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 September 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 7th 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 November 2, 2016, the Registrant had outstanding 13,075,670 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 September 30, 2016 and December 31, 2015	3
		Consolidated Statements of Income For the Three Months Ended September 30, 2016 and 2015	4
		Consolidated Statements of Income For the Nine Months Ended September 30, 2016 and 2015	5
		Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended September 30, 2016 and 2015	6
		Consolidated Statements of Changes in Stockholders' Equity For the Three and Nine Months Ended September 30, 2016 and 2015	7
		Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2016 and 2015	9
		Notes to Consolidated Financial Statements
		Note 1. Summary of Significant Accounting Policies	11
		Note 2. Investment Securities	13
		Note 3. Loans/Leases Receivable	18
		Note 4. Borrowings	28
		Note 5. Earnings Per Share	30
		Note 6. Fair Value	31
		Note 7. Business Segment Information	34
		Note 8. Regulatory Capital Requirements	36
		Note 9. Acquisition of Community State Bank and Common Stock Offering	38
		Note 10. Related Party Transactions	41
	Item 2        Management's Discussion and Analysis of Financial Condition and Results of Operations
		Introduction	42
		General	42
		Executive Overview	43
		Long-Term Financial Goals	44
		Strategic Developments	45
		GAAP to Non-GAAP Reconciliations	47
		Net Interest Income (Tax Equivalent Basis)	49
		Critical Accounting Policies	54

1

		Results of Operations
		Interest Income	55
		Interest Expense	55
		Provision for Loan/Lease Losses	56
		Noninterest Income	57
		Noninterest Expense	61
		Income Taxes	63
		Financial Condition	64
		Investment Securities	64
		Loans/Leases	66
		Allowance for Estimated Losses on Loans/Leases	68
		Nonperforming Assets	70
		Deposits	71
		Borrowings	71
		Stockholders' Equity	73
		Liquidity and Capital Resources	73
		Special Note Concerning Forward-Looking Statements	76
	Item 3        Quantitative and Qualitative Disclosures About Market Risk		77
	Item 4        Controls and Procedures		79
Part II	OTHER INFORMATION
	Item 1        Legal Proceedings		80
	Item 1A     Risk Factors		80
	Item 2        Unregistered Sales of Equity Securities and Use of Proceeds		80
	Item 3        Defaults upon Senior Securities		80
	Item 4        Mine Safety Disclosures		80
	Item 5        Other Information		80
	Item 6        Exhibits		81
Signatures			82

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 September 30, 2016 and December 31, 2015

	September 30,			December 31,
	2016			2015
ASSETS
Cash and due from banks	$	61,213,134		$	41,742,321
Federal funds sold		21,022,000			19,850,000
Interest-bearing deposits at financial institutions		75,025,417			36,313,965
Securities held to maturity, at amortized cost		306,740,174			253,674,159
Securities available for sale, at fair value		258,190,081			323,434,982
Total securities		564,930,255			577,109,141
Loans receivable held for sale		1,377,875			565,850
Loans/leases receivable held for investment		2,359,222,637			1,797,456,825
Gross loans/leases receivable		2,360,600,512			1,798,022,675
Less allowance for estimated losses on loans/leases		(28,826,835	)		(26,140,906	)
Net loans/leases receivable		2,331,773,677			1,771,881,769
Bank-owned life insurance		56,810,035			55,485,655
Premises and equipment, net		59,484,141			37,350,352
Restricted investment securities		14,999,425			14,835,925
Other real estate owned, net		5,807,603			7,150,658
Goodwill		13,631,626			3,222,688
Core deposit intangible		7,613,593			1,471,409
Other assets		68,675,203			26,784,392
Total assets	$	3,280,986,109		$	2,593,198,275
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$	764,614,548		$	615,292,211
Interest-bearing		1,830,298,205			1,265,373,973
Total deposits		2,594,912,753			1,880,666,184
Short-term borrowings		60,015,417			144,662,716
Federal Home Loan Bank advances		138,642,529			151,000,000
Other borrowings		80,000,000			110,000,000
Junior subordinated debentures		33,446,578			38,499,052
Other liabilities		93,111,672			42,484,573
Total liabilities		3,000,128,949			2,367,312,525
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value; shares authorized 250,000		-			-
September 2016 and December 2015 - No shares issued or outstanding
Common stock, $1 par value; shares authorized 20,000,000		13,075,307			11,761,083
September 2016 - 13,075,307 shares issued and outstanding
December 2015 - 11,761,083 shares issued and outstanding
Additional paid-in capital		155,950,678			123,282,851
Retained earnings		110,610,144			92,965,645
Accumulated other comprehensive income (loss):
Securities available for sale		2,379,584			(1,324,408	)
Interest rate cap derivatives		(1,158,553	)		(799,421	)
Total stockholders' equity		280,857,160			225,885,750
Total liabilities and stockholders' equity	$	3,280,986,109		$	2,593,198,275

See Notes to Consolidated Financial Statements (Unaudited)

3

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended September 30,

	2016		2015
Interest and dividend income:
Loans/leases, including fees	$	23,001,107	$	19,278,335
Securities:
Taxable		1,057,204		1,639,534
Nontaxable		2,510,169		2,021,804
Interest-bearing deposits at financial institutions		103,216		66,604
Restricted investment securities		132,047		127,172
Federal funds sold		12,992		7,663
Total interest and dividend income		26,816,735		23,141,112
Interest expense:
Deposits		1,472,031		1,140,419
Short-term borrowings		12,541		63,815
Federal Home Loan Bank advances		420,570		537,473
Other borrowings		974,634		944,903
Junior subordinated debentures		306,182		316,976
Total interest expense		3,185,958		3,003,586
Net interest income		23,630,777		20,137,526
Provision for loan/lease losses		1,607,986		1,635,263
Net interest income after provision for loan/lease losses		22,022,791		18,502,263
Noninterest income:
Trust department fees		1,518,600		1,531,964
Investment advisory and management fees		765,977		782,442
Deposit service fees		1,150,869		984,631
Gains on sales of residential real estate loans, net		144,105		84,609
Gains on sales of government guaranteed portions of loans, net		218,785		759,668
Swap fee income		333,772		62,700
Securities gains, net		4,251,773		56,580
Earnings on bank-owned life insurance		450,251		407,018
Debit card fees		475,182		333,144
Correspondent banking fees		253,823		310,759
Participation service fees on commercial loan participations		237,456		201,822
Fee income from early termination of leases		95,129		89,332
Credit card issuing fees		137,620		133,904
Lawsuit award		-		387,045
Other		390,059		277,068
Total noninterest income		10,423,401		6,402,686
Noninterest expense:
Salaries and employee benefits		11,202,460		10,583,361
Occupancy and equipment expense		2,086,331		1,863,648
Professional and data processing fees		1,931,329		1,742,268
Acquisition costs		2,046,036		-
FDIC insurance, other insurance and regulatory fees		582,835		702,136
Loan/lease expense		102,678		90,415
Net cost of operations of other real estate		133,055		(1,117,671	)
Advertising and marketing		547,768		460,411
Postage and communications		237,569		220,895
Stationery and supplies		167,887		144,967
Bank service charges		415,401		392,352
Losses on debt extinguishment, net		4,137,310		-
Correspondent banking expense		205,998		176,977
Other		683,826		687,332
Total noninterest expense		24,480,483		15,947,091
Net income before income taxes		7,965,709		8,957,858
Federal and state income tax expense		1,858,208		2,468,871
Net income	$	6,107,501	$	6,488,987
Basic earnings per common share	$	0.47	$	0.55
Diluted earnings per common share	$	0.46	$	0.55
Weighted average common shares outstanding		13,066,777		11,713,993
Weighted average common and common equivalent shares outstanding		13,269,703		11,875,930
Cash dividends declared per common share	$	0.04	$	-

See Notes to Consolidated Financial Statements (Unaudited)

4

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Nine Months Ended September 30,

	2016		2015
Interest and dividend income:
Loans/leases, including fees	$	62,939,656	$	55,528,578
Securities:
Taxable		3,605,948		5,317,794
Nontaxable		7,028,387		5,642,692
Interest-bearing deposits at financial institutions		225,775		208,323
Restricted investment securities		396,157		377,651
Federal funds sold		36,155		18,416
Total interest and dividend income		74,232,078		67,093,454
Interest expense:
Deposits		4,106,227		3,296,351
Short-term borrowings		73,672		181,084
Federal Home Loan Bank advances		1,278,207		2,982,834
Other borrowings		2,624,154		3,285,231
Junior subordinated debentures		912,706		937,375
Total interest expense		8,994,966		10,682,875
Net interest income		65,237,112		56,410,579
Provision for loan/lease losses		4,878,821		5,694,384
Net interest income after provision for loan/lease losses		60,358,291		50,716,195
Noninterest income:
Trust department fees		4,606,590		4,676,535
Investment advisory and management fees		2,117,100		2,250,918
Deposit service fees		3,028,758		2,790,456
Gains on sales of residential real estate loans, net		288,904		266,284
Gains on sales of government guaranteed portions of loans, net		2,701,203		899,987
Swap fee income		1,358,312		1,182,630
Securities gains, net		4,628,283		473,513
Earnings on bank-owned life insurance		1,324,380		1,318,909
Debit card fees		1,126,581		912,030
Correspondent banking fees		800,892		915,759
Participation service fees on commercial loan participations		694,175		647,598
Fee income from early termination of leases		172,922		250,892
Credit card issuing fees		413,348		403,713
Lawsuit award		-		387,045
Other		746,827		775,142
Total noninterest income		24,008,275		18,151,411
Noninterest expense:
Salaries and employee benefits		32,920,840		32,709,765
Occupancy and equipment expense		5,797,875		5,507,533
Professional and data processing fees		4,921,064		4,683,480
Acquisition costs		2,401,005		-
FDIC insurance, other insurance and regulatory fees		1,866,804		2,151,756
Loan/lease expense		419,846		601,888
Net cost of operations of other real estate		513,149		(1,088,696	)
Advertising and marketing		1,367,478		1,368,152
Postage and communications		711,226		683,993
Stationery and supplies		490,682		424,330
Bank service charges		1,246,682		1,088,806
Losses on debt extinguishment, net		4,220,507		6,894,185
Correspondent banking expense		564,763		517,770
Other		1,736,813		1,775,637
Total noninterest expense		59,178,734		57,318,599
Net income before income taxes		25,187,832		11,549,007
Federal and state income tax expense		6,030,375		1,405,949
Net income	$	19,157,457	$	10,143,058
Basic earnings per common share	$	1.55	$	1.03
Diluted earnings per common share	$	1.52	$	1.01
Weighted average common shares outstanding		12,398,491		9,878,882
Weighted average common and common equivalent shares outstanding		12,580,042		10,024,441
Cash dividends declared per common share	$	0.12	$	0.04

See Notes to Consolidated Financial Statements (Unaudited)

5

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three and Nine Months Ended September 30, 2016 and 2015

	Three Months Ended September 30,
	2016			2015
Net income	$	6,107,501		$	6,488,987
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale:
Unrealized holding gains arising during the period before tax		3,682,514			4,155,252
Less reclassification adjustment for gains included in net income before tax		4,251,773			56,580
		(569,259	)		4,098,672
Unrealized losses on interest rate cap derivatives:
Unrealized holding losses arising during the period before tax		(16,327	)		(419,219	)
Less reclassification adjustment for ineffectiveness and caplet amortization before tax		33,246			20,099
		(49,573	)		(439,318	)
Other comprehensive income (loss), before tax		(618,832	)		3,659,354
Tax expense (benefit)		(257,648	)		1,402,871
Other comprehensive income (loss), net of tax		(361,184	)		2,256,483
Comprehensive income	$	5,746,317		$	8,745,470

	Nine Months Ended September 30,
	2016			2015
Net income	$	19,157,457		$	10,143,058
Other comprehensive income:
Unrealized gains on securities available for sale:
Unrealized holding gains arising during the period before tax		10,628,032			4,598,599
Less reclassification adjustment for gains included in net income before tax		4,628,283			473,513
		5,999,749			4,125,086
Unrealized losses on interest rate cap derivatives:
Unrealized holding losses arising during the period before tax		(552,510	)		(672,169	)
Less reclassification adjustment for ineffectiveness and caplet amortization before tax		82,281			30,562
		(634,791	)		(702,731	)
Other comprehensive income, before tax		5,364,958			3,422,355
Tax expense		2,020,098			1,323,928
Other comprehensive income, net of tax		3,344,860			2,098,427
Comprehensive income	$	22,502,317		$	12,241,485

See Notes to Consolidated Financial Statements (Unaudited)

6

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

Three and Nine Months Ended September 30, 2016 and 2015

										Accumulated
				Additional						Other
	Common			Paid-In			Retained			Comprehensive
	Stock			Capital			Earnings			Income (Loss)			Total
Balance December 31, 2015	$	11,761,083		$	123,282,851		$	92,965,645		$	(2,123,829	)	$	225,885,750
Net income		-			-			6,373,489			-			6,373,489
Other comprehensive income, net of tax		-			-			-			2,525,411			2,525,411
Common cash dividends declared, $0.04 per share		-			-			(470,873	)		-			(470,873	)
Proceeds from issuance of 5,054 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan		5,054			94,560			-			-			99,614
Proceeds from issuance of 46,020 shares of common stock as a result of stock options exercised		46,020			729,473			-			-			775,493
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 15,689 shares of common stock in connection with stock options exercised		(15,689	)		(346,834	)								(362,523	)
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 acquisition of noncontrolling interest in m2 Lease Funds		-			2,132,415			-			-			2,132,415
Stock compensation expense		-			187,569									187,569
Tax benefit of nonqualified stock options exercised		-			87,858			-			-			87,858
Restricted stock awards		(500	)		500			-			-			-
Balance June 30, 2016	$	13,057,368		$	155,453,781		$	105,024,027		$	1,582,215		$	275,117,391
Net income		-			-			6,107,501			-			6,107,501
Other comprehensive loss, net of tax		-			-			-			(361,184	)		(361,184	)
Common cash dividends declared, $0.04 per share		-			-			(521,384	)		-			(521,384	)
Proceeds from issuance of 4,085 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan		4,085			85,217			-			-			89,302
Proceeds from issuance of 14,692 shares of common stock as a result of stock options exercised		14,692			173,890			-			-			188,582
Stock compensation expense		-			190,211			-			-			190,211
Tax benefit of nonqualified stock options exercised		-			72,694			-			-			72,694
Exchange of 838 shares of common stock in connection with stock options exercised		(838	)		(25,115	)		-			-			(25,953	)
Balance September 30, 2016	$	13,075,307		$	155,950,678		$	110,610,144		$	1,221,031		$	280,857,160

(Continued)

7

QCR HOLDINGS, INC. AND SUBSIDIARIES

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

Three and Nine Months Ended September 30, 2016 and 2015

										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
Net income		-			-			6,488,987			-			-			6,488,987
Other comprehensive income, net of tax		-			-			-			2,256,483			-			2,256,483
Adjustment to common cash dividends declared		-			-			(1,393	)		-			-			(1,393	)
Proceeds from issuance of 5,394 shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan		5,394			81,309			-			-			-			86,703
Proceeds from issuance of 24,711 shares of common stock as a result of stock options exercised		24,711			318,732			-			-			-			343,443
Tax benefit of nonqualified stock options exercised		-			39,632			-			-			-			39,632
Retirement of treasury stock, 121,246 shares of common stock		(121,246	)		(580,886	)		(904,378	)		-			1,606,510			-
Stock compensation expense		-			203,967			-			-			-			203,967
Restricted stock awards		228			(228	)		-			-			-			-
Balance September 30, 2015	$	11,728,911		$	122,573,712		$	86,649,405		$	163,211		$	-		$	221,115,239

See Notes to Consolidated Financial Statements (Unaudited)

8

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended September 30, 2016 and 2015

	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	19,157,457		$	10,143,058
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,422,257			2,283,558
Provision for loan/lease losses		4,878,821			5,694,384
Stock-based compensation expense		760,541			758,493
Deferred compensation expense accrued		910,439			767,292
Losses (gains) on other real estate owned, net		130,280			(1,204,016	)
Amortization of premiums on securities, net		968,553			756,876
Securities gains, net		(4,628,283	)		(473,513	)
Loans originated for sale		(57,160,485	)		(29,968,289	)
Proceeds on sales of loans		59,838,717			31,154,335
Gains on sales of residential real estate loans		(288,904	)		(266,284	)
Gains on sales of government guaranteed portions of loans		(2,701,203	)		(899,987	)
Losses on debt extinguishment, net		4,220,507			6,894,185
Amortization of core deposit intangible		210,469			149,634
Accretion of acquisition fair value adjustments, net		(690,379	)		(334,990	)
Increase in cash value of bank-owned life insurance		(1,324,380	)		(1,318,909	)
Increase in other assets		(2,480,461	)		(5,211,555	)
Decrease in other liabilities		1,614,477			4,269,482
Net cash provided by operating activities	$	25,838,423		$	23,193,754
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in federal funds sold		(474,000	)		12,450,000
Net decrease (increase) in interest-bearing deposits at financial institutions		(23,981,295	)		3,059,051
Proceeds from sales of other real estate owned		1,913,775			6,774,151
Activity in securities portfolio:
Purchases		(111,622,489	)		(200,249,686	)
Calls, maturities and redemptions		109,421,584			187,029,003
Paydowns		21,939,878			11,859,406
Sales		87,772,898			65,889,838
Activity in restricted investment securities:
Purchases		(25,700	)		(2,806,650	)
Redemptions		1,375,100			3,435,200
Net increase in loans/leases originated and held for investment		(144,605,204	)		(129,356,790	)
Purchase of premises and equipment		(3,871,166	)		(4,327,671	)
Net cash paid for Community State Bank acquisition		(69,905,355	)		-
Net cash used in investing activities	$	(132,061,974	)	$	(46,244,148	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts		227,918,002			175,656,866
Net decrease in short-term borrowings		(84,647,299	)		(100,787,458	)
Activity in Federal Home Loan Bank advances:
Term advances		-			5,000,000
Calls and maturities		(19,000,000	)		(24,000,000	)
Net change in short-term and overnight advances		1,300,000			24,000,000
Prepayments		(10,524,197	)		(81,192,185	)
Activity in other borrowings:
Proceeds from other borrowings		35,000,000			-
Calls, maturities and scheduled principal payments		-			(7,350,000	)
Prepayments		(50,320,407	)		(29,177,000	)
Retirement of junior subordinated debentures		(3,955,000	)		-
Payment of cash dividends on common stock		(1,460,157	)		(782,054	)
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		1,554,506			1,016,324
Net cash provided by financing activities	$	125,694,364		$	25,868,616
Net increase in cash and due from banks		19,470,813			2,818,222
Cash and due from banks, beginning		41,742,321			38,235,019
Cash and due from banks, ending	$	61,213,134		$	41,053,241

(Continued)

9

QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - continued

Nine Months Ended September 30, 2016 and 2015

	2016			2015
Supplemental disclosure of cash flow information, cash payments for:
Interest	$	9,081,850		$	10,880,589
Income/franchise taxes	$	9,487,002		$	1,985,275
Supplemental schedule of noncash investing activities:
Change in accumulated other comprehensive income, unrealized gains on securities available for sale and derivative instruments, net	$	3,344,860		$	2,098,427
Exchange of shares of common stock in connection with payroll taxes for restricted stock and in connection with stock options exercised	$	(477,387	)	$	(68,706	)
Tax benefit of nonqualified stock options exercised	$	183,060		$	71,110
Transfers of loans to other real estate owned	$	51,000		$	942,782
Due from broker for sales of securities	$	32,078,011		$	-
Due to broker for purchases of securities	$	15,190,000		$	-
Due to counterparties for prepayment of FHLB advances and other borrowings	$	(24,575,903	)	$	-
Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds	$	2,132,415		$	-
Supplemental disclosure of cash flow information for Community State Bank acquisition:
Fair value of assets acquired:
Cash and due from banks *	$	10,094,645		$	-
Federal funds sold		698,000			-
Interest-bearing deposits at financial institutions		14,730,157			-
Securities		102,640,029			-
Loans/leases receivable held for investment, net		419,029,277			-
Premises and equipment, net		20,684,880			-
Core deposit intangible		6,352,653			-
Restricted investment securities		1,512,900			-
Other real estate owned		650,000			-
Other assets		4,763,224			-
Total assets acquired	$	581,155,765		$	-
Fair value of liabilities assumed:
Deposits	$	486,298,262		$	-
FHLB advances		20,368,877			-
Other liabilities		4,897,564			-
Total liabilities assumed	$	511,564,703		$	-
Net assets acquired	$	69,591,062		$	-
Consideration paid:
Cash paid *	$	80,000,000		$	-
Total consideration paid	$	80,000,000		$	-
Goodwill	$	10,408,938		$	-

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

See Notes to Consolidated Financial Statements (Unaudited)

10

Part I

Item 1

QCR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 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 September 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	FRB: Federal Reserve Bank of Chicago
AOCI: Accumulated other comprehensive income (loss)	GAAP: Generally Accepted Accounting Principles
AFS: Available for sale	HTM: Held to maturity
ASC: Accounting Standards Codification	m2: m2 Lease Funds, LLC
ASC 805: Business Combinations Standard	MD&A: Management's Discussion & Analysis
ASU: Accounting Standards Update	NIM: Net interest margin
BOLI: Bank-owned life insurance	NPA: Nonperforming asset
Caps: Interest rate cap derivatives	NPL: Nonperforming loan
Community National: Community National Bancorporation	OREO: Other real estate owned
CNB: Community National Bank	OTTI: Other-than-temporary impairment
CRBT: Cedar Rapids Bank & Trust Company	PCI: Purchased credit impaired
CRE: Commercial real estate	Provision: Provision for loan/lease losses
CSB: Community State Bank	QCBT: Quad City Bank & Trust Company
C&I: Commercial and industrial	RB&T: Rockford Bank & Trust Company
Dodd-Frank Act: Dodd-Frank Wall Street Reform and	ROAA: Return on Average Assets
Consumer Protection Act	SBA: U.S. Small Business Administration
EPS: Earnings per share	SEC: Securities and Exchange Commission
Exchange Act: Securities Exchange Act of 1934, as amended	TA: Tangible assets
FASB: Financial Accounting Standards Board	TCE: Tangible common equity
FDIC: Federal Deposit Insurance Corporation	TDRs: Troubled debt restructurings
FHLB: Federal Home Loan Bank	The Company: QCR Holdings, Inc.
	USDA: U.S. Department of Agriculture

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries which include four commercial banks: QCBT, CRBT, CSB and RB&T. All are state-chartered commercial banks. 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.

The acquisition of CSB closed on August 31, 2016. CSB is headquartered in Ankeny, Iowa. The financial results of CSB for the period since acquisition are included in this report. See Note 9 to the Consolidated Financial Statements for additional information.

11

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 and it is not expected to have a significant impact 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.

12

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 September 30, 2016 and December 31, 2015 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
September 30, 2016:
Securities HTM:
Municipal securities	$	305,690,174	$	5,533,151	$	(778,982	)	$	310,444,343
Other securities		1,050,000		-		-			1,050,000
	$	306,740,174	$	5,533,151	$	(778,982	)	$	311,494,343
Securities AFS:
U.S. govt. sponsored agency securities	$	66,966,328	$	992,084	$	(73,463	)	$	67,884,949
Residential mortgage-backed and related securities		131,496,011		1,824,345		(147,552	)		133,172,804
Municipal securities		53,887,898		816,063		(63,499	)		54,640,462
Other securities		2,002,113		492,980		(3,227	)		2,491,866
	$	254,352,350	$	4,125,472	$	(287,741	)	$	258,190,081
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

13

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 September 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
September 30, 2016:
Securities HTM:
Municipal securities	$	23,632,888	$	(251,558	)	$	14,150,396	$	(527,424	)	$	37,783,284	$	(778,982	)
Securities AFS:
U.S. govt. sponsored agency securities	$	9,547,746	$	(73,463	)	$	-	$	-		$	9,547,746	$	(73,463	)
Residential mortgage-backed and related securities		9,326,000		(78,305	)		8,464,738		(69,247	)		17,790,738		(147,552	)
Municipal securities		25,921,780		(49,087	)		846,894		(14,412	)		26,768,674		(63,499	)
Other securities		641,430		(3,227	)		-		-			641,430		(3,227	)
	$	45,436,956	$	(204,082	)	$	9,311,632	$	(83,659	)	$	54,748,588	$	(287,741	)
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 September 30, 2016, the investment portfolio included 526 securities. Of this number, 92 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 92 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 September 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 nine months ended September 30, 2016 and 2015.   

14

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

All sales of securities for the three and nine months ended September 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						Nine Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Proceeds from sales of securities*	$	58,775,764		$	11,922,915		$	119,850,909		$	65,889,838
Pre-tax gross gains from sales of securities		4,281,828			102,766			4,815,373			672,317
Pre-tax gross losses from sales of securities		(30,055	)		(46,186	)		(187,090	)		(198,804	)

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

In September 2016, the Company sold an equity security and recognized a pre-tax gross gain on the sale of $4,010,877. The equity security was acquired by the Company at no cost as part of a membership in the invested company in 2002.

The amortized cost and fair value of securities as of September 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	$	9,333,827	$	9,382,178
Due after one year through five years		30,899,427		31,047,261
Due after five years		266,506,920		271,064,904
	$	306,740,174	$	311,494,343
Securities AFS:
Due in one year or less	$	2,345,063	$	2,347,195
Due after one year through five years		55,691,033		56,456,647
Due after five years		62,818,130		63,721,569
	$	120,854,226	$	122,525,411
Residential mortgage-backed and related securities		131,496,011		133,172,804
Other securities		2,002,113		2,491,866
	$	254,352,350	$	258,190,081

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	$	178,052,716	$	180,307,064
Securities AFS:
U.S. govt. sponsored agency securities		11,042,867		11,073,088
Municipal securities		41,062,791		37,443,219
	$	52,105,658	$	48,516,307

15

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

As of September 30, 2016, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 114 issuers with fair values totaling $115.8 million and revenue bonds issued by 112 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $249.3 million. The Company held investments in general obligation bonds in 24 states, including four states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in 13 states, including five 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:

September 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		27	$	32,289,974	$	32,746,465	$	1,212,832
Illinois		19		30,063,690		30,437,115		1,601,953
North Dakota		6		19,403,728		19,906,421		3,317,737
Missouri		13		8,304,022		8,448,994		649,923
Other		49		23,934,196		24,247,257		494,842
Total general obligation bonds		114	$	113,995,610	$	115,786,252	$	1,015,669

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

16

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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

September 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		44	$	90,171,820	$	91,084,628	$	2,070,105
Iowa		30		75,440,709		77,216,784		2,573,893
Indiana		20		43,994,737		44,605,536		2,230,277
Kansas		6		13,480,269		13,587,744		2,264,624
North Dakota		4		8,114,931		8,175,230		2,043,808
Other		8		14,379,998		14,628,631		1,828,579
Total revenue bonds		112	$	245,582,464	$	249,298,553	$	2,225,880

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 September 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 four charters, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. Each charter is monitored individually, and as of September 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 September 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.

17

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 September 30, 2016 and December 31, 2015 is presented as follows:

	As of September 30,			As of December 31,
	2016			2015
C&I loans	$	804,307,562		$	648,159,892
CRE loans
Owner-occupied CRE		317,899,011			252,523,164
Commercial construction, land development, and other land		160,527,094			49,083,844
Other non owner-occupied CRE		591,878,656			422,761,757
		1,070,304,761			724,368,765
Direct financing leases *		166,924,077			173,655,605
Residential real estate loans **		229,080,600			170,432,530
Installment and other consumer loans		81,917,732			73,669,493
		2,352,534,732			1,790,286,285
Plus deferred loan/lease origination costs, net of fees		8,065,780			7,736,390
		2,360,600,512			1,798,022,675
Less allowance		(28,826,835	)		(26,140,906	)
	$	2,331,773,677		$	1,771,881,769
* Direct financing leases:
Net minimum lease payments to be received	$	186,183,516		$	195,476,230
Estimated unguaranteed residual values of leased assets		1,085,154			1,165,706
Unearned lease/residual income		(20,344,593	)		(22,986,331	)
		166,924,077			173,655,605
Plus deferred lease origination costs, net of fees		6,018,484			6,594,582
		172,942,561			180,250,187
Less allowance		(3,041,962	)		(3,395,088	)
	$	169,900,599		$	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 nine months ended September 30, 2016 and 2015.

**Includes residential real estate loans held for sale totaling $1,377,875 and $565,850 as of September 30, 2016, and December 31, 2015, respectively.

18

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 September 30, 2016 and December 31, 2015 is presented as follows:

	As of September 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	$	796,943,072		$	358,503		$	232,297		$	266,485		$	6,507,205		$	804,307,562
CRE
Owner-Occupied CRE		316,299,798			-			-			-			1,599,213			317,899,011
Commercial Construction, Land Development, and Other Land		160,034,828			-			-			-			492,266			160,527,094
Other Non Owner-Occupied CRE		585,545,037			4,617,055			-			-			1,716,564			591,878,656
Direct Financing Leases		162,556,659			1,180,356			998,896			-			2,188,166			166,924,077
Residential Real Estate		227,061,212			122,744			114,638			104,789			1,677,217			229,080,600
Installment and Other Consumer		81,576,782			89,104			41,332			20,492			190,022			81,917,732
	$	2,330,017,388		$	6,367,762		$	1,387,163		$	391,766		$	14,370,653		$	2,352,534,732
As a percentage of total loan/lease portfolio		99.05	%		0.27	%		0.06	%		0.02	%		0.61	%		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	%

19

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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

	As of September 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	$	266,485	$	6,507,205	$	170,113	$	6,943,803		41.86	%
CRE
Owner-Occupied CRE		-		1,599,213		-		1,599,213		9.64	%
Commercial Construction, Land Development, and Other Land		-		492,266		-		492,266		2.97	%
Other Non Owner-Occupied CRE		-		1,716,564		-		1,716,564		10.35	%
Direct Financing Leases		-		2,188,166		1,138,335		3,326,501		20.05	%
Residential Real Estate		104,789		1,677,217		390,039		2,172,045		13.09	%
Installment and Other Consumer		20,492		190,022		126,998		337,512		2.03	%
	$	391,766	$	14,370,653	$	1,825,485	$	16,587,904		100.00	%

*Nonaccrual loans/leases included $4,859,420 of TDRs, including $2,241,205 in C&I loans, $1,937,655 in CRE loans, $463,859 in direct financing leases, $110,702 in residential real estate loans, and $105,999 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.

20

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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

	Three Months Ended September 30, 2016
	C&I			CRE		Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,724,506		$	10,987,062	$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490
Provisions charged to expense		859,031			8,962		641,435			79,221			19,337			1,607,986
Loans/leases charged off		(96,330	)		-		(847,668	)		(38,554	)		(4,530	)		(987,082	)
Recoveries on loans/leases previously charged off		70,759			6,500		22,001			-			9,181			108,441
Balance, ending	$	11,557,966		$	11,002,524	$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835

	Three Months Ended September 30, 2015
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,020,866		$	9,929,656		$	3,352,303		$	1,720,135		$	1,123,040		$	26,146,000
Provisions charged to expense		520,058			573,119			361,071			130,742			50,273			1,635,263
Loans/leases charged off		(145,665	)		(1,813,973	)		(483,420	)		(25,928	)		(6,837	)		(2,475,823	)
Recoveries on loans/leases previously charged off		136,909			19,913			18,679			4,107			49,296			228,904
Balance, ending	$	10,532,168		$	8,708,715		$	3,248,633		$	1,829,056		$	1,215,772		$	25,534,344

	Nine Months Ended September 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		1,357,262			1,644,008			1,580,677			336,865			(39,991	)		4,878,821
Loans/leases charged off		(388,879	)		(23,101	)		(1,983,322	)		(72,261	)		(22,018	)		(2,489,581	)
Recoveries on loans/leases previously charged off		105,503			6,500			49,519			900			134,267			296,689
Balance, ending	$	11,557,966		$	11,002,524		$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835

	Nine Months Ended September 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		1,513,430			2,490,766			1,238,505			324,925			126,758			5,694,384
Loans/leases charged off		(391,303	)		(2,165,049	)		(1,496,010	)		(25,928	)		(40,886	)		(4,119,176	)
Recoveries on loans/leases previously charged off		659,724			29,612			63,223			4,107			128,105			884,771
Balance, ending	$	10,532,168		$	8,708,715		$	3,248,633		$	1,829,056		$	1,215,772		$	25,534,344

21

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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

	As of September 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	1,114,680		$	175,743		$	739,207		$	169,147		$	148,320		$	2,347,097
Allowance for nonimpaired loans/leases		10,443,286			10,826,781			2,302,755			1,886,507			1,020,409			26,479,738
	$	11,557,966		$	11,002,524		$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835
Impaired loans/leases	$	5,874,093		$	3,495,386		$	2,925,205		$	2,230,829		$	368,924		$	14,894,437
Nonimpaired loans/leases		798,433,469			1,066,809,375			163,998,872			226,849,771			81,548,808			2,337,640,295
	$	804,307,562		$	1,070,304,761		$	166,924,077		$	229,080,600		$	81,917,732		$	2,352,534,732
Allowance as a percentage of impaired loans/leases		18.98	%		5.03	%		25.27	%		7.58	%		40.20	%		15.76	%
Allowance as a percentage of nonimpaired loans/leases		1.31	%		1.01	%		1.40	%		0.83	%		1.25	%		1.13	%
Total allowance as a percentage of total loans/leases		1.44	%		1.03	%		1.82	%		0.90	%		1.43	%		1.22	%

	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	%

22

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 nine months ended September 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	$	1,846,140	$	1,987,082	$	-	$	3,864,852	$	8,644	$	8,644
CRE
Owner-Occupied CRE		767,032		860,806		-		621,553		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		-		-		-
Other Non Owner-Occupied CRE		2,042,391		2,042,391		-		1,789,571		-		-
Direct Financing Leases		1,860,773		1,860,773		-		1,755,969		52,595		52,595
Residential Real Estate		1,418,957		1,458,158		-		1,455,159		2,992		2,992
Installment and Other Consumer		208,916		208,916		-		430,322		-		-
	$	8,144,209	$	8,418,126	$	-	$	9,917,426	$	64,231	$	64,231
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	4,027,953	$	4,031,792	$	1,114,680	$	2,195,524	$	-	$	-
CRE
Owner-Occupied CRE		322,148		322,148		57,398		401,050		-		-
Commercial Construction, Land Development, and Other Land		186,681		186,681		77,611		190,208		-		-
Other Non Owner-Occupied CRE		177,134		177,134		40,734		67,571		-		-
Direct Financing Leases		1,064,432		1,064,432		739,207		653,884		-		-
Residential Real Estate		811,872		886,004		169,147		799,427		5,409		5,409
Installment and Other Consumer		160,008		160,008		148,320		145,962		4,426		4,426
	$	6,750,228	$	6,828,199	$	2,347,097	$	4,453,626	$	9,835	$	9,835
Total Impaired Loans/Leases:
C&I	$	5,874,093	$	6,018,874	$	1,114,680	$	6,060,376	$	8,644	$	8,644
CRE
Owner-Occupied CRE		1,089,180		1,182,954		57,398		1,022,603		-		-
Commercial Construction, Land Development, and Other Land		186,681		186,681		77,611		190,208		-		-
Other Non Owner-Occupied CRE		2,219,525		2,219,525		40,734		1,857,142		-		-
Direct Financing Leases		2,925,205		2,925,205		739,207		2,409,853		52,595		52,595
Residential Real Estate		2,230,829		2,344,162		169,147		2,254,586		8,401		8,401
Installment and Other Consumer		368,924		368,924		148,320		576,284		4,426		4,426
	$	14,894,437	$	15,246,325	$	2,347,097	$	14,371,052	$	74,066	$	74,066

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 and for the three months ended September 30, 2016 and 2015, respectively, are presented as follows:

	Three Months Ended September 30, 2016						Three Months Ended September 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	$	1,677,527	$	3,301	$	3,301	$	365,798	$	1,870	$	1,870
CRE
Owner-Occupied CRE		767,032		-		-		451,851		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		9,968		-		-
Other Non Owner-Occupied CRE		1,969,034		-		-		2,868,950		-		-
Direct Financing Leases		2,008,095		21,095		21,095		634,378		325		325
Residential Real Estate		1,481,340		941		941		900,938		1,362		1,362
Installment and Other Consumer		322,738		-		-		328,669		3,912		3,912
	$	8,225,766	$	25,337	$	25,337	$	5,560,552	$	7,469	$	7,469
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	4,188,621	$	-	$	-	$	4,735,149	$	-	$	-
CRE
Owner-Occupied CRE		363,911		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		187,831		-		-		335,707		-		-
Other Non Owner-Occupied CRE		135,141		-		-		-		-		-
Direct Financing Leases		793,769		-		-		488,860		-		-
Residential Real Estate		807,827		1,503		1,503		984,558		1,981		1,981
Installment and Other Consumer		160,301		1,458		1,458		723,674		1,391		1,391
	$	6,637,401	$	2,961	$	2,961	$	7,267,948	$	3,372	$	3,372
Total Impaired Loans/Leases:
C&I	$	5,866,148	$	3,301	$	3,301	$	5,100,947	$	1,870	$	1,870
CRE
Owner-Occupied CRE		1,130,943		-		-		451,851		-		-
Commercial Construction, Land Development, and Other Land		187,831		-		-		345,675		-		-
Other Non Owner-Occupied CRE		2,104,175		-		-		2,868,950		-		-
Direct Financing Leases		2,801,864		21,095		21,095		1,123,238		325		325
Residential Real Estate		2,289,167		2,444		2,444		1,885,496		3,343		3,343
Installment and Other Consumer		483,039		1,458		1,458		1,052,343		5,303		5,303
	$	14,863,167	$	28,298	$	28,298	$	12,828,500	$	10,841	$	10,841

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

24

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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.

25

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 September 30, 2016 and December 31, 2015:

	As of September 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)	$	770,822,390	$	307,017,431	$	153,401,738	$	572,769,744	$	1,804,011,303		96.24	%
Special Mention (Rating 6)		10,160,760		1,737,127		1,780,000		5,894,259		19,572,146		1.04	%
Substandard (Rating 7)		23,324,412		9,144,453		5,345,356		13,214,653		51,028,874		2.72	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	804,307,562	$	317,899,011	$	160,527,094	$	591,878,656	$	1,874,612,323		100.00	%

	As of September 30, 2016
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	163,597,576	$	226,908,556	$	81,580,220	$	472,086,352		98.78	%
Nonperforming		3,326,501		2,172,044		337,512		5,836,057		1.22	%
	$	166,924,077	$	229,080,600	$	81,917,732	$	477,922,409		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.

26

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

As of September 30, 2016 and December 31, 2015, TDRs totaled $6,684,905 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 nine months ended September 30, 2016 and 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 September 30, 2016								For the three months ended September 30, 2015
Classes of Loans/Leases	Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance		Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance
CONCESSION - Significant Payment Delay
Direct Financing Leases		2	$	461,643	$	461,643	$	-					$	-	$	-
		2	$	461,643	$	461,643	$	-		-	$	-	$	-	$	-
CONCESSION - Interest Rate Adjusted Below Market
Installment and Other Consumer		-	$	-	$	-	$	-		1	$	14,203	$	14,203	$	-
		-	$	-	$	-	$	-		1	$	14,203	$	14,203	$	-
TOTAL		2	$	461,643	$	461,643	$	-		1	$	14,203	$	14,203	$	-

	For the nine months ended September 30, 2016								For the nine months ended September 30, 2015
Classes of Loans/Leases	Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance		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		6		771,672		771,672		-		-		-		-		-
		7	$	833,812	$	833,812	$	-		-	$	-	$	-	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-		-	$	-	$	-	$	-
Installment and Other Consumer		-		-		-		-		1		14,203		14,203		-
		1	$	1,233,740	$	1,233,740	$	-		1	$	14,203	$	14,203	$	-
TOTAL		13	$	2,530,491	$	2,530,491	$	-		1	$	14,203	$	14,203	$	-

Of the TDRs reported above, two with a post-modification recorded balance of $1,384,680 were on nonaccrual as of September 30, 2016. Not included in the table above, the Company had one TDR that was restructured and charged off in 2016, totaling $236,545.

For the three and nine months ended September 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.

27

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

NOTE 4 – BORROWINGS

Maturity and interest rate information on advances from FHLB as of September 30, 2016 and December 31, 2015 is as follows:

	September 30, 2016
			Weighted					Weighted
			Average			Amount Due		Average
			Interest Rate			with		Interest Rate
	Amount Due		at Quarter-End			Putable Option *		at Quarter-End
Maturity:
Year ending December 31:
2016	$	90,300,000		0.55	%	$	-		-	%
2017		23,342,549		2.59			-		-
2018		25,000,000		2.70			-		-
Total FHLB advances	$	138,642,549		1.68	%	$	-		-	%

	December 31, 2015
			Weighted					Weighted
			Average			Amount Due		Average
			Interest Rate			with		Interest Rate
	Amount Due		at Year-End			Putable Option *		at Year-End
Maturity:
Year ending December 31:
2016	$	103,000,000		0.56	%	$	2,000,000		4.00	%
2017		18,000,000		2.89			-		-
2018		30,000,000		3.27			5,000,000		2.84
Total FHLB advances	$	151,000,000		1.37	%	$	7,000,000		3.17	%

Other borrowings as of September 30, 2016 and December 31, 2015 are summarized as follows:

	As of September 30, 2016		As of December 31, 2015
Wholesale structured repurchase agreements	$	45,000,000	$	110,000,000
Term note		30,000,000		-
Revolving line of credit		5,000,000		-
	$	80,000,000	$	110,000,000

28

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Maturity and interest rate information concerning wholesale structured repurchase agreements is summarized as follows:

	September 30, 2016					December 31, 2015
			Weighted					Weighted
			Average					Average
			Interest Rate					Interest Rate
	Amount Due		at Quarter-End			Amount Due		at Year-End
Maturity:
Year ending December 31:
2016	$	-		0.00	%	$	-		0.00	%
2017		10,000,000		3.07			10,000,000		3.00
2018		-		-			10,000,000		3.97
2019		10,000,000		3.44			45,000,000		3.40
2020		25,000,000		2.48			45,000,000		2.66
Total Wholesale Structured Repurchase Agreements	$	45,000,000		2.83	%	$	110,000,000		3.11	%

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%.

During the third quarter of 2016, the Company executed further balance sheet restructuring at QCBT which included the repayment of $55.0 million of wholesale structured repurchase agreements and $5.0 million of FHLB advances with a combined weighted average interest rate of 3.24%. As a result of this restructuring, the Company incurred $4.1 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 2.95 years, with $5.0 million maturing in 2018, $35.0 million maturing in 2019, and $20.0 million maturing in 2020. This funding was replaced partially with proceeds from the sale of bonds previously pledged as collateral for the wholesale structured repurchase agreements ($27.8 million) and the rest 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 five-year term. Interest on the revolving line of credit is calculated at the effective LIBOR rate plus 2.50% per annum (3.34% at September 30, 2016). Interest on the term note is calculated at the effective LIBOR rate plus 3.00% per annum (3.84% at September 30, 2016). Upon closing of the acquisition of CSB, the Company utilized the full $30.0 million term note commitment and borrowed $5.0 million on the revolving line of credit note. At September 30, 2016, the Company had $35.0 million in borrowings outstanding. For the term note, the Company is required to make quarterly principal payments of $1.5 million with maturity information as of September 30, 2016, summarized as follows:

	As of September 30, 2016
2017		6,000,000
2018		6,000,000
2019		6,000,000
2020		6,000,000
2021		6,000,000
	$	30,000,000

29

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Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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.

In October 2016, the Company executed new agreements with the creditor on both the term note and the revolving line of credit, adjusting the rate index from 3-month LIBOR to 1-month LIBOR.

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.

NOTE 5 - EARNINGS PER SHARE

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

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Net income	$	6,107,501	$	6,488,987	$	19,157,457	$	10,143,058
Basic EPS	$	0.47	$	0.55	$	1.55	$	1.03
Diluted EPS	$	0.46	$	0.55	$	1.52	$	1.01
Weighted average common shares outstanding*		13,066,777		11,713,993		12,398,491		9,878,882
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan		202,926		161,937		181,551		145,559
Weighted average common and common equivalent shares outstanding		13,269,703		11,875,930		12,580,042		10,024,441

*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.

30

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 September 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)
September 30, 2016:
Securities AFS:
U.S. govt. sponsored agency securities	$	67,884,949	$	-	$	67,884,949	$	-
Residential mortgage-backed and related securities		133,172,804		-		133,172,804		-
Municipal securities		54,640,462		-		54,640,462		-
Other securities		2,491,866		1,107		2,490,759		-
Interest rate caps		221,233		-		221,233		-
Interest rate swaps - assets		9,386,262		-		9,386,262		-
Total assets measured at fair value	$	267,797,576	$	1,107	$	267,796,469	$	-
Interest rate swaps - liabilities	$	9,386,262	$	-	$	9,386,262	$	-
Total liabilities measured at fair value	$	9,386,262	$	-	$	9,386,262	$	-
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 nine months ended September 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).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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).

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 September 30, 2016 and December 31, 2015:

			Fair Value Measurements at Reporting Date Using
	Fair Value		Level 1		Level 2		Level 3
September 30, 2016:
Impaired loans/leases	$	7,870,032	$	-	$	-	$	7,870,032
OREO		6,272,211		-		-		6,272,211
	$	14,142,243	$	-	$	-	$	14,142,243
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.

32

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Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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 September 30, 2016		Fair Value December 31, 2015		Valuation Technique	Unobservable Input	Range
Impaired loans/leases	$	7,870,032	$	4,545,966	Appraisal of collateral	Appraisal adjustments		-10.00%	to	-50.00%
OREO		6,272,211		7,722,711	Appraisal of collateral	Appraisal adjustments		0.00%	to	-35.00%

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 nine months ended September 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 September 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	$	61,213,134	$	61,213,134	$	41,742,321	$	41,742,321
Federal funds sold	Level 2		21,022,000		21,022,000		19,850,000		19,850,000
Interest-bearing deposits at financial institutions	Level 2		75,025,417		75,025,417		36,313,965		36,313,965
Investment securities:
HTM	Level 2		306,740,174		311,494,343		253,674,159		255,691,285
AFS	See Previous Table		258,190,081		258,190,081		323,434,982		323,434,982
Loans/leases receivable, net	Level 3		7,287,067		7,870,032		4,209,228		4,545,966
Loans/leases receivable, net	Level 2		2,324,486,610		2,327,955,000		1,767,672,541		1,764,178,772
Interest rate caps	Level 2		221,233		221,233		856,024		856,024
Interest rate swaps - assets	Level 2		9,386,262		9,386,262		3,044,525		3,044,525
Deposits:
Nonmaturity deposits	Level 2		2,103,706,174		2,103,706,174		1,516,599,081		1,516,599,081
Time deposits	Level 2		491,206,579		491,849,000		364,067,103		364,192,000
Short-term borrowings	Level 2		60,015,417		60,015,417		144,662,716		144,662,716
FHLB advances	Level 2		138,642,529		140,153,000		151,000,000		153,143,000
Other borrowings	Level 2		80,000,000		82,119,000		110,000,000		116,061,000
Junior subordinated debentures	Level 2		33,446,578		24,768,273		38,499,052		27,642,093
Interest rate swaps - liabilities	Level 2		9,386,262		9,386,262		3,044,525		3,044,525

33

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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 four subsidiary banks wholly owned by the Company: QCBT, CRBT, CSB 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 four 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.

34

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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 nine months ended September 30, 2016 and 2015.

	Commercial Banking								Wealth					Intercompany			Consolidated
	QCBT		CRBT		CSB		RB&T		Management		All Other			Eliminations			Total
Three Months Ended September 30, 2016
Total revenue	$	18,026,215	$	10,065,032	$	2,675,741	$	4,232,205	$	2,284,577	$	8,463,636		$	(8,507,270	)	$	37,240,136
Net interest income	$	11,225,414	$	7,594,557	$	2,191,862	$	3,056,989	$	-	$	(438,045	)	$	-		$	23,630,777
Net income	$	3,596,469	$	3,286,724	$	188,608	$	944,781	$	398,859	$	6,107,492		$	(8,415,432	)	$	6,107,501
Total assets	$	1,407,733,009	$	887,592,695	$	580,210,270	$	393,191,774	$	-	$	368,990,749		$	(356,732,388	)	$	3,280,986,109
Provision	$	1,137,986	$	-	$	270,000	$	200,000	$	-	$	-		$	-		$	1,607,986
Goodwill	$	3,222,688	$	-	$	10,408,938	$	-	$	-	$	-		$	-		$	13,631,626
Core deposit intangible	$	-	$	1,321,775	$	6,291,818	$	-	$	-	$	-		$	-		$	7,613,593
Three Months Ended September 30, 2015
Total revenue	$	14,143,548	$	10,047,658	$	-	$	3,922,304	$	2,314,406	$	7,937,087		$	(8,821,205	)	$	29,543,798
Net interest income	$	10,728,143	$	6,956,027	$	-	$	2,771,214	$	-	$	(317,858	)	$	-		$	20,137,526
Net income (loss)	$	3,786,289	$	2,893,397	$	-	$	847,709	$	373,801	$	6,488,988		$	(7,901,197	)	$	6,488,987
Total assets	$	1,328,053,105	$	867,064,041	$	-	$	360,348,002	$	-	$	277,001,408		$	(256,611,839	)	$	2,575,854,717
Provision	$	910,263	$	550,000	$	-	$	175,000	$	-	$	-		$	-		$	1,635,263
Goodwill	$	3,222,688	$	-	$	-	$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,521,287	$	-	$	-	$	-	$	-		$	-		$	1,521,287
Nine Months Ended September 30, 2016
Total revenue	$	45,706,061	$	31,342,345	$	2,675,741	$	11,945,081	$	6,723,690	$	23,567,906		$	(23,720,471	)	$	98,240,353
Net interest income	$	33,394,620	$	21,755,270	$	2,191,862	$	8,914,380	$	-	$	(1,019,020	)	$	-		$	65,237,112
Net income	$	10,326,508	$	9,366,441	$	188,608	$	2,334,735	$	1,232,831	$	19,157,447		$	(23,449,113	)	$	19,157,457
Total assets	$	1,407,733,009	$	887,592,695	$	580,210,270	$	393,191,774	$	-	$	368,990,749		$	(356,732,388	)	$	3,280,986,109
Provision	$	3,108,821	$	700,000	$	270,000	$	800,000	$	-	$	-		$	-		$	4,878,821
Goodwill	$	3,222,688	$	-	$	10,408,938	$	-	$	-	$	-		$	-		$	13,631,626
Core deposit intangible	$	-	$	1,321,775	$	6,291,818	$	-	$	-	$	-		$	-		$	7,613,593
Nine Months Ended September 30, 2015
Total revenue	$	39,893,713	$	28,396,380	$	-	$	11,095,899	$	6,927,453	$	14,487,857		$	(15,556,437	)	$	85,244,865
Net interest income	$	29,745,080	$	19,836,835	$	-	$	8,089,626	$	-	$	(1,260,962	)	$	-		$	56,410,579
Net income	$	6,578,479	$	4,645,136	$	-	$	1,895,933	$	1,271,661	$	10,143,059		$	(14,391,210	)	$	10,143,058
Total assets	$	1,328,053,105	$	867,064,041	$	-	$	360,348,002	$	-	$	277,001,408		$	(256,611,839	)	$	2,575,854,717
Provision	$	3,466,384	$	1,650,000	$	-	$	578,000	$	-	$	-		$	-		$	5,694,384
Goodwill	$	3,222,688	$	-	$	-	$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,521,287	$	-	$	-	$	-	$	-		$	-		$	1,521,287

35

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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 September 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 September 30, 2016 and December 31, 2015 are also presented in the following table (dollars in thousands). As of September 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 September 30, 2016:
Company:
Total risk-based capital	$	316,063		11.33	%	$	240,629	>	8.625	%	$	278,991	>	10.0	%
Tier 1 risk-based capital		287,015		10.29	%		184,831	>	6.625			223,192	>	8.0
Tier 1 leverage		287,015		10.09	%		113,737	>	4.000			142,172	>	5.0
Common equity Tier 1		257,119		9.22	%		142,983	>	5.125			181,344	>	6.5
Quad City Bank & Trust:
Total risk-based capital	$	138,333		11.71	%	$	101,861	>	8.625	%	$	118,100	>	10.0	%
Tier 1 risk-based capital		125,410		10.62	%		78,241	>	6.625			94,480	>	8.0
Tier 1 leverage		125,410		8.86	%		56,628	>	4.000			70,785	>	5.0
Common equity Tier 1		125,410		10.62	%		60,526	>	5.125			76,765	>	6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	104,206		13.13	%	$	68,474	>	8.625	%	$	79,390	>	10.0	%
Tier 1 risk-based capital		94,266		11.87	%		52,596	>	6.625			63,512	>	8.0
Tier 1 leverage		94,266		10.36	%		36,407	>	4.000			45,509	>	5.0
Common equity Tier 1		94,266		11.87	%		40,687	>	5.125			51,604	>	6.5
Community State Bank:
Total risk-based capital	$	67,008		14.09	%	$	41,031	>	8.625	%	$	47,572	>	10.0	%
Tier 1 risk-based capital		66,735		14.03	%		31,516	>	6.625			38,058	>	8.0
Tier 1 leverage		66,735		11.74	%		22,745	>	4.000			28,431	>	5.0
Common equity Tier 1		66,735		14.03	%		24,381	>	5.125			30,922	>	6.5
Rockford Bank & Trust:
Total risk-based capital	$	41,130		11.95	%	$	29,680	>	8.625	%	$	34,412	>	10.0	%
Tier 1 risk-based capital		36,821		10.70	%		22,798	>	6.625			27,529	>	8.0
Tier 1 leverage		36,821		9.45	%		15,587	>	4.000			19,484	>	5.0
Common equity Tier 1		36,821		10.70	%		17,636	>	5.125			22,367	>	6.5

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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 occurred in 2016.

On October 27, 2016, the Company filed a universal shelf registration statement on Form S-3 with the SEC. When declared effective by the SEC, the registration statement will allow the Company to offer and sell various types of securities, including common stock, preferred stock, debt securities and/or warrants, from time to time up to an aggregate amount of $100 million. The Company utilized $30.1 million of its previous $100 million shelf registration filing through the offer and sale of its common stock in the second quarter of 2016 to help fund the acquisition of CSB. This Form S-3 filing will replenish the amount available to the previous level of $100 million. The specific terms and prices of any securities offered pursuant to the registration statement 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.

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Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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

On August 31, 2016, the Company acquired Community State Bank from Van Diest Investment Company. CSB is headquartered in Ankeny, Iowa and is an Iowa-chartered bank that operates ten banking locations throughout the Des Moines metropolitan area. The Company purchased 100% of the outstanding common stock of CSB for cash consideration of $80.0 million.

The acquisition of CSB allowed the Company to expand its footprint into the Des Moines market. CSB has an experienced and capable leadership team that is committed to leading the Company’s efforts in the Des Moines MSA. CSB has demonstrated significant improvement in earnings and asset quality during the last three years. Additionally, CSB has a strong core deposit base and retail franchise. Although CSB already has strong earnings with an expected ROAA of 1.00% in 2016, the Company has identified several opportunities for enhanced future earnings performance. With $581 million of assets acquired, the Company believes this acquisition is large enough to provide meaningful impact on the financial results, but is not too large to overstrain existing infrastructure. Lastly, financial metrics related to the transaction were favorable, as measured by EPS accretion and earn-back of tangible book value dilution.

In connection with the acquisition, during the second quarter of 2016, the Company sold 1,215,000 shares of its common stock at a price of $24.75 per share, for net proceeds of $29.8 million, after deducting expenses. The shares were offered to institutional investors in a registered direct offering conducted without an underwriter or placement agent. The offering was a partial take-down of a previously filed shelf registration and closed on May 23, 2016.

Cash received from the common stock offering was used to help finance the purchase price of the acquisition. Additionally, the Company drew $5.0 million on its $10.0 million revolving line of credit and fully funded its $30.0 million term facility. Both of these facilities are described further in Note 4 to the Consolidated Financial Statements. Cash dividends of $15.2 million from QCBT and CRBT were used to fund the remainder of the purchase price.

The Company accounted for the business combination under the acquisition method of accounting in accordance with ASC 805. The Company recognized the full fair value of the assets acquired and liabilities assumed at the acquisition date, net of applicable income tax effects. The Company considers all purchase accounting adjustments as provisional and fair values are subject to refinement for up to one year after the closing date.

The excess of the consideration paid over the fair value of the net assets acquired is recorded as goodwill. This goodwill is not deductible for tax purposes.

The Company has several areas of specialization, including government guaranteed lending, C&I lending, interest rate swaps, leasing, wealth management, private banking and municipal bond offerings that will be offered in this new market, increasing future earnings potential. There is also value added to the Company through having a footprint in a market that has strong growth potential. Additionally, there are qualitative benefits gained through the addition of a new charter including better leverage of centralized operations and increased lending limits. The experience and value of the personnel at CSB and their knowledge of the Des Moines MSA is also beneficial.

38

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The fair values of the assets acquired and liabilities assumed including the consideration paid and resulting goodwill is as follows:

	As of
	August 31, 2016
ASSETS
Cash and due from banks	$	10,094,645
Federal funds sold		698,000
Interest-bearing deposits at financial institutions		14,730,157
Securities		102,640,029
Loans/leases receivable, net		419,029,277
Premises and equipment		20,684,880
Core deposit intangible		6,352,653
Restricted investment securities		1,512,900
Other real estate owned		650,000
Other assets		4,763,224
Total assets acquired	$	581,155,765
LIABILITIES
Deposits	$	486,298,262
FHLB advances		20,368,877
Other liabilities		4,897,564
Total liabilities assumed	$	511,564,703
Net assets acquired	$	69,591,062
CONSIDERATION PAID:
Cash	$	80,000,000
Total consideration paid	$	80,000,000
Goodwill	$	10,408,938

Loans acquired in a business combination are recorded and initially measured at their estimated fair value as of the acquisition date. Credit discounts are included in the determination of fair value. A third party valuation consultant assisted with the determination of fair value.

Purchased loans are segregated into two categories: PCI loans and non-PCI (performing) loans. PCI loans are accounted for in accordance with ASC 310-30, as they display significant credit deterioration since origination and it is probable, as of the acquisition date, that the Company will be unable to collect all contractually required payments from the borrower. Performing loans are accounted for in accordance with ASC 310-20, as these loans do not have evidence of significant credit deterioration since origination and it is probable that the contractually required payments will be received from the borrower.

For PCI loans, the difference between the contractually required payments at acquisition and the cash flows expected to be collected is referred to as the non-accretable discount. Further, any excess cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the expected remaining life of the loan. Subsequent to the purchase date, increases in cash flows over those expected at the purchase date are recognized as interest income prospectively. The present value of any decreases in expected cash flows after the purchase date is recognized by recording an allowance for loan and lease losses and provision for loan losses.

For performing loans, the difference between the estimated fair value of the loans and the principal balance outstanding is accreted over the remaining life of the loans.

39

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The following table presents the purchased loans as of the acquisition date:

	PCI			Performing
	Loans			Loans			Total
Contractually required principal payments	$	3,662,431		$	428,552,119		$	432,214,550
Nonaccretable discount		(991,685	)		-			(991,685	)
Principal cash flows expected to be collected	$	2,670,746		$	428,552,119		$	431,222,865
Accretable discount		(277,579	)		(11,916,009	)		(12,193,588	)
Fair Value of acquired loans	$	2,393,167		$	416,636,110		$	419,029,277

Changes in accretable yield for the loans acquired were as follows for the three and nine months ended September 30, 2016:

	PCI			Performing
	Loans			Loans			Total
Balance at the beginning of the period		(277,579	)		(11,916,009	)		(12,193,588	)
Accretion recognized		29,317			366,293			395,610
Balance at the end of the period	$	(248,262	)	$	(11,549,716	)	$	(11,797,978	)

During the current quarter, there was also $89 thousand of nonaccretable discount that was accelerated due to the early repayment of PCI loans.

Premises and equipment acquired with a fair value of $20,684,880 includes ten branch locations with a fair value of $19,735,000, including a write-up of $8,334,437. The fair value was determined with the assistance of a third party appraiser. The write-up of these properties will be recognized as an increase in depreciation expense over 39 years.

The Company recorded a core deposit intangible totaling $6,352,653 which is the portion of the acquisition purchase price which represents the value assigned to the existing deposit base. The core deposit intangible has a finite life and is amortized using an accelerated method over the estimated useful life of the deposits (estimated to be ten years).

The following table presents the changes in the carrying amount of core deposit intangibles, gross carrying amount, accumulated amortization, and net book value:

	September 30, 2016
Balance at the beginning of the period	$	6,352,653
Amortization expense		(60,834	)
Balance at the end of the period	$	6,291,819
Gross carrying amount	$	6,352,653
Accumulated amortization		(60,834	)
Net book value	$	6,291,819

40

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The following presents the estimated amortization expense of the core deposit intangible:

Years ending December 31,	Amount
2016	$	182,503
2017		723,955
2018		710,751
2019		694,374
2020		674,819
Thereafter		3,305,417
	$	6,291,819

*There is another core deposit intangible on the balance sheet totaling $1,321,774 that is related to a previous acquisition.

During the first nine months of 2016, the Company incurred $2.4 million of expenses related to the acquisition, comprised primarily of legal, accounting, investment banking costs and personnel costs. These acquisition costs are presented on their own line within the consolidated statements of income. CSB results are included in the consolidated statements of income effective on the acquisition date. For the period 8/31/16 to 9/30/16, CSB reported revenues of $2.7 million and net income of $189 thousand, which included $473 thousand of after tax acquisition costs.

Unaudited pro forma combined operating results for the three and nine months ended September 30, 2016 and 2015, giving effect to the CSB acquisition as if it had occurred as of January 1, 2015, are as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
	(in thousands, except for per share data)
Interest income	$	27,615	$	25,685	$	80,755	$	73,051
Noninterest income	$	11,415	$	8,074	$	27,744	$	23,167
Net income	$	7,301	$	8,216	$	23,813	$	15,324
Earnings per common share:
Basic	$	0.56	$	0.64	$	1.85	$	1.38
Diluted	$	0.55	$	0.63	$	1.82	$	1.36

The pro forma results do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on January 1, 2015 or of future results of operations of the consolidated entities.

NOTE 10 – RELATED PARTY TRANSACTIONS

Management reviews transactions with related parties on a quarterly basis, as part of Disclosure Committee procedures.

During 2016, the Company entered into a material related party transaction with a company that is owned and controlled by a CRBT director. That company was chosen as the general contractor for the remodel of the Waterloo branch. The company was the original contractor for the branch and is recognized as a leader in Iowa and the Midwest market for the design and construction of financial services and professional office buildings. Based on the company’s expertise, their experience as the original designer/builder of the branch location and a decline to bid from two other contractors, management chose the company as the general contractor. Management determined that the bids received from the company were at market rates.

The project total is estimated at $3.5 million. This is the full contract price, as subcontractors will be utilized to complete the work. It is estimated that the company will receive $2.1 million for their work as the general contractor, including payments for a portion of the actual construction costs as the company is completing a portion of the subcontracting work in addition to being the general contractor.  

41

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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 nine months ending September 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 a financial holding company and the parent company of QCBT, CRBT, CSB and RB&T.

QCBT, CRBT and CSB are Iowa-chartered commercial banks, and RB&T is an Illinois-chartered commercial bank. QCBT, CRBT and RB&T are members of the Federal Reserve system with depository accounts insured to the maximum amount permitted by law by the FDIC. CSB is not a Federal Reserve system member at this time, however, CSB intends to file a membership application as soon as possible. CSB’s depository accounts are 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).

● CSB was acquired in the third quarter of 2016, as further described in Note 9 to the Consolidated Financial Statements. CSB provides full-service commercial and consumer banking to the Des Moines, Iowa area and adjacent communities through its 10 branch locations, including its main office located on North Ankeny Boulevard in Ankeny, Iowa.

● 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.

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EXECUTIVE OVERVIEW

The Company reported net income of $6.1 million and diluted EPS of $0.46 for the quarter ended September 30, 2016. This included $1.5 million of acquisition costs (after-tax) related to the acquisition of CSB. By comparison, for the quarter ended June 30, 2016, the Company reported net income of $6.7 million and diluted EPS of $0.53. This included $231 thousand of acquisition costs (after-tax) related to CSB. For the third quarter of 2015, the Company reported net income of $6.5 million and diluted EPS of $0.55.

For the nine months ended September 30, 2016, the Company reported net income of $19.2 million and diluted EPS of $1.52. This included $1.7 million of acquisition costs (after-tax) related to the acquisition of CSB. By comparison, for the nine months ended September 30, 2015, the Company reported net income of $10.1 million and diluted EPS of $1.01. This included several nonrecurring items, including $4.5 million of losses on debt extinguishments (after-tax) related to the balance sheet restructuring that took place in the second quarter of 2015.

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

● The successful closing of the acquisition of CSB, headquartered in Ankeny, Iowa;

● Loan and lease growth at an annualized rate of 10.6% through the first nine months of the year (excluding the acquisition of CSB);

● Strong swap fee income and gains on the sale of government guaranteed portions of loans, totaling $4.1 million year-to-date;

● Further reductions in wholesale borrowings totaling $60 million in the third quarter; and

● NIM improvement of 9 basis points quarter-over-quarter.

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

	For the three months ended						For the nine months ended
	September 30, 2016		June 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Net income	$	6,107,501	$	6,676,467	$	6,488,987	$	19,157,457	$	10,143,058
Diluted earnings per common share	$	0.46	$	0.53	$	0.55	$	1.52	$	1.01
Weighted average common and common equivalent shares outstanding*		13,269,703		12,516,474		11,875,930		12,580,042		10,024,441

*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 nine months ended
	September 30, 2016		June 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Net interest income	$	23,630,777	$	21,008,813	$	20,137,526	$	65,237,112	$	56,410,579
Provision expense		1,607,986		1,197,850		1,635,263		4,878,821		5,694,384
Noninterest income		10,423,401		6,762,401		6,402,686		24,008,275		18,151,411
Noninterest expense		24,480,483		17,743,753		15,947,091		59,178,734		57,318,599
Federal and state income tax expense		1,858,208		2,153,144		2,468,871		6,030,375		1,405,949
Net income	$	6,107,501	$	6,676,467	$	6,488,987	$	19,157,457	$	10,143,058

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

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

● Net interest income increased 12% compared to the second quarter of 2016 and increased 17% from the same period in 2015. Much of this increase was the result of the acquisition of CSB, which reported net interest income of $2.2 million for the partial quarter.

● Provision increased 34% compared to the second quarter of 2016. Provision was flat from the same period of 2015. The increase in the third quarter was primarily the result of the acquisition of CSB, which reported provision expense of $270 thousand for the partial quarter.

● Noninterest income increased 54% compared to the second quarter of 2016. Noninterest income increased 63% from the third quarter of 2015. The increase in noninterest income was primarily due to a one-time gain from the sale of an equity security totaling $4.0 million.

● Noninterest expense increased 38% compared to the second quarter of 2016. Noninterest expense increased 54% from the third quarter of 2015. The third quarter of 2016 included $2.0 million of pre-tax acquisition costs related to CSB, as well as $4.1 million of losses on debt extinguishment. See Note 4 to the Consolidated Financial Statements for additional details.

● Federal and state income tax expense decreased 14% compared to the second quarter of 2016. Federal and state income tax decreased 25% compared to the third 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 m2 commercial loan and lease portfolio to $250 million;

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● 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 10% annually.

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

				For the Quarter Ending
Goal	Key Metric		Target**	September 30, 2016		June 30, 2016		September 30, 2015
Balance sheet efficiency	Gross loans and leases to total assets		70 - 75%		72%		72%		68%
	NIM	> 3.75%			3.71%		3.62%		3.51%
Profitability	ROAA	> 1.10%			0.85%		1.01%		1.01%
	Core ROAA (non-GAAP)				1.05%		1.04%		0.97%
	NPAs to total assets	< 0.75%			0.69%		0.70%		0.80%
Asset quality	Net charge-offs to average loans and leases*	< 0.25% annually			0.15%		0.12%		0.26%
Lower reliance on wholesale funding	Wholesale funding to total assets	< 15%			13%		18%		21%
Funding mix	Noninterest bearing deposits as a percentage of total assets	> 30%			23%		23%		23%
m2 commercial loans and leases	Total loans and leases	$250 million		$206.8 million		$205.9 million		$194.9 million
Consistent, high quality noninterest income revenue streams	Gains on sales of government guaranteed portions of loans and swap fee income*	> $4 million annually		$5.4 million		$7.1 million		$2.8 million
	Grow wealth management segment net income*	> 10% annually			(3%)		(7%)		6%

* 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 appropriate.

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 10.6% when annualized (excluding CSB). This is within the Company’s target organic growth rate of 10-12%. A majority of this growth was in the C&I and CRE loan categories. Strong loan and lease growth continues to keep the Company’s loan and leases to asset ratio within the targeted range of 70-75%.

● 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 third quarter of 2016, the Company acquired CSB, headquartered in Ankeny, Iowa. See Note 9 of the Consolidated Financial Statements for additional 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 0.69% at September 30, 2016. Although NPAs increased as a result of the acquisition of CSB, the NPAs to total assets ratio decreased slightly as compared to the prior quarter and the Company remains committed to further improving asset quality ratios in 2016.

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● Management continued to focus on reducing the Company’s reliance on wholesale funding. The restructuring executed in the first and third quarters of 2016 (as described in Note 4 of the Consolidated Financial Statements) has further reduced the Company’s reliance on long-term wholesale funding. These prepayments, along with the addition of CSB, which has a very strong core funding base with minimal wholesale borrowings, assisted in lowering the Company’s reliance on wholesale funding as a percentage of assets down to 13% in the current quarter. Management continues to closely evaluate opportunities for continued reduction in wholesale funding.

● 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 179 downstream banks with average total noninterest bearing deposits of $343.1 million during the third quarter of 2016. This line of business provides a strong source of noninterest bearing deposits, fee income, high-quality loan participations and bank stock loans.

● The Company provides commercial leasing services through its wholly-owned subsidiary, m2 Lease Funds, which has lease specialists in Iowa, Wisconsin, Minnesota, North Carolina, South Carolina, Florida, California, 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 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 September 30, 2016 the Company had $1.85 billion of total financial assets in trust (and related) accounts and $727 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.

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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. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to stockholders’ equity and total assets, which are the most directly comparable GAAP financial measures.

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. In compliance with applicable rules of the SEC, these non-GAAP measures are reconciled to net income, which is the most directly comparable GAAP financial measure.

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.

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	As of
GAAP TO NON-GAAP RECONCILIATIONS	September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
	(dollars in thousands, except per share data)
TCE / TA RATIO
Stockholders' equity (GAAP)	$	280,857		$	275,117		$	235,143		$	225,886		$	221,115
Less: Intangible assets		22,755			4,595			4,645			4,694			4,744
TCE (non-GAAP)	$	258,102		$	270,522		$	230,498		$	221,192		$	216,371
Total assets (GAAP)	$	3,280,986		$	2,683,434		$	2,640,673		$	2,593,198		$	2,575,855
Less: Intangible assets		22,755			4,595			4,645			4,694			4,744
TA (non-GAAP)	$	3,258,231		$	2,678,839		$	2,636,028		$	2,588,504		$	2,571,111
TCE / TA ratio (non-GAAP)		7.92	%		10.10	%		8.74	%		8.55	%		8.42	%

	For the Quarter Ended															For the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
CORE NET INCOME	2016			2016			2016			2015			2015			2016			2015
Net income (GAAP)	$	6,108		$	6,676		$	6,373		$	6,785		$	6,489		$	19,157		$	10,143
Less nonrecurring items (post-tax) (*):
Income:
Securities gains, net	$	2,764		$	12		$	233		$	211		$	37		$	3,009		$	308
Lawsuit settlement		-			-			-			-			252						252
Total nonrecurring income (non-GAAP)	$	2,764		$	12		$	233		$	211		$	289		$	3,009		$	560
Expense:
Losses on debt extinguishment	$	2,689		$	-		$	54		$	189		$	-		$	2,743		$	4,481
Acquisition costs		1,506			231			-			-			-			1,737			-
Other non-recurring expenses		-			-			-			-			-			-			513
Accrual adjustments		-			-			-			(487	)		-			-			-
Total nonrecurring expense (non-GAAP)	$	4,195		$	231		$	54		$	(298	)	$	-		$	4,480		$	4,994
Core net income (non-GAAP)	$	7,539		$	6,895		$	6,194		$	6,276		$	6,200		$	20,628		$	14,577
CORE EPS
Core net income (non-GAAP) (from above)	$	7,539		$	6,895		$	6,194		$	6,276		$	6,200		$	20,628		$	14,577
Weighted average common shares outstanding		13,066,777			12,335,077			11,793,620			11,744,495			11,713,993			12,398,491			9,878,882
Weighted average common and common equivalent shares outstanding		13,269,703			12,516,474			11,953,949			11,926,038			11,875,930			12,580,042			10,024,441
Core EPS (non-GAAP):
Basic	$	0.58		$	0.56		$	0.53		$	0.53		$	0.53		$	1.66		$	1.48
Diluted	$	0.57		$	0.55		$	0.52		$	0.53		$	0.52		$	1.64		$	1.45
CORE ROAA
Core net income (non-GAAP) (from above)	$	7,539		$	6,895		$	6,194		$	6,276		$	6,200		$	20,628		$	14,577
Average Assets	$	2,865,947		$	2,640,678		$	2,602,350		$	2,611,276		$	2,563,739		$	2,702,992		$	2,529,469
Core ROAA (annualized) (non-GAAP)		1.05	%		1.04	%		0.95	%		0.96	%		0.97	%		1.02	%		0.77	%

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

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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 18% to $25.2 million for the quarter ended September 30, 2016, compared to the same quarter of the prior year. For the nine months ended September 30, 2016, net interest income, on a tax equivalent basis, increased 16% to $69.5 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 15% in that period;

● The recent acquisition of CSB, whose strong margin will significantly contribute to the Company’s results; and

● The Company’s balance sheet restructuring and deleveraging strategies executed throughout 2015 and 2016.

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

● The average yield on interest-earning assets increased 18 basis points.

● The average cost of interest-bearing liabilities decreased 2 basis points.

● The net interest spread increased 20 basis points from 3.29% to 3.49%.

● The NIM improved 20 basis points from 3.51% to 3.71%.

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

● The average yield on interest-earning assets increased 15 basis points.

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

● The net interest spread increased 30 basis points from 3.13% to 3.43%.

● The NIM improved 28 basis points from 3.37% to 3.65%.

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 improvement in margin in the third quarter of 2016 was primarily the result of the acquisition of CSB. Excluding CSB, the Company’s margin was flat from the second quarter of 2016. CSB’s margin will fluctuate based on the amortization and accretion of purchase accounting adjustments, mostly notably, the discount on the loan portfolio. This benefit can fluctuate based on prepayments of both PCI and performing loans. As loans prepay, the associated discount/premium is accelerated.

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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

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.

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 September 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	$	17,685		$	13		0.29	%	$	22,435		$	8		0.14	%
Interest-bearing deposits at financial institutions		67,807			103		0.60	%		51,380			67		0.52	%
Investment securities (1)		525,417			4,826		3.65	%		591,538			4,683		3.14	%
Restricted investment securities		14,877			132		3.53	%		14,224			127		3.54	%
Gross loans/leases receivable (1) (2) (3)		2,077,376			23,330		4.47	%		1,744,043			19,564		4.45	%
Total interest earning assets	$	2,703,162		$	28,404		4.18	%	$	2,423,620		$	24,449		4.00	%
Noninterest-earning assets:
Cash and due from banks	$	52,678							$	44,679
Premises and equipment		42,986								38,318
Less allowance		(30,927	)							(26,417	)
Other		98,048								83,539
Total assets	$	2,865,947							$	2,563,739
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits	$	1,116,325			717		0.26	%	$	822,178			465		0.22	%
Time deposits		422,603			755		0.71	%		414,393			675		0.65	%
Short-term borrowings		30,208			12		0.16	%		147,880			64		0.17	%
FHLB advances		118,564			421		1.41	%		131,343			537		1.62	%
Junior subordinated debentures		33,430			306		3.64	%		40,510			317		3.10	%
Other borrowings		116,856			975		3.32	%		115,017			945		3.26	%
Total interest-bearing liabilities	$	1,837,986		$	3,186		0.69	%	$	1,671,321		$	3,003		0.71	%
Noninterest-bearing demand deposits	$	704,469							$	645,033
Other noninterest-bearing liabilities		45,123								30,932
Total liabilities	$	2,587,578							$	2,347,286
Stockholders' equity		278,369								216,453
Total liabilities and stockholders' equity	$	2,865,947							$	2,563,739
Net interest income				$	25,218							$	21,446
Net interest spread							3.49	%							3.29	%
Net interest margin							3.71	%							3.51	%
Ratio of average interest-earning assets to average interest bearing liabilities		147.07	%							145.01	%

(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.

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Analysis of Changes of Interest Income/Interest Expense

For the three months ended September 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		36			12			24
Investment securities (2)		143			2,551			(2,408	)
Restricted investment securities		5			(3	)		8
Gross loans/leases receivable (2) (3) (4)		3,766			75			3,691
Total change in interest income	$	3,955		$	2,651		$	1,304
INTEREST EXPENSE
Interest-bearing deposits	$	252		$	70		$	182
Time deposits		80			67			13
Short-term borrowings		(52	)		(5	)		(47	)
Federal Home Loan Bank advances		(116	)		(66	)		(50	)
Junior subordinated debentures		(11	)		214			(225	)
Other borrowings		30			16			14
Total change in interest expense	$	183		$	296		$	(113	)
Total change in net interest income	$	3,772		$	2,355		$	1,417

(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.

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	For the nine months ended September 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	$	16,364		$	36		0.29	%	$	18,549		$	18		0.13	%
Interest-bearing deposits at financial institutions		53,063			226		0.57	%		55,528			208		0.50	%
Investment securities (1)		527,162			14,084		3.57	%		608,687			13,725		3.01	%
Restricted investment securities		14,396			396		3.67	%		15,083			378		3.35	%
Gross loans/leases receivable (1) (2) (3)		1,937,086			63,784		4.40	%		1,688,605			56,452		4.47	%
Total interest earning assets	$	2,548,070		$	78,526		4.12	%	$	2,386,451		$	70,781		3.97	%
Noninterest-earning assets:
Cash and due from banks	$	49,677							$	43,924
Premises and equipment		39,637								38,354
Less allowance		(28,480	)							(24,746	)
Other		94,087								85,485
Total assets	$	2,702,992							$	2,529,469
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits	$	994,476			1,931		0.26	%	$	797,892			1,357		0.23	%
Time deposits		415,808			2,175		0.70	%		391,218			1,939		0.66	%
Short-term borrowings		55,623			74		0.18	%		163,091			181		0.15	%
FHLB advances		125,319			1,278		1.36	%		170,520			2,983		2.34	%
Junior subordinated debentures		33,825			913		3.61	%		40,475			937		3.10	%
Other borrowings		106,201			2,624		3.30	%		131,278			3,286		3.35	%
Total interest-bearing liabilities	$	1,731,251		$	8,995		0.69	%	$	1,694,474		$	10,683		0.84	%
Noninterest-bearing demand deposits	$	675,240							$	620,089
Other noninterest-bearing liabilities		41,499								32,771
Total liabilities	$	2,447,989							$	2,347,334
Stockholders' equity		255,002								182,134
Total liabilities and stockholders' equity	$	2,702,992							$	2,529,469
Net interest income				$	69,531							$	60,098
Net interest spread							3.43	%							3.13	%
Net interest margin							3.65	%							3.37	%
Ratio of average interest-earning assets to average interest-bearing liabilities		147.18	%							140.84	%

(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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

Analysis of Changes of Interest Income/Interest Expense

For the nine months ended September 30, 2016

	Inc./(Dec.)			Components
	from			of Change (1)
	Prior Period			Rate			Volume
	2016 vs. 2015
	(dollars in thousands)
INTEREST INCOME
Federal funds sold	$	18		$	22		$	(4	)
Interest-bearing deposits at financial institutions		18			32			(14	)
Investment securities (2)		359			3,051			(2,692	)
Restricted investment securities		18			44			(26	)
Gross loans/leases receivable (2) (3) (4)		7,332			(1,456	)		8,788
Total change in interest income	$	7,745		$	1,693		$	6,052
INTEREST EXPENSE
Interest-bearing deposits	$	574		$	209		$	365
Time deposits		236			109			127
Short-term borrowings		(107	)		49			(156	)
Federal Home Loan Bank advances		(1,705	)		(1,043	)		(662	)
Junior subordinated debentures		(24	)		194			(218	)
Other borrowings		(662	)		(45	)		(617	)
Total change in interest expense	$	(1,688	)	$	(527	)	$	(1,161	)
Total change in net interest income	$	9,433		$	2,220		$	7,213

(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.

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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 September 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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

RESULTS OF OPERATIONS

INTEREST INCOME

Interest income increased 16%, comparing the third quarter of 2016 to the same period of 2015 and increased 11%, comparing the first nine months 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. The acquisition of CSB also contributed to this increase. CSB’s interest income for the partial quarter totaled $2.3 million.

Overall, the Company’s average earning assets increased 12%, comparing the third quarter of 2016 to the third quarter of 2015. During the same time period, average gross loans and leases increased 19%, while average investment securities decreased 11%.

The securities portfolio yield continued to increase (from 3.14% for the third quarter of 2015 to 3.65% for the third quarter of 2016) as the Company continued to sell low-yielding investments taking advantage of favorable market opportunities. Call activity picked up in 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 third quarter of 2016 increased 6% from the third quarter of 2015. The acquisition of CSB contributed to this increase, as their interest expense for the partial quarter was $83 thousand. For the first nine months of 2016, interest expense decreased 16% compared to the first nine 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 nine months of 2016 have further reduced interest expense. Refer to Note 4 of the Consolidated Financial Statements in this Form 10-Q and Note 12 of the Consolidated Financial Statements 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. 

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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 $1.6 million for the third quarter of 2016, which was flat from the same quarter of the prior year. Notably, CSB incurred $270 thousand of provision expense in the partial quarter since acquisition. Provision for the first nine months of the year totaled $4.9 million, which was down $816 thousand, or 14%, compared to the first nine months of 2015. The decrease in provision expense was primarily due to stronger asset quality in recent periods.

The Company had provision of $1.6 million for the third quarter of 2016 which, when coupled with net charge-offs of $878 thousand, increased the Company’s allowance to $28.8 million at September 30, 2016. As of September 30, 2016, the Company’s allowance to total loans/leases was 1.22%, which was down from 1.46% at June 30, 2016 and down from 1.45% at September 30, 2015, respectively.

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of CSB were recorded at market value; therefore, there was no allowance associated with CSB’s loans at acquisition. Management continues to evaluate the allowance needed on the acquired CSB loans factoring in the net remaining discount ($12.7 million at September 30, 2016). When factoring this remaining discount into the Company’s allowance to total loans and leases calculation, the Company’s allowance as a percentage of total loans and leases increases from 1.22% to 1.76%.

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

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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 nine months ended September 30, 2016 and 2015.

	Three Months Ended
	September 30, 2016		September 30, 2015		$ Change			% Change
Trust department fees	$	1,518,600	$	1,531,964	$	(13,364	)		(0.9	)%
Investment advisory and management fees		765,977		782,442		(16,465	)		(2.1	)
Deposit service fees		1,150,869		984,631		166,238			16.9
Gains on sales of residential real estate loans, net		144,105		84,609		59,496			70.3
Gains on sales of government guaranteed portions of loans, net		218,785		759,668		(540,883	)		(71.2	)
Swap fee income		333,772		62,700		271,072			432.3
Securities gains, net		4,251,773		56,580		4,195,193			7,414.6
Earnings on bank-owned life insurance		450,251		407,018		43,233			10.6
Debit card fees		475,182		333,144		142,038			42.6
Correspondent banking fees		253,823		310,759		(56,936	)		(18.3	)
Participation service fees on commercial loan participations		237,456		201,822		35,634			17.7
Fee income from early termination of leases		95,129		89,332		5,797			6.5
Credit card issuing fees		137,620		133,904		3,716			2.8
Lawsuit award		-		387,045		(387,045	)		(100.0	)
Other		390,059		277,068		112,991			40.8
Total noninterest income	$	10,423,401	$	6,402,686	$	4,020,715			62.8	%

	Nine Months Ended
	September 30, 2016		September 30, 2015		$ Change			% Change
Trust department fees	$	4,606,590	$	4,676,535	$	(69,945	)		(1.5	)%
Investment advisory and management fees		2,117,100		2,250,918		(133,818	)		(5.9	)
Deposit service fees		3,028,758		2,790,456		238,302			8.5
Gains on sales of residential real estate loans		288,904		266,284		22,620			8.5
Gains on sales of government guaranteed portions of loans		2,701,203		899,987		1,801,216			200.1
Swap fee income		1,358,312		1,182,630		175,682			14.9
Securities gains, net		4,628,283		473,513		4,154,770			877.4
Earnings on bank-owned life insurance		1,324,380		1,318,909		5,471			0.4
Debit card fees		1,126,581		912,030		214,551			23.5
Correspondent banking fees		800,892		915,759		(114,867	)		(12.5	)
Participation service fees on commercial loan participations		694,175		647,598		46,577			7.2
Fee income from early termination of leases		172,922		250,892		(77,970	)		(31.1	)
Credit card issuing fees		413,348		403,713		9,635			2.4
Lawsuit award		-		387,045		(387,045	)		(100.0	)
Other		746,827		775,142		(28,315	)		(3.7	)
Total noninterest income	$	24,008,275	$	18,151,411	$	5,856,864			32.3	%

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 decreased 1% compared to the third quarter of 2015 and decreased 2% when comparing the first nine months 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.

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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 2% from the third quarter of 2015 to the third quarter of 2016 and they decreased 6% when comparing the first nine months of 2015 to the first nine months of 2016.

Deposit service fees expanded 17%, comparing the third quarter of 2016 to the same period in 2015, and expanded 9% when comparing the first nine months of 2016 to the same period of the prior year. The majority of this increase is the result of the addition of CSB. Its deposit service fees for the partial quarter were $152 thousand. Additionally, 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 increased 70%, comparing the third quarter of 2016 to the third quarter of 2015 and increased 9% when comparing the first nine months 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. Nearly half of the increase in the third quarter was attributable to the addition of CSB, which recognized $27 thousand of gains on the sales of residential real estate in the partial quarter.

The Company’s gains on the sale of government-guaranteed portions of loans for the third quarter were down 71% from the prior year but were up 200% when comparing the first nine months of 2016 to the same period of 2015. Given the nature of these gains, large fluctuations can happen from quarter-to-quarter. Year-to-date results for the current year are reflective of 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 have success in this category.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

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 $334 thousand in third quarter of 2016, as compared to $63 thousand in third quarter of 2015. Swap fee income totaled $1.4 million for the first nine months of 2016, compared to $1.2 million in the first nine months of 2015. Future levels of swap fee income are dependent upon prevailing interest rates.

Securities gains were $4.3 million for the third quarter of 2016, as compared to $57 thousand in the third quarter of 2015. Securities gains totaled $4.6 million for the first nine months of 2016, compared to $474 thousand for the first nine months of 2015. The Company took advantage of market opportunities by selling approximately $115.8 million of investments that were low-yielding during the nine months ended September 30, 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. In the third quarter of 2016, the Company had the opportunity to sell an equity investment and recognize a gain of $4.0 million, which was then used to reduce wholesale borrowings and further de-lever the balance sheet.

Earnings on BOLI increased 11% from the third quarter of 2015 to the third quarter of 2016 and increased less than 1% comparing the first nine months of 2015 to the first nine months 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. 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. CSB has not invested in BOLI as of September 30, 2016.

Debit card fees are the interchange fees paid on certain debit card customer transactions. Debit card fees increased 43% comparing the third quarter of 2016 to the third quarter of 2015, and increased 24% comparing the first nine months of 2016 to the first nine months of 2015. The primary reason for this increase in debit card fees was the addition of CSB, which had debit card fees totaling $122 thousand for the partial quarter. Additionally, 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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

Correspondent banking fees decreased 18%, comparing the third quarter of 2016 to the third quarter of 2015 and decreased 13% when comparing the first nine months of 2016 to the first nine months 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 179 banks in Iowa, Illinois and Wisconsin.

Participation service fees on commercial loan participations represent fees paid to the Company by the participant(s) to cover servicing expenses incurred by the Company. The fee is generally 0.25% of the participated loan amount. Additionally, the Company receives a mandated 1.00% servicing fee on the sold portion of government-guaranteed loans. Participation service fees increased 18%, comparing the third quarter of 2016 to the third quarter of 2015, and grew 7%, comparing the first nine months of 2016 to the first nine months of 2015.

The Company recognized $387 thousand of non-recurring income during the third quarter of 2015 from the favorable conclusion of a lawsuit.

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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 nine months ended September 30, 2016 and 2015.

	Three Months Ended
	September 30, 2016		September 30, 2015			$ Change			% Change
Salaries and employee benefits	$	11,202,460	$	10,583,361		$	619,099			5.8	%
Occupancy and equipment expense		2,086,331		1,863,648			222,683			11.9
Professional and data processing fees		1,931,329		1,742,268			189,061			10.9
Acquisition costs		2,046,036		-			2,046,036			100.0
FDIC insurance, other insurance and regulatory fees		582,835		702,136			(119,301	)		(17.0	)
Loan/lease expense		102,678		90,415			12,263			13.6
Net cost of operations of other real estate		133,055		(1,117,671	)		1,250,726			(111.9	)
Advertising and marketing		547,768		460,411			87,357			19.0
Postage and communications		237,569		220,895			16,674			7.5
Stationery and supplies		167,887		144,967			22,920			15.8
Bank service charges		415,401		392,352			23,049			5.9
Losses on debt extinguishment, net		4,137,310		-			4,137,310			100.0
Correspondent banking expense		205,998		176,977			29,021			16.4
Other		683,826		687,332			(3,506	)		(0.5	)
Total noninterest expense	$	24,480,483	$	15,947,091		$	8,533,392			53.5	%

	Nine Months Ended
	September 30, 2016		September 30, 2015			$ Change			% Change
Salaries and employee benefits	$	32,920,840	$	32,709,765		$	211,075			0.6	%
Occupancy and equipment expense		5,797,875		5,507,533			290,342			5.3
Professional and data processing fees		4,921,064		4,683,480			237,584			5.1
Acquisition costs		2,401,005		-			2,401,005			100.0
FDIC insurance, other insurance and regulatory fees		1,866,804		2,151,756			(284,952	)		(13.2	)
Loan/lease expense		419,846		601,888			(182,042	)		(30.2	)
Net cost of operations of other real estate		513,149		(1,088,696	)		1,601,845			(147.1	)
Advertising and marketing		1,367,478		1,368,152			(674	)		(0.0	)
Postage and communications		711,226		683,993			27,233			4.0
Stationery and supplies		490,682		424,330			66,352			15.6
Bank service charges		1,246,682		1,088,806			157,876			14.5
Losses on debt extinguishment, net		4,220,507		6,894,185			(2,673,678	)		(38.8	)
Correspondent banking expense		564,763		517,770			46,993			9.1
Other		1,736,813		1,775,637			(38,824	)		(2.2	)
Total noninterest expense	$	59,178,734	$	57,318,599		$	1,860,135			3.2	%

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

Salaries and employee benefits, which is the largest component of noninterest expense, increased from the third quarter of 2015 to the third quarter of 2016 by 6%. This increase is related to the acquisition of CSB. CSB’s salaries and benefits for the partial quarter totaled $759 thousand. Salaries and employee benefits increased only 1% when comparing the first nine months of 2016 to the first nine months of 2015.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

Occupancy and equipment expense increased 12%, comparing the third quarter of 2016 to the same period of the prior year and increased 5% when comparing the first nine months of 2016 to the same period of the prior year. The increased expense was mostly due to the addition of CSB for the partial quarter.

Professional and data processing fees increased 11%, comparing the third quarter of 2016 to the same period in 2015 and increased 5% comparing the first nine months of 2016 to the same period in 2015. This increased expense was mostly due to the addition of CSB for the partial quarter. CSB’s professional and data processing fees totaled $200 thousand for the period since acquisition. 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 third quarter of 2016 were $2.0 million. For the first nine months of 2016, acquisition costs totaled $2.4 million. These costs were related to the acquisition of CSB, as described in Note 9 to the Consolidated Financial Statements.

FDIC and other insurance expense decreased 17%, comparing the third quarter of 2016 to the third quarter of 2015, and decreased 13% comparing the first nine months 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. Partially offsetting this was the acquisition of CSB, which has $45 thousand of FDIC and other insurance expense.

Loan/lease expense increased 14%, comparing the third quarter of 2016 to the same quarter of 2015 and decreased 30% when comparing the first nine months 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 $133 thousand for the third quarter of 2016, compared to ($1.1) million for the third quarter of 2015. Net costs of operations of other real estate totaled $513 thousand for the first nine months of 2016, compared to ($1.1) million for the first nine months of 2015. The third quarter of 2015 included a large gain on the sale of an OREO property.

Bank service charges, a large portion of which includes indirect costs incurred to provide services to QCBT’s correspondent banking customer portfolio, increased 6% from the third quarter of 2015 to the third quarter of 2016 and increased 15% from the first nine months of 2015 to the first nine months 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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

In the first nine months of 2016, the Company incurred $4.2 million of losses on debt extinguishment, net. This amount included $5.4 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 nine months 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 Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Correspondent banking expense was up 16% when comparing the third quarter of 2016 to the third quarter of 2015 and up 9% when comparing the first nine 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 third quarter of 2016, the Company incurred income tax expense of $1.9 million. For the first nine months of the year, the Company incurred income tax expense of $6.0 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 nine months ended September 30, 2016 and 2015.

	For the Three Months Ended September 30,												For the Nine Months Ended September 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	$	2,787,998			35.0	%	$	3,135,250			35.0	%	$	8,815,741			35.0	%	$	4,042,152			35.0	%
Tax exempt income, net		(1,180,470	)		(14.8	)		(832,287	)		(9.3	)		(3,135,276	)		(12.5	)		(2,541,017	)		(22.0	)
Bank-owned life insurance		(157,587	)		(2.0	)		(142,456	)		(1.6	)		(463,532	)		(1.8	)		(461,618	)		(4.0	)
State income taxes, net of federal benefit, current year		289,287			3.6			284,346			3.2			853,325			3.4			369,563			3.2
Other		118,980			1.5			24,018			0.3			(39,883	)		(0.2	)		(3,131	)		(0.0	)
Federal and state income tax expense	$	1,858,208			23.3	%	$	2,468,871			27.6	%	$	6,030,375			23.9	%	$	1,405,949			12.2	%

The effective tax for the quarter ended September 30, 2016 was 23.3% which was a decrease from the effective tax rate of 27.6% for the quarter ended September 30, 2015. The effective tax rate for the nine months ended September 30, 2016 was 23.9%, which was an increase over the effective tax rate of 12.2% for the nine months ended September 30, 2015.

During the third quarter ended September 30, 2016, the Company incurred $2.0 million of acquisition costs (of which $1.5 million was deductible for income taxes) which contributed to a decline in pre-tax income comparing the third quarter of 2016 to the third quarter of 2015. In addition, the Company increased its income from tax exempt sources mostly from growth in tax-exempt municipal bonds and loans. Combining the impact of the acquisition costs and the increase in tax exempt income during the third quarter of 2016, the result is a larger portion of tax exempt income of the total pre-tax income which led to the reduced effective tax rate. Comparing the nine months ended September 30, 2016 to the same period in 2015, the Company’s pre-tax income more than doubled. In the first half of 2015, the Company incurred elevated deductible expenses (including $6.9 million of losses on debt extinguishment, net) which led to a significantly reduced effective tax rate for the first nine months of 2015.

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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
	September 30, 2016					June 30, 2016					December 31, 2015					September 30, 2015
	(dollars in thousands)
	Amount		%			Amount		%			Amount		%			Amount		%
Cash and due from banks	$	61,213		2	%	$	49,581		2	%	$	41,742		2	%	$	41,053		2	%
Federal funds sold and interest-bearing deposits		96,047		3	%		68,432		3	%		56,164		2	%		66,606		3	%
Securities		564,930		17	%		510,959		19	%		577,109		22	%		590,775		23	%
Net loans/leases		2,331,774		71	%		1,894,676		70	%		1,771,882		68	%		1,730,138		67	%
Other assets		227,022		7	%		159,786		6	%		146,301		6	%		147,283		6	%
Total assets	$	3,280,986		100	%	$	2,683,434		100	%	$	2,593,198		100	%	$	2,575,855		100	%
Total deposits	$	2,594,913		79	%	$	1,973,594		74	%	$	1,880,666		72	%	$	1,855,319		71	%
Total borrowings		312,104		10	%		381,875		14	%		444,162		17	%		456,091		18	%
Other liabilities		93,112		3	%		52,848		2	%		42,484		2	%		43,330		2	%
Total stockholders' equity		280,857		8	%		275,117		10	%		225,886		9	%		221,115		9	%
Total liabilities and stockholders' equity	$	3,280,986		100	%	$	2,683,434		100	%	$	2,593,198		100	%	$	2,575,855		100	%

During the third quarter of 2016, the Company’s total assets increased $597.6 million, or 22%, to a total of $3.3 billion. Most of this growth was attributable to CSB, which had $580.2 million in total assets as of September 30, 2016. Total gross loans and leases grew $437.8 million. Of the $437.8 million of loan growth, $419.5 million related to CSB, while the remaining $18.3 million was organic growth. The loan and lease growth was funded primarily by deposits, which increased $140.1 million in the third quarter, excluding the acquisition of CSB. This deposit growth allowed the Company to further reduce borrowings. Total borrowings decreased $69.8 million, or 18%, in the third quarter of 2016. Stockholders’ equity increased $5.7 million, or 2%, in the current quarter due to net income.

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 and related 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.

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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
	September 30, 2016						June 30, 2016						December 31, 2015						September 30, 2015
	Amount			%			Amount			%			Amount			%			Amount			%
	(dollars in thousands)
U.S. govt. sponsored agency securities	$	67,885			12	%	$	88,321			25	%	$	213,537			37	%	$	247,625			43	%
Municipal securities		360,330			64	%		302,689			53	%		280,203			49	%		265,293			42	%
Residential mortgage-backed and related securities		133,173			24	%		116,765			22	%		80,670			14	%		74,901			14	%
Other securities		3,542			1	%		3,184			0	%		2,699			0	%		2,956			1	%
	$	564,930			100	%	$	510,959			100	%	$	577,109			100	%	$	590,775			100	%
Securities as a % of Total Assets		17.22	%					19.04	%					22.25	%					22.94	%
Net Unrealized Gains (Losses) as a % of Amortized Cost		1.53	%					1.95	%					(0.03	%)					0.41	%
Duration (in years)		5.7						5.1						5.1						4.5
Yield on investment securities (tax equivalent)		3.65	%					3.64	%					3.07	%					3.14	%

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 1.95% of amortized cost at June 30, 2016 to a net unrealized gain position of 1.53% of amortized cost at September 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 increased slightly during the current quarter. Duration was extended from the strong growth in longer term fixed rate municipal securities. Additionally, some shorter-duration agency securities were sold during the quarter, increasing the average duration of the overall portfolio.

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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

LOANS/LEASES 

Total loans/leases grew 10.6% on an annualized basis during the first nine months of 2016 when excluding CSB. The mix of the loan/lease types within the Company’s loan/lease portfolio is presented in the following table.

	As of
	September 30, 2016						June 30, 2016						December 31, 2015						September 30, 2015
	Amount			%			Amount			%			Amount			%			Amount			%
	(dollars in thousands)
C&I loans	$	804,308			34	%	$	706,261			37	%	$	648,160			36	%	$	647,398			36	%
CRE loans		1,070,305			45	%		784,379			41	%		724,369			40	%		692,569			41	%
Direct financing leases		166,924			7	%		169,928			9	%		173,656			10	%		173,304			10	%
Residential real estate loans		229,081			10	%		180,482			9	%		170,433			10	%		165,061			9	%
Installment and other consumer loans		81,918			3	%		73,658			4	%		73,669			4	%		69,863			4	%
Total loans/leases	$	2,352,536			100	%	$	1,914,708			100	%	$	1,790,287			100	%	$	1,748,195			100	%
Plus deferred loan/lease origination costs, net of fees		8,065						8,065						7,736						7,477
Less allowance		(28,827	)					(28,097	)					(26,141	)					(25,534	)
Net loans/leases	$	2,331,774					$	1,894,676					$	1,771,882					$	1,730,138

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 September 30, 2016 and June 30, 2016, respectively, approximately 30% and 33% of the CRE loan portfolio was owner-occupied. The decrease in this percentage in the third quarter was mostly due to the addition of CSB, which had a slightly lower owner-occupied percentage as compared to the other three charters. CSB’s percentage of owner-occupied loans was 17% of their CRE portfolio, while the other three charters were collectively at 34%.

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 $156.9 million, or 24% over the past twelve months. A portion of this growth was attributable to the acquisition of CSB, which had $101.0 million of C&I loans as of September 30, 2016.

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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 September 30,					As of June 30,					As of December 31,					As of September 30,
	2016					2016					2015					2015
	Amount		%			Amount		%			Amount		%			Amount		%
	(dollars in thousands)
Lessors of Nonresidential Buildings	$	333,100		32	%	$	285,522		36	%	$	264,133		37	%	$	250,202		36	%
Lessors of Residential Buildings		141,051		13	%		104,395		13	%		89,189		12	%		92,986		13	%
New Single-Family Housing Construction		86,560		8	%		7,024		1	%		5,406		1	%		7,717		1	%
Lessors of Other Real Estate Property		23,521		2	%		21,803		3	%		22,009		3	%		18,056		3	%
Hotels		24,509		2	%		19,804		3	%		19,228		3	%		19,190		3	%
Land Subdivision		31,690		3	%		18,034		2	%		17,839		2	%		15,537		2	%
Nursing Care Facilities		21,823		2	%		15,070		2	%		17,288		2	%		10,689		2	%
Other *		408,051		38	%		312,727		40	%		289,277		40	%		278,192		40	%
Total CRE Loans	$	1,070,305		100	%	$	784,379		100	%	$	724,369		100	%	$	692,569		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 changes in concentrations in the current quarter were primarily attributable to the addition of CSB.

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.

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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 nine months ended September 30, 2016 and 2015 are presented as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
	(dollars in thousands)						(dollars in thousands)
Balance, beginning	$	28,097		$	26,146		$	26,141		$	23,074
Provisions charged to expense		1,608			1,635			4,879			5,694
Loans/leases charged off		(987	)		(2,476	)		(2,489	)		(4,119	)
Recoveries on loans/leases previously charged off		109			229			296			885
Balance, ending	$	28,827		$	25,534		$	28,827		$	25,534

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 *	September 30, 2016			June 30, 2016			December 31, 2015			September 30, 2015
	(dollars in thousands)
Special Mention (Rating 6)	$	19,572		$	16,231		$	37,289		$	30,463
Substandard (Rating 7)		51,029			44,636			27,962			23,217
Doubtful (Rating 8)		-			-			-			-
	$	70,601		$	60,867		$	65,251		$	53,680
Criticized Loans **	$	70,601		$	60,867		$	65,251		$	53,680
Classified Loans ***	$	51,029		$	44,636		$	27,962		$	23,217
Criticized Loans as a % of Total Loans/Leases		2.99	%		3.17	%		3.63	%		3.06	%
Classified Loans as a % of Total Loans/Leases		2.16	%		2.32	%		1.56	%		1.32	%

* 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 both criticized and classified loans during the first nine months of 2016. The increases during the first nine months of 2016 were primarily due to a limited number of relationship downgrades. A portion of the third quarter increase was due to the addition of CSB (approximately $2.6 million). The Company continues its strong focus on improving credit quality in an effort to limit NPLs.

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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
	September 30, 2016			June 30, 2016			December 31, 2015			September 30, 2015
Allowance / Gross Loans/Leases		1.22	%		1.46	%		1.45	%		1.45	%
Allowance / NPLs *		173.78	%		223.42	%		223.33	%		207.39	%

*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 September 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.

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of CSB were recorded at market value; therefore, there was no allowance associated with CSB’s loans at acquisition. Management continues to evaluate the allowance needed on the acquired CSB loans factoring in the net remaining discount ($12.7 million at September 30, 2016). When factoring this remaining discount into the Company’s allowance to total loans and leases calculation, the Company’s allowance as a percentage of total loans and leases increases from 1.22% to 1.76%. This elimination of CSB’s allowance also resulted in a decrease of the allowance to NPLs ratio, as CSB’s nonperforming loans no longer have reserves allocated to them and instead, have a loan discount amount that is separate from the allowance.

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

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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 September 30,			As of June 30,			As of December 31,			As of September 30,
	2016			2016			2015			2015
	(dollars in thousands)
Nonaccrual loans/leases (1) (2)	$	14,371		$	10,737		$	10,648		$	11,269
Accruing loans/leases past due 90 days or more		392			86			3			3
TDRs - accruing		1,825			1,753			1,054			1,040
Total NPLs		16,588			12,576			11,705			12,312
OREO		5,808			6,179			7,151			8,140
Other repossessed assets		353			154			246			194
Total NPAs	$	22,749		$	18,909		$	19,102		$	20,646
NPLs to total loans/leases		0.70	%		0.65	%		0.65	%		0.70	%
NPAs to total loans/leases plus repossessed property		0.96	%		0.98	%		1.06	%		1.17	%
NPAs to total assets		0.69	%		0.70	%		0.74	%		0.80	%
Texas ratio (3)		7.81	%		6.28	%		7.62	%		8.45	%

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

(2) Includes TDRs of $4.9 million at September 30, 2016, $1.6 million at June 30, 2016, $1.5 million at December 31, 2015, and $3.9 million at September 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 September 30, 2016 were $22.7 million, which were up $3.8 million from June 30, 2016 and up $2.1 million from September 30, 2015. The increase in the current quarter is primarily due to the acquisition of CSB. In addition, the ratio of NPAs to total assets was 0.69% at September 30, 2016, which was down from 0.70% at June 30, 2016, and down from 0.80% at September 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 September 30, 2016, government guaranteed amounts of nonaccrual loans totaled approximately $1.9 million, or 13% of the $14.4 million of total nonaccrual loans/leases.

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

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

DEPOSITS 

Deposits increased $621.3 million during the third quarter of 2016. Of this, $481.2 million was the result of CSB and $140.1 million was organic growth. The table below presents the composition of the Company’s deposit portfolio.

	As of
	September 30, 2016					June 30, 2016					December 31, 2015					September 30, 2015
	(dollars in thousands)
	Amount		%			Amount		%			Amount		%			Amount		%
Noninterest bearing demand deposits	$	764,615		30	%	$	615,764		31	%	$	615,292		33	%	$	585,300		34	%
Interest bearing demand deposits		1,298,781		50	%		918,036		47	%		886,294		47	%		884,163		43	%
Time deposits		420,470		16	%		337,584		17	%		309,974		16	%		302,978		18	%
Brokered deposits		111,047		4	%		102,210		5	%		69,106		4	%		82,878		5	%
	$	2,594,913		100	%	$	1,973,594		100	%	$	1,880,666		100	%	$	1,855,319		100	%

Strong organic growth of $140.1 million was driven by the Company’s strong focus on core deposit growth. Of the $140.1 million in growth in the third quarter, $28.9 million was noninterest bearing, $94.2 million was interest bearing, $8.1 million was time deposits and $8.8 million was brokered deposits. The noninterest bearing deposit growth was led by the correspondent banking area, which grew deposits $22.6 million.

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
	September 30, 2016		June 30, 2016		December 31, 2015		September 30, 2015
	(dollars in thousands)
Overnight repurchase agreements with customers	$	8,265	$	21,441	$	73,873	$	74,404
Federal funds purchased		51,750		30,120		70,790		93,160
	$	60,015	$	51,561	$	144,663	$	167,564

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.

71

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued 

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

	As of
	September 30, 2016		June 30, 2016		December 31, 2015		September 30, 2015
	(dollars in thousands)
Term FHLB advances	$	83,343	$	78,000	$	97,000	$	102,000
Overnight FHLB advances		55,300		118,900		54,000		31,000
	$	138,643	$	196,900	$	151,000	$	133,000

Term FHLB advances increased in the current quarter, due to the addition of CSB, which had $15.3 million of FHLB advances as of September 30, 2016.

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 and related securities. Structured repos totaled $45 million, $100 million, $110 million and $115 million as of September 30, 2016, June 30, 2016, December 31, 2015 and September 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.

	September 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	$	159,883		0.59	%	$	125,038		0.59	%
2017		54,398		2.02			49,055		2.07
2018		38,459		2.70			57,283		2.87
2019		16,950		2.65			50,089		3.14
2020		25,000		2.66			45,000		2.66
Thereafter		-		-			3,641		2.51
Total Wholesale Funding	$	294,690		1.38	%	$	330,106		1.89	%

During the first nine months of 2016, wholesale funding decreased $35.4 million. Year-to-date, the Company has prepaid $80.0 million of borrowings and repaid $28.1 million of borrowings at maturity throughout the year. Offsetting these reductions in wholesale borrowings was a net increase in brokered funding of $56.1 million and the addition of CSB, which had $15.3 million of outstanding advance as of September 30, 2016. Short-term borrowings from the FHLB increased $1.3 million since December 31, 2015.

72

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
	September 30, 2016			June 30, 2016			December 31, 2015			September 30, 2015
	Amount			Amount			Amount			Amount
	(dollars in thousands)
Common stock	$	13,075		$	13,057		$	11,761		$	11,729
Additional paid in capital		155,951			155,454			123,283			122,574
Retained earnings		110,610			105,024			92,966			86,649
AOCI (loss)		1,221			1,582			(2,124	)		163
Total stockholders' equity	$	280,857		$	275,117		$	225,886		$	221,115
TCE* / TA		7.92	%		10.10	%		8.55	%		8.42	%

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

The decrease in TCE/TA in the third quarter was due to the addition of CSB.

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 $138.2 million during the third 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 AFS, 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 September 30, 2016, the subsidiary banks had 34 lines of credit totaling $393.6 million, of which $37.6 million was secured and $356.0 million was unsecured. At September 30, 2016, $354.6 million was available as $39.0 million was utilized for short-term borrowings needs at QCBT.

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.

73

Part I

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued

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 September 30, 2016, the Company had borrowed $5.0 million on this revolving credit note and the remaining $5.0 million is available.

The Company currently has $320.7 million in correspondent banking deposits spread over 179 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 $132.1 million during the first nine months of 2016, compared to $46.2 million for the same period of 2015. Proceeds from calls, maturities, paydowns, and sales of securities were $219.1 million for the first nine months of 2016, compared to $264.8 million for the same period of 2015. Purchases of securities used cash of $111.6 million for the first nine months of 2016, compared to $200.2 million for the same period of 2015. The net increase in loans/leases used cash of $144.6 million for the first nine months of 2016 compared to $129.4 million for the same period of 2015. The net cash paid for the acquisition of CSB was $69.9 million.

Financing activities provided cash of $125.7 million for the first nine months of 2016, compared to $25.9 million for same period of 2015. Net increases in deposits totaled $227.9 million for the first nine months of 2016, compared to $175.7 million for the same period of 2015. During the first nine months of 2016, the Company’s short-term borrowings decreased $84.6 million, while they decreased $100.8 million for the same period of 2015. During the first nine months of 2016, the Company used $64.8 million to prepay select FHLB advances and other borrowings, compared to $110.4 million for the same period of 2015. In the first nine months of 2016, the Company received $29.8 million of proceeds from the common stock offering of 1.2 million shares of common stock. During the first nine 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 first nine months of 2016, the Company received $35.0 million in cash from the proceeds of other borrowings.

Total cash provided by operating activities was $25.8 million for the first nine months of 2016, compared to $23.2 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.

74

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 September 30, 2016 and December 31, 2015.

Name	Date Issued	Amount Outstanding September 30, 2016		Amount Outstanding December 31, 2015		Interest Rate	Interest Rate as of September 30, 2016			Interest Rate as of December 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		2.23	%		1.87	%
Community National Statutory Trust II	September 2004		3,093,000		3,093,000	2.17% over 3-month LIBOR		3.03	%		2.74	%
Community National Statutory Trust III	March 2007		3,609,000		3,609,000	1.75% over 3-month LIBOR		2.60	%		2.26	%
		$	35,570,000	$	40,725,000	Weighted Average Rate		2.99	%		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 September 30, 2016, the remaining discount was $2.1 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 October 27, 2016, the Company filed a universal shelf registration statement on Form S-3 with the SEC. When declared effective by the SEC, the registration statement will allow the Company to offer and sell various types of securities, including common stock, preferred stock, debt securities and/or warrants, from time to time up to an aggregate amount of $100 million. The Company utilized $30.1 million of its $100 million previous shelf registration filing through the offer and sale of its common stock in the second quarter of 2016 to help fund the acquisition of CSB. This Form S-3 filing will replenish the amount available to the previous level of $100 million. The specific terms and prices of any securities offered pursuant to the registration statement 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.

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.

75

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. One should not consider the risk factors to be a complete discussion of risks, uncertainties and assumptions.

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

76

Part I

Item 3

QUANTITATIVE AND QUALITATIVE DISCLOSURE 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.

77

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 June 30, 2016			As of December 31, 2015			As of December 31, 2014
100 basis point downward shift		-10.0	%		-1.1	%		-2.1	%		-1.7	%
200 basis point upward shift		-10.0	%		-2.3	%		-2.7	%		-5.0	%
300 basis point upward shock		-25.0	%		-4.6	%		-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 June 30, 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.

78

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 September 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.

79

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

80

Part II

QCR HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION - continued

Item 6	Exhibits
10.1	Form of QCR Holdings, Inc. 2016 Equity Incentive Plan Nonqualified Stock Option Award Agreement incorporated by reference to the registrant’s Form S-8 filed with the Commission on October 27, 2016 (SEC file no. 333-214282).

10.2 Form of QCR Holdings, Inc. 2016 Equity Incentive Plan Restricted Stock Award Agreement incorporated by reference to the registrant’s Form S-8 filed with the Commission on October 27, 2016 (SEC file no. 333-214282).

10.3 Form of QCR Holdings, Inc. 2016 Equity Incentive Plan Restricted Stock Unit Award Agreement incorporated by reference to the registrant’s Form S-8 filed with the Commission on October 27, 2016 (SEC file no. 333-214282).

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 September 30, 2016 and December 31, 2015; (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2016 and September 30, 2015; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and September 30, 2015; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2016 and September 30, 2015; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and September 30, 2015; and (vi) Notes to the Consolidated Financial Statements.

81

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 November 8, 2016	/s/ Douglas M. Hultquist
	Douglas M. Hultquist, President
	Chief Executive Officer

Date November 8, 2016	/s/ Todd A. Gipple
	Todd A. Gipple, Executive Vice President
	Chief Operating Officer
	Chief Financial Officer

Date November 8, 2016	/s/ Elizabeth A. Grabin
	Elizabeth A. Grabin, Vice President
	Controller & Director of Financial Reporting
	Principal Accounting Officer

82 

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:     November 8, 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:     November 8, 2016	By:	/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 September 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

November 8, 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 September 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

November 8, 2016

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 02, 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)		13,075,670
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks	$ 61,213,134	$ 41,742,321
Federal funds sold	21,022,000	19,850,000
Interest-bearing deposits at financial institutions	75,025,417	36,313,965
Securities held to maturity, at amortized cost	306,740,174	253,674,159
Securities available for sale, at fair value	258,190,081	323,434,982
Total securities	564,930,255	577,109,141
Loans receivable held for sale	1,377,875	565,850
Loans/leases receivable held for investment	2,359,222,637	1,797,456,825
Gross loans/leases receivable	2,360,600,512	1,798,022,675
Less allowance for estimated losses on loans/leases	(28,826,835)	(26,140,906)
Net loans/leases receivable	2,331,773,677	1,771,881,769
Bank-owned life insurance	56,810,035	55,485,655
Premises and equipment, net	59,484,141	37,350,352
Restricted investment securities	14,999,425	14,835,925
Other real estate owned, net	5,807,603	7,150,658
Goodwill	13,631,626	3,222,688
Net book value	7,613,593	1,471,409
Other assets	68,675,203	26,784,392
Total assets	3,280,986,109	2,593,198,275
LIABILITIES
Noninterest-bearing	764,614,548	615,292,211
Interest-bearing	1,830,298,205	1,265,373,973
Total deposits	2,594,912,753	1,880,666,184
Short-term borrowings	60,015,417	144,662,716
Federal Home Loan Bank advances	138,642,529	151,000,000
Other borrowings	80,000,000	110,000,000
Junior subordinated debentures	33,446,578	38,499,052
Other liabilities	93,111,672	42,484,573
Total liabilities	3,000,128,949	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	13,075,307	11,761,083
Additional paid-in capital	155,950,678	123,282,851
Retained earnings	110,610,144	92,965,645
Securities available for sale	2,379,584	(1,324,408)
Interest rate cap derivatives	(1,158,553)	(799,421)
Total stockholders' equity	280,857,160	225,885,750
Total liabilities and stockholders' equity	$ 3,280,986,109	$ 2,593,198,275

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 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 (Unaudited) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Loans/leases, including fees		$ 23,001,107	$ 19,278,335	$ 62,939,656	$ 55,528,578
Securities:
Taxable		1,057,204	1,639,534	3,605,948	5,317,794
Nontaxable		2,510,169	2,021,804	7,028,387	5,642,692
Interest-bearing deposits at financial institutions		103,216	66,604	225,775	208,323
Restricted investment securities		132,047	127,172	396,157	377,651
Federal funds sold		12,992	7,663	36,155	18,416
Total interest and dividend income		26,816,735	23,141,112	74,232,078	67,093,454
Interest expense:
Deposits		1,472,031	1,140,419	4,106,227	3,296,351
Short-term borrowings		12,541	63,815	73,672	181,084
Federal Home Loan Bank advances		420,570	537,473	1,278,207	2,982,834
Other borrowings		974,634	944,903	2,624,154	3,285,231
Junior subordinated debentures		306,182	316,976	912,706	937,375
Total interest expense		3,185,958	3,003,586	8,994,966	10,682,875
Net interest income		23,630,777	20,137,526	65,237,112	56,410,579
Provision for loan/lease losses		1,607,986	1,635,263	4,878,821	5,694,384
Net interest income after provision for loan/lease losses		22,022,791	18,502,263	60,358,291	50,716,195
Noninterest income:
Trust department fees		1,518,600	1,531,964	4,606,590	4,676,535
Investment advisory and management fees		765,977	782,442	2,117,100	2,250,918
Deposit service fees		1,150,869	984,631	3,028,758	2,790,456
Gains on sales of residential real estate loans, net		144,105	84,609	288,904	266,284
Gains on sales of government guaranteed portions of loans, net		218,785	759,668	2,701,203	899,987
Swap fee income		333,772	62,700	1,358,312	1,182,630
Securities gains, net		4,251,773	56,580	4,628,283	473,513
Earnings on bank-owned life insurance		450,251	407,018	1,324,380	1,318,909
Debit card fees		475,182	333,144	1,126,581	912,030
Correspondent banking fees		253,823	310,759	800,892	915,759
Participation service fees on commercial loan participations		237,456	201,822	694,175	647,598
Fee income from early termination of leases		95,129	89,332	172,922	250,892
Credit card issuing fees		137,620	133,904	413,348	403,713
Lawsuit award			387,045		387,045
Other		390,059	277,068	746,827	775,142
Total noninterest income		10,423,401	6,402,686	24,008,275	18,151,411
Noninterest expense:
Salaries and employee benefits		11,202,460	10,583,361	32,920,840	32,709,765
Occupancy and equipment expense		2,086,331	1,863,648	5,797,875	5,507,533
Professional and data processing fees		1,931,329	1,742,268	4,921,064	4,683,480
Acquisition costs		2,046,036		2,401,005
FDIC insurance, other insurance and regulatory fees		582,835	702,136	1,866,804	2,151,756
Loan/lease expense		102,678	90,415	419,846	601,888
Net cost of operations of other real estate		133,055	(1,117,671)	513,149	(1,088,696)
Advertising and marketing		547,768	460,411	1,367,478	1,368,152
Postage and communications		237,569	220,895	711,226	683,993
Stationery and supplies		167,887	144,967	490,682	424,330
Bank service charges		415,401	392,352	1,246,682	1,088,806
Losses on debt extinguishment, net		4,137,310		4,220,507	6,894,185
Correspondent banking expense		205,998	176,977	564,763	517,770
Other		683,826	687,332	1,736,813	1,775,637
Total noninterest expense		24,480,483	15,947,091	59,178,734	57,318,599
Net income before income taxes		7,965,709	8,957,858	25,187,832	11,549,007
Federal and state income tax expense		1,858,208	2,468,871	6,030,375	1,405,949
Net income		$ 6,107,501	$ 6,488,987	$ 19,157,457	$ 10,143,058
Basic earnings (loss) per common share (in dollars per share) (in dollars per share)		$ 0.47	$ 0.55	$ 1.55	$ 1.03
Diluted earnings (loss) per common share (in dollars per share) (in dollars per share)		$ 0.46	$ 0.55	$ 1.52	$ 1.01
Weighted average common shares outstanding (in shares)	[1]	13,066,777	11,713,993	12,398,491	9,878,882
Weighted average common and common equivalent shares outstanding (in shares)		13,269,703	11,875,930	12,580,042	10,024,441
Common cash dividends declared, dividends per share (in dollars per share)		$ 0.04		$ 0.12	$ 0.04
Loans/leases, including fees		$ 23,001,107	$ 19,278,335	$ 62,939,656	$ 55,528,578

[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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income	$ 6,107,501	$ 6,488,987	$ 19,157,457	$ 10,143,058
Unrealized holding gains arising during the period before tax	3,682,514	4,155,252	10,628,032	4,598,599
Less reclassification adjustment for gains included in net income before tax	4,251,773	56,580	4,628,283	473,513
	(569,259)	4,098,672	5,999,749	4,125,086
Unrealized holding losses arising during the period before tax	(16,327)	(419,219)	(552,510)	(672,169)
Less reclassification adjustment for ineffectiveness and caplet amortization before tax	33,246	20,099	82,281	30,562
	(49,573)	(439,318)	(634,791)	(702,731)
Other comprehensive income (loss), before tax	(618,832)	3,659,354	5,364,958	3,422,355
Tax expense (benefit)	(257,648)	1,402,871	2,020,098	1,323,928
Other comprehensive income (loss), net of tax	(361,184)	2,256,483	3,344,860	2,098,427
Comprehensive income	5,746,317	8,745,470	22,502,317	12,241,485
Other comprehensive income:
Unrealized holding gains arising during the period before tax	3,682,514	4,155,252	10,628,032	4,598,599
Less reclassification adjustment for gains included in net income before tax	4,251,773	56,580	4,628,283	473,513
	(569,259)	4,098,672	5,999,749	4,125,086
Unrealized holding losses arising during the period before tax	(16,327)	(419,219)	(552,510)	(672,169)
Less reclassification adjustment for ineffectiveness and caplet amortization before tax	33,246	20,099	82,281	30,562
	(49,573)	(439,318)	(634,791)	(702,731)
Other comprehensive income (loss), before tax	(618,832)	3,659,354	5,364,958	3,422,355
Tax expense (benefit)	(257,648)	1,402,871	2,020,098	1,323,928
Other comprehensive income (loss), net of tax	(361,184)	2,256,483	3,344,860	2,098,427
Comprehensive income	$ 5,746,317	$ 8,745,470	$ 22,502,317	$ 12,241,485

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, 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						10,143,058
Other comprehensive income, net of tax						2,098,427
Balance at Sep. 30, 2015	11,728,911	122,573,712	86,649,405	163,211		221,115,239
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, 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)
Exchange of shares of common stock in connection with stock options exercised	(630)	(10,616)				(11,246)
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
Net income			6,488,987			6,488,987
Other comprehensive income, net of tax				2,256,483		2,256,483
Common cash dividends declared			(1,393)			(1,393)
Proceeds from issuance of shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan	5,394	81,309				86,703
Proceeds from issuance of shares of common stock as a result of stock options exercised	24,711	318,732				343,443
Stock compensation expense		203,967				203,967
Tax benefit of nonqualified stock options exercised		39,632				39,632
Restricted stock awards	228	(228)
Balance at Sep. 30, 2015	11,728,911	122,573,712	86,649,405	163,211		221,115,239
Retirement of treasury stock, shares of common stock	(121,246)	(580,886)	(904,378)		$ 1,606,510
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, 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	46,020	729,473				775,493
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 stock options exercised	(15,689)	(346,834)				(362,523)
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						19,157,457
Other comprehensive income, net of tax						3,344,860
Balance at Sep. 30, 2016	13,075,307	155,950,678	110,610,144	1,221,031		280,857,160
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, 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
Net income			6,107,501			6,107,501
Other comprehensive income, net of tax				(361,184)		(361,184)
Common cash dividends declared			(521,384)			(521,384)
Proceeds from issuance of shares of common stock as a result of stock purchased under the Employee Stock Purchase Plan	4,085	85,217				89,302
Proceeds from issuance of shares of common stock as a result of stock options exercised	14,692	173,890				188,582
Stock compensation expense		190,211				190,211
Tax benefit of nonqualified stock options exercised		72,694				72,694
Exchange of shares of common stock in connection with stock options exercised	(838)	(25,115)				(25,953)
Balance at Sep. 30, 2016	$ 13,075,307	$ 155,950,678	$ 110,610,144	$ 1,221,031		$ 280,857,160

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015
Common Stock [Member]
Common cash dividends declared, dividends per share (in dollars per share)	$ 0.04	$ 0.04	$ 0.04		$ 0.04
Proceeds from issuance of common stock, Employee Stock Purchase Plan, shares (in shares)	4,085	6,982	5,054	5,394	8,558	5,679
Proceeds from issuance of common stock, stock options exercised, shares (in shares)	14,692	20,975	46,020	24,711	17,240	9,688
Exchange of common stock, stock options exercised, shares (in shares)	838		15,689		630
Exchange of common stock, restricted stock vested, shares (in shares)			3,939			3,272
Stock Issued During Period, Shares, New Issues		1,215,000			3,680,000
Retirement of treasury stock, shares (in shares)				121,246
Common cash dividends declared, dividends per share (in dollars per share)	$ 0.04
Stock Issued During Period, Shares, New Issues		1,215,000

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015	Sep. 30, 2016		Sep. 30, 2015
Community State Bank Acquisition [Member]
Fair value of assets acquired:
Cash and due from banks *	$ 10,094,645	[1]		$ 10,094,645	[1]
Federal funds sold	698,000			698,000
Interest-bearing deposits at financial institutions	14,730,157			14,730,157
Securities	102,640,029			102,640,029
Loans/leases receivable held for investment, net	419,029,277			419,029,277
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	20,684,880			20,684,880
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	6,352,653			6,352,653
Restricted investment securities	1,512,900			1,512,900
Other real estate owned	650,000			650,000
Other assets	4,763,224			4,763,224
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	581,155,765			581,155,765
Fair value of liabilities assumed:
Deposits	486,298,262			486,298,262
FHLB advances	20,368,877			20,368,877
Other liabilities	4,897,564			4,897,564
Total liabilities assumed	511,564,703			511,564,703
Net assets acquired	69,591,062			69,591,062
Consideration paid:
Cash paid *				80,000,000	[1]
Business Combination, Consideration Transferred				80,000,000
Goodwill	10,408,938			10,408,938
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	6,107,501		6,488,987	19,157,457		10,143,058
Depreciation				2,422,257		2,283,558
Provision for loan/lease losses	1,607,986		1,635,263	4,878,821		5,694,384
Stock-based compensation expense				760,541		758,493
Deferred compensation expense accrued				910,439		767,292
Losses (gains) on other real estate owned, net				130,280		(1,204,016)
Amortization of premiums on securities, net				968,553		756,876
Securities gains, net				(4,628,283)		(473,513)
Loans originated for sale				(57,160,485)		(29,968,289)
Proceeds on sales of loans				59,838,717		31,154,335
Gains on sales of residential real estate loans	(144,105)		(84,609)	(288,904)		(266,284)
Gains on sales of government guaranteed portions of loans	(218,785)		(759,668)	(2,701,203)		(899,987)
Losses on debt extinguishment, net	4,137,310			4,220,507		6,894,185
Amortization of core deposit intangible				210,469		149,634
Accretion of acquisition fair value adjustments, net				(690,379)		(334,990)
Increase in cash value of bank-owned life insurance				(1,324,380)		(1,318,909)
Increase in other assets				(2,480,461)		(5,211,555)
Decrease in other liabilities				1,614,477		4,269,482
Net cash provided by operating activities				25,838,423		23,193,754
Net decrease (increase) in federal funds sold				(474,000)		12,450,000
Net decrease (increase) in interest-bearing deposits at financial institutions				(23,981,295)		3,059,051
Proceeds from sales of other real estate owned				1,913,775		6,774,151
Purchases				(111,622,489)		(200,249,686)
Calls, maturities and redemptions				109,421,584		187,029,003
Paydowns				21,939,878		11,859,406
Sales				87,772,898		65,889,838
Purchases				(25,700)		(2,806,650)
Redemptions				1,375,100		3,435,200
Net increase in loans/leases originated and held for investment				(144,605,204)		(129,356,790)
Purchase of premises and equipment				(3,871,166)		(4,327,671)
Net cash paid for Community State Bank acquisition				(69,905,355)
Net cash used in investing activities				(132,061,974)		(46,244,148)
Net increase in deposit accounts				227,918,002		175,656,866
Net decrease in short-term borrowings				(84,647,299)		(100,787,458)
Term advances						5,000,000
Calls and maturities				(19,000,000)		(24,000,000)
Net change in short-term and overnight advances				1,300,000		24,000,000
Prepayments	(5,000,000)			(10,524,197)		(81,192,185)
Proceeds from other borrowings				35,000,000
Calls, maturities and scheduled principal payments						(7,350,000)
Prepayments				(50,320,407)		(29,177,000)
Retirement of junior subordinated debentures				(3,955,000)
Payment of cash dividends on common stock				(1,460,157)		(782,054)
Net proceeds from the common stock offering				1,554,506		1,016,324
Net cash provided by financing activities				125,694,364		25,868,616
Net increase in cash and due from banks				19,470,813		2,818,222
Cash and due from banks, beginning				41,742,321		38,235,019
Cash and due from banks, ending	61,213,134		41,053,241	61,213,134		41,053,241
Supplemental disclosure of cash flow information, cash payments for:
Interest				9,081,850		10,880,589
Income/franchise taxes				9,487,002		1,985,275
Supplemental schedule of noncash investing activities:
Change in accumulated other comprehensive income, unrealized gains on securities available for sale and derivative instruments, net				3,344,860		2,098,427
Exchange of shares of common stock in connection with payroll taxes for restricted stock and in connection with stock options exercised				(477,387)		(68,706)
Tax benefit of nonqualified stock options exercised				183,060		71,110
Transfers of loans to other real estate owned				51,000		942,782
Due from broker for sales of securities				32,078,011
Due to broker for purchases of securities				15,190,000
Due to counterparties for prepayment of FHLB advances and other borrowings				(24,575,903)
Tax basis adjustment related to the acquisition of noncontrolling interest in m2 Lease Funds				2,132,415
Consideration paid:
Goodwill	$ 13,631,626		$ 3,222,688	$ 13,631,626		$ 3,222,688

[1] Net cash paid at closing totaled $69,905,355

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Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - shares	9 Months Ended
	Sep. 30, 2016	Sep. 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

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Note 1 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 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 September 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	FRB: Federal Reserve Bank of Chicago
AOCI: Accumulated other comprehensive income (loss)	GAAP: Generally Accepted Accounting Principles
AFS: Available for sale	HTM: Held to maturity
ASC: Accounting Standards Codification	m2: m2 Lease Funds, LLC
ASC 805: Business Combinations Standard	MD&A: Management's Discussion & Analysis
ASU: Accounting Standards Update	NIM: Net interest margin
BOLI: Bank-owned life insurance	NPA: Nonperforming asset
Caps: Interest rate cap derivatives	NPL: Nonperforming loan
Community National: Community National Bancorporation	OREO: Other real estate owned
CNB: Community National Bank	OTTI: Other-than-temporary impairment
CRBT: Cedar Rapids Bank & Trust Company	PCI: Purchased credit impaired
CRE: Commercial real estate	Provision: Provision for loan/lease losses
CSB: Community State Bank	QCBT: Quad City Bank & Trust Company
C&I: Commercial and industrial	RB&T: Rockford Bank & Trust Company
Dodd-Frank Act: Dodd-Frank Wall Street Reform and	ROAA: Return on Average Assets
Consumer Protection Act	SBA: U.S. Small Business Administration
EPS: Earnings per share	SEC: Securities and Exchange Commission
Exchange Act: Securities Exchange Act of 1934, as amended	TA: Tangible assets
FASB: Financial Accounting Standards Board	TCE: Tangible common equity
FDIC: Federal Deposit Insurance Corporation	TDRs: Troubled debt restructurings
FHLB: Federal Home Loan Bank	The Company: QCR Holdings, Inc.
	USDA: U.S. Department of Agriculture

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries which include four commercial banks: QCBT, CRBT, CSB and RB&T. All are state-chartered commercial banks. 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.

The acquisition of CSB closed on August 31, 2016. CSB is headquartered in Ankeny, Iowa. The financial results of CSB for the period since acquisition are included in this report. See Note 9 to the Consolidated Financial Statements for additional information.

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 and it is not expected to have a significant impact 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.

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.

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Note 2 - Investment Securities

9 Months Ended

Sep. 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 September 30, 2016 and December 31, 2015 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
September 30, 2016:
Securities HTM:
Municipal securities	$	305,690,174	$	5,533,151	$	(778,982	)	$	310,444,343
Other securities		1,050,000		-		-			1,050,000
	$	306,740,174	$	5,533,151	$	(778,982	)	$	311,494,343
Securities AFS:
U.S. govt. sponsored agency securities	$	66,966,328	$	992,084	$	(73,463	)	$	67,884,949
Residential mortgage-backed and related securities		131,496,011		1,824,345		(147,552	)		133,172,804
Municipal securities		53,887,898		816,063		(63,499	)		54,640,462
Other securities		2,002,113		492,980		(3,227	)		2,491,866
	$	254,352,350	$	4,125,472	$	(287,741	)	$	258,190,081
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

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 September 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
September 30, 2016:
Securities HTM:
Municipal securities	$	23,632,888	$	(251,558	)	$	14,150,396	$	(527,424	)	$	37,783,284	$	(778,982	)
Securities AFS:
U.S. govt. sponsored agency securities	$	9,547,746	$	(73,463	)	$	-	$	-		$	9,547,746	$	(73,463	)
Residential mortgage-backed and related securities		9,326,000		(78,305	)		8,464,738		(69,247	)		17,790,738		(147,552	)
Municipal securities		25,921,780		(49,087	)		846,894		(14,412	)		26,768,674		(63,499	)
Other securities		641,430		(3,227	)		-		-			641,430		(3,227	)
	$	45,436,956	$	(204,082	)	$	9,311,632	$	(83,659	)	$	54,748,588	$	(287,741	)
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 September 30, 2016, the investment portfolio included 526 securities. Of this number, 92 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 92 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 September 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 nine months ended September 30, 2016 and 2015.   

All sales of securities for the three and nine months ended September 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						Nine Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Proceeds from sales of securities*	$	58,775,764		$	11,922,915		$	119,850,909		$	65,889,838
Pre-tax gross gains from sales of securities		4,281,828			102,766			4,815,373			672,317
Pre-tax gross losses from sales of securities		(30,055	)		(46,186	)		(187,090	)		(198,804	)

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

In September 2016, the Company sold an equity security and recognized a pre-tax gross gain on the sale of $4,010,877. The equity security was acquired by the Company at no cost as part of a membership in the invested company in 2002.

The amortized cost and fair value of securities as of September 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	$	9,333,827	$	9,382,178
Due after one year through five years		30,899,427		31,047,261
Due after five years		266,506,920		271,064,904
	$	306,740,174	$	311,494,343
Securities AFS:
Due in one year or less	$	2,345,063	$	2,347,195
Due after one year through five years		55,691,033		56,456,647
Due after five years		62,818,130		63,721,569
	$	120,854,226	$	122,525,411
Residential mortgage-backed and related securities		131,496,011		133,172,804
Other securities		2,002,113		2,491,866
	$	254,352,350	$	258,190,081

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	$	178,052,716	$	180,307,064
Securities AFS:
U.S. govt. sponsored agency securities		11,042,867		11,073,088
Municipal securities		41,062,791		37,443,219
	$	52,105,658	$	48,516,307

As of September 30, 2016, the Company’s municipal securities portfolios were comprised of general obligation bonds issued by 114 issuers with fair values totaling $115.8 million and revenue bonds issued by 112 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $249.3 million. The Company held investments in general obligation bonds in 24 states, including four states in which the aggregate fair value exceeded $5.0 million. The Company held investments in revenue bonds in 13 states, including five 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:

September 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		27	$	32,289,974	$	32,746,465	$	1,212,832
Illinois		19		30,063,690		30,437,115		1,601,953
North Dakota		6		19,403,728		19,906,421		3,317,737
Missouri		13		8,304,022		8,448,994		649,923
Other		49		23,934,196		24,247,257		494,842
Total general obligation bonds		114	$	113,995,610	$	115,786,252	$	1,015,669

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

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

September 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		44	$	90,171,820	$	91,084,628	$	2,070,105
Iowa		30		75,440,709		77,216,784		2,573,893
Indiana		20		43,994,737		44,605,536		2,230,277
Kansas		6		13,480,269		13,587,744		2,264,624
North Dakota		4		8,114,931		8,175,230		2,043,808
Other		8		14,379,998		14,628,631		1,828,579
Total revenue bonds		112	$	245,582,464	$	249,298,553	$	2,225,880

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 September 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 four charters, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. Each charter is monitored individually, and as of September 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 September 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.

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Note 3 - Loans Leases Receivable

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Financing Receivables [Text Block]

NOTE 3

– LOANS/LEASES RECEIVABLE

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

	As of September 30,			As of December 31,
	2016			2015
C&I loans	$	804,307,562		$	648,159,892
CRE loans
Owner-occupied CRE		317,899,011			252,523,164
Commercial construction, land development, and other land		160,527,094			49,083,844
Other non owner-occupied CRE		591,878,656			422,761,757
		1,070,304,761			724,368,765
Direct financing leases *		166,924,077			173,655,605
Residential real estate loans **		229,080,600			170,432,530
Installment and other consumer loans		81,917,732			73,669,493
		2,352,534,732			1,790,286,285
Plus deferred loan/lease origination costs, net of fees		8,065,780			7,736,390
		2,360,600,512			1,798,022,675
Less allowance		(28,826,835	)		(26,140,906	)
	$	2,331,773,677		$	1,771,881,769
* Direct financing leases:
Net minimum lease payments to be received	$	186,183,516		$	195,476,230
Estimated unguaranteed residual values of leased assets		1,085,154			1,165,706
Unearned lease/residual income		(20,344,593	)		(22,986,331	)
		166,924,077			173,655,605
Plus deferred lease origination costs, net of fees		6,018,484			6,594,582
		172,942,561			180,250,187
Less allowance		(3,041,962	)		(3,395,088	)
	$	169,900,599		$	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 nine months ended September 30, 2016 and 2015.

**Includes residential real estate loans held for sale totaling $1,377,875 and $565,850 as of September 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 September 30, 2016 and December 31, 2015 is presented as follows:

	As of September 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	$	796,943,072		$	358,503		$	232,297		$	266,485		$	6,507,205		$	804,307,562
CRE
Owner-Occupied CRE		316,299,798			-			-			-			1,599,213			317,899,011
Commercial Construction, Land Development, and Other Land		160,034,828			-			-			-			492,266			160,527,094
Other Non Owner-Occupied CRE		585,545,037			4,617,055			-			-			1,716,564			591,878,656
Direct Financing Leases		162,556,659			1,180,356			998,896			-			2,188,166			166,924,077
Residential Real Estate		227,061,212			122,744			114,638			104,789			1,677,217			229,080,600
Installment and Other Consumer		81,576,782			89,104			41,332			20,492			190,022			81,917,732
	$	2,330,017,388		$	6,367,762		$	1,387,163		$	391,766		$	14,370,653		$	2,352,534,732
As a percentage of total loan/lease portfolio		99.05	%		0.27	%		0.06	%		0.02	%		0.61	%		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	%

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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

	As of September 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	$	266,485	$	6,507,205	$	170,113	$	6,943,803		41.86	%
CRE
Owner-Occupied CRE		-		1,599,213		-		1,599,213		9.64	%
Commercial Construction, Land Development, and Other Land		-		492,266		-		492,266		2.97	%
Other Non Owner-Occupied CRE		-		1,716,564		-		1,716,564		10.35	%
Direct Financing Leases		-		2,188,166		1,138,335		3,326,501		20.05	%
Residential Real Estate		104,789		1,677,217		390,039		2,172,045		13.09	%
Installment and Other Consumer		20,492		190,022		126,998		337,512		2.03	%
	$	391,766	$	14,370,653	$	1,825,485	$	16,587,904		100.00	%

*Nonaccrual loans/leases included $4,859,420 of TDRs, including $2,241,205 in C&I loans, $1,937,655 in CRE loans, $463,859 in direct financing leases, $110,702 in residential real estate loans, and $105,999 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 nine months ended September 30, 2016 and 2015, respectively, are presented as follows:

	Three Months Ended September 30, 2016
	C&I			CRE		Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,724,506		$	10,987,062	$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490
Provisions charged to expense		859,031			8,962		641,435			79,221			19,337			1,607,986
Loans/leases charged off		(96,330	)		-		(847,668	)		(38,554	)		(4,530	)		(987,082	)
Recoveries on loans/leases previously charged off		70,759			6,500		22,001			-			9,181			108,441
Balance, ending	$	11,557,966		$	11,002,524	$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835

	Three Months Ended September 30, 2015
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,020,866		$	9,929,656		$	3,352,303		$	1,720,135		$	1,123,040		$	26,146,000
Provisions charged to expense		520,058			573,119			361,071			130,742			50,273			1,635,263
Loans/leases charged off		(145,665	)		(1,813,973	)		(483,420	)		(25,928	)		(6,837	)		(2,475,823	)
Recoveries on loans/leases previously charged off		136,909			19,913			18,679			4,107			49,296			228,904
Balance, ending	$	10,532,168		$	8,708,715		$	3,248,633		$	1,829,056		$	1,215,772		$	25,534,344

	Nine Months Ended September 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		1,357,262			1,644,008			1,580,677			336,865			(39,991	)		4,878,821
Loans/leases charged off		(388,879	)		(23,101	)		(1,983,322	)		(72,261	)		(22,018	)		(2,489,581	)
Recoveries on loans/leases previously charged off		105,503			6,500			49,519			900			134,267			296,689
Balance, ending	$	11,557,966		$	11,002,524		$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835

	Nine Months Ended September 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		1,513,430			2,490,766			1,238,505			324,925			126,758			5,694,384
Loans/leases charged off		(391,303	)		(2,165,049	)		(1,496,010	)		(25,928	)		(40,886	)		(4,119,176	)
Recoveries on loans/leases previously charged off		659,724			29,612			63,223			4,107			128,105			884,771
Balance, ending	$	10,532,168		$	8,708,715		$	3,248,633		$	1,829,056		$	1,215,772		$	25,534,344

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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

	As of September 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	1,114,680		$	175,743		$	739,207		$	169,147		$	148,320		$	2,347,097
Allowance for nonimpaired loans/leases		10,443,286			10,826,781			2,302,755			1,886,507			1,020,409			26,479,738
	$	11,557,966		$	11,002,524		$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835
Impaired loans/leases	$	5,874,093		$	3,495,386		$	2,925,205		$	2,230,829		$	368,924		$	14,894,437
Nonimpaired loans/leases		798,433,469			1,066,809,375			163,998,872			226,849,771			81,548,808			2,337,640,295
	$	804,307,562		$	1,070,304,761		$	166,924,077		$	229,080,600		$	81,917,732		$	2,352,534,732
Allowance as a percentage of impaired loans/leases		18.98	%		5.03	%		25.27	%		7.58	%		40.20	%		15.76	%
Allowance as a percentage of nonimpaired loans/leases		1.31	%		1.01	%		1.40	%		0.83	%		1.25	%		1.13	%
Total allowance as a percentage of total loans/leases		1.44	%		1.03	%		1.82	%		0.90	%		1.43	%		1.22	%

	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 nine months ended September 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	$	1,846,140	$	1,987,082	$	-	$	3,864,852	$	8,644	$	8,644
CRE
Owner-Occupied CRE		767,032		860,806		-		621,553		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		-		-		-
Other Non Owner-Occupied CRE		2,042,391		2,042,391		-		1,789,571		-		-
Direct Financing Leases		1,860,773		1,860,773		-		1,755,969		52,595		52,595
Residential Real Estate		1,418,957		1,458,158		-		1,455,159		2,992		2,992
Installment and Other Consumer		208,916		208,916		-		430,322		-		-
	$	8,144,209	$	8,418,126	$	-	$	9,917,426	$	64,231	$	64,231
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	4,027,953	$	4,031,792	$	1,114,680	$	2,195,524	$	-	$	-
CRE
Owner-Occupied CRE		322,148		322,148		57,398		401,050		-		-
Commercial Construction, Land Development, and Other Land		186,681		186,681		77,611		190,208		-		-
Other Non Owner-Occupied CRE		177,134		177,134		40,734		67,571		-		-
Direct Financing Leases		1,064,432		1,064,432		739,207		653,884		-		-
Residential Real Estate		811,872		886,004		169,147		799,427		5,409		5,409
Installment and Other Consumer		160,008		160,008		148,320		145,962		4,426		4,426
	$	6,750,228	$	6,828,199	$	2,347,097	$	4,453,626	$	9,835	$	9,835
Total Impaired Loans/Leases:
C&I	$	5,874,093	$	6,018,874	$	1,114,680	$	6,060,376	$	8,644	$	8,644
CRE
Owner-Occupied CRE		1,089,180		1,182,954		57,398		1,022,603		-		-
Commercial Construction, Land Development, and Other Land		186,681		186,681		77,611		190,208		-		-
Other Non Owner-Occupied CRE		2,219,525		2,219,525		40,734		1,857,142		-		-
Direct Financing Leases		2,925,205		2,925,205		739,207		2,409,853		52,595		52,595
Residential Real Estate		2,230,829		2,344,162		169,147		2,254,586		8,401		8,401
Installment and Other Consumer		368,924		368,924		148,320		576,284		4,426		4,426
	$	14,894,437	$	15,246,325	$	2,347,097	$	14,371,052	$	74,066	$	74,066

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 September 30, 2016 and 2015, respectively, are presented as follows:

	Three Months Ended September 30, 2016						Three Months Ended September 30, 2015
Classes of Loans/Leases	Averag e 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	$	1,677,527	$	3,301	$	3,301	$	365,798	$	1,870	$	1,870
CRE
Owner-Occupied CRE		767,032		-		-		451,851		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		9,968		-		-
Other Non Owner-Occupied CRE		1,969,034		-		-		2,868,950		-		-
Direct Financing Leases		2,008,095		21,095		21,095		634,378		325		325
Residential Real Estate		1,481,340		941		941		900,938		1,362		1,362
Installment and Other Consumer		322,738		-		-		328,669		3,912		3,912
	$	8,225,766	$	25,337	$	25,337	$	5,560,552	$	7,469	$	7,469
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	4,188,621	$	-	$	-	$	4,735,149	$	-	$	-
CRE
Owner-Occupied CRE		363,911		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		187,831		-		-		335,707		-		-
Other Non Owner-Occupied CRE		135,141		-		-		-		-		-
Direct Financing Leases		793,769		-		-		488,860		-		-
Residential Real Estate		807,827		1,503		1,503		984,558		1,981		1,981
Installment and Other Consumer		160,301		1,458		1,458		723,674		1,391		1,391
	$	6,637,401	$	2,961	$	2,961	$	7,267,948	$	3,372	$	3,372
Total Impaired Loans/Leases:
C&I	$	5,866,148	$	3,301	$	3,301	$	5,100,947	$	1,870	$	1,870
CRE
Owner-Occupied CRE		1,130,943		-		-		451,851		-		-
Commercial Construction, Land Development, and Other Land		187,831		-		-		345,675		-		-
Other Non Owner-Occupied CRE		2,104,175		-		-		2,868,950		-		-
Direct Financing Leases		2,801,864		21,095		21,095		1,123,238		325		325
Residential Real Estate		2,289,167		2,444		2,444		1,885,496		3,343		3,343
Installment and Other Consumer		483,039		1,458		1,458		1,052,343		5,303		5,303
	$	14,863,167	$	28,298	$	28,298	$	12,828,500	$	10,841	$	10,841

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 September 30, 2016 and December 31, 2015:

	As of September 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)	$	770,822,390	$	307,017,431	$	153,401,738	$	572,769,744	$	1,804,011,303		96.24	%
Special Mention (Rating 6)		10,160,760		1,737,127		1,780,000		5,894,259		19,572,146		1.04	%
Substandard (Rating 7)		23,324,412		9,144,453		5,345,356		13,214,653		51,028,874		2.72	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	804,307,562	$	317,899,011	$	160,527,094	$	591,878,656	$	1,874,612,323		100.00	%

	As of September 30, 2016
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	163,597,576	$	226,908,556	$	81,580,220	$	472,086,352		98.78	%
Nonperforming		3,326,501		2,172,044		337,512		5,836,057		1.22	%
	$	166,924,077	$	229,080,600	$	81,917,732	$	477,922,409		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 September 30, 2016 and December 31, 2015, TDRs totaled $6,684,905 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 nine months ended September 30, 2016 and 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 September 30, 2016								For the three months ended September 30, 2015
Classes of Loans/Leases	Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance		Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance
CONCESSION - Significant Payment Delay
Direct Financing Leases		2	$	461,643	$	461,643	$	-					$	-	$	-
		2	$	461,643	$	461,643	$	-		-	$	-	$	-	$	-
CONCESSION - Interest Rate Adjusted Below Market
Installment and Other Consumer		-	$	-	$	-	$	-		1	$	14,203	$	14,203	$	-
		-	$	-	$	-	$	-		1	$	14,203	$	14,203	$	-
TOTAL		2	$	461,643	$	461,643	$	-		1	$	14,203	$	14,203	$	-

	For the nine months ended September 30, 2016								For the nine months ended September 30, 2015
Classes of Loans/Leases	Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance		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		6		771,672		771,672		-		-		-		-		-
		7	$	833,812	$	833,812	$	-		-	$	-	$	-	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-		-	$	-	$	-	$	-
Installment and Other Consumer		-		-		-		-		1		14,203		14,203		-
		1	$	1,233,740	$	1,233,740	$	-		1	$	14,203	$	14,203	$	-
TOTAL		13	$	2,530,491	$	2,530,491	$	-		1	$	14,203	$	14,203	$	-

Of the TDRs reported above, two with a post-modification recorded balance of $1,384,680 were on nonaccrual as of September 30, 2016. Not included in the table above, the Company had one TDR that was restructured and charged off in 2016, totaling $236,545.

For the three and nine months ended September 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.

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Note 4 - Borrowings

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 4

–

BORROWINGS

Maturity and interest rate information on advances from FHLB as of September 30, 2016 and December 31, 2015 is as follows:

	September 30, 2016
			Weighted					Weighted
			Average			Amount Due		Average
			Interest Rate			with		Interest Rate
	Amount Due		at Quarter-End			Putable Option *		at Quarter-End
Maturity:
Year ending December 31:
2016	$	90,300,000		0.55	%	$	-		-	%
2017		23,342,549		2.59			-		-
2018		25,000,000		2.70			-		-
Total FHLB advances	$	138,642,549		1.68	%	$	-		-	%

	December 31, 2015
			Weighted					Weighted
			Average			Amount Due		Average
			Interest Rate			with		Interest Rate
	Amount Due		at Year-End			Putable Option *		at Year-End
Maturity:
Year ending December 31:
2016	$	103,000,000		0.56	%	$	2,000,000		4.00	%
2017		18,000,000		2.89			-		-
2018		30,000,000		3.27			5,000,000		2.84
Total FHLB advances	$	151,000,000		1.37	%	$	7,000,000		3.17	%

Other borrowings as of September 30, 2016 and December 31, 2015 are summarized as follows:

	As of September 30, 2016		As of December 31, 2015
Wholesale structured repurchase agreements	$	45,000,000	$	110,000,000
Term note		30,000,000		-
Revolving line of credit		5,000,000		-
	$	80,000,000	$	110,000,000

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

Maturity and interest rate information concerning wholesale structured repurchase agreements is summarized as follows:

	September 30, 2016					December 31, 2015
			Weighted					Weighted
			Average					Average
			Interest Rate					Interest Rate
	Amount Due		at Quarter-End			Amount Due		at Year-End
Maturity:
Year ending December 31:
2016	$	-		0.00	%	$	-		0.00	%
2017		10,000,000		3.07			10,000,000		3.00
2018		-		-			10,000,000		3.97
2019		10,000,000		3.44			45,000,000		3.40
2020		25,000,000		2.48			45,000,000		2.66
Total Wholesale Structured Repurchase Agreements	$	45,000,000		2.83	%	$	110,000,000		3.11	%

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%.

During the third quarter of 2016, the Company executed further balance sheet restructuring at QCBT which included the repayment of $55.0 million of wholesale structured repurchase agreements and $5.0 million of FHLB advances with a combined weighted average interest rate of 3.24%. As a result of this restructuring, the Company incurred $4.1 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 2.95 years, with $5.0 million maturing in 2018, $35.0 million maturing in 2019, and $20.0 million maturing in 2020. This funding was replaced partially with proceeds from the sale of bonds previously pledged as collateral for the wholesale structured repurchase agreements ($27.8 million) and the rest 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 five-year term. Interest on the revolving line of credit is calculated at the effective LIBOR rate plus 2.50% per annum (3.34% at September 30, 2016). Interest on the term note is calculated at the effective LIBOR rate plus 3.00% per annum (3.84% at September 30, 2016). Upon closing of the acquisition of CSB, the Company utilized the full $30.0 million term note commitment and borrowed $5.0 million on the revolving line of credit note. At September 30, 2016, the Company had $35.0 million in borrowings outstanding. For the term note, the Company is required to make quarterly principal payments of $1.5 million with maturity information as of September 30, 2016, summarized as follows:

	As of September 30, 2016
2017		6,000,000
2018		6,000,000
2019		6,000,000
2020		6,000,000
2021		6,000,000
	$	30,000,000

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

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.

In October 2016, the Company executed new agreements with the creditor on both the term note and the revolving line of credit, adjusting the rate index from 3-month LIBOR to 1-month LIBOR.

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.

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Note 5 - Earnings Per Share

9 Months Ended

Sep. 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				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Net income	$	6,107,501	$	6,488,987	$	19,157,457	$	10,143,058
Basic EPS	$	0.47	$	0.55	$	1.55	$	1.03
Diluted EPS	$	0.46	$	0.55	$	1.52	$	1.01
Weighted average common shares outstanding*		13,066,777		11,713,993		12,398,491		9,878,882
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan		202,926		161,937		181,551		145,559
Weighted average common and common equivalent shares outstanding		13,269,703		11,875,930		12,580,042		10,024,441

*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.

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Note 6 - Fair Value

9 Months Ended

Sep. 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 September 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)
September 30, 2016:
Securities AFS:
U.S. govt. sponsored agency securities	$	67,884,949	$	-	$	67,884,949	$	-
Residential mortgage-backed and related securities		133,172,804		-		133,172,804		-
Municipal securities		54,640,462		-		54,640,462		-
Other securities		2,491,866		1,107		2,490,759		-
Interest rate caps		221,233		-		221,233		-
Interest rate swaps - assets		9,386,262		-		9,386,262		-
Total assets measured at fair value	$	267,797,576	$	1,107	$	267,796,469	$	-
Interest rate swaps - liabilities	$	9,386,262	$	-	$	9,386,262	$	-
Total liabilities measured at fair value	$	9,386,262	$	-	$	9,386,262	$	-
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 nine months ended September 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).

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 September 30, 2016 and December 31, 2015:

			Fair Value Measurements at Reporting Date Using
	Fair Value		Level 1		Level 2		Level 3
September 30, 2016:
Impaired loans/leases	$	7,870,032	$	-	$	-	$	7,870,032
OREO		6,272,211		-		-		6,272,211
	$	14,142,243	$	-	$	-	$	14,142,243
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 September 30, 2016		Fair Value December 31, 2015		Valuation Technique	Unobservable Input	Range
Impaired loans/leases	$	7,870,032	$	4,545,966	Appraisal of collateral	Appraisal adjustments		-10.00%	to	-50.00%
OREO		6,272,211		7,722,711	Appraisal of collateral	Appraisal adjustments		0.00%	to	-35.00%

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 nine months ended September 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 September 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	$	61,213,134	$	61,213,134	$	41,742,321	$	41,742,321
Federal funds sold	Level 2		21,022,000		21,022,000		19,850,000		19,850,000
Interest-bearing deposits at financial institutions	Level 2		75,025,417		75,025,417		36,313,965		36,313,965
Investment securities:
HTM	Level 2		306,740,174		311,494,343		253,674,159		255,691,285
AFS	See Previous Table		258,190,081		258,190,081		323,434,982		323,434,982
Loans/leases receivable, net	Level 3		7,287,067		7,870,032		4,209,228		4,545,966
Loans/leases receivable, net	Level 2		2,324,486,610		2,327,955,000		1,767,672,541		1,764,178,772
Interest rate caps	Level 2		221,233		221,233		856,024		856,024
Interest rate swaps - assets	Level 2		9,386,262		9,386,262		3,044,525		3,044,525
Deposits:
Nonmaturity deposits	Level 2		2,103,706,174		2,103,706,174		1,516,599,081		1,516,599,081
Time deposits	Level 2		491,206,579		491,849,000		364,067,103		364,192,000
Short-term borrowings	Level 2		60,015,417		60,015,417		144,662,716		144,662,716
FHLB advances	Level 2		138,642,529		140,153,000		151,000,000		153,143,000
Other borrowings	Level 2		80,000,000		82,119,000		110,000,000		116,061,000
Junior subordinated debentures	Level 2		33,446,578		24,768,273		38,499,052		27,642,093
Interest rate swaps - liabilities	Level 2		9,386,262		9,386,262		3,044,525		3,044,525

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Note 7 - Business Segment Information

9 Months Ended

Sep. 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 four subsidiary banks wholly owned by the Company: QCBT, CRBT, CSB 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 four 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.

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

	Commercial Banking								Wealth					Intercompany			Consolidated
	QCBT		CRBT		CSB		RB&T		Management		All Other			Eliminations			Total
Three Months Ended September 30, 2016
Total revenue	$	18,026,215	$	10,065,032	$	2,675,741	$	4,232,205	$	2,284,577	$	8,463,636		$	(8,507,270	)	$	37,240,136
Net interest income	$	11,225,414	$	7,594,557	$	2,191,862	$	3,056,989	$	-	$	(438,045	)	$	-		$	23,630,777
Net income	$	3,596,469	$	3,286,724	$	188,608	$	944,781	$	398,859	$	6,107,492		$	(8,415,432	)	$	6,107,501
Total assets	$	1,407,733,009	$	887,592,695	$	580,210,270	$	393,191,774	$	-	$	368,990,749		$	(356,732,388	)	$	3,280,986,109
Provision	$	1,137,986	$	-	$	270,000	$	200,000	$	-	$	-		$	-		$	1,607,986
Goodwill	$	3,222,688	$	-	$	10,408,938	$	-	$	-	$	-		$	-		$	13,631,626
Core deposit intangible	$	-	$	1,321,775	$	6,291,818	$	-	$	-	$	-		$	-		$	7,613,593
Three Months Ended September 30, 2015
Total revenue	$	14,143,548	$	10,047,658	$	-	$	3,922,304	$	2,314,406	$	7,937,087		$	(8,821,205	)	$	29,543,798
Net interest income	$	10,728,143	$	6,956,027	$	-	$	2,771,214	$	-	$	(317,858	)	$	-		$	20,137,526
Net income (loss)	$	3,786,289	$	2,893,397	$	-	$	847,709	$	373,801	$	6,488,988		$	(7,901,197	)	$	6,488,987
Total assets	$	1,328,053,105	$	867,064,041	$	-	$	360,348,002	$	-	$	277,001,408		$	(256,611,839	)	$	2,575,854,717
Provision	$	910,263	$	550,000	$	-	$	175,000	$	-	$	-		$	-		$	1,635,263
Goodwill	$	3,222,688	$	-	$	-	$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,521,287	$	-	$	-	$	-	$	-		$	-		$	1,521,287
Nine Months Ended September 30, 2016
Total revenue	$	45,706,061	$	31,342,345	$	2,675,741	$	11,945,081	$	6,723,690	$	23,567,906		$	(23,720,471	)	$	98,240,353
Net interest income	$	33,394,620	$	21,755,270	$	2,191,862	$	8,914,380	$	-	$	(1,019,020	)	$	-		$	65,237,112
Net income	$	10,326,508	$	9,366,441	$	188,608	$	2,334,735	$	1,232,831	$	19,157,447		$	(23,449,113	)	$	19,157,457
Total assets	$	1,407,733,009	$	887,592,695	$	580,210,270	$	393,191,774	$	-	$	368,990,749		$	(356,732,388	)	$	3,280,986,109
Provision	$	3,108,821	$	700,000	$	270,000	$	800,000	$	-	$	-		$	-		$	4,878,821
Goodwill	$	3,222,688	$	-	$	10,408,938	$	-	$	-	$	-		$	-		$	13,631,626
Core deposit intangible	$	-	$	1,321,775	$	6,291,818	$	-	$	-	$	-		$	-		$	7,613,593
Nine Months Ended September 30, 2015
Total revenue	$	39,893,713	$	28,396,380	$	-	$	11,095,899	$	6,927,453	$	14,487,857		$	(15,556,437	)	$	85,244,865
Net interest income	$	29,745,080	$	19,836,835	$	-	$	8,089,626	$	-	$	(1,260,962	)	$	-		$	56,410,579
Net income	$	6,578,479	$	4,645,136	$	-	$	1,895,933	$	1,271,661	$	10,143,059		$	(14,391,210	)	$	10,143,058
Total assets	$	1,328,053,105	$	867,064,041	$	-	$	360,348,002	$	-	$	277,001,408		$	(256,611,839	)	$	2,575,854,717
Provision	$	3,466,384	$	1,650,000	$	-	$	578,000	$	-	$	-		$	-		$	5,694,384
Goodwill	$	3,222,688	$	-	$	-	$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,521,287	$	-	$	-	$	-	$	-		$	-		$	1,521,287

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Note 8 - Regulatory Capital Requirements

9 Months Ended

Sep. 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 September 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 September 30, 2016 and December 31, 2015 are also presented in the following table (dollars in thousands). As of September 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 September 30, 2016:
Company:
Total risk-based capital	$	316,063		11.33	%	$	240,629	>	8.625	%	$	278,991	>	10.0	%
Tier 1 risk-based capital		287,015		10.29	%		184,831	>	6.625			223,192	>	8.0
Tier 1 leverage		287,015		10.09	%		113,737	>	4.000			142,172	>	5.0
Common equity Tier 1		257,119		9.22	%		142,983	>	5.125			181,344	>	6.5
Quad City Bank & Trust:
Total risk-based capital	$	138,333		11.71	%	$	101,861	>	8.625	%	$	118,100	>	10.0	%
Tier 1 risk-based capital		125,410		10.62	%		78,241	>	6.625			94,480	>	8.0
Tier 1 leverage		125,410		8.86	%		56,628	>	4.000			70,785	>	5.0
Common equity Tier 1		125,410		10.62	%		60,526	>	5.125			76,765	>	6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	104,206		13.13	%	$	68,474	>	8.625	%	$	79,390	>	10.0	%
Tier 1 risk-based capital		94,266		11.87	%		52,596	>	6.625			63,512	>	8.0
Tier 1 leverage		94,266		10.36	%		36,407	>	4.000			45,509	>	5.0
Common equity Tier 1		94,266		11.87	%		40,687	>	5.125			51,604	>	6.5
Community State Bank:
Total risk-based capital	$	67,008		14.09	%	$	41,031	>	8.625	%	$	47,572	>	10.0	%
Tier 1 risk-based capital		66,735		14.03	%		31,516	>	6.625			38,058	>	8.0
Tier 1 leverage		66,735		11.74	%		22,745	>	4.000			28,431	>	5.0
Common equity Tier 1		66,735		14.03	%		24,381	>	5.125			30,922	>	6.5
Rockford Bank & Trust:
Total risk-based capital	$	41,130		11.95	%	$	29,680	>	8.625	%	$	34,412	>	10.0	%
Tier 1 risk-based capital		36,821		10.70	%		22,798	>	6.625			27,529	>	8.0
Tier 1 leverage		36,821		9.45	%		15,587	>	4.000			19,484	>	5.0
Common equity Tier 1		36,821		10.70	%		17,636	>	5.125			22,367	>	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 occurred in 2016.

On October 27, 2016, the Company filed a universal shelf registration statement on Form S-3 with the SEC. When declared effective by the SEC, the registration statement will allow the Company to offer and sell various types of securities, including common stock, preferred stock, debt securities and/or warrants, from time to time up to an aggregate amount of $100 million. The Company utilized $30.1 million of its previous $100 million shelf registration filing through the offer and sale of its common stock in the second quarter of 2016 to help fund the acquisition of CSB. This Form S-3 filing will replenish the amount available to the previous level of $100 million. The specific terms and prices of any securities offered pursuant to the registration statement 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.

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

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

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

On August 31, 2016, the Company acquired Community State Bank from Van Diest Investment Company. CSB is headquartered in Ankeny, Iowa and is an Iowa-chartered bank that operates ten banking locations throughout the Des Moines metropolitan area. The Company purchased 100% of the outstanding common stock of CSB for cash consideration of $80.0 million.

The acquisition of CSB allowed the Company to expand its footprint into the Des Moines market. CSB has an experienced and capable leadership team that is committed to leading the Company’s efforts in the Des Moines MSA. CSB has demonstrated significant improvement in earnings and asset quality during the last three years. Additionally, CSB has a strong core deposit base and retail franchise. Although CSB already has strong earnings with an expected ROAA of 1.00% in 2016, the Company has identified several opportunities for enhanced future earnings performance. With $581 million of assets acquired, the Company believes this acquisition is large enough to provide meaningful impact on the financial results, but is not too large to overstrain existing infrastructure. Lastly, financial metrics related to the transaction were favorable, as measured by EPS accretion and earn-back of tangible book value dilution.

In connection with the acquisition, during the second quarter of 2016, the Company sold 1,215,000 shares of its common stock at a price of $24.75 per share, for net proceeds of $29.8 million, after deducting expenses. The shares were offered to institutional investors in a registered direct offering conducted without an underwriter or placement agent. The offering was a partial take-down of a previously filed shelf registration and closed on May 23, 2016.

Cash received from the common stock offering was used to help finance the purchase price of the acquisition. Additionally, the Company drew $5.0 million on its $10.0 million revolving line of credit and fully funded its $30.0 million term facility. Both of these facilities are described further in Note 4 to the Consolidated Financial Statements. Cash dividends of $15.2 million from QCBT and CRBT were used to fund the remainder of the purchase price.

The Company accounted for the business combination under the acquisition method of accounting in accordance with ASC 805. The Company recognized the full fair value of the assets acquired and liabilities assumed at the acquisition date, net of applicable income tax effects. The Company considers all purchase accounting adjustments as provisional and fair values are subject to refinement for up to one year after the closing date.

The excess of the consideration paid over the fair value of the net assets acquired is recorded as goodwill. This goodwill is not deductible for tax purposes.

The Company has several areas of specialization, including government guaranteed lending, C&I lending, interest rate swaps, leasing, wealth management, private banking and municipal bond offerings that will be offered in this new market, increasing future earnings potential. There is also value added to the Company through having a footprint in a market that has strong growth potential. Additionally, there are qualitative benefits gained through the addition of a new charter including better leverage of centralized operations and increased lending limits. The experience and value of the personnel at CSB and their knowledge of the Des Moines MSA is also beneficial.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The fair values of the assets acquired and liabilities assumed including the consideration paid and resulting goodwill is as follows:

	As of
	August 31, 2016
ASSETS
Cash and due from banks	$	10,094,645
Federal funds sold		698,000
Interest-bearing deposits at financial institutions		14,730,157
Securities		102,640,029
Loans/leases receivable, net		419,029,277
Premises and equipment		20,684,880
Core deposit intangible		6,352,653
Restricted investment securities		1,512,900
Other real estate owned		650,000
Other assets		4,763,224
Total assets acquired	$	581,155,765
LIABILITIES
Deposits	$	486,298,262
FHLB advances		20,368,877
Other liabilities		4,897,564
Total liabilities assumed	$	511,564,703
Net assets acquired	$	69,591,062
CONSIDERATION PAID:
Cash	$	80,000,000
Total consideration paid	$	80,000,000
Goodwill	$	10,408,938

Loans acquired in a business combination are recorded and initially measured at their estimated fair value as of the acquisition date. Credit discounts are included in the determination of fair value. A third party valuation consultant assisted with the determination of fair value.

Purchased loans are segregated into two categories: PCI loans and non-PCI (performing) loans. PCI loans are accounted for in accordance with ASC 310-30, as they display significant credit deterioration since origination and it is probable, as of the acquisition date, that the Company will be unable to collect all contractually required payments from the borrower. Performing loans are accounted for in accordance with ASC 310-20, as these loans do not have evidence of significant credit deterioration since origination and it is probable that the contractually required payments will be received from the borrower.

For PCI loans, the difference between the contractually required payments at acquisition and the cash flows expected to be collected is referred to as the non-accretable discount. Further, any excess cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the expected remaining life of the loan. Subsequent to the purchase date, increases in cash flows over those expected at the purchase date are recognized as interest income prospectively. The present value of any decreases in expected cash flows after the purchase date is recognized by recording an allowance for loan and lease losses and provision for loan losses.

For performing loans, the difference between the estimated fair value of the loans and the principal balance outstanding is accreted over the remaining life of the loans.

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The following table presents the purchased loans as of the acquisition date:

	PCI			Performing
	Loans			Loans			Total
Contractually required principal payments	$	3,662,431		$	428,552,119		$	432,214,550
Nonaccretable discount		(991,685	)		-			(991,685	)
Principal cash flows expected to be collected	$	2,670,746		$	428,552,119		$	431,222,865
Accretable discount		(277,579	)		(11,916,009	)		(12,193,588	)
Fair Value of acquired loans	$	2,393,167		$	416,636,110		$	419,029,277

Changes in accretable yield for the loans acquired were as follows for the three and nine months ended September 30, 2016:

	PCI			Performing
	Loans			Loans			Total
Balance at the beginning of the period		(277,579	)		(11,916,009	)		(12,193,588	)
Accretion recognized		29,317			366,293			395,610
Balance at the end of the period	$	(248,262	)	$	(11,549,716	)	$	(11,797,978	)

During the current quarter, there was also $89 thousand of nonaccretable discount that was accelerated due to the early repayment of PCI loans.

Premises and equipment acquired with a fair value of $20,684,880 includes ten branch locations with a fair value of $19,735,000, including a write-up of $8,334,437. The fair value was determined with the assistance of a third party appraiser. The write-up of these properties will be recognized as an increase in depreciation expense over 39 years.

The Company recorded a core deposit intangible totaling $6,352,653 which is the portion of the acquisition purchase price which represents the value assigned to the existing deposit base. The core deposit intangible has a finite life and is amortized using an accelerated method over the estimated useful life of the deposits (estimated to be ten years).

The following table presents the changes in the carrying amount of core deposit intangibles, gross carrying amount, accumulated amortization, and net book value:

	September 30, 2016
Balance at the beginning of the period	$	6,352,653
Amortization expense		(60,834	)
Balance at the end of the period	$	6,291,819
Gross carrying amount	$	6,352,653
Accumulated amortization		(60,834	)
Net book value	$	6,291,819

Part I

Item 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-continued

The following presents the estimated amortization expense of the core deposit intangible:

Years ending December 31,	Amount
2016	$	182,503
2017		723,955
2018		710,751
2019		694,374
2020		674,819
Thereafter		3,305,417
	$	6,291,819

*There is another core deposit intangible on the balance sheet totaling $1,321,774 that is related to a previous acquisition.

During the first nine months of 2016, the Company incurred $2.4 million of expenses related to the acquisition, comprised primarily of legal, accounting, investment banking costs and personnel costs. These acquisition costs are presented on their own line within the consolidated statements of income. CSB results are included in the consolidated statements of income effective on the acquisition date. For the period 8/31/16 to 9/30/16, CSB reported revenues of $2.7 million and net income of $189 thousand, which included $473 thousand of after tax acquisition costs.

Unaudited pro forma combined operating results for the three and nine months ended September 30, 2016 and 2015, giving effect to the CSB acquisition as if it had occurred as of January 1, 2015, are as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
	(in thousands, except for per share data)
Interest income	$	27,615	$	25,685	$	80,755	$	73,051
Noninterest income	$	11,415	$	8,074	$	27,744	$	23,167
Net income	$	7,301	$	8,216	$	23,813	$	15,324
Earnings per common share:
Basic	$	0.56	$	0.64	$	1.85	$	1.38
Diluted	$	0.55	$	0.63	$	1.82	$	1.36

The pro forma results do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on January 1, 2015 or of future results of operations of the consolidated entities.

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Note 10 - Related Party Transactions

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE 10 – RELATED PARTY TRANSACTIONS

Management reviews transactions with related parties on a quarterly basis, as part of Disclosure Committee procedures.

During 2016, the Company entered into a material related party transaction with a company that is owned and controlled by a CRBT director. That company was chosen as the general contractor for the remodel of the Waterloo branch. The company was the original contractor for the branch and is recognized as a leader in Iowa and the Midwest market for the design and construction of financial services and professional office buildings. Based on the company’s expertise, their experience as the original designer/builder of the branch location and a decline to bid from two other contractors, management chose the company as the general contractor. Management determined that the bids received from the company were at market rates.

The project total is estimated at $3.5 million. This is the full contract price, as subcontractors will be utilized to complete the work. It is estimated that the company will receive $2.1 million for their work as the general contractor, including payments for a portion of the actual construction costs as the company is completing a portion of the subcontracting work in addition to being the general contractor. 

 

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 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 September 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	FRB: Federal Reserve Bank of Chicago
AOCI: Accumulated other comprehensive income (loss)	GAAP: Generally Accepted Accounting Principles
AFS: Available for sale	HTM: Held to maturity
ASC: Accounting Standards Codification	m2: m2 Lease Funds, LLC
ASC 805: Business Combinations Standard	MD&A: Management's Discussion & Analysis
ASU: Accounting Standards Update	NIM: Net interest margin
BOLI: Bank-owned life insurance	NPA: Nonperforming asset
Caps: Interest rate cap derivatives	NPL: Nonperforming loan
Community National: Community National Bancorporation	OREO: Other real estate owned
CNB: Community National Bank	OTTI: Other-than-temporary impairment
CRBT: Cedar Rapids Bank & Trust Company	PCI: Purchased credit impaired
CRE: Commercial real estate	Provision: Provision for loan/lease losses
CSB: Community State Bank	QCBT: Quad City Bank & Trust Company
C&I: Commercial and industrial	RB&T: Rockford Bank & Trust Company
Dodd-Frank Act: Dodd-Frank Wall Street Reform and	ROAA: Return on Average Assets
Consumer Protection Act	SBA: U.S. Small Business Administration
EPS: Earnings per share	SEC: Securities and Exchange Commission
Exchange Act: Securities Exchange Act of 1934, as amended	TA: Tangible assets
FASB: Financial Accounting Standards Board	TCE: Tangible common equity
FDIC: Federal Deposit Insurance Corporation	TDRs: Troubled debt restructurings
FHLB: Federal Home Loan Bank	The Company: QCR Holdings, Inc.
	USDA: U.S. Department of Agriculture

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries which include four commercial banks: QCBT, CRBT, CSB and RB&T. All are state-chartered commercial banks. 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.

The acquisition of CSB closed on August 31, 2016. CSB is headquartered in Ankeny, Iowa. The financial results of CSB for the period since acquisition are included in this report. See Note 9 to the Consolidated Financial Statements for additional information.

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 and it is not expected to have a significant impact 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.

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Note 2 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

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

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
September 30, 2016:
Securities HTM:
Municipal securities	$	305,690,174	$	5,533,151	$	(778,982	)	$	310,444,343
Other securities		1,050,000		-		-			1,050,000
	$	306,740,174	$	5,533,151	$	(778,982	)	$	311,494,343
Securities AFS:
U.S. govt. sponsored agency securities	$	66,966,328	$	992,084	$	(73,463	)	$	67,884,949
Residential mortgage-backed and related securities		131,496,011		1,824,345		(147,552	)		133,172,804
Municipal securities		53,887,898		816,063		(63,499	)		54,640,462
Other securities		2,002,113		492,980		(3,227	)		2,491,866
	$	254,352,350	$	4,125,472	$	(287,741	)	$	258,190,081
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
September 30, 2016:
Securities HTM:
Municipal securities	$	23,632,888	$	(251,558	)	$	14,150,396	$	(527,424	)	$	37,783,284	$	(778,982	)
Securities AFS:
U.S. govt. sponsored agency securities	$	9,547,746	$	(73,463	)	$	-	$	-		$	9,547,746	$	(73,463	)
Residential mortgage-backed and related securities		9,326,000		(78,305	)		8,464,738		(69,247	)		17,790,738		(147,552	)
Municipal securities		25,921,780		(49,087	)		846,894		(14,412	)		26,768,674		(63,499	)
Other securities		641,430		(3,227	)		-		-			641,430		(3,227	)
	$	45,436,956	$	(204,082	)	$	9,311,632	$	(83,659	)	$	54,748,588	$	(287,741	)
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						Nine Months Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Proceeds from sales of securities*	$	58,775,764		$	11,922,915		$	119,850,909		$	65,889,838
Pre-tax gross gains from sales of securities		4,281,828			102,766			4,815,373			672,317
Pre-tax gross losses from sales of securities		(30,055	)		(46,186	)		(187,090	)		(198,804	)

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized Cost		Fair Value
Securities HTM:
Due in one year or less	$	9,333,827	$	9,382,178
Due after one year through five years		30,899,427		31,047,261
Due after five years		266,506,920		271,064,904
	$	306,740,174	$	311,494,343
Securities AFS:
Due in one year or less	$	2,345,063	$	2,347,195
Due after one year through five years		55,691,033		56,456,647
Due after five years		62,818,130		63,721,569
	$	120,854,226	$	122,525,411
Residential mortgage-backed and related securities		131,496,011		133,172,804
Other securities		2,002,113		2,491,866
	$	254,352,350	$	258,190,081

	Amortized Cost		Fair Value
Securities HTM:
Municipal securities	$	178,052,716	$	180,307,064
Securities AFS:
U.S. govt. sponsored agency securities		11,042,867		11,073,088
Municipal securities		41,062,791		37,443,219
	$	52,105,658	$	48,516,307

Schedule of Investment in Bond Securities [Table Text Block]

September 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Iowa		27	$	32,289,974	$	32,746,465	$	1,212,832
Illinois		19		30,063,690		30,437,115		1,601,953
North Dakota		6		19,403,728		19,906,421		3,317,737
Missouri		13		8,304,022		8,448,994		649,923
Other		49		23,934,196		24,247,257		494,842
Total general obligation bonds		114	$	113,995,610	$	115,786,252	$	1,015,669

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

September 30, 2016:
U.S. State:	Number of Issuers		Amortized Cost		Fair Value		Average Exposure Per Issuer (Fair Value)
Missouri		44	$	90,171,820	$	91,084,628	$	2,070,105
Iowa		30		75,440,709		77,216,784		2,573,893
Indiana		20		43,994,737		44,605,536		2,230,277
Kansas		6		13,480,269		13,587,744		2,264,624
North Dakota		4		8,114,931		8,175,230		2,043,808
Other		8		14,379,998		14,628,631		1,828,579
Total revenue bonds		112	$	245,582,464	$	249,298,553	$	2,225,880

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

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Note 3 - Loans Leases Receivable (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

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

	As of September 30,			As of December 31,
	2016			2015
C&I loans	$	804,307,562		$	648,159,892
CRE loans
Owner-occupied CRE		317,899,011			252,523,164
Commercial construction, land development, and other land		160,527,094			49,083,844
Other non owner-occupied CRE		591,878,656			422,761,757
		1,070,304,761			724,368,765
Direct financing leases *		166,924,077			173,655,605
Residential real estate loans **		229,080,600			170,432,530
Installment and other consumer loans		81,917,732			73,669,493
		2,352,534,732			1,790,286,285
Plus deferred loan/lease origination costs, net of fees		8,065,780			7,736,390
		2,360,600,512			1,798,022,675
Less allowance		(28,826,835	)		(26,140,906	)
	$	2,331,773,677		$	1,771,881,769
* Direct financing leases:
Net minimum lease payments to be received	$	186,183,516		$	195,476,230
Estimated unguaranteed residual values of leased assets		1,085,154			1,165,706
Unearned lease/residual income		(20,344,593	)		(22,986,331	)
		166,924,077			173,655,605
Plus deferred lease origination costs, net of fees		6,018,484			6,594,582
		172,942,561			180,250,187
Less allowance		(3,041,962	)		(3,395,088	)
	$	169,900,599		$	176,855,099

Past Due Financing Receivables [Table Text Block]

	As of September 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	$	796,943,072		$	358,503		$	232,297		$	266,485		$	6,507,205		$	804,307,562
CRE
Owner-Occupied CRE		316,299,798			-			-			-			1,599,213			317,899,011
Commercial Construction, Land Development, and Other Land		160,034,828			-			-			-			492,266			160,527,094
Other Non Owner-Occupied CRE		585,545,037			4,617,055			-			-			1,716,564			591,878,656
Direct Financing Leases		162,556,659			1,180,356			998,896			-			2,188,166			166,924,077
Residential Real Estate		227,061,212			122,744			114,638			104,789			1,677,217			229,080,600
Installment and Other Consumer		81,576,782			89,104			41,332			20,492			190,022			81,917,732
	$	2,330,017,388		$	6,367,762		$	1,387,163		$	391,766		$	14,370,653		$	2,352,534,732
As a percentage of total loan/lease portfolio		99.05	%		0.27	%		0.06	%		0.02	%		0.61	%		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 September 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	$	266,485	$	6,507,205	$	170,113	$	6,943,803		41.86	%
CRE
Owner-Occupied CRE		-		1,599,213		-		1,599,213		9.64	%
Commercial Construction, Land Development, and Other Land		-		492,266		-		492,266		2.97	%
Other Non Owner-Occupied CRE		-		1,716,564		-		1,716,564		10.35	%
Direct Financing Leases		-		2,188,166		1,138,335		3,326,501		20.05	%
Residential Real Estate		104,789		1,677,217		390,039		2,172,045		13.09	%
Installment and Other Consumer		20,492		190,022		126,998		337,512		2.03	%
	$	391,766	$	14,370,653	$	1,825,485	$	16,587,904		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 September 30, 2016
	C&I			CRE		Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,724,506		$	10,987,062	$	3,226,194		$	2,014,987		$	1,144,741		$	28,097,490
Provisions charged to expense		859,031			8,962		641,435			79,221			19,337			1,607,986
Loans/leases charged off		(96,330	)		-		(847,668	)		(38,554	)		(4,530	)		(987,082	)
Recoveries on loans/leases previously charged off		70,759			6,500		22,001			-			9,181			108,441
Balance, ending	$	11,557,966		$	11,002,524	$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835

	Three Months Ended September 30, 2015
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Balance, beginning	$	10,020,866		$	9,929,656		$	3,352,303		$	1,720,135		$	1,123,040		$	26,146,000
Provisions charged to expense		520,058			573,119			361,071			130,742			50,273			1,635,263
Loans/leases charged off		(145,665	)		(1,813,973	)		(483,420	)		(25,928	)		(6,837	)		(2,475,823	)
Recoveries on loans/leases previously charged off		136,909			19,913			18,679			4,107			49,296			228,904
Balance, ending	$	10,532,168		$	8,708,715		$	3,248,633		$	1,829,056		$	1,215,772		$	25,534,344

	Nine Months Ended September 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		1,357,262			1,644,008			1,580,677			336,865			(39,991	)		4,878,821
Loans/leases charged off		(388,879	)		(23,101	)		(1,983,322	)		(72,261	)		(22,018	)		(2,489,581	)
Recoveries on loans/leases previously charged off		105,503			6,500			49,519			900			134,267			296,689
Balance, ending	$	11,557,966		$	11,002,524		$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835

	Nine Months Ended September 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		1,513,430			2,490,766			1,238,505			324,925			126,758			5,694,384
Loans/leases charged off		(391,303	)		(2,165,049	)		(1,496,010	)		(25,928	)		(40,886	)		(4,119,176	)
Recoveries on loans/leases previously charged off		659,724			29,612			63,223			4,107			128,105			884,771
Balance, ending	$	10,532,168		$	8,708,715		$	3,248,633		$	1,829,056		$	1,215,772		$	25,534,344

	As of September 30, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total
Allowance for impaired loans/leases	$	1,114,680		$	175,743		$	739,207		$	169,147		$	148,320		$	2,347,097
Allowance for nonimpaired loans/leases		10,443,286			10,826,781			2,302,755			1,886,507			1,020,409			26,479,738
	$	11,557,966		$	11,002,524		$	3,041,962		$	2,055,654		$	1,168,729		$	28,826,835
Impaired loans/leases	$	5,874,093		$	3,495,386		$	2,925,205		$	2,230,829		$	368,924		$	14,894,437
Nonimpaired loans/leases		798,433,469			1,066,809,375			163,998,872			226,849,771			81,548,808			2,337,640,295
	$	804,307,562		$	1,070,304,761		$	166,924,077		$	229,080,600		$	81,917,732		$	2,352,534,732
Allowance as a percentage of impaired loans/leases		18.98	%		5.03	%		25.27	%		7.58	%		40.20	%		15.76	%
Allowance as a percentage of nonimpaired loans/leases		1.31	%		1.01	%		1.40	%		0.83	%		1.25	%		1.13	%
Total allowance as a percentage of total loans/leases		1.44	%		1.03	%		1.82	%		0.90	%		1.43	%		1.22	%

	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	$	1,846,140	$	1,987,082	$	-	$	3,864,852	$	8,644	$	8,644
CRE
Owner-Occupied CRE		767,032		860,806		-		621,553		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		-		-		-
Other Non Owner-Occupied CRE		2,042,391		2,042,391		-		1,789,571		-		-
Direct Financing Leases		1,860,773		1,860,773		-		1,755,969		52,595		52,595
Residential Real Estate		1,418,957		1,458,158		-		1,455,159		2,992		2,992
Installment and Other Consumer		208,916		208,916		-		430,322		-		-
	$	8,144,209	$	8,418,126	$	-	$	9,917,426	$	64,231	$	64,231
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	4,027,953	$	4,031,792	$	1,114,680	$	2,195,524	$	-	$	-
CRE
Owner-Occupied CRE		322,148		322,148		57,398		401,050		-		-
Commercial Construction, Land Development, and Other Land		186,681		186,681		77,611		190,208		-		-
Other Non Owner-Occupied CRE		177,134		177,134		40,734		67,571		-		-
Direct Financing Leases		1,064,432		1,064,432		739,207		653,884		-		-
Residential Real Estate		811,872		886,004		169,147		799,427		5,409		5,409
Installment and Other Consumer		160,008		160,008		148,320		145,962		4,426		4,426
	$	6,750,228	$	6,828,199	$	2,347,097	$	4,453,626	$	9,835	$	9,835
Total Impaired Loans/Leases:
C&I	$	5,874,093	$	6,018,874	$	1,114,680	$	6,060,376	$	8,644	$	8,644
CRE
Owner-Occupied CRE		1,089,180		1,182,954		57,398		1,022,603		-		-
Commercial Construction, Land Development, and Other Land		186,681		186,681		77,611		190,208		-		-
Other Non Owner-Occupied CRE		2,219,525		2,219,525		40,734		1,857,142		-		-
Direct Financing Leases		2,925,205		2,925,205		739,207		2,409,853		52,595		52,595
Residential Real Estate		2,230,829		2,344,162		169,147		2,254,586		8,401		8,401
Installment and Other Consumer		368,924		368,924		148,320		576,284		4,426		4,426
	$	14,894,437	$	15,246,325	$	2,347,097	$	14,371,052	$	74,066	$	74,066

	Three Months Ended September 30, 2016						Three Months Ended September 30, 2015
Classes of Loans/Leases	Averag e 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	$	1,677,527	$	3,301	$	3,301	$	365,798	$	1,870	$	1,870
CRE
Owner-Occupied CRE		767,032		-		-		451,851		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		9,968		-		-
Other Non Owner-Occupied CRE		1,969,034		-		-		2,868,950		-		-
Direct Financing Leases		2,008,095		21,095		21,095		634,378		325		325
Residential Real Estate		1,481,340		941		941		900,938		1,362		1,362
Installment and Other Consumer		322,738		-		-		328,669		3,912		3,912
	$	8,225,766	$	25,337	$	25,337	$	5,560,552	$	7,469	$	7,469
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	4,188,621	$	-	$	-	$	4,735,149	$	-	$	-
CRE
Owner-Occupied CRE		363,911		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		187,831		-		-		335,707		-		-
Other Non Owner-Occupied CRE		135,141		-		-		-		-		-
Direct Financing Leases		793,769		-		-		488,860		-		-
Residential Real Estate		807,827		1,503		1,503		984,558		1,981		1,981
Installment and Other Consumer		160,301		1,458		1,458		723,674		1,391		1,391
	$	6,637,401	$	2,961	$	2,961	$	7,267,948	$	3,372	$	3,372
Total Impaired Loans/Leases:
C&I	$	5,866,148	$	3,301	$	3,301	$	5,100,947	$	1,870	$	1,870
CRE
Owner-Occupied CRE		1,130,943		-		-		451,851		-		-
Commercial Construction, Land Development, and Other Land		187,831		-		-		345,675		-		-
Other Non Owner-Occupied CRE		2,104,175		-		-		2,868,950		-		-
Direct Financing Leases		2,801,864		21,095		21,095		1,123,238		325		325
Residential Real Estate		2,289,167		2,444		2,444		1,885,496		3,343		3,343
Installment and Other Consumer		483,039		1,458		1,458		1,052,343		5,303		5,303
	$	14,863,167	$	28,298	$	28,298	$	12,828,500	$	10,841	$	10,841

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 September 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)	$	770,822,390	$	307,017,431	$	153,401,738	$	572,769,744	$	1,804,011,303		96.24	%
Special Mention (Rating 6)		10,160,760		1,737,127		1,780,000		5,894,259		19,572,146		1.04	%
Substandard (Rating 7)		23,324,412		9,144,453		5,345,356		13,214,653		51,028,874		2.72	%
Doubtful (Rating 8)		-		-		-		-		-		-
	$	804,307,562	$	317,899,011	$	160,527,094	$	591,878,656	$	1,874,612,323		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 September 30, 2016
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total
Performing	$	163,597,576	$	226,908,556	$	81,580,220	$	472,086,352		98.78	%
Nonperforming		3,326,501		2,172,044		337,512		5,836,057		1.22	%
	$	166,924,077	$	229,080,600	$	81,917,732	$	477,922,409		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 September 30, 2016								For the three months ended September 30, 2015
Classes of Loans/Leases	Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance		Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance
CONCESSION - Significant Payment Delay
Direct Financing Leases		2	$	461,643	$	461,643	$	-					$	-	$	-
		2	$	461,643	$	461,643	$	-		-	$	-	$	-	$	-
CONCESSION - Interest Rate Adjusted Below Market
Installment and Other Consumer		-	$	-	$	-	$	-		1	$	14,203	$	14,203	$	-
		-	$	-	$	-	$	-		1	$	14,203	$	14,203	$	-
TOTAL		2	$	461,643	$	461,643	$	-		1	$	14,203	$	14,203	$	-

	For the nine months ended September 30, 2016								For the nine months ended September 30, 2015
Classes of Loans/Leases	Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance		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		6		771,672		771,672		-		-		-		-		-
		7	$	833,812	$	833,812	$	-		-	$	-	$	-	$	-
CONCESSION - Interest Rate Adjusted Below Market
CRE - Other		1	$	1,233,740	$	1,233,740	$	-		-	$	-	$	-	$	-
Installment and Other Consumer		-		-		-		-		1		14,203		14,203		-
		1	$	1,233,740	$	1,233,740	$	-		1	$	14,203	$	14,203	$	-
TOTAL		13	$	2,530,491	$	2,530,491	$	-		1	$	14,203	$	14,203	$	-

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Note 4 - Borrowings (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	September 30, 2016
			Weighted					Weighted
			Average			Amount Due		Average
			Interest Rate			with		Interest Rate
	Amount Due		at Quarter-End			Putable Option *		at Quarter-End
Maturity:
Year ending December 31:
2016	$	90,300,000		0.55	%	$	-		-	%
2017		23,342,549		2.59			-		-
2018		25,000,000		2.70			-		-
Total FHLB advances	$	138,642,549		1.68	%	$	-		-	%

	December 31, 2015
			Weighted					Weighted
			Average			Amount Due		Average
			Interest Rate			with		Interest Rate
	Amount Due		at Year-End			Putable Option *		at Year-End
Maturity:
Year ending December 31:
2016	$	103,000,000		0.56	%	$	2,000,000		4.00	%
2017		18,000,000		2.89			-		-
2018		30,000,000		3.27			5,000,000		2.84
Total FHLB advances	$	151,000,000		1.37	%	$	7,000,000		3.17	%

Schedule of Debt [Table Text Block]

	As of September 30, 2016		As of December 31, 2015
Wholesale structured repurchase agreements	$	45,000,000	$	110,000,000
Term note		30,000,000		-
Revolving line of credit		5,000,000		-
	$	80,000,000	$	110,000,000

Schedule of Wholesale Repurchase Agreements [Table Text Block]

	September 30, 2016					December 31, 2015
			Weighted					Weighted
			Average					Average
			Interest Rate					Interest Rate
	Amount Due		at Quarter-End			Amount Due		at Year-End
Maturity:
Year ending December 31:
2016	$	-		0.00	%	$	-		0.00	%
2017		10,000,000		3.07			10,000,000		3.00
2018		-		-			10,000,000		3.97
2019		10,000,000		3.44			45,000,000		3.40
2020		25,000,000		2.48			45,000,000		2.66
Total Wholesale Structured Repurchase Agreements	$	45,000,000		2.83	%	$	110,000,000		3.11	%

Schedule of Maturities of Long-term Debt [Table Text Block]

	As of September 30, 2016
2017		6,000,000
2018		6,000,000
2019		6,000,000
2020		6,000,000
2021		6,000,000
	$	30,000,000

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Note 5 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

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

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Net income	$	6,107,501	$	6,488,987	$	19,157,457	$	10,143,058
Basic EPS	$	0.47	$	0.55	$	1.55	$	1.03
Diluted EPS	$	0.46	$	0.55	$	1.52	$	1.01
Weighted average common shares outstanding*		13,066,777		11,713,993		12,398,491		9,878,882
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan		202,926		161,937		181,551		145,559
Weighted average common and common equivalent shares outstanding		13,269,703		11,875,930		12,580,042		10,024,441

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Note 6 - Fair Value (Tables)

9 Months Ended

Sep. 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)
September 30, 2016:
Securities AFS:
U.S. govt. sponsored agency securities	$	67,884,949	$	-	$	67,884,949	$	-
Residential mortgage-backed and related securities		133,172,804		-		133,172,804		-
Municipal securities		54,640,462		-		54,640,462		-
Other securities		2,491,866		1,107		2,490,759		-
Interest rate caps		221,233		-		221,233		-
Interest rate swaps - assets		9,386,262		-		9,386,262		-
Total assets measured at fair value	$	267,797,576	$	1,107	$	267,796,469	$	-
Interest rate swaps - liabilities	$	9,386,262	$	-	$	9,386,262	$	-
Total liabilities measured at fair value	$	9,386,262	$	-	$	9,386,262	$	-
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
September 30, 2016:
Impaired loans/leases	$	7,870,032	$	-	$	-	$	7,870,032
OREO		6,272,211		-		-		6,272,211
	$	14,142,243	$	-	$	-	$	14,142,243
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 September 30, 2016		Fair Value December 31, 2015		Valuation Technique	Unobservable Input	Range
Impaired loans/leases	$	7,870,032	$	4,545,966	Appraisal of collateral	Appraisal adjustments		-10.00%	to	-50.00%
OREO		6,272,211		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 September 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	$	61,213,134	$	61,213,134	$	41,742,321	$	41,742,321
Federal funds sold	Level 2		21,022,000		21,022,000		19,850,000		19,850,000
Interest-bearing deposits at financial institutions	Level 2		75,025,417		75,025,417		36,313,965		36,313,965
Investment securities:
HTM	Level 2		306,740,174		311,494,343		253,674,159		255,691,285
AFS	See Previous Table		258,190,081		258,190,081		323,434,982		323,434,982
Loans/leases receivable, net	Level 3		7,287,067		7,870,032		4,209,228		4,545,966
Loans/leases receivable, net	Level 2		2,324,486,610		2,327,955,000		1,767,672,541		1,764,178,772
Interest rate caps	Level 2		221,233		221,233		856,024		856,024
Interest rate swaps - assets	Level 2		9,386,262		9,386,262		3,044,525		3,044,525
Deposits:
Nonmaturity deposits	Level 2		2,103,706,174		2,103,706,174		1,516,599,081		1,516,599,081
Time deposits	Level 2		491,206,579		491,849,000		364,067,103		364,192,000
Short-term borrowings	Level 2		60,015,417		60,015,417		144,662,716		144,662,716
FHLB advances	Level 2		138,642,529		140,153,000		151,000,000		153,143,000
Other borrowings	Level 2		80,000,000		82,119,000		110,000,000		116,061,000
Junior subordinated debentures	Level 2		33,446,578		24,768,273		38,499,052		27,642,093
Interest rate swaps - liabilities	Level 2		9,386,262		9,386,262		3,044,525		3,044,525

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Note 7 - Business Segment Information (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

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

	Commercial Banking								Wealth					Intercompany			Consolidated
	QCBT		CRBT		CSB		RB&T		Management		All Other			Eliminations			Total
Three Months Ended September 30, 2016
Total revenue	$	18,026,215	$	10,065,032	$	2,675,741	$	4,232,205	$	2,284,577	$	8,463,636		$	(8,507,270	)	$	37,240,136
Net interest income	$	11,225,414	$	7,594,557	$	2,191,862	$	3,056,989	$	-	$	(438,045	)	$	-		$	23,630,777
Net income	$	3,596,469	$	3,286,724	$	188,608	$	944,781	$	398,859	$	6,107,492		$	(8,415,432	)	$	6,107,501
Total assets	$	1,407,733,009	$	887,592,695	$	580,210,270	$	393,191,774	$	-	$	368,990,749		$	(356,732,388	)	$	3,280,986,109
Provision	$	1,137,986	$	-	$	270,000	$	200,000	$	-	$	-		$	-		$	1,607,986
Goodwill	$	3,222,688	$	-	$	10,408,938	$	-	$	-	$	-		$	-		$	13,631,626
Core deposit intangible	$	-	$	1,321,775	$	6,291,818	$	-	$	-	$	-		$	-		$	7,613,593
Three Months Ended September 30, 2015
Total revenue	$	14,143,548	$	10,047,658	$	-	$	3,922,304	$	2,314,406	$	7,937,087		$	(8,821,205	)	$	29,543,798
Net interest income	$	10,728,143	$	6,956,027	$	-	$	2,771,214	$	-	$	(317,858	)	$	-		$	20,137,526
Net income (loss)	$	3,786,289	$	2,893,397	$	-	$	847,709	$	373,801	$	6,488,988		$	(7,901,197	)	$	6,488,987
Total assets	$	1,328,053,105	$	867,064,041	$	-	$	360,348,002	$	-	$	277,001,408		$	(256,611,839	)	$	2,575,854,717
Provision	$	910,263	$	550,000	$	-	$	175,000	$	-	$	-		$	-		$	1,635,263
Goodwill	$	3,222,688	$	-	$	-	$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,521,287	$	-	$	-	$	-	$	-		$	-		$	1,521,287
Nine Months Ended September 30, 2016
Total revenue	$	45,706,061	$	31,342,345	$	2,675,741	$	11,945,081	$	6,723,690	$	23,567,906		$	(23,720,471	)	$	98,240,353
Net interest income	$	33,394,620	$	21,755,270	$	2,191,862	$	8,914,380	$	-	$	(1,019,020	)	$	-		$	65,237,112
Net income	$	10,326,508	$	9,366,441	$	188,608	$	2,334,735	$	1,232,831	$	19,157,447		$	(23,449,113	)	$	19,157,457
Total assets	$	1,407,733,009	$	887,592,695	$	580,210,270	$	393,191,774	$	-	$	368,990,749		$	(356,732,388	)	$	3,280,986,109
Provision	$	3,108,821	$	700,000	$	270,000	$	800,000	$	-	$	-		$	-		$	4,878,821
Goodwill	$	3,222,688	$	-	$	10,408,938	$	-	$	-	$	-		$	-		$	13,631,626
Core deposit intangible	$	-	$	1,321,775	$	6,291,818	$	-	$	-	$	-		$	-		$	7,613,593
Nine Months Ended September 30, 2015
Total revenue	$	39,893,713	$	28,396,380	$	-	$	11,095,899	$	6,927,453	$	14,487,857		$	(15,556,437	)	$	85,244,865
Net interest income	$	29,745,080	$	19,836,835	$	-	$	8,089,626	$	-	$	(1,260,962	)	$	-		$	56,410,579
Net income	$	6,578,479	$	4,645,136	$	-	$	1,895,933	$	1,271,661	$	10,143,059		$	(14,391,210	)	$	10,143,058
Total assets	$	1,328,053,105	$	867,064,041	$	-	$	360,348,002	$	-	$	277,001,408		$	(256,611,839	)	$	2,575,854,717
Provision	$	3,466,384	$	1,650,000	$	-	$	578,000	$	-	$	-		$	-		$	5,694,384
Goodwill	$	3,222,688	$	-	$	-	$	-	$	-	$	-		$	-		$	3,222,688
Core deposit intangible	$	-	$	1,521,287	$	-	$	-	$	-	$	-		$	-		$	1,521,287

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Note 8 - Regulatory Capital Requirements (Tables)

9 Months Ended

Sep. 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 September 30, 2016:
Company:
Total risk-based capital	$	316,063		11.33	%	$	240,629	>	8.625	%	$	278,991	>	10.0	%
Tier 1 risk-based capital		287,015		10.29	%		184,831	>	6.625			223,192	>	8.0
Tier 1 leverage		287,015		10.09	%		113,737	>	4.000			142,172	>	5.0
Common equity Tier 1		257,119		9.22	%		142,983	>	5.125			181,344	>	6.5
Quad City Bank & Trust:
Total risk-based capital	$	138,333		11.71	%	$	101,861	>	8.625	%	$	118,100	>	10.0	%
Tier 1 risk-based capital		125,410		10.62	%		78,241	>	6.625			94,480	>	8.0
Tier 1 leverage		125,410		8.86	%		56,628	>	4.000			70,785	>	5.0
Common equity Tier 1		125,410		10.62	%		60,526	>	5.125			76,765	>	6.5
Cedar Rapids Bank & Trust:
Total risk-based capital	$	104,206		13.13	%	$	68,474	>	8.625	%	$	79,390	>	10.0	%
Tier 1 risk-based capital		94,266		11.87	%		52,596	>	6.625			63,512	>	8.0
Tier 1 leverage		94,266		10.36	%		36,407	>	4.000			45,509	>	5.0
Common equity Tier 1		94,266		11.87	%		40,687	>	5.125			51,604	>	6.5
Community State Bank:
Total risk-based capital	$	67,008		14.09	%	$	41,031	>	8.625	%	$	47,572	>	10.0	%
Tier 1 risk-based capital		66,735		14.03	%		31,516	>	6.625			38,058	>	8.0
Tier 1 leverage		66,735		11.74	%		22,745	>	4.000			28,431	>	5.0
Common equity Tier 1		66,735		14.03	%		24,381	>	5.125			30,922	>	6.5
Rockford Bank & Trust:
Total risk-based capital	$	41,130		11.95	%	$	29,680	>	8.625	%	$	34,412	>	10.0	%
Tier 1 risk-based capital		36,821		10.70	%		22,798	>	6.625			27,529	>	8.0
Tier 1 leverage		36,821		9.45	%		15,587	>	4.000			19,484	>	5.0
Common equity Tier 1		36,821		10.70	%		17,636	>	5.125			22,367	>	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

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

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	As of
	August 31, 2016
ASSETS
Cash and due from banks	$	10,094,645
Federal funds sold		698,000
Interest-bearing deposits at financial institutions		14,730,157
Securities		102,640,029
Loans/leases receivable, net		419,029,277
Premises and equipment		20,684,880
Core deposit intangible		6,352,653
Restricted investment securities		1,512,900
Other real estate owned		650,000
Other assets		4,763,224
Total assets acquired	$	581,155,765
LIABILITIES
Deposits	$	486,298,262
FHLB advances		20,368,877
Other liabilities		4,897,564
Total liabilities assumed	$	511,564,703
Net assets acquired	$	69,591,062
CONSIDERATION PAID:
Cash	$	80,000,000
Total consideration paid	$	80,000,000
Goodwill	$	10,408,938

Business Combination, Purchased Loans as of The Acquisition Date [Table Text Block]

	PCI			Performing
	Loans			Loans			Total
Contractually required principal payments	$	3,662,431		$	428,552,119		$	432,214,550
Nonaccretable discount		(991,685	)		-			(991,685	)
Principal cash flows expected to be collected	$	2,670,746		$	428,552,119		$	431,222,865
Accretable discount		(277,579	)		(11,916,009	)		(12,193,588	)
Fair Value of acquired loans	$	2,393,167		$	416,636,110		$	419,029,277

Certain Loans Acquired in Transfer Accounted for as Debt Securities Accretable Yield Movement Schedule [Table Text Block]

	PCI			Performing
	Loans			Loans			Total
Balance at the beginning of the period		(277,579	)		(11,916,009	)		(12,193,588	)
Accretion recognized		29,317			366,293			395,610
Balance at the end of the period	$	(248,262	)	$	(11,549,716	)	$	(11,797,978	)

Core Deposit [Table Text Block]

	September 30, 2016
Balance at the beginning of the period	$	6,352,653
Amortization expense		(60,834	)
Balance at the end of the period	$	6,291,819
Gross carrying amount	$	6,352,653
Accumulated amortization		(60,834	)
Net book value	$	6,291,819

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Years ending December 31,	Amount
2016	$	182,503
2017		723,955
2018		710,751
2019		694,374
2020		674,819
Thereafter		3,305,417
	$	6,291,819

Business Acquisition, Pro Forma Information [Table Text Block]

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
	(in thousands, except for per share data)
Interest income	$	27,615	$	25,685	$	80,755	$	73,051
Noninterest income	$	11,415	$	8,074	$	27,744	$	23,167
Net income	$	7,301	$	8,216	$	23,813	$	15,324
Earnings per common share:
Basic	$	0.56	$	0.64	$	1.85	$	1.38
Diluted	$	0.55	$	0.63	$	1.82	$	1.36

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Note 2 - Investment Securities (Details Textual)	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Equity Securities [Member]
Percentage of Investment Portfolio	1.00%	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
General Obligation Bonds [Member] | Municipal Bonds [Member] | Aggregate Fair Value Exceeding 5 Million [Member]
Number of States Investments Held in	4	4		4		4
General Obligation Bonds [Member] | Municipal Bonds [Member] | Minimum [Member]
Other Investments	$ 5,000,000	$ 5,000,000		$ 5,000,000		$ 5,000,000
General Obligation Bonds [Member] | Municipal Bonds [Member]
Number of Issuers	114	114		114		82
Other Investments	$ 115,800,000	$ 115,800,000		$ 115,800,000		$ 67,800,000
Number of States Investments Held in	24	24		24		19
General Obligation Bonds [Member] | Stockholders' Equity, Total [Member] | Credit Concentration Risk [Member]
Concentration Risk, Percentage				0.00%		0.00%
Revenue Bonds [Member] | Municipal Bonds [Member] | Aggregate Fair Value Exceeding 5 Million [Member]
Number of States Investments Held in	5	5		5		4
Revenue Bonds [Member] | Municipal Bonds [Member] | Minimum [Member]
Other Investments	$ 5,000,000	$ 5,000,000		$ 5,000,000		$ 5,000,000
Revenue Bonds [Member] | Municipal Bonds [Member]
Number of Issuers	112	112		112		92
Other Investments	$ 249,300,000	$ 249,300,000		$ 249,300,000		$ 214,400,000
Number of States Investments Held in	13	13		13		9
Revenue Bonds [Member] | Stockholders' Equity, Total [Member] | Credit Concentration Risk [Member]
Concentration Risk, Percentage				0.00%		0.00%
Number of Securities	526	526		526
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	92	92		92
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		17
Accounts Receivable, Sale of Securities, from Broker	$ 32,100,000	$ 32,100,000		$ 32,100,000
Gain on Sale of Investments	$ 4,010,877	$ 4,281,828	$ 102,766	$ 4,815,373	$ 672,317

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Note 2 - Investment Securities - Amortized Cost and Fair Value of Investment Securities (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
US States and Political Subdivisions Debt Securities [Member]
Securities held to maturity, at amortized cost	$ 305,690,174	$ 252,624,159
Securities held to maturity, gross unrealized gains	5,533,151	3,190,558
Securities held to maturity, gross unrealized (losses)	(778,982)	(1,173,432)
HTM	310,444,343	254,641,285
Securities available for sale, amortized cost	53,887,898	26,764,981
Securities available for sale, gross unrealized gains	816,063	872,985
Securities available for sale, gross unrealized (losses)	(63,499)	(59,378)
AFS	54,640,462	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)
HTM	1,050,000	1,050,000
Securities available for sale, amortized cost	2,002,113	1,108,124
Securities available for sale, gross unrealized gains	492,980	540,919
Securities available for sale, gross unrealized (losses)	(3,227)	(163)
AFS	2,491,866	1,648,880
US Government Agencies Debt Securities [Member]
Securities available for sale, amortized cost	66,966,328	216,281,416
Securities available for sale, gross unrealized gains	992,084	104,524
Securities available for sale, gross unrealized (losses)	(73,463)	(2,848,561)
AFS	67,884,949	213,537,379
Residential Mortgage Backed Securities [Member]
Securities available for sale, amortized cost	131,496,011	81,442,479
Securities available for sale, gross unrealized gains	1,824,345	511,095
Securities available for sale, gross unrealized (losses)	(147,552)	(1,283,439)
AFS	133,172,804	80,670,135
Securities held to maturity, at amortized cost	306,740,174	253,674,159
Securities held to maturity, gross unrealized gains	5,533,151	3,190,558
Securities held to maturity, gross unrealized (losses)	(778,982)	(1,173,432)
HTM	311,494,343	255,691,285
Securities available for sale, amortized cost	254,352,350	325,597,000
Securities available for sale, gross unrealized gains	4,125,472	2,029,523
Securities available for sale, gross unrealized (losses)	(287,741)	(4,191,541)
AFS	$ 258,190,081	$ 323,434,982

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Note 2 - Investment Securities - Securities in a Continuous Unrealized Loss Position (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
US States and Political Subdivisions Debt Securities [Member]
Securities held to maturity, less than 12 months, fair value	$ 23,632,888	$ 14,803,408
Securities held to maturity, less than 12 months, gross unrealized losses	(251,558)	(294,438)
Securities held to maturity, 12 months or more, fair value	14,150,396	19,927,581
Securities held to maturity, 12 months or more, gross unrealized losses	(527,424)	(878,994)
Securities held to maturity, fair value	37,783,284	34,730,989
Securities held to maturity, gross unrealized losses	(778,982)	(1,173,432)
Securities available for sale, less than 12 months, fair value	25,921,780	2,220,800
Securities available for sale, less than 12 months, gross unrealized losses	(49,087)	(31,807)
Securities available for sale, 12 months or more, fair value	846,894	848,329
Securities available for sale, 12 months or more, gross unrealized losses	(14,412)	(27,571)
Securities available for sale, fair value	26,768,674	3,069,129
Securities available for sale, gross unrealized losses	(63,499)	(59,378)
US Government Agencies Debt Securities [Member]
Securities available for sale, less than 12 months, fair value	9,547,746	112,900,327
Securities available for sale, less than 12 months, gross unrealized losses	(73,463)	(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	9,547,746	177,376,988
Securities available for sale, gross unrealized losses	(73,463)	(2,848,561)
Residential Mortgage Backed Securities [Member]
Securities available for sale, less than 12 months, fair value	9,326,000	40,356,921
Securities available for sale, less than 12 months, gross unrealized losses	(78,305)	(730,466)
Securities available for sale, 12 months or more, fair value	8,464,738	19,836,637
Securities available for sale, 12 months or more, gross unrealized losses	(69,247)	(552,973)
Securities available for sale, fair value	17,790,738	60,193,558
Securities available for sale, gross unrealized losses	(147,552)	(1,283,439)
Other Securities [Member]
Securities available for sale, less than 12 months, fair value	641,430	411
Securities available for sale, less than 12 months, gross unrealized losses	(3,227)	(163)
Securities available for sale, fair value	641,430	411
Securities available for sale, gross unrealized losses	(3,227)	(163)
Securities available for sale, less than 12 months, fair value	45,436,956	155,478,459
Securities available for sale, less than 12 months, gross unrealized losses	(204,082)	(2,160,027)
Securities available for sale, 12 months or more, fair value	9,311,632	85,161,627
Securities available for sale, 12 months or more, gross unrealized losses	(83,659)	(2,031,514)
Securities available for sale, fair value	54,748,588	240,640,086
Securities available for sale, gross unrealized losses	$ (287,741)	$ (4,191,541)

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Note 2 - Investment Securities - Sales of Securities (Details) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Proceeds from sales of securities*	[1]		$ 58,775,764	$ 11,922,915	$ 119,850,909	$ 65,889,838
Gain on Sale of Investments		$ 4,010,877	4,281,828	102,766	4,815,373	672,317
Pre-tax gross losses from sales of securities			$ (30,055)	$ (46,186)	$ (187,090)	$ (198,804)

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

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Note 2 - Investment Securities - Amortized Cost and Fair Value of Securities by Contractual Maturity (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Callable Securities [Member] | US States and Political Subdivisions Debt Securities [Member]
Amortized Cost	$ 178,052,716
Fair Value	180,307,064
US States and Political Subdivisions Debt Securities [Member] | Callable Securities [Member]
Amortized Cost	41,062,791
Fair Value	37,443,219
US States and Political Subdivisions Debt Securities [Member]
	310,444,343	$ 254,641,285
US Government-sponsored Enterprises Debt Securities [Member] | Callable Securities [Member]
Amortized Cost	11,042,867
Fair Value	11,073,088
Residential Mortgage Backed Securities [Member]
Amortized Cost	131,496,011
Fair Value	133,172,804
Other Securities [Member]
	1,050,000	1,050,000
Amortized Cost	2,002,113
Fair Value	2,491,866
Callable Securities [Member]
	52,105,658
	48,516,307
Due in one year or less	9,333,827
Due in one year or less	9,382,178
Due after one year through five years	30,899,427
Due after one year through five years	31,047,261
Due after five years	266,506,920
Due after five years	271,064,904
	306,740,174
	311,494,343	$ 255,691,285
Due in one year or less	2,345,063
Due in one year or less	2,347,195
Due after one year through five years	55,691,033
Due after one year through five years	56,456,647
Due after five years	62,818,130
Due after five years	63,721,569
	120,854,226
	122,525,411
	254,352,350
	$ 258,190,081

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Note 2 - Investment Securities - Amortized Cost and Fair Values of General Obligation Bonds by Issuer's State (Details)	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
General Obligation Bonds [Member] | Iowa [Member]
Number of issuers	27	15
Amortized cost	$ 32,289,974	$ 19,974,939
Other Investments	32,746,465	20,247,108
Average exposure per issuer (fair value)	$ 1,212,832	$ 1,349,807
General Obligation Bonds [Member] | Missouri [Member]
Number of issuers	13	12
Amortized cost	$ 8,304,022	$ 7,924,800
Other Investments	8,448,994	7,986,856
Average exposure per issuer (fair value)	$ 649,923	$ 665,571
General Obligation Bonds [Member] | Illinois [Member]
Number of issuers	19	9
Amortized cost	$ 30,063,690	$ 10,928,700
Other Investments	30,437,115	11,264,348
Average exposure per issuer (fair value)	$ 1,601,953	$ 1,251,594
General Obligation Bonds [Member] | North Dakota [Member]
Number of issuers	6	5
Amortized cost	$ 19,403,728	$ 10,890,000
Other Investments	19,906,421	11,050,235
Average exposure per issuer (fair value)	$ 3,317,737	$ 2,210,047
General Obligation Bonds [Member] | Other States [Member]
Number of issuers	49	41
Amortized cost	$ 23,934,196	$ 16,965,393
Other Investments	24,247,257	17,229,485
Average exposure per issuer (fair value)	$ 494,842	$ 420,231
General Obligation Bonds [Member]
Number of issuers	114	82
Amortized cost	$ 113,995,610	$ 66,683,832
Other Investments	115,786,252	67,778,032
Average exposure per issuer (fair value)	$ 1,015,669	$ 826,561
Revenue Bonds [Member] | Iowa [Member]
Number of issuers	30	26
Amortized cost	$ 75,440,709	$ 70,773,660
Other Investments	77,216,784	71,659,410
Average exposure per issuer (fair value)	$ 2,573,893	$ 2,756,131
Revenue Bonds [Member] | Missouri [Member]
Number of issuers	44	41
Amortized cost	$ 90,171,820	$ 78,593,590
Other Investments	91,084,628	79,015,378
Average exposure per issuer (fair value)	$ 2,070,105	$ 1,927,204
Revenue Bonds [Member] | North Dakota [Member]
Number of issuers	4
Amortized cost	$ 8,114,931
Other Investments	8,175,230
Average exposure per issuer (fair value)	$ 2,043,808
Revenue Bonds [Member] | Indiana [Member]
Number of issuers	20	17
Amortized cost	$ 43,994,737	$ 40,018,381
Other Investments	44,605,536	40,210,320
Average exposure per issuer (fair value)	$ 2,230,277	$ 2,365,313
Revenue Bonds [Member] | Kansas [Member]
Number of issuers	6	3
Amortized cost	$ 13,480,269	$ 11,748,679
Other Investments	13,587,744	11,821,055
Average exposure per issuer (fair value)	$ 2,264,624	$ 3,940,352
Revenue Bonds [Member] | Other States [Member]
Number of issuers	8	5
Amortized cost	$ 14,379,998	$ 11,570,998
Other Investments	14,628,631	11,735,678
Average exposure per issuer (fair value)	$ 1,828,579	$ 2,347,136
Revenue Bonds [Member]
Number of issuers	112	92
Amortized cost	$ 245,582,464	$ 212,705,308
Other Investments	249,298,553	214,441,841
Average exposure per issuer (fair value)	$ 2,225,880	$ 2,330,890

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Note 3 - Loans Leases Receivable (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Residential Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 110,702		$ 110,702		$ 119,305
Residential Portfolio Segment [Member]
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	1,377,875		1,377,875		565,850
Financing Receivable, Recorded Investment, Nonaccrual Status	1,677,217		1,677,217		1,016,743
Commercial Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	2,241,205		2,241,205		1,164,423
Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	6,507,205		6,507,205		5,791,975
Commercial Real Estate Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,937,655		1,937,655		193,804
Finance Leases Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	463,859		463,859		42,098
Finance Leases Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	2,188,166		2,188,166		1,701,341
Consumer Portfolio Segment [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	105,999		105,999		14,027
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	190,022		190,022		109,117
Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment, Nonaccrual Status	4,859,420		$ 4,859,420		1,533,657
Financing Receivable, Modifications, Number of Contracts			1
Nonaccrual [Member]
Financing Receivable, Modifications, Number of Contracts			2
Financing Receivable, Modifications, Post-Modification Recorded Investment			$ 1,384,680
Losses on Residual Value	$ 0	$ 0	$ 0	$ 0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0	0	0
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 14,370,653		$ 14,370,653		10,648,211
Financing Receivable, Modifications, Recorded Investment	$ 6,684,905		$ 6,684,905		$ 2,587,413
Financing Receivable, Modifications, Number of Contracts	2	1	13	1
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 461,643	$ 14,203	$ 2,530,491	$ 14,203
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down			$ 236,545

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Note 3 - Loans Leases Receivable - Composition of the Loan Lease Portfolio (Details) - USD ($)		Sep. 30, 2016		Jun. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Commercial Portfolio Segment [Member]
Loans		$ 804,307,562			$ 648,159,892
Less allowance		(11,557,966)		$ (10,724,506)	(10,484,080)		$ (10,532,168)	$ (10,020,866)	$ (8,750,317)
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans		317,899,011			252,523,164
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans		160,527,094			49,083,844
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans		591,878,656			422,761,757
Commercial Real Estate Portfolio Segment [Member]
Loans		1,070,304,761			724,368,765
Less allowance		(11,002,524)		(10,987,062)	(9,375,117)		(8,708,715)	(9,929,656)	(8,353,386)
Finance Leases Portfolio Segment [Member]
Loans	[1],[2]	166,924,077			173,655,605
Plus deferred loan/lease origination costs, net of fees	[1]	6,018,484			6,594,582
Gross loans/leases receivable	[1]	172,942,561			180,250,187
Less allowance		(3,041,962)	[1]	(3,226,194)	(3,395,088)	[1]	(3,248,633)	(3,352,303)	(3,442,915)
	[1]	169,900,599			176,855,099
Net minimum lease payments to be received	[1]	186,183,516			195,476,230
Estimated unguaranteed residual values of leased assets	[1]	1,085,154			1,165,706
Unearned lease/residual income	[1]	(20,344,593)			(22,986,331)
Residential Portfolio Segment [Member]
Loans	[2],[3]	229,080,600			170,432,530
Less allowance		(2,055,654)		(2,014,987)	(1,790,150)		(1,829,056)	(1,720,135)	(1,525,952)
Consumer Portfolio Segment [Member]
Loans	[2]	81,917,732			73,669,493
Less allowance		(1,168,729)		(1,144,741)	(1,096,471)		(1,215,772)	(1,123,040)	(1,001,795)
Loans		2,352,534,732			1,790,286,285
Plus deferred loan/lease origination costs, net of fees		8,065,780			7,736,390
Gross loans/leases receivable		2,360,600,512			1,798,022,675
Less allowance		(28,826,835)		$ (28,097,490)	(26,140,906)		$ (25,534,344)	$ (26,146,000)	$ (23,074,365)
		$ 2,331,773,677			$ 1,771,881,769

[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 nine months ended September 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 $1,377,875 and $565,850 as of September 30, 2016, and December 31, 2015, respectively.

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Note 3 - Loans Leases Receivable - Aging of the Loan Lease Portfolio (Details) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due		$ 358,503	$ 1,636,860
Commercial Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due		232,297	5,816
Commercial Portfolio Segment [Member]
Current		796,943,072	640,725,241
Nonaccrual Loans/Leases		6,507,205	5,791,975
Loans		804,307,562	648,159,892
Accruing Past Due 90 Days or More		266,485
Commercial Real Estate Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Past Due			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		4,617,055	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			219,383
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Current		316,299,798	251,612,752
Nonaccrual Loans/Leases		1,599,213	727,463
Loans		317,899,011	252,523,164
Accruing Past Due 90 Days or More
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Current		160,034,828	48,890,040
Nonaccrual Loans/Leases		492,266	193,804
Loans		160,527,094	49,083,844
Accruing Past Due 90 Days or More
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Current		585,545,037	420,819,874
Nonaccrual Loans/Leases		1,716,564	1,107,768
Loans		591,878,656	422,761,757
Accruing Past Due 90 Days or More
Commercial Real Estate Portfolio Segment [Member]
Loans		1,070,304,761	724,368,765
Finance Leases Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due		1,180,356	1,490,818
Finance Leases Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due		998,896	439,314
Finance Leases Portfolio Segment [Member]
Current		162,556,659	170,021,289
Nonaccrual Loans/Leases		2,188,166	1,701,341
Loans	[1],[2]	166,924,077	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		122,744	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		227,061,212	166,415,118
Nonaccrual Loans/Leases		1,677,217	1,016,743
Loans	[2],[3]	229,080,600	170,432,530
Accruing Past Due 90 Days or More		104,789
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due		89,104	412,052
Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due		41,332	14,127
Consumer Portfolio Segment [Member]
Current		81,576,782	73,134,197
Nonaccrual Loans/Leases		190,022	109,117
Loans	[2]	81,917,732	73,669,493
Accruing Past Due 90 Days or More		20,492
Financing Receivables, 30 to 59 Days Past Due [Member]
Past Due		$ 6,367,762	$ 7,138,000
Past due as a percentage of total loan/lease portfolio		0.27%	0.40%
Financing Receivables, 60 to 89 Days Past Due [Member]
Past Due		$ 1,387,163	$ 878,720
Past due as a percentage of total loan/lease portfolio		0.06%	0.05%
Current		$ 2,330,017,388	$ 1,771,618,511
Nonaccrual Loans/Leases		14,370,653	10,648,211
Loans		2,352,534,732	1,790,286,285
Accruing Past Due 90 Days or More		$ 391,766	$ 2,843
Current as a percentage of total loan/lease portfolio		99.05%	98.96%
Accruing past due 90 days or more as a percentage of total loan/lease portfolio		0.02%	0.00%
Nonaccrual Loans/Leases as a percentage of total loan/lease portfolio		0.61%	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 nine months ended September 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 $1,377,875 and $565,850 as of September 30, 2016, and December 31, 2015, respectively.

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Note 3 - Loans Leases Receivable - Loans Leases Nonperforming Loans Leases (Details) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases	[1]		5,791,975
Accruing TDRs		$ 170,113	173,087
Loans		$ 6,943,803	$ 5,965,062
Loans and leases as a percentage of total loan/lease portfolio		41.86%	50.96%
Commercial Portfolio Segment [Member]
Accruing Past Due 90 Days or More		$ 266,485
Nonaccrual Loans/Leases		6,507,205	$ 5,791,975
Loans		804,307,562	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]		727,463
Accruing TDRs
Loans		$ 1,599,213	$ 727,463
Loans and leases as a percentage of total loan/lease portfolio		9.64%	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	[1]		193,804
Accruing TDRs
Loans		$ 492,266	$ 193,804
Loans and leases as a percentage of total loan/lease portfolio		2.97%	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
Nonaccrual Loans/Leases	[1]		1,107,768
Accruing TDRs
Loans		$ 1,716,564	$ 1,107,768
Loans and leases as a percentage of total loan/lease portfolio		10.35%	9.46%
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases		1,599,213	$ 727,463
Loans		317,899,011	252,523,164
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases		492,266	193,804
Loans		160,527,094	49,083,844
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases		1,716,564	1,107,768
Loans		591,878,656	422,761,757
Commercial Real Estate Portfolio Segment [Member]
Loans		1,070,304,761	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]		1,701,341
Accruing TDRs		1,138,335
Loans	[2]	$ 3,326,501	$ 1,704,184
Loans and leases as a percentage of total loan/lease portfolio		20.05%	14.56%
Finance Leases Portfolio Segment [Member]
Accruing Past Due 90 Days or More			$ 2,843
Nonaccrual Loans/Leases		2,188,166	1,701,341
Loans	[2],[3]	166,924,077	173,655,605
Residential Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases	[1]		1,016,743
Accruing TDRs		390,039	402,044
Loans		$ 2,172,045	$ 1,418,787	[2]
Loans and leases as a percentage of total loan/lease portfolio		13.09%	12.12%
Residential Portfolio Segment [Member]
Accruing Past Due 90 Days or More		$ 104,789
Nonaccrual Loans/Leases		1,677,217	$ 1,016,743
Loans	[2],[4]	229,080,600	170,432,530
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More
Nonaccrual Loans/Leases	[1]		109,117
Accruing TDRs		126,998	478,625
Loans	[2]	$ 337,512	$ 587,742
Loans and leases as a percentage of total loan/lease portfolio		2.03%	5.02%
Consumer Portfolio Segment [Member]
Accruing Past Due 90 Days or More		$ 20,492
Nonaccrual Loans/Leases		190,022	$ 109,117
Loans	[2]	81,917,732	73,669,493
Nonperforming Financial Instruments [Member]
Accruing Past Due 90 Days or More			2,843
Nonaccrual Loans/Leases	[1]		10,648,211
Accruing TDRs		1,825,485	1,053,756
Loans		$ 16,587,904	$ 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		$ 391,766	$ 2,843
Nonaccrual Loans/Leases		14,370,653	10,648,211
Accruing TDRs		6,684,905	2,587,413
Loans		$ 2,352,534,732	$ 1,790,286,285
Loans and leases as a percentage of total loan/lease portfolio		100.00%	100.00%

[1] 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.

[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] 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 nine months ended September 30, 2016 and 2015.

[4] Includes residential real estate loans held for sale totaling $1,377,875 and $565,850 as of September 30, 2016, and December 31, 2015, respectively.

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Note 3 - Loans Leases Receivable - Allowance for Estimated Losses on Loans Leases (Details) - USD ($)		3 Months Ended			9 Months Ended
		Sep. 30, 2016		Sep. 30, 2015	Sep. 30, 2016		Sep. 30, 2015	Sep. 30, 2016		Dec. 31, 2015
Commercial Portfolio Segment [Member]
Balance		$ 10,724,506		$ 10,020,866	$ 10,484,080		$ 8,750,317
Provision for loan/lease losses		859,031		520,058	1,357,262		1,513,430
Loans/leases charged off		(96,330)		(145,665)	(388,879)		(391,303)
Recoveries on loans/leases previously charged off		70,759		136,909	105,503		659,724
Balance		11,557,966		10,532,168	11,557,966		10,532,168
Allowance for impaired loans/leases								$ 1,114,680		$ 2,592,270
Allowance for nonimpaired loans/leases								10,443,286		7,891,810
Less allowance for estimated losses on loans/leases		10,724,506		10,020,866	11,557,966		10,532,168	11,557,966		10,484,080
Impaired loans/leases								5,874,093		5,286,482
Nonimpaired loans/leases								798,433,469		642,873,410
Loans								$ 804,307,562		$ 648,159,892
Allowance as a percentage of impaired loans/leases								18.98%		49.04%
Allowance as a percentage of nonimpaired loans/leases								1.31%		1.23%
Total allowance as a percentage of total loans/leases								1.44%		1.62%
Commercial Real Estate Portfolio Segment [Member]
Balance		10,987,062		9,929,656	9,375,117		8,353,386
Provision for loan/lease losses		8,962		573,119	1,644,008		2,490,766
Loans/leases charged off				(1,813,973)	(23,101)		(2,165,049)
Recoveries on loans/leases previously charged off		6,500		19,913	6,500		29,612
Balance		11,002,524		8,708,715	11,002,524		8,708,715
Allowance for impaired loans/leases								$ 175,743		$ 76,934
Allowance for nonimpaired loans/leases								10,826,781		9,298,183
Less allowance for estimated losses on loans/leases		10,987,062		9,929,656	11,002,524		8,708,715	11,002,524		9,375,117
Impaired loans/leases								3,495,386		2,029,035
Nonimpaired loans/leases								1,066,809,375		722,339,730
Loans								$ 1,070,304,761		$ 724,368,765
Allowance as a percentage of impaired loans/leases								5.03%		3.79%
Allowance as a percentage of nonimpaired loans/leases								1.01%		1.29%
Total allowance as a percentage of total loans/leases								1.03%		1.29%
Finance Leases Portfolio Segment [Member]
Balance		3,226,194		3,352,303	3,395,088	[1]	3,442,915
Provision for loan/lease losses		641,435		361,071	1,580,677		1,238,505
Loans/leases charged off		(847,668)		(483,420)	(1,983,322)		(1,496,010)
Recoveries on loans/leases previously charged off		22,001		18,679	49,519		63,223
Balance		3,041,962	[1]	3,248,633	3,041,962	[1]	3,248,633
Allowance for impaired loans/leases								$ 739,207		$ 306,193
Allowance for nonimpaired loans/leases								2,302,755		3,088,895
Less allowance for estimated losses on loans/leases		3,041,962	[1]	3,352,303	3,041,962	[1]	3,248,633	3,041,962	[1]	3,395,088	[1]
Impaired loans/leases								2,925,205		1,701,341
Nonimpaired loans/leases								163,998,872		171,954,264
Loans	[1],[2]							$ 166,924,077		$ 173,655,605
Allowance as a percentage of impaired loans/leases								25.27%		18.00%
Allowance as a percentage of nonimpaired loans/leases								1.40%		1.80%
Total allowance as a percentage of total loans/leases								1.82%		1.96%
Residential Portfolio Segment [Member]
Balance		2,014,987		1,720,135	1,790,150		1,525,952
Provision for loan/lease losses		79,221		130,742	336,865		324,925
Loans/leases charged off		(38,554)		(25,928)	(72,261)		(25,928)
Recoveries on loans/leases previously charged off				4,107	900		4,107
Balance		2,055,654		1,829,056	2,055,654		1,829,056
Allowance for impaired loans/leases								$ 169,147		$ 185,801
Allowance for nonimpaired loans/leases								1,886,507		1,604,349
Less allowance for estimated losses on loans/leases		2,014,987		1,720,135	2,055,654		1,829,056	2,055,654		1,790,150
Impaired loans/leases								2,230,829		1,418,787
Nonimpaired loans/leases								226,849,771		169,013,743
Loans	[2],[3]							$ 229,080,600		$ 170,432,530
Allowance as a percentage of impaired loans/leases								7.58%		13.10%
Allowance as a percentage of nonimpaired loans/leases								0.83%		0.95%
Total allowance as a percentage of total loans/leases								0.90%		1.05%
Consumer Portfolio Segment [Member]
Balance		1,144,741		1,123,040	1,096,471		1,001,795
Provision for loan/lease losses		19,337		50,273	(39,991)		126,758
Loans/leases charged off		(4,530)		(6,837)	(22,018)		(40,886)
Recoveries on loans/leases previously charged off		9,181		49,296	134,267		128,105
Balance		1,168,729		1,215,772	1,168,729		1,215,772
Allowance for impaired loans/leases								$ 148,320		$ 143,089
Allowance for nonimpaired loans/leases								1,020,409		953,382
Less allowance for estimated losses on loans/leases		1,144,741		1,123,040	1,168,729		1,215,772	1,168,729		1,096,471
Impaired loans/leases								368,924		587,742
Nonimpaired loans/leases								81,548,808		73,081,751
Loans	[2]							$ 81,917,732		$ 73,669,493
Allowance as a percentage of impaired loans/leases								40.20%		24.35%
Allowance as a percentage of nonimpaired loans/leases								1.25%		1.30%
Total allowance as a percentage of total loans/leases								1.43%		1.49%
Balance		28,097,490		26,146,000	26,140,906		23,074,365
Provision for loan/lease losses		1,607,986		1,635,263	4,878,821		5,694,384
Loans/leases charged off		(987,082)		(2,475,823)	(2,489,581)		(4,119,176)
Recoveries on loans/leases previously charged off		108,441		228,904	296,689		884,771
Balance		28,826,835		25,534,344	28,826,835		25,534,344
Allowance for impaired loans/leases								$ 2,347,097		$ 3,304,287
Allowance for nonimpaired loans/leases								26,479,738		22,836,619
Less allowance for estimated losses on loans/leases		$ 28,826,835		$ 26,146,000	$ 28,826,835		$ 25,534,344	28,826,835		26,140,906
Impaired loans/leases								14,894,437		11,023,387
Nonimpaired loans/leases								2,337,640,295		1,779,262,898
Loans								$ 2,352,534,732		$ 1,790,286,285
Allowance as a percentage of impaired loans/leases								15.76%		29.98%
Allowance as a percentage of nonimpaired loans/leases								1.13%		1.28%
Total allowance as a percentage of total loans/leases								1.22%		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 nine months ended September 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 $1,377,875 and $565,850 as of September 30, 2016, and December 31, 2015, respectively.

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Note 3 - Loans Leases Receivable - Impaired Loans Leases (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member]
Recorded investment with no specific allowance recorded	$ 1,846,140		$ 1,846,140	$ 234,636
Unpaid principal balance with no specific allowance recorded	1,987,082		1,987,082	346,072
Average recorded investment with no specific allowance recorded	1,677,527	$ 365,798	3,864,852
Interest income recognized with no specific allowance recorded	3,301	1,870	8,644
Interest income recognized for cash payments received with no specific allowance recorded	3,301	1,870	8,644
Recorded investment with specific allowance recorded	4,027,953		4,027,953	5,051,846
Unpaid principal balance with specific allowance recorded	4,031,792		4,031,792	5,055,685
Related allowance	1,114,680		1,114,680	2,592,270
Average recorded investment with specific allowance recorded	4,188,621	4,735,149	2,195,524
Interest income recognized with specific allowance recorded
Interest income recognized for cash payments received with specific allowance recorded
Recorded investment	5,874,093		5,874,093	5,286,482
Unpaid principal balance	6,018,874		6,018,874	5,401,757
Average recorded investment	5,866,148	5,100,947	6,060,376
Interest income recognized	3,301	1,870	8,644
Interest income recognized for cash payments received	3,301	1,870	8,644
Interest income recognized with no specific allowance recorded	3,301	1,870	8,644
Interest income recognized for cash payments received with no specific allowance recorded	3,301	1,870	8,644
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Recorded investment with no specific allowance recorded	767,032		767,032	256,761
Unpaid principal balance with no specific allowance recorded	860,806		860,806	350,535
Average recorded investment with no specific allowance recorded	767,032	451,851	621,553
Interest income recognized with no specific allowance recorded
Interest income recognized for cash payments received with no specific allowance recorded
Recorded investment with specific allowance recorded	322,148		322,148
Unpaid principal balance with specific allowance recorded	322,148		322,148
Related allowance	57,398		57,398
Average recorded investment with specific allowance recorded	363,911		401,050
Interest income recognized with specific allowance recorded
Interest income recognized for cash payments received with specific allowance recorded
Recorded investment	1,089,180		1,089,180	256,761
Unpaid principal balance	1,182,954		1,182,954	350,535
Average recorded investment	1,130,943	451,851	1,022,603
Interest income recognized
Interest income recognized for cash payments received
Interest income recognized with no specific allowance recorded
Interest income recognized for cash payments received with no specific allowance recorded
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Recorded investment with no specific allowance recorded
Unpaid principal balance with no specific allowance recorded				228,818
Average recorded investment with no specific allowance recorded		9,968
Interest income recognized with no specific allowance recorded
Interest income recognized for cash payments received with no specific allowance recorded
Recorded investment with specific allowance recorded	186,681		186,681	193,804
Unpaid principal balance with specific allowance recorded	186,681		186,681	205,804
Related allowance	77,611		77,611	76,934
Average recorded investment with specific allowance recorded	187,831	335,707	190,208
Interest income recognized with specific allowance recorded
Interest income recognized for cash payments received with specific allowance recorded
Recorded investment	186,681		186,681	193,804
Unpaid principal balance	186,681		186,681	434,622
Average recorded investment	187,831	345,675	190,208
Interest income recognized
Interest income recognized for cash payments received
Interest income recognized with no specific allowance recorded
Interest income recognized for cash payments received with no specific allowance recorded
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Recorded investment with no specific allowance recorded	2,042,391		2,042,391	1,578,470
Unpaid principal balance with no specific allowance recorded	2,042,391		2,042,391	1,578,470
Average recorded investment with no specific allowance recorded	1,969,034	2,868,950	1,789,571
Interest income recognized with no specific allowance recorded
Interest income recognized for cash payments received with no specific allowance recorded
Recorded investment with specific allowance recorded	177,134		177,134
Unpaid principal balance with specific allowance recorded	177,134		177,134
Related allowance	40,734		40,734
Average recorded investment with specific allowance recorded	135,141		67,571
Interest income recognized with specific allowance recorded
Interest income recognized for cash payments received with specific allowance recorded
Recorded investment	2,219,525		2,219,525	1,578,470
Unpaid principal balance	2,219,525		2,219,525	1,578,470
Average recorded investment	2,104,175	2,868,950	1,857,142
Interest income recognized
Interest income recognized for cash payments received
Interest income recognized with no specific allowance recorded
Interest income recognized for cash payments received with no specific allowance recorded
Finance Leases Portfolio Segment [Member]
Recorded investment with no specific allowance recorded	1,860,773		1,860,773	871,884
Unpaid principal balance with no specific allowance recorded	1,860,773		1,860,773	871,884
Average recorded investment with no specific allowance recorded	2,008,095	634,378	1,755,969
Interest income recognized with no specific allowance recorded	21,095	325	52,595
Interest income recognized for cash payments received with no specific allowance recorded	21,095	325	52,595
Recorded investment with specific allowance recorded	1,064,432		1,064,432	829,457
Unpaid principal balance with specific allowance recorded	1,064,432		1,064,432	829,457
Related allowance	739,207		739,207	306,193
Average recorded investment with specific allowance recorded	793,769	488,860	653,884
Interest income recognized with specific allowance recorded
Interest income recognized for cash payments received with specific allowance recorded
Recorded investment	2,925,205		2,925,205	1,701,341
Unpaid principal balance	2,925,205		2,925,205	1,701,341
Average recorded investment	2,801,864	1,123,238	2,409,853
Interest income recognized	21,095	325	52,595
Interest income recognized for cash payments received	21,095	325	52,595
Interest income recognized with no specific allowance recorded	21,095	325	52,595
Interest income recognized for cash payments received with no specific allowance recorded	21,095	325	52,595
Residential Portfolio Segment [Member]
Recorded investment with no specific allowance recorded	1,418,957		1,418,957	613,486
Unpaid principal balance with no specific allowance recorded	1,458,158		1,458,158	649,064
Average recorded investment with no specific allowance recorded	1,481,340	900,938	1,455,159
Interest income recognized with no specific allowance recorded	941	1,362	2,992
Interest income recognized for cash payments received with no specific allowance recorded	941	1,362	2,992
Recorded investment with specific allowance recorded	811,872		811,872	805,301
Unpaid principal balance with specific allowance recorded	886,004		886,004	805,301
Related allowance	169,147		169,147	185,801
Average recorded investment with specific allowance recorded	807,827	984,558	799,427
Interest income recognized with specific allowance recorded	1,503	1,981	5,409
Interest income recognized for cash payments received with specific allowance recorded	1,503	1,981	5,409
Recorded investment	2,230,829		2,230,829	1,418,787
Unpaid principal balance	2,344,162		2,344,162	1,454,365
Average recorded investment	2,289,167	1,885,496	2,254,586
Interest income recognized	2,444	3,343	8,401
Interest income recognized for cash payments received	2,444	3,343	8,401
Interest income recognized with no specific allowance recorded	941	1,362	2,992
Interest income recognized for cash payments received with no specific allowance recorded	941	1,362	2,992
Consumer Portfolio Segment [Member]
Recorded investment with no specific allowance recorded	208,916		208,916	377,304
Unpaid principal balance with no specific allowance recorded	208,916		208,916	377,304
Average recorded investment with no specific allowance recorded	322,738	328,669	430,322
Interest income recognized with no specific allowance recorded		3,912
Interest income recognized for cash payments received with no specific allowance recorded		3,912
Recorded investment with specific allowance recorded	160,008		160,008	210,438
Unpaid principal balance with specific allowance recorded	160,008		160,008	210,438
Related allowance	148,320		148,320	143,089
Average recorded investment with specific allowance recorded	160,301	723,674	145,962
Interest income recognized with specific allowance recorded	1,458	1,391	4,426
Interest income recognized for cash payments received with specific allowance recorded	1,458	1,391	4,426
Recorded investment	368,924		368,924	587,742
Unpaid principal balance	368,924		368,924	587,742
Average recorded investment	483,039	1,052,343	576,284
Interest income recognized	1,458	5,303	4,426
Interest income recognized for cash payments received	1,458	5,303	4,426
Interest income recognized with no specific allowance recorded		3,912
Interest income recognized for cash payments received with no specific allowance recorded		3,912
Recorded investment with no specific allowance recorded	8,144,209		8,144,209	3,932,541
Unpaid principal balance with no specific allowance recorded	8,418,126		8,418,126	4,402,147
Average recorded investment with no specific allowance recorded	8,225,766	5,560,552	9,917,426
Interest income recognized with no specific allowance recorded	25,337	7,469	64,231
Interest income recognized for cash payments received with no specific allowance recorded	25,337	7,469	64,231
Recorded investment with specific allowance recorded	6,750,228		6,750,228	7,090,846
Unpaid principal balance with specific allowance recorded	6,828,199		6,828,199	7,106,685
Related allowance	2,347,097		2,347,097	3,304,287
Average recorded investment with specific allowance recorded	6,637,401	7,267,948	4,453,626
Interest income recognized with specific allowance recorded	2,961	3,372	9,835
Interest income recognized for cash payments received with specific allowance recorded	2,961	3,372	9,835
Recorded investment	14,894,437		14,894,437	11,023,387
Unpaid principal balance	15,246,325		15,246,325	$ 11,508,832
Average recorded investment	14,863,167	12,828,500	14,371,052
Interest income recognized	28,298	10,841	74,066
Interest income recognized for cash payments received	28,298	10,841	74,066
Interest income recognized with no specific allowance recorded	25,337	7,469	64,231
Interest income recognized for cash payments received with no specific allowance recorded	$ 25,337	$ 7,469	$ 64,231

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Note 3 - Loans Leases Receivable - Loans By Internally Assigned Risk Rating (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member] | Pass [Member]
Loans	$ 770,822,390	$ 616,200,797
Commercial Portfolio Segment [Member] | Special Mention [Member]
Loans	10,160,760	18,031,845
Commercial Portfolio Segment [Member] | Substandard [Member]
Loans	23,324,412	13,927,250
Commercial Portfolio Segment [Member]
Loans	804,307,562	648,159,892
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans	307,017,431	238,119,608
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Construction Loans [Member]
Loans	153,401,738	46,929,876
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans	572,769,744	406,027,442
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans	1,737,127	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	5,894,259	8,846,286
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans	9,144,453	5,772,898
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Construction Loans [Member]
Loans	5,345,356	373,968
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans	13,214,653	7,888,029
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Commercial Real Estate Loans [Member]
Loans	317,899,011	252,523,164
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans	160,527,094	49,083,844
Commercial Real Estate Portfolio Segment [Member] | Other Non-owner Occupied Commercial Real Estate Loans [Member]
Loans	591,878,656	422,761,757
Commercial Real Estate Portfolio Segment [Member]
Loans	1,070,304,761	724,368,765
Commercial and Commercial Real Estate Portfolio Segments [Member] | Pass [Member]
Loans	$ 1,804,011,303	$ 1,307,277,723
As a % of Total	96.24%	95.24%
Commercial and Commercial Real Estate Portfolio Segments [Member] | Special Mention [Member]
Loans	$ 19,572,146	$ 37,288,789
As a % of Total	1.04%	2.72%
Commercial and Commercial Real Estate Portfolio Segments [Member] | Substandard [Member]
Loans	$ 51,028,874	$ 27,962,145
As a % of Total	2.72%	2.04%
Commercial and Commercial Real Estate Portfolio Segments [Member]
Loans	$ 1,874,612,323	$ 1,372,528,657
As a % of Total	100.00%	100.00%
Loans	$ 2,352,534,732	$ 1,790,286,285

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Note 3 - Loans Leases Receivable - Leases By Delinquency Status (Details) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
Performing Financial Instruments [Member] | Finance Leases Portfolio Segment [Member]
Loans	[1]	$ 163,597,576	$ 171,951,421
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Loans	[1]	226,908,556	169,013,743
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Loans	[1]	81,580,220	73,081,751
Performing Financial Instruments [Member] | Lease Residential and Consumer Portfolio Segments [Member]
Loans	[1]	$ 472,086,352	$ 414,046,915
As a % of Total	[1]	98.78%	99.11%
Nonperforming Financial Instruments [Member] | Finance Leases Portfolio Segment [Member]
Loans	[1]	$ 3,326,501	$ 1,704,184
Nonperforming Financial Instruments [Member] | Residential Portfolio Segment [Member]
Loans		2,172,045	1,418,787	[1]
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Loans	[1]	337,512	587,742
Nonperforming Financial Instruments [Member] | Lease Residential and Consumer Portfolio Segments [Member]
Loans	[1]	$ 5,836,057	$ 3,710,713
As a % of Total	[1]	1.22%	0.89%
Nonperforming Financial Instruments [Member]
Loans		$ 16,587,904	$ 11,704,810
Finance Leases Portfolio Segment [Member]
Loans	[1],[2]	166,924,077	173,655,605
Residential Portfolio Segment [Member]
Loans	[1],[3]	229,080,600	170,432,530
Consumer Portfolio Segment [Member]
Loans	[1]	81,917,732	73,669,493
Lease Residential and Consumer Portfolio Segments [Member]
Loans	[1]	$ 477,922,409	$ 417,757,628
As a % of Total	[1]	100.00%	100.00%
Loans		$ 2,352,534,732	$ 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 nine months ended September 30, 2016 and 2015.

[3] Includes residential real estate loans held for sale totaling $1,377,875 and $565,850 as of September 30, 2016, and December 31, 2015, respectively.

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Note 3 - Loans Leases Receivable - Troubled Debt Restructurings (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)
Finance Leases Portfolio Segment [Member] | Payment Deferral [Member]
Number of Loans / Leases	2		6
Pre-Modification Recorded Investment	$ 461,643		$ 771,672
Post-Modification Recorded Investment	$ 461,643		$ 771,672
Finance Leases Portfolio Segment [Member] | Extended Maturity [Member]
Number of Loans / Leases			4
Pre-Modification Recorded Investment			$ 410,653
Post-Modification Recorded Investment			$ 410,653
Commercial Portfolio Segment [Member] | Payment Deferral [Member]
Number of Loans / Leases			1
Pre-Modification Recorded Investment			$ 62,140
Post-Modification Recorded Investment			$ 62,140
Commercial Portfolio Segment [Member] | Extended Maturity [Member]
Number of Loans / Leases			1
Pre-Modification Recorded Investment			$ 52,286
Post-Modification Recorded Investment			$ 52,286
Consumer Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Number of Loans / Leases		1		1
Pre-Modification Recorded Investment		$ 14,203		$ 14,203
Post-Modification Recorded Investment		$ 14,203		$ 14,203
Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Number of Loans / Leases			1
Pre-Modification Recorded Investment			$ 1,233,740
Post-Modification Recorded Investment			$ 1,233,740
Payment Deferral [Member]
Number of Loans / Leases	2		7
Pre-Modification Recorded Investment	$ 461,643		$ 833,812
Post-Modification Recorded Investment	$ 461,643		$ 833,812
Extended Maturity [Member]
Number of Loans / Leases			5
Pre-Modification Recorded Investment			$ 462,939
Post-Modification Recorded Investment			$ 462,939
Interest Rate Below Market Reduction [Member]
Number of Loans / Leases		1	1	1
Pre-Modification Recorded Investment		$ 14,203	$ 1,233,740	$ 14,203
Post-Modification Recorded Investment		$ 14,203	$ 1,233,740	$ 14,203
Number of Loans / Leases	2	1	13	1
Pre-Modification Recorded Investment	$ 461,643	$ 14,203	$ 2,530,491	$ 14,203
Post-Modification Recorded Investment	$ 461,643	$ 14,203	$ 2,530,491	$ 14,203

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Note 4 - Borrowings (Details Textual) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Aug. 31, 2016	Jun. 30, 2016	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		2.50%					2.50%
Revolving Credit Facility [Member]
Long-term Line of Credit							$ 0
Line of Credit Facility, Maximum Borrowing Capacity		$ 10,000,000	$ 10,000,000		$ 10,000,000		$ 40,000,000
Debt Instrument, Interest Rate, Effective Percentage			3.34%		3.34%		3.10%
Proceeds from Lines of Credit	$ 5,000,000				$ 5,000,000
Whole sale Repurchase Agreements [Member]
Repayments of Other Debt			$ 55,000,000	$ 10,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Two			10,000,000		10,000,000		$ 10,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Three							10,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Four			10,000,000		10,000,000		45,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Five			25,000,000		25,000,000		45,000,000
Securities Sold under Agreements to Repurchase, Fair Value of Collateral			27,800,000		27,800,000
Long-term Debt			$ 45,000,000		$ 45,000,000		$ 110,000,000
Wholesale Repurchase Agreement and FHLB Advances [Member]
Debt Instrument, Interest Rate, Stated Percentage			3.24%	3.92%	3.24%
Gain (Loss) on Extinguishment of Debt			$ 4,100,000	$ (1,300,000)
Extinguished Debt Weighted Average Term			2 years 346 days	2 years 62 days
Long-term Debt, Maturities, Repayments of Principal in Year Two				$ 10,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Three			$ 5,000,000	$ 10,000,000	$ 5,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Four			35,000,000		35,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Five			20,000,000		20,000,000
Revolving Line of Credit Note [Member]
Long-term Debt			35,000,000		35,000,000
London Interbank Offered Rate (LIBOR) [Member] | Junior Subordinated Debt [Member]
Debt Instrument, Basis Spread on Variable Rate				1.80%
Term Note [Member]
Long-term Debt, Maturities, Repayments of Principal in Year Two			6,000,000		6,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Three			6,000,000		6,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Four			6,000,000		6,000,000
Long-term Debt, Maturities, Repayments of Principal in Year Five			$ 6,000,000		$ 6,000,000
Debt Instrument, Basis Spread on Variable Rate		3.00%
Debt Instrument, Interest Rate, Effective Percentage			3.84%		3.84%
Notes Payable		$ 30,000,000
Debt Instrument, Term		5 years
Proceeds from Notes Payable	$ 30,000,000
Long-term Debt			$ 30,000,000		$ 30,000,000
Debt Instrument, Periodic Payment, Principal					1,500,000
Junior Subordinated Debt [Member] | Note Payable to QCR Holdings Capital Trust IV [Member]
Gain (Loss) on Extinguishment of Debt				$ 1,200,000
Debt Instrument, Interest Rate, Effective Percentage				2.42%
Extinguishment of Debt, Amount				$ 5,100,000
Repayments of Other Debt					50,320,407	$ 29,177,000
Repayments of Federal Home Loan Bank Borrowings			$ 5,000,000	$ 10,000,000	$ 10,524,197	$ 81,192,185
Short-term Debt, Weighted Average Interest Rate			0.50%	0.50%	0.50%
Notes Payable			$ 30,000,000		$ 30,000,000

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Note 4 - Borrowings - Maturity and Interest Rate Information On Advances From FHLB (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Federal Home Loan Bank, Advances, Putable Option [Member] | Weighted Average [Member]
Total FHLB advances		3.17%
Federal Home Loan Bank, Advances, Putable Option [Member]
2016		$ 2,000,000
2016		4.00%
2017
2017
2018		$ 5,000,000
2018		2.84%
Total FHLB advances		$ 7,000,000
Total FHLB advances
Weighted Average [Member]
Total FHLB advances		1.37%
2016	$ 90,300,000	$ 103,000,000
2016	0.55%	0.56%
2017	$ 23,342,549	$ 18,000,000
2017	2.59%	2.89%
2018	$ 25,000,000	$ 30,000,000
2018	2.70%	3.27%
Total FHLB advances	$ 138,642,549	$ 151,000,000
Total FHLB advances	1.68%

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Note 4 – Borrowings - Other Borrowings (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Whole sale Repurchase Agreements [Member]
Other borrowings	$ 45,000,000	$ 110,000,000
Term Note [Member]
Other borrowings	30,000,000
Revolving Credit Facility [Member]
Other borrowings	5,000,000
Other borrowings	$ 80,000,000	$ 110,000,000

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Note 4 - Borrowings - Wholesale Repurchase Agreements (Details) - Whole sale Repurchase Agreements [Member] - USD ($)	Sep. 30, 2016	Dec. 31, 2015
2016
2016	0.00%	0.00%
Long-term Debt, Maturities, Repayments of Principal in Year Two	$ 10,000,000	$ 10,000,000
2017	3.07%	3.00%
Long-term Debt, Maturities, Repayments of Principal in Year Three		$ 10,000,000
2018		3.97%
Long-term Debt, Maturities, Repayments of Principal in Year Four	$ 10,000,000	$ 45,000,000
2019	3.44%	3.40%
Long-term Debt, Maturities, Repayments of Principal in Year Five	$ 25,000,000	$ 45,000,000
2020	2.48%	2.66%
Long-term Debt	$ 45,000,000	$ 110,000,000
Total Wholesale Structures Repurchase Agreements	2.83%	3.11%

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Note 4 - Borrowings - Maturity Schedule of Term Note (Details) - Term Note [Member]	Sep. 30, 2016 USD ($)
2017	$ 6,000,000
2018	6,000,000
2019	6,000,000
2020	6,000,000
2021	6,000,000
	$ 30,000,000

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Note 5 - Earnings Per Share - Basic and Diluted (Details) - USD ($)		3 Months Ended						9 Months Ended
		Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income		$ 6,107,501	$ 6,676,467	$ 6,373,489	$ 6,488,987	$ (523,818)	$ 4,177,889	$ 19,157,457	$ 10,143,058
Basic earnings (loss) per common share (in dollars per share) (in dollars per share)		$ 0.47			$ 0.55			$ 1.55	$ 1.03
Diluted earnings (loss) per common share (in dollars per share) (in dollars per share)		$ 0.46			$ 0.55			$ 1.52	$ 1.01
Weighted average common shares outstanding (in shares)	[1]	13,066,777			11,713,993			12,398,491	9,878,882
Weighted average common shares issuable upon exercise of stock options and under the employee stock purchase plan (in shares)		202,926			161,937			181,551	145,559
Weighted average common and common equivalent shares outstanding (in shares)		13,269,703			11,875,930			12,580,042	10,024,441

[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.

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Note 6 - Fair Value - Assets Measured At Fair Value On a Recurring and Nonrecurring Basis (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Impaired Loans Leases [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired loans/leases
Impaired Loans Leases [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired loans/leases
Impaired Loans Leases [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans/leases	7,870,032	4,545,966
Impaired Loans Leases [Member]
Impaired loans/leases	7,870,032	4,545,966
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 1 [Member]
Impaired loans/leases
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 2 [Member]
Impaired loans/leases
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 3 [Member]
Impaired loans/leases	6,272,211	7,722,711
Other Real Estate Owned [Member]
Impaired loans/leases	6,272,211	7,722,711
US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AFS
US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AFS	67,884,949	213,537,379
US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AFS
US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AFS	67,884,949	213,537,379
US Government Agencies Debt Securities [Member]
AFS	67,884,949	213,537,379
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AFS
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AFS	133,172,804	80,670,135
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AFS
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
AFS	133,172,804	80,670,135
Residential Mortgage Backed Securities [Member]
AFS	133,172,804	80,670,135
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AFS
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AFS	54,640,462	27,578,588
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AFS
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AFS	54,640,462	27,578,588
US States and Political Subdivisions Debt Securities [Member]
AFS	54,640,462	27,578,588
Other Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AFS	1,107	411
Other Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AFS	2,490,759	1,648,469
Other Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AFS
Other Securities [Member] | Fair Value, Measurements, Recurring [Member]
AFS	2,491,866	1,648,880
Other Securities [Member]
AFS	2,491,866	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	1,107	411
Liabilities Fair Value
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Cap [Member]
Interest rate caps	221,233	856,024
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]
Interest rate caps	9,386,262	3,044,525
Derivative Liabilites	9,386,262	3,044,525
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Fair Value	267,796,469	327,335,120
Liabilities Fair Value	9,386,262	3,044,525
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, Measurements, Recurring [Member] | Interest Rate Cap [Member]
Interest rate caps	221,233	856,024
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap [Member]
Interest rate caps	9,386,262	3,044,525
Derivative Liabilites	9,386,262	3,044,525
Fair Value, Measurements, Recurring [Member]
Assets Fair Value	267,797,576	327,335,531
Liabilities Fair Value	9,386,262	3,044,525
Fair Value, Inputs, Level 1 [Member]
Impaired loans/leases
Fair Value, Inputs, Level 2 [Member]
Impaired loans/leases
Fair Value, Inputs, Level 3 [Member]
Impaired loans/leases	14,142,243	12,268,677
AFS	258,190,081	323,434,982
Impaired loans/leases	$ 14,142,243	$ 12,268,677

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Note 6 - Fair Value - Quantitative Information About Level Fair Value Measurements (Details) - USD ($)	9 Months Ended
	Sep. 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	$ 7,870,032	$ 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	$ 6,272,211	7,722,711
Valuation technique	Appraisal of collateral
Fair value	$ 14,142,243	$ 12,268,677

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Note 6 - Fair Value - Carrying Values and Estimated Fair Values of Financial Assets and Liabilities (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member]
Cash and due from banks	$ 61,213,134	$ 41,742,321
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member]
Cash and due from banks	61,213,134	41,742,321
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Interest-bearing Deposits [Member]
Interest-bearing deposits at financial institutions	75,025,417	36,313,965
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Interest Rate Cap [Member]
Interest rate caps	221,233	856,024
Interest rate swaps - assets	221,233	856,024
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Interest Rate Swap [Member]
Interest rate caps	9,386,262	3,044,525
Interest rate swaps - assets	9,386,262	3,044,525
Interest rate swaps - liabilities	9,386,262	3,044,525
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Non-maturity Deposits [Member]
Nonmaturity deposits	2,103,706,174	1,516,599,081
Deposits	2,103,706,174	1,516,599,081
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Time Deposits [Member]
Nonmaturity deposits	491,206,579	364,067,103
Deposits	491,206,579	364,067,103
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member]
Federal funds sold	21,022,000	19,850,000
HTM	306,740,174	253,674,159
AFS	258,190,081	323,434,982
Loans/leases receivable, net	2,324,486,610	1,767,672,541
Short-term borrowings	60,015,417	144,662,716
FHLB advances	138,642,529	151,000,000
Other borrowings	80,000,000	110,000,000
Junior subordinated debentures	33,446,578	38,499,052
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Interest-bearing Deposits [Member]
Interest-bearing deposits at financial institutions	75,025,417	36,313,965
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Interest Rate Cap [Member]
Interest rate caps	221,233	856,024
Interest rate swaps - assets	221,233	856,024
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Interest Rate Swap [Member]
Interest rate caps	9,386,262	3,044,525
Interest rate swaps - assets	9,386,262	3,044,525
Interest rate swaps - liabilities	9,386,262	3,044,525
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Non-maturity Deposits [Member]
Nonmaturity deposits	2,103,706,174	1,516,599,081
Deposits	2,103,706,174	1,516,599,081
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Time Deposits [Member]
Nonmaturity deposits	491,849,000	364,192,000
Deposits	491,849,000	364,192,000
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Federal funds sold	21,022,000	19,850,000
HTM	311,494,343	255,691,285
AFS	258,190,081	323,434,982
Loans/leases receivable, net	2,327,955,000	1,764,178,772
Short-term borrowings	60,015,417	144,662,716
FHLB advances	140,153,000	153,143,000
Other borrowings	82,119,000	116,061,000
Junior subordinated debentures	24,768,273	27,642,093
Fair Value, Inputs, Level 3 [Member] | Reported Value Measurement [Member]
Loans/leases receivable, net	7,287,067	4,209,228
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Loans/leases receivable, net	7,870,032	4,545,966
HTM	311,494,343	255,691,285
AFS	$ 258,190,081	$ 323,434,982

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Note 7 - Business Segment Information - Selected Financial Information on the Company's Business Segments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Operating Segments [Member] | Commercial Banking Segment [Member] | Quad City Bank and Trust Company [Member]
Total revenue	$ 18,026,215	$ 14,143,548	$ 45,706,061	$ 39,893,713
Net interest income	11,225,414	10,728,143	33,394,620	29,745,080
Net income (loss)	3,596,469	3,786,289	10,326,508	6,578,479
Total assets	1,407,733,009	1,328,053,105	1,407,733,009	1,328,053,105
Provision for loan/lease losses	1,137,986	910,263	3,108,821	3,466,384
Goodwill	3,222,688	3,222,688	3,222,688	3,222,688
Finite-Lived Intangible Assets, Net
Operating Segments [Member] | Commercial Banking Segment [Member] | Cedar Rapids Bank and Trust [Member]
Total revenue	10,065,032	10,047,658	31,342,345	28,396,380
Net interest income	7,594,557	6,956,027	21,755,270	19,836,835
Net income (loss)	3,286,724	2,893,397	9,366,441	4,645,136
Total assets	887,592,695	867,064,041	887,592,695	867,064,041
Provision for loan/lease losses		550,000	700,000	1,650,000
Goodwill
Finite-Lived Intangible Assets, Net	1,321,775	1,521,287	1,321,775	1,521,287
Operating Segments [Member] | Commercial Banking Segment [Member] | Community State Bank [Member]
Total revenue	2,675,741		2,675,741
Net interest income	2,191,862		2,191,862
Net income (loss)	188,608		188,608
Total assets	580,210,270		580,210,270
Provision for loan/lease losses	270,000		270,000
Goodwill	10,408,938		10,408,938
Finite-Lived Intangible Assets, Net	6,291,818		6,291,818
Operating Segments [Member] | Commercial Banking Segment [Member] | Rockford Bank and Trust [Member]
Total revenue	4,232,205	3,922,304	11,945,081	11,095,899
Net interest income	3,056,989	2,771,214	8,914,380	8,089,626
Net income (loss)	944,781	847,709	2,334,735	1,895,933
Total assets	393,191,774	360,348,002	393,191,774	360,348,002
Provision for loan/lease losses	200,000	175,000	800,000	578,000
Goodwill
Finite-Lived Intangible Assets, Net
Operating Segments [Member] | Wealth Management Segment [Member]
Total revenue	2,284,577	2,314,406	6,723,690	6,927,453
Net interest income
Net income (loss)	398,859	373,801	1,232,831	1,271,661
Total assets
Provision for loan/lease losses
Goodwill
Finite-Lived Intangible Assets, Net
Operating Segments [Member] | Other Segments [Member]
Total revenue	8,463,636	7,937,087	23,567,906	14,487,857
Net interest income	(438,045)	(317,858)	(1,019,020)	(1,260,962)
Net income (loss)	6,107,492	6,488,988	19,157,447	10,143,059
Total assets	368,990,749	277,001,408	368,990,749	277,001,408
Provision for loan/lease losses
Goodwill
Finite-Lived Intangible Assets, Net
Intersegment Eliminations [Member]
Total revenue	(8,507,270)	(8,821,205)	(23,720,471)	(15,556,437)
Net interest income
Net income (loss)	(8,415,432)	(7,901,197)	(23,449,113)	(14,391,210)
Total assets	(356,732,388)	(256,611,839)	(356,732,388)	(256,611,839)
Provision for loan/lease losses
Goodwill
Finite-Lived Intangible Assets, Net
Total revenue	37,240,136	29,543,798	98,240,353	85,244,865
Net interest income	23,630,777	20,137,526	65,237,112	56,410,579
Net income (loss)	6,107,501	6,488,987	19,157,457	10,143,058
Total assets	3,280,986,109	2,575,854,717	3,280,986,109	2,575,854,717	$ 2,593,198,275
Provision for loan/lease losses	1,607,986	1,635,263	4,878,821	5,694,384
Goodwill	13,631,626	3,222,688	13,631,626	3,222,688	3,222,688
Finite-Lived Intangible Assets, Net	$ 7,613,593	$ 1,521,287	$ 7,613,593	$ 1,521,287	$ 1,471,409

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Note 8 - Regulatory Capital Requirements (Details Textual) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Oct. 27, 2016
Subsequent Event [Member]
Shelf Registration Maximum Value of Equity Authorized For Issuance			$ 100.0
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%
Proceeds From Issuance of Common Stock Gross	$ 30.1

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Note 8 - Regulatory Capital Requirements - Capital Requirements (Details) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
Parent Company [Member]
Total risk-based capital, actual, amount		$ 316,063	$ 280,273
Total risk-based capital, actual, ratio		11.33%	13.11%
Total risk-based capital for capital adequacy purposes, amount	[1]	$ 240,629	$ 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		$ 278,991	$ 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		$ 287,015	$ 253,891
Tier 1 risk-based capital, actual, ratio		10.29%	11.88%
Tier 1 risk-based capital for capital adequacy purposes, amount	[1]	$ 184,831	$ 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		$ 223,192	$ 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		$ 287,015	$ 253,891
Tier 1 leverage, actual, ratio		10.09%	9.75%
Tier 1 leverage for capital adequacy purposes, amount	[1]	$ 113,737	$ 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		$ 142,172	$ 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		$ 257,119	$ 220,800
Common equity Tier 1, actual ratio		9.22%	10.33%
Common equity Tier 1 capital adequacy purposes, amount	[1]	$ 142,983	$ 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		$ 181,344	$ 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		$ 138,333	$ 135,477
Total risk-based capital, actual, ratio		11.71%	12.50%
Total risk-based capital for capital adequacy purposes, amount	[1]	$ 101,861	$ 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		$ 118,100	$ 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		$ 125,410	$ 123,498
Tier 1 risk-based capital, actual, ratio		10.62%	11.39%
Tier 1 risk-based capital for capital adequacy purposes, amount	[1]	$ 78,241	$ 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		$ 94,480	$ 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		$ 125,410	$ 123,498
Tier 1 leverage, actual, ratio		8.86%	8.87%
Tier 1 leverage for capital adequacy purposes, amount	[1]	$ 56,628	$ 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		$ 70,785	$ 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		$ 125,410	$ 123,498
Common equity Tier 1, actual ratio		10.62%	11.39%
Common equity Tier 1 capital adequacy purposes, amount	[1]	$ 60,526	$ 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		$ 76,765	$ 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		$ 104,206	$ 105,285
Total risk-based capital, actual, ratio		13.13%	14.39%
Total risk-based capital for capital adequacy purposes, amount	[1]	$ 68,474	$ 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		$ 79,390	$ 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		$ 94,266	$ 96,118
Tier 1 risk-based capital, actual, ratio		11.87%	13.14%
Tier 1 risk-based capital for capital adequacy purposes, amount	[1]	$ 52,596	$ 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		$ 63,512	$ 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		$ 94,266	$ 96,118
Tier 1 leverage, actual, ratio		10.36%	10.96%
Tier 1 leverage for capital adequacy purposes, amount	[1]	$ 36,407	$ 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		$ 45,509	$ 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		$ 94,266	$ 96,118
Common equity Tier 1, actual ratio		11.87%	13.14%
Common equity Tier 1 capital adequacy purposes, amount	[1]	$ 40,687	$ 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		$ 51,604	$ 47,562
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio		6.50%	6.50%
Community State Bank [Member]
Total risk-based capital, actual, amount		$ 67,008
Total risk-based capital, actual, ratio		14.09%
Total risk-based capital for capital adequacy purposes, amount	[1]	$ 41,031
Total risk-based capital for capital adequacy purposes, ratio	[1]	8.625%
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 47,572
Total risk-based capital to be well capitalized under prompt corrective action provisions, ratio		10.00%
Tier 1 risk-based capital, actual, amount		$ 66,735
Tier 1 risk-based capital, actual, ratio		14.03%
Tier 1 risk-based capital for capital adequacy purposes, amount	[1]	$ 31,516
Tier 1 risk-based capital for capital adequacy purposes, ratio	[1]	6.625%
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 38,058
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, ratio		8.00%
Tier 1 leverage, actual, amount		$ 66,735
Tier 1 leverage, actual, ratio		11.74%
Tier 1 leverage for capital adequacy purposes, amount	[1]	$ 22,745
Tier 1 leverage for capital adequacy purposes, ratio	[1]	4.00%
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount		$ 28,431
Tier 1 leverage to be well capitalized under prompt corrective action provisions, ratio		5.00%
Common equity Tier 1, actual, amount		$ 66,735
Common equity Tier 1, actual ratio		14.03%
Common equity Tier 1 capital adequacy purposes, amount	[1]	$ 24,381
Common equity Tier 1 capital adequacy purposes, ratio	[1]	5.125%
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount		$ 30,922
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, ratio		6.50%
Rockford Bank and Trust [Member]
Total risk-based capital, actual, amount		$ 41,130	$ 38,544
Total risk-based capital, actual, ratio		11.95%	11.96%
Total risk-based capital for capital adequacy purposes, amount		$ 29,680	$ 25,772	[1]
Total risk-based capital for capital adequacy purposes, ratio		8.625%	8.00%	[1]
Total risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 34,412	$ 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		$ 36,821	$ 34,514
Tier 1 risk-based capital, actual, ratio		10.70%	10.71%
Tier 1 risk-based capital for capital adequacy purposes, amount		$ 22,798	$ 19,329	[1]
Tier 1 risk-based capital for capital adequacy purposes, ratio		6.625%	6.00%	[1]
Tier 1 risk-based capital to be well capitalized under prompt corrective action provisions, amount		$ 27,529	$ 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		$ 36,821	$ 34,514
Tier 1 leverage, actual, ratio		9.45%	9.59%
Tier 1 leverage for capital adequacy purposes, amount		$ 15,587	$ 14,401	[1]
Tier 1 leverage for capital adequacy purposes, ratio		4.00%	4.00%	[1]
Tier 1 leverage to be well capitalized under prompt corrective action provisions, amount		$ 19,484	$ 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		$ 36,821	$ 34,514
Common equity Tier 1, actual ratio		10.70%	10.71%
Common equity Tier 1 capital adequacy purposes, amount		$ 17,636	$ 14,497	[1]
Common equity Tier 1 capital adequacy purposes, ratio		5.125%	4.50%	[1]
Common equity Tier 1 to be well capitalized under prompt corrective action provisions, amount		$ 22,367	$ 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.

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Note 9 - Acquisition of Community State Bank and Common Stock Offering (Details Textual)		1 Months Ended	3 Months Ended			9 Months Ended		12 Months Ended
	Aug. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2016	Dec. 31, 2015 USD ($)
Community State Bank [Member] | Scenario, Forecast [Member]
Return on Average Assets								1.00%
Community State Bank [Member]
Number of Branches	10
Community State Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Nonaccretable Discount, Accelerated			$ 89,000
Community State Bank [Member] | Ten Branch Locations [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	$ 19,735,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment, Write-up	$ 8,334,437
Property, Plant and Equipment, Useful Life	39 years
Community State Bank [Member] | Core Deposits [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	$ 6,352,653
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	10 years
Finite-Lived Intangible Assets, Net		$ 6,291,819	6,291,819			$ 6,291,819
Community State Bank [Member]
Business Acquisition, Percentage of Voting Interests Acquired	100.00%
Business Combination, Consideration Transferred	$ 80,000,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	581,155,765
Dividends, Cash						15,200,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	20,684,880
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	6,352,653
Business Combination, Acquisition Related Costs		473,000				2,400,000
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual		2,700,000
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual		189,000
Community National Bancorporation and Community National Bank [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets, Net		1,321,774	1,321,774			1,321,774
Revolving Credit Facility [Member]
Proceeds from Lines of Credit	$ 5,000,000					5,000,000
Line of Credit Facility, Maximum Borrowing Capacity		10,000,000	10,000,000	$ 10,000,000		10,000,000			$ 40,000,000
Core Deposits [Member]
Finite-Lived Intangible Assets, Net		6,291,819	6,291,819			6,291,819			6,352,653
Stock Issued During Period, Shares, New Issues | shares				1,215,000
Shares Issued, Price Per Share | $ / shares				$ 24.75
Proceeds from Issuance of Common Stock				$ 29,800,000		1,554,506	$ 1,016,324
Notes Payable		30,000,000	30,000,000			30,000,000
Finite-Lived Intangible Assets, Net		$ 7,613,593	7,613,593		$ 1,521,287	7,613,593	1,521,287		$ 1,471,409
Business Combination, Acquisition Related Costs			$ 2,046,036			$ 2,401,005

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Note 9 - Acquisition of Community State Bank and Common Stock Offering - Consideration Paid and Goodwill (Details) - USD ($)	Aug. 31, 2016	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Community State Bank [Member]
Cash and due from banks *	$ 10,094,645
Federal funds sold	698,000
Interest-bearing deposits at financial institutions	14,730,157
Securities	102,640,029
Loans/leases receivable held for investment, net	419,029,277
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	20,684,880
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	6,352,653
Restricted investment securities	1,512,900
Other real estate owned	650,000
Other assets	4,763,224
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	581,155,765
Deposits	486,298,262
FHLB advances	20,368,877
Other liabilities	4,897,564
Total liabilities assumed	511,564,703
Net assets acquired	69,591,062
Consideration paid:
Cash paid *	80,000,000
Business Combination, Consideration Transferred	80,000,000
Goodwill	$ 10,408,938
Goodwill		$ 13,631,626	$ 3,222,688	$ 3,222,688

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Note 9 - Acquisition of Community State Bank and Common Stock Offering - Purchased Loans As of the Acquisition Date (Details) - Community State Bank [Member]	Aug. 31, 2016 USD ($)
Receivables Acquired with Deteriorated Credit Quality [Member]
Contractually required principal payments	$ 3,662,431
Nonaccretable discount	(991,685)
Principal cash flows expected to be collected	2,670,746
Accretable discount	(277,579)
Fair Value of acquired loans	2,393,167
Performing Financial Instruments [Member]
Contractually required principal payments	428,552,119
Nonaccretable discount
Principal cash flows expected to be collected	428,552,119
Accretable discount	(11,916,009)
Fair Value of acquired loans	416,636,110
Contractually required principal payments	432,214,550
Nonaccretable discount	(991,685)
Principal cash flows expected to be collected	431,222,865
Accretable discount	(12,193,588)
Fair Value of acquired loans	$ 419,029,277

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Note 9 - Acquisition of Community State Bank and Common Stock Offering - Changes in Accretable Yield (Details) - Community State Bank [Member]	9 Months Ended
	Sep. 30, 2016 USD ($)
Receivables Acquired with Deteriorated Credit Quality [Member]
Balance at the beginning of the period	$ (277,579)
Accretion recognized	29,317
Balance at the end of the period	(248,262)
Performing Financial Instruments [Member]
Balance at the beginning of the period	(11,916,009)
Accretion recognized	366,293
Balance at the end of the period	(11,549,716)
Balance at the beginning of the period	(12,193,588)
Accretion recognized	395,610
Balance at the end of the period	$ (11,797,978)

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Note 9 - Acquisition of Community State Bank and Common Stock Offering - Core Deposit (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016
Core Deposits [Member]
Balance at the beginning of the period	$ 6,352,653
Amortization expense	(60,834)
Balance at the end of the period	6,291,819
Gross carrying amount			$ 6,352,653
Accumulated amortization			(60,834)
Net book value	6,352,653		6,291,819
Balance at the beginning of the period	1,471,409
Amortization expense	(210,469)	$ (149,634)
Balance at the end of the period	7,613,593	1,521,287
Net book value	$ 7,613,593	$ 1,521,287	$ 7,613,593

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Note 9 - Acquisition of Community State Bank and Common Stock Offering - Estimated Amortization Expense (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Core Deposits [Member] | Community State Bank [Member]
2016	$ 182,503
2017	723,955
2018	710,751
2019	694,374
2020	674,819
Thereafter	3,305,417
Finite-Lived Intangible Assets, Net	6,291,819
Core Deposits [Member]
Finite-Lived Intangible Assets, Net	6,291,819	$ 6,352,653
Finite-Lived Intangible Assets, Net	$ 7,613,593	$ 1,471,409	$ 1,521,287

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Note 9 - Acquisition of Community State Bank and Common Stock Offering - Pro Forma Combined Operating Results (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income	$ 27,615	$ 25,685	$ 80,755	$ 73,051
Noninterest income	11,415	8,074	27,744	23,167
Net income	$ 7,301	$ 8,216	$ 23,813	$ 15,324
Earnings per common share:
Basic (in dollars per share)	$ 0.56	$ 0.64	$ 1.85	$ 1.38
Diluted (in dollars per share)	$ 0.55	$ 0.63	$ 1.82	$ 1.36

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Note 10 - Related Party Transactions (Details Textual) - General Contractor [Member] $ in Millions	9 Months Ended
	Sep. 30, 2016 USD ($)
Estimated Full Contract Price to Complete Remodel [Member]
Related Party Transaction, Amounts of Transaction	$ 3.5
Estimated Amount That Contractor Will Receive For Completion of Project [Member]
Due to Related Parties	$ 2.1