QCR HOLDINGS INC

The subsidiary banks purchase federal funds for short-term funding needs from the FRB or from their correspondent banks. The table below presents the composition of the Company's short-term borrowings.

The Company's federal funds purchased fluctuate based on the short-term funding needs of the Company's subsidiary banks.

Part I

Item 2

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

The table below presents the Company's FHLB advances.

The Company had a decrease in overnight FHLB advances of $230.0 million from December 31, 2023 to March 31, 2024. The Company had no change in term FHLB advances from December 31, 2023 to March 31, 2024. The decreases were primarily due to strong deposit growth during the first quarter of 2024.

It is management's intention to reduce its reliance on wholesale funding, including FHLB advances and brokered deposits. Replacement of this funding with core deposits helps to reduce interest expense as 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 (defined as FHLB advances and brokered deposits).

During the first three months of 2024, wholesale funding decreased $253.4 million due to a reduction in short-term FHLB advances and brokered deposit maturities due to strong deposit growth.

The Company renewed its revolving credit note in the second quarter of 2023. At renewal, the available line amount remained unchanged at $50.0 million for which there was no outstanding balance as of March 31, 2024. Interest on the revolving line of credit is calculated at the greater of: (a) the effective Prime Rate less 0.50% or (b) 3.00% per annum. The collateral on the revolving line of credit is 100% of the outstanding stock of the Company’s bank subsidiaries.

The Company had subordinated notes totaling $233.2 million and $232.7 million as of March 31, 2024 and March 31, 2023, respectively.

Part I

Item 2

The Company had junior subordinated debentures totaling $48.8 million and $48.6 million as of March 31, 2024 and March 31, 2023, respectively.