ECONOMIC OUTLOOK

M. Randolph Westlund, CFAExecutive Vice President andChief Investment OfficerQuad City Bank and Trust Company

2

Resilient Economy - No Sense of Urgency

M. Randolph Westlund, CFA

April 2017

Sources: ABA, Bloomberg, Federal Reserve, JP Morgan Asset Mgmt,

Kiplinger’s, Ned Davis Research, Northern Trust, QCRH, Reader’s Digest,

Standard and Poor’s, Young Invincibles

3

Statistics Do Not Lie…

Source: QCR Anecdote File

4

Consumer Sentiment – Looking Forward More Comfortably

Source: Bloomberg

5

Business Sentiment – Still Expecting Better

Source: ABA

6

When you hear the phrase

“slow growth”, do you

focus on “slow”, or

focus on “growth”?

7

Source: ABA

U.S. Economy is Growing

8

Economist Forecasts Anticipate Somewhat Better to Come

Source: JP Morgan Asset Mgmt, Bloomberg

9

Source: Christian Century 11-3-09

Employment Needs?

10

Employment Advances – Less Unemployed and More Earnings

Source: JP Morgan Asset Mgmt, Ned Davis Research

11

Employment Advances – More Jobs Filled, More Jobs Open

Source: Ned Davis Research, JP Morgan Asset Mgmt

12

Source: New York Fed, JP Morgan Asset Mgmt

Consumer Balance Sheets – Staying Solid

** JPM Estimate

13

Source: New York Fed, JP Morgan Asset Mgmt

Consumer Balance Sheets – Staying Solid

** JPM Estimate

14

Household Formation Coming Back?

Source: QCR Anecdote File

15

Source: ABA, Northern Trust, JP Morgan Asset Mgmt

Housing – Some Supply Growth and Upward Price Moves

-20

-15

-10

-5

0

5

10

15

Apr-07 Apr-09 Apr-11 Apr-13 Apr-15

PRICES - YOY % GROWTH

Existing homes

S&P/Case-Shiller

16

And Now, From Washington DC…

Source: Reader’s Digest June 2015

17

Fiscal Forecast – Cloudy with a Chance of…

Source: JP Morgan Asset Mgmt

18

Looking Into the Future of Global Growth…

Source: QCR Anecdote File

19

A Picture of Global Economic Growth

Source: Northern Trust

Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 12Mo Trend

Manufacturing 50.7 50.2 50.1 50.4 51.0 50.7 51.0 51.9 52.0 52.7 52.7 53.0

Services 51.3 51.7 51.2 51.3 51.6 51.2 51.6 52.9 53.1 53.5 54.0 53.3

Manufacturing 50.9 50.5 50.3 51.2 51.4 51.2 51.5 52.6 52.9 53.7 54.2 54.1

Services 51.7 52.3 51.8 51.5 51.3 51.5 51.7 53.6 54.0 53.8 54.5 53.6

Manufacturing 51.7 50.7 51.0 52.8 52.3 49.4 51.7 52.0 53.5 54.5 56.0 57.7

Services 54.9 55.7 53.6 56.1 54.9 51.7 56.6 54.6 56.2 56.6 56.5 57.6

Manufacturing 51.6 51.7 51.5 52.8 52.0 51.7 52.6 53.5 53.7 54.9 55.2 55.4

Services 53.1 53.1 53.3 52.8 52.9 52.8 52.2 52.8 53.8 53.7 53.7 55.5

Manufacturing 51.2 49.7 50.7 52.5 48.2 53.5 55.2 54.6 53.5 56.0 55.4 54.5

Services 53.7 52.3 53.5 52.3 47.4 52.9 52.6 54.5 55.2 56.2 54.5 53.3

Manufacturing 49.1 48.2 47.7 48.1 49.3 49.5 50.4 51.4 51.3 52.4 52.7 53.3

Services 50.0 49.3 50.4 49.4 50.4 49.6 48.2 50.5 51.8 52.3 51.9 51.3

Manufacturing 51.5 52.2 52.1 51.8 51.9 51.1 50.3 51.1 51.5 51.8 53.5 54.7

Services n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Manufacturing 58.1 53.4 51.0 51.8 56.4 46.9 49.8 50.9 54.2 55.4 51.2 59.3

Services 49.5 49.7 51.5 51.3 53.9 45.0 48.9 50.5 51.1 57.7 54.5 49.0

Manufacturing 50.2 49.6 49.5 49.3 50.3 50.1 50.4 51.0 50.7 51.0 50.8 51.3

Services 50.1 49.9 49.1 50.5 51.5 51.2 51.0 51.0 50.9 51.5 52.1 52.0

Manufacturing 49.7 49.4 49.2 48.6 50.6 50.0 50.1 51.2 50.9 51.9 51.0 51.7

Services 52.2 51.8 51.2 52.7 51.7 52.1 52.0 52.4 53.1 53.4 53.1 52.6

GLOBAL PMI SURVEYS

Canada

Australia

Emerging

Markets

Developed

Markets

Global

United

States

Eurozone

United

Kingdom

Japan

China

20

A Global Economy in Transition

Source: Kiplinger’s

21

Developed Economies – Stressing the Next Gen?

Source: Northern Trust

Source: Northern Trust, United Nations Population Division. Data labels represent non-indexed population figures/estimates (millions). Dependency ratio defined as % of population older than 65 or younger than 15 divided by the remainder. Eurozone* excludes Portugal.

322

389

65

75

325 322 127

107

50

60

70

80

90

100

110

120

130

140

150

160

2015 2020 2025 2050 2015 2020 2025 2050 2015 2020 2025 2050 2015 2020 2025 2050

United States United Kingdom Eurozone* Japan

ESTIMATED CHANGES IN POPULATION (2015 = 100)

0

10

20

30

40

50

60

70

80

90

100

2015 2020 2025 2050 2015 2020 2025 2050 2015 2020 2025 2050 2015 2020 2025 2050

United States United Kingdom Eurozone Japan

FUTURE PROJECTIONS FOR DEPENDENCY RATIOS (%)

22

Emerging Economies – Growing the Next Gen?

Source: Northern Trust

Source: Northern Trust, United Nations Population Division. Data labels represent non-indexed population figures/estimates (millions). Dependency ratio defined as % of population older than 65 or younger than 15 divided by the remainder.

208

238

143

128

1311

1705

1376 1348

50

60

70

80

90

100

110

120

130

140

150

160

2015 2020 2025 2050 2015 2020 2025 2050 2015 2020 2025 2050 2015 2020 2025 2050

Brazil Russia India China

ESTIMATED CHANGES IN POPULATION (2015 = 100)

0

10

20

30

40

50

60

70

80

90

100

2015 2020 2025 2050 2015 2020 2025 2050 2015 2020 2025 2050 2015 2020 2025 2050

Brazil Russia India China

FUTURE PROJECTIONS FOR DEPENDENCY RATIOS (%)

23

Millennials in Focus – Planning for the Future

Source: Young Invincibles

24

Investment Market Expectations…

Source: QCR Anecdote File

25

Source: Bloomberg

The Long Downhill of Interest Rates

US Treasury Yields

26

“To let be, or not to let be, that is the question:

Whether ‘tis Nobler in the mind to suffer

The Slings and Arrows of outrageous future losses

Or to take Arms against a sea of low yields,

And by opposing end them: to sell, to hold

No more; and by a sell, to say we end

The Heart-ache, and the thousand Natural shocks

Of price declines that the portfolio is heir to?

“Tis a consummation Devoutly to be wished.”

(With major apologies to Shakespeare!)

Interest Rates Offer Little Return (with Risk?)…

Source: QCR Anecdote File

27

Source: Bloomberg

Time to Adjust Interest Rate Expectations?

US Treasury Yields

28

Is This Rational?

Source: QCR Anecdote File

29

Source: JPMorgan Asset Mgmt, Standard and Poor’s

Should Equity Markets Expect a Correction?

30

Source: JPMorgan Asset Mgmt, Standard and Poor’s

Should Equity Markets Expect a Correction?

OPERATING AS REPORTED 12-MTH EARNINGS PER SHARE

EARNINGS EARNINGS OPERATING AS REPORTED

QUARTER -END PRICE PER SHR PER SHR EARNINGS EARNINGS (ests are (ests are (ests are (ests are

bottom up) bottom up bottom up) bottom up)

ESTIMATES

12/31/2018 $39.07 $33.46 $146.57 $130.03

9/30/2018 $37.69 $33.50 $142.58 $127.98

6/30/2018 $36.01 $32.56 $138.60 $125.73

3/31/2018 $33.80 $30.51 $134.36 $122.47

12/31/2017 $35.08 $31.41 $129.74 $118.83

9/30/2017 $33.71 $31.25 $122.56 $111.58

6/30/2017 $31.77 $29.30 $117.54 $105.72

3/31/2017 2362.72 $29.18 $26.87 $111.47 $99.70

12/31/2016 (98.2%) 2238.83 $27.90 $24.16 $106.26 $94.55

ACTUAL

09/30/2016 2168.27 $28.69 $25.39 $101.42 $89.09

06/30/2016 2098.86 $25.70 $23.28 $98.17 $86.92

03/31/2016 2059.74 $23.97 $21.72 $98.61 $86.44

12/31/2015 2043.94 $23.06 $18.70 $100.45 $86.53

09/30/2015 1920.03 $25.44 $23.22 $104.14 $90.66

06/30/2015 2063.11 $26.14 $22.80 $108.30 $94.91

03/31/2015 2067.89 $25.81 $21.81 $111.50 $99.25

12/31/2014 2058.90 $26.75 $22.83 $113.01 $102.31

09/30/2014 1972.29 $29.60 $27.47 $114.51 $105.96

06/30/2014 1960.23 $29.34 $27.14 $111.83 $103.12

03/31/2014 1872.34 $27.32 $24.87 $108.85 $100.85

12/31/2013 1848.36 $28.25 $26.48 $107.30 $100.20

31

Source: JPMorgan Asset Mgmt

Thinking on Long-Term Trends…

32

Source: JPMorgan Asset Mgmt

Thinking on Long-Term Trends…

33

Disclosures

This presentation was prepared by Quad City Bank & Trust and is intended for your private use. This material reflects the current opinion of the Investment Group

based upon sources believed reliable but not guaranteed by it. Opinions expressed are subject to change without notice. This information does not constitute a

solicitation or an offer to buy or sell any security. is intended for your private use. This material reflects the current opinion of the Investment Group based upon sources

believed reliable but not guaranteed by it. Opinions expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell

any security.