining pricing discipline on deposits and decreasing the cost of borrowings, which has more than offset the growth impact and contributed to the net decline in interest expense.

Management has placed a strong focus on reducing the reliance on long-term wholesale funding as it tends to be higher cost than deposits. In the second quarter of 2015, the Company executed a balance sheet restructuring that is saving approximately $4.2 million of interest expense annually. Continued balance sheet restructurings in the fourth quarter of 2015 and first quarter of 2016 (refer to Note 4 of the Consolidated Financial Statements) have further reduced interest expense. Refer to Note 12 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for additional details.

The Company’s management intends to continue to shift the mix of funding from wholesale funds to core deposits, including noninterest-bearing deposits. Continuing this trend is expected to strengthen the Company’s franchise value, reduce funding costs, and increase fee income opportunities through deposit service charges.

49

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

PROVISION FOR LOAN/LEASE LOSSES

The provision is established based on a number of factors, including the Company’s historical loss experience, delinquencies and charge-off trends, the local and national economy and risk associated with the loans/leases in the portfolio as described in more detail in the “Critical Accounting Policies” section.

The Company’s provision totaled $1.2 million for the second quarter of 2016, which was down $1.2 million, or 49%, from the same quarter of the prior year. Provision for the first half of the year totaled $3.3 million, which was down $788 thousand, or 19%, compared to the first half of 2015. The decrease in provision expense was primarily due to stronger asset quality in recent periods.

The Company had net charge-offs of $496 thousand for the second quarter of 2016 which, when coupled with the provision of $1.2 million, increased the Company’s allowance to $28.1 million at June 30, 2016. As of June 30, 2016, the Company’s allowance to total loans/leases was 1.46%, which was flat from 1.46%at March 31, 2016 and down from 1.52% at June 30, 2015, respectively.

A more detailed discussion of the Company’s allowance can be found in the “Financial Condition” section of this report.

50

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

NONINTEREST INCOME

The following tables set forth the various categories of noninterest income for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended
	June 30, 2016		June 30, 2015		$ Change			% Change
Trust department fees	$	1,512,083	$	1,511,176	$	907			0.1	%
Investment advisory and management fees		692,738		758,433		(65,695	)		(8.7	)
Deposit service fees		946,810		924,642		22,168			2.4
Gains on sales of residential real estate loans, net		84,413		95,535		(11,122	)		(11.6	)
Gains on sales of government guaranteed portions of loans, net		1,603,890		69,346		1,534,544			2,212.9
Swap fee income		167,582		393,723		(226,141	)		(57.4	)
Securities gains, net		18,030		-		18,030			100.0
Earnings on bank-owned life insurance		480,520		433,152		47,368			10.9
Debit card fees		343,748		255,000		88,748			34.8
Correspondent banking fees		244,939		285,379		(40,440	)		(14.2	)
Participation service fees on commercial loan participations		246,010		223,827		22,183			9.9
Fee income from early termination of leases		66,043		76,722		(10,679	)		(13.9	)
Credit card issuing fees		139,073		135,649		3,424			2.5
Other		216,522		298,650		(82,128	)		(27.5	)
Total noninterest income	$	6,762,401	$	5,461,234	$	1,301,167			23.8	%

	Six Months Ended
	June 30, 2016		June 30, 2015		$ Change			% Change
Trust department fees	$	3,087,990	$	3,144,571	$	(56,581	)		(1.8	)%
Investment advisory and management fees		1,351,123		1,468,476		(117,353	)		(8.0	)
Deposit service fees		1,877,889		1,825,998		51,891			2.8
Gains on sales of residential real estate loans		144,799		181,675		(36,876	)		(20.3	)
Gains on sales of government guaranteed portions of loans		2,482,418		140,319		2,342,099			1,669.1
Swap fee income		1,024,540		1,119,930		(95,390	)		(8.5	)
Securities gains, net		376,510		416,933		(40,423	)		(9.7	)
Earnings on bank-owned life insurance		874,129		911,891		(37,762	)		(4.1	)
Debit card fees		651,399		493,000		158,399			32.1
Correspondent banking fees		547,069		605,000		(57,931	)		(9.6	)
Participation service fees on commercial loan participations		456,719		445,776		10,943			2.5
Fee income from early termination of leases		77,793		161,560		(83,767	)		(51.8	)
Credit card issuing fees		275,728		269,810		5,918			2.2
Other		356,768		498,073		(141,305	)		(28.4	)
Total noninterest income	$	13,584,874	$	11,683,012	$	1,901,862			16.3	%

In recent years, the Company has been successful in expanding its wealth management customer base, which has helped drive increases in fee income. While trust department fees continue to be a significant contributor to noninterest income, due to poor market conditions early in 2016, coupled with a large amount of distributions to clients and beneficiaries, trust department fees were flat compared to the first quarter of 2016. Trust department fees decreased 2% when comparing the first half of 2016 to the same period of the prior year. Income is generated primarily from fees charged based on assets under administration for corporate and personal trusts and for custodial services. The majority of the trust department fees are determined based on the value of the investments within the fully managed trusts. Additionally, the Company recently started offering trust operations services to correspondent banks. Fees are expected to grow in light of this new offering.

51

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Management has placed a strong emphasis on growing its investment advisory and management services. Part of this initiative has been to restructure the Company’s Wealth Management Division to allow for more efficient delivery of products and services through selective additions of talent as well as leverage of and collaboration among existing resources (including the aforementioned trust department). Similar to trust department fees, these fees are largely determined based on the value of the investments managed. And, similar to the trust department, the Company has had some success in expanding its customer base. However, due to poor market conditions early in 2016, investment advisory fees decreased 9% from the second quarter of 2015 to the second quarter of 2016 and they decreased 8% when comparing the first half of 2015 to the first half of 2016.

Deposit service fees expanded 2%, comparing the second quarter of 2016 to the same period in 2015 and expanded 3% when comparing the first half of 2016 to the same period of the prior year. The Company continues its emphasis on shifting the mix of deposits from brokered and retail time deposits to non-maturity demand deposits across all its markets. With this shift in mix, the Company has increased the number of demand deposit accounts, which tend to be lower in interest cost and higher in service fees. The Company plans to continue this shift in mix and to further focus on growing deposit service fees.

Gains on sales of residential real estate loans decreased 12%, comparing the second quarter of 2016 to the second quarter of 2015 and decreased 20% when comparing the first half of 2016 to the same period of the prior year. With the sustained historically low interest rate environment, refinancing activity has slowed, as many of the Company’s existing and prospective customers have already executed a refinancing. Therefore, this area has become a much smaller contributor to overall noninterest income.

The Company’s gains on the sale of government-guaranteed portions of loans for the second quarter and first six months of 2016 were up significantly, compared to the same periods of 2015, due to the strong demand for these types of loans in 2016. As one of its core strategies, the Company continues to leverage its expertise by taking advantage of programs offered by the SBA and the USDA. The Company’s portfolio of government-guaranteed loans has grown as a direct result of the Company’s strong expertise in SBA and USDA lending. In some cases, it is more beneficial for the Company to sell the government-guaranteed portion on the secondary market for a premium rather than retain the loans in the Company’s portfolio. Sales activity for government-guaranteed portions of loans tends to fluctuate depending on the demand for loans that fit the criteria for the government guarantee. Further, the size of the transactions can vary and, as the gain is determined as a percentage of the guaranteed amount, the resulting gain on sale can vary. Lastly, a strategy for improved pricing is packaging loans together for sale. From time to time, the Company may execute on this strategy, which may delay the gains on sales of some loans to achieve better pricing. The Company has added additional talent and is executing on strategies in an effort to make this a more consistent and larger source of revenue. The pipelines for SBA and USDA lending are strong, and management believes that the Company will continue to post solid numbers in this category.

As a result of the sustained historically low interest rate environment, the Company was able to execute several interest rate swaps on select commercial loans. The interest rate swaps allow the commercial borrowers to pay a fixed interest rate while the Company receives a variable interest rate as well as an upfront fee dependent upon the pricing. Management believes that these swaps help position the Company more favorably for rising rate environments. Management will continue to review opportunities to execute these swaps at all of its subsidiary banks, as the circumstances are appropriate for the borrower and the Company. Swap fee income totaled $168 thousand in second quarter of 2016, as compared to $394 thousand in second quarter of 2015. Swap fee income totaled $1.0 million for the first half of 2016, compared to $1.1 million in the first half of 2015. Future levels of swap fee income are dependent upon prevailing interest rates.

52

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Securities gains were $18 thousand for the second quarter of 2016. There were no gains recognized in the second quarter of 2015. Securities gains totaled $377 thousand for the first six months of 2016, compared to $417 thousand for the first six months of 2015. The Company took advantage of market opportunities by selling approximately $5.5 million of investments that were low-yielding during the quarter ended June 30, 2016 and $61.1 million for the first six months of 2016. Proceeds were then used to purchase higher-yielding tax-exempt municipal bonds with a modest duration extension and to fund loan and lease growth.

Earnings on BOLI increased 11% from the second quarter of 2015 to the second quarter of 2016 and decreased 4% comparing the first half of 2015 to the first half of 2016. There were no purchases of BOLI within the last twelve months. Notably, a small portion of the Company’s BOLI is variable in nature whereby the returns are determined by the performance of the equity market. The poor market performance in the first half of 2016 contributed to the decrease in earnings on BOLI year-to-date. Management intends to continue to review its BOLI investments to be consistent with policy and regulatory limits in conjunction with the rest of its earning assets in an effort to maximize returns while minimizing risk.

Debit card fees are the interchange fees paid on certain debit card customer transactions. Debit card fees increased 35% comparing the second quarter of 2016 to the second quarter of 2015 and increased 32% comparing the first half of 2016 to the first half of 2015. These fees can vary based on customer debit card usage, so fluctuations from period to period may occur. As an opportunity to maximize fees, the Company offers a deposit product with a modestly increased interest rate that incentivizes debit card activity.

Correspondent banking fees decreased 14%, comparing the second quarter of 2016 to the second quarter of 2015 and decreased 10% when comparing the first half of 2016 to the first half of 2015. As correspondent bank deposit balances rise, they receive a higher earnings credit, which then reduces the direct fees that the Company receives. There was an earnings credit rate increase implemented in the first quarter of 2016. Correspondent banking continues to be a core strategy for the Company, as this line of business provides a high level of noninterest bearing deposits that can be used to fund loan growth as well as a steady source of fee income.    The Company now serves approximately 176 banks in Iowa, Illinois and Wisconsin.

53

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

NONINTEREST EXPENSE

The following tables set forth the various categories of noninterest expense for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended
	June 30, 2016		June 30, 2015			$ Change			% Change
Salaries and employee benefits	$	10,917,473	$	11,091,952		$	(174,479	)		(1.6	)%
Occupancy and equipment expense		1,884,556		1,865,552			19,004			1.0
Professional and data processing fees		1,542,322		1,470,695			71,627			4.9
Acquisition costs		354,969		-			354,969			100.0
FDIC insurance, other insurance and regulatory fees		649,604		730,563			(80,959	)		(11.1	)
Loan/lease expense		154,349		208,552			(54,203	)		(26.0	)
Net cost of operations of other real estate		277,911		(47,876	)		325,787			(680.5	)
Advertising and marketing		433,451		489,504			(56,053	)		(11.5	)
Postage and communications		256,567		214,142			42,425			19.8
Stationery and supplies		157,924		136,808			21,116			15.4
Bank service charges		415,350		358,996			56,354			15.7
Losses on debt extinguishment, net		-		6,894,185			(6,894,185	)		(100.0	)
Correspondent banking expense		181,776		165,091			16,685			10.1
Other		517,501		523,470			(5,969	)		(1.1	)
Total noninterest expense	$	17,743,753	$	24,101,634		$	(6,357,881	)		(26.4	)%

	Six Months Ended
	June 30, 2016		June 30, 2015		$ Change			% Change
Salaries and employee benefits	$	21,718,380	$	22,126,404	$	(408,024	)		(1.8	)%
Occupancy and equipment expense		3,711,544		3,659,723		51,821			1.4
Professional and data processing fees		2,989,735		2,941,212		48,523			1.6
Acquisition costs		354,969		-		354,969			100.0
FDIC insurance, other insurance and regulatory fees		1,283,969		1,449,620		(165,651	)		(11.4	)
Loan/lease expense		317,168		511,475		(194,307	)		(38.0	)
Net cost of operations of other real estate		380,094		28,975		351,119			1,211.8
Advertising and marketing		819,710		907,741		(88,031	)		(9.7	)
Postage and communications		473,657		463,098		10,559			2.3
Stationery and supplies		322,795		279,363		43,432			15.5
Bank service charges		831,281		696,454		134,827			19.4
Losses on debt extinguishment, net		83,197		6,894,185		(6,810,988	)		(98.8	)
Correspondent banking expense		358,765		340,794		17,971			5.3
Other		1,052,987		1,006,751		46,236			4.6
Total noninterest expense	$	34,698,251	$	41,305,795	$	(6,607,544	)		(16.0	)%

Management places a strong emphasis on overall cost containment and is committed to improving the Company’s general efficiency.

54

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Salaries and employee benefits, which is the largest component of noninterest expense, decreased from the second quarter of 2015 to the second quarter of 2016 by 2%. This line item also decreased 2% when comparing the first half of 2016 to the first half of 2015. This was primarily due to the acquisition of the noncontrolling interest in m2 in 2015, thus eliminating the related salary expense. This amount represented the former minority owner’s 20% interest in the earnings of m2, as further described in Note 23 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Additionally, management focused on taking steps to reduce salary and employee benefits expense during the last half of 2015 and the first half of 2016, consistent with the Company’s stated goal of carefully managing noninterest expense growth.

Occupancy and equipment expense increased slightly, comparing the second quarter of 2016 to the same period of the prior year and comparing the first half of 2016 to the same period of the prior year. The increased expense was mostly due to higher service contract-related expenses.

Professional and data processing fees increased 5%, comparing the second quarter of 2016 to the same period in 2015 and increased 2% comparing the first half of 2016 to the same period in 2015. Generally, professional and data processing fees can fluctuate depending on certain one-time project costs. Management will continue to focus on minimizing such one-time costs and driving recurring costs down through contract renegotiation or managed reduction in activity where costs are determined on a usage basis.    

Acquisition costs for the second quarter of 2016 and for the first half of 2016 total $355 thousand. These costs are related to the planned acquisition of Community State Bank, as described in Note 9 to the Consolidated Financial Statements.

FDIC and other insurance expense decreased 11%, comparing the second quarter of 2016 to the second quarter of 2015, and decreased 11% comparing the first half of 2016 to the same period of 2015. The decrease in expense was due to a decrease in the assessment rate designated by the FDIC.

Loan/lease expense decreased 26%, comparing the second quarter of 2016 to the same quarter of 2015 and decreased 38% when comparing the first half of 2016 to the same period of 2015. The Company incurred elevated levels of expense during 2015 for certain existing NPLs in connection with the work-out of these loans. Generally, loan/lease expense has a direct relationship with the level of NPLs; however, it may deviate depending upon the individual NPLs.

Net cost of operations of other real estate includes gains/losses on the sale of OREO, write-downs of OREO and all income/expenses associated with OREO. Net costs of operations of other real estate totaled $278 thousand for the second quarter of 2016, compared to ($48) thousand for the second quarter of 2015. Net costs of operations of other real estate totaled $380 thousand for the first six months of 2016, compared to $29 thousand for the first six months of 2015.

Bank service charges, a large portion of which includes indirect costs incurred to provide services to QCBT’s correspondent banking customer portfolio, increased 15% from the second quarter of 2015 to the second quarter of 2016 and increased 19% from the first half of 2015 to the first half of 2016. The increase was due, in large part, to the success QCBT has had in growing its correspondent banking customer portfolio. As transactions volumes continue to increase and the number of correspondent banking clients increases, the associated expenses will also increase. This may not directly correlate to correspondent banking balances, as quarter-end balances can fluctuate.

55

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

In the first half of 2016, the Company incurred $83 thousand of losses on debt extinguishment, net. This amount included $1.3 million of losses related to the prepayment of certain FHLB advances and whole structured repurchase agreements, as well as a $1.2 million gain recognized through the repurchase of trust preferred securities. For further details, please refer to Note 4 of the Consolidated Financial Statements. In the first half of 2015, the Company incurred $6.9 million of losses on debt extinguishment, net, due to the prepayment of certain FHLB advances and structured repurchase agreements, as described in detail within Note 12 of the Company’s annual report on Form 10-K for the year ended December 31, 2015.

Correspondent banking expense was up 10% when comparing the second quarter of 2016 to the second quarter of 2015 and up 5% when comparing the first six months of 2016 to the same period of 2015. These are direct costs incurred to provide services to QCBT’s correspondent banking customer portfolio, including safekeeping and cash management services.

INCOME TAXES

In the second quarter of 2016, the Company incurred income tax expense of $2.2 million. For the first half of the year, the Company incurred income tax expense of $4.2 million. Following is a reconciliation of the expected income tax expense to the income tax expense included in the consolidated statements of income for the three and six months ended June 30, 2016 and 2015.

	For the Three Months Ended June 30,												For the Six Months Ended June 30,
	2016						2015						2016						2015
				% of						% of						% of						% of
				Pretax						Pretax						Pretax						Pretax
	Amount			Income			Amount			Income			Amount			Income			Amount			Income
Computed "expected" tax expense	$	3,090,364			35.0	%	$	(874,380	)		35.0	%	$	6,027,743			35.0	%	$	906,902			35.0	%
Tax exempt income, net		(988,488	)		(11.2	)		(882,613	)		35.3			(1,954,806	)		(11.4	)		(1,708,730	)		(65.9	)
Bank-owned life insurance		(168,182	)		(1.9	)		(151,603	)		6.1			(305,945	)		(1.8	)		(319,162	)		(12.3	)
State income taxes, net of federal benefit, current year		297,130			3.4			(85,113	)		3.4			564,038			3.3			85,217			3.3
Other		(77,680	)		(0.9	)		19,298			(0.8	)		(158,863	)		(0.9	)		(27,149	)		(1.1	)
Federal and state income tax expense	$	2,153,144			24.4	%	$	(1,974,411	)		79.0	%	$	4,172,167			24.2	%	$	(1,062,922	)		(41.0	)%

The effective tax for the quarter ended June 30, 2016 was 24.4% which was an increase over the effective tax rate of 79% for the quarter ended June 30, 2015. The effective tax rate for the six months ended June 30, 2016 was 24.2%, which was an increase over the effective tax rate of (41.0%) for the six months ended June 30, 2015. The increase in pre-tax income was derived from a larger portion of taxable income which drove the increase in the effective tax rate. The Company’s tax-exempt income sources include interest income from tax-exempt municipal bonds and loans as well as earnings on BOLI. Tax-exempt income grew over the past year; however, the growth in taxable income far outpaced the growth in non-taxable income. In 2015, the Company had more nontaxable income and deductible expenses (including $6.9 million of losses on debt extinguishment, net) than taxable income, which led to tax benefits in both periods presented above.

56

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

FINANCIAL CONDITION

Following is a table that represents the major categories of the Company’s balance sheet.

	As of
	June 30, 2016					March 31, 2016					December 31, 2015					June 30, 2015
	(dollars in thousands)
	Amount		%			Amount		%			Amount		%			Amount		%
Cash and due from banks	$	49,581		2	%	$	44,931		2	%	$	41,742		2	%	$	39,995		2	%
Federal funds sold and interest-bearing deposits		68,432		3	%		57,229		2	%		56,164		2	%		70,238		3	%
Securities		510,959		19	%		537,317		20	%		577,109		22	%		592,368		23	%
Net loans/leases		1,894,676		71	%		1,846,428		70	%		1,771,882		68	%		1,689,238		66	%
Other assets		159,786		6	%		154,768		6	%		146,301		6	%		151,130		6	%
Total assets	$	2,683,434		100	%	$	2,640,673		100	%	$	2,593,198		100	%	$	2,542,969		100	%
Total deposits	$	1,973,594		74	%	$	1,989,573		75	%	$	1,880,666		72	%	$	1,836,767		72	%
Total borrowings		381,875		14	%		347,901		13	%		444,162		17	%		456,567		18	%
Other liabilities		52,848		2	%		68,056		3	%		42,484		2	%		37,938		2	%
Total stockholders' equity		275,117		10	%		235,143		9	%		225,886		9	%		211,697		8	%
Total liabilities and stockholders' equity	$	2,683,434		100	%	$	2,640,673		100	%	$	2,593,198		100	%	$	2,542,969		100	%

During the second quarter of 2016, the Company’s total assets increased $42.8 million, or 2%, to a total of $2.7 billion, while total gross loans and leases grew $48.2 million, or 3%. The loan and lease growth was funded primarily by called securities and short-term borrowings. Deposits decreased $16.0 million, or 1%, during the quarter. Borrowings increased $34.0 million (mostly overnight FHLB advances) in the second quarter to $381.9 million. Stockholders’ equity increased $40.0 million, or 17%, in the current quarter due to net income, as well as the common stock offering described in Note 9 to the Consolidated Financial Statements.

INVESTMENT SECURITIES 

The composition of the Company’s securities portfolio is managed to meet liquidity needs while prioritizing the impact on interest rate risk and maximizing return, while minimizing credit risk. The Company has further diversified the portfolio by decreasing U.S government sponsored agency securities, while increasingresidential mortgage-backed securities and tax-exempt municipal securities. Of the latter, the large majority are privately placed tax-exempt debt issuances by municipalities located in the Midwest (with some in or near the Company’s existing markets) and require a thorough underwriting process before investment. Additionally, management will continue to diversify the portfolio with further growth strictly dictated by the pace of growth in deposits and loans.

57

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Following is a breakdown of the Company’s securities portfolio by type, the percentage of unrealized gains (losses) to carrying value on the total portfolio, and the portfolio duration:

	As of
	June 30, 2016						March 31, 2016						December 31, 2015						June 30, 2015
	Amount			%			Amount			%			Amount			%			Amount			%
	(dollars in thousands)
U.S. govt. sponsored agency securities	$	88,321			17	%	$	132,742			25	%	$	213,537			37	%	$	256,444			43	%
Municipal securities		302,689			59	%		285,009			53	%		280,203			49	%		251,992			42	%
Residential mortgage-backed and related securities		116,765			23	%		116,452			22	%		80,670			14	%		80,844			14	%
Other securities		3,184			1	%		3,114			0	%		2,699			0	%		3,088			1	%
	$	510,959			100	%	$	537,317			100	%	$	577,109			100	%	$	592,368			100	%
Securities as a % of Total Assets		19.04	%					20.35	%					22.25	%					23.29	%
Net Unrealized Gains (Losses) as a % of Amortized Cost		1.95	%					1.05	%					(0.03%	)					(0.69%	)
Duration (in years)		5.1						5.2						5.1						4.9
Yield on investment securities (tax equivalent)		3.64	%					3.42	%					3.07	%					3.00	%

As a result of fluctuations in longer-term interest rates, the fair value of the Company’s securities portfolio went from a net unrealized gain position of 1.05% of amortized cost at March 31, 2016 to a net unrealized gain position of 1.95% of amortized cost at June 30, 2016. Management performs an evaluation of the portfolio quarterly to understand the current market value as well as projections of market value in a variety of rising and falling interest rate scenarios. In addition, management has evaluated those securities with an unrealized loss position to determine whether the loss is derived from credit deterioration or the movement in interest rates. The evaluation determined that there were no securities in the portfolio with OTTI. See the “Critical Accounting Policies” section of this report for further discussion of this evaluation.

The duration of the securities portfolio has stayed relatively flat over the past several quarters. Duration was extended from the strong growth in longer term fixed rate municipal securities, but was mostly offset by the duration shortening of agency and mortgage-backed securities portfolios resulting from targeted sales of longer duration investments and as the remaining agency portfolio rolled closer to maturities or call dates.

The Company has not invested in commercial mortgage-backed securities or pooled trust preferred securities. Additionally, the Company has not invested in the types of securities subject to the Volcker Rule (a provision of the Dodd-Frank Act).

See Note 2 to the Consolidated Financial Statements for additional information regarding the Company’s investment securities.

58

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

LOANS/LEASES 

Total loans/leases grew 13.9% on an annualized basis during the first six months of 2016. The mix of the loan/lease types within the Company’s loan/lease portfolio is presented in the following table.

	As of
	June 30, 2016						March 31, 2016						December 31, 2015						June 30, 2015
	Amount			%			Amount			%			Amount			%			Amount			%
	(dollars in thousands)
C&I loans	$	706,261			37	%	$	682,057			37	%	$	648,160			36	%	$	606,826			36	%
CRE loans		784,379			41	%		766,159			41	%		724,369			40	%		696,122			41	%
Direct financing leases		169,928			9	%		172,774			9	%		173,656			10	%		170,799			10	%
Residential real estate loans		180,482			9	%		173,096			9	%		170,433			10	%		161,985			9	%
Installment and other consumer loans		73,658			4	%		71,842			4	%		73,669			4	%		72,448			4	%
Total loans/leases	$	1,914,708			100	%	$	1,865,928			100	%	$	1,790,287			100	%	$	1,708,180			100	%
Plus deferred loan/lease origination costs, net of fees		8,065						7,895						7,736						7,204
Less allowance		(28,097	)					(27,395	)					(26,141	)					(26,146	)
Net loans/leases	$	1,894,676					$	1,846,428					$	1,771,882					$	1,689,238

As CRE loans have historically been the Company’s largest portfolio segment, management places a strong emphasis on monitoring the composition of the Company’s CRE loan portfolio. For example, management tracks the level of owner-occupied CRE loans relative to non owner-occupied loans. Owner-occupied loans are generally considered to have less risk. As of June 30, 2016 and March 31, 2016, respectively, approximately 33% and 34% of the CRE loan portfolio was owner-occupied.

Over the past several quarters, the Company has been successful in shifting the mix of its commercial loan portfolio by adding more C&I loans. C&I loans grew $99.4 million, or 16% over the past twelve months, which increased its percentage to total loans/leases from 36% to 37%.

59

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Following is a listing of significant industries within the Company’s CRE loan portfolio:

	As of June 30,					As of March 31,					As of December 31,					As of June 30,
	2016					2016					2015					2015
	Amount		%			Amount		%			Amount		%			Amount		%
	(dollars in thousands)
Lessors of Nonresidential Buildings	$	285,522		37	%	$	277,822		36	%	$	264,133		37	%	$	248,315		35	%
Lessors of Residential Buildings		104,395		13	%		99,104		13	%		89,189		12	%		87,424		12	%
Lessors of Other Real Estate Property		21,803		3	%		21,895		3	%		22,009		3	%		18,251		3	%
Hotels		19,804		3	%		19,694		3	%		19,228		3	%		17,648		3	%
Land Subdivision		18,034		2	%		18,467		2	%		17,839		2	%		15,494		2	%
Nonresidential Property Managers		17,517		2	%		17,003		2	%		10,500		1	%		5,360		1	%
Nursing Care Facilities		15,070		2	%		13,807		2	%		17,288		2	%		15,293		2	%
New Car Dealers		10,856		1	%		11,430		2	%		11,656		2	%		12,978		2	%
Other *		291,378		37	%		286,937		37	%		272,527		38	%		275,359		40	%
Total CRE Loans	$	784,379		100	%	$	766,159		100	%	$	724,369		100	%	$	696,122		100	%

* “Other” consists of all other industries. None of these had concentrations greater than $15.0 million, or approximately 2% of total CRE loans in the most recent period presented.

The Company’s residential real estate loan portfolio consists of the following:

● Certain loans that do not meet the criteria for sale into the secondary market. These are often structured as adjustable rate mortgages with maturities ranging from three to seven years to avoid the long-term interest rate risk.

● A limited amount of 15-year fixed rate residential real estate loans that meet certain credit guidelines.

The remaining residential real estate loans originated by the Company were sold on the secondary market to avoid the interest rate risk associated with longer term fixed rate loans. Loans originated for this purpose were classified as held for sale and are included in the residential real estate loans above. In addition, the Company has not originated any subprime, Alt-A, no documentation, or stated income residential real estate loans throughout its history.

See Note 3 to the Consolidated Financial Statements for additional information regarding the Company’s loan/lease portfolio.

60

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

ALLOWANCE FOR ESTIMATED LOSSES ON LOANS/LEASES

Changes in the allowance for the three and six months ended June 30, 2016 and 2015 are presented as follows:

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
	(dollars in thousands)						(dollars in thousands)
Balance, beginning	$	27,395		$	23,883		$	26,141		$	23,074
Provisions charged to expense		1,198			2,349			3,271			4,059
Loans/leases charged off		(634	)		(536	)		(1,502	)		(1,643	)
Recoveries on loans/leases previously charged off		138			450			187			656
Balance, ending	$	28,097		$	26,146		$	28,097		$	26,146

The allowance was determined based on factors that included the overall composition of the loan/lease portfolio, types of loans/leases, past loss experience, loan/lease delinquencies, potential substandard and doubtful credits, economic conditions, collateral positions, governmental guarantees and other factors that, in management’s judgment, deserved evaluation. To ensure that an adequate allowance was maintained, provisions were made based on a number of factors, including the increase in loans/leases and a detailed analysis of the loan/lease portfolio. The loan/lease portfolio is reviewed and analyzed monthly with specific detailed reviews completed on all loans risk-rated worse than “fair quality” and carrying aggregate exposure in excess of $250 thousand. The adequacy of the allowance is monitored by the loan review staff and reported to management and the board of directors.

The Company’s levels of criticized and classified loans are reported in the following table.

	As of
Internally Assigned Risk Rating *	June 30, 2016			March 31, 2016			December 31, 2015			June 30, 2015
	(dollars in thousands)
Special Mention (Rating 6)	$	16,231		$	28,065		$	37,289		$	35,093
Substandard (Rating 7)		44,636			38,273			27,962			24,688
Doubtful (Rating 8)		-			-			-			-
	$	60,867		$	66,338		$	65,251		$	59,781
Criticized Loans **	$	60,867		$	66,338		$	65,251		$	59,781
Classified Loans ***	$	44,636		$	38,273		$	27,962		$	24,688
Criticized Loans as a % of Total Loans/Leases		3.17	%		3.54	%		3.63	%		3.48	%
Classified Loans as a % of Total Loans/Leases		2.32	%		2.04	%		1.56	%		1.44	%

* Amounts above include the government guaranteed portion, if any. For the calculation of allowance, the Company assigns internal risk ratings of Pass (Rating 2) for the government guaranteed portion.

** Criticized loans are defined as commercial and industrial and commercial real estate loans with internally assigned risk ratings of 6, 7, or 8, regardless of performance.

*** Classified loans are defined as commercial and industrial and commercial real estate loans with internally assigned risk ratings of 7 or 8, regardless of performance.

The Company experienced an increase in classified loans during the first half of 2016, while criticized loans decreased during this same period. The increase in classified loans during the first half of 2016 was primarily due to a limited number of relationship downgrades. The Company continues its strong focus on improving credit quality in an effort to limit NPLs.

61

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

The following table summarizes the trend in the allowance as a percentage of gross loans/leases and as a percentage of NPLs.

	As of
	June 30, 2016			March 31, 2016			December 31, 2015			June 30, 2015
Allowance / Gross Loans/Leases		1.46	%		1.46	%		1.45	%		1.52	%
Allowance / NPLs *		223.42	%		228.75	%		223.33	%		176.02	%

*NPLs consist of nonaccrual loans/leases, accruing loans/leases past due 90 days or more, and accruing TDRs.

Although management believes that the allowance at June 30, 2016 was at a level adequate to absorb losses on existing loans/leases, there can be no assurance that such losses will not exceed the estimated amounts or that the Company will not be required to make additional provisions in the future. Unpredictable future events could adversely affect cash flows for both commercial and individual borrowers, which could cause the Company to experience increases in problem assets, delinquencies and losses on loans/leases, and require further increases in the provision. Asset quality is a priority for the Company and its subsidiaries. The ability to grow profitably is in part dependent upon the ability to maintain that quality. The Company continually focuses efforts at its subsidiary banks and leasing company with the intention to improve the overall quality of the Company’s loan/lease portfolio.

See Note 3 to the Consolidated Financial Statements for additional information regarding the Company’s allowance.

62

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

NONPERFORMING ASSETS 

The table below presents the amounts of NPAs.

	As of June 30,			As of March 31,			As of December 31,			As of June 30,
	2016			2016			2015			2015
	(dollars in thousands)
Nonaccrual loans/leases (1) (2)	$	10,737		$	10,772		$	10,648		$	13,542
Accruing loans/leases past due 90 days or more		86			47			3			46
TDRs - accruing		1,753			1,157			1,054			1,266
Total NPLs		12,576			11,976			11,705			14,854
OREO		6,179			6,680			7,151			11,952
Other repossessed assets		154			46			246			297
Total NPAs	$	18,909		$	18,702		$	19,102		$	27,103
NPLs to total loans/leases		0.65	%		0.64	%		0.65	%		0.87	%
NPAs to total loans/leases plus repossessed property		0.98	%		0.99	%		1.06	%		1.57	%
NPAs to total assets		0.70	%		0.71	%		0.74	%		1.07	%
Texas ratio (3)		6.28	%		7.23	%		7.62	%		11.50	%

(1) Includes government guaranteed portion of loans, as applicable.

(2) Includes TDRs of $2.4 million at June 30, 2016, $1.6 million at March 31, 2016, $1.5 million at December 31, 2015, and $3.9 million at June 30, 2015.

(3) Texas Ratio = Nonperforming Assets (excluding Other Repossessed Assets) / Tangible Equity plus Allowance. Texas Ratio is a non-GAAP financial measure. Management included this ratio as it is considered by many investors and analysts to be a metric with which to analyze and evaluate asset quality. Other companies may calculate this ratio differently.

NPAs at June 30, 2016 were $18.9 million, which were flat from March 31, 2016 and down $8.2 million from June 30, 2015. In addition, the ratio of NPAs to total assets was 0.70% at June 30, 2016, which was down from 0.71% at March 31, 2016, and down from 1.07% at June 30, 2015.

The large majority of the NPAs consist of nonaccrual loans/leases, accruing TDRs, and OREO. For nonaccrual loans/leases and accruing TDRs, management has thoroughly reviewed these loans/leases and has provided specific allowances as appropriate.

OREO is carried at the lower of carrying amount or fair value less costs to sell.

Additionally, a portion of several of the nonaccrual loans are guaranteed by the government. At June 30, 2016, government guaranteed amounts of nonaccrual loans totaled approximately $713 thousand, or 7% of the $10.7 million of total nonaccrual loans/leases.

The Company’s lending/leasing practices remain unchanged and asset quality remains a top priority for management.

63

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

DEPOSITS 

Deposits decreased $16.0 million during the second quarter of 2016. The table below presents the composition of the Company’s deposit portfolio.

	As of
	June 30, 2016					March 31, 2016					December 31, 2015					June 30, 2015
	(dollars in thousands)
	Amount		%			Amount		%			Amount		%			Amount		%
Noninterest bearing demand deposits	$	615,764		31	%	$	641,859		32	%	$	615,292		33	%	$	633,370		34	%
Interest bearing demand deposits		918,036		47	%		916,455		46	%		886,294		47	%		785,705		43	%
Time deposits		337,584		17	%		331,786		17	%		309,974		16	%		322,826		18	%
Brokered deposits		102,210		5	%		99,473		5	%		69,106		4	%		94,866		5	%
	$	1,973,594		100	%	$	1,989,573		100	%	$	1,880,666		100	%	$	1,836,767		100	%

The Company has been successful in growing its noninterest bearing deposit portfolio over the past several years, although during the second quarter, noninterest bearing demand deposits decreased 4%.

Quarter-end balances can greatly fluctuate due to large customer and correspondent bank activity. Management will continue to focus on growing its noninterest bearing deposit portfolio, including its correspondent banking business at QCBT, as well as shifting the mix from brokered and other higher cost deposits to lower cost core deposits.

BORROWINGS 

The subsidiary banks offer short-term repurchase agreements to some of their significant customers. Also, the subsidiary banks purchase federal funds for short-term funding needs from the Federal Reserve Bank of Chicago or from their correspondent banks. The table below presents the composition of the Company’s short-term borrowings.

	As of
	June 30, 2016		March 31, 2016		December 31, 2015		June 30, 2015
	(dollars in thousands)
Overnight repurchase agreements with customers	$	21,441	$	52,153	$	73,873	$	118,795
Federal funds purchased		30,120		11,870		70,790		49,780
	$	51,561	$	64,023	$	144,663	$	168,575

The Company is nearing the end of transitioning its overnight repurchase agreements with customers into a comparable interest bearing demand deposit product that offers full FDIC insurance. This transition freed up securities that were previously pledged as collateral to the overnight repurchase agreements with customers. This enhanced the Company’s ability to further rotate its earning assets from securities to loans.

As a result of their memberships in either the FHLB of Des Moines or Chicago, the subsidiary banks have the ability to borrow funds for short or long-term purposes under a variety of programs. FHLB advances are utilized for loan matching as a hedge against the possibility of rising interest rates, and when these advances provide a less costly or more readily available source of funds than customer deposits.

64

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

Other borrowings consist of structured repos which are utilized as an alternative funding source to FHLB advances and customer deposits. Structured repos are collateralized by certain U.S. government agency securities and residential mortgage backed securities. Structured repos totaled $100 million, $100 million, $110 million and $115 million as of June 30, 2016, March 31, 2016, December 31, 2015 and June 30, 2015, respectively.

It is management’s intention to continue to reduce its reliance on wholesale funding, including FHLB advances, structured repos, and brokered deposits. Replacement of this funding with core deposits helps to reduce interest expense as the wholesale funding tends to be higher cost. However, the Company may choose to utilize advances and/or brokered deposits to supplement funding needs, as this is a way for the Company to effectively and efficiently manage interest rate risk. The table below presents the maturity schedule including weighted average interest cost for the Company’s combined wholesale funding portfolio.

	June 30, 2016					December 31, 2015
			Weighted					Weighted
			Average					Average
Maturity:	Amount Due		Interest Rate			Amount Due		Interest Rate
Year ending December 31:	(dollar amounts in thousands)
2016	$	222,873		0.56	%	$	125,038		0.59	%
2017		39,055		1.61			49,055		2.07
2018		45,233		2.70			57,283		2.87
2019		46,950		3.21			50,089		3.14
2020		45,000		2.66			45,000		2.66
Thereafter		-		0.00			3,641		2.51
Total Wholesale Funding	$	399,111		1.45	%	$	330,106		1.89	%

During the first six months of 2016, wholesale funding increased $69.0 million. While the Company increased overall wholesale funding, the increase was all short-term in nature, as 2016 maturities increased $97.8 million, while all future year maturities saw a decrease due to brokered CDs that were called and prepayments of certain FHLB advances and structured repos (as further described in Note 4 of the Consolidated Financial Statements).

The table below presents the Company’s term FHLB advances and overnight FHLB advances.

	As of
	June 30, 2016		March 31, 2016		December 31, 2015		June 30, 2015
	(dollars in thousands)
Term FHLB advances	$	78,000	$	80,000	$	97,000	$	104,000
Overnight FHLB advances		118,900		70,500		54,000		28,500
	$	196,900	$	150,500	$	151,000	$	132,500

65

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

STOCKHOLDERS’ EQUITY

The table below presents the composition of the Company’s stockholders’ equity.

	As of
	June 30, 2016			March 31, 2016			December 31, 2015			June 30, 2015
	Amount			Amount			Amount			Amount
	(dollars in thousands)
Common stock	$	13,057		$	11,815		$	11,761		$	11,820
Additional paid in capital		155,454			124,058			123,283			122,511
Retained earnings		105,024			98,868			92,966			81,066
AOCI (loss)		1,582			402			(2,124	)		(2,094	)
Less: Treasury stock		-			-			-			(1,606	)
Total stockholders' equity	$	275,117		$	235,143		$	225,886		$	211,697
TCE* / TA		10.10	%		8.74	%		8.55	%		8.15	%

*TCE is defined as total common stockholders’ equity excluding goodwill and other intangibles. This ratio is a non-GAAP financial measure.

During the second quarter of 2015, the Company finalized its acquisition of the 20% noncontrolling interest in m2 (further described in Note 23 of the Company’s annual report filed on Form 10-K as of December 31, 2015). As final 2015 tax returns were filed in early 2016, the Company made necessary final adjustments to the related deferred tax accounts. This resulted in an increase of $2.1 million to deferred tax assets and additional paid in capital during the second quarter of 2016.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity measures the ability of the Company to meet maturing obligations and its existing commitments, to withstand fluctuations in deposit levels, to fund its operations, and to provide for customers’ credit needs. The Company monitors liquidity risk through contingency planning stress testing on a regular basis. The Company seeks to avoid over-concentration of funding sources and to establish and maintain contingent funding facilities that can be drawn upon if normal funding sources become unavailable. One source of liquidity is cash and short-term assets, such as interest-bearing deposits in other banks and federal funds sold, which averaged $115.4 million during the second quarter of 2016 and $129.5 million during 2015. The Company’s on balance sheet liquidity position can fluctuate based on short-term activity in deposits and loans.

The subsidiary banks have a variety of sources of short-term liquidity available to them, including federal funds purchased from correspondent banks, FHLB advances, wholesale structured repurchase agreements, brokered deposits, lines of credit, borrowing at the Federal Reserve Discount Window, sales of securities available for sale, and loan/lease participations or sales. The Company also generates liquidity from the regular principal payments and prepayments made on its loan/lease portfolio, and on the regular monthly payments on its securities portfolio (both residential mortgage-backed securities and municipal securities).

At June 30, 2016, the subsidiary banks had 33 lines of credit totaling $359.0 million, of which $12.0 million was secured and $347.0 million was unsecured. At June 30, 2016, $339.0 million was available as $20.0 million was utilized for short-term borrowings needs at QCBT.

66

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

At December 31, 2015, the subsidiary banks had 32 lines of credit totaling $346.6 million, of which $14.6 million was secured and $332.0 million was unsecured. At December 31, 2015, $286.6 million was available as $60.0 million was utilized for short-term borrowing needs at QCBT.

The Company has emphasized growing the number and amount of lines of credit in an effort to strengthen this contingent source of liquidity. Additionally, the Company maintains a $10.0 million secured revolving credit note with a variable interest rate and a maturity of June 30, 2017. At June 30, 2016, the Company had not borrowed on this revolving credit note and had the full amount available.

The Company currently has $299.8 million in correspondent banking deposits spread over 176 relationships. While the Company feels that these funds are very stable, there is the potential for large fluctuations that can impact liquidity. Seasonality and the liquidity needs of these correspondent banks can impact balances. Management closely monitors these fluctuations and runs stress scenarios to measure the impact on liquidity and interest rate risk with various levels of correspondent deposit run-off.

Investing activities used cash of $67.2 million during the first six months of 2016, compared to $15.0 million for the same period of 2015. Proceeds from calls, maturities, paydowns, and sales of securities were $171.1 million for the first six months of 2016, compared to $240.3 million for the same period of 2015. Purchases of securities used cash of $97.1 million for the first six months of 2016, compared to $181.3 million for the same period of 2015. The net increase in loans/leases used cash of $125.0 million for the first six months of 2016 compared to $85.8 million for the same period of 2015.

Financing activities provided cash of $60.3 million for the first six months of 2016, compared to $7.9 million for same period of 2015. Net increases in deposits totaled $92.9 million for the first six months of 2016, compared to $157.1 million for the same period of 2015. During the first six months of 2016, the Company’s short-term borrowings decreased $93.1 million, while they decreased $99.8 million for the same period of 2015. During the first six months of 2016, the Company used $25.2 million to prepay select FHLB advances and other borrowings. In the same period, the Company received $29.8 million of proceeds from the common stock offering of 1.2 million shares of common stock. During the first six months of 2015, the Company received $63.5 million of proceeds from the common stock offering of 3.7 million shares of common stock. In the same period, the Company used $110.4 million to prepay select FHLB advances and other borrowings.

Total cash provided by operating activities was $14.8 million for the first six months of 2016, compared to $8.9 million for the same period of 2015.

Throughout its history, the Company has secured additional capital through various sources, including the issuance of common and preferred stock, as well as trust preferred securities. Trust preferred securities are reported on the Company’s balance sheet as liabilities, but currently qualify for treatment as regulatory capital.

67

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

The following table presents the details of the trust preferred securities outstanding as of June 30, 2016 and December 31, 2015.

Name	Date Issued	Amount Outstanding 6/30/16	Amount Outstanding 12/31/15	Interest Rate	Interest Rate as of 6/30/16	Interest Rate as of 12/31/2015
QCR Holdings Statutory Trust II	February 2004	$10,310,000	$10,310,000	2.85% over 3-month LIBOR	3.48%	3.18%
QCR Holdings Statutory Trust III	February 2004	8,248,000	8,248,000	2.85% over 3-month LIBOR	3.48%	3.18%
QCR Holdings Statutory Trust IV	May 2005	-	5,155,000	1.80% over 3-month LIBOR	N/A	2.12%
QCR Holdings Statutory Trust V	February 2006	10,310,000	10,310,000	1.55% over 3-month LIBOR	2.18%	1.87%
Community National Statutory Trust II	September 2004	3,093,000	3,093,000	2.17% over 3-month LIBOR	2.82%	2.74%
Community National Statutory Trust III	March 2007	3,609,000	3,609,000	1.75% over 3-month LIBOR	2.40%	2.26%
		$35,570,000	$40,725,000	Weighted Average Rate	2.94%	2.60%

The Company assumed the trust preferred securities originally issued by Community National in connection with its acquisition in May 2013. As a result of acquisition accounting, the liabilities were recorded at fair value upon acquisition with the resulting discount being accreted as interest expense on a level yield basis over the expected term. The original discount totaled $2.6 million. As of June 30, 2016, the remaining discount was $2.2 million.

QCR Holdings Statutory Trust IV was extinguished in the first quarter of 2016. Refer to Note 4 of the Consolidated Financial Statements for additional information.

On August 27, 2015, the Company filed a universal shelf registration statement on Form S-3 with the SEC. This registration statement, declared effective by the SEC on October 5, 2015, allows the Company to issue various types of securities, including common stock, preferred stock, debt securities or warrants, from time to time, up to an aggregate amount of $100 million. The specific terms and prices of the securities will be determined at the time of any future offering and described in a separate prospectus supplement, which would be filed with the SEC at the time of the particular offering, if any. On May 23, 2016, the Company completed a $30 million takedown from its shelf registration statement for the common stock issuance discussed in Note 9 of the Consolidated Financial Statements, leaving $70 million for future offerings. 

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and subsidiary banks’ financial statements. Refer to Note 8 of the Consolidated Financial Statements for additional information regarding regulatory capital.

68

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

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

The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. The factors which could have a material adverse effect on the Company’s operations and future prospects are detailed in the “Risk Factors” sections included under Item 1A of Part I of the Company’s Annual Report on Form 10-K and Item 1A of Part II of this report. In addition to the risk factors described in that section, there are other factors that may impact any public company, including the Company, which could have a material adverse effect on the Company’s operations and future prospects of the Company and its subsidiaries.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

69

Part I

Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company, like other financial institutions, is subject to direct and indirect market risk. Direct market risk exists from changes in interest rates. The Company’s net income is dependent on its net interest income. Net interest income is susceptible to interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest-earning assets. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.

In an attempt to manage the Company’s exposure to changes in interest rates, management monitors the Company’s interest rate risk. Each subsidiary bank has an asset/liability management committee of the board of directors that meets quarterly to review the bank’s interest rate risk position and profitability, and to make or recommend adjustments for consideration by the full board of each bank.

Internal asset/liability management teams consisting of members of the subsidiary banks’ management meet weekly to manage the mix of assets and liabilities to maximize earnings and liquidity and minimize interest rate and other risks. Management also reviews the subsidiary banks’ securities portfolios, formulates investment strategies, and oversees the timing and implementation of transactions to assure attainment of the board's objectives in an effective manner. Notwithstanding the Company’s interest rate risk management activities, the potential for changing interest rates is an uncertainty that can have an adverse effect on net income.

In adjusting the Company’s asset/liability position, the board of directors and management attempt to manage the Company’s interest rate risk while maintaining or enhancing net interest margins. At times, depending on the level of general interest rates, the relationship between long-term and short-term interest rates, market conditions and competitive factors, the board of directors and management may decide to increase the Company’s interest rate risk position somewhat in order to increase its net interest margin. The Company’s results of operations and net portfolio values remain vulnerable to increases in interest rates and to fluctuations in the difference between long-term and short-term interest rates.

One method used to quantify interest rate risk is a short-term earnings at risk summary, which is a detailed and dynamic simulation model used to quantify the estimated exposure of net interest income to sustained interest rate changes. This simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all interest sensitive assets and liabilities reflected on the Company’s consolidated balance sheet. This sensitivity analysis demonstrates net interest income exposure annually over a five-year horizon, assuming no balance sheet growth and various interest rate scenarios including no change in rates; 200, 300, 400, and 500 basis point upward shifts; and a 100 basis point downward shift in interest rates, where interest-bearing assets and liabilities reprice at their earliest possible repricing date.

The model assumes parallel and pro rata shifts in interest rates over a twelve-month period for the 200 basis point upward shift and 100 basis point downward shift. For the 400 basis point upward shift, the model assumes a parallel and pro rata shift in interest rates over a twenty-four month period. For the 500 basis point upward shift, the model assumes a flattening and pro rata shift in interest rates over a twelve-month period where the short-end of the yield curve shifts upward greater than the long-end of the yield curve.

70

Part I

Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Further, in recent years, the Company added additional interest rate scenarios where interest rates experience a parallel and instantaneous shift upward 100, 200, 300, and 400 basis points and a parallel and instantaneous shift downward 100 basis points. The Company will run additional interest rate scenarios on an as-needed basis.

The asset/liability management committees of the subsidiary bank boards of directors have established policy limits of a 10% decline in net interest income for the 200 basis point upward parallel shift and the 100 basis point downward parallel shift. For the 300 basis point upward shock, the established policy limit has been increased to 25% decline in net interest income. The increased policy limit is appropriate as the shock scenario is extreme and unlikely and warrants a higher limit than the more realistic and traditional parallel/pro-rata shift scenarios.

Application of the simulation model analysis for select interest rate scenarios at the most recent quarter-end available is presented in the following table:

		NET INTEREST INCOME EXPOSURE in YEAR 1
INTEREST RATE SCENARIO	POLICY LIMIT	As of March 31, 2016	As of December 31, 2015	As of December 31, 2014
100 basis point downward shift	-10.0%	-1.2%	-2.1%	-1.7%
200 basis point upward shift	-10.0%	-3.4%	-2.7%	-5.0%
300 basis point upward shock	-25.0%	-7.1%	-7.1%	-11.9%

The simulation is within the board-established policy limits for all three scenarios. Additionally, for all of the various interest rate scenarios modeled and measured by management (as described above), the results at March 31, 2016 (the most recent quarter available) were within established risk tolerances as established by policy or by best practice (if the interest rate scenario didn’t have a specific policy limit).

In 2014, the Company executed two interest rate cap transactions, each with a notional value of $15.0 million, for a total of $30.0 million. The interest rate caps purchased essentially set a ceiling to the interest rate paid on the $30.0 million of short-term FHLB advances that are being hedged, minimizing the interest rate risk associated with rising interest rates. The Company will continue to analyze and evaluate similar transactions as an alternative and cost effective way to mitigate interest rate risk.

Interest rate risk is considered to be one of the most significant market risks affecting the Company. For that reason, the Company engages the assistance of a national consulting firm and its risk management system to monitor and control the Company’s interest rate risk exposure. Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company’s business activities.

71

Part I

Item 4

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act of 1934) as of June 30, 2016. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed in the reports filed and submitted under the Exchange Act was recorded, processed, summarized and reported as and when required.

Changes in Internal Control over Financial Reporting. There have been no significant changes to the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

72

Part II

QCR HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1              Legal Proceedings                                       

There are no material pending legal proceedings to which the Company or any of its subsidiaries is a party other than ordinary routine litigation incidental to their respective businesses.

Item 1A           Risk Factors

There have been no material changes in the risk factors applicable to the Company from those disclosed in Part I, Item 1.A. “Risk Factors,” in the Company’s 2015 Annual Report on Form 10-K. Please refer to that section of the Company’s Form 10-K for disclosures regarding the risks and uncertainties related to the Company’s business.

Item 2              Unregistered Sales of Equity Securities and Use of Proceeds                         

None 

Item 3             Defaults Upon Senior Securities                         

None

Item 4             Mine Safety Disclosures

Not applicable

Item 5            Other Information                                        

               None               

73

Part II

QCR HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION - continued

Item 6           Exhibits

2.1 Stock Purchase Agreement, between QCR Holdings, Inc. and Van Diest Investment Company, dated May 23, 2016 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on May 23, 2016).

10.1 2016 Equity Incentive Plan (incorporated by reference to Appendix A of the Company’s definitive proxy statement on Schedule 14A filed on April 1, 2016).

10.2 Form of Securities Purchase Agreement, between the Company and certain investors, dated May 20, 2016 ((incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on May 23, 2016).

31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).

31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).

32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015; (ii) Consolidated Statements of Income for the three and six months ended June 30, 2016 and June 30, 2015; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and June 30, 2015; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2016 and June 30, 2015; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and June 30, 2015; and (vi) Notes to the Consolidated Financial Statements.

74

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

QCR HOLDINGS, INC.

(Registrant)

Date August 5, 2016	/s/ Douglas M. Hultquist
	Douglas M. Hultquist, President
	Chief Executive Officer

Date August 5, 2016	/s/ Todd A. Gipple
	Todd A. Gipple, Executive Vice President
	Chief Operating Officer
	Chief Financial Officer

Date August 5, 2016	/s/ Elizabeth A. Grabin
	Elizabeth A. Grabin, Vice President
	Controller & Director of Financial Reporting
	Principal Accounting Officer

 75

EX-31.1

Exhibit 31.1

	I, Douglas M. Hultquist, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of QCR Holdings, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     August 5, 2016	/s/ Douglas M. Hultquist
	Douglas M. Hultquist Chief Executive Officer

EX-31.2

Exhibit 31.2

	I, Todd A. Gipple, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of QCR Holdings, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date:     August 5, 2016	/s/ Todd A. Gipple
	Todd A. Gipple Chief Operating Officer       Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of QCR Holdings, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Douglas M. Hultquist, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

  (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Douglas M. Hultquist           

Douglas M. Hultquist

Chief Executive Officer

August 5, 2016

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of QCR Holdings, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Todd A. Gipple, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

  (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Todd A. Gipple                 

Todd A. Gipple

Chief Operating Officer

Chief Financial Officer

August 5, 2016

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 01, 2016
Document Information [Line Items]
Entity Registrant Name	QCR HOLDINGS INC
Entity Central Index Key	0000906465
Trading Symbol	qcrh
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		13,062,382
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks	$ 49,581,154	$ 41,742,321
Federal funds sold	20,825,000	19,850,000
Interest-bearing deposits at financial institutions	47,607,304	36,313,965
Securities held to maturity, at amortized cost	280,345,532	253,674,159
Securities available for sale, at fair value	230,613,784	323,434,982
Total securities	510,959,316	577,109,141
Loans receivable held for sale	1,558,500	565,850
Loans/leases receivable held for investment	1,921,214,897	1,797,456,825
Gross loans/leases receivable	1,922,773,397	1,798,022,675
Less allowance for estimated losses on loans/leases	(28,097,490)	(26,140,906)
Net loans/leases receivable	1,894,675,907	1,771,881,769
Bank-owned life insurance	56,359,784	55,485,655
Premises and equipment, net	38,751,532	37,350,352
Restricted investment securities	16,693,125	14,835,925
Other real estate owned, net	6,179,102	7,150,658
Goodwill	3,222,688	3,222,688
Core deposit intangible	1,371,653	1,471,409
Other assets	37,207,723	26,784,392
Total assets	2,683,434,288	2,593,198,275
LIABILITIES
Noninterest-bearing	615,764,311	615,292,211
Interest-bearing	1,357,829,473	1,265,373,973
Total deposits	1,973,593,784	1,880,666,184
Short-term borrowings	51,561,748	144,662,716
Federal Home Loan Bank advances	196,900,000	151,000,000
Other borrowings	100,000,000	110,000,000
Junior subordinated debentures	33,412,643	38,499,052
Other liabilities	52,848,722	42,484,573
Total liabilities	2,408,316,897	2,367,312,525
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value; shares authorized 250,000; June 2016 and December 2015 - No shares issued or outstanding
Common stock, $1 par value; shares authorized 20,000,000; June 2016 - 13,057,368 shares issued and outstanding; December 2015 - 11,761,083 shares issued and outstanding	13,057,368	11,761,083
Additional paid-in capital	155,453,781	123,282,851
Retained earnings	105,024,027	92,965,645
Securities available for sale	2,730,155	(1,324,408)
Interest rate cap derivatives	(1,147,940)	(799,421)
Total stockholders' equity	275,117,391	225,885,750
Total liabilities and stockholders' equity	$ 2,683,434,288	$ 2,593,198,275

XML

Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	250,000	250,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	13,057,368	11,761,083
Common stock, shares outstanding (in shares)	13,057,368	11,761,083

XML

Consolidated Statements of Income (Loss) (Unaudited) - USD ($)		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Loans/leases, including fees		$ 20,238,179	$ 18,245,724	$ 39,938,549	$ 36,250,243
Securities:
Taxable		1,192,541	1,735,495	2,548,744	3,678,260
Nontaxable		2,276,203	1,890,320	4,518,218	3,620,888
Interest-bearing deposits at financial institutions		62,242	64,665	122,559	141,719
Restricted investment securities		133,546	108,161	264,110	250,479
Federal funds sold		10,573	6,247	23,163	10,753
Total interest and dividend income		23,913,284	22,050,612	47,415,343	43,952,342
Interest expense:
Deposits		1,344,398	1,083,487	2,634,196	2,155,932
Short-term borrowings		18,065	53,244	61,131	117,269
Federal Home Loan Bank advances		415,933	1,001,646	857,637	2,445,361
Other borrowings		824,437	1,108,442	1,649,520	2,340,328
Junior subordinated debentures		301,638	312,957	606,524	620,399
Total interest expense		2,904,471	3,559,776	5,809,008	7,679,289
Net interest income		21,008,813	18,490,836	41,606,335	36,273,053
Provision for loan/lease losses		1,197,850	2,348,665	3,270,835	4,059,121
Net interest income after provision for loan/lease losses		19,810,963	16,142,171	38,335,500	32,213,932
Other borrowings		824,437	1,108,442	1,649,520	2,340,328
Noninterest income:
Trust department fees		1,512,083	1,511,176	3,087,990	3,144,571
Investment advisory and management fees		692,738	758,433	1,351,123	1,468,476
Deposit service fees		946,810	924,642	1,877,889	1,825,998
Gains on sales of residential real estate loans, net		84,413	95,535	144,799	181,675
Gains on sales of government guaranteed portions of loans, net		1,603,890	69,346	2,482,418	140,319
Swap fee income		167,582	393,723	1,024,540	1,119,930
Securities gains, net		18,030		376,510	416,933
Earnings on bank-owned life insurance		480,520	433,152	874,129	911,891
Debit card fees		343,748	255,000	651,399	493,000
Correspondent banking fees		244,939	285,379	547,069	605,000
Participation service fees on commercial loan participations		246,010	223,827	456,719	445,776
Fee income from early termination of leases		66,043	76,722	77,793	161,560
Credit card issuing fees		139,073	135,649	275,728	269,810
Other		216,522	298,650	356,768	498,073
Total noninterest income		6,762,401	5,461,234	13,584,874	11,683,012
Noninterest expense:
Salaries and employee benefits		10,917,473	11,091,952	21,718,380	22,126,404
Occupancy and equipment expense		1,884,556	1,865,552	3,711,544	3,659,723
Professional and data processing fees		1,542,322	1,470,695	2,989,735	2,941,212
Acquisition costs		354,969		354,969
FDIC insurance, other insurance and regulatory fees		649,604	730,563	1,283,969	1,449,620
Loan/lease expense		154,349	208,552	317,168	511,475
Net cost of operations of other real estate		277,911	(47,876)	380,094	28,975
Advertising and marketing		433,451	489,504	819,710	907,741
Postage and communications		256,567	214,142	473,657	463,098
Stationery and supplies		157,924	136,808	322,795	279,363
Bank service charges		415,350	358,996	831,281	696,454
Losses on debt extinguishment, net			6,894,185	83,197	6,894,185
Correspondent banking expense		181,776	165,091	358,765	340,794
Other		517,501	523,470	1,052,987	1,006,751
Total noninterest expense		17,743,753	24,101,634	34,698,251	41,305,795
Net income (loss) before income taxes		8,829,611	(2,498,229)	17,222,123	2,591,149
Federal and state income tax expense (benefit)		2,153,144	(1,974,411)	4,172,167	(1,062,922)
Net income (loss)		$ 6,676,467	$ (523,818)	$ 13,049,956	$ 3,654,071
Basic earnings (loss) per common share (in dollars per share) (in dollars per share)		$ 0.54	$ (0.05)	$ 1.08	$ 0.41
Diluted earnings (loss) per common share (in dollars per share) (in dollars per share)		$ 0.53	$ (0.05)	$ 1.07	$ 0.40
Weighted average common shares outstanding (in shares)	[1]	12,335,077	9,946,744	12,064,349	8,961,327
Weighted average common and common equivalent shares outstanding (in shares)		12,516,474	9,946,744	12,235,212	9,098,697
Cash dividends declared per common share (in dollars per share)		$ 0.04	$ 0.04	$ 0.08	$ 0.04
Loans/leases, including fees		$ 20,238,179	$ 18,245,724	$ 39,938,549	$ 36,250,243
Business Combination, Acquisition Related Costs		$ 354,969		$ 354,969

[1] The increase in the weighted average common shares outstanding was primarily due to the common stock issuance discussed in Note 9 to the Consolidated Financial Statements.

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net income	$ 6,676,467	$ (523,818)	$ 13,049,956	$ 3,654,071
Unrealized holding gains (losses) arising during the period before tax	2,081,800	(3,954,857)	6,945,518	443,347
Less reclassification adjustment for gains included in net income before tax	18,030		376,510	416,933
	2,063,770	(3,954,857)	6,569,008	26,414
Unrealized holding gains (losses) arising during the period before tax	(159,691)	119,433	(549,627)	(252,950)
Less reclassification adjustment for ineffectiveness and caplet amortization before tax	20,154	9,561	35,591	10,463
	(179,845)	109,872	(585,218)	(263,413)
Other comprehensive income (loss), before tax	1,883,925	(3,844,985)	5,983,790	(236,999)
Tax expense (benefit)	703,292	(1,466,064)	2,277,746	(78,943)
Other comprehensive income (loss), net of tax	1,180,633	(2,378,921)	3,706,044	(158,056)
Comprehensive income (loss)	7,857,100	(2,902,739)	16,756,000	3,496,015
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period before tax	2,081,800	(3,954,857)	6,945,518	443,347
Less reclassification adjustment for gains included in net income before tax	18,030		376,510	416,933
	2,063,770	(3,954,857)	6,569,008	26,414
Unrealized holding gains (losses) arising during the period before tax	(159,691)	119,433	(549,627)	(252,950)
Less reclassification adjustment for ineffectiveness and caplet amortization before tax	20,154	9,561	35,591	10,463
	(179,845)	109,872	(585,218)	(263,413)
Other comprehensive income (loss), before tax	1,883,925	(3,844,985)	5,983,790	(236,999)
Tax expense (benefit)	703,292	(1,466,064)	2,277,746	(78,943)
Other comprehensive income (loss), net of tax	1,180,633	(2,378,921)	3,706,044	(158,056)
Comprehensive income (loss)	$ 7,857,100	$ (2,902,739)	$ 16,756,000	$ 3,496,015

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2014	$ 8,074,443	$ 61,668,968	$ 77,876,824	$ (1,935,216)	$ (1,606,510)	$ 144,078,509
Net income			4,177,889			4,177,889
Other comprehensive income (loss), net of tax				2,220,865		2,220,865
Proceeds from issuance of shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan	5,679	82,641				88,320
Proceeds from issuance of shares of common stock as a result of stock options exercised	9,688	94,728				104,416
Stock compensation expense		367,775				367,775
Tax benefit of nonqualified stock options exercised		15,651				15,651
Restricted stock awards	26,502	(26,502)
Exchange of shares of common stock in connection with restricted stock vested, net	(3,272)	(54,188)				(57,460)
Balance at Mar. 31, 2015	8,113,040	62,149,073	82,054,713	285,649	(1,606,510)	150,995,965
Balance at Dec. 31, 2014	8,074,443	61,668,968	77,876,824	(1,935,216)	(1,606,510)	144,078,509
Net income						3,654,071
Other comprehensive income (loss), net of tax						(158,056)
Balance at Jun. 30, 2015	11,819,824	122,511,186	81,066,189	(2,093,272)	(1,606,510)	211,697,417
Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds
Balance at Mar. 31, 2015	8,113,040	62,149,073	82,054,713	285,649	(1,606,510)	150,995,965
Net income			(523,818)			(523,818)
Other comprehensive income (loss), net of tax				(2,378,921)		(2,378,921)
Common cash dividends declared			(464,706)			(464,706)
Proceeds from issuance of shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan	8,558	128,927				137,485
Proceeds from issuance of shares of common stock as a result of stock options exercised	17,240	238,717				255,957
Stock compensation expense		186,751				186,751
Tax benefit of nonqualified stock options exercised		15,827				15,827
Restricted stock awards	1,616	(1,616)
Balance at Jun. 30, 2015	11,819,824	122,511,186	81,066,189	(2,093,272)	(1,606,510)	211,697,417
Proceeds from issuance of shares of common stock, net of issuance costs	3,680,000	59,804,123				63,484,123
Exchange of shares of common stock in connection with stock options exercised	(630)	(10,616)				(11,246)
Balance at Dec. 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 (loss), net of tax				2,525,411		2,525,411
Common cash dividends declared			(470,873)			(470,873)
Proceeds from issuance of 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 shares of common stock as a result of stock options exercised	30,331	382,639				412,970
Stock compensation expense		382,761				382,761
Tax benefit of nonqualified stock options exercised		22,508				22,508
Restricted stock awards	22,382	(22,382)
Exchange of shares of common stock in connection with restricted stock vested, net	(3,939)	(84,972)				(88,911)
Balance at Mar. 31, 2016	11,814,911	124,057,965	98,868,261	401,582		235,142,719
Balance at Dec. 31, 2015	11,761,083	123,282,851	92,965,645	(2,123,829)		225,885,750
Net income						13,049,956
Other comprehensive income (loss), net of tax						3,706,044
Balance at Jun. 30, 2016	13,057,368	155,453,781	105,024,027	1,582,215		275,117,391
Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds						2,132,415
Balance at Mar. 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 income (loss), net of tax				1,180,633		1,180,633
Common cash dividends declared			(520,701)			(520,701)
Proceeds from issuance of 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 shares of common stock as a result of stock options exercised	20,975	230,671				251,646
Stock compensation expense		187,569				187,569
Tax benefit of nonqualified stock options exercised		87,858				87,858
Restricted stock awards	(500)	500
Balance at Jun. 30, 2016	13,057,368	155,453,781	105,024,027	1,582,215		275,117,391
Proceeds from issuance of shares of common stock, net of issuance costs	1,215,000	28,613,916				29,828,916
Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds		$ 2,132,415				$ 2,132,415

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Mar. 31, 2015
Common Stock [Member]
Common cash dividends declared, per share (in dollars per share)	$ 0.04	$ 0.04	$ 0.04
Proceeds from issuance of common stock, Employee Stock Purchase Plan, Shares (in shares)	6,982	5,054	8,558	5,679
Proceeds from issuance of common stock, stock options exercised, shares (in shares)	20,975	30,331	17,240	9,688
Exchange of common stock, restricted stock vested, shares (in shares)		3,939		3,272
Proceeds from issuance of common stock, net of issuance costs, shares (in shares)	1,215,000		3,680,000
Exchange of shares of common stock in connection with stock options exercised (in shares)			630
Common cash dividends declared, per share (in dollars per share)	$ 0.04		$ 0.04

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Common Stock Offering 1 [Member]
Activity in other borrowings:
Net proceeds from the common stock offering		$ 63,484,123
Common Stock Offering 2 [Member]
Activity in other borrowings:
Net proceeds from the common stock offering	29,828,916
Net income	13,049,956	3,654,071
Depreciation	1,552,176	1,520,380
Provision for loan/lease losses	3,270,835	4,059,121
Stock-based compensation expense	570,330	554,526
Deferred compensation expense accrued	623,831	767,292
Losses (gains) on other real estate owned, net	157,739	(69,923)
Amortization of premiums on securities, net	611,900	485,085
Securities gains, net	(376,510)	(416,933)
Loans originated for sale	(43,526,263)	(15,205,967)
Proceeds on sales of loans	45,160,830	14,532,761
Gains on sales of residential real estate loans	(144,799)	(181,675)
Gains on sales of government guaranteed portions of loans	(2,482,418)	(140,319)
Losses on debt extinguishment, net	83,197	6,894,185
Amortization of core deposit intangible	99,756	99,756
Accretion of acquisition fair value adjustments, net	(61,065)	(267,414)
Increase in cash value of bank-owned life insurance	(874,129)	(911,891)
Increase in other assets	(4,330,548)	(4,767,394)
Increase (decrease) in other liabilities	1,386,323	(1,722,759)
Net cash provided by operating activities	14,771,141	8,882,902
Net decrease (increase) in federal funds sold	(975,000)	24,225,000
Net increase in interest-bearing deposits at financial institutions	(11,293,339)	(12,348,141)
Proceeds from sales of other real estate owned	864,817	1,723,317
Purchases	(97,132,279)	(181,272,218)
Calls, maturities and redemptions	96,704,276	177,366,721
Paydowns	13,321,512	8,003,250
Sales	61,075,145	54,966,923
Purchases	(1,857,200)	(1,338,650)
Redemptions		3,431,700
Net increase in loans/leases originated and held for investment	(124,972,098)	(85,814,353)
Purchase of premises and equipment	(2,953,356)	(3,927,981)
Net cash used in investing activities	(67,217,522)	(14,984,432)
Net increase in deposit accounts	92,920,820	157,102,985
Net decrease in short-term borrowings	(93,100,968)	(99,776,818)
Term advances		5,000,000
Maturities	(9,000,000)	(22,000,000)
Net change in short-term and overnight advances	64,900,000	21,500,000
Prepayments	(10,524,197)	(81,192,185)
Maturities and scheduled principal payments		(7,350,000)
Prepayments	(10,759,000)	(29,177,000)
Retirement of junior subordinated debentures	(3,955,000)
Payment of cash dividends on common stock	(939,456)	(315,954)
Net proceeds from the common stock offering	914,099	586,178
Net cash provided by financing activities	60,285,214	7,861,329
Net increase in cash and due from banks	7,838,833	1,759,799
Cash and due from banks, beginning	41,742,321	38,235,019
Cash and due from banks, ending	49,581,154	39,994,818
Supplemental disclosure of cash flow information, cash payments for:
Interest	5,852,789	7,903,945
Income/franchise taxes	4,869,300	1,940,275
Supplemental schedule of noncash investing activities:
Change in accumulated other comprehensive income, unrealized gains (losses) on securities available for sale and derivative instruments, net	3,706,044	(158,056)
Exchange of shares of common stock in connection with payroll taxes for restricted stock and in connection with stock options exercised	(88,911)	(68,706)
Tax benefit of nonqualified stock options exercised	110,366	31,478
Transfers of loans to other real estate owned	51,000	837,782
Due to broker for purchases of securities	(1,500,000)
Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds	$ 2,132,415

XML

Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Common Stock Offering 1 [Member]
Net proceeds from the common stock offering, shares issued (in shares)		3,680,000
Common Stock Offering 2 [Member]
Net proceeds from the common stock offering, shares issued (in shares)	1,215,000

XML

Note 1 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Significant Accounting Policies [Text Block]

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, 2015, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2016. 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 U.S. 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 June 30, 2016, are not necessarily indicative of the results expected for the year ending December 31, 2016, 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	GAAP: Generally Accepted Accounting Principles
AOCI: Accumulated other comprehensive income (loss)	HTM: Held to maturity
AFS: Available for sale	m2: m2 Lease Funds, LLC
ASU: Accounting Standards Update	MD&A: Management's Discussion & Analysis
BOLI: Bank-owned life insurance	NIM: Net interest margin
Caps: Interest rate cap derivatives	NPA: Nonperforming asset
Community National: Community National Bancorporation	NPL: Nonperforming loan
CNB: Community National Bank	OREO: Other real estate owned
CRBT: Cedar Rapids Bank & Trust Company	OTTI: Other-than-temporary impairment
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	The Company: QCR Holdings, Inc.
FRB: Federal Reserve Bank of Chicago	USDA: U.S. Department of Agriculture

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

On May 23, 2016, the Company announced the signing of a definitive agreement to acquire CSB, headquartered in Ankeny, Iowa, from Van Diest Investment Company. The transaction is expected to close during the third quarter of 2016, subject to certain customary closing conditions. The financial results of CSB are not recognized in this Report. See Note 9 to the Consolidated Financial Statements for additional information about the planned 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. The Company is in the process of analyzing the impact of adoption.

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 March 2016, the FASB issued ASU 2016-09,

Compensation – Stock Compensation

. ASU 2016-09 aims to simplify the accounting for companies that issue share-based payment awards to their employees. Simplification includes the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows of share-based payment awards. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, 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.

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.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Reclassifications

: Certain amounts in the prior year’s consolidated financial statements have been reclassified, with no effect on net income or stockholders’ equity, to conform with the current period presentation.

XML

Note 2 - Investment Securities

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Investment Holdings [Text Block]

NOTE 2 – INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of June 30, 2016 and December 31, 2015 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
June 30, 2016:
Securities HTM:
Municipal securities	$	279,295,532	$	6,194,753	$	(731,170	)	$	284,759,115
Other securities		1,050,000		-		-			1,050,000
	$	280,345,532	$	6,194,753	$	(731,170	)	$	285,809,115
Securities AFS:
U.S. govt. sponsored agency securities	$	87,068,743	$	1,332,981	$	(80,276	)	$	88,321,448
Residential mortgage-backed and related securities		114,990,076		1,855,710		(80,276	)		116,765,510
Municipal securities		22,463,188		945,994		(16,365	)		23,392,817
Other securities		1,684,787		449,222		-			2,134,009
	$	226,206,794	$	4,583,907	$	(176,917	)	$	230,613,784
December 31, 2015:
Securities HTM:
Municipal securities	$	252,624,159	$	3,190,558	$	(1,173,432	)	$	254,641,285
Other securities		1,050,000		-		-			1,050,000
	$	253,674,159	$	3,190,558	$	(1,173,432	)	$	255,691,285
Securities AFS:
U.S. govt. sponsored agency securities	$	216,281,416	$	104,524	$	(2,848,561	)	$	213,537,379
Residential mortgage-backed and related securities		81,442,479		511,095		(1,283,439	)		80,670,135
Municipal securities		26,764,981		872,985		(59,378	)		27,578,588
Other securities		1,108,124		540,919		(163	)		1,648,880
	$	325,597,000	$	2,029,523	$	(4,191,541	)	$	323,434,982

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 commercial 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 June 30, 2016 and December 31, 2015, 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
June 30, 2016:
Securities HTM:
Municipal securities	$	5,805,354	$	(384,457	)	$	14,508,402	$	(346,713	)	$	20,313,756	$	(731,170	)
Securities AFS:
U.S. govt. sponsored agency securities	$	5,825,476	$	(80,276	)	$	-	$	-		$	5,825,476	$	(80,276	)
Residential mortgage-backed and related securities		4,337,187		(7,492	)		8,829,330		(72,784	)		13,166,517		(80,276	)
Municipal securities		380,749		(206	)		850,050		(16,159	)		1,230,799		(16,365	)
Other securities		-		-			-		-			-		-
	$	10,543,412	$	(87,974	)	$	9,679,380	$	(88,943	)	$	20,222,792	$	(176,917	)
December 31, 2015:
Securities HTM:
Municipal securities	$	14,803,408	$	(294,438	)	$	19,927,581	$	(878,994	)	$	34,730,989	$	(1,173,432	)
Securities AFS:
U.S. govt. sponsored agency securities	$	112,900,327	$	(1,397,591	)	$	64,476,661	$	(1,450,970	)	$	177,376,988	$	(2,848,561	)
Residential mortgage-backed and related securities		40,356,921		(730,466	)		19,836,637		(552,973	)		60,193,558		(1,283,439	)
Municipal securities		2,220,800		(31,807	)		848,329		(27,571	)		3,069,129		(59,378	)
Other securities		411		(163	)		-		-			411		(163	)
	$	155,478,459	$	(2,160,027	)	$	85,161,627	$	(2,031,514	)	$	240,640,086	$	(4,191,541	)

At June 30, 2016, the investment portfolio included 447 securities. Of this number, 30 securities were in an unrealized loss position. The aggregate losses of these securities totaled less than 1% of the total amortized cost of the portfolio. Of these 30 securities, 17 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 does not intend 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 June 30, 2016 and December 31, 2015, 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 six months ended June 30, 2016 and 2015.   

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

All sales of securities for the three and six months ended June 30, 2016 and 2015, respectively, 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				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016			June 30, 2015
Proceeds from sales of securities	$	5,548,294	$	-	$	61,075,145		$	54,966,923
Pre-tax gross gains from sales of securities		18,030		-		533,545			569,551
Pre-tax gross losses from sales of securities		-		-		(157,035	)		(152,618	)

The amortized cost and fair value of securities as of June 30, 2016 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	$	4,972,563	$	4,993,619
Due after one year through five years		20,232,407		20,415,409
Due after five years		255,140,562		260,400,087
	$	280,345,532	$	285,809,115
Securities AFS:
Due in one year or less	$	2,133,829	$	2,141,186
Due after one year through five years		54,381,038		55,669,426
Due after five years		53,017,064		53,903,653
	$	109,531,931	$	111,714,265
Residential mortgage-backed and related securities		114,990,076		116,765,510
Other securities		1,684,787		2,134,009
	$	226,206,794	$	230,613,784

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	$	153,065,142	$	156,170,970
Securities AFS:
U.S. govt. sponsored agency securities		23,616,009		23,718,901
Municipal securities		13,844,290		14,296,378
	$	37,460,299	$	38,015,279

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

As of June 30, 2016, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 77 issuers with fair values totaling $69.0 million and revenue bonds issued by 99 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $239.1 million. The Company held investments in general obligation bonds in 19 states, including four states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in nine states, including four states in which the aggregate fair value exceeded $5.0 million.

As of December 31, 2015, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 82 issuers with fair values totaling $67.8 million and revenue bonds issued by 92 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $214.4 million. The Company held investments in general obligation bonds in 19 states, including four states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in nine states, including four 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:

June 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		13	$	19,441,057	$	19,965,926	$	1,535,840
Illinois		9		10,127,747		10,527,337		1,169,704
Missouri		12		7,349,505		7,519,474		626,623
North Dakota		6		16,208,320		16,872,189		2,812,032
Other		37		13,738,908		14,133,036		381,974
Total general obligation bonds		77	$	66,865,537	$	69,017,962	$	896,337

December 31, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		15	$	19,974,939	$	20,247,108	$	1,349,807
Illinois		9		10,928,700		11,264,348		1,251,594
North Dakota		5		10,890,000		11,050,235		2,210,047
Missouri		12		7,924,800		7,986,856		665,571
Other		41		16,965,393		17,229,485		420,231
Total general obligation bonds		82	$	66,683,832	$	67,778,032	$	826,561

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:

June 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		41	$	89,033,470	$	90,174,695	$	2,199,383
Iowa		26		73,076,794		74,933,480		2,882,057
Indiana		18		40,009,789		40,615,477		2,256,415
Kansas		5		13,172,824		13,315,662		2,663,132
North Dakota		4		8,161,630		8,359,661		2,089,915
Other		5		11,438,676		11,734,995		2,346,999
Total revenue bonds		99	$	234,893,183	$	239,133,970	$	2,415,495

December 31, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		41	$	78,593,590	$	79,015,378	$	1,927,204
Iowa		26		70,773,660		71,659,410		2,756,131
Indiana		17		40,018,381		40,210,320		2,365,313
Kansas		3		11,748,679		11,821,055		3,940,352
Other		5		11,570,998		11,735,678		2,347,136
Total revenue bonds		92	$	212,705,308	$	214,441,841	$	2,330,890

Both general obligation and revenue bonds are diversified across many issuers. As of June 30, 2016 and December 31, 2015, the Company did not hold general obligation or revenue bonds of any single issuer, the aggregate book or market value of which exceeded 4% of the Company’s stockholders’ equity. Of the general obligation and revenue bonds in the Company’s portfolio, the majority are unrated bonds that represent small, private issuances. All unrated bonds were underwritten according to loan underwriting standards and have an average loan risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services such as water, sewer, education, and medical facilities.

The Company’s municipal securities are owned by each of the three charters, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. Each charter is monitored individually, and as of June 30, 2016, all were well within policy limitations approved by the board of directors. Policy limits are calculated as a percentage of total risk-based capital.

As of June 30, 2016, the Company’s standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credit ratings than those assigned by a nationally recognized statistical rating organization, or in the case of unrated bonds, the rating assigned using the credit underwriting standards.

XML

Note 3 - Loans Leases Receivable

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Financing Receivables [Text Block]

NOTE 3

– LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of June 30, 2016 and December 31, 2015 is presented as follows:

	As of June 30,			As of December 31,
	2016			2015
C&I loans	$	706,261,186		$	648,159,892
CRE loans
Owner-occupied CRE		258,688,445			252,523,164
Commercial construction, land development, and other land		48,948,825			49,083,844
Other non owner-occupied CRE		476,741,839			422,761,757
		784,379,109			724,368,765
Direct financing leases *		169,927,481			173,655,605
Residential real estate loans **		180,482,005			170,432,530
Installment and other consumer loans		73,658,172			73,669,493
		1,914,707,953			1,790,286,285
Plus deferred loan/lease origination costs, net of fees		8,065,444			7,736,390
		1,922,773,397			1,798,022,675
Less allowance		(28,097,490	)		(26,140,906	)
	$	1,894,675,907		$	1,771,881,769
* Direct financing leases:
Net minimum lease payments to be received	$	190,107,687		$	195,476,230
Estimated unguaranteed residual values of leased assets		1,085,154			1,165,706
Unearned lease/residual income		(21,265,360	)		(22,986,331	)
		169,927,481			173,655,605
Plus deferred lease origination costs, net of fees		6,339,871			6,594,582
		176,267,352			180,250,187
Less allowance		(3,226,194	)		(3,395,088	)
	$	173,041,158		$	176,855,099

*Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management’s expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal. There were no losses related to residual values for the three and six months ended June 30, 2016 and 2015.

**Includes residential real estate loans held for sale totaling $1,558,500 and $565,850 as of June 30, 2016, and December 31, 2015, respectively.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The aging of the loan/lease portfolio by classes of loans/leases as of June 30, 2016 and December 31, 2015 is presented as follows:

	As of June 30, 2016
Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due*			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total
C&I	$	687,859,076		$	400,711		$	13,225,353		$	-		$	4,776,046		$	706,261,186
CRE
Owner-Occupied CRE		257,503,344			141,571			-			-			1,043,530			258,688,445
Commercial Construction, Land Development, and Other Land		48,759,844			-			-			-			188,981			48,948,825
Other Non Owner-Occupied CRE		473,256,279			530,808			1,384,387			84,500			1,485,865			476,741,839
Direct Financing Leases		165,927,453			1,036,764			1,230,235			-			1,733,029			169,927,481
Residential Real Estate		179,075,229			-			215,561			-			1,191,215			180,482,005
Installment and Other Consumer		72,831,797			446,971			59,391			1,868			318,145			73,658,172
	$	1,885,213,022		$	2,556,825		$	16,114,927		$	86,368		$	10,736,811		$	1,914,707,953
As a percentage of total loan/lease portfolio		98.46	%		0.13	%		0.84	%		0.00	%		0.56	%		100.00	%

	As of December 31, 2015
Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total
C&I	$	640,725,241		$	1,636,860		$	5,816		$	-		$	5,791,975		$	648,159,892
CRE
Owner-Occupied CRE		251,612,752			182,949			-			-			727,463			252,523,164
Commercial Construction, Land Development, and Other Land		48,890,040			-			-			-			193,804			49,083,844
Other Non Owner-Occupied CRE		420,819,874			614,732			219,383			-			1,107,768			422,761,757
Direct Financing Leases		170,021,289			1,490,818			439,314			2,843			1,701,341			173,655,605
Residential Real Estate		166,415,118			2,800,589			200,080			-			1,016,743			170,432,530
Installment and Other Consumer		73,134,197			412,052			14,127			-			109,117			73,669,493
	$	1,771,618,511		$	7,138,000		$	878,720		$	2,843		$	10,648,211		$	1,790,286,285
As a percentage of total loan/lease portfolio		98.96	%		0.40	%		0.05	%		0.00	%		0.59	%		100.00	%

* Inflated due to a small number of loans that were not renewed timely. Since June 30, 2016, these loans were renewed without issue.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NPLs by classes of loans/leases as of June 30, 2016 and December 31, 2015 are presented as follows:

	As of June 30, 2016
Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases *		Accruing TDRs		Total NPLs		Percentage of Total NPLs
C&I	$	-	$	4,776,046	$	171,108	$	4,947,154		39.34	%
CRE
Owner-Occupied CRE		-		1,043,530		-		1,043,530		8.30	%
Commercial Construction, Land Development, and Other Land		-		188,981		-		188,981		1.50	%
Other Non Owner-Occupied CRE		84,500		1,485,865		-		1,570,365		12.49	%
Direct Financing Leases		-		1,733,029		1,059,919		2,792,948		22.21	%
Residential Real Estate		-		1,191,215		393,799		1,585,014		12.60	%
Installment and Other Consumer		1,868		318,145		128,151		448,164		3.56	%
	$	86,368	$	10,736,811	$	1,752,977	$	12,576,156		100.00	%

*Nonaccrual loans/leases included $2,351,137 of TDRs, including $767,261 in C&I loans, $1,422,722 in CRE loans, $34,850 in direct financing leases, $113,031 in residential real estate loans, and $13,273 in installment loans.

	As of December 31, 2015
Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases **		Accruing TDRs		Total NPLs		Percentage of Total NPLs
C&I	$	-	$	5,791,975	$	173,087	$	5,965,062		50.96	%
CRE							$	-
Owner-Occupied CRE		-		727,463		-	$	727,463		6.22	%
Commercial Construction, Land Development, and Other Land		-		193,804		-	$	193,804		1.66	%
Other Non Owner-Occupied CRE		-		1,107,768		-	$	1,107,768		9.46	%
Direct Financing Leases		2,843		1,701,341		-	$	1,704,184		14.56	%
Residential Real Estate		-		1,016,743		402,044	$	1,418,787		12.12	%
Installment and Other Consumer		-		109,117		478,625	$	587,742		5.02	%
	$	2,843	$	10,648,211	$	1,053,756	$	11,704,810		100.00	%

**Nonaccrual loans/leases included $1,533,657 of TDRs, including $1,164,423 in C&I loans, $193,804 in CRE loans, $42,098 in direct financing leases, $119,305 in residential real estate loans, and $14,027 in installment loans.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Changes in the allowance by portfolio segment for the three and six months ended June 30, 2016 and 2015, respectively, are presented as follows:

	Three Months Ended June 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,991,979		$	10,090,567		$	3,287,231		$	1,836,622		$	1,189,043		$	27,395,442
Provisions (credits) charged to expense		(241,600	)		919,596			460,997			194,988			(136,131	)		1,197,850
Loans/leases charged off		(48,983	)		(23,101	)		(534,716	)		(17,523	)		(9,892	)		(634,215	)
Recoveries on loans/leases previously charged off		23,110			-			12,682			900			101,721			138,413
Balance, ending	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490

	Three Months Ended June 30, 2015
	C&I			CRE		Direct Financing Leases			Residential Real Estate		Installment and Other Consumer			Total
Balance, beginning	$	9,093,650		$	8,838,204	$	3,310,973		$	1,597,754	$	1,042,693		$	23,883,274
Provisions charged to expense		604,731			1,081,753		473,982			122,381		65,818			2,348,665
Loans/leases charged off		(45,337	)		-		(465,098	)		-		(25,255	)		(535,690	)
Recoveries on loans/leases previously charged off		367,822			9,699		32,446			-		39,784			449,751
Balance, ending	$	10,020,866		$	9,929,656	$	3,352,303		$	1,720,135	$	1,123,040		$	26,146,000

	Six Months Ended June 30, 2016
	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,484,080		$	9,375,117		$	3,395,088		$	1,790,150		$	1,096,471		$	26,140,906
Provisions (credits) charged to expense		498,231			1,635,046			939,242			257,644			(59,328	)		3,270,835
Loans/leases charged off		(292,549	)		(23,101	)		(1,135,654	)		(33,707	)		(17,488	)		(1,502,499	)
Recoveries on loans/leases previously charged off		34,744			-			27,518			900			125,086			188,248
Balance, ending	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490

	Six Months Ended June 30, 2015
	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate		Installment and Other Consumer			Total
Balance, beginning	$	8,750,317		$	8,353,386		$	3,442,915		$	1,525,952	$	1,001,795		$	23,074,365
Provisions charged to expense		993,372			1,917,647			877,434			194,183		76,485			4,059,121
Loans/leases charged off		(245,638	)		(351,076	)		(1,012,590	)		-		(34,049	)		(1,643,353	)
Recoveries on loans/leases previously charged off		522,815			9,699			44,544			-		78,809			655,867
Balance, ending	$	10,020,866		$	9,929,656		$	3,352,303		$	1,720,135	$	1,123,040		$	26,146,000

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The allowance by impairment evaluation and by portfolio segment as of June 30, 2016 and December 31, 2015 is presented as follows:

	As of June 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	1,242,430		$	123,079		$	555,819		$	198,020		$	138,490		$	2,257,838
Allowance for nonimpaired loans/leases		9,482,076			10,863,983			2,670,375			1,816,967			1,006,251			25,839,652
	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490
Impaired loans/leases	$	4,454,638		$	2,616,301		$	2,678,521		$	1,585,013		$	446,297		$	11,780,770
Nonimpaired loans/leases		701,806,548			781,762,808			167,248,960			178,896,992			73,211,875			1,902,927,183
	$	706,261,186		$	784,379,109		$	169,927,481		$	180,482,005		$	73,658,172		$	1,914,707,953
Allowance as a percentage of impaired loans/leases		27.89	%		4.70	%		20.75	%		12.49	%		31.03	%		19.17	%
Allowance as a percentage of nonimpaired loans/leases		1.35	%		1.39	%		1.60	%		1.02	%		1.37	%		1.36	%
Total allowance as a percentage of total loans/leases		1.52	%		1.40	%		1.90	%		1.12	%		1.55	%		1.46	%

	As of December 31, 2015
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	2,592,270		$	76,934		$	306,193		$	185,801		$	143,089		$	3,304,287
Allowance for nonimpaired loans/leases		7,891,810			9,298,183			3,088,895			1,604,349			953,382			22,836,619
	$	10,484,080		$	9,375,117		$	3,395,088		$	1,790,150		$	1,096,471		$	26,140,906
Impaired loans/leases	$	5,286,482		$	2,029,035		$	1,701,341		$	1,418,787		$	587,742		$	11,023,387
Nonimpaired loans/leases		642,873,410			722,339,730			171,954,264			169,013,743			73,081,751			1,779,262,898
	$	648,159,892		$	724,368,765		$	173,655,605		$	170,432,530		$	73,669,493		$	1,790,286,285
Allowance as a percentage of impaired loans/leases		49.04	%		3.79	%		18.00	%		13.10	%		24.35	%		29.98	%
Allowance as a percentage of nonimpaired loans/leases		1.23	%		1.29	%		1.80	%		0.95	%		1.30	%		1.28	%
Total allowance as a percentage of total loans/leases		1.62	%		1.29	%		1.96	%		1.05	%		1.49	%		1.45	%

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Information for impaired loans/leases is presented in the tables below. The recorded investment represents customer balances net of any partial charge-offs recognized on the loan/lease. The unpaid principal balance represents the recorded balance outstanding on the loan/lease prior to any partial charge-offs.

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the six months ended June 30, 2016 are presented as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	639,448	$	780,390	$	-	$	3,197,308	$	5,343	$	5,343
CRE
Owner-Occupied CRE		-		93,774		-		163,216		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		-		-		-
Other Non Owner-Occupied CRE		1,516,555		1,516,555		-		1,243,616		-		-
Direct Financing Leases		1,652,661		1,652,661		-		1,398,419		31,500		31,500
Residential Real Estate		672,061		711,262		-		627,715		2,051		2,051
Installment and Other Consumer		231,730		231,730		-		281,740		-		-
	$	4,712,455	$	4,986,372	$	-	$	6,912,014	$	38,894	$	38,894
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	3,815,190	$	3,819,029	$	1,242,430	$	1,775,881	$	-	$	-
CRE
Owner-Occupied CRE		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		188,981		200,981		79,911		191,384		-		-
Other Non Owner-Occupied CRE		910,765		910,765		43,168		595,714		-		-
Direct Financing Leases		1,025,860		1,025,860		555,819		866,749		-		-
Residential Real Estate		912,952		948,530		198,020		872,297		3,906		3,906
Installment and Other Consumer		214,567		214,567		138,490		212,806		2,968		2,968
	$	7,068,315	$	7,119,732	$	2,257,838	$	4,514,831	$	6,874	$	6,874
Total Impaired Loans/Leases:
C&I	$	4,454,638	$	4,599,419	$	1,242,430	$	4,973,189	$	5,343	$	5,343
CRE
Owner-Occupied CRE		-		93,774		-		163,216		-		-
Commercial Construction, Land Development, and Other Land		188,981		200,981		79,911		191,384		-		-
Other Non Owner-Occupied CRE		2,427,320		2,427,320		43,168		1,839,330		-		-
Direct Financing Leases		2,678,521		2,678,521		555,819		2,265,168		31,500		31,500
Residential Real Estate		1,585,013		1,659,792		198,020		1,500,012		5,957		5,957
Installment and Other Consumer		446,297		446,297		138,490		494,546		2,968		2,968
	$	11,780,770	$	12,106,104	$	2,257,838	$	11,426,845	$	45,768	$	45,768

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the three months ended June 30, 2016 and 2015, respectively, are presented as follows:

	Three Months Ended June 30, 2016						Three Months Ended June 30, 2015
Classes of Loans/Leases	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	2,524,056	$	3,519	$	3,519	$	320,187	$	1,860	$	1,860
CRE
Owner-Occupied CRE		121,444		-		-		550,374		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		222,926		-		-
Other Non Owner-Occupied CRE		1,311,540		-		-		2,474,448		-		-
Direct Financing Leases		1,510,987		19,897		19,897		582,316		1,878		1,878
Residential Real Estate		621,354		1,013		1,013		969,580		-		-
Installment and Other Consumer		229,207		-		-		705,750		475		475
	$	6,318,588	$	24,429	$	24,429	$	5,825,581	$	4,213	$	4,213
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	2,292,483	$	-	$	-	$	4,912,917	$	-	$	-
CRE
Owner-Occupied CRE		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		190,174		-		-		139,250		-		-
Other Non Owner-Occupied CRE		658,220		-		-		1,657,506		-		-
Direct Financing Leases		995,446		-		-		561,840		-		-
Residential Real Estate		919,271		1,948		1,948		869,073		1,967		1,967
Installment and Other Consumer		218,742		1,468		1,468		608,277		2,252		2,252
	$	5,274,336	$	3,416	$	3,416	$	8,748,863	$	4,219	$	4,219
Total Impaired Loans/Leases:
C&I	$	4,816,539	$	3,519	$	3,519	$	5,233,104	$	1,860	$	1,860
CRE
Owner-Occupied CRE		121,444		-		-		550,374		-		-
Commercial Construction, Land Development, and Other Land		190,174		-		-		362,176		-		-
Other Non Owner-Occupied CRE		1,969,760		-		-		4,131,954		-		-
Direct Financing Leases		2,506,433		19,897		19,897		1,144,156		1,878		1,878
Residential Real Estate		1,540,625		2,961		2,961		1,838,653		1,967		1,967
Installment and Other Consumer		447,949		1,468		1,468		1,314,027		2,727		2,727
	$	11,592,924	$	27,845	$	27,845	$	14,574,444	$	8,432	$	8,432

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Loans/leases, by classes of financing receivable, considered to be impaired as of December 31, 2015 are presented as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	234,636	$	346,072	$	-
CRE
Owner-Occupied CRE		256,761		350,535		-
Commercial Construction, Land Development, and Other Land		-		228,818		-
Other Non Owner-Occupied CRE		1,578,470		1,578,470		-
Direct Financing Leases		871,884		871,884		-
Residential Real Estate		613,486		649,064		-
Installment and Other Consumer		377,304		377,304		-
	$	3,932,541	$	4,402,147	$	-
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	5,051,846	$	5,055,685	$	2,592,270
CRE
Owner-Occupied CRE		-		-		-
Commercial Construction, Land Development, and Other Land		193,804		205,804		76,934
Other Non Owner-Occupied CRE		-		-		-
Direct Financing Leases		829,457		829,457		306,193
Residential Real Estate		805,301		805,301		185,801
Installment and Other Consumer		210,438		210,438		143,089
	$	7,090,846	$	7,106,685	$	3,304,287
Total Impaired Loans/Leases:
C&I	$	5,286,482	$	5,401,757	$	2,592,270
CRE
Owner-Occupied CRE		256,761		350,535		-
Commercial Construction, Land Development, and Other Land		193,804		434,622		76,934
Other Non Owner-Occupied CRE		1,578,470		1,578,470		-
Direct Financing Leases		1,701,341		1,701,341		306,193
Residential Real Estate		1,418,787		1,454,365		185,801
Installment and Other Consumer		587,742		587,742		143,089
	$	11,023,387	$	11,508,832	$	3,304,287

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

For C&I and CRE loans, the Company’s credit quality indicator consists of internally assigned risk ratings. Each commercial loan is assigned a risk rating upon origination. The risk rating is reviewed every 15 months, at a minimum, and on an as-needed basis depending on the specific circumstances of the loan.

For direct financing leases, residential real estate loans, and installment and other consumer loans, the Company’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the Company’s loan system.

For each class of financing receivable, the following presents the recorded investment by credit quality indicator as of June 30, 2016 and December 31, 2015:

	As of June 30, 2016
			CRE
					Non Owner-Occupied
Internally Assigned Risk Rating	C&I		Owner-Occupied CRE		Commercial Construction, Land Development, and Other Land		Other CRE		Total		As a % of Total
Pass (Ratings 1 through 5)	$	678,225,838	$	247,914,237	$	44,672,408	$	458,961,143	$	1,429,773,626		95.92	%
Special Mention (Rating 6)		6,381,586		2,114,505		1,780,000		5,954,788		16,230,879		1.09	%
Substandard (Rating 7)		21,653,762		8,659,703		2,496,417		11,825,908		44,635,790		2.99	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	706,261,186	$	258,688,445	$	48,948,825	$	476,741,839	$	1,490,640,295		100.00	%

	As of June 30, 2016
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	167,134,533	$	178,896,991	$	73,210,008	$	419,241,532		98.86	%
Nonperforming		2,792,948		1,585,014		448,164		4,826,126		1.14	%
	$	169,927,481	$	180,482,005	$	73,658,172	$	424,067,658		100.00	%

	As of December 31, 2015
			CRE
					Non Owner-Occupied
Internally Assigned Risk Rating	C&I		Owner-Occupied CRE		Commercial Construction, Land Development, and Other Land		Other CRE		Total		As a % of Total
Pass (Ratings 1 through 5)	$	616,200,797	$	238,119,608	$	46,929,876	$	406,027,442	$	1,307,277,723		95.24	%
Special Mention (Rating 6)		18,031,845		8,630,658		1,780,000		8,846,286		37,288,789		2.72	%
Substandard (Rating 7)		13,927,250		5,772,898		373,968		7,888,029		27,962,145		2.04	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	648,159,892	$	252,523,164	$	49,083,844	$	422,761,757	$	1,372,528,657		100.00	%

	As of December 31, 2015
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	171,951,421	$	169,013,743	$	73,081,751	$	414,046,915		99.11	%
Nonperforming		1,704,184		1,418,787		587,742		3,710,713		0.89	%
	$	173,655,605	$	170,432,530	$	73,669,493	$	417,757,628		100.00	%

*Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing TDRs.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

As of June 30, 2016 and December 31, 2015, TDRs totaled $4,104,114 and $2,587,413, respectively.

For each class of financing receivable, the following presents the number and recorded investment of TDRs, by type of concession, that were restructured during the three and six months ended June 30, 2016. There were no TDRs that were restructured during the three and six months ended June 30, 2015. The difference between the pre-modification recorded investment and the post-modification recorded investment would be any partial charge-offs at the time of the restructuring.

	For the three months ended June 30, 2016
Classes of Loans/Leases	Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance
CONCESSION - Extension of Maturity
C&I		1	$	52,286	$	52,286	$	-
		1	$	52,286	$	52,286	$	-
CONCESSION - Significant Payment Delay
C&I		1	$	62,140	$	62,140	$	-
Direct Financing Leases		4		494,692		494,692		-
		5	$	556,832	$	556,832	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-
		1	$	1,233,740	$	1,233,740	$	-
TOTAL		7	$	1,842,858	$	1,842,858	$	-

	For the six months ended June 30, 2016
Classes of Loans/Leases	Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance
CONCESSION - Extension of Maturity
C&I		1	$	52,286	$	52,286	$	-
Direct Financing Leases		4		410,653		410,653		-
		5	$	462,939	$	462,939	$	-
CONCESSION - Significant Payment Delay
C&I		1	$	62,140	$	62,140	$	-
Direct Financing Leases		5		540,631		540,631		-
		6	$	602,771	$	602,771	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-
		1	$	1,233,740	$	1,233,740	$	-
TOTAL		12	$	2,299,450	$	2,299,450	$	-

Of the TDRs reported above, one with a post-modification recorded balance of $1,233,740 was on nonaccrual as of June 30, 2016.

For the three and six months ended June 30, 2016 and 2015, none of the Company’s TDRs had redefaulted within 12 months subsequent to restructure where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status.

XML

Note 4 - Borrowings

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 4

–

BORROWINGS

During the first quarter of 2016, the Company extinguished $5.1 million of the QCR Holdings Capital Trust IV junior subordinated debentures (the full balance outstanding) and recorded a $1.2 million gain on extinguishment (pre-tax), as the Company was able to acquire the related security at a discount through auction. This gain is included in the statements of income within losses on debt extinguishment. The interest rate on these debentures floated at 3-month LIBOR plus 1.80% and had a rate of 2.42% at the time of extinguishment. QCR Holdings Capital Trust IV was dissolved after the extinguishment.

Also during the first quarter of 2016, the Company executed balance sheet restructuring strategies at QCBT and CRBT, which included the repayment of $10.0 million of wholesale structured repurchase agreements and $10.0 million of FHLB advances with a combined weighted average interest rate of 3.92%. As a result of this restructuring, the Company incurred $1.3 million (pre-tax) in losses on debt extinguishment that are included in the statements of income. The weighted average duration of this combined debt was 2.17 years, with $10.0 million maturing in 2017 and $10.0 maturing in 2018. This funding was replaced with short-term borrowings at an average interest rate of 0.50%.

As of December 31, 2015, the Company maintained a $40.0 million revolving line of credit note, with interest calculated at the effective LIBOR rate plus 2.50% per annum (3.10% at December 31, 2015). At December 31, 2015, the Company had not borrowed on this revolving credit note and had the full amount available. At the renewal date in June 2016, the note was amended to provide a $10.0 million revolving line of credit note and a $30.0 million term note commitment with a 5-year term. Interest on both facilities is calculated at the effective LIBOR rate plus 2.50% per annum (3.13% at June 30, 2016). At June 30, 2016, the Company had not borrowed on either of these facilities and had the full amounts available. Similar to the previous revolving note agreement, the amended agreement contains covenants that place restrictions on additional debt and stipulate minimum capital and various operating ratios.

XML

Note 5 - Earnings Per Share

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

5

- EARNINGS PER SHARE

The following information was used in the computation of EPS on a basic and diluted basis:

	Three months ended					Six months ended
	June 30,					June 30,
	2016		2015			2016		2015
Net income (loss)	$	6,676,467	$	(523,818	)	$	13,049,956	$	3,654,071
Basic EPS	$	0.54	$	(0.05	)	$	1.08	$	0.41
Diluted EPS	$	0.53	$	(0.05	)	$	1.07	$	0.40
Weighted average common shares outstanding*		12,335,077		9,946,744			12,064,349		8,961,327
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan**		181,397		-			170,863		137,370
Weighted average common and common equivalent shares outstanding**		12,516,474		9,946,744			12,235,212		9,098,697

*The increase in the weighted average common shares outstanding was primarily due to the common stock issuance discussed in Note 9 to the Consolidated Financial Statements.

**In accordance with U.S. GAAP, the common equivalent shares are not considered in the calculation of diluted EPS in periods when the numerator is a net loss.

XML

Note 6 - Fair Value

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 6 – FAIR VALUE

Accounting guidance on fair value measurement uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follows:

● Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in markets;

● Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and

● Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis comprise the following at June 30, 2016 and December 31, 2015:

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2016:
Securities AFS:
U.S. govt. sponsored agency securities	$	88,321,448	$	-	$	88,321,448	$	-
Residential mortgage-backed and related securities		116,765,510		-		116,765,510		-
Municipal securities		23,392,817		-		23,392,817		-
Other securities		2,134,009		1,353		2,132,656		-
Interest rate caps		270,806		-		270,806		-
Interest rate swaps - assets		9,867,856		-		9,867,856		-
Total assets measured at fair value	$	240,752,446	$	1,353	$	240,751,093	$	-
Interest rate swaps - liabilities	$	9,867,856	$	-	$	9,867,856	$	-
Total liabilities measured at fair value	$	9,867,856	$	-	$	9,867,856	$	-
December 31, 2015:
Securities AFS:
U.S. govt. sponsored agency securities	$	213,537,379	$	-	$	213,537,379	$	-
Residential mortgage-backed and related securities		80,670,135		-		80,670,135		-
Municipal securities		27,578,588		-		27,578,588		-
Other securities		1,648,880		411		1,648,469		-
Interest rate caps		856,024		-		856,024		-
Interest rate swaps - assets		3,044,525		-		3,044,525		-
Total assets measured at fair value	$	327,335,531	$	411	$	327,335,120	$	-
Interest rate swaps - liabilities	$	3,044,525	$	-	$	3,044,525	$	-
Total liabilities measured at fair value	$	3,044,525	$	-	$	3,044,525	$	-

There were no transfers of assets or liabilities between Levels 1, 2, and 3 of the fair value hierarchy for the three and six months ended June 30, 2016 or 2015.

A small portion of the securities available for sale portfolio consists of common stock issued by various unrelated bank holding companies. The fair values used by the Company are obtained from an independent pricing service and represent quoted market prices for the identical securities (Level 1 inputs).

The remainder of the securities available for sale portfolio consists of securities whereby the Company obtains fair values from an independent pricing service. The fair values are determined by pricing models that consider observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2 inputs).

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Interest rate caps are used for the purpose of hedging interest rate risk. The fair values are determined by pricing models that consider observable market data for derivative instruments with similar structures (Level 2 inputs).

Interest rate swaps are executed for select commercial customers. The interest rate swaps are further described in Note 1 of the Company’s annual report filed on form 10-K as of December 31, 2015. The fair values are determined by comparing the contract rate on the swap with the then-current market rate for the remaining term of the transaction (Level 2 inputs).

Certain financial assets are measured at fair value on a non-recurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Assets measured at fair value on a non-recurring basis comprise the following at June 30, 2016 and December 31, 2015:

			Fair Value Measurements at Reporting Date Using
	Fair Value		Level 1		Level 2		Level 3
June 30, 2016:
Impaired loans/leases	$	5,669,757	$	-	$	-	$	5,669,757
OREO		6,673,430		-		-		6,673,430
	$	12,343,187	$	-	$	-	$	12,343,187
December 31, 2015:
Impaired loans/leases	$	4,545,966	$	-	$	-	$	4,545,966
OREO		7,722,711		-		-		7,722,711
	$	12,268,677	$	-	$	-	$	12,268,677

Impaired loans/leases are evaluated and valued at the time the loan/lease is identified as impaired, at the lower of cost or fair value, and are classified as Level 3 in the fair value hierarchy.  Fair value is measured based on the value of the collateral securing these loans/leases.  Collateral may be real estate and/or business assets, including equipment, inventory and/or accounts receivable, and is determined based on appraisals by qualified licensed appraisers hired by the Company.  Appraised and reported values are discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business.  

OREO in the table above consists of property acquired through foreclosures and settlements of loans.  Property acquired is carried at the estimated fair value of the property, less disposal costs, and is classified as Level 3 in the fair value hierarchy. The estimated fair value of the property is determined based on appraisals by qualified licensed appraisers hired by the Company.  Appraised and reported values are discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the property.

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level Fair Value Measurements
	Fair Value June 30, 2016		Fair Value December 31, 2015		Valuation Technique	Unobservable Input	Range
Impaired loans/leases	$	5,669,757	$	4,545,966	Appraisal of collateral	Appraisal adjustments	-10.00%	to	-50.00%
OREO		6,673,430		7,722,711	Appraisal of collateral	Appraisal adjustments	0.00%	to	-35.00%

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

For the impaired loans/leases and OREO, the Company records carrying value at fair value less disposal or selling costs. The amounts reported in the tables above are fair values before the adjustment for disposal or selling costs.

There have been no changes in valuation techniques used for any assets measured at fair value during the three and six months ended June 30, 2016 and 2015.

The following table presents the carrying values and estimated fair values of financial assets and liabilities carried on the Company’s consolidated balance sheets, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis:

	Fair Value	As of June 30, 2016				As of December 31, 2015
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Value		Fair Value		Value		Fair Value
Cash and due from banks	Level 1	$	49,581,154	$	49,581,154	$	41,742,321	$	41,742,321
Federal funds sold	Level 2		20,825,000		20,825,000		19,850,000		19,850,000
Interest-bearing deposits at financial institutions	Level 2		47,607,304		47,607,304		36,313,965		36,313,965
Investment securities:
HTM	Level 2		280,345,532		285,809,115		253,674,159		255,691,285
AFS	See Previous Table		240,481,640		240,481,640		323,434,982		323,434,982
Loans/leases receivable, net	Level 3		5,249,775		5,669,757		4,209,228		4,545,966
Loans/leases receivable, net	Level 2		1,889,426,132		1,897,957,225		1,767,672,541		1,764,178,772
Interest rate caps	Level 2		270,806		270,806		856,024		856,024
Interest rate swaps - assets	Level 2		9,867,856		9,867,856		3,044,525		3,044,525
Deposits:
Nonmaturity deposits	Level 2		1,554,404,101		1,554,404,101		1,516,599,081		1,516,599,081
Time deposits	Level 2		419,189,683		420,107,000		364,067,103		364,192,000
Short-term borrowings	Level 2		51,561,748		51,561,748		144,662,716		144,662,716
FHLB advances	Level 2		196,900,000		198,373,000		151,000,000		153,143,000
Other borrowings	Level 2		100,000,000		106,692,000		110,000,000		116,061,000
Junior subordinated debentures	Level 2		33,412,643		24,627,848		38,499,052		27,642,093
Interest rate swaps - liabilities	Level 2		9,867,856		9,867,856		3,044,525		3,044,525

XML

Note 7 - Business Segment Information

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 7 – BUSINESS SEGMENT INFORMATION

Selected financial and descriptive information is required to be disclosed for reportable operating segments, applying a “management perspective” as the basis for identifying reportable segments. The management perspective is determined by the view that management takes of the segments within the Company when making operating decisions, allocating resources, and measuring performance. The segments of the Company have been defined by the structure of the Company’s internal organization, focusing on the financial information that the Company’s operating decision-makers routinely use to make decisions about operating matters.

The Company’s primary segment, Commercial Banking, is geographically divided by markets into the secondary segments comprised of the three subsidiary banks wholly owned by the Company: QCBT, CRBT, and RB&T. Each of these secondary segments offers similar products and services, but is managed separately due to different pricing, product demand, and consumer markets. Each offers commercial, consumer, and mortgage loans and deposit services.

The Company’s Wealth Management segment represents the trust and asset management and investment management and advisory services offered at the Company’s three subsidiary banks in aggregate. This segment generates income primarily from fees charged based on assets under administration for corporate and personal trusts, custodial services, and investments managed. No assets of the subsidiary banks have been allocated to the Wealth Management segment.

The Company’s All Other segment includes the operations of all other consolidated subsidiaries and/or defined operating segments that fall below the segment reporting thresholds. This segment includes the corporate operations of the parent company.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Selected financial information on the Company’s business segments is presented as follows as of and for the three and six months ended June 30, 2016 and 2015.

	Commercial Banking							Wealth					Intercompany			Consolidated
	QCBT		CRBT			RB&T		Management		All Other			Eliminations			Total
Three Months Ended June 30, 2016
Total revenue	$	14,162,914	$	10,438,092		$	3,918,629	$	2,204,821	$	8,244,495		$	(8,293,266	)	$	30,675,685
Net interest income	$	11,207,759	$	7,135,725		$	2,945,417	$	-	$	(280,088	)	$	-		$	21,008,813
Net income	$	3,898,343	$	3,144,986		$	772,169	$	386,202	$	6,676,467		$	(8,201,700	)	$	6,676,467
Total assets	$	1,390,025,232	$	904,367,275		$	402,157,473	$	-	$	328,099,700		$	(341,215,392	)	$	2,683,434,288
Provision	$	747,850	$	150,000		$	300,000	$	-	$	-		$	-		$	1,197,850
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,371,653		$	-	$	-	$	-		$	-		$	1,371,653
Three Months Ended June 30, 2015
Total revenue	$	12,930,582	$	8,777,259		$	3,627,740	$	2,269,609	$	718,325		$	(811,669	)	$	27,511,846
Net interest income	$	9,741,899	$	6,522,511		$	2,684,330	$	-	$	(457,904	)	$	-		$	18,490,836
Net income (loss)	$	229,577	$	(316,567	)	$	529,567	$	438,530	$	(523,818	)	$	(881,107	)	$	(523,818	)
Total assets	$	1,299,556,911	$	860,403,296		$	363,049,771	$	-	$	268,874,722		$	(248,915,854	)	$	2,542,968,846
Provision	$	1,673,665	$	500,000		$	175,000	$	-	$	-		$	-		$	2,348,665
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,571,165		$	-	$	-	$	-		$	-		$	1,571,165
Six Months Ended June 30, 2016
Total revenue	$	27,679,846	$	21,277,313		$	7,712,876	$	4,439,113	$	15,104,270		$	(15,213,201	)	$	61,000,217
Net interest income	$	22,169,206	$	14,160,713		$	5,857,391	$	-	$	(580,975	)	$	-		$	41,606,335
Net income	$	6,730,039	$	6,079,717		$	1,389,954	$	833,972	$	13,049,955		$	(15,033,681	)	$	13,049,956
Total assets	$	1,390,025,232	$	904,367,275		$	402,157,473	$	-	$	328,099,700		$	(341,215,392	)	$	2,683,434,288
Provision	$	1,970,835	$	700,000		$	600,000	$	-	$	-		$	-		$	3,270,835
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,371,653		$	-	$	-	$	-		$	-		$	1,371,653
Six Months Ended June 30, 2015
Total revenue	$	25,732,000	$	18,302,906		$	7,169,330	$	4,613,047	$	6,334,768		$	(6,516,697	)	$	55,635,354
Net interest income	$	19,016,937	$	12,880,808		$	5,318,412	$	-	$	(943,104	)	$	-		$	36,273,053
Net income	$	2,792,190	$	1,751,739		$	1,048,224	$	897,860	$	3,654,071		$	(6,490,013	)	$	3,654,071
Total assets	$	1,299,556,911	$	860,403,296		$	363,049,771	$	-	$	268,874,722		$	(248,915,854	)	$	2,542,968,846
Provision	$	2,556,121	$	1,100,000		$	403,000	$	-	$	-		$	-		$	4,059,121
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,571,165		$	-	$	-	$	-		$	-		$	1,571,165

XML

Note 8 - Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 8 – REGULATORY CAPITAL REQUIREMENTS

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and subsidiary banks’ financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the subsidiary banks to maintain minimum amounts and ratios (set forth in the following table) of total common equity Tier 1 and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets, each as defined by regulation. Management believes, as of June 30, 2016 and December 31, 2015, that the Company and the subsidiary banks met all capital adequacy requirements to which they are subject.

Under the regulatory framework for prompt corrective action, to be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and common equity Tier 1 ratios as set forth in the following tables. The Company and the subsidiary banks’ actual capital amounts and ratios as of June 30, 2016 and December 31, 2015 are also presented in the following table (dollars in thousands). As of June 30, 2016 and December 31, 2015, each of the subsidiary banks met the requirements to be “well capitalized”.

						For Capital						To Be Well
						Adequacy Purposes						Capitalized Under
						With Capital						Prompt Corrective
	Actual					Conservation Buffer*						Action Provisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio
As of June 30, 2016:
Company:
Total risk-based capital	$	322,562		14.29	%	$	194,670	>		8.625	%	$	225,705	>		10.0	%
Tier 1 risk-based capital		294,265		13.04	%		149,529	>		6.625			180,564	>		8.0
Tier 1 leverage		294,265		11.18	%		105,263	>		4.000			131,578	>		5.0
Common equity Tier 1		264,422		11.72	%		115,674	>		5.125			146,708	>		6.5
Quad City Bank & Trust:
Total risk-based capital	$	143,744		12.76	%	$	97,131	>		8.625	%	$	112,616	>		10.0	%
Tier 1 risk-based capital		131,003		11.63	%		74,608	>		6.625			90,093	>		8.0
Tier 1 leverage		131,003		9.42	%		55,618	>		4.000			69,523	>		5.0
Common equity Tier 1		131,003		11.63	%		57,716	>		5.125			73,200	>		6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	110,325		13.82	%	$	68,850	>		8.625	%	$	79,826	>		10.0	%
Tier 1 risk-based capital		100,331		12.57	%		52,885	>		6.625			63,861	>		8.0
Tier 1 leverage		100,331		11.20	%		35,830	>		4.000			44,788	>		5.0
Common equity Tier 1		100,331		12.57	%		40,911	>		5.125			51,887	>		6.5
Rockford Bank & Trust:
Total risk-based capital	$	40,108		11.87	%	$	29,154	>		8.625	%	$	33,801	>		10.0	%
Tier 1 risk-based capital		35,877		10.61	%		22,393	>		6.625			27,041	>		8.0
Tier 1 leverage		35,877		9.50	%		15,099	>		4.000			18,874	>		5.0
Common equity Tier 1		35,877		10.61	%		17,323	>		5.125			21,971	>		6.5

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

												To Be Well Capitalized Under
						For Capital						Prompt Corrective
	Actual					Adequacy Purposes*						Action Provisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio
As of December 31, 2015:
Company:
Total risk-based capital	$	280,273		13.11	%	$	170,969	>		8.0	%	$	213,711	>		10.0	%
Tier 1 risk-based capital		253,891		11.88	%		128,227	>		6.0			170,969	>		8.0
Tier 1 leverage		253,891		9.75	%		104,163	>		4.0			130,203	>		5.0
Common equity Tier 1		220,800		10.33	%		96,170	>		4.5			138,912	>		6.5
Quad City Bank & Trust:
Total risk-based capital	$	135,477		12.50	%	$	86,726	>		8.0	%	$	108,407	>		10.0	%
Tier 1 risk-based capital		123,498		11.39	%		65,044	>		6.0			86,726	>		8.0
Tier 1 leverage		123,498		8.87	%		55,718	>		4.0			69,648	>		5.0
Common equity Tier 1		123,498		11.39	%		48,783	>		4.5			70,465	>		6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	105,285		14.39	%	$	58,537	>		8.0	%	$	73,172	>		10.0	%
Tier 1 risk-based capital		96,118		13.14	%		43,903	>		6.0			58,537	>		8.0
Tier 1 leverage		96,118		10.96	%		35,079	>		4.0			43,848	>		5.0
Common equity Tier 1		96,118		13.14	%		32,927	>		4.5			47,562	>		6.5
Rockford Bank & Trust:
Total risk-based capital	$	38,544		11.96	%	$	25,772	>		8.0	%	$	32,216	>		10.0	%
Tier 1 risk-based capital		34,514		10.71	%		19,329	>		6.0			25,772	>		8.0
Tier 1 leverage		34,514		9.59	%		14,401	>		4.0			18,001	>		5.0
Common equity Tier 1		34,514		10.71	%		14,497	>		4.5			20,940	>		6.5

*The minimums under Basel III phase in higher by .625% (the capital conservation buffer) annually until 2019. The fully phased-in minimums are 10.5% (Total risk-based capital), 8.5% (Tier 1 risk-based capital), and 7.0% (Common equity Tier 1). At December 31, 2015, the New Basel III minimums mirrored the minimums required for capital adequacy purposes. The first phase-in of the Basel III capital conservation buffer occured in 2016.

XML

Note 9 - Acquisition of Community State Bank and Common Stock Offering

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE 9 – ACQUISITION OF COMMUNITY STATE BANK AND COMMON STOCK OFFERING

On May 23, 2016, the Company announced the signing of a definitive agreement to acquire CSB, headquartered in Ankeny, Iowa, from Van Diest Investment Company. CSB is an Iowa-chartered bank that operates ten banking locations throughout the Des Moines metropolitan area. As of June 30, 2016, CSB had $571 million in assets, $433 million in loans and $481 million in deposits.

In the acquisition, the Company will acquire from Van Diest Investment Company 100% of the outstanding common stock of CSB for cash consideration of $80 million. The transaction is subject to certain customary closing conditions and is expected to close during the third quarter of 2016. The Company intends to maintain CSB as an independent banking charter.

In connection with the planned acquisition, during the second quarter the Company sold 1,215,000 shares of its common stock at a price of $24.75 per share, for approximate gross proceeds of $30 million, before deducting anticipated expenses. The shares were offered to institutional investors in a registered direct offering conducted without an underwriter or placement agent. The offering was a take-down of a previously filed shelf registration and closed on May 23, 2016.

Cash received from the common stock offering will be used to help finance the purchase price of the pending acquisition. Additionally, the Company plans to draw approximately $5 million on its $10 million revolving line of credit and fully fund the $30 million term facility it has available. Both of these facilities are described further in Note 4 to the Consolidated Financial Statements. Cash dividends of approximately $15 million from QCBT and CRBT will be used to finance the remainder of the purchase price.

During the second quarter of 2016, the Company incurred $355 thousand of expenses related to the planned acquisition, comprised primarily of legal and investment banking costs.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

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, 2015, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2016. 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 U.S. 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 June 30, 2016, are not necessarily indicative of the results expected for the year ending December 31, 2016, 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	GAAP: Generally Accepted Accounting Principles
AOCI: Accumulated other comprehensive income (loss)	HTM: Held to maturity
AFS: Available for sale	m2: m2 Lease Funds, LLC
ASU: Accounting Standards Update	MD&A: Management's Discussion & Analysis
BOLI: Bank-owned life insurance	NIM: Net interest margin
Caps: Interest rate cap derivatives	NPA: Nonperforming asset
Community National: Community National Bancorporation	NPL: Nonperforming loan
CNB: Community National Bank	OREO: Other real estate owned
CRBT: Cedar Rapids Bank & Trust Company	OTTI: Other-than-temporary impairment
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	The Company: QCR Holdings, Inc.
FRB: Federal Reserve Bank of Chicago	USDA: U.S. Department of Agriculture

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

On May 23, 2016, the Company announced the signing of a definitive agreement to acquire CSB, headquartered in Ankeny, Iowa, from Van Diest Investment Company. The transaction is expected to close during the third quarter of 2016, subject to certain customary closing conditions. The financial results of CSB are not recognized in this Report. See Note 9 to the Consolidated Financial Statements for additional information about the planned acquisition.

New Accounting Pronouncements, Policy [Policy Text Block]

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. The Company is in the process of analyzing the impact of adoption.

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 March 2016, the FASB issued ASU 2016-09,

Compensation – Stock Compensation

. ASU 2016-09 aims to simplify the accounting for companies that issue share-based payment awards to their employees. Simplification includes the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows of share-based payment awards. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, 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.

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.

Reclassification, Policy [Policy Text Block]

Reclassifications

: Certain amounts in the prior year’s consolidated financial statements have been reclassified, with no effect on net income or stockholders’ equity, to conform with the current period presentation.

XML

Note 2 - Investment Securities (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Unrealized Gain (Loss) on Investments [Table Text Block]

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
June 30, 2016:
Securities HTM:
Municipal securities	$	279,295,532	$	6,194,753	$	(731,170	)	$	284,759,115
Other securities		1,050,000		-		-			1,050,000
	$	280,345,532	$	6,194,753	$	(731,170	)	$	285,809,115
Securities AFS:
U.S. govt. sponsored agency securities	$	87,068,743	$	1,332,981	$	(80,276	)	$	88,321,448
Residential mortgage-backed and related securities		114,990,076		1,855,710		(80,276	)		116,765,510
Municipal securities		22,463,188		945,994		(16,365	)		23,392,817
Other securities		1,684,787		449,222		-			2,134,009
	$	226,206,794	$	4,583,907	$	(176,917	)	$	230,613,784
December 31, 2015:
Securities HTM:
Municipal securities	$	252,624,159	$	3,190,558	$	(1,173,432	)	$	254,641,285
Other securities		1,050,000		-		-			1,050,000
	$	253,674,159	$	3,190,558	$	(1,173,432	)	$	255,691,285
Securities AFS:
U.S. govt. sponsored agency securities	$	216,281,416	$	104,524	$	(2,848,561	)	$	213,537,379
Residential mortgage-backed and related securities		81,442,479		511,095		(1,283,439	)		80,670,135
Municipal securities		26,764,981		872,985		(59,378	)		27,578,588
Other securities		1,108,124		540,919		(163	)		1,648,880
	$	325,597,000	$	2,029,523	$	(4,191,541	)	$	323,434,982

Schedule of Unrealized Loss on Investments [Table Text Block]

	Less than 12 Months					12 Months or More					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
June 30, 2016:
Securities HTM:
Municipal securities	$	5,805,354	$	(384,457	)	$	14,508,402	$	(346,713	)	$	20,313,756	$	(731,170	)
Securities AFS:
U.S. govt. sponsored agency securities	$	5,825,476	$	(80,276	)	$	-	$	-		$	5,825,476	$	(80,276	)
Residential mortgage-backed and related securities		4,337,187		(7,492	)		8,829,330		(72,784	)		13,166,517		(80,276	)
Municipal securities		380,749		(206	)		850,050		(16,159	)		1,230,799		(16,365	)
Other securities		-		-			-		-			-		-
	$	10,543,412	$	(87,974	)	$	9,679,380	$	(88,943	)	$	20,222,792	$	(176,917	)
December 31, 2015:
Securities HTM:
Municipal securities	$	14,803,408	$	(294,438	)	$	19,927,581	$	(878,994	)	$	34,730,989	$	(1,173,432	)
Securities AFS:
U.S. govt. sponsored agency securities	$	112,900,327	$	(1,397,591	)	$	64,476,661	$	(1,450,970	)	$	177,376,988	$	(2,848,561	)
Residential mortgage-backed and related securities		40,356,921		(730,466	)		19,836,637		(552,973	)		60,193,558		(1,283,439	)
Municipal securities		2,220,800		(31,807	)		848,329		(27,571	)		3,069,129		(59,378	)
Other securities		411		(163	)		-		-			411		(163	)
	$	155,478,459	$	(2,160,027	)	$	85,161,627	$	(2,031,514	)	$	240,640,086	$	(4,191,541	)

Realized Gain (Loss) on Investments [Table Text Block]

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016			June 30, 2015
Proceeds from sales of securities	$	5,548,294	$	-	$	61,075,145		$	54,966,923
Pre-tax gross gains from sales of securities		18,030		-		533,545			569,551
Pre-tax gross losses from sales of securities		-		-		(157,035	)		(152,618	)

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized Cost		Fair Value
Securities HTM:
Due in one year or less	$	4,972,563	$	4,993,619
Due after one year through five years		20,232,407		20,415,409
Due after five years		255,140,562		260,400,087
	$	280,345,532	$	285,809,115
Securities AFS:
Due in one year or less	$	2,133,829	$	2,141,186
Due after one year through five years		54,381,038		55,669,426
Due after five years		53,017,064		53,903,653
	$	109,531,931	$	111,714,265
Residential mortgage-backed and related securities		114,990,076		116,765,510
Other securities		1,684,787		2,134,009
	$	226,206,794	$	230,613,784

	Amortized Cost		Fair Value
Securities HTM:
Municipal securities	$	153,065,142	$	156,170,970
Securities AFS:
U.S. govt. sponsored agency securities		23,616,009		23,718,901
Municipal securities		13,844,290		14,296,378
	$	37,460,299	$	38,015,279

Schedule of Debt [Table Text Block]

June 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		13	$	19,441,057	$	19,965,926	$	1,535,840
Illinois		9		10,127,747		10,527,337		1,169,704
Missouri		12		7,349,505		7,519,474		626,623
North Dakota		6		16,208,320		16,872,189		2,812,032
Other		37		13,738,908		14,133,036		381,974
Total general obligation bonds		77	$	66,865,537	$	69,017,962	$	896,337

December 31, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		15	$	19,974,939	$	20,247,108	$	1,349,807
Illinois		9		10,928,700		11,264,348		1,251,594
North Dakota		5		10,890,000		11,050,235		2,210,047
Missouri		12		7,924,800		7,986,856		665,571
Other		41		16,965,393		17,229,485		420,231
Total general obligation bonds		82	$	66,683,832	$	67,778,032	$	826,561

June 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		41	$	89,033,470	$	90,174,695	$	2,199,383
Iowa		26		73,076,794		74,933,480		2,882,057
Indiana		18		40,009,789		40,615,477		2,256,415
Kansas		5		13,172,824		13,315,662		2,663,132
North Dakota		4		8,161,630		8,359,661		2,089,915
Other		5		11,438,676		11,734,995		2,346,999
Total revenue bonds		99	$	234,893,183	$	239,133,970	$	2,415,495

December 31, 2015:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		41	$	78,593,590	$	79,015,378	$	1,927,204
Iowa		26		70,773,660		71,659,410		2,756,131
Indiana		17		40,018,381		40,210,320		2,365,313
Kansas		3		11,748,679		11,821,055		3,940,352
Other		5		11,570,998		11,735,678		2,347,136
Total revenue bonds		92	$	212,705,308	$	214,441,841	$	2,330,890

XML

Note 3 - Loans Leases Receivable (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	As of June 30,			As of December 31,
	2016			2015
C&I loans	$	706,261,186		$	648,159,892
CRE loans
Owner-occupied CRE		258,688,445			252,523,164
Commercial construction, land development, and other land		48,948,825			49,083,844
Other non owner-occupied CRE		476,741,839			422,761,757
		784,379,109			724,368,765
Direct financing leases *		169,927,481			173,655,605
Residential real estate loans **		180,482,005			170,432,530
Installment and other consumer loans		73,658,172			73,669,493
		1,914,707,953			1,790,286,285
Plus deferred loan/lease origination costs, net of fees		8,065,444			7,736,390
		1,922,773,397			1,798,022,675
Less allowance		(28,097,490	)		(26,140,906	)
	$	1,894,675,907		$	1,771,881,769
* Direct financing leases:
Net minimum lease payments to be received	$	190,107,687		$	195,476,230
Estimated unguaranteed residual values of leased assets		1,085,154			1,165,706
Unearned lease/residual income		(21,265,360	)		(22,986,331	)
		169,927,481			173,655,605
Plus deferred lease origination costs, net of fees		6,339,871			6,594,582
		176,267,352			180,250,187
Less allowance		(3,226,194	)		(3,395,088	)
	$	173,041,158		$	176,855,099

Past Due Financing Receivables [Table Text Block]

	As of June 30, 2016
Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due*			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total
C&I	$	687,859,076		$	400,711		$	13,225,353		$	-		$	4,776,046		$	706,261,186
CRE
Owner-Occupied CRE		257,503,344			141,571			-			-			1,043,530			258,688,445
Commercial Construction, Land Development, and Other Land		48,759,844			-			-			-			188,981			48,948,825
Other Non Owner-Occupied CRE		473,256,279			530,808			1,384,387			84,500			1,485,865			476,741,839
Direct Financing Leases		165,927,453			1,036,764			1,230,235			-			1,733,029			169,927,481
Residential Real Estate		179,075,229			-			215,561			-			1,191,215			180,482,005
Installment and Other Consumer		72,831,797			446,971			59,391			1,868			318,145			73,658,172
	$	1,885,213,022		$	2,556,825		$	16,114,927		$	86,368		$	10,736,811		$	1,914,707,953
As a percentage of total loan/lease portfolio		98.46	%		0.13	%		0.84	%		0.00	%		0.56	%		100.00	%

	As of December 31, 2015
Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total
C&I	$	640,725,241		$	1,636,860		$	5,816		$	-		$	5,791,975		$	648,159,892
CRE
Owner-Occupied CRE		251,612,752			182,949			-			-			727,463			252,523,164
Commercial Construction, Land Development, and Other Land		48,890,040			-			-			-			193,804			49,083,844
Other Non Owner-Occupied CRE		420,819,874			614,732			219,383			-			1,107,768			422,761,757
Direct Financing Leases		170,021,289			1,490,818			439,314			2,843			1,701,341			173,655,605
Residential Real Estate		166,415,118			2,800,589			200,080			-			1,016,743			170,432,530
Installment and Other Consumer		73,134,197			412,052			14,127			-			109,117			73,669,493
	$	1,771,618,511		$	7,138,000		$	878,720		$	2,843		$	10,648,211		$	1,790,286,285
As a percentage of total loan/lease portfolio		98.96	%		0.40	%		0.05	%		0.00	%		0.59	%		100.00	%

Schedule of Nonperforming Loans Leases [Table Text Block]

	As of June 30, 2016
Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases *		Accruing TDRs		Total NPLs		Percentage of Total NPLs
C&I	$	-	$	4,776,046	$	171,108	$	4,947,154		39.34	%
CRE
Owner-Occupied CRE		-		1,043,530		-		1,043,530		8.30	%
Commercial Construction, Land Development, and Other Land		-		188,981		-		188,981		1.50	%
Other Non Owner-Occupied CRE		84,500		1,485,865		-		1,570,365		12.49	%
Direct Financing Leases		-		1,733,029		1,059,919		2,792,948		22.21	%
Residential Real Estate		-		1,191,215		393,799		1,585,014		12.60	%
Installment and Other Consumer		1,868		318,145		128,151		448,164		3.56	%
	$	86,368	$	10,736,811	$	1,752,977	$	12,576,156		100.00	%

	As of December 31, 2015
Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases **		Accruing TDRs		Total NPLs		Percentage of Total NPLs
C&I	$	-	$	5,791,975	$	173,087	$	5,965,062		50.96	%
CRE							$	-
Owner-Occupied CRE		-		727,463		-	$	727,463		6.22	%
Commercial Construction, Land Development, and Other Land		-		193,804		-	$	193,804		1.66	%
Other Non Owner-Occupied CRE		-		1,107,768		-	$	1,107,768		9.46	%
Direct Financing Leases		2,843		1,701,341		-	$	1,704,184		14.56	%
Residential Real Estate		-		1,016,743		402,044	$	1,418,787		12.12	%
Installment and Other Consumer		-		109,117		478,625	$	587,742		5.02	%
	$	2,843	$	10,648,211	$	1,053,756	$	11,704,810		100.00	%

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Three Months Ended June 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,991,979		$	10,090,567		$	3,287,231		$	1,836,622		$	1,189,043		$	27,395,442
Provisions (credits) charged to expense		(241,600	)		919,596			460,997			194,988			(136,131	)		1,197,850
Loans/leases charged off		(48,983	)		(23,101	)		(534,716	)		(17,523	)		(9,892	)		(634,215	)
Recoveries on loans/leases previously charged off		23,110			-			12,682			900			101,721			138,413
Balance, ending	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490

	Three Months Ended June 30, 2015
	C&I			CRE		Direct Financing Leases			Residential Real Estate		Installment and Other Consumer			Total
Balance, beginning	$	9,093,650		$	8,838,204	$	3,310,973		$	1,597,754	$	1,042,693		$	23,883,274
Provisions charged to expense		604,731			1,081,753		473,982			122,381		65,818			2,348,665
Loans/leases charged off		(45,337	)		-		(465,098	)		-		(25,255	)		(535,690	)
Recoveries on loans/leases previously charged off		367,822			9,699		32,446			-		39,784			449,751
Balance, ending	$	10,020,866		$	9,929,656	$	3,352,303		$	1,720,135	$	1,123,040		$	26,146,000

	Six Months Ended June 30, 2016
	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,484,080		$	9,375,117		$	3,395,088		$	1,790,150		$	1,096,471		$	26,140,906
Provisions (credits) charged to expense		498,231			1,635,046			939,242			257,644			(59,328	)		3,270,835
Loans/leases charged off		(292,549	)		(23,101	)		(1,135,654	)		(33,707	)		(17,488	)		(1,502,499	)
Recoveries on loans/leases previously charged off		34,744			-			27,518			900			125,086			188,248
Balance, ending	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490

	Six Months Ended June 30, 2015
	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate		Installment and Other Consumer			Total
Balance, beginning	$	8,750,317		$	8,353,386		$	3,442,915		$	1,525,952	$	1,001,795		$	23,074,365
Provisions charged to expense		993,372			1,917,647			877,434			194,183		76,485			4,059,121
Loans/leases charged off		(245,638	)		(351,076	)		(1,012,590	)		-		(34,049	)		(1,643,353	)
Recoveries on loans/leases previously charged off		522,815			9,699			44,544			-		78,809			655,867
Balance, ending	$	10,020,866		$	9,929,656		$	3,352,303		$	1,720,135	$	1,123,040		$	26,146,000

	As of June 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	1,242,430		$	123,079		$	555,819		$	198,020		$	138,490		$	2,257,838
Allowance for nonimpaired loans/leases		9,482,076			10,863,983			2,670,375			1,816,967			1,006,251			25,839,652
	$	10,724,506		$	10,987,062		$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490
Impaired loans/leases	$	4,454,638		$	2,616,301		$	2,678,521		$	1,585,013		$	446,297		$	11,780,770
Nonimpaired loans/leases		701,806,548			781,762,808			167,248,960			178,896,992			73,211,875			1,902,927,183
	$	706,261,186		$	784,379,109		$	169,927,481		$	180,482,005		$	73,658,172		$	1,914,707,953
Allowance as a percentage of impaired loans/leases		27.89	%		4.70	%		20.75	%		12.49	%		31.03	%		19.17	%
Allowance as a percentage of nonimpaired loans/leases		1.35	%		1.39	%		1.60	%		1.02	%		1.37	%		1.36	%
Total allowance as a percentage of total loans/leases		1.52	%		1.40	%		1.90	%		1.12	%		1.55	%		1.46	%

	As of December 31, 2015
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	2,592,270		$	76,934		$	306,193		$	185,801		$	143,089		$	3,304,287
Allowance for nonimpaired loans/leases		7,891,810			9,298,183			3,088,895			1,604,349			953,382			22,836,619
	$	10,484,080		$	9,375,117		$	3,395,088		$	1,790,150		$	1,096,471		$	26,140,906
Impaired loans/leases	$	5,286,482		$	2,029,035		$	1,701,341		$	1,418,787		$	587,742		$	11,023,387
Nonimpaired loans/leases		642,873,410			722,339,730			171,954,264			169,013,743			73,081,751			1,779,262,898
	$	648,159,892		$	724,368,765		$	173,655,605		$	170,432,530		$	73,669,493		$	1,790,286,285
Allowance as a percentage of impaired loans/leases		49.04	%		3.79	%		18.00	%		13.10	%		24.35	%		29.98	%
Allowance as a percentage of nonimpaired loans/leases		1.23	%		1.29	%		1.80	%		0.95	%		1.30	%		1.28	%
Total allowance as a percentage of total loans/leases		1.62	%		1.29	%		1.96	%		1.05	%		1.49	%		1.45	%

Impaired Financing Receivables [Table Text Block]

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	639,448	$	780,390	$	-	$	3,197,308	$	5,343	$	5,343
CRE
Owner-Occupied CRE		-		93,774		-		163,216		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		-		-		-
Other Non Owner-Occupied CRE		1,516,555		1,516,555		-		1,243,616		-		-
Direct Financing Leases		1,652,661		1,652,661		-		1,398,419		31,500		31,500
Residential Real Estate		672,061		711,262		-		627,715		2,051		2,051
Installment and Other Consumer		231,730		231,730		-		281,740		-		-
	$	4,712,455	$	4,986,372	$	-	$	6,912,014	$	38,894	$	38,894
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	3,815,190	$	3,819,029	$	1,242,430	$	1,775,881	$	-	$	-
CRE
Owner-Occupied CRE		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		188,981		200,981		79,911		191,384		-		-
Other Non Owner-Occupied CRE		910,765		910,765		43,168		595,714		-		-
Direct Financing Leases		1,025,860		1,025,860		555,819		866,749		-		-
Residential Real Estate		912,952		948,530		198,020		872,297		3,906		3,906
Installment and Other Consumer		214,567		214,567		138,490		212,806		2,968		2,968
	$	7,068,315	$	7,119,732	$	2,257,838	$	4,514,831	$	6,874	$	6,874
Total Impaired Loans/Leases:
C&I	$	4,454,638	$	4,599,419	$	1,242,430	$	4,973,189	$	5,343	$	5,343
CRE
Owner-Occupied CRE		-		93,774		-		163,216		-		-
Commercial Construction, Land Development, and Other Land		188,981		200,981		79,911		191,384		-		-
Other Non Owner-Occupied CRE		2,427,320		2,427,320		43,168		1,839,330		-		-
Direct Financing Leases		2,678,521		2,678,521		555,819		2,265,168		31,500		31,500
Residential Real Estate		1,585,013		1,659,792		198,020		1,500,012		5,957		5,957
Installment and Other Consumer		446,297		446,297		138,490		494,546		2,968		2,968
	$	11,780,770	$	12,106,104	$	2,257,838	$	11,426,845	$	45,768	$	45,768

	Three Months Ended June 30, 2016						Three Months Ended June 30, 2015
Classes of Loans/Leases	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	2,524,056	$	3,519	$	3,519	$	320,187	$	1,860	$	1,860
CRE
Owner-Occupied CRE		121,444		-		-		550,374		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		222,926		-		-
Other Non Owner-Occupied CRE		1,311,540		-		-		2,474,448		-		-
Direct Financing Leases		1,510,987		19,897		19,897		582,316		1,878		1,878
Residential Real Estate		621,354		1,013		1,013		969,580		-		-
Installment and Other Consumer		229,207		-		-		705,750		475		475
	$	6,318,588	$	24,429	$	24,429	$	5,825,581	$	4,213	$	4,213
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	2,292,483	$	-	$	-	$	4,912,917	$	-	$	-
CRE
Owner-Occupied CRE		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		190,174		-		-		139,250		-		-
Other Non Owner-Occupied CRE		658,220		-		-		1,657,506		-		-
Direct Financing Leases		995,446		-		-		561,840		-		-
Residential Real Estate		919,271		1,948		1,948		869,073		1,967		1,967
Installment and Other Consumer		218,742		1,468		1,468		608,277		2,252		2,252
	$	5,274,336	$	3,416	$	3,416	$	8,748,863	$	4,219	$	4,219
Total Impaired Loans/Leases:
C&I	$	4,816,539	$	3,519	$	3,519	$	5,233,104	$	1,860	$	1,860
CRE
Owner-Occupied CRE		121,444		-		-		550,374		-		-
Commercial Construction, Land Development, and Other Land		190,174		-		-		362,176		-		-
Other Non Owner-Occupied CRE		1,969,760		-		-		4,131,954		-		-
Direct Financing Leases		2,506,433		19,897		19,897		1,144,156		1,878		1,878
Residential Real Estate		1,540,625		2,961		2,961		1,838,653		1,967		1,967
Installment and Other Consumer		447,949		1,468		1,468		1,314,027		2,727		2,727
	$	11,592,924	$	27,845	$	27,845	$	14,574,444	$	8,432	$	8,432

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	234,636	$	346,072	$	-
CRE
Owner-Occupied CRE		256,761		350,535		-
Commercial Construction, Land Development, and Other Land		-		228,818		-
Other Non Owner-Occupied CRE		1,578,470		1,578,470		-
Direct Financing Leases		871,884		871,884		-
Residential Real Estate		613,486		649,064		-
Installment and Other Consumer		377,304		377,304		-
	$	3,932,541	$	4,402,147	$	-
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	5,051,846	$	5,055,685	$	2,592,270
CRE
Owner-Occupied CRE		-		-		-
Commercial Construction, Land Development, and Other Land		193,804		205,804		76,934
Other Non Owner-Occupied CRE		-		-		-
Direct Financing Leases		829,457		829,457		306,193
Residential Real Estate		805,301		805,301		185,801
Installment and Other Consumer		210,438		210,438		143,089
	$	7,090,846	$	7,106,685	$	3,304,287
Total Impaired Loans/Leases:
C&I	$	5,286,482	$	5,401,757	$	2,592,270
CRE
Owner-Occupied CRE		256,761		350,535		-
Commercial Construction, Land Development, and Other Land		193,804		434,622		76,934
Other Non Owner-Occupied CRE		1,578,470		1,578,470		-
Direct Financing Leases		1,701,341		1,701,341		306,193
Residential Real Estate		1,418,787		1,454,365		185,801
Installment and Other Consumer		587,742		587,742		143,089
	$	11,023,387	$	11,508,832	$	3,304,287

Financing Receivable Credit Quality Indicators [Table Text Block]

	As of June 30, 2016
			CRE
					Non Owner-Occupied
Internally Assigned Risk Rating	C&I		Owner-Occupied CRE		Commercial Construction, Land Development, and Other Land		Other CRE		Total		As a % of Total
Pass (Ratings 1 through 5)	$	678,225,838	$	247,914,237	$	44,672,408	$	458,961,143	$	1,429,773,626		95.92	%
Special Mention (Rating 6)		6,381,586		2,114,505		1,780,000		5,954,788		16,230,879		1.09	%
Substandard (Rating 7)		21,653,762		8,659,703		2,496,417		11,825,908		44,635,790		2.99	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	706,261,186	$	258,688,445	$	48,948,825	$	476,741,839	$	1,490,640,295		100.00	%

	As of December 31, 2015
			CRE
					Non Owner-Occupied
Internally Assigned Risk Rating	C&I		Owner-Occupied CRE		Commercial Construction, Land Development, and Other Land		Other CRE		Total		As a % of Total
Pass (Ratings 1 through 5)	$	616,200,797	$	238,119,608	$	46,929,876	$	406,027,442	$	1,307,277,723		95.24	%
Special Mention (Rating 6)		18,031,845		8,630,658		1,780,000		8,846,286		37,288,789		2.72	%
Substandard (Rating 7)		13,927,250		5,772,898		373,968		7,888,029		27,962,145		2.04	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	648,159,892	$	252,523,164	$	49,083,844	$	422,761,757	$	1,372,528,657		100.00	%

Financing Receivable Credit Quality Indicators Performance Status [Table Text Block]

	As of June 30, 2016
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	167,134,533	$	178,896,991	$	73,210,008	$	419,241,532		98.86	%
Nonperforming		2,792,948		1,585,014		448,164		4,826,126		1.14	%
	$	169,927,481	$	180,482,005	$	73,658,172	$	424,067,658		100.00	%

	As of December 31, 2015
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	171,951,421	$	169,013,743	$	73,081,751	$	414,046,915		99.11	%
Nonperforming		1,704,184		1,418,787		587,742		3,710,713		0.89	%
	$	173,655,605	$	170,432,530	$	73,669,493	$	417,757,628		100.00	%

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	For the three months ended June 30, 2016
Classes of Loans/Leases	Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance
CONCESSION - Extension of Maturity
C&I		1	$	52,286	$	52,286	$	-
		1	$	52,286	$	52,286	$	-
CONCESSION - Significant Payment Delay
C&I		1	$	62,140	$	62,140	$	-
Direct Financing Leases		4		494,692		494,692		-
		5	$	556,832	$	556,832	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-
		1	$	1,233,740	$	1,233,740	$	-
TOTAL		7	$	1,842,858	$	1,842,858	$	-

	For the six months ended June 30, 2016
Classes of Loans/Leases	Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance
CONCESSION - Extension of Maturity
C&I		1	$	52,286	$	52,286	$	-
Direct Financing Leases		4		410,653		410,653		-
		5	$	462,939	$	462,939	$	-
CONCESSION - Significant Payment Delay
C&I		1	$	62,140	$	62,140	$	-
Direct Financing Leases		5		540,631		540,631		-
		6	$	602,771	$	602,771	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-
		1	$	1,233,740	$	1,233,740	$	-
TOTAL		12	$	2,299,450	$	2,299,450	$	-

XML

Note 5 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three months ended					Six months ended
	June 30,					June 30,
	2016		2015			2016		2015
Net income (loss)	$	6,676,467	$	(523,818	)	$	13,049,956	$	3,654,071
Basic EPS	$	0.54	$	(0.05	)	$	1.08	$	0.41
Diluted EPS	$	0.53	$	(0.05	)	$	1.07	$	0.40
Weighted average common shares outstanding*		12,335,077		9,946,744			12,064,349		8,961,327
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan**		181,397		-			170,863		137,370
Weighted average common and common equivalent shares outstanding**		12,516,474		9,946,744			12,235,212		9,098,697

XML

Note 6 - Fair Value (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

			Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2016:
Securities AFS:
U.S. govt. sponsored agency securities	$	88,321,448	$	-	$	88,321,448	$	-
Residential mortgage-backed and related securities		116,765,510		-		116,765,510		-
Municipal securities		23,392,817		-		23,392,817		-
Other securities		2,134,009		1,353		2,132,656		-
Interest rate caps		270,806		-		270,806		-
Interest rate swaps - assets		9,867,856		-		9,867,856		-
Total assets measured at fair value	$	240,752,446	$	1,353	$	240,751,093	$	-
Interest rate swaps - liabilities	$	9,867,856	$	-	$	9,867,856	$	-
Total liabilities measured at fair value	$	9,867,856	$	-	$	9,867,856	$	-
December 31, 2015:
Securities AFS:
U.S. govt. sponsored agency securities	$	213,537,379	$	-	$	213,537,379	$	-
Residential mortgage-backed and related securities		80,670,135		-		80,670,135		-
Municipal securities		27,578,588		-		27,578,588		-
Other securities		1,648,880		411		1,648,469		-
Interest rate caps		856,024		-		856,024		-
Interest rate swaps - assets		3,044,525		-		3,044,525		-
Total assets measured at fair value	$	327,335,531	$	411	$	327,335,120	$	-
Interest rate swaps - liabilities	$	3,044,525	$	-	$	3,044,525	$	-
Total liabilities measured at fair value	$	3,044,525	$	-	$	3,044,525	$	-

			Fair Value Measurements at Reporting Date Using
	Fair Value		Level 1		Level 2		Level 3
June 30, 2016:
Impaired loans/leases	$	5,669,757	$	-	$	-	$	5,669,757
OREO		6,673,430		-		-		6,673,430
	$	12,343,187	$	-	$	-	$	12,343,187
December 31, 2015:
Impaired loans/leases	$	4,545,966	$	-	$	-	$	4,545,966
OREO		7,722,711		-		-		7,722,711
	$	12,268,677	$	-	$	-	$	12,268,677

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

	Quantitative Information about Level Fair Value Measurements
	Fair Value June 30, 2016		Fair Value December 31, 2015		Valuation Technique	Unobservable Input	Range
Impaired loans/leases	$	5,669,757	$	4,545,966	Appraisal of collateral	Appraisal adjustments	-10.00%	to	-50.00%
OREO		6,673,430		7,722,711	Appraisal of collateral	Appraisal adjustments	0.00%	to	-35.00%

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Fair Value	As of June 30, 2016				As of December 31, 2015
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Value		Fair Value		Value		Fair Value
Cash and due from banks	Level 1	$	49,581,154	$	49,581,154	$	41,742,321	$	41,742,321
Federal funds sold	Level 2		20,825,000		20,825,000		19,850,000		19,850,000
Interest-bearing deposits at financial institutions	Level 2		47,607,304		47,607,304		36,313,965		36,313,965
Investment securities:
HTM	Level 2		280,345,532		285,809,115		253,674,159		255,691,285
AFS	See Previous Table		240,481,640		240,481,640		323,434,982		323,434,982
Loans/leases receivable, net	Level 3		5,249,775		5,669,757		4,209,228		4,545,966
Loans/leases receivable, net	Level 2		1,889,426,132		1,897,957,225		1,767,672,541		1,764,178,772
Interest rate caps	Level 2		270,806		270,806		856,024		856,024
Interest rate swaps - assets	Level 2		9,867,856		9,867,856		3,044,525		3,044,525
Deposits:
Nonmaturity deposits	Level 2		1,554,404,101		1,554,404,101		1,516,599,081		1,516,599,081
Time deposits	Level 2		419,189,683		420,107,000		364,067,103		364,192,000
Short-term borrowings	Level 2		51,561,748		51,561,748		144,662,716		144,662,716
FHLB advances	Level 2		196,900,000		198,373,000		151,000,000		153,143,000
Other borrowings	Level 2		100,000,000		106,692,000		110,000,000		116,061,000
Junior subordinated debentures	Level 2		33,412,643		24,627,848		38,499,052		27,642,093
Interest rate swaps - liabilities	Level 2		9,867,856		9,867,856		3,044,525		3,044,525

XML

Note 7 - Business Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Commercial Banking							Wealth					Intercompany			Consolidated
	QCBT		CRBT			RB&T		Management		All Other			Eliminations			Total
Three Months Ended June 30, 2016
Total revenue	$	14,162,914	$	10,438,092		$	3,918,629	$	2,204,821	$	8,244,495		$	(8,293,266	)	$	30,675,685
Net interest income	$	11,207,759	$	7,135,725		$	2,945,417	$	-	$	(280,088	)	$	-		$	21,008,813
Net income	$	3,898,343	$	3,144,986		$	772,169	$	386,202	$	6,676,467		$	(8,201,700	)	$	6,676,467
Total assets	$	1,390,025,232	$	904,367,275		$	402,157,473	$	-	$	328,099,700		$	(341,215,392	)	$	2,683,434,288
Provision	$	747,850	$	150,000		$	300,000	$	-	$	-		$	-		$	1,197,850
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,371,653		$	-	$	-	$	-		$	-		$	1,371,653
Three Months Ended June 30, 2015
Total revenue	$	12,930,582	$	8,777,259		$	3,627,740	$	2,269,609	$	718,325		$	(811,669	)	$	27,511,846
Net interest income	$	9,741,899	$	6,522,511		$	2,684,330	$	-	$	(457,904	)	$	-		$	18,490,836
Net income (loss)	$	229,577	$	(316,567	)	$	529,567	$	438,530	$	(523,818	)	$	(881,107	)	$	(523,818	)
Total assets	$	1,299,556,911	$	860,403,296		$	363,049,771	$	-	$	268,874,722		$	(248,915,854	)	$	2,542,968,846
Provision	$	1,673,665	$	500,000		$	175,000	$	-	$	-		$	-		$	2,348,665
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,571,165		$	-	$	-	$	-		$	-		$	1,571,165
Six Months Ended June 30, 2016
Total revenue	$	27,679,846	$	21,277,313		$	7,712,876	$	4,439,113	$	15,104,270		$	(15,213,201	)	$	61,000,217
Net interest income	$	22,169,206	$	14,160,713		$	5,857,391	$	-	$	(580,975	)	$	-		$	41,606,335
Net income	$	6,730,039	$	6,079,717		$	1,389,954	$	833,972	$	13,049,955		$	(15,033,681	)	$	13,049,956
Total assets	$	1,390,025,232	$	904,367,275		$	402,157,473	$	-	$	328,099,700		$	(341,215,392	)	$	2,683,434,288
Provision	$	1,970,835	$	700,000		$	600,000	$	-	$	-		$	-		$	3,270,835
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,371,653		$	-	$	-	$	-		$	-		$	1,371,653
Six Months Ended June 30, 2015
Total revenue	$	25,732,000	$	18,302,906		$	7,169,330	$	4,613,047	$	6,334,768		$	(6,516,697	)	$	55,635,354
Net interest income	$	19,016,937	$	12,880,808		$	5,318,412	$	-	$	(943,104	)	$	-		$	36,273,053
Net income	$	2,792,190	$	1,751,739		$	1,048,224	$	897,860	$	3,654,071		$	(6,490,013	)	$	3,654,071
Total assets	$	1,299,556,911	$	860,403,296		$	363,049,771	$	-	$	268,874,722		$	(248,915,854	)	$	2,542,968,846
Provision	$	2,556,121	$	1,100,000		$	403,000	$	-	$	-		$	-		$	4,059,121
Goodwill	$	3,222,688	$	-		$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,571,165		$	-	$	-	$	-		$	-		$	1,571,165

XML

Note 8 - Regulatory Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

						For Capital						To Be Well
						Adequacy Purposes						Capitalized Under
						With Capital						Prompt Corrective
	Actual					Conservation Buffer*						Action Provisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio
As of June 30, 2016:
Company:
Total risk-based capital	$	322,562		14.29	%	$	194,670	>		8.625	%	$	225,705	>		10.0	%
Tier 1 risk-based capital		294,265		13.04	%		149,529	>		6.625			180,564	>		8.0
Tier 1 leverage		294,265		11.18	%		105,263	>		4.000			131,578	>		5.0
Common equity Tier 1		264,422		11.72	%		115,674	>		5.125			146,708	>		6.5
Quad City Bank & Trust:
Total risk-based capital	$	143,744		12.76	%	$	97,131	>		8.625	%	$	112,616	>		10.0	%
Tier 1 risk-based capital		131,003		11.63	%		74,608	>		6.625			90,093	>		8.0
Tier 1 leverage		131,003		9.42	%		55,618	>		4.000			69,523	>		5.0
Common equity Tier 1		131,003		11.63	%		57,716	>		5.125			73,200	>		6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	110,325		13.82	%	$	68,850	>		8.625	%	$	79,826	>		10.0	%
Tier 1 risk-based capital		100,331		12.57	%		52,885	>		6.625			63,861	>		8.0
Tier 1 leverage		100,331		11.20	%		35,830	>		4.000			44,788	>		5.0
Common equity Tier 1		100,331		12.57	%		40,911	>		5.125			51,887	>		6.5
Rockford Bank & Trust:
Total risk-based capital	$	40,108		11.87	%	$	29,154	>		8.625	%	$	33,801	>		10.0	%
Tier 1 risk-based capital		35,877		10.61	%		22,393	>		6.625			27,041	>		8.0
Tier 1 leverage		35,877		9.50	%		15,099	>		4.000			18,874	>		5.0
Common equity Tier 1		35,877		10.61	%		17,323	>		5.125			21,971	>		6.5

												To Be Well Capitalized Under
						For Capital						Prompt Corrective
	Actual					Adequacy Purposes*						Action Provisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio
As of December 31, 2015:
Company:
Total risk-based capital	$	280,273		13.11	%	$	170,969	>		8.0	%	$	213,711	>		10.0	%
Tier 1 risk-based capital		253,891		11.88	%		128,227	>		6.0			170,969	>		8.0
Tier 1 leverage		253,891		9.75	%		104,163	>		4.0			130,203	>		5.0
Common equity Tier 1		220,800		10.33	%		96,170	>		4.5			138,912	>		6.5
Quad City Bank & Trust:
Total risk-based capital	$	135,477		12.50	%	$	86,726	>		8.0	%	$	108,407	>		10.0	%
Tier 1 risk-based capital		123,498		11.39	%		65,044	>		6.0			86,726	>		8.0
Tier 1 leverage		123,498		8.87	%		55,718	>		4.0			69,648	>		5.0
Common equity Tier 1		123,498		11.39	%		48,783	>		4.5			70,465	>		6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	105,285		14.39	%	$	58,537	>		8.0	%	$	73,172	>		10.0	%
Tier 1 risk-based capital		96,118		13.14	%		43,903	>		6.0			58,537	>		8.0
Tier 1 leverage		96,118		10.96	%		35,079	>		4.0			43,848	>		5.0
Common equity Tier 1		96,118		13.14	%		32,927	>		4.5			47,562	>		6.5
Rockford Bank & Trust:
Total risk-based capital	$	38,544		11.96	%	$	25,772	>		8.0	%	$	32,216	>		10.0	%
Tier 1 risk-based capital		34,514		10.71	%		19,329	>		6.0			25,772	>		8.0
Tier 1 leverage		34,514		9.59	%		14,401	>		4.0			18,001	>		5.0
Common equity Tier 1		34,514		10.71	%		14,497	>		4.5			20,940	>		6.5

XML

Note 2 - Investment Securities (Details Textual)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Equity Securities [Member]
Percentage of Investment Portfolio	1.00%		1.00%		1.00%
Other than Temporary Impairment Losses, Investments	$ 0	$ 0
Debt Securities [Member]
Other than Temporary Impairment Losses, Investments			$ 0	$ 0
Stockholders' Equity, Total [Member] | Credit Concentration Risk [Member] | General Obligation Bonds [Member]
Concentration Risk, Percentage			0.00%		0.00%
Stockholders' Equity, Total [Member] | Credit Concentration Risk [Member] | Revenue Bonds [Member]
Concentration Risk, Percentage			0.00%		0.00%
General Obligation Bonds [Member] | Municipal Bonds [Member] | Aggregate Fair Value Exceeding 5 Million [Member]
Number of States Investments Held in	4		4		4
General Obligation Bonds [Member] | Municipal Bonds [Member] | Minimum [Member]
Other Investments	$ 5,000,000		$ 5,000,000		$ 5,000,000
General Obligation Bonds [Member] | Municipal Bonds [Member]
Number of Issuers	77		77		82
Other Investments	$ 69,000,000		$ 69,000,000		$ 67,800,000
Number of States Investments Held in	19		19		19
Revenue Bonds [Member] | Municipal Bonds [Member] | Aggregate Fair Value Exceeding 5 Million [Member]
Number of States Investments Held in	4		4		4
Revenue Bonds [Member] | Municipal Bonds [Member] | Minimum [Member]
Other Investments	$ 5,000,000		$ 5,000,000		$ 5,000,000
Revenue Bonds [Member] | Municipal Bonds [Member]
Number of Issuers	99		99		92
Other Investments	$ 239,100,000		$ 239,100,000		$ 214,400,000
Number of States Investments Held in	9		9		9
Number of Securities	447		447
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	30		30
Aggregate Depreciation from Amortized Cost Basis, Percent			1.00%
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	17		17

XML

Note 2 - Amortized Cost and Fair Value of Investment Securities (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
US States and Political Subdivisions Debt Securities [Member]
Securities held to maturity, at amortized cost	$ 279,295,532	$ 252,624,159
Securities held to maturity, gross unrealized gains	6,194,753	3,190,558
Securities held to maturity, gross unrealized (losses)	(731,170)	(1,173,432)
Securities held to maturity,fair value	284,759,115	254,641,285
Securities available for sale, amortized cost	22,463,188	26,764,981
Securities available for sale, gross unrealized gains	945,994	872,985
Securities available for sale, gross unrealized (losses)	(16,365)	(59,378)
Securities available for sale, at fair value	23,392,817	27,578,588
Other Securities [Member]
Securities held to maturity, at amortized cost	1,050,000	1,050,000
Securities held to maturity, gross unrealized gains
Securities held to maturity, gross unrealized (losses)
Securities held to maturity,fair value	1,050,000	1,050,000
Securities available for sale, amortized cost	1,684,787	1,108,124
Securities available for sale, gross unrealized gains	449,222	540,919
Securities available for sale, gross unrealized (losses)		(163)
Securities available for sale, at fair value	2,134,009	1,648,880
US Government Agencies Debt Securities [Member]
Securities available for sale, amortized cost	87,068,743	216,281,416
Securities available for sale, gross unrealized gains	1,332,981	104,524
Securities available for sale, gross unrealized (losses)	(80,276)	(2,848,561)
Securities available for sale, at fair value	88,321,448	213,537,379
Residential Mortgage Backed Securities [Member]
Securities available for sale, amortized cost	114,990,076	81,442,479
Securities available for sale, gross unrealized gains	1,855,710	511,095
Securities available for sale, gross unrealized (losses)	(80,276)	(1,283,439)
Securities available for sale, at fair value	116,765,510	80,670,135
Securities held to maturity, at amortized cost	280,345,532	253,674,159
Securities held to maturity, gross unrealized gains	6,194,753	3,190,558
Securities held to maturity, gross unrealized (losses)	(731,170)	(1,173,432)
Securities held to maturity,fair value	285,809,115	255,691,285
Securities available for sale, amortized cost	226,206,794	325,597,000
Securities available for sale, gross unrealized gains	4,583,907	2,029,523
Securities available for sale, gross unrealized (losses)	(176,917)	(4,191,541)
Securities available for sale, at fair value	$ 230,613,784	$ 323,434,982

XML

Note 2 - Securities in a Continuous Unrealized Loss Position (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
US States and Political Subdivisions Debt Securities [Member]
Securities held to maturity, less than 12 months, fair value	$ 5,805,354	$ 14,803,408
Securities held to maturity, less than 12 months, gross unrealized losses	(384,457)	(294,438)
Securities held to maturity, 12 months or more, fair value	14,508,402	19,927,581
Securities held to maturity, 12 months or more, gross unrealized losses	(346,713)	(878,994)
Securities held to maturity, fair value	20,313,756	34,730,989
Securities held to maturity, gross unrealized losses	(731,170)	(1,173,432)
Securities available for sale, less than 12 months, fair value	380,749	2,220,800
Securities available for sale, less than 12 months, gross unrealized losses	(206)	(31,807)
Securities available for sale, 12 months or more, fair value	850,050	848,329
Securities available for sale, 12 months or more, gross unrealized losses	(16,159)	(27,571)
Securities available for sale, fair value	1,230,799	3,069,129
Securities available for sale, gross unrealized losses	(16,365)	(59,378)
US Government Agencies Debt Securities [Member]
Securities available for sale, less than 12 months, fair value	5,825,476	112,900,327
Securities available for sale, less than 12 months, gross unrealized losses	(80,276)	(1,397,591)
Securities available for sale, 12 months or more, fair value		64,476,661
Securities available for sale, 12 months or more, gross unrealized losses		(1,450,970)
Securities available for sale, fair value	5,825,476	177,376,988
Securities available for sale, gross unrealized losses	(80,276)	(2,848,561)
Residential Mortgage Backed Securities [Member]
Securities available for sale, less than 12 months, fair value	4,337,187	40,356,921
Securities available for sale, less than 12 months, gross unrealized losses	(7,492)	(730,466)
Securities available for sale, 12 months or more, fair value	8,829,330	19,836,637
Securities available for sale, 12 months or more, gross unrealized losses	(72,784)	(552,973)
Securities available for sale, fair value	13,166,517	60,193,558
Securities available for sale, gross unrealized losses	(80,276)	(1,283,439)
Other Securities [Member]
Securities available for sale, less than 12 months, fair value		411
Securities available for sale, less than 12 months, gross unrealized losses		(163)
Securities available for sale, fair value		411
Securities available for sale, gross unrealized losses		(163)
Securities available for sale, less than 12 months, fair value	10,543,412	155,478,459
Securities available for sale, less than 12 months, gross unrealized losses	(87,974)	(2,160,027)
Securities available for sale, 12 months or more, fair value	9,679,380	85,161,627
Securities available for sale, 12 months or more, gross unrealized losses	(88,943)	(2,031,514)
Securities available for sale, fair value	20,222,792	240,640,086
Securities available for sale, gross unrealized losses	$ (176,917)	$ (4,191,541)

XML

Note 2 - Sales of Securities (Details) - USD ($)	3 Months Ended		6 Months Ended	18 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2016
Proceeds from sales of securities	$ 5,548,294		$ 54,966,923	$ 61,075,145
Pre-tax gross gains from sales of securities	18,030		569,551	533,545
Pre-tax gross losses from sales of securities			$ (152,618)	$ (157,035)

XML

Note 2 - Amortized Cost and Fair Value of Securities by Contractual Maturity (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Callable Securities [Member] | US States and Political Subdivisions Debt Securities [Member]
Amortized Cost	$ 153,065,142
Fair Value	156,170,970
US States and Political Subdivisions Debt Securities [Member] | Callable Securities [Member]
Amortized Cost	13,844,290
Fair Value	14,296,378
US States and Political Subdivisions Debt Securities [Member]
	284,759,115	$ 254,641,285
US Government-sponsored Enterprises Debt Securities [Member] | Callable Securities [Member]
Amortized Cost	23,616,009
Fair Value	23,718,901
Residential Mortgage Backed Securities [Member]
Amortized Cost	114,990,076
Fair Value	116,765,510
Other Securities [Member]
	1,050,000	1,050,000
Amortized Cost	1,684,787
Fair Value	2,134,009
Callable Securities [Member]
	37,460,299
	38,015,279
Due in one year or less	4,972,563
Due in one year or less	4,993,619
Due after one year through five years	20,232,407
Due after one year through five years	20,415,409
Due after five years	255,140,562
Due after five years	260,400,087
	280,345,532
	285,809,115	$ 255,691,285
Due in one year or less	2,133,829
Due in one year or less	2,141,186
Due after one year through five years	54,381,038
Due after one year through five years	55,669,426
Due after five years	53,017,064
Due after five years	53,903,653
	109,531,931
	111,714,265
	226,206,794
	$ 230,613,784

XML

Note 2 - Amortized Cost and Fair Values of General Obligation Bonds by Issuer's State (Details)	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
General Obligation Bonds [Member] | Iowa [Member]
Number of issuers	13	15
Amortized cost	$ 19,441,057	$ 19,974,939
Fair value	19,965,926	20,247,108
Average exposure per issuer (fair value)	$ 1,535,840	$ 1,349,807
General Obligation Bonds [Member] | Missouri [Member]
Number of issuers	12	12
Amortized cost	$ 7,349,505	$ 7,924,800
Fair value	7,519,474	7,986,856
Average exposure per issuer (fair value)	$ 626,623	$ 665,571
General Obligation Bonds [Member] | Illinois [Member]
Number of issuers	9	9
Amortized cost	$ 10,127,747	$ 10,928,700
Fair value	10,527,337	11,264,348
Average exposure per issuer (fair value)	$ 1,169,704	$ 1,251,594
General Obligation Bonds [Member] | North Dakota [Member]
Number of issuers	6	5
Amortized cost	$ 16,208,320	$ 10,890,000
Fair value	16,872,189	11,050,235
Average exposure per issuer (fair value)	$ 2,812,032	$ 2,210,047
General Obligation Bonds [Member] | Other States [Member]
Number of issuers	37	41
Amortized cost	$ 13,738,908	$ 16,965,393
Fair value	14,133,036	17,229,485
Average exposure per issuer (fair value)	$ 381,974	$ 420,231
General Obligation Bonds [Member]
Number of issuers	77	82
Amortized cost	$ 66,865,537	$ 66,683,832
Fair value	69,017,962	67,778,032
Average exposure per issuer (fair value)	$ 896,337	$ 826,561
Revenue Bonds [Member] | Iowa [Member]
Number of issuers	26	26
Amortized cost	$ 73,076,794	$ 70,773,660
Fair value	74,933,480	71,659,410
Average exposure per issuer (fair value)	$ 2,882,057	$ 2,756,131
Revenue Bonds [Member] | Missouri [Member]
Number of issuers	41	41
Amortized cost	$ 89,033,470	$ 78,593,590
Fair value	90,174,695	79,015,378
Average exposure per issuer (fair value)	$ 2,199,383	$ 1,927,204
Revenue Bonds [Member] | North Dakota [Member]
Number of issuers	4
Amortized cost	$ 8,161,630
Fair value	8,359,661
Average exposure per issuer (fair value)	$ 2,089,915
Revenue Bonds [Member] | Indiana [Member]
Number of issuers	18	17
Amortized cost	$ 40,009,789	$ 40,018,381
Fair value	40,615,477	40,210,320
Average exposure per issuer (fair value)	$ 2,256,415	$ 2,365,313
Revenue Bonds [Member] | Kansas [Member]
Number of issuers	5	3
Amortized cost	$ 13,172,824	$ 11,748,679
Fair value	13,315,662	11,821,055
Average exposure per issuer (fair value)	$ 2,663,132	$ 3,940,352
Revenue Bonds [Member] | Other States [Member]
Number of issuers	5	5
Amortized cost	$ 11,438,676	$ 11,570,998
Fair value	11,734,995	11,735,678
Average exposure per issuer (fair value)	$ 2,346,999	$ 2,347,136
Revenue Bonds [Member]
Number of issuers	99	92
Amortized cost	$ 234,893,183	$ 212,705,308
Fair value	239,133,970	214,441,841
Average exposure per issuer (fair value)	$ 2,415,495	$ 2,330,890

XML

Note 3 - Loans Leases Receivable (Details Textual)	3 Months Ended			6 Months Ended
	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Residential Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 113,031			$ 113,031		$ 119,305
Residential Portfolio Segment [Member]
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	1,558,500			1,558,500		565,850
Financing Receivable, Recorded Investment, Nonaccrual Status	1,191,215			1,191,215		1,016,743
Commercial Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	767,261			767,261		1,164,423
Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	4,776,046			4,776,046		5,791,975
Commercial Real Estate Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,422,722			1,422,722		193,804
Finance Leases Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	34,850			34,850		42,098
Finance Leases Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,733,029			1,733,029		1,701,341
Consumer Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	13,273			13,273		14,027
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	318,145			318,145		109,117
Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	2,351,137			$ 2,351,137		1,533,657
Nonaccrual [Member]
Financing Receivable, Modifications, Number of Contracts				1	0
Financing Receivable, Modifications, Post-Modification Recorded Investment				$ 1,233,740
Losses on Residual Value	0		$ 0	0	$ 0
Financing Receivable, Recorded Investment, Nonaccrual Status	10,736,811			10,736,811		10,648,211
Financing Receivable, Modifications, Recorded Investment	$ 4,104,114			$ 4,104,114		$ 2,587,413
Financing Receivable, Modifications, Number of Contracts			0	7	12
Financing Receivable, Modifications, Post-Modification Recorded Investment		$ 2,299,450		$ 1,842,858
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0		0	0	0

XML

Note 3 - Composition of the Loan Lease Portfolio (Details) - USD ($)		Jun. 30, 2016		Mar. 31, 2016	Dec. 31, 2015		Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Commercial Portfolio Segment [Member]
Loans		$ 706,261,186			$ 648,159,892
Less allowance		(10,724,506)		$ (10,991,979)	(10,484,080)		$ (10,020,866)	$ (9,093,650)	$ (8,750,317)
		706,261,186			648,159,892
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans		258,688,445			252,523,164
		258,688,445			252,523,164
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans		48,948,825			49,083,844
		48,948,825			49,083,844
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans		476,741,839			422,761,757
		476,741,839			422,761,757
Commercial Real Estate Portfolio Segment [Member]
Loans		784,379,109			724,368,765
Less allowance		(10,987,062)		(10,090,567)	(9,375,117)		(9,929,656)	(8,838,204)	(8,353,386)
		784,379,109			724,368,765
Finance Leases Portfolio Segment [Member]
Loans	[1],[2]	169,927,481			173,655,605
Plus deferred loan/lease origination costs, net of fees	[1]	6,339,871			6,594,582
Loans and Leases Receivable, Gross	[1]	176,267,352			180,250,187
Less allowance		(3,226,194)	[1]	(3,287,231)	(3,395,088)	[1]	(3,352,303)	(3,310,973)	(3,442,915)
	[1]	173,041,158			176,855,099
Net minimum lease payments to be received	[1]	190,107,687			195,476,230
Estimated unguaranteed residual values of leased assets	[1]	1,085,154			1,165,706
Unearned lease/residual income	[1]	(21,265,360)			(22,986,331)
	[1],[2]	169,927,481			173,655,605
Residential Portfolio Segment [Member]
Loans	[2],[3]	180,482,005			170,432,530
Less allowance		(2,014,987)		(1,836,622)	(1,790,150)		(1,720,135)	(1,597,754)	(1,525,952)
	[2],[3]	180,482,005			170,432,530
Consumer Portfolio Segment [Member]
Loans	[2]	73,658,172			73,669,493
Less allowance		(1,144,741)		(1,189,043)	(1,096,471)		(1,123,040)	(1,042,693)	(1,001,795)
	[2]	73,658,172			73,669,493
Loans		1,914,707,953			1,790,286,285
Plus deferred loan/lease origination costs, net of fees		8,065,444			7,736,390
Loans and Leases Receivable, Gross		1,922,773,397			1,798,022,675
Less allowance		(28,097,490)		$ (27,395,442)	(26,140,906)		$ (26,146,000)	$ (23,883,274)	$ (23,074,365)
		1,894,675,907			1,771,881,769
		$ 1,914,707,953			$ 1,790,286,285

[1] Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal. There were no losses related to residual values for the three and six months ended June 30, 2016 and 2015.

[2] Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing TDRs.

[3] Includes residential real estate loans held for sale totaling $1,558,500 and $565,850 as of June 30, 2016, and December 31, 2015, respectively.

XML

Note 3 - Aging of the Loan Lease Portfolio (Details) - USD ($)		Jun. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due		$ 400,711	$ 1,636,860
Commercial Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due		13,225,353	5,816
Commercial Portfolio Segment [Member]
Current		687,859,076	640,725,241
Nonaccrual Loans/Leases		4,776,046	5,791,975
Loans		706,261,186	648,159,892
Commercial Real Estate Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Past Due		141,571	182,949
Commercial Real Estate Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Past Due		530,808	614,732
Commercial Real Estate Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Past Due		1,384,387	219,383
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Current		257,503,344	251,612,752
Nonaccrual Loans/Leases		1,043,530	727,463
Loans		258,688,445	252,523,164
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Current		48,759,844	48,890,040
Nonaccrual Loans/Leases		188,981	193,804
Loans		48,948,825	49,083,844
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Current		473,256,279	420,819,874
Nonaccrual Loans/Leases		1,485,865	1,107,768
Loans		476,741,839	422,761,757
Commercial Real Estate Portfolio Segment [Member]
Loans		784,379,109	724,368,765
Finance Leases Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due		1,036,764	1,490,818
Finance Leases Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due		1,230,235	439,314
Finance Leases Portfolio Segment [Member]
Current		165,927,453	170,021,289
Nonaccrual Loans/Leases		1,733,029	1,701,341
Loans	[1],[2]	169,927,481	173,655,605
Accruing Past Due 90 Days or More			2,843
Residential Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due			2,800,589
Residential Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due			200,080
Residential Portfolio Segment [Member]
Current		179,075,229	166,415,118
Nonaccrual Loans/Leases		1,191,215	1,016,743
Loans	[2],[3]	180,482,005	170,432,530
Accruing Past Due 90 Days or More
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due		446,971	412,052
Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due		59,391	14,127
Consumer Portfolio Segment [Member]
Current		72,831,797	73,134,197
Nonaccrual Loans/Leases		318,145	109,117
Loans	[2]	73,658,172	73,669,493
Accruing Past Due 90 Days or More		1,868
Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due		$ 2,556,825	$ 7,138,000
Past due as a percentage of total loan/lease portfolio		0.13%	0.40%
Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due		$ 16,114,927	$ 878,720
Past due as a percentage of total loan/lease portfolio		0.84%	0.05%
Current		$ 1,885,213,022	$ 1,771,618,511
Nonaccrual Loans/Leases		10,736,811	10,648,211
Loans		1,914,707,953	1,790,286,285
Accruing Past Due 90 Days or More		$ 86,368	$ 2,843
Current as a percentage of total loan/lease portfolio		98.46%	98.96%
Accruing past due 90 days or more as a percentage of total loan/lease portfolio		0.00%	0.00%
Nonaccrual Loans/Leases as a percentage of total loan/lease portfolio		0.56%	0.59%
Loans and leases as a percentage of total loan/lease portfolio		100.00%	100.00%

[1] Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal. There were no losses related to residual values for the three and six months ended June 30, 2016 and 2015.

[2] Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing TDRs.

[3] Includes residential real estate loans held for sale totaling $1,558,500 and $565,850 as of June 30, 2016, and December 31, 2015, respectively.

XML

Note 3 - Nonperforming Loans Leases (Details) - USD ($)		Jun. 30, 2016		Dec. 31, 2015
Commercial Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases		4,776,046	[1]	5,791,975	[2]
Accruing TDRs		171,108		173,087
Loans		$ 4,947,154		$ 5,965,062
Loans and leases as a percentage of total loan/lease portfolio		39.34%		50.96%
Commercial Portfolio Segment [Member]
Nonaccrual Loans/Leases		$ 4,776,046		$ 5,791,975
Loans		706,261,186		648,159,892
Commercial Real Estate Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases		1,043,530	[1]	727,463	[2]
Accruing TDRs
Loans		$ 1,043,530		$ 727,463
Loans and leases as a percentage of total loan/lease portfolio		8.30%		6.22%
Commercial Real Estate Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Construction Loans [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases		188,981	[1]	193,804	[2]
Accruing TDRs
Loans		$ 188,981		$ 193,804
Loans and leases as a percentage of total loan/lease portfolio		1.50%		1.66%
Commercial Real Estate Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Accruing Past Due 90 Days or More		$ 84,500
Nonaccrual Loans/Leases		1,485,865	[1]	1,107,768	[2]
Accruing TDRs
Loans		$ 1,570,365		$ 1,107,768
Loans and leases as a percentage of total loan/lease portfolio		12.49%		9.46%
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Nonaccrual Loans/Leases		$ 1,043,530		$ 727,463
Loans		258,688,445		252,523,164
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Nonaccrual Loans/Leases		188,981		193,804
Loans		48,948,825		49,083,844
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Nonaccrual Loans/Leases		1,485,865		1,107,768
Loans		476,741,839		422,761,757
Commercial Real Estate Portfolio Segment [Member]
Loans		784,379,109		724,368,765
Finance Leases Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More				2,843
Nonaccrual Loans/Leases		1,733,029	[1]	1,701,341	[2]
Accruing TDRs		1,059,919
Loans	[3]	$ 2,792,948		$ 1,704,184
Loans and leases as a percentage of total loan/lease portfolio		22.21%		14.56%
Finance Leases Portfolio Segment [Member]
Accruing Past Due 90 Days or More				$ 2,843
Nonaccrual Loans/Leases		$ 1,733,029		1,701,341
Loans	[3],[4]	169,927,481		173,655,605
Residential Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases		1,191,215	[1]	1,016,743	[2]
Accruing TDRs		393,799		402,044
Loans	[3]	$ 1,585,014		$ 1,418,787
Loans and leases as a percentage of total loan/lease portfolio		12.60%		12.12%
Residential Portfolio Segment [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases		1,191,215		$ 1,016,743
Loans	[3],[5]	180,482,005		170,432,530
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More		1,868
Nonaccrual Loans/Leases		318,145	[1]	109,117	[2]
Accruing TDRs		128,151		478,625
Loans	[3]	$ 448,164		$ 587,742
Loans and leases as a percentage of total loan/lease portfolio		3.56%		5.02%
Consumer Portfolio Segment [Member]
Accruing Past Due 90 Days or More		$ 1,868
Nonaccrual Loans/Leases		318,145		$ 109,117
Loans	[3]	73,658,172		73,669,493
Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More		86,368		2,843
Nonaccrual Loans/Leases		10,736,811	[1]	10,648,211	[2]
Accruing TDRs		1,752,977		1,053,756
Loans		$ 12,576,156		$ 11,704,810
Loans and leases as a percentage of total loan/lease portfolio		100.00%		100.00%
Accruing Past Due 90 Days or More		$ 86,368		$ 2,843
Nonaccrual Loans/Leases		10,736,811		10,648,211
Accruing TDRs		4,104,114		2,587,413
Loans		$ 1,914,707,953		$ 1,790,286,285
Loans and leases as a percentage of total loan/lease portfolio		100.00%		100.00%

[1] Nonaccrual loans/leases included $2,351,137 of TDRs, including $767,261 in C&I loans, $1,422,722 in CRE loans, $34,850 in direct financing leases, $113,031 in residential real estate loans, and $13,273 in installment loans.

[2] Nonaccrual loans/leases included $1,533,657 of TDRs, including $1,164,423 in C&I loans, $193,804 in CRE loans, $42,098 in direct financing leases, $119,305 in residential real estate loans, and $14,027 in installment loans.

[3] Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing TDRs.

[4] Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal. There were no losses related to residual values for the three and six months ended June 30, 2016 and 2015.

[5] Includes residential real estate loans held for sale totaling $1,558,500 and $565,850 as of June 30, 2016, and December 31, 2015, respectively.

XML

Note 3 - Allowance for Estimated Losses on Loans Leases (Details) - USD ($)		3 Months Ended			6 Months Ended
		Jun. 30, 2016		Jun. 30, 2015	Jun. 30, 2016		Jun. 30, 2015	Jun. 30, 2016		Dec. 31, 2015
Commercial Portfolio Segment [Member]
Balance		$ 10,991,979		$ 9,093,650	$ 10,484,080		$ 8,750,317
Provisions (credits) charged to expense		(241,600)		604,731	498,231		993,372
Loans/leases charged off		(48,983)		(45,337)	(292,549)		(245,638)
Recoveries on loans/leases previously charged off		23,110		367,822	34,744		522,815
Balance		10,724,506		10,020,866	10,724,506		10,020,866
Allowance for impaired loans/leases								$ 1,242,430		$ 2,592,270
Allowance for nonimpaired loans/leases								9,482,076		7,891,810
Less allowance for estimated losses on loans/leases		10,991,979		9,093,650	10,724,506		10,020,866	10,724,506		10,484,080
Impaired loans/leases								4,454,638		5,286,482
Nonimpaired loans/leases								701,806,548		642,873,410
Loans								$ 706,261,186		$ 648,159,892
Allowance as a percentage of impaired loans/leases								27.89%		49.04%
Allowance as a percentage of nonimpaired loans/leases								1.35%		1.23%
Total allowance as a percentage of total loans/leases								1.52%		1.62%
Commercial Real Estate Portfolio Segment [Member]
Balance		10,090,567		8,838,204	9,375,117		8,353,386
Provisions (credits) charged to expense		919,596		1,081,753	1,635,046		1,917,647
Loans/leases charged off		(23,101)			(23,101)		(351,076)
Recoveries on loans/leases previously charged off				9,699			9,699
Balance		10,987,062		9,929,656	10,987,062		9,929,656
Allowance for impaired loans/leases								$ 123,079		$ 76,934
Allowance for nonimpaired loans/leases								10,863,983		9,298,183
Less allowance for estimated losses on loans/leases		10,090,567		8,838,204	10,987,062		9,929,656	10,987,062		9,375,117
Impaired loans/leases								2,616,301		2,029,035
Nonimpaired loans/leases								781,762,808		722,339,730
Loans								$ 784,379,109		$ 724,368,765
Allowance as a percentage of impaired loans/leases								4.70%		3.79%
Allowance as a percentage of nonimpaired loans/leases								1.39%		1.29%
Total allowance as a percentage of total loans/leases								1.40%		1.29%
Finance Leases Portfolio Segment [Member]
Balance		3,287,231		3,310,973	3,395,088	[1]	3,442,915
Provisions (credits) charged to expense		460,997		473,982	939,242		877,434
Loans/leases charged off		(534,716)		(465,098)	(1,135,654)		(1,012,590)
Recoveries on loans/leases previously charged off		12,682		32,446	27,518		44,544
Balance		3,226,194	[1]	3,352,303	3,226,194	[1]	3,352,303
Allowance for impaired loans/leases								$ 555,819		$ 306,193
Allowance for nonimpaired loans/leases								2,670,375		3,088,895
Less allowance for estimated losses on loans/leases		3,226,194	[1]	3,310,973	3,226,194	[1]	3,352,303	3,226,194	[1]	3,395,088	[1]
Impaired loans/leases								2,678,521		1,701,341
Nonimpaired loans/leases								167,248,960		171,954,264
Loans	[1],[2]							$ 169,927,481		$ 173,655,605
Allowance as a percentage of impaired loans/leases								20.75%		18.00%
Allowance as a percentage of nonimpaired loans/leases								1.60%		1.80%
Total allowance as a percentage of total loans/leases								1.90%		1.96%
Residential Portfolio Segment [Member]
Balance		1,836,622		1,597,754	1,790,150		1,525,952
Provisions (credits) charged to expense		194,988		122,381	257,644		194,183
Loans/leases charged off		(17,523)			(33,707)
Recoveries on loans/leases previously charged off		900			900
Balance		2,014,987		1,720,135	2,014,987		1,720,135
Allowance for impaired loans/leases								$ 198,020		$ 185,801
Allowance for nonimpaired loans/leases								1,816,967		1,604,349
Less allowance for estimated losses on loans/leases		1,836,622		1,597,754	2,014,987		1,720,135	2,014,987		1,790,150
Impaired loans/leases								1,585,013		1,418,787
Nonimpaired loans/leases								178,896,992		169,013,743
Loans	[2],[3]							$ 180,482,005		$ 170,432,530
Allowance as a percentage of impaired loans/leases								12.49%		13.10%
Allowance as a percentage of nonimpaired loans/leases								1.02%		0.95%
Total allowance as a percentage of total loans/leases								1.12%		1.05%
Consumer Portfolio Segment [Member]
Balance		1,189,043		1,042,693	1,096,471		1,001,795
Provisions (credits) charged to expense		(136,131)		65,818	(59,328)		76,485
Loans/leases charged off		(9,892)		(25,255)	(17,488)		(34,049)
Recoveries on loans/leases previously charged off		101,721		39,784	125,086		78,809
Balance		1,144,741		1,123,040	1,144,741		1,123,040
Allowance for impaired loans/leases								$ 138,490		$ 143,089
Allowance for nonimpaired loans/leases								1,006,251		953,382
Less allowance for estimated losses on loans/leases		1,189,043		1,042,693	1,144,741		1,123,040	1,144,741		1,096,471
Impaired loans/leases								446,297		587,742
Nonimpaired loans/leases								73,211,875		73,081,751
Loans	[2]							$ 73,658,172		$ 73,669,493
Allowance as a percentage of impaired loans/leases								31.03%		24.35%
Allowance as a percentage of nonimpaired loans/leases								1.37%		1.30%
Total allowance as a percentage of total loans/leases								1.55%		1.49%
Balance		27,395,442		23,883,274	26,140,906		23,074,365
Provisions (credits) charged to expense		1,197,850		2,348,665	3,270,835		4,059,121
Loans/leases charged off		(634,215)		(535,690)	(1,502,499)		(1,643,353)
Recoveries on loans/leases previously charged off		138,413		449,751	188,248		655,867
Balance		28,097,490		26,146,000	28,097,490		26,146,000
Allowance for impaired loans/leases								$ 2,257,838		$ 3,304,287
Allowance for nonimpaired loans/leases								25,839,652		22,836,619
Less allowance for estimated losses on loans/leases		$ 28,097,490		$ 23,883,274	$ 28,097,490		$ 26,146,000	28,097,490		26,140,906
Impaired loans/leases								11,780,770		11,023,387
Nonimpaired loans/leases								1,902,927,183		1,779,262,898
Loans								$ 1,914,707,953		$ 1,790,286,285
Allowance as a percentage of impaired loans/leases								19.17%		29.98%
Allowance as a percentage of nonimpaired loans/leases								1.36%		1.28%
Total allowance as a percentage of total loans/leases								1.46%		1.45%

[1] Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal. There were no losses related to residual values for the three and six months ended June 30, 2016 and 2015.

[2] Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing TDRs.

[3] Includes residential real estate loans held for sale totaling $1,558,500 and $565,850 as of June 30, 2016, and December 31, 2015, respectively.

XML

Note 3 - Impaired Loans Leases (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member]
Recorded investment with no specific allowance recorded	$ 639,448		$ 639,448	$ 234,636
Unpaid principal balance with no specific allowance recorded	780,390		780,390	346,072
Average recorded investment with no specific allowance recorded	2,524,056	$ 320,187	3,197,308
Interest income recognized with no specific allowance recorded	3,519	1,860	5,343
Interest income recognized for cash payments received with no specific allowance recorded	3,519	1,860	5,343
Recorded investment with no specific allowance recorded	639,448		639,448	234,636
Unpaid principal balance with no specific allowance recorded	780,390		780,390	346,072
Average recorded investment with no specific allowance recorded	2,524,056	320,187	3,197,308
Interest income recognized with no specific allowance recorded	3,519	1,860	5,343
Interest income recognized for cash payments received with no specific allowance recorded	3,519	1,860	5,343
Recorded investment with specific allowance recorded	3,815,190		3,815,190	5,051,846
Unpaid principal balance with specific allowance recorded	3,819,029		3,819,029	5,055,685
Related allowance	1,242,430		1,242,430	2,592,270
Average recorded investment with specific allowance recorded	2,292,483	4,912,917	1,775,881
Recorded investment	4,454,638		4,454,638	5,286,482
Unpaid principal balance	4,599,419		4,599,419	5,401,757
Average recorded investment	4,816,539	5,233,104	4,973,189
Interest income recognized	3,519	1,860	5,343
Interest income recognized for cash payments received	3,519	1,860	5,343
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Recorded investment with no specific allowance recorded				256,761
Unpaid principal balance with no specific allowance recorded	93,774		93,774	350,535
Average recorded investment with no specific allowance recorded	121,444	550,374	163,216
Recorded investment with no specific allowance recorded				256,761
Unpaid principal balance with no specific allowance recorded	93,774		93,774	350,535
Average recorded investment with no specific allowance recorded	121,444	550,374	163,216
Recorded investment				256,761
Unpaid principal balance	93,774		93,774	350,535
Average recorded investment	121,444	550,374	163,216
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Unpaid principal balance with no specific allowance recorded				228,818
Average recorded investment with no specific allowance recorded		222,926
Unpaid principal balance with no specific allowance recorded				228,818
Average recorded investment with no specific allowance recorded		222,926
Recorded investment with specific allowance recorded	188,981		188,981	193,804
Unpaid principal balance with specific allowance recorded	200,981		200,981	205,804
Related allowance	79,911		79,911	76,934
Average recorded investment with specific allowance recorded	190,174	139,250	191,384
Recorded investment	188,981		188,981	193,804
Unpaid principal balance	200,981		200,981	434,622
Average recorded investment	190,174	362,176	191,384
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Recorded investment with no specific allowance recorded	1,516,555		1,516,555	1,578,470
Unpaid principal balance with no specific allowance recorded	1,516,555		1,516,555	1,578,470
Average recorded investment with no specific allowance recorded	1,311,540	2,474,448	1,243,616
Recorded investment with no specific allowance recorded	1,516,555		1,516,555	1,578,470
Unpaid principal balance with no specific allowance recorded	1,516,555		1,516,555	1,578,470
Average recorded investment with no specific allowance recorded	1,311,540	2,474,448	1,243,616
Recorded investment with specific allowance recorded	910,765		910,765
Unpaid principal balance with specific allowance recorded	910,765		910,765
Related allowance	43,168		43,168
Average recorded investment with specific allowance recorded	658,220	1,657,506	595,714
Recorded investment	2,427,320		2,427,320	1,578,470
Unpaid principal balance	2,427,320		2,427,320	1,578,470
Average recorded investment	1,969,760	4,131,954	1,839,330
Finance Leases Portfolio Segment [Member]
Recorded investment with no specific allowance recorded	1,652,661		1,652,661	871,884
Unpaid principal balance with no specific allowance recorded	1,652,661		1,652,661	871,884
Average recorded investment with no specific allowance recorded	1,510,987	582,316	1,398,419
Interest income recognized with no specific allowance recorded	19,897	1,878	31,500
Interest income recognized for cash payments received with no specific allowance recorded	19,897	1,878	31,500
Recorded investment with no specific allowance recorded	1,652,661		1,652,661	871,884
Unpaid principal balance with no specific allowance recorded	1,652,661		1,652,661	871,884
Average recorded investment with no specific allowance recorded	1,510,987	582,316	1,398,419
Interest income recognized with no specific allowance recorded	19,897	1,878	31,500
Interest income recognized for cash payments received with no specific allowance recorded	19,897	1,878	31,500
Recorded investment with specific allowance recorded	1,025,860		1,025,860	829,457
Unpaid principal balance with specific allowance recorded	1,025,860		1,025,860	829,457
Related allowance	555,819		555,819	306,193
Average recorded investment with specific allowance recorded	995,446	561,840	866,749
Recorded investment	2,678,521		2,678,521	1,701,341
Unpaid principal balance	2,678,521		2,678,521	1,701,341
Average recorded investment	2,506,433	1,144,156	2,265,168
Interest income recognized	19,897	1,878	31,500
Interest income recognized for cash payments received	19,897	1,878	31,500
Residential Portfolio Segment [Member]
Recorded investment with no specific allowance recorded	672,061		672,061	613,486
Unpaid principal balance with no specific allowance recorded	711,262		711,262	649,064
Average recorded investment with no specific allowance recorded	621,354	969,580	627,715
Interest income recognized with no specific allowance recorded	1,013		2,051
Interest income recognized for cash payments received with no specific allowance recorded	1,013		2,051
Recorded investment with no specific allowance recorded	672,061		672,061	613,486
Unpaid principal balance with no specific allowance recorded	711,262		711,262	649,064
Average recorded investment with no specific allowance recorded	621,354	969,580	627,715
Interest income recognized with no specific allowance recorded	1,013		2,051
Interest income recognized for cash payments received with no specific allowance recorded	1,013		2,051
Recorded investment with specific allowance recorded	912,952		912,952	805,301
Unpaid principal balance with specific allowance recorded	948,530		948,530	805,301
Related allowance	198,020		198,020	185,801
Average recorded investment with specific allowance recorded	919,271	869,073	872,297
Interest income recognized with specific allowance recorded	1,948	1,967	3,906
Interest income recognized for cash payments received with specific allowance recorded	1,948	1,967	3,906
Recorded investment	1,585,013		1,585,013	1,418,787
Unpaid principal balance	1,659,792		1,659,792	1,454,365
Average recorded investment	1,540,625	1,838,653	1,500,012
Interest income recognized	2,961	1,967	5,957
Interest income recognized for cash payments received	2,961	1,967	5,957
Consumer Portfolio Segment [Member]
Recorded investment with no specific allowance recorded	231,730		231,730	377,304
Unpaid principal balance with no specific allowance recorded	231,730		231,730	377,304
Average recorded investment with no specific allowance recorded	229,207	705,750	281,740
Interest income recognized with no specific allowance recorded		475
Interest income recognized for cash payments received with no specific allowance recorded		475
Recorded investment with no specific allowance recorded	231,730		231,730	377,304
Unpaid principal balance with no specific allowance recorded	231,730		231,730	377,304
Average recorded investment with no specific allowance recorded	229,207	705,750	281,740
Interest income recognized with no specific allowance recorded		475
Interest income recognized for cash payments received with no specific allowance recorded		475
Recorded investment with specific allowance recorded	214,567		214,567	210,438
Unpaid principal balance with specific allowance recorded	214,567		214,567	210,438
Related allowance	138,490		138,490	143,089
Average recorded investment with specific allowance recorded	218,742	608,277	212,806
Interest income recognized with specific allowance recorded	1,468	2,252	2,968
Interest income recognized for cash payments received with specific allowance recorded	1,468	2,252	2,968
Recorded investment	446,297		446,297	587,742
Unpaid principal balance	446,297		446,297	587,742
Average recorded investment	447,949	1,314,027	494,546
Interest income recognized	1,468	2,727	2,968
Interest income recognized for cash payments received	1,468	2,727	2,968
Recorded investment with no specific allowance recorded	4,712,455		4,712,455	3,932,541
Unpaid principal balance with no specific allowance recorded	4,986,372		4,986,372	4,402,147
Average recorded investment with no specific allowance recorded	6,318,588	5,825,581	6,912,014
Interest income recognized with no specific allowance recorded	24,429	4,213	38,894
Interest income recognized for cash payments received with no specific allowance recorded	24,429	4,213	38,894
Recorded investment with no specific allowance recorded	4,712,455		4,712,455	3,932,541
Unpaid principal balance with no specific allowance recorded	4,986,372		4,986,372	4,402,147
Average recorded investment with no specific allowance recorded	6,318,588	5,825,581	6,912,014
Interest income recognized with no specific allowance recorded	24,429	4,213	38,894
Interest income recognized for cash payments received with no specific allowance recorded	24,429	4,213	38,894
Recorded investment with specific allowance recorded	7,068,315		7,068,315	7,090,846
Unpaid principal balance with specific allowance recorded	7,119,732		7,119,732	7,106,685
Related allowance	2,257,838		2,257,838	3,304,287
Average recorded investment with specific allowance recorded	5,274,336	8,748,863	4,514,831
Interest income recognized with specific allowance recorded	3,416	4,219	6,874
Interest income recognized for cash payments received with specific allowance recorded	3,416	4,219	6,874
Recorded investment	11,780,770		11,780,770	11,023,387
Unpaid principal balance	12,106,104		12,106,104	$ 11,508,832
Average recorded investment	11,592,924	14,574,444	11,426,845
Interest income recognized	27,845	8,432	45,768
Interest income recognized for cash payments received	$ 27,845	$ 8,432	$ 45,768

XML

Note 3 - Loans By Internally Assigned Risk Rating (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member] | Pass [Member]
Loans	$ 678,225,838	$ 616,200,797
Commercial Portfolio Segment [Member] | Special Mention [Member]
Loans	6,381,586	18,031,845
Commercial Portfolio Segment [Member] | Substandard [Member]
Loans	21,653,762	13,927,250
Commercial Portfolio Segment [Member]
Loans	706,261,186	648,159,892
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans	247,914,237	238,119,608
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Construction Loans [Member]
Loans	44,672,408	46,929,876
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans	458,961,143	406,027,442
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans	2,114,505	8,630,658
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member] | Construction Loans [Member]
Loans	1,780,000	1,780,000
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans	5,954,788	8,846,286
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans	8,659,703	5,772,898
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Construction Loans [Member]
Loans	2,496,417	373,968
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans	11,825,908	7,888,029
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans	258,688,445	252,523,164
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans	48,948,825	49,083,844
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans	476,741,839	422,761,757
Commercial Real Estate Portfolio Segment [Member]
Loans	784,379,109	724,368,765
Commercial and Commercial Real Estate Portfolio Segments [Member] | Pass [Member]
Loans	$ 1,429,773,626	$ 1,307,277,723
As a % of Total	95.92%	95.24%
Commercial and Commercial Real Estate Portfolio Segments [Member] | Special Mention [Member]
Loans	$ 16,230,879	$ 37,288,789
As a % of Total	1.09%	2.72%
Commercial and Commercial Real Estate Portfolio Segments [Member] | Substandard [Member]
Loans	$ 44,635,790	$ 27,962,145
As a % of Total	2.99%	2.04%
Commercial and Commercial Real Estate Portfolio Segments [Member]
Loans	$ 1,490,640,295	$ 1,372,528,657
As a % of Total	100.00%	100.00%
Loans	$ 1,914,707,953	$ 1,790,286,285

XML

Note 3 - Leases By Delinquency Status (Details) - USD ($)		Jun. 30, 2016	Dec. 31, 2015
Finance Leases Portfolio Segment [Member] | Performing Financial Instruments [Member]
Loans	[1]	$ 167,134,533	$ 171,951,421
Finance Leases Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Loans	[1]	2,792,948	1,704,184
Finance Leases Portfolio Segment [Member]
Loans	[1],[2]	169,927,481	173,655,605
Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Loans	[1]	178,896,991	169,013,743
Residential Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Loans	[1]	1,585,014	1,418,787
Residential Portfolio Segment [Member]
Loans	[1],[3]	180,482,005	170,432,530
Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Loans	[1]	73,210,008	73,081,751
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Loans	[1]	448,164	587,742
Consumer Portfolio Segment [Member]
Loans	[1]	73,658,172	73,669,493
Lease Residential and Consumer Portfolio Segments [Member] | Performing Financial Instruments [Member]
Loans	[1]	$ 419,241,532	$ 414,046,915
As a % of Total	[1]	98.86%	99.11%
Lease Residential and Consumer Portfolio Segments [Member] | Nonperforming Financial Instruments [Member]
Loans	[1]	$ 4,826,126	$ 3,710,713
As a % of Total	[1]	1.14%	0.89%
Lease Residential and Consumer Portfolio Segments [Member]
Loans	[1]	$ 424,067,658	$ 417,757,628
As a % of Total	[1]	100.00%	100.00%
Nonperforming Financial Instruments [Member]
Loans		$ 12,576,156	$ 11,704,810
Loans		$ 1,914,707,953	$ 1,790,286,285

[1] Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing TDRs.

[2] Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal. There were no losses related to residual values for the three and six months ended June 30, 2016 and 2015.

[3] Includes residential real estate loans held for sale totaling $1,558,500 and $565,850 as of June 30, 2016, and December 31, 2015, respectively.

XML

Note 3 - Troubled Debt Restructurings (Details)	3 Months Ended		6 Months Ended
	Mar. 31, 2016 USD ($)	Jun. 30, 2015	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)
Extended Maturity [Member] | Commercial Portfolio Segment [Member]
Number of Loans / Leases			1	1
Pre-Modification Recorded Investment			$ 52,286	$ 52,286
Post-Modification Recorded Investment			$ 52,286	$ 52,286
Extended Maturity [Member] | Finance Leases Portfolio Segment [Member]
Number of Loans / Leases				4
Pre-Modification Recorded Investment				$ 410,653
Post-Modification Recorded Investment				$ 410,653
Extended Maturity [Member]
Number of Loans / Leases			1	5
Pre-Modification Recorded Investment			$ 52,286	$ 462,939
Post-Modification Recorded Investment			$ 52,286	$ 462,939
Payment Deferral [Member] | Commercial Portfolio Segment [Member]
Number of Loans / Leases			1	1
Pre-Modification Recorded Investment			$ 62,140	$ 62,140
Post-Modification Recorded Investment			$ 62,140	$ 62,140
Payment Deferral [Member] | Finance Leases Portfolio Segment [Member]
Number of Loans / Leases			4	5
Pre-Modification Recorded Investment			$ 494,692	$ 540,631
Post-Modification Recorded Investment			$ 494,692	$ 540,631
Payment Deferral [Member]
Number of Loans / Leases			5	6
Pre-Modification Recorded Investment			$ 556,832	$ 602,771
Post-Modification Recorded Investment			$ 556,832	$ 602,771
Interest Rate Below Market Reduction [Member] | Commercial Real Estate Portfolio Segment [Member]
Number of Loans / Leases			1	1
Pre-Modification Recorded Investment			$ 1,233,740	$ 1,233,740
Post-Modification Recorded Investment			$ 1,233,740	$ 1,233,740
Interest Rate Below Market Reduction [Member]
Number of Loans / Leases			1	1
Pre-Modification Recorded Investment			$ 1,233,740	$ 1,233,740
Post-Modification Recorded Investment			$ 1,233,740	$ 1,233,740
Number of Loans / Leases		0	7	12
Pre-Modification Recorded Investment	$ 2,299,450		$ 1,842,858
Post-Modification Recorded Investment	$ 2,299,450		$ 1,842,858

XML

Note 4 - Borrowings (Details Textual) - USD ($)	3 Months Ended	6 Months Ended		12 Months Ended
	Mar. 31, 2016	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Junior Subordinated Debt [Member] | Note Payable to QCR Holdings Capital Trust IV [Member]
Extinguishment of Debt, Amount	$ 5,100,000
Gain (Loss) on Extinguishment of Debt	$ 1,200,000
Debt Instrument, Interest Rate, Effective Percentage	2.42%
Junior Subordinated Debt [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	1.80%
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member]
Debt Instrument, Basis Spread on Variable Rate		2.50%		2.50%
Whole sale Repurchase Agreements [Member]
Repayments of Other Debt	$ 10,000,000
Wholesale Repurchase Agreement and FHLB Advances [Member]
Gain (Loss) on Extinguishment of Debt	$ (1,300,000)
Debt Instrument, Interest Rate, Stated Percentage	3.92%
Extinguished Debt Weighted Average Term	2 years 62 days
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year	$ 10,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Two	10,000,000
Revolving Credit Facility [Member]
Debt Instrument, Interest Rate, Effective Percentage		3.13%		3.10%
Line of Credit Facility, Maximum Borrowing Capacity		$ 10,000,000		$ 40,000,000
Long-term Line of Credit		0		$ 0
Repayments of Other Debt		10,759,000	$ 29,177,000
Repayments of Federal Home Loan Bank Borrowings	$ 10,000,000	10,524,197	$ 81,192,185
Short-term Debt, Weighted Average Interest Rate	0.50%
Notes Payable		$ 30,000,000
Debt Instrument, Term		5 years

XML

Note 5 - Earnings Per Share - Basic and Diluted (Details) - USD ($)		3 Months Ended				6 Months Ended
		Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2016	Jun. 30, 2015
Net income (loss)		$ 6,676,467	$ 6,373,489	$ (523,818)	$ 4,177,889	$ 13,049,956	$ 3,654,071
Basic EPS (in dollars per share)		$ 0.54		$ (0.05)		$ 1.08	$ 0.41
Diluted EPS (in dollars per share)		$ 0.53		$ (0.05)		$ 1.07	$ 0.40
Weighted average common shares outstanding (in shares)	[1]	12,335,077		9,946,744		12,064,349	8,961,327
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan** (in shares)	[2]	181,397				170,863	137,370
Weighted average common and common equivalent shares outstanding** (in shares)		12,516,474		9,946,744		12,235,212	9,098,697

[1] The increase in the weighted average common shares outstanding was primarily due to the common stock issuance discussed in Note 9 to the Consolidated Financial Statements.

[2] In accordance with U.S. GAAP, the common equivalent shares are not considered in the calculation of diluted EPS in periods when the numerator is a net loss.

XML

Note 6 - Assets Measured at Fair Value on a Recurring and Nonrecurring Basis (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Impaired Loans Leases [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value
Impaired Loans Leases [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value
Impaired Loans Leases [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair value	5,669,757	4,545,966
Impaired Loans Leases [Member] | Fair Value, Measurements, Recurring [Member]
Fair value	5,669,757	4,545,966
Impaired Loans Leases [Member]
Fair value	5,669,757	4,545,966
Other Real Estate Owned [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value
Other Real Estate Owned [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value
Other Real Estate Owned [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair value	6,673,430	7,722,711
Other Real Estate Owned [Member] | Fair Value, Measurements, Recurring [Member]
Fair value	6,673,430	7,722,711
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available for sale, at fair value
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale, at fair value	88,321,448	213,537,379
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available for sale, at fair value
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member]
Securities available for sale, at fair value	88,321,448	213,537,379
Fair Value, Measurements, Recurring [Member] | Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available for sale, at fair value
Fair Value, Measurements, Recurring [Member] | Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale, at fair value	116,765,510	80,670,135
Fair Value, Measurements, Recurring [Member] | Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available for sale, at fair value
Fair Value, Measurements, Recurring [Member] | Residential Mortgage Backed Securities [Member]
Securities available for sale, at fair value	116,765,510	80,670,135
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available for sale, at fair value
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale, at fair value	23,392,817	27,578,588
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available for sale, at fair value
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, at fair value	23,392,817	27,578,588
Fair Value, Measurements, Recurring [Member] | Other Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available for sale, at fair value	1,353	411
Fair Value, Measurements, Recurring [Member] | Other Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale, at fair value	2,132,656	1,648,469
Fair Value, Measurements, Recurring [Member] | Other Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available for sale, at fair value
Fair Value, Measurements, Recurring [Member] | Other Securities [Member]
Securities available for sale, at fair value	2,134,009	1,648,880
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Interest Rate Cap [Member]
Interest rate caps
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Interest Rate Swap [Member]
Interest rate caps
Derivative Liabilites
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Fair Value	1,353	411
Liabilities Fair Value
Fair value
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Cap [Member]
Interest rate caps	270,806	856,024
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]
Interest rate caps	9,867,856	3,044,525
Derivative Liabilites	9,867,856	3,044,525
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Fair Value	240,751,093	327,335,120
Liabilities Fair Value	9,867,856	3,044,525
Fair value
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Interest Rate Cap [Member]
Interest rate caps
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Interest Rate Swap [Member]
Interest rate caps
Derivative Liabilites
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Fair Value
Liabilities Fair Value
Fair value	12,343,187	12,268,677
Fair Value, Measurements, Recurring [Member] | Interest Rate Cap [Member]
Interest rate caps	270,806	856,024
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap [Member]
Interest rate caps	9,867,856	3,044,525
Derivative Liabilites	9,867,856	3,044,525
Fair Value, Measurements, Recurring [Member]
Assets Fair Value	240,752,446	327,335,531
Liabilities Fair Value	9,867,856	3,044,525
Fair value	12,343,187	12,268,677
US Government Agencies Debt Securities [Member]
Securities available for sale, at fair value	88,321,448	213,537,379
Residential Mortgage Backed Securities [Member]
Securities available for sale, at fair value	116,765,510	80,670,135
US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, at fair value	23,392,817	27,578,588
Other Securities [Member]
Securities available for sale, at fair value	2,134,009	1,648,880
Fair Value, Inputs, Level 2 [Member] | Interest Rate Cap [Member]
Interest rate caps	270,806	856,024
Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]
Interest rate caps	9,867,856	3,044,525
Fair Value, Inputs, Level 2 [Member]
Securities available for sale, at fair value	240,481,640	323,434,982
Fair Value, Inputs, Level 3 [Member] | Interest Rate Swap [Member]
Derivative Liabilites
Securities available for sale, at fair value	$ 230,613,784	$ 323,434,982

XML

Note 6 - Quantitative Information About Level Fair Value Measurements (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Impaired Loans Leases [Member] | Minimum [Member]
Appraisal adjustments	10.00%
Impaired Loans Leases [Member] | Maximum [Member]
Appraisal adjustments	50.00%
Impaired Loans Leases [Member]
Fair value	$ 5,669,757	$ 4,545,966
Valuation technique	Appraisal of collateral
Other Securities [Member] | Minimum [Member]
Appraisal adjustments	0.00%
Other Securities [Member] | Maximum [Member]
Appraisal adjustments	35.00%
Other Securities [Member]
Fair value	$ 6,673,430	$ 7,722,711
Valuation technique	Appraisal of collateral

XML

Note 6 - Carrying Values and Estimated Fair Values of Financial Assets and Liabilities (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 1 [Member]
Cash and due from banks	$ 49,581,154	$ 41,742,321
Fair Value, Inputs, Level 2 [Member] | Interest-bearing Deposits [Member]
Interest-bearing deposits at financial institutions	47,607,304	36,313,965
Interest-bearing deposits at financial institutions	47,607,304	36,313,965
Fair Value, Inputs, Level 2 [Member] | Interest Rate Cap [Member]
Interest rate caps	270,806	856,024
Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]
Interest rate caps	9,867,856	3,044,525
Fair Value, Inputs, Level 2 [Member] | Non-maturity Deposits [Member]
Deposits	1,554,404,101	1,516,599,081
Deposits	1,554,404,101	1,516,599,081
Fair Value, Inputs, Level 2 [Member] | Time Deposits [Member]
Deposits	419,189,683	364,067,103
Deposits	420,107,000	364,192,000
Fair Value, Inputs, Level 2 [Member]
Federal funds sold	20,825,000	19,850,000
Federal funds sold	20,825,000	19,850,000
HTM	280,345,532	253,674,159
	285,809,115	255,691,285
AFS	240,481,640	323,434,982
Loans/leases receivable, net	1,889,426,132	1,767,672,541
Loans/leases receivable, net	1,897,957,225	1,764,178,772
Short-term borrowings	51,561,748	144,662,716
Short-term borrowings	51,561,748	144,662,716
FHLB advances	196,900,000	151,000,000
FHLB advances	198,373,000	153,143,000
Other borrowings	100,000,000	110,000,000
Other borrowings	106,692,000	116,061,000
Junior subordinated debentures	33,412,643	38,499,052
Junior subordinated debentures	24,627,848	27,642,093
Fair Value, Inputs, Level 3 [Member]
Loans/leases receivable, net	5,249,775	4,209,228
Loans/leases receivable, net	5,669,757	4,545,966
Cash and due from banks	49,581,154	41,742,321
Federal funds sold	20,825,000	19,850,000
Interest-bearing deposits at financial institutions	47,607,304	36,313,965
HTM	280,345,532
	285,809,115	255,691,285
AFS	230,613,784	323,434,982
Deposits	1,973,593,784	1,880,666,184
Other borrowings	$ 100,000,000	$ 110,000,000

XML

Note 7 - Selected Financial Information on the Company's Business Segments (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Operating Segments [Member] | Commercial Banking Segment [Member] | Quad City Bank and Trust Company [Member]
Total revenue	$ 14,162,914	$ 12,930,582	$ 27,679,846	$ 25,732,000
Net interest income	11,207,759	9,741,899	22,169,206	19,016,937
Net income (loss)	3,898,343	229,577	6,730,039	2,792,190
Assets	1,390,025,232	1,299,556,911	1,390,025,232	1,299,556,911
Provision for loan/lease losses	747,850	1,673,665	1,970,835	2,556,121
Goodwill	3,222,688	3,222,688	3,222,688	3,222,688
Core deposit intangible
Operating Segments [Member] | Commercial Banking Segment [Member] | Cedar Rapids Bank and Trust [Member]
Total revenue	10,438,092	8,777,259	21,277,313	18,302,906
Net interest income	7,135,725	6,522,511	14,160,713	12,880,808
Net income (loss)	3,144,986	(316,567)	6,079,717	1,751,739
Assets	904,367,275	860,403,296	904,367,275	860,403,296
Provision for loan/lease losses	150,000	500,000	700,000	1,100,000
Goodwill
Core deposit intangible	1,371,653	1,571,165	1,371,653	1,571,165
Operating Segments [Member] | Commercial Banking Segment [Member] | Rockford Bank and Trust [Member]
Total revenue	3,918,629	3,627,740	7,712,876	7,169,330
Net interest income	2,945,417	2,684,330	5,857,391	5,318,412
Net income (loss)	772,169	529,567	1,389,954	1,048,224
Assets	402,157,473	363,049,771	402,157,473	363,049,771
Provision for loan/lease losses	300,000	175,000	600,000	403,000
Goodwill
Core deposit intangible
Operating Segments [Member] | Wealth Management Segment [Member]
Total revenue	2,204,821	2,269,609	4,439,113	4,613,047
Net interest income
Net income (loss)	386,202	438,530	833,972	897,860
Assets
Provision for loan/lease losses
Goodwill
Core deposit intangible
Operating Segments [Member] | Other Segments [Member]
Total revenue	8,244,495	718,325	15,104,270	6,334,768
Net interest income	(280,088)	(457,904)	(580,975)	(943,104)
Net income (loss)	6,676,467	(523,818)	13,049,955	3,654,071
Assets	328,099,700	268,874,722	328,099,700	268,874,722
Provision for loan/lease losses
Goodwill
Core deposit intangible
Intersegment Eliminations [Member]
Total revenue	(8,293,266)	(811,669)	(15,213,201)	(6,516,697)
Net interest income
Net income (loss)	(8,201,700)	(881,107)	(15,033,681)	(6,490,013)
Assets	(341,215,392)	(248,915,854)	(341,215,392)	(248,915,854)
Provision for loan/lease losses
Goodwill
Core deposit intangible
Total revenue	30,675,685	27,511,846	61,000,217	55,635,354
Net interest income	21,008,813	18,490,836	41,606,335	36,273,053
Net income (loss)	6,676,467	(523,818)	13,049,956	3,654,071
Assets	2,683,434,288	2,542,968,846	2,683,434,288	2,542,968,846	$ 2,593,198,275
Provision for loan/lease losses	1,197,850	2,348,665	3,270,835	4,059,121
Goodwill	3,222,688	3,222,688	3,222,688	3,222,688	3,222,688
Core deposit intangible	$ 1,371,653	$ 1,571,165	$ 1,371,653	$ 1,571,165	$ 1,471,409

XML

Note 8 - Regulatory Capital Requirements (Details Textual)	12 Months Ended
	Dec. 31, 2015
Annual Phase in Percentage Of Capital Conservation Buffer	0.625%
Capital Required for Capital Adequacy to Risk Weighted Assets with Capital Conservation Buffer Fully Phased in	10.50%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets with Capital Conservation Buffer Fully Phased in	8.50%
Common Equity Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets with Capital Conservation Buffer Fully Phased in	7.00%

XML

Note 8 - Capital Requirements (Details) - USD ($)		Jun. 30, 2016	Dec. 31, 2015
Parent Company [Member]
Total risk-based capital, actual, amount		$ 322,562	$ 280,273
Total risk-based capital, actual, ratio		14.29%	13.11%
Total risk-based capital for capital adequacy purposes, amount	[1]	$ 194,670	$ 170,969
Total risk-based capital for capital adequacy purposes, ratio	[1]	8.625%	8.00%
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 225,705	$ 213,711
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio		10.00%	10.00%
Tier 1 risk-based capital, actual, amount		$ 294,265	$ 253,891
Tier 1 risk-based capital, actual, ratio		13.04%	11.88%
Tier 1 risk-based capital for capital adequacy purposes, amount	[1]	$ 149,529	$ 128,227
Tier 1 risk-based capital for capital adequacy purposes, ratio	[1]	6.625%	6.00%
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 180,564	$ 170,969
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio		8.00%	8.00%
Tier 1 leverage, actual, amount		$ 294,265	$ 253,891
Tier 1 leverage, actual, ratio		11.18%	9.75%
Tier 1 leverage for capital adequacy purposes, amount	[1]	$ 105,263	$ 104,163
Tier 1 leverage for capital adequacy purposes, ratio	[1]	4.00%	4.00%
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount		$ 131,578	$ 130,203
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio		5.00%	5.00%
Common equity Tier 1, actual, amount		$ 264,422	$ 220,800
Common equity Tier 1, actual ratio		11.72%	10.33%
Common equity Tier 1 capital adequacy purposes, amount	[1]	$ 115,674	$ 96,170
Common equity Tier 1 capital adequacy purposes, ratio	[1]	5.125%	4.50%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount		$ 146,708	$ 138,912
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio		6.50%	6.50%
Quad City Bank and Trust Company [Member]
Total risk-based capital, actual, amount		$ 143,744	$ 135,477
Total risk-based capital, actual, ratio		12.76%	12.50%
Total risk-based capital for capital adequacy purposes, amount	[1]	$ 97,131	$ 86,726
Total risk-based capital for capital adequacy purposes, ratio	[1]	8.625%	8.00%
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 112,616	$ 108,407
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio		10.00%	10.00%
Tier 1 risk-based capital, actual, amount		$ 131,003	$ 123,498
Tier 1 risk-based capital, actual, ratio		11.63%	11.39%
Tier 1 risk-based capital for capital adequacy purposes, amount	[1]	$ 74,608	$ 65,044
Tier 1 risk-based capital for capital adequacy purposes, ratio	[1]	6.625%	6.00%
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 90,093	$ 86,726
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio		8.00%	8.00%
Tier 1 leverage, actual, amount		$ 131,003	$ 123,498
Tier 1 leverage, actual, ratio		9.42%	8.87%
Tier 1 leverage for capital adequacy purposes, amount	[1]	$ 55,618	$ 55,718
Tier 1 leverage for capital adequacy purposes, ratio	[1]	4.00%	4.00%
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount		$ 69,523	$ 69,648
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio		5.00%	5.00%
Common equity Tier 1, actual, amount		$ 131,003	$ 123,498
Common equity Tier 1, actual ratio		11.63%	11.39%
Common equity Tier 1 capital adequacy purposes, amount	[1]	$ 57,716	$ 48,783
Common equity Tier 1 capital adequacy purposes, ratio	[1]	5.125%	4.50%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount		$ 73,200	$ 70,465
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio		6.50%	6.50%
Cedar Rapids Bank and Trust [Member]
Total risk-based capital, actual, amount		$ 110,325	$ 105,285
Total risk-based capital, actual, ratio		13.82%	14.39%
Total risk-based capital for capital adequacy purposes, amount	[1]	$ 68,850	$ 58,537
Total risk-based capital for capital adequacy purposes, ratio	[1]	8.625%	8.00%
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 79,826	$ 73,172
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio		10.00%	10.00%
Tier 1 risk-based capital, actual, amount		$ 100,331	$ 96,118
Tier 1 risk-based capital, actual, ratio		12.57%	13.14%
Tier 1 risk-based capital for capital adequacy purposes, amount	[1]	$ 52,885	$ 43,903
Tier 1 risk-based capital for capital adequacy purposes, ratio	[1]	6.625%	6.00%
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 63,861	$ 58,537
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio		8.00%	8.00%
Tier 1 leverage, actual, amount		$ 100,331	$ 96,118
Tier 1 leverage, actual, ratio		11.20%	10.96%
Tier 1 leverage for capital adequacy purposes, amount	[1]	$ 35,830	$ 35,079
Tier 1 leverage for capital adequacy purposes, ratio	[1]	4.00%	4.00%
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount		$ 44,788	$ 43,848
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio		5.00%	5.00%
Common equity Tier 1, actual, amount		$ 100,331	$ 96,118
Common equity Tier 1, actual ratio		12.57%	13.14%
Common equity Tier 1 capital adequacy purposes, amount	[1]	$ 40,911	$ 32,927
Common equity Tier 1 capital adequacy purposes, ratio	[1]	5.125%	4.50%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount		$ 51,887	$ 47,562
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio		6.50%	6.50%
Rockford Bank and Trust [Member]
Total risk-based capital, actual, amount		$ 40,108	$ 38,544
Total risk-based capital, actual, ratio		11.87%	11.96%
Total risk-based capital for capital adequacy purposes, amount	[1]	$ 29,154	$ 25,772
Total risk-based capital for capital adequacy purposes, ratio	[1]	8.625%	8.00%
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 33,801	$ 32,216
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio		10.00%	10.00%
Tier 1 risk-based capital, actual, amount		$ 35,877	$ 34,514
Tier 1 risk-based capital, actual, ratio		10.61%	10.71%
Tier 1 risk-based capital for capital adequacy purposes, amount	[1]	$ 22,393	$ 19,329
Tier 1 risk-based capital for capital adequacy purposes, ratio	[1]	6.625%	6.00%
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 27,041	$ 25,772
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio		8.00%	8.00%
Tier 1 leverage, actual, amount		$ 35,877	$ 34,514
Tier 1 leverage, actual, ratio		9.50%	9.59%
Tier 1 leverage for capital adequacy purposes, amount	[1]	$ 15,099	$ 14,401
Tier 1 leverage for capital adequacy purposes, ratio	[1]	4.00%	4.00%
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount		$ 18,874	$ 18,001
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio		5.00%	5.00%
Common equity Tier 1, actual, amount		$ 35,877	$ 34,514
Common equity Tier 1, actual ratio		10.61%	10.71%
Common equity Tier 1 capital adequacy purposes, amount	[1]	$ 17,323	$ 14,497
Common equity Tier 1 capital adequacy purposes, ratio	[1]	5.125%	4.50%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount		$ 21,971	$ 20,940
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio		6.50%	6.50%

[1] The minimums under Basel III phase in higher by .625% (the capital conservation buffer) annually until 2019. The fully phased-in minimums are 10.5% (Total risk-based capital), 8.5% (Tier 1 risk-based capital), and 7.0% (Common equity Tier 1). At December 31, 2015, the New Basel III minimums mirrored the minimums required for capital adequacy purposes. The first phase-in of the Basel III capital conservation buffer occured in 2016.

XML

Note 9 - Acquisition of Community State Bank and Common Stock Offering (Details Textual)		3 Months Ended			6 Months Ended
	May 23, 2016 USD ($) $ / shares shares	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
CSB [Member]
Number of Branches			10		10
Assets			$ 571,000,000		$ 571,000,000
Loans and Leases Receivable, Gross			433,000,000		433,000,000
Deposits			481,000,000		481,000,000
CSB [Member] | Scenario, Forecast [Member]
Business Acquisition, Percentage of Voting Interests Acquired		100.00%
Business Combination, Consideration Transferred		$ 80,000,000
Dividends, Cash		15,000,000
CSB [Member]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares	1,215,000
Business Acquisition, Share Price | $ / shares	$ 24.75
Business Combination, Acquisition Related Costs			355,000
Scenario, Forecast [Member] | Revolving Credit Facility [Member]
Proceeds from Lines of Credit		$ 5,000,000
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity			10,000,000		10,000,000		$ 40,000,000
Assets			2,683,434,288	$ 2,542,968,846	2,683,434,288	$ 2,542,968,846	2,593,198,275
Loans and Leases Receivable, Gross			1,922,773,397		1,922,773,397		1,798,022,675
Deposits			1,973,593,784		1,973,593,784		$ 1,880,666,184
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	$ 30,000,000
Notes Payable			30,000,000		30,000,000
Business Combination, Acquisition Related Costs			$ 354,969		$ 354,969