July 2 - QCR Holdings Inc. (Nasdaq:QCRH) has redeemed $10.2 million of the $40.1 million in preferred stock the company had previously issued to the United States Department of the Treasury under the Small Business Lending Fund Program. QCR Holdings received this preferred capital investment in September 2011 and only 43 percent of all banks that had made application for SBLF capital received approval for participation in the SBLF Program.
"We were quite pleased to have been approved by Treasury for participation in the SBLF last year," stated Douglas M. Hultquist, president and CEO. "Our participation in the SBLF Program allowed us to fully exit the Troubled Asset Relief Program, or TARP, in 2011." Hultquist added, "While our participation in SBLF has been a real positive for our company, and Treasury's approval for our participation in the program a significant indicator of the strength of QCR Holdings Inc., it is now time for us to execute on our previously stated objective of redeeming this SBLF capital over the next several years."
Subsequent to this partial redemption, the company and its subsidiary banks continue to maintain capital at levels well above the minimum requirements administered by the federal regulatory agencies and in excess of the levels to be considered well capitalized.
"This initial partial redemption of the SBLF preferred capital is a significant step in our previously stated long-term capital plan for the company," said Todd A. Gipple, executive vice president, chief operating officer and chief financial officer. "Our plan is to increase our tangible common equity through improved earnings and the conversion of our series E preferred stock to common equity, while self generating the excess capital required to fully redeem the SBLF capital in future years without the need for a dilutive common equity raise."
Gipple added, "The future conversion of our series E preferred stock will add approximately 1.20 percent to our TCE ratio and, combined with future earnings and good capital management, we are targeting a TCE ratio in the mid-6 percent range as our goal for capital planning purposes.
We believe that this is a prudent long-range target for tangible common equity that is achievable without a dilutive common equity raise.
Executing on this plan will result in the opportunity for significant growth in shareholder value. In addition, this redemption of $10.2 million in SBLF preferred will result in a reduction in SBLF preferred dividends of $511,000 annually, thereby increasing fully diluted EPS by 11 cents on an annual basis."
Gipple continued, "Combined with our significant growth in EPS in recent quarters and continued strong progress in the reduction of our level of non-performing assets, demonstrating the capability to self-fund the redemption of the SBLF capital will continue to drive improved value for our shareholders."
QCR Holdings Inc., headquartered in Moline, Ill., is a relationship-driven, multi-bank holding company, which serves the Quad City, Cedar Rapids, and Rockford communities through its wholly owned subsidiary banks. Quad City Bank and Trust Company, which is based in Bettendorf, Iowa, and commenced operations in 1994, Cedar Rapids Bank and Trust Company, which is based in Cedar Rapids, Iowa, and commenced operations in 2001, and Rockford Bank and Trust Company, which is based in Rockford, Ill., and commenced operations in 2005, provide full-service commercial and consumer banking and trust and asset management services. Quad City Bank and Trust Company also engages in commercial leasing through its 80 percent-owned subsidiary, m2 Lease Funds LLC, based in Milwaukee, Wis.