[Part I Financial Information](index=4&type=section&id=Part%20I%20FINANCIAL%20INFORMATION) [Item 1 Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements for QCR Holdings, Inc., covering balance sheets, income, equity, cash flows, and notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | **Assets** | | | | Total assets | $9,242,331 | $9,026,030 | | Net loans/leases receivable | $6,836,192 | $6,694,563 | | Total securities | $1,263,452 | $1,200,435 | | **Liabilities & Equity** | | | | Total deposits | $7,318,353 | $7,061,187 | | Total liabilities | $8,191,777 | $8,028,643 | | Total stockholders' equity | $1,050,554 | $997,387 | - Total assets increased by **$216.3 million** from December 31, 2024, to June 30, 2025, reflecting growth in net loans/leases and securities[12](index=12&type=chunk) [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Total interest and dividend income | $120,247 | $119,746 | | Total interest expense | $58,165 | $63,583 | | Net interest income | $62,082 | $56,163 | | Provision for credit losses | $4,043 | $5,496 | | Total noninterest income | $22,115 | $30,889 | | Total noninterest expense | $49,583 | $49,888 | | Net income | $29,019 | $29,114 | | Diluted earnings per common share | $1.71 | $1.72 | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Total interest and dividend income | $236,920 | $234,795 | | Total interest expense | $114,852 | $123,933 | | Net interest income | $122,068 | $110,862 | | Provision for credit losses | $8,277 | $8,465 | | Total noninterest income | $39,007 | $57,747 | | Total noninterest expense | $96,122 | $100,578 | | Net income | $54,816 | $55,840 | | Diluted earnings per common share | $3.22 | $3.30 | - Net interest income increased by **$5.9 million (10.5%)** for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to lower interest expense[14](index=14&type=chunk) - Net income for the three months ended June 30, 2025, was **$29.0 million**, a slight decrease from **$29.1 million** in the prior year, while diluted EPS decreased from **$1.72** to **$1.71**[14](index=14&type=chunk) [Consolidated Statements of Comprehensive Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net income | $29,019 | $29,114 | | Other comprehensive loss, net of tax | $(1,671) | $(368) | | Comprehensive income | $27,348 | $28,746 | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net income | $54,816 | $55,840 | | Other comprehensive loss, net of tax | $(1,267) | $(5,741) | | Comprehensive income | $53,549 | $50,099 | - Comprehensive income for the six months ended June 30, 2025, increased to **$53.5 million** from **$50.1 million** in the prior year, primarily due to a smaller other comprehensive loss[17](index=17&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Common stock | $16,935 | $16,882 | | Additional paid-in capital | $376,571 | $374,975 | | Retained earnings | $717,956 | $665,171 | | Accumulated other comprehensive loss | $(60,908) | $(59,641) | | Total stockholders' equity | $1,050,554 | $997,387 | - Total stockholders' equity increased by **$53.2 million** from December 31, 2024, to June 30, 2025, driven by net income and stock-based compensation, partially offset by dividends and other comprehensive loss[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $38,676 | $29,087 | | Net cash used in investing activities | $(220,055) | $(332,791) | | Net cash provided by financing activities | $194,416 | $298,754 | | Net increase (decrease) in cash | $13,037 | $(4,950) | | Cash and due from banks, ending | $104,769 | $92,173 | - Net cash provided by operating activities increased to **$38.7 million** for the first six months of 2025, up from **$29.1 million** in the prior year[19](index=19&type=chunk) - Net cash used in investing activities decreased significantly from **$(332.8) million** in 2024 to **$(220.1) million** in 2025, primarily due to lower net increase in loans/leases originated and held for investment[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1. Summary of Significant Accounting Policies](index=11&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) - The interim unaudited Consolidated Financial Statements are prepared in accordance with GAAP for interim financial reporting and reflect all necessary recurring adjustments[23](index=23&type=chunk) - The Company adopted ASU 2024-01 on January 1, 2025, which did not have a significant impact on financial statements. ASU 2023-09 and ASU 2024-03 are effective for future periods and are not expected to have a significant impact[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) [Note 2. Investment Securities](index=14&type=section&id=Note%202.%20Investment%20Securities) | Security Type | June 30, 2025 Fair Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :------------------------------------------ | :-------------------------------------- | :---------------------------------------- | | Securities HTM | $803,565 | $800,583 | | Securities AFS | $271,517 | $281,109 | | Securities trading | $82,900 | $83,529 | | **Total securities** | **$1,157,982** | **$1,165,221** | - As of June 30, 2025, the investment portfolio included 677 securities, with 574 in an unrealized loss position, totaling approximately **15.01%** of the total amortized cost. Management concluded these losses were temporary due to the changing interest rate environment[34](index=34&type=chunk) - Trading securities, consisting of retained beneficial interests from Freddie Mac securitizations, had a fair value of **$82.9 million** as of June 30, 2025, a slight decrease from **$83.5 million** at December 31, 2024[37](index=37&type=chunk) [Note 3. Loans/Leases Receivable](index=18&type=section&id=Note%203.%20Loans/Leases%20Receivable) | Loan/Lease Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | C&I - revolving | $380,029 | $387,991 | | C&I - other | $1,375,689 | $1,514,932 | | CRE - owner occupied | $593,675 | $605,993 | | CRE - non-owner occupied | $1,036,049 | $1,077,852 | | Construction and land development | $1,529,022 | $1,313,543 | | Multi-family | $1,251,763 | $1,132,110 | | Direct financing leases | $12,880 | $17,076 | | 1-4 family real estate | $592,253 | $588,179 | | Consumer | $153,564 | $146,728 | | **Gross loans/leases receivable** | **$6,924,924** | **$6,784,404** | | Less allowance for credit losses | $(88,732) | $(89,841) | | **Net loans/leases receivable** | **$6,836,192** | **$6,694,563** | - Gross loans/leases receivable increased by **$140.5 million** from December 31, 2024, to June 30, 2025, primarily driven by growth in construction and land development and multi-family loans[44](index=44&type=chunk) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Total NPLs | $42,489 | $44,350 | | NPLs as % of total loan/lease portfolio | 0.61% | 0.65% | [Note 4. Securitizations and Variable Interest Entities](index=28&type=section&id=Note%204.%20Securitizations%20and%20Variable%20Interest%20Entities) - The Company retained beneficial interests from Freddie Mac securitizations, classified as trading securities. Total assets related to these VIEs were **$82.9 million** at June 30, 2025, with a maximum exposure to loss of **$85.5 million**[65](index=65&type=chunk)[67](index=67&type=chunk) - The Company determined it was not the primary beneficiary of the VIEs as of June 30, 2025, as it lacked the power to direct the most significant activities[66](index=66&type=chunk) [Note 5. Derivatives and Hedging Activities](index=28&type=section&id=Note%205.%20Derivatives%20and%20Hedging%20Activities) | Derivative Type | June 30, 2025 Fair Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :------------------------------------ | :-------------------------------------- | :---------------------------------------- | | Hedged Derivatives Assets | $866 | $2,023 | | Unhedged Derivatives Assets | $184,116 | $184,878 | | Hedged Derivatives Liabilities | $(25,805) | $(31,063) | | Unhedged Derivatives Liabilities | $(183,700) | $(183,760) | | **Net Derivatives** | **$(24,523)** | **$(27,922)** | - The Company uses interest rate swaps, caps, collars, and swaptions to manage interest rate risk. Changes in fair value for cash flow hedges are recorded in AOCI, while fair value hedges impact interest income/expense[68](index=68&type=chunk)[69](index=69&type=chunk) - Unhedged derivatives, primarily back-to-back interest rate swaps, are marked-to-market with changes recognized in current earnings. The fair value of swaptions, used to hedge regulatory capital ratios, was **$416 thousand** at June 30, 2025[70](index=70&type=chunk) [Note 6. Income Taxes](index=33&type=section&id=Note%206.%20Income%20Taxes) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Federal and state income tax expense | $1,552 | $2,554 | | Effective tax rate | 5.1% | 8.1% | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Federal and state income tax expense | $1,860 | $3,726 | | Effective tax rate | 3.3% | 6.3% | - The effective tax rate for the first six months of 2025 was **3.3%**, down from **6.3%** in the prior year, primarily due to tax benefits from equity compensation, new state tax credit investments, and lower pre-tax income from capital markets revenue[75](index=75&type=chunk) - The Company adopted ASU 2023-02 on January 1, 2024, for tax credit investments, applying the proportional amortization method[76](index=76&type=chunk) [Note 7. Earnings Per Share](index=35&type=section&id=Note%207.%20Earnings%20Per%20Share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net income (in thousands) | $29,019 | $29,114 | | Basic EPS | $1.71 | $1.73 | | Diluted EPS | $1.71 | $1.72 | | Weighted average common shares outstanding | 16,928,542 | 16,814,814 | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net income (in thousands) | $54,816 | $55,840 | | Basic EPS | $3.24 | $3.32 | | Diluted EPS | $3.22 | $3.30 | | Weighted average common shares outstanding | 16,914,663 | 16,799,081 | [Note 8. Fair Value](index=35&type=section&id=Note%208.%20Fair%20Value) | Asset Type (June 30, 2025) | Fair Value (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :------------------------------------ | :------------------------ | :--------------------- | :--------------------- | :--------------------- | | Securities AFS | $271,517 | $0 | $271,517 | $0 | | Securities trading | $82,900 | $0 | $0 | $82,900 | | Derivatives (assets) | $184,982 | $0 | $184,982 | $0 | | Derivatives (liabilities) | $209,505 | $0 | $209,505 | $0 | | Loans/leases evaluated individually | $55,773 | $0 | $0 | $55,773 | | OREO | $67 | $0 | $0 | $67 | - Trading securities and individually evaluated loans/leases are classified as Level 3 in the fair value hierarchy, with fair values estimated using discounted cash flow methods or collateral appraisals[82](index=82&type=chunk)[83](index=83&type=chunk) - For Level 3 assets, appraisal adjustments for loans/leases ranged from **-10.00%** to **-30.00%**, and for OREO from **0.00%** to **-35.00%**[85](index=85&type=chunk) [Note 9. Business Segment Information](index=40&type=section&id=Note%209.%20Business%20Segment%20Information) - The Company's Commercial Banking business is divided into four subsidiary banks (QCBT, CRBT, CSB, and GB), each managed separately due to different market dynamics[88](index=88&type=chunk) - For the three months ended June 30, 2025, QCBT reported net income of **$8.2 million**, CRBT **$15.4 million**, CSB **$5.2 million**, and GB **$5.0 million**[89](index=89&type=chunk) - For the six months ended June 30, 2025, QCBT reported net income of **$16.8 million**, CRBT **$29.0 million**, CSB **$9.3 million**, and GB **$9.1 million**[90](index=90&type=chunk) [Note 10. Regulatory Capital Requirements](index=42&type=section&id=Note%2010.%20Regulatory%20Capital%20Requirements) - As of June 30, 2025, the Company and its subsidiary banks met all capital adequacy requirements and were categorized as 'well capitalized' under regulatory frameworks[92](index=92&type=chunk)[93](index=93&type=chunk) | Capital Ratio (Company) | June 30, 2025 Actual Ratio | Minimum for Capital Adequacy | Minimum for Well Capitalized | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | | Total risk-based capital | 14.26% | > 8.00% | > 10.00% | | Tier 1 risk-based capital | 10.96% | > 6.00% | > 8.00% | | Tier 1 leverage | 11.22% | > 4.00% | > 5.00% | | Common equity Tier 1 | 10.43% | > 4.50% | > 6.50% | [Note 11. Commitments](index=43&type=section&id=Note%2011.%20Commitments) - The Company has a remaining commitment of approximately **$17.9 million** for the construction of a new CSB facility in Ankeny, Iowa, anticipated to be completed in 2026[95](index=95&type=chunk) [Note 12. Subsequent Events](index=43&type=section&id=Note%2012.%20Subsequent%20Events) - On July 25, 2025, the Company issued notices to redeem all **$20.0 million** of its 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030 on September 30, 2025, and all **$50.0 million** of its 5.125% Fixed-to-Floating Subordinated Note due 2030 on September 15, 2025[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on Q2 and H1 2025 financial condition and results, covering executive overview, strategic metrics, reconciliations, and financial components [Introduction](index=45&type=section&id=Introduction) - This section reviews the financial condition and results of operations for QCR Holdings, Inc. and its subsidiaries as of and for the three and six months ending June 30, 2025[100](index=100&type=chunk) [General](index=45&type=section&id=General) - As of June 30, 2025, the Company had **$9.3 billion** in consolidated assets, including **$6.8 billion** in net loans/leases, and **$7.3 billion** in deposits[102](index=102&type=chunk) [Critical Accounting Policies and Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Critical%20Accounting%20Estimates) - Critical accounting policies and estimates include the Allowance for Credit Losses on Loans and Leases and Off-Balance Sheet Exposures, and Goodwill[104](index=104&type=chunk)[106](index=106&type=chunk) [Executive Overview](index=45&type=section&id=Executive%20Overview) | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :--------------------- | | Net income | $29,019 | $25,797 | $29,114 | | Diluted EPS | $1.71 | $1.52 | $1.72 | | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | | Net income | $54,816 | $55,840 | | Diluted EPS | $3.22 | $3.30 | - Adjusted net income (non-GAAP) for Q2 2025 was **$29.4 million**, with adjusted diluted EPS of **$1.73**[107](index=107&type=chunk)[109](index=109&type=chunk) - Net interest income in Q2 2025 increased **3% QoQ** and **11% YoY**, driven by higher average earning assets and investment yields, and a decrease in the cost of interest-bearing deposits[110](index=110&type=chunk) - Provision for credit losses in Q2 2025 decreased **$191 thousand QoQ** and **$1.5 million YoY**, primarily due to lower loan growth and a decrease in criticized loans[110](index=110&type=chunk)[111](index=111&type=chunk) - Noninterest income in Q2 2025 increased **31% QoQ** due to higher capital markets revenue from swap fees, but decreased **28% YoY** due to overall lower capital markets revenue[114](index=114&type=chunk) - Noninterest expense in Q2 2025 increased **7% QoQ** due to higher capital markets revenue's impact on variable compensation and professional fees for digital transformation, but decreased **1% YoY** due to lower capital markets revenue's impact on variable compensation[114](index=114&type=chunk) [Strategic Financial Metrics](index=49&type=section&id=Strategic%20Financial%20Metrics) - The Company's long-term strategic financial metrics include generating loan and lease growth of **>9% annually**, growing fee-based income by at least **6% per year**, and limiting annual operating expense growth to **<5% per year**[115](index=115&type=chunk) | Strategic Financial Metric | Target | Year to Date June 30, 2025 | Year to Date June 30, 2024 | | :------------------------------------ | :------- | :------------------------- | :------------------------- | | Loan and lease growth organically | > 9% annually | 6.0% | 12.4% | | Fee income growth | > 6% annually | (36.1)% | (13.5)% | | Noninterest expense growth | < 5% annually | (6.3)% | (4.4)% | [Strategic Developments](index=51&type=section&id=Strategic%20Developments) - Loans and leases grew **8.0% annualized** in Q2 2025, driven by traditional and LIHTC lending, even with the runoff of m2 loans and leases[116](index=116&type=chunk) - Correspondent banking remains a core business, serving 189 downstream banks with **$97.3 million** in noninterest-bearing deposits and **$933.5 million** in interest-bearing deposits as of June 30, 2025[116](index=116&type=chunk) - Capital markets revenue from swap fees totaled **$9.9 million** for Q2 2025 and **$16.4 million** for H1 2025, influenced by macroeconomic and governmental uncertainty, but demand for affordable housing remains strong[116](index=116&type=chunk) - Assets under wealth management increased by **$347.7 million QoQ** and **$372.3 million H1 2025 YoY**, contributing significantly to noninterest income[116](index=116&type=chunk) [GAAP to Non-GAAP Reconciliations](index=53&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) - Non-GAAP measures like TCE/TA ratio, adjusted net income, adjusted EPS, adjusted ROAA, NIM (TEY), and efficiency ratios are used to provide a clearer comparison by excluding non-core or non-recurring items[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :------------ | | TCE (non-GAAP, in thousands) | $902,221 | $873,752 | $784,851 | | TA (non-GAAP, in thousands) | $9,093,998 | $9,003,784 | $8,720,523 | | TCE/TA ratio (non-GAAP) | 9.92% | 9.70% | 9.00% | | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | Adjusted net income (non-GAAP, in thousands) | $29,416 | $25,953 | $29,259 | | Adjusted diluted EPS (non-GAAP) | $1.73 | $1.53 | $1.73 | | Adjusted ROAA (non-GAAP) | 1.29% | 1.15% | 1.33% | | NIM (TEY) (non-GAAP) | 3.46% | 3.42% | 3.27% | | Adjusted NIM (TEY) (non-GAAP) | 3.45% | 3.41% | 3.26% | | Adjusted efficiency ratio (non-GAAP) | 58.54% | 60.38% | 57.19% | [Net Interest Income - (Tax Equivalent Basis)](index=55&type=section&id=Net%20Interest%20Income%20-%20(Tax%20Equivalent%20Basis)) - Net interest income (GAAP) increased **3% YoY** for Q2 2025 and **10% YoY** for H1 2025. On a tax-equivalent basis (non-GAAP), it increased **11%** for both periods[127](index=127&type=chunk) - The increase in net interest income was primarily due to higher loan and investment growth, expanded loan and investment yields, partially offset by deposit growth with a lower cost of funds[127](index=127&type=chunk) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | Average Yield on Interest-Earning Assets | 5.74% | 5.66% | 5.99% | | Average Cost of Interest-Bearing Liabilities | 3.42% | 3.44% | 3.93% | | Net Interest Spread | 2.32% | 2.22% | 2.06% | | NIM (TEY) (Non-GAAP) | 3.46% | 3.42% | 3.27% | - The Company's cost of funds was **3.01%** for Q2 2025, a decrease from **3.43%** for Q2 2024, attributed to the Federal Reserve lowering interest rates in the second half of 2024[142](index=142&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) [Interest Income](index=59&type=section&id=Interest%20Income) - Interest income increased **$501 thousand YoY** for Q2 2025 and **$2.1 million YoY** for H1 2025. On a tax-equivalent basis, these increases were **$1.7 million** and **$4.4 million**, respectively[140](index=140&type=chunk) - These increases were primarily due to higher loan and investment average balances and margin expansion from higher loan yields[140](index=140&type=chunk) [Interest Expense](index=60&type=section&id=Interest%20Expense) - Interest expense decreased **$5.4 million YoY** for Q2 2025 and **$9.1 million YoY** for H1 2025, primarily due to a lower cost of funds[142](index=142&type=chunk) - The Company's cost of funds decreased from **3.43%** in Q2 2024 to **3.01%** in Q2 2025, and from **3.39%** in H1 2024 to **3.01%** in H1 2025, following Federal Reserve interest rate reductions[142](index=142&type=chunk) [Provision for Credit Losses](index=60&type=section&id=Provision%20for%20Credit%20Losses) | Provision Type | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | | Loans and leases | $4,667 | $4,343 | | Off-balance sheet exposures | $(624) | $1,153 | | Available for sale securities | $0 | $0 | | **Total provision for credit losses** | **$4,043** | **$5,496** | | Provision Type | H1 2025 (in thousands) | H1 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | | Loans and leases | $9,410 | $8,079 | | Off-balance sheet exposures | $(1,133) | $831 | | Available for sale securities | $0 | $(445) | | **Total provision for credit losses** | **$8,277** | **$8,465** | - The ACL for loans/leases held for investment was **1.28%** of total gross loans/leases at June 30, 2025, down from **1.33%** at June 30, 2024[146](index=146&type=chunk) [Noninterest Income](index=62&type=section&id=Noninterest%20Income) | Noninterest Income Category | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | | :------------------------------------ | :--------------------- | :--------------------- | :------- | | Trust fees | $3,395 | $3,103 | 9.4% | | Investment advisory and management fees | $1,254 | $1,214 | 3.3% | | Deposit service fees | $2,187 | $1,986 | 10.1% | | Capital markets revenue | $9,869 | $17,758 | (44.4)% | | Earnings on bank-owned life insurance | $998 | $2,964 | (66.3)% | | Correspondent banking fees | $699 | $510 | 37.1% | | Loan related fee income | $1,096 | $962 | 13.9% | | Fair value gain on derivatives and trading securities | $230 | $51 | 351.0% | | **Total noninterest income** | **$22,115** | **$30,889** | **(28.4)%** | - Total noninterest income decreased by **28.4% YoY** for Q2 2025 and **32.5% YoY** for H1 2025, primarily due to a significant decline in capital markets revenue[148](index=148&type=chunk) - Trust and investment advisory fees increased due to growth in assets under management and market performance. Correspondent banking fees increased due to a shift from non-interest bearing to interest-bearing accounts[148](index=148&type=chunk)[149](index=149&type=chunk)[156](index=156&type=chunk) [Noninterest Expense](index=66&type=section&id=Noninterest%20Expense) | Noninterest Expense Category | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | | :------------------------------------ | :--------------------- | :--------------------- | :------- | | Salaries and employee benefits | $28,474 | $31,079 | (8.4)% | | Occupancy and equipment expense | $6,837 | $6,377 | 7.2% | | Professional and data processing fees | $6,089 | $4,823 | 26.2% | | FDIC insurance, other insurance and regulatory fees | $1,960 | $1,854 | 5.7% | | Loan/lease expense | $407 | $151 | 169.5% | | **Total noninterest expense** | **$49,583** | **$49,888** | **(0.6)%** | - Total noninterest expense decreased slightly by **0.6% YoY** for Q2 2025 and **4.4% YoY** for H1 2025, primarily due to lower salaries and employee benefits from reduced variable compensation[160](index=160&type=chunk)[161](index=161&type=chunk) - Professional and data processing fees increased significantly (**26.2% YoY** for Q2 2025) due to higher CDARS/ICS expenses and costs related to the Company's digital transformation[163](index=163&type=chunk) [Income Taxes](index=69&type=section&id=Income%20Taxes) - Income tax expense for Q2 2025 was **$1.6 million**, down from **$2.6 million** in Q2 2024. For H1 2025, it was **$1.9 million**, down from **$3.7 million** in H1 2024[176](index=176&type=chunk) - The effective tax rate for H1 2025 was **3%**, down from **6%** in H1 2024, due to tax benefits from equity compensation, new state tax credit investments, and lower pre-tax income from capital markets revenue[176](index=176&type=chunk) [Financial Condition](index=69&type=section&id=Financial%20Condition) [Investment Securities](index=71&type=section&id=Investment%20Securities) - The Company's securities portfolio is managed to meet liquidity needs, prioritize interest rate risk, maximize return, and minimize credit risk, with a recent shift towards increasing tax-exempt municipal securities[180](index=180&type=chunk) | Security Type | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Municipal securities | $1,033,642 | $885,046 | | Residential mortgage-backed and related securities | $58,864 | $54,708 | | Trading securities | $82,900 | $22,362 | | **Total securities** | **$1,263,715** | **$1,033,402** | | Securities as a % of total assets | 13.67% | 11.65% | | Net unrealized losses as a % of Amortized Cost | (13.20)% | (7.17)% | | Duration (in years) | 5.6 | 6.2 | | Annual yield on investment securities (tax equivalent) | 5.46% | 5.08% | [Loans/Leases](index=71&type=section&id=Loans/Leases) - Total loans/leases grew **6.2% on an annualized basis** during H1 2025, even with the planned runoff of m2 Equipment Finance loans and leases[182](index=182&type=chunk) | Loan/Lease Type | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Construction and land development | $1,529,022 | $1,082,348 | | Multi-family | $1,251,763 | $1,477,483 | | C&I - other | $1,375,689 | $1,463,198 | | **Total loans/leases** | **$6,924,924** | **$6,854,386** | - Approximately **45%** of the CRE loan portfolio consists of LIHTC loans, all of which are performing and pass rated. Office exposure within the CRE portfolio is low at **3.2%** of total loans[183](index=183&type=chunk)[185](index=185&type=chunk) [Allowance for Credit Losses on Loans/Leases and Off-Balance Sheet Exposures](index=75&type=section&id=Allowance%20for%20Credit%20Losses%20on%20Loans/Leases%20and%20OBS%20Exposures) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | ACL for loans/leases, beginning balance | $89,841 | $87,200 | | Provision for loans/leases | $9,410 | $8,079 | | Charge-offs | $(11,434) | $(5,311) | | Recoveries | $915 | $617 | | **ACL for loans/leases, ending balance** | **$88,732** | **$87,706** | - The ACL for OBS exposures was **$7.1 million** at June 30, 2025, with a negative provision of **$624 thousand** in Q2 2025 due to a decrease in unfunded commitments[193](index=193&type=chunk) | Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | ACL for loans/leases / Total loans/leases held for investment | 1.28% | 1.33% | | ACL for loans/leases / NPLs | 208.84% | 260.77% | | Criticized Loans as a % of Total Loans/Leases | 2.16% | 2.41% | | Classified Loans as a % of Total Loans/Leases | 1.17% | 1.17% | [Nonperforming Assets](index=77&type=section&id=Nonperforming%20Assets) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | June 30, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :---------------------------- | :----------------------------- | | Nonaccrual loans/leases | $42,482 | $47,259 | $33,546 | | Total NPLs | $42,489 | $47,615 | $33,633 | | Total NPAs | $42,664 | $48,139 | $34,514 | | NPAs to total assets | 0.46% | 0.53% | 0.39% | - NPAs decreased by **$5.5 million** from March 31, 2025, to June 30, 2025, driven by payoffs and charge-offs, but increased by **$8.2 million** from June 30, 2024[200](index=200&type=chunk) - The majority of NPAs consist of nonaccrual loans/leases, for which specific allowances have been provided[201](index=201&type=chunk) [Deposits](index=78&type=section&id=Deposits) - Total deposits decreased by **$19.0 million** in Q2 2025, following robust growth in Q1 2025[204](index=204&type=chunk) | Deposit Type | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Noninterest bearing demand deposits | $952,032 | $956,445 | | Interest bearing demand deposits | $5,087,783 | $4,644,918 | | Time deposits | $974,341 | $859,593 | | Brokered deposits | $304,197 | $303,711 | | **Total deposits** | **$7,318,353** | **$6,764,667** | - Deposits in the ICS/CDARS program totaled **$2.4 billion**, representing **32.8%** of all deposits, as of June 30, 2025[205](index=205&type=chunk) [Borrowings](index=79&type=section&id=Borrowings) - Borrowings increased by **$79.4 million (18%)** in Q2 2025, primarily due to increased funding needs from strong loan and investment growth[179](index=179&type=chunk) | Borrowing Type | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Federal funds purchased | $1,350 | $1,600 | | Term FHLB advances | $145,383 | $135,000 | | Overnight FHLB advances | $80,000 | $350,000 | | Subordinated notes | $233,701 | $233,300 | | Junior subordinated debentures | $48,925 | $48,800 | | **Total borrowings** | **$509,359** | **$768,700** | - Wholesale funding decreased by **$114.1 million** during H1 2025. The Company aims to reduce reliance on wholesale funding by replacing it with core deposits[212](index=212&type=chunk)[214](index=214&type=chunk) [Stockholders' Equity](index=80&type=section&id=Stockholders'%20Equity) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Common stock | $16,935 | $16,825 | | Additional paid in capital | $376,571 | $372,378 | | Retained earnings | $717,956 | $608,816 | | AOCI | $(60,908) | $(61,700) | | **Total stockholders' equity** | **$1,050,554** | **$936,319** | | TCE / TA ratio (non-GAAP) | 9.92% | 9.00% | - Total stockholders' equity increased to **$1.05 billion** at June 30, 2025, from **$936.3 million** at June 30, 2024. The TCE/TA ratio improved to **9.92%** from **9.00%** over the same period[217](index=217&type=chunk) - No shares were repurchased under the Company's stock repurchase program during H1 2025, with **760,915 shares** remaining for repurchase[219](index=219&type=chunk) [Liquidity and Capital Resources](index=81&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company's cash and short-term assets for liquidity totaled **$250.5 million** at June 30, 2025, up from **$194.4 million** at June 30, 2024[220](index=220&type=chunk) - Subsidiary banks had **$1.2 billion** in available lines of credit with correspondent banks at June 30, 2025, and the Company maintained a **$60.0 million** secured revolving credit note, fully available[222](index=222&type=chunk)[224](index=224&type=chunk) - Investing activities used **$220.1 million** in H1 2025, a decrease from **$332.8 million** in H1 2024, primarily due to a lower net increase in loans/leases[226](index=226&type=chunk) - Financing activities provided **$194.4 million** in H1 2025, with net deposit increases of **$257.2 million**, partially offset by a **$60.0 million** net decrease in overnight FHLB advances[227](index=227&type=chunk) [Special Note Concerning Forward-Looking Statements](index=83&type=section&id=Special%20Note%20Concerning%20Forward-Looking%20Statements) - The document contains forward-looking statements regarding financial condition, results of operations, plans, and future performance, which are subject to inherent uncertainties[231](index=231&type=chunk) - Factors that could materially affect operations include economic conditions, regulatory changes, competition, technological changes (including AI), acquisitions, loss of key personnel, and market fluctuations[232](index=232&type=chunk)[236](index=236&type=chunk) [Item 3 Quantitative and Qualitative Disclosures About Market Risk](index=87&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the Company's market risk exposure, primarily interest rate risk, and management strategies, using a dynamic simulation model to quantify exposure and ensure policy compliance - The Company is subject to direct market risk from changes in interest rates, which can affect net interest income if interest-bearing liabilities and assets reprice at different rates[237](index=237&type=chunk) - Management uses a dynamic simulation model to quantify net interest income exposure to sustained interest rate changes, with policy limits of a **10% decline** for 200-basis point shifts and a **30% decline** for 300-basis point shocks[241](index=241&type=chunk)[244](index=244&type=chunk) | Interest Rate Scenario | Policy Limit | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :----------- | :------------ | :---------------- | | 300 basis point downward parallel shock | (30.0)% | 2.5% | 4.8% | | 200 basis point downward parallel shift | (10.0)% | 1.5% | 2.3% | | 200 basis point upward parallel shift | (10.0)% | (1.6)% | (3.2)% | | 300 basis point upward parallel shock | (30.0)% | (4.8)% | (9.2)% | - As of June 30, 2025, the simulation results were within board-established policy limits for all scenarios, indicating the Company's balance sheet is moderately liability sensitive[246](index=246&type=chunk)[247](index=247&type=chunk) [Item 4 Controls and Procedures](index=90&type=section&id=Item%204%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures as of June 30, 2025, with no significant changes to internal control - The Company's disclosure controls and procedures were deemed effective as of June 30, 2025, ensuring timely and accurate reporting of required information[251](index=251&type=chunk) - There have been no significant changes to the Company's internal control over financial reporting during the period covered by this report[252](index=252&type=chunk) [Part II Other Information](index=91&type=section&id=Part%20II%20OTHER%20INFORMATION) [Item 1 Legal Proceedings](index=91&type=section&id=Item%201%20Legal%20Proceedings) No material pending legal proceedings against the Company or its subsidiaries, beyond ordinary routine litigation - There are no material pending legal proceedings to which the Company or its subsidiaries are a party, beyond ordinary routine litigation[255](index=255&type=chunk) [Item 1A Risk Factors](index=91&type=section&id=Item%201A%20Risk%20Factors) No material changes to risk factors since those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred in the risk factors applicable to the Company since those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[256](index=256&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=91&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the Company's share repurchase program during the first six months of 2025 - No shares were repurchased under the Company's share repurchase program during the first six months of 2025[257](index=257&type=chunk) - The program, approved on May 19, 2022, authorizes the repurchase of up to **1,500,000 shares** of outstanding common stock and does not have an expiration date[257](index=257&type=chunk) [Item 3 Defaults Upon Senior Securities](index=91&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reported period - There were no defaults upon senior securities[257](index=257&type=chunk) [Item 4 Mine Safety Disclosures](index=91&type=section&id=Item%204%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[257](index=257&type=chunk) [Item 5 Other Information](index=91&type=section&id=Item%205%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[257](index=257&type=chunk) [Item 6 Exhibits](index=92&type=section&id=Item%206%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL interactive data files - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1, 32.2) and Inline XBRL interactive data files for the consolidated financial statements (101, 104)[259](index=259&type=chunk)

Financial Data and Key Metrics Changes - The company reported a 13% improvement in earnings per share (EPS) over the first quarter, driven by increased net interest income and disciplined expense management [3][19] - Net interest income for the quarter was $62 million, a $2 million increase from the first quarter, with a net interest margin (NIM) expansion of 4 basis points [19][20] - Adjusted return on average assets (ROAA) was 1.29%, contributing to the increase in EPS [6][24] - Total non-interest expenses were $49.6 million, an increase of $3 million, but down 9% on an annualized basis compared to the first half of 2024 [23][24] Business Line Data and Key Metrics Changes - Loan growth reached an annualized rate of 8%, with strong new loan production, despite a planned runoff of M2 equipment finance loans [3][26] - Capital markets revenue improved significantly, up more than 50% from the first quarter, totaling $10 million for the second quarter [4][21] - Wealth management revenue remained consistent at $5 million for the second quarter, reflecting an 8% growth compared to the same period in 2024 [22] Market Data and Key Metrics Changes - The company holds the number one market share in the Quad Cities and Cedar Rapids, Iowa markets, and is ranked sixth in Des Moines, Iowa, indicating strong competitive positioning [9][10] - Total deposits declined slightly by $19 million or 1% on an annualized basis during the second quarter, while average deposit balances rose by $72 million compared to the first quarter [27] Company Strategy and Development Direction - The company is focused on three primary lines of business: traditional banking, wealth management, and LITEQ lending, with significant opportunities identified in each [8][14] - A digital transformation initiative is underway to improve operational efficiency and enhance customer experience, expected to be completed by the first half of 2027 [11][12] - The company aims to strengthen its core deposit base as a top strategic initiative, which is expected to improve funding mix and profitability [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about solid loan growth for the remainder of the year, guiding for gross loan growth in the range of 8% to 10% in the second half [4][6] - The company anticipates capital markets revenue to normalize over the next four quarters, with a strong pipeline of transactions expected to close [5][6] - Management highlighted the importance of relationships in navigating economic uncertainties and emphasized the company's commitment to community engagement [7] Other Important Information - The company plans to call and replace $70 million of subordinated debt in September, which is expected to maintain current Tier 2 total risk-based capital levels [30][74] - The effective tax rate for the quarter was 5%, up from 1% in the prior quarter, primarily due to higher pretax income [31][32] Q&A Session All Questions and Answers Question: Can you talk about the margin and the outlook? - The company is guiding for a static to up four basis points in NIM for the third quarter, assuming no Fed rate cuts [34][35] Question: What is the appetite for buybacks going forward? - The company is building capital at a fast pace and will evaluate capital deployment options in the back half of the year [51][53] Question: What are the implications of the latest legislation for affordable housing? - Management does not anticipate immediate impacts but sees significant long-term implications for LITEQ allocations [56][58] Question: Can you provide insights on the credit side, particularly non-performing loans? - There is a high correlation between the decline in non-performing loans and net charge-offs, primarily from the M2 equipment finance segment [111][112]

Core Insights - QCR Holdings reported a revenue of $84.2 million for the quarter ended June 2025, reflecting a 3.3% decrease year-over-year, with EPS remaining unchanged at $1.73 compared to the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $84.65 million, resulting in a surprise of -0.54%, while the EPS exceeded expectations by 6.13% against a consensus estimate of $1.63 [1] Financial Performance Metrics - Efficiency Ratio (Non-GAAP) was reported at 58.9%, higher than the average estimate of 55.9% from three analysts [4] - Net interest margin (GAAP) stood at 3%, below the average estimate of 3.5% from three analysts [4] - Total earning assets averaged $8.38 billion, matching the two-analyst average estimate [4] - Net charge-offs as a percentage of average loans/leases were 0.1%, better than the estimated 0.2% by two analysts [4] - Total noninterest income was $22.12 million, lower than the average estimate of $23.17 million from three analysts [4] - Gains on sales of residential real estate loans reached $0.56 million, exceeding the average estimate of $0.39 million from three analysts [4] - Capital markets revenue was reported at $9.87 million, below the average estimate of $12.8 million from two analysts [4] - Deposit service fees totaled $2.19 million, slightly below the average estimate of $2.2 million from two analysts [4] - Net Interest Income was $62.08 million, slightly above the average estimate of $61.9 million from two analysts [4] - Net interest income - tax equivalent (non-GAAP) was reported at $72.17 million, exceeding the average estimate of $71.73 million from two analysts [4] Stock Performance - QCR Holdings shares have returned +12.1% over the past month, outperforming the Zacks S&P 500 composite's +5.9% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - QCR Holdings reported quarterly earnings of $1.73 per share, exceeding the Zacks Consensus Estimate of $1.63 per share, with a year-over-year comparison showing no change in earnings [1][2] Financial Performance - The company posted revenues of $84.2 million for the quarter ended June 2025, which was a miss against the Zacks Consensus Estimate by 0.54%, and a decrease from $87.05 million in the same quarter last year [2] - Over the last four quarters, QCR Holdings has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - QCR Holdings shares have declined approximately 6.6% since the beginning of the year, contrasting with the S&P 500's gain of 7.3% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.67 on revenues of $88.25 million, while the estimate for the current fiscal year is $6.63 on revenues of $343.55 million [7] - The trend of estimate revisions for QCR Holdings was unfavorable prior to the earnings release, which may impact future stock performance [6] Industry Context - The Banks - Midwest industry, to which QCR Holdings belongs, is currently ranked in the top 30% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

[QCR Holdings, Inc. Second Quarter 2025 Earnings Release](index=1&type=section&id=QCR%20Holdings%2C%20Inc.%20Second%20Quarter%202025%20Earnings%20Release) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) The company reported strong Q2 2025 results driven by net interest income growth, margin expansion, and disciplined expense management Q2 2025 Key Financial Results | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $29.0M | $25.8M | $29.1M | | Diluted EPS | $1.71 | $1.52 | $1.72 | | Adjusted Net Income | $29.4M | $26.0M | $29.3M | | Adjusted Diluted EPS | $1.73 | $1.53 | $1.73 | - Key performance drivers included a **4 basis point expansion** in Net Interest Margin (TEY) to **3.46%**, a **51% linked-quarter growth** in capital markets revenue, and a **13% annualized growth** in tangible book value per share to **$53.28**[8](index=8&type=chunk)[46](index=46&type=chunk) - The company's Tangible Common Equity to Tangible Assets (TCE/TA) ratio **improved by 22 basis points to 9.92%**, and nonperforming assets saw a significant **decline of $5.5 million, or 11%**[8](index=8&type=chunk) [Management Discussion and Analysis](index=1&type=section&id=Management%20Discussion%20and%20Analysis) Management highlighted strong performance driven by NII growth, a surge in capital markets revenue, and excellent asset quality [Net Interest Income and Margin](index=1&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income grew to $62.1 million, with the tax-equivalent net interest margin expanding by 4 basis points to 3.46% Net Interest Income & Margin Performance | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Interest Income | $62.1M | $60.0M | | Net Interest Margin (NIM) | 2.97% | 2.95% | | NIM (TEY Basis) | 3.46% | 3.42% | - The company anticipates continued margin expansion, guiding for Q3 2025 NIM TEY to range from **flat to an increase of four basis points**[9](index=9&type=chunk) [Noninterest Income](index=2&type=section&id=Noninterest%20Income) Noninterest income rose to $22.1 million, primarily driven by a 51% increase in capital markets revenue to $9.9 million Noninterest Income Breakdown | Component | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Total Noninterest Income | $22.1M | $16.9M | | Capital Markets Revenue | $9.9M | $6.5M | | Wealth Management Revenue | $4.6M | ~$4.9M | - The company reaffirms guidance for Capital Markets revenue to be **$50-$60 million** over the next four quarters and projects **$13-$16 million** for Q3 2025[13](index=13&type=chunk) [Noninterest Expense](index=2&type=section&id=Noninterest%20Expense) Noninterest expense totaled $49.6 million, below guidance, with an efficiency ratio of 58.9% - Noninterest expense increased by $3.1 million linked-quarter to **$49.6 million**, primarily due to higher variable compensation and digital transformation costs[15](index=15&type=chunk) - The company's efficiency ratio was **58.9%** in Q2 2025, with guidance for Q3 2025 noninterest expense set at **$52 to $55 million**[16](index=16&type=chunk) [Loan and Deposit Activity](index=2&type=section&id=Loan%20and%20Deposit%20Activity) Loan balances grew at an 8% annualized rate, while total deposits saw a slight decline after robust prior-quarter growth - Total loans held for investment grew by $102.6 million to $6.9 billion; adjusted for planned runoffs, annualized growth was **8%**[18](index=18&type=chunk) - The company guides for gross loan growth of **8% to 10%** in the second half of 2025[18](index=18&type=chunk) - Total deposits declined slightly by $19.0 million in Q2, but core deposits have grown by **$311 million (9% annualized)** year-to-date[20](index=20&type=chunk) [Asset Quality](index=3&type=section&id=Asset%20Quality) Asset quality remained strong, with nonperforming assets declining by 11% and the NPA to total assets ratio improving to 0.46% Asset Quality Metrics | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Nonperforming Assets (NPAs) | $42.7M | $48.2M | | NPAs to Total Assets | 0.46% | 0.53% | | Criticized Loans to Total Loans | 2.16% | 2.06% | | Provision for Credit Losses | $4.0M | $4.2M | | ACL to Total Loans | 1.28% | 1.32% | - Net charge-offs were **$6.3 million**, an increase of $2.1 million from the prior quarter, primarily due to charging off previously fully reserved loans[24](index=24&type=chunk) [Capital and Shareholder Value](index=3&type=section&id=Capital%20and%20Shareholder%20Value) The company demonstrated strong capital accretion, with a 13% annualized increase in tangible book value per share - Tangible book value per share grew by $1.64 to **$53.28**, a **13% annualized increase**[26](index=26&type=chunk)[46](index=46&type=chunk) Key Capital Ratios | Ratio | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | TCE / TA Ratio | 9.92% | 9.70% | | Total Risk-Based Capital | 14.26% | 14.18% | | Common Equity Tier 1 | 10.43% | 10.27% | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) The statements detail a financial position with $9.2 billion in assets, $6.9 billion in loans, and $7.3 billion in deposits [Condensed Balance Sheet](index=5&type=section&id=Condensed%20Balance%20Sheet) As of June 30, 2025, total assets grew to $9.24 billion, with stable deposits and an increase in stockholders' equity Key Balance Sheet Items (in billions) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $9.24 | $9.15 | | Loans/Leases Held for Investment | $6.92 | $6.82 | | Total Deposits | $7.32 | $7.34 | | Total Stockholders' Equity | $1.05 | $1.02 | [Income Statement](index=7&type=section&id=Income%20Statement) For Q2 2025, the company generated $62.1 million in net interest income, resulting in a net income of $29.0 million Q2 2025 Income Statement Summary (in millions) | Account | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $62.1 | $60.0 | $56.2 | | Provision for Credit Losses | $4.0 | $4.2 | $5.5 | | Total Noninterest Income | $22.1 | $16.9 | $30.9 | | Total Noninterest Expense | $49.6 | $46.5 | $49.9 | | Net Income | $29.0 | $25.8 | $29.1 | [Key Performance and Capital Ratios](index=10&type=section&id=Key%20Performance%20and%20Capital%20Ratios) Key ratios for Q2 2025 showed solid profitability and efficiency, with an ROAA of 1.27% and an efficiency ratio of 58.89% Q2 2025 Key Ratios | Ratio | Q2 2025 | | :--- | :--- | | Return on Average Assets (ROAA) | 1.27% | | Return on Average Equity (ROAE) | 11.15% | | Net Interest Margin (TEY) | 3.46% | | Efficiency Ratio | 58.89% | | Total Risk-Based Capital Ratio | 14.26% | [Asset Quality Analysis](index=12&type=section&id=Asset%20Quality%20Analysis) Asset quality metrics indicated a healthy portfolio, with nonperforming assets at 0.46% of total assets Asset Quality Metrics (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Total Nonperforming Assets | $42.7M | | Nonperforming Assets / Total Assets | 0.46% | | ACL / Total Loans Held for Investment | 1.28% | | ACL / Nonperforming Loans | 208.84% | | Total Criticized Loans | $149.7M | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section provides conference call details, forward-looking statement disclaimers, and non-GAAP financial reconciliations [GAAP to Non-GAAP Reconciliations](index=15&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) The report reconciles GAAP measures to non-GAAP metrics like adjusted net income to clarify core operational performance - The company provides non-GAAP reconciliations to exclude non-core items and provide what management believes is a more realistic view of future performance[65](index=65&type=chunk) Key Q2 2025 GAAP vs. Non-GAAP Metrics | Metric | GAAP | Non-GAAP (Adjusted) | | :--- | :--- | :--- | | Net Income | $29.0M | $29.4M | | Diluted EPS | $1.71 | $1.73 | | ROAA (annualized) | 1.27% | 1.29% | | Net Interest Margin (TEY) | 3.46% | 3.45% (excl. acq. accretion) | [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The release contains forward-looking statements subject to risks and uncertainties that could cause results to differ materially - The document includes forward-looking statements identifiable by words like **"believe," "expect," "anticipate," and "guidance"**[31](index=31&type=chunk) - A wide range of factors could cause actual results to differ, including **economic conditions, regulatory changes, and credit risk**[32](index=32&type=chunk)

Financial Performance - The company reported a net income of $29.0 million and diluted earnings per share (EPS) of $1.71 for Q2 2025, an increase from $25.8 million and $1.52 in Q1 2025 [1][21] - Adjusted net income for Q2 2025 was $29.4 million with an adjusted diluted EPS of $1.73, compared to $26.0 million and $1.53 in Q1 2025 [2][21] - The net interest income for Q2 2025 was $62.1 million, reflecting a $2.1 million increase or 14% annualized from Q1 2025 [5][21] Net Interest Income and Margin - The net interest margin (NIM) for Q2 2025 was 2.97%, with a tax-equivalent yield (TEY) of 3.46%, up from 2.95% and 3.42% in Q1 2025 [5][6] - The company anticipates continued margin expansion, guiding for a potential increase in Q3 NIM TEY by up to four basis points [6] Noninterest Income - Noninterest income for Q2 2025 was $22.1 million, up from $16.9 million in Q1 2025, driven by a 51% increase in capital markets revenue [8][10] - Wealth management revenue totaled $4.6 million, showing an 8% increase compared to Q2 2024 [8] Loan Growth - Total loans and leases held for investment grew by $102.6 million to $6.9 billion in Q2 2025, representing an 8% annualized growth rate [15] - The company expects gross loan growth in the range of 8% to 10% for the second half of the year [15] Deposit and Asset Quality - Total deposits slightly declined by $19.0 million or 1% annualized from Q1 2025, while average deposit balances increased by $72.0 million [17] - The nonperforming assets (NPAs) to total assets ratio was 0.46%, down seven basis points from the prior quarter, with NPAs totaling $42.7 million [19] Capital and Book Value - Tangible book value per share increased by $1.64 or 13% annualized during Q2 2025 [24] - The tangible common equity to tangible assets (TCE/TA) ratio improved by 22 basis points to 9.92% [25]

Core Viewpoint - The market anticipates a year-over-year decline in QCR Holdings' earnings due to lower revenues, with a focus on how actual results will compare to estimates [1][3]. Earnings Expectations - QCR Holdings is expected to report quarterly earnings of $1.63 per share, reflecting a -5.8% change year-over-year [3]. - Revenues are projected to be $84.65 million, down 2.8% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analysts' assessments [4]. - A positive Earnings ESP of +2.45% suggests recent bullish sentiment among analysts, although the stock holds a Zacks Rank of 4, complicating predictions of an earnings beat [12]. Earnings Surprise History - In the last reported quarter, QCR Holdings had an earnings surprise of +0.66%, reporting $1.53 per share against an expectation of $1.52 [13]. - The company has beaten consensus EPS estimates in all of the last four quarters [14]. Comparison with Industry Peers - Old National Bancorp, another player in the Zacks Banks - Midwest industry, is expected to post earnings of $0.51 per share, indicating a +10.9% year-over-year change, with revenues expected to rise by 29.3% [18][19]. - Old National Bancorp has a positive Earnings ESP of +5.06% and a Zacks Rank of 2, suggesting a higher likelihood of beating consensus EPS estimates [19][20].

Core Viewpoint - QCR Holdings, Inc. is set to release its second quarter financial results on July 23, 2025, followed by a conference call on July 24, 2025, to discuss these results [1]. Financial Results Announcement - The financial results for the second quarter ended June 30, 2025, will be released after market close on July 23, 2025 [1]. - A conference call and webcast will take place on July 24, 2025, at 10:00 a.m. Central Time to discuss the financial results [1]. Teleconference Details - Dial-in information for the teleconference includes 888-346-9286 (international 412-317-5253) [2]. - The event will be archived and available for replay until July 31, 2025, with replay access information being 877-344-7529 (international 412-317-0088); access code 8414968 [2]. Webcast Information - A webcast of the teleconference can be accessed on the Company's News and Events page at www.qcrh.com [3]. - An archived version of the webcast will be available shortly after the live event [3]. Company Overview - QCR Holdings, Inc. is a multi-bank holding company headquartered in Moline, Illinois, serving various communities through its subsidiary banks [4]. - The Company provides full-service commercial and consumer banking, as well as trust and wealth management services [4]. - As of March 31, 2025, QCR Holdings had $9.2 billion in assets, $6.8 billion in loans, and $7.3 billion in deposits [4].

Financial Performance - Net interest income for the three months ended March 31, 2025, was $59,986 thousand, an increase of 9.4% compared to $54,699 thousand for the same period in 2024[14]. - Net income for the three months ended March 31, 2025, was $25,797 thousand, a decrease of 3.5% from $26,726 thousand in the same period of 2024[14]. - Basic earnings per common share for Q1 2025 was $1.53, slightly down from $1.59 in Q1 2024[14]. - The company reported a comprehensive income of $26,201 thousand for Q1 2025, compared to $21,353 thousand in Q1 2024, indicating an increase of 22.0%[16]. - The effective tax rate for Q1 2025 was exceptionally low at 1%, down from 4% in Q1 2024, primarily due to tax benefits from equity compensation and lower pre-tax income[73]. - Tax credits recognized for Q1 2025 amounted to $2,707,000, compared to $2,204,000 in Q1 2024, reflecting an increase in tax credit programs[75]. Asset and Deposit Growth - Total assets increased to $9,152,779 thousand as of March 31, 2025, up from $9,026,030 thousand at December 31, 2024, representing a growth of 1.4%[12]. - Total deposits increased to $7,337,390 thousand as of March 31, 2025, compared to $7,061,187 thousand at December 31, 2024, reflecting a growth of 3.9%[12]. - The balance of retained earnings increased to $689,953,000 as of March 31, 2025, up from $580,710,000 a year earlier, representing an increase of 18.8%[18]. - The Company had total deposits of $7.34 billion as of March 31, 2025, with interest-bearing demand deposits making up 70% of the total[197]. - The Company’s total wholesale funding decreased by $196 million during the first three months of 2025, attributed to strong deposit growth[205]. Credit Quality and Loss Provisions - Provision for credit losses rose to $4,234 thousand for Q1 2025, compared to $2,969 thousand in Q1 2024, indicating a 42.6% increase[14]. - The allowance for credit losses on loans/leases increased to $90,354 thousand as of March 31, 2025, compared to $89,841 thousand at December 31, 2024[12]. - The percentage of nonaccrual loans/leases in the total loan/lease portfolio was 0.69% as of March 31, 2025, compared to 0.59% as of December 31, 2024, indicating a slight increase in nonperforming assets[46]. - Total nonperforming loans (NPLs) amounted to $47,615 thousand, representing a 7% increase from the previous period[47]. - The total provision for credit losses increased to $4.2 million in Q1 2025 from $3.0 million in Q1 2024, primarily due to loan growth and increased net charge-offs[137]. Investment and Securities - The fair value of available-for-sale (AFS) securities was $264.241 million as of March 31, 2025, with unrealized losses totaling $53.672 million[32]. - The fair value of trading securities was $82.4 million as of March 31, 2025, down from $83.5 million at the end of 2024, with a net loss of $809 thousand for the first quarter of 2025[38]. - The total fair value of asset-backed securities held by the company was $264.2 million as of March 31, 2025, compared to $317.8 million, indicating a decrease of approximately 16.9%[39]. Operational Efficiency - Total noninterest expense decreased to $46,539 thousand in Q1 2025, down 8.5% from $50,690 thousand in Q1 2024[14]. - The efficiency ratio was not specified, but management aims to limit annual operating expense growth to 5%[110]. - The Company believes it met all capital adequacy requirements as of March 31, 2025, and December 31, 2024, ensuring compliance with regulatory standards[89]. Loan Portfolio and Growth - As of March 31, 2025, the company's total loan/lease portfolio amounted to $6,823.2 million, an increase from $6,784.4 million as of December 31, 2024, reflecting a growth of approximately 0.57%[44]. - The construction and land development loans increased to $1,419.2 million as of March 31, 2025, from $1,313.5 million as of December 31, 2024, marking a growth of approximately 8.1%[44]. - Total performing loans across all categories reached $284,983 thousand in 2025, up from $270,210 thousand in 2024, marking a growth of 5.15%[59]. Risk Management - The Company actively monitors interest rate risk and adjusts the asset/liability position to enhance net interest margins[231][233]. - A short-term earnings at risk summary is used to quantify interest rate risk exposure, simulating various interest rate scenarios over a five-year horizon[234]. - The Company assesses credit risk by monitoring publicly available credit ratings and only enters into derivatives with highly rated counterparties[72]. Capital and Regulatory Compliance - As of March 31, 2025, the Company had total risk-based capital of $1,286,554 thousand, with a ratio of 14.18%, exceeding the well-capitalized requirement of 8.00%[90]. - The Common Equity Tier 1 ratio as of March 31, 2025, was 10.27%, exceeding the required 4.50%[90]. - The Company secured additional capital through various sources, including common and preferred stock, trust preferred securities, and subordinated notes[221].

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income and adjusted net income of $26 million, with reported earnings per diluted share at $1.52 and $1.53 on an adjusted basis [7][29] - The adjusted net interest margin (NIM) on a tax-equivalent basis increased by one basis point compared to the previous quarter [7][31] - Non-interest income for the first quarter was $17 million, including $7 million from capital markets revenue [10][34] - The effective tax rate for the quarter was 1%, down from 9% in the prior quarter [53] Business Line Data and Key Metrics Changes - The wealth management business generated $5 million in revenue for Q1, reflecting a 14% annualized increase from the prior quarter [35][36] - Non-interest expenses decreased by $7 million or 13% to $47 million, well below the guidance range of $52 to $55 million [13][37] - Total loans held for investment grew by $39 million or 2% annualized, with loan growth funded by a robust expansion in core deposits of $332 million [40][43] Market Data and Key Metrics Changes - Total core deposit growth was robust at 20% annualized, enhancing liquidity and reducing reliance on wholesale funding [10][43] - The company experienced strong deposit betas, actively managing deposit costs as the Federal Reserve reduced interest rates [32][33] Company Strategy and Development Direction - The company is focused on the growth potential of its wealth management business, expecting continued long-term growth fueled by strategic investments [12][36] - The long-term securitization strategy supports the ongoing success of the LIHTC business and drives substantial capital market revenue [42][110] - The company aims to maintain a CET1 ratio above 10% while optimizing the mix and quality of its capital as it grows [52][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term resilience of markets and the financial health of clients despite macroeconomic uncertainties [16][23] - The company suspended its full-year loan growth guidance due to heightened uncertainty, providing a revised guidance of 4% to 6% for Q2 2025 [9][61] - Management noted that the LIHTC lending business is beginning to normalize as clients adjust to the current environment [11][82] Other Important Information - The company’s allowance for credit losses as a percent of total loans held for investment stood at 1.32% at the end of Q1 [15][48] - The tangible common equity to tangible assets ratio increased by 15 basis points to 9.70% at quarter-end, driven by strong earnings [50] Q&A Session Summary Question: Loan growth outlook and guidance reconciliation - Management acknowledged modest loan growth in Q1 due to elevated payoffs but expressed confidence in achieving 4% to 6% growth in Q2 [61][62] Question: Provision for credit losses expectations - Management indicated that a lower provision is likely if loan growth remains muted, aligning with the lower guidance [63][64] Question: Fixed-rate loans repricing cadence - Management confirmed success in rolling up rates on new fundings, with a weighted average rate of 7.21% for the quarter [66][67] Question: Expectations for non-capital markets revenue - Management expects non-interest income to grow at 6% or better, with strong performance in wealth management [76][77] Question: LIHTC business and project timing - Management noted that uncertainty in Washington had previously slowed LIHTC projects, but activity is starting to pick up again [100][101] Question: Securitization plans and timing - Management indicated that the timing of the next securitization will depend on the pace of LIHTC growth, with a potential large securitization planned [110][112] Question: Credit quality and tariff exposure - Management conducted a credit analysis and identified minimal high-risk exposure related to tariffs, with most clients having shifted imports away from China [126][130]