Summary of QCR HOLDINGS INC

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
QCR Holdings, Inc. is the parent company of Quad City Bank & Trust, Cedar Rapids Bank & Trust, Rockford Bank & Trust, and Quad City Bancard, Inc. Quad City Bank & Trust and Cedar Rapids Bank & Trust are Iowa-chartered commercial banks, and Rockford Bank & Trust is an Illinois-chartered commercial bank. All are members of the Federal Reserve System with depository accounts insured to the maximum amount permitted by law by the Federal Deposit Insurance Corporation ("FDIC").
Х Quad City Bank & Trust 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. Quad City Bank & Trust also provides leasing services through its 80%-owned subsidiary, m2 Lease Funds, located in Brookfield, Wisconsin. On January 1, 2008, Quad City Bank & Trust acquired 100% of the membership units of CMG Investment Advisors, LLC, which is an investment management and advisory company.

Х Cedar Rapids Bank & Trust commenced operations in 2001 and provides full-service commercial and consumer banking, and trust and asset management services to Cedar Rapids 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 Rapids Bank & Trust also provides residential real estate mortgage lending services through its 50%-owned joint venture, Cedar Rapids Mortgage Company.

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

On December 31, 2008, the Company sold its Milwaukee subsidiary, First Wisconsin Bank & Trust for $13.7 million which resulted in a gain on sale, net of taxes and related expenses, of approximately $356 thousand. The 2008 financial results associated with First Wisconsin Bank & Trust have been reflected as discontinued operations.
Bancard currently provides credit card processing for its agent banks and for cardholders of the Company's subsidiary banks and agent banks. As discussed in the footnotes to the financial statements, the Company sold the merchant credit card acquiring business segment of Bancard during the third quarter of 2008. The 2008 activity related to the merchant credit card acquiring business is accounted for as discontinued operations.

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Part I Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued OVERVIEW
The Company reported net income attributable to QCR Holdings, Inc. for the first quarter ended March 31, 2009 of $84 thousand, which resulted in diluted earnings per share for common shareholders of ($0.13). Earnings for the first quarter of 2009 were significantly impacted by additional loan/lease loss provisions as the Company increased its qualitative reserves due to the continued uncertainty in the national and local economy and made increased provisions regarding several specific commercial credits. By comparison, for the quarter ended December 31, 2008, the Company reported a slight net loss attributable to QCR Holdings, Inc. of $55 thousand, or diluted earnings per share of ($0.11). For the first quarter of 2008, the Company reported net income attributable to QCR Holdings, Inc. of $686 thousand, or diluted earnings per share of $0.05.
The Company's earnings from continuing operations attributable to QCR Holdings, Inc. were $84 thousand and $1.7 million for the quarters ended March 31, 2009 and 2008, respectively. Diluted earnings per share from continuing operations attributable to QCR Holdings, Inc. decreased from $0.27 to ($0.13). This reduction was due to the significant increase in provision for loan/lease losses of $3.4 million. Partially offsetting this increased provision expense was an increase in net interest income of $1.9 million, or 18%, from $10.1 million for the quarter ending March 31, 2008 to $12.0 million for the quarter ending March 31, 2009.
The Company's operating results are derived largely from net interest income. Net interest income is the difference between interest income, principally from loans and investment securities, and interest expense, principally on borrowings and customer deposits. Net interest income, on a tax equivalent basis, increased $1.9 million, or by 13%, to $12.1 million for the quarter ended March 31, 2009, from $10.2 million for the first quarter of 2008. For the first quarter of 2009, average earning assets increased by $214.6 million, or by 16%, and average interest-bearing liabilities increased by $161.9 million, or by 14%, when compared with average balances for the first quarter of 2008. A comparison of yields, spread and margin from the first quarter of 2009 to the first quarter of 2008 is as follows (on a tax equivalent basis):
Х The average yield on interest-earning assets decreased 100 basis points.

Х The average cost of interest-bearing liabilities decreased 106 basis points.

Х The net interest spread improved 6 basis points from 2.83% to 2.89%.

Х The net interest margin improved 4 basis points from 3.15% to 3.19%.

Table of Contents

Part I
Item 2
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued
The Company's average balances, interest income/expense, and rates earned/paid
on major balance sheet categories, as well as the components of change in net
interest income, are presented in the following tables:

                                                                    For the three months ended March 31,
                                                           2009                                             2008
                                                          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                      $    34,314      $       19            0.22 %    $     3,979      $       25            2.51 %
Interest-bearing deposits at
financial institutions                       15,529              19            0.49 %         10,394              94            3.62 %
Investment securities (1)                   255,284           2,993            4.69 %        218,900           2,997            5.48 %
Gross loans/leases receivable (2)
(3)                                       1,212,058          18,076            5.97 %      1,069,348          18,262            6.83 %


Total interest earning assets           $ 1,517,185          21,107            5.56 %    $ 1,302,621          21,378            6.56 %

Noninterest-earning assets:
Cash and due from banks                 $    30,013                                      $    34,370
Premises and equipment                       30,954                                           31,535
Less allowance for estimated losses
on loans/leases                             (19,092 )                                        (11,871 )
Other                                        76,906                                          138,610


Total assets                            $ 1,635,966                                      $ 1,495,265