U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ x ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended December 31, 1996
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
-------------- -------------------------
Commission file number 0-22208
Quad City Holdings, Inc.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 42-1397595
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2118 Middle Road, Bettendorf, Iowa 52722
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(319) 344-0600
------------------------------------------------
(Issuer's telephone number, including area code)
-------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 past 90 days. Yes [ x ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
1,437,824 as of February 8, 1997
- --------------------------------
<PAGE>
QUAD CITY HOLDINGS, INC. AND SUBSIDIARIES
INDEX
Page
Number
Part I FINANCIAL INFORMATION
Item 1 Consolidated Condensed Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets,
December 31, 1996 & June 30, 1996
Consolidated Condensed Statements of Income,
For the Three Months Ended December 31, 1996 and 1995
Consolidated Condensed Statements of Income,
For the Six Months Ended December 31, 1996 and 1995
Consolidated Condensed Statement of Cash Flows,
For the Six Months Ended December 31, 1996 and 1995
Notes to Consolidated Condensed Financial Statements
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
QUAD CITY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
<TABLE>
December 31, June 30,
1996 1996
------------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks ................................................... $ 7,120,790 $ 6,615,407
Federal funds sold ........................................................ 12,420,000 2,728,000
Certificates of deposit at financial institutions ......................... 5,657,633 5,472,012
Securities held to maturity, at amortized cost
(fair value December 1996, $3,005,002; June 1996, $3,097,115) ..... 3,021,946 3,156,601
Securities available for sale, at fair value
(amortized cost December 1996, $31,036,670; June 1996, $31,518,121) 30,994,573 31,032,652
------------- -------------
Total securities ...................................................... 34,016,519 34,189,253
------------- -------------
Loans receivable .......................................................... 76,610,570 56,809,720
Less: Allowance for estimated losses on loans ............................. (1,150,856) (852,500)
------------- -------------
Net loans receivable .................................................. 75,459,714 55,957,220
------------- -------------
Premises and equipment, net ............................................... 5,118,679 4,531,038
Accrued interest receivable ............................................... 1,191,550 1,121,268
Other assets .............................................................. 961,213 860,779
------------- -------------
Total assets ...................................................... $ 141,946,098 $ 111,474,977
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing .................................................... $ 18,242,555 $ 15,730,265
Interest-bearing ....................................................... 98,490,912 77,187,853
------------- -------------
Total deposits ....................................................... 116,733,467 92,918,118
------------- -------------
Federal funds purchased ................................................... 0 1,190,000
Federal Home Loan Bank advances ........................................... 8,165,664 3,411,470
Other borrowings .......................................................... 1,500,000 1,000,000
Other liabilities ......................................................... 1,873,558 1,286,783
------------- -------------
Total liabilities ................................................. 128,272,689 99,806,371
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value; shares authorized 250,000; shares issued
and outstanding December 1996, 10; June 1996, none ...................... 10 0
Common stock, $1 par value; shares authorized 2,500,000; shares issued
and outstanding 1,437,824 ............................................... 1,437,824 1,437,824
Additional paid-in capital ................................................ 12,764,406 11,764,416
Retained earnings (deficit) ............................................... (486,734) (1,048,165)
------------- -------------
13,715,506 12,154,075
Unrealized (losses) on securities available for sale, net ................. (42,097) (485,469)
------------- -------------
Total stockholders' equity ........................................ 13,673,409 11,668,606
------------- -------------
Total liabilities and stockholders' equity ........................ $ 141,946,098 $ 111,474,977
============= =============
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
QUAD CITY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
Three Months
Ended December 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans ............................. $1,559,832 $ 945,151
Interest and dividends on securities ................... 542,456 423,979
Interest on federal funds sold ......................... 103,194 75,338
Other interest ......................................... 104,158 89,806
---------- ----------
Total interest income ............................. 2,309,640 1,534,274
---------- ----------
Interest expense:
Interest on deposits .................................. 1,059,273 798,268
Interest on other borrowings .......................... 142,985 1,741
---------- ----------
Total interest expense ............................ 1,202,258 800,009
---------- ----------
Net interest income ............................... 1,107,382 734,265
Provision for loan losses .................................. 146,325 153,300
---------- ----------
Net interest income after provision for loan losses 961,057 580,965
---------- ----------
Other income:
Merchant credit card, net of processing fees ........... 362,864 214,707
Trust department ....................................... 134,630 76,929
Deposit service fees ................................... 46,845 34,254
Investment securities gains, net ....................... 0 7,279
Other .................................................. 53,876 40,472
---------- ----------
Total other income ................................ 598,215 373,641
---------- ----------
Other expenses:
Salaries and benefits .................................. 648,922 413,422
Professional and data processing fees .................. 96,625 56,095
Advertising and marketing .............................. 20,940 27,390
Occupancy and equipment expense ........................ 163,662 74,984
Stationery and supplies ................................ 49,578 25,131
Provision for merchant credit card losses .............. 67,241 26,879
Insurance .............................................. 32,169 35,943
Postage and telephone .................................. 36,950 28,408
Other .................................................. 140,938 101,576
---------- ----------
Total other expenses .............................. 1,257,025 789,828
---------- ----------
Net income ........................................ $ 302,247 $ 164,778
========== ==========
Income per common share: .................................... $ 0.21 $ 0.11
========== ==========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE>
QUAD CITY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
Six Months
Ended December 31,
-----------------------
1996 1995
-----------------------
<S> <C> <C>
Interest income:
Interest and fees on loans ............................. $2,905,947 $1,742,058
Interest and dividends on securities ................... 1,063,437 839,637
Interest on federal funds sold ......................... 152,294 223,031
Other interest ......................................... 202,199 171,966
---------- ----------
Total interest income ............................. 4,323,877 2,976,692
---------- ----------
Interest expense:
Interest on deposits .................................. 1,978,414 1,561,677
Interest on other borrowings .......................... 232,113 48,186
---------- ----------
Total interest expense ............................ 2,210,527 1,609,863
---------- ----------
Net interest income ............................... 2,113,350 1,366,829
Provision for loan losses .................................. 303,725 254,100
---------- ----------
Net interest income after provision for loan losses 1,809,625 1,112,729
---------- ----------
Other income:
Merchant credit card, net of processing fees ........... 690,057 444,399
Trust department ....................................... 251,133 150,568
Deposit service fees ................................... 89,114 61,482
Investment securities gains, net ....................... 0 7,279
Other .................................................. 87,119 76,348
---------- ----------
Total other income ................................ 1,117,423 740,076
---------- ----------
Other expenses:
Salaries and benefits .................................. 1,212,093 864,781
Professional and data processing fees .................. 204,890 119,659
Advertising and marketing .............................. 51,830 62,464
Occupancy and equipment expense ........................ 302,548 146,532
Stationery and supplies ................................ 93,490 52,700
Provision for merchant credit card losses .............. 111,195 44,188
Insurance .............................................. 51,118 62,684
Postage and telephone .................................. 82,617 57,916
Other .................................................. 255,836 183,261
---------- ----------
Total other expenses .............................. 2,365,617 1,594,185
---------- ----------
Net income ........................................ $ 561,431 $ 258,620
========== ==========
Income per common share: .................................... $ 0.39 $ 0.18
========== ==========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE>
QUAD CITY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
Six Months
Ended December 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ........................................................... $ 561,431 $ 258,620
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation ....................................................... 154,864 65,362
Provision for loan losses .......................................... 303,725 254,100
Amortization of premiums (accretion of discounts) on securities, net (19,224) (10,639)
Realized gain on securities available for sale ..................... 0 (7,279)
(Increase) in accrued interest receivable .......................... (70,282) (221,760)
(Increase) in other assets ......................................... (100,434) (699,525)
Increase in other liabilities ...................................... 586,775 210,582
------------ ------------
Net cash provided by (used in) operating activities ............. $ 1,416,855 $ (150,539)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold ........................ (9,692,000) 4,800,000
Net (increase) in certificates of deposits at financial institutions . (185,621) (1,422,945)
Net loans originated ................................................. (19,806,219) (11,377,426)
Purchase of securities held to maturity .............................. 0 (2,723,782)
Purchase of securities available for sale ............................ (603,532) (7,027,450)
Proceeds from maturity of securities ................................. 1,000,000 3,000,000
Proceeds from calls/paydowns on securities ........................... 238,862 3,455,393
Proceeds from sale of securities available for sale .................. 0 51,446
Purchase of premises and equipment ................................... (742,505) (169,404)
------------ ------------
Net cash (used in) investing activities ......................... $(29,791,015) $(11,414,168)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in time certificates of deposit accounts ................ 7,183,960 5,189,480
Net increase in non-time deposit accounts ............................ 16,631,389 15,372,598
Proceeds from issuance of preferred stock ............................ 1,000,000 0
Net (decrease) in federal funds purchased ............................ (1,190,000) (6,711,072)
Net increase in Federal Home Loan Bank advances ...................... 4,754,194 0
Net increase in other borrowings ..................................... 500,000 0
------------ ------------
Net cash provided by financing activities ....................... $ 28,879,543 $ 13,851,006
------------ ------------
Net increase in cash and due from banks ......................... 505,383 2,286,299
Cash and due from banks, beginning .............................. 6,615,407 3,830,270
------------ ------------
Cash and due from banks, ending ................................. $ 7,120,790 $ 6,116,569
============ ============
Supplemental disclosure of cash flow information, cash payments for:
Interest ............................................................. $ 2,171,586 $ 1,534,827
============ ============
Supplemental schedule of noncash investing activities:
Change in unrealized gains on securities available for sale, net ..... $ 443,372 $ 77,089
============ ============
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
Part I
Item 1
QUAD CITY HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include information or footnotes necessary for a fair presentation
of financial position, results of operations and changes in financial condition
in conformity with generally accepted accounting principles. However, all
adjustments that are, in the opinion of management, necessary for a fair
presentation have been included. Results for the three and six months ended
December 31, 1996 are not necessarily indicative of the results that may be
expected for the fiscal year ending June 30, 1997.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The accompanying consolidated condensed financial statements include the
accounts of Quad City Holdings, Inc. (the "Company") and its wholly owned
subsidiaries, Quad City Bank and Trust Company (the "Bank") and Quad City
Bancard, Inc. ("Bancard"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
NOTE 3 - INITIAL PUBLIC OFFERING
The Company was incorporated in February of 1993, and its primary operating
subsidiary, the Bank, commenced operations during the first calendar quarter of
1994. On October 6, 1993, the Company went effective with its initial public
offering. 1.2 million shares of common stock were issued in the offering. In
November of 1993, the underwriter exercised its over-allotment option and
acquired 162,824 additional shares of common stock. 75,000 shares were issued in
a private placement in April of 1993 resulting in the total issued shares of
1,437,824.
<PAGE>
Part I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Quad City Holdings. Inc. (the "Company") was formed in February of 1993
under the laws of the state of Delaware for the purpose of becoming the bank
holding company of Quad City Bank and Trust Company (the "Bank").
The Bank was capitalized on October 13, 1993 and commenced operations on
January 7, 1994. The Bank was organized as an Iowa-chartered commercial bank
that is a member of the Federal Reserve System with depository accounts insured
by the Federal Deposit Insurance Corporation. The Bank provides full-service
commercial and consumer banking services in Bettendorf and Davenport, Iowa and
adjacent communities.
Quad City Bancard, Inc. ("Bancard") was capitalized on April 3, 1995, as a
Delaware corporation which provides merchant credit card processing services.
This operation had previously been a division of the Bank since July 1994.
Bancard has contracted with an independent sales organization which markets
credit card services to merchants throughout the country. Currently,
approximately 9,500 merchants process transactions with Bancard.
The Company has a fiscal year end of June 30.
FINANCIAL CONDITION
Total assets of the Company increased by $30,471,121 or 27.33% to
$141,946,098 at December 31, 1996 from $111,474,977 at June 30, 1996. The growth
primarily resulted from an increase in deposits received from customers.
Cash and due from banks increased by $505,383 or 7.64% to $7,120,790 at
December 31, 1996 from $6,615,407 at June 30, 1996 and represented both cash
maintained at the Bank, as well as funds that the Bank and the Company had
deposited in other banks in the form of demand deposits.
Federal funds sold are inter-bank funds with daily liquidity. At December
31, 1996, the Bank had invested $12,420,000 in such funds. This amount increased
by $9,692,000, or 355.28%, from $2,728,000 at June 30, 1996.
Certificates of deposit at financial institutions increased by $185,621 or
3.39% to $5,657,633 at December 31, 1996 from $5,472,012 at June 30, 1996. The
increase was due to new deposits in other banks in the form of certificates of
deposit.
Securities decreased by $172,734 or 0.51% to $34,016,519 at December 31,
1996 from $34,189,253 at June 30, 1996. The decrease was the result of a number
of transactions in the security portfolio. Two securities, classified as
available for sale, were purchased during the quarter for $603,532, the net of
the amortization of premiums and accretion of discounts was $19,224, and the
decrease in unrealized loss on securities available for sale was $443,372. The
increase was offset by paydowns received on mortgage backed securities of
$238,862 and the maturity of a $1,000,000 security.
Loans receivable increased by $19,800,850 or 34.85% to $76,610,570 at
December 31, 1996 from $56,809,720 at June 30, 1996. The increase was the result
of the origination of $40,476,279 of commercial business, consumer and real
estate loans, less loan repayments of $20,675,429.
The allowance for estimated losses on loans at December 31, 1996 was
$1,150,856, representing approximately 1.5% of gross loans outstanding.
Similarly, the allowance for estimated losses on loans at June 30, 1996 was
approximately 1.5% of gross loans outstanding, or $852,500. Although management
believes that the allowance for estimated losses on loans at December 31, 1996
was at a level that is adequate to absorb losses on existing loans, 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 contributions to its provision
for loan losses in the future.
Premises and equipment increased by $587,641 or 12.97% to $5,118,679 at
December 31, 1996 from $4,531,038 at June 30, 1996. The increase resulted from
the purchase of additional furniture, fixtures and equipment for the Bank and
Bancard, and the site construction costs for the new Davenport banking location,
offset by depreciation expense.
<PAGE>
Accrued interest receivable on loans, securities and interest-bearing cash
accounts increased slightly by $70,282 or 6.27% to $1,191,550 at December 31,
1996 from $1,121,268 at June 30, 1996.
Other assets increased by $100,434 or 11.67% to $961,213 at December 31,
1996 from $860,779 at June 30, 1996. Other assets consisted mainly of
miscellaneous receivables, prepaid expenses and accrued trust department income.
Deposits increased by $23,815,349 or 25.63% to $116,733,467 at December 31,
1996 from $92,918,118 at June 30, 1996. The increase resulted from a $16,631,389
increase in non-interest bearing demand, NOW, money market and other savings
accounts and a $7,183,960 increase in certificates of deposit.
The Company had no federal funds purchased at December 31, 1996, as
compared to $1,190,000 at June 30, 1996. The decrease was attributable to the
reduction in funds received from correspondent banking customers to be
reinvested in overnight deposits "as principal".
Federal Home Loan Bank ("FHLB") advances increased by $4,754,194 or
139.36% to $8,165,664 at December 31, 1996 from $3,411,470 at June 30, 1996. The
Bank is a member of the FHLB of Des Moines. As a result of its membership in the
FHLB, the Bank has the ability to borrow funds for short- or long-term purposes
under a variety of programs.
Other borrowings increased by $500,000 or 50.00% to $1,500,000 at December
31, 1996 from $1,000,000 at June 30, 1996. Other borrowings consisted of the
amount outstanding on a $1,500,000 revolving credit note, which is secured by
all the outstanding stock of the Bank. The borrowed funds were utilized to
provide additional capital to the Bank to maintain its required 9% leverage
ratio.
Other liabilities increased by $586,775 or 45.60% to $1,873,558 at
December 31, 1996 from $1,286,783 at June 30, 1996. Other liabilities was
comprised of unpaid amounts for various products and services, and accrued but
unpaid interest on deposits. The increase was primarily due to the accounts
payable on Bancard's books at the end of the quarter.
In anticipation of continued asset growth, the Company has privately
placed shares of its preferred stock with institutional investors. It is
management's intention to raise at least $7.5 million of its preferred stock.
Subscriptions were signed during October and November 1996 for $5.5 million. On
December 27, 1996, 10 shares of preferred stock were issued to a subscriber for
a consideration of $1,000,000. Preferred stock of $10 at December 31, 1996
represented 10 shares at $1.00 par value of the Company's preferred stock.
Common stock of $1,437,824 at both December 31, 1996 and June 30, 1996
represented 1,437,824 shares at $1.00 par value of the Company's common stock.
Additional paid-in-capital increased by $999,990 or 8.5% to $12,764,406
at December 31, 1996 from $11,764,416 at June 30, 1996. The increase consisted
of the proceeds above par from the preferred stock placement.
The accumulated deficit at June 30, 1996 of $1,048,165 was comprised of
pre-opening expenses, start-up expenses for the Bank, consisting primarily of
salaries, marketing and advertising fees, supplies and forms and the net loss
incurred. The accumulated deficit decreased by $561,431 to $486,734 at December
31, 1996 to reflect the net income for the six months.
Unrealized losses on securities available for sale decreased by $443,372
to $42,097 at December 31, 1996 from $485,469 at June 30, 1996. The decrease was
attributable to the increase in fair value of securities identified as available
for sale for the six month period.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
Net income for the three month period ended December 31, 1996 of $302,247
almost doubled as compared to net income of $164,778 for the same period in
1995.
Interest income increased by $775,366 from $1,534,274 for the three month
period ended December 31, 1995 to $2,309,640 for the three month period ended
December 31, 1996. The rise in interest income was primarily attributable to
greater average outstanding balances in interest earning assets.
<PAGE>
Interest expense increased by $402,249 from $800,009 for the three month
period ended December 31, 1995 to $1,202,258 for the three month period ended
December 31, 1996. The increase in interest expense was primarily attributable
to greater average outstanding balances in interest bearing liabilities.
The Company had an allowance for estimated losses on loans of
approximately 1.5% of total loans at both December 31, 1996 and 1995. The
provision for loan losses decreased slightly by $6,975 from $153,300 for the
three month period ended December 31, 1995 to $146,325 for the three month
period ended December 31, 1996. In the future, the Company will begin to adjust
the provision based on a risk weighting policy.
Other income increased by $224,574 from $373,641 for the three month period
ended December 31, 1995 to $598,215 for the three month period ended December
31, 1996. In 1996, other income consisted of income from depository service
fees, income from the trust department, income from the merchant credit card
operation and other miscellaneous fees. In 1995, other income also included the
gains received on the sale of investment securities. The increase in other
income was primarily due to the addition of new customers and increased volume
of merchant credit card processing services at Bancard and the addition of new
clients in the trust department at the Bank.
The main components of other expenses were primarily salaries and benefits,
occupancy and equipment expenses, professional and data processing fees, and the
provision for merchant credit card losses for both periods. Other expenses for
the three months ended December 31, 1996 were $1,257,025 as compared to $789,828
for the same period in 1995. The $467,197 increase was primarily due to higher
overhead expenses on the increased volume of business acquired in the last
fiscal year.
SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
Net income for the six month period ended December 31, 1996 more than
doubled to $561,431 as compared to a net income of $258,620 for the same period
in 1995.
Interest income increased by $1,347,185 from $2,976,692 for the six month
period ended December 31, 1995 to $4,323,877 for the six month period ended
December 31, 1996. The rise in interest income was primarily attributable to
greater average outstanding balances in interest earning assets.
Interest expense increased by $600,664 from $1,609,863 for the six month
period ended December 31, 1995 to $2,210,527 for the six month period ended
December 31, 1996. The increase in interest expense was primarily attributable
to greater average outstanding balances in interest bearing liabilities.
The Company had an allowance for estimated losses on loans of
approximately 1.5% of total loans at both December 31, 1996 and 1995. The
provision for loan losses increased by $49,625 from $254,100 for the six month
period ended December 31, 1995 to $303,725 for the six month period ended
December 31, 1996. The 19.53% increase in the provision was made as a result of
the increase in the total loan portfolio, as well as the restoration of a loan
charge off. In the future, the Company will begin to adjust the provision based
on a risk weighting policy.
Other income increased by $377,347 from $740,076 for the six month period
ended December 31, 1995 to $1,117,423 for the six month period ended December
31, 1996. In 1996, other income consisted of income from depository service
fees, income from the trust department, income from the merchant credit card
operation and other miscellaneous fees. In 1995, other income also included the
gains received on the sale of investment securities. The increase in other
income was primarily due to the addition of new customers and increased volume
of merchant credit card processing services at Bancard and the addition of new
clients in the trust department at the Bank.
The main components of other expenses were primarily salaries and benefits,
occupancy and equipment expenses, professional and data processing fees, and the
provision for merchant credit card losses for both periods. Other expenses for
the six months ended December 31, 1996 were $2,365,617 as compared to $1,594,185
for the same period in 1995. The $771,432 increase was primarily due to higher
overhead expenses on the increased volume of business acquired in the last
fiscal year.
<PAGE>
OTHER DEVELOPMENTS
The Bank opened the permanent Davenport facility on July 1, 1996. The newly
constructed building is located on North Brady Street. The Bank owns one half of
the two story commercial office structure that is separated by an atrium. The
Bank occupies all 6,000 square feet of its first floor and utilizes the basement
for storage and item processing. Approximately thirty four hundred square feet
of its second floor has been leased to a professional services firm. The
remaining 2,300 square feet is available for lease.
In October of 1996, the management of the Company announced its intentions
to lease space in the historic Velie Mansion in Moline. Bancard plans to
relocate its operations to the third floor of the 30,000 square foot building in
mid 1997. Subject to regulatory approval, the Bank will create a full-service
banking operation on the east side of the first floor of the building in late
1997 or early 1998.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement No. 125
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" and Statement No. 127 "Deferral of the Effective Date of Certain
Provisions of Statement No. 125". Statement No. 125 provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities based on consistent application of a
financial-components approach that focuses on control. Under that approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and derecognizes liabilities
when extinguished. Statement No. 125 provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers that
are secured borrowings. The provisions of Statement No. 125 applicable to
servicing of financial assets are effective for servicing of financial assets
occurring after December 31, 1996. The provisions of Statement No. 125
applicable to transfers of financial assets and extinguishments of liabilities
are effective for transfers and extinguishments occurring after December 31,
1997. Management believes that adoption of this Statement will not have a
material effect on the Company's financial statements.
<PAGE>
Part II
QUAD CITY HOLDINGS, INC.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings - None
Item 2 Changes in Securities - None
Item 3 Defaults Upon Senior Securities - None
Item 4 Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders was held at the Jumer's Castle Lodge
located at 900 Spruce Hills Drive, Bettendorf, Iowa on October 23, 1996 at
10:00 a.m. At the meeting, Richard R. Horst and Ronald G. Peterson were
elected to serve as a Class III directors with a term expiring in 1999.
Continuing as a Class I director (term expires in 1997) is Michael A.
Bauer. Continuing as Class II directors (terms expire in 1998) are Douglas
M. Hultquist and John W. Schricker. There were 1,437,824 issued and
outstanding shares of common stock at the time of the annual meeting.
There were 1,228,806 common shares represented at the meeting, either in
person or by proxy, which constituted approximately 85% of the outstanding
shares. The voting for directors at the annual meeting was as follows:
Richard R. Horst - 1,227,384 votes for and 1,422 votes withheld
Ronald G. Peterson - 1,227,784 votes for and 1,022 votes withheld
Item 5 Other Information - None
Item 6 Exhibits and Reports on Form 8-K - None
<PAGE>
Part II
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
QUAD CITY HOLDINGS, INC.
(Registrant)
By: /s/ Douglas M. Hultquist
-------------------------------
Douglas M. Hultquist, President
Date February 8, 1997 /s/ Michael A. Bauer
---------------- -----------------------------
Michael A. Bauer, Chairman
Date February 8, 1997 /s/ Douglas M. Hultquist
---------------- -------------------------------
Douglas M. Hultquist, President
Principal Executive, Financial
& Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1996 10-QSB FOR QUAD CITY HOLDINGS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 7,121
<INT-BEARING-DEPOSITS> 5,658
<FED-FUNDS-SOLD> 12,420
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 30,995
<INVESTMENTS-CARRYING> 3,022
<INVESTMENTS-MARKET> 3,005
<LOANS> 76,611
<ALLOWANCE> 1,151
<TOTAL-ASSETS> 141,946
<DEPOSITS> 116,733
<SHORT-TERM> 8,165
<LIABILITIES-OTHER> 1,874
<LONG-TERM> 1,500
0
0
<COMMON> 1,438
<OTHER-SE> 12,236
<TOTAL-LIABILITIES-AND-EQUITY> 141,946
<INTEREST-LOAN> 2,906
<INTEREST-INVEST> 1,603
<INTEREST-OTHER> 354
<INTEREST-TOTAL> 4,324
<INTEREST-DEPOSIT> 1,978
<INTEREST-EXPENSE> 2,211
<INTEREST-INCOME-NET> 2,113
<LOAN-LOSSES> 304
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,366
<INCOME-PRETAX> 561
<INCOME-PRE-EXTRAORDINARY> 561
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 561
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 853
<CHARGE-OFFS> 5
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,151
<ALLOWANCE-DOMESTIC> 1,151
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
