QCR Holdings, Inc. (NASDAQ:QCRH) Q4 2023 Earnings Conference Call January 24, 2024 11:00 AM ET Company Participants Larry Helling - Chief Executive Officer Todd Gipple - President and Chief Financial Officer Conference Call Participants Nathan Race - Piper Sandler Damon DelMonte - KBW Brian Martin - Janney Montgomery Scott Jeff Rulis - DA Davidson Daniel Tamayo - Raymond James Nathan Race - Piper Sandler Operator Greetings and welcome to the QCR Holdings Incorporated Earnings Conference Call for the Fourth ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to________ Commission file number 0-22208 QCR HOLDINGS, INC. (Exact name of Registrant as specified in its charter) Delaware 42-1397595 (State o ...

QCR Holdings, Inc. (NASDAQ:QCRH) Q3 2023 Earnings Conference Call October 26, 2023 11:00 AM ET Company Participants Larry Helling - Chief Executive Officer Todd Gipple - President and Chief Financial Officer Conference Call Participants Damon DelMonte - KBW Nathan Race - Piper Sandler Brian Martin - Janney Daniel Tamayo - Raymond James Operator Greetings and welcome to the QCR Holdings Inc. Earnings Conference Call for the Third Quarter of 2023. Yesterday after market close the company distributed its third ...

)CR HOLDINGS, INC. A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forwardlooking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economies(including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics ...

Financial Performance - Net income for the three months ended June 30, 2023, was $28,425 thousand, a 86.1% increase compared to $15,242 thousand for the same period in 2022[13] - Basic earnings per common share increased to $1.70 for the three months ended June 30, 2023, compared to $0.88 for the same period in 2022, reflecting a significant growth of 93.2%[13] - Net income for the six months ended June 30, 2023, was $55,582,000, up from $38,866,000 in 2022, reflecting a 42.9% growth[16] - Basic earnings per common share increased to $3.32 in 2023 from $2.36 in 2022, a growth of 40.6%[15] - Comprehensive income for the six months ended June 30, 2023, was $58,571,000, compared to a loss of $12,760,000 in 2022[16] - Net income for the three months ended June 30, 2023, was $28,425,000, a 86.2% increase from $15,242,000 in the same period of 2022[81] Asset and Liability Growth - Total assets increased to $8,226,673 thousand as of June 30, 2023, up from $7,948,837 thousand at December 31, 2022, representing a growth of 3.5%[11] - The total liabilities increased to $7,403,984 thousand as of June 30, 2023, from $7,176,113 thousand at December 31, 2022, representing a growth of 3.2%[11] - Total deposits increased to $6,606,720 thousand as of June 30, 2023, compared to $5,984,217 thousand at December 31, 2022, an increase of 10.4%[11] - Cash and due from banks increased to $84,084 thousand as of June 30, 2023, compared to $59,723 thousand at December 31, 2022, a rise of 40.9%[11] Income and Expense Analysis - Total noninterest income rose to $32,520 thousand for the three months ended June 30, 2023, up from $22,782 thousand in the same period of 2022, marking a 42.7% increase[13] - Total noninterest expenses increased to $98,512,000 in 2023 from $92,573,000 in 2022, a rise of 6.4%[15] - Interest payments increased significantly to $78,966,000 in 2023 from $13,779,000 in 2022, reflecting a rise in interest expenses[20] - The company reported a total interest and dividend income of $98,377 thousand for the three months ended June 30, 2023, compared to $68,205 thousand in the same period of 2022, an increase of 44.2%[13] Credit Quality and Provisions - Provision for credit losses decreased to $3,606 thousand for the three months ended June 30, 2023, down from $11,200 thousand in the same period of 2022, indicating improved credit quality[13] - The company reported a provision for credit losses of $7,534,000 in 2023, slightly down from $8,284,000 in 2022, a decrease of 9.0%[15] - The allowance for credit losses decreased to $85.8 million as of June 30, 2023, from $87.7 million as of December 31, 2022[49] - The percentage of current loans in the total loan/lease portfolio was 99.30% as of June 30, 2023, compared to 99.71% as of December 31, 2022[51] Loan and Lease Portfolio - The loan/lease portfolio totaled $6.379 billion as of June 30, 2023, an increase from $6.139 billion as of December 31, 2022, representing a growth of approximately 3.9%[49] - The company held $1.308 billion in construction and land development loans as of June 30, 2023, up from $1.192 billion at the end of 2022, indicating a growth of approximately 9.7%[49] - The total for construction and land development loans was $16,507 thousand, with all loans classified as performing[66] - The total for CRE - owner occupied loans is $609,717 thousand, with a mix of performing and nonperforming loans[65] Capital and Ratios - The Company maintained a total risk-based capital ratio of 14.69% as of June 30, 2023, exceeding the minimum requirement of 8.00%[98] - Tier 1 risk-based capital ratio was reported at 10.38% as of June 30, 2023, above the required minimum of 6.00%[98] - The total risk-based capital ratio as of December 31, 2022, was 14.28%, exceeding the required minimum of 8.00%[99] Interest Rate Management - The Company has $300 million in deposits hedged against rising interest rates with interest rate caps, with an initial premium of $3.5 million paid[74] - The interest rate collar for loans has a notional amount of $50,000 thousand with a cap strike rate of 4.40% and a floor strike rate of 2.44%[74] - The total balance of interest rate swaps decreased to $159,172 thousand as of June 30, 2023, from $166,614 thousand as of December 31, 2022[73] Noninterest Income and Fees - Total noninterest income increased by 51.9% to $58.4 million for the first half of 2023 compared to $38.4 million in the same period of 2022, with significant contributions from capital markets revenue and trust fees[152] - Capital markets revenue surged by 72.9% to $22.5 million in the second quarter of 2023 compared to $13.0 million in the same period of 2022[152] - Trust fees increased by 14% in the second quarter of 2023 compared to the same period in 2022, reflecting an increase in assets under management by $569.9 million in the second quarter[152] Operational Efficiency - The efficiency ratio (non-GAAP) improved to 58.01% for the quarter ended June 30, 2023, from 59.02% in the previous quarter and 66.01% a year ago[124] - Noninterest expense (GAAP) was $49.7 million for the quarter ended June 30, 2023, compared to $48.8 million in the previous quarter and $54.2 million a year ago[124] Market and Economic Conditions - The Company aims to generate loan and lease growth of 9% per year, funded by core deposits, as part of its long-term strategic financial metrics[109] - The Company plans to continue growing quality loans and leases while expanding its private placement tax-exempt securities portfolio to maximize yield and minimize risks[142]

Financial Data and Key Metrics Changes - The company reported net income of $28.4 million or $1.69 per diluted share, with an annualized increase of 18.7% [26][70] - Return on Average Assets (ROAA) was 1.44% and Return on Average Equity (ROAE) was 13.97%, both metrics near the high end of the peer group [26] - Adjusted net interest income decreased by $2.4 million to $59.5 million, with an adjusted net interest margin (NIM) of 3.28%, down 19 basis points from the previous quarter [70][71] - Non-interest income increased by $6.7 million, or 26%, driven by capital markets revenue [47] Business Line Data and Key Metrics Changes - Total loans grew by 12.2% on an annualized basis, primarily due to the low-income housing tax credit (LIHTC) lending program [26][66] - Core deposits, excluding short-term broker deposits, increased by $339 million, representing a 23% annualized growth [44][64] - Capital markets revenue was $22.5 million, up from $17 million in the first quarter, benefiting from stabilization in supply chain and construction costs [47][72] Market Data and Key Metrics Changes - The company experienced a modest increase in non-performing assets (NPAs) to $26.1 million, or 32 basis points of total assets, which remains near historic lows [74] - The reserve for credit losses was maintained at 1.41% of total loans, indicating strong asset quality [37][51] Company Strategy and Development Direction - The company plans to increase the size of planned securitizations of LIHTC loans to achieve improved pricing and execution, expecting to close transactions early in the fourth quarter [41][125] - The focus remains on growing core deposits and managing liquidity effectively, with a target for capital ratios in the top quartile of the peer group [28][35] - The company aims to leverage its specialty finance business, particularly in LIHTC lending, which is viewed as countercyclical and resilient in economic downturns [67][126] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the economic resiliency of their markets, noting no significant signs of weakness [65] - The guidance for loan growth for the remainder of the year was increased to a range of 9% to 12% on an annualized basis [42] - The company anticipates continued pressure on margins due to a liability-sensitive balance sheet but expects this pressure to lessen in the coming quarters [71][110] Other Important Information - The effective tax rate for the quarter was 12.2%, up from 9.3% in the first quarter, primarily due to a higher mix of taxable income [52][77] - The company maintains a disciplined approach to expenses, reaffirming non-interest expense guidance for the third quarter to be in the range of $48 million to $51 million [50][120] Q&A Session Summary Question: What is the outlook on capital markets revenues? - Management expects capital markets revenue to be in the range of $45 million to $55 million over the next four quarters, with a strong pipeline [80][120] Question: How is the company managing its loan growth and credit quality? - The company is focused on maintaining strong reserves and managing credit quality, with a slight uptick in non-performing loans attributed to a few smaller companies under pressure [99][104] Question: What is the strategy for LIHTC loans and securitization? - The company plans to securitize approximately $300 million in LIHTC loans in the fourth quarter, with a focus on managing liquidity and capital effectively [125][145]

Financial Performance - Net income for Q1 2023 was $27,157 thousand, compared to $23,624 thousand in Q1 2022, marking an increase of 15.5%[15]. - Comprehensive income for Q1 2023 was $36,482,000, compared to a loss of $3,716,000 in Q1 2022[16]. - Total revenue for the three months ended March 31, 2023, was $120,059,000, an increase from $66,695,000 in the same period of 2022, representing an increase of approximately 80.4%[89]. - Net interest income for the three months ended March 31, 2023, was $56,810 thousand, up from $45,733 thousand in the same period of 2022, representing a year-over-year increase of 24.5%[15]. - Noninterest income for Q1 2023 was $25,842 thousand, an increase from $15,633 thousand in Q1 2022, reflecting a growth of 65.1%[15]. - Basic earnings per common share increased to $1.62 for Q1 2023, compared to $1.51 for Q1 2022, representing a growth of 7.3%[15]. - The company reported net income of $27.2 million and diluted EPS of $1.60 for Q1 2023, compared to $30.9 million and $1.81 in Q4 2022, and $23.6 million and $1.49 in Q1 2022[100]. - Adjusted net income (non-GAAP) for Q1 2023 was $28,024,000, down 10% from $31,129,000 in Q4 2022 but up 15% from $24,371,000 in Q1 2022[119]. Asset and Deposit Growth - Total assets increased to $8,036,904 thousand as of March 31, 2023, compared to $7,948,837 thousand as of December 31, 2022, reflecting a growth of 1.1%[12]. - Total deposits rose to $6,501,663 thousand as of March 31, 2023, from $5,984,217 thousand as of December 31, 2022, indicating a growth of 8.7%[12]. - The net increase in deposit accounts was $517,446,000 in Q1 2023, compared to a decrease of $83,083,000 in Q1 2022[18]. - The Company’s nonmaturity deposits totaled $5,288,242,000 as of March 31, 2023, reflecting a stable funding base[89]. - The Company added $497.5 million in short-term brokered deposits during the quarter to enhance liquidity and eliminate overnight borrowings from the FHLB[199]. Credit Quality and Allowance for Credit Losses - The allowance for credit losses decreased slightly to $86,573 thousand as of March 31, 2023, from $87,706 thousand as of December 31, 2022[12]. - The provision for credit losses was $3,928,000 in Q1 2023, compared to a benefit of $2,916,000 in Q1 2022[18]. - The company’s allowance for credit losses (ACL) on loans and leases was 1.43% of total gross loans/leases held for investment as of March 31, 2023, unchanged from December 31, 2022[135]. - The provision for credit losses totaled $2,458 thousand in Q1 2023, compared to a charge-off of $2,275 thousand[185]. - Nonperforming assets (NPAs) increased to $23.0 million as of March 31, 2023, up $14.1 million from December 31, 2022, and up $20.3 million from March 31, 2022[195]. Loan Portfolio and Performance - The company reported a total of $6,190,022 thousand in gross loans/leases receivable as of March 31, 2023, down from $6,138,871 thousand as of December 31, 2022[12]. - The total loan/lease portfolio amounted to $6,190.0 million, an increase from $6,138.9 million as of December 31, 2022, reflecting a growth of approximately 0.84%[46]. - The construction and land development loan portfolio totaled $1,208,185 thousand, with a 19% share of total loans/leases[181]. - Total loans/leases increased by 3.3% on an annualized basis in Q1 2023, reaching $6,190,022 thousand[177]. - The company aims to grow quality loans and leases while expanding its private placement tax-exempt securities portfolio to maximize yield[130]. Capital Adequacy and Regulatory Compliance - The Company and its subsidiary banks met all capital adequacy requirements as of March 31, 2023, ensuring compliance with regulatory standards[91]. - Total risk-based capital for the Company was $1,078,343 thousand with a ratio of 14.68% as of March 31, 2023, exceeding the required 8.00%[93]. - Tier 1 risk-based capital was reported at $754,221 thousand with a ratio of 10.27% as of March 31, 2023, also above the required 6.00%[93]. - Common equity Tier 1 capital stood at $705,587 thousand with a ratio of 9.60% as of March 31, 2023, surpassing the minimum requirement of 4.50%[93]. Interest Rate Management - The company has $300 million in deposits hedged against rising interest rates, with an initial premium of $3.5 million paid for interest rate caps[68]. - The fair value of interest rate caps as of March 31, 2023, is $6,714,000, a decrease from $8,327,000 as of December 31, 2022, indicating a decline of about 19.4%[68]. - The company has entered into interest rate swaps with a total notional amount of $300 million, with liabilities recorded at $(29,978,000) as of March 31, 2023, down from $(35,631,000) at the end of 2022, reflecting an improvement of approximately 15.7%[69]. - The company utilizes interest rate collars to manage future interest rate exposure on variable rate loans, with a notional amount of $50,000,000 and a fair value of $(57,000) as of March 31, 2023[69]. Noninterest Expense and Efficiency - Noninterest expense totaled $48.8 million in Q1 2023, an increase of $10.5 million, or 27%, compared to Q1 2022[113]. - The efficiency ratio (non-GAAP) improved to 59.02% in Q1 2023 from 57.50% in Q4 2022, but worsened from 62.45% in Q1 2022[119]. - Total noninterest expense increased by 27.3% year-over-year in Q1 2023, with salaries and employee benefits rising by 35.5% due to the GFED acquisition[155][156]. Market Presence and Strategic Initiatives - The acquisition of GFED, the holding company of GB, was completed on April 1, 2022, and the merged entity is now named Guaranty Bank[25]. - The combined bank from the merger is expected to enhance market presence and operational efficiency in the Springfield area[25]. - The company has not invested in private mortgage-backed securities or pooled trust preferred securities, focusing solely on government-sponsored or guaranteed securities[32].

QCR Holdings Inc. (NASDAQ:QCRH) Q1 2023 Results Conference Call April 27, 2023 11:00 AM ET Company Participants Larry Helling - CEO & Director Todd Gipple - President, COO, CFO & Director Conference Call Participants Damon DelMonte - KBW Nathan Race - Piper Sandler Brian Martin - Janney Montgomery Daniel Tamayo - Raymond James Jeff Rulis - D.A. Davidson Operator Greetings, and welcome to the QCR Holdings, Inc. Earnings Conference Call for the First Quarter of 2023. Yesterday, after market close, the company ...

Financial Performance - The Company reported net income of $99.1 million for the year ended December 31, 2022, with diluted EPS of $5.87, compared to net income of $98.9 million and diluted EPS of $6.20 in 2021[204]. - Adjusted net income (non-GAAP) for 2022 was $114.9 million, or $6.80 per diluted share, representing an increase of 14.8% and 8.5%, respectively, excluding one-time expenses related to the GFED acquisition[207]. - The Company reported net income of $99.1 million for 2022, compared to $98.9 million in 2021, indicating a slight increase of 0.2%[333]. Loan and Lease Growth - Loan and lease growth for the year was 14.6%, excluding PPP and GFED acquired loans[207]. - Loan and lease growth in 2022 was 31.2%, with organic growth (excluding PPP and GFED loans) at 14.6%[217]. - The Company aims to grow loans/leases by 9% per year, funded by core deposits[214]. Interest Income and Expense - Net interest income increased by $52.9 million, or 29.7%, in 2022, primarily due to an improved net interest margin in a rising interest rate environment[213]. - Interest income increased by $92.4 million, or 46%, compared to 2021, driven by higher yields and increased loan volumes[238]. - Interest expense rose by $39.5 million, or 180%, year-over-year, with the cost of funds increasing to 1.28% in 2022 from 0.59% in 2021[240]. Noninterest Income and Expense - Noninterest income decreased by $19.7 million, or 19.6%, primarily due to lower capital markets revenue from swap fee income[213]. - Total noninterest income decreased by 19.6% in 2022, totaling $80.7 million compared to $100.4 million in 2021[247]. - Total noninterest expense increased by 23.6% in 2022, amounting to $190.0 million, influenced by the GFED acquisition and one-time charges[263]. Credit Losses and Provisions - Provision for credit losses increased by $4.8 million in 2022, attributed to a CECL Day 2 provision for credit losses on acquired loans from the GFED transaction[213]. - The total provision for credit losses was $8.3 million for 2022, an increase of $4.8 million from 2021, primarily due to CECL Day 2 credit loss expense related to the GFED acquisition[243]. - The company recorded a pre-tax provision of $11.0 million for credit losses on loans in 2022 due to the CECL Day 2 provision related to the GFED acquisition[293]. Assets and Deposits - As of December 31, 2022, the Company had $7.9 billion in consolidated assets, including $6.1 billion in total loans/leases and $6.0 billion in deposits[187]. - Total deposits grew by $1.1 billion, or 22%, during 2022[279]. - The company had total uninsured deposits of $1.6 billion as of December 31, 2022, down from $1.9 billion in 2021[313]. Capital and Equity - Total stockholders' equity increased to $772.7 million in 2022, up from $677.0 million in 2021[279]. - The effective tax rate decreased to 12.7% in 2022 from 18.6% in 2021, with income tax expense at $14.5 million[277]. Risk Management and Lending Policies - The Company’s risk management includes assessing the ability and stability of current management, stable earnings, and sufficient cash flow for debt repayment[43][44]. - The Company’s lending policy specifies maximum loan-to-value limits for CRE loans, with a maximum advance rate of 80% for loans on improved property[51]. - The company has established policy limits for non-owner occupied CRE loans at 300% of total risk-based capital, with heightened risk management practices when outstanding balances increase by 50% or more over 36 months[55]. Market Conditions and Trends - The company’s net unrealized gains shifted from 7.17% in 2021 to a net unrealized loss of (11.26)% in 2022 due to rising interest rates[282]. - Fair value gain on derivatives increased by 1061.8% in 2022, driven by the rising interest rate environment[260].

QCR Holdings, Inc. (NASDAQ:QCRH) Q4 2022 Earnings Conference Call January 25, 2023 12:00 PM ET Company Participants Larry Helling - Chief Executive Officer Todd Gipple - President, Chief Operating Officer, and Chief Financial Officer Conference Call Participants Jeff Rulis - D.A. Davidson Damon DelMonte - KBW Daniel Tamayo - Raymond James Brian Martin - Janney Montgomery Nathan Race - Piper Sandler Operator Greetings, and welcome to the QCR Holdings, Inc. Earnings Conference Call for the Fourth Quarter of F ...