QCR (US:QCRH)2025-02-28 22:01Financial Performance - The Company reported net income of $113.9 million for the year ended December 31, 2024, compared to $113.6 million in 2023, with diluted EPS of $6.71 and $6.73 respectively [239]. - Adjusted net income (non-GAAP) for 2024 was $119.3 million, with adjusted diluted EPS of $7.03 [241]. - Adjusted net income for 2024 was $119.3 million, compared to $115.1 million in 2023, with adjusted EPS increasing to $7.09 from $6.88 [259]. - The provision for income taxes was $8.7 million for 2024, with an effective tax rate of 7.1%, down from $13.1 million and 10.3% in 2023 [309]. - The company reported net income of $113,850,000 for 2024, slightly up from $113,558,000 in 2023 [375]. Income and Expenses - Net interest income increased by $10.8 million, or 4.9%, in 2024, primarily due to higher loan and investment average balances [243]. - Noninterest income decreased by $17.2 million, or 12.9%, primarily due to lower capital markets revenue from swap fees [246]. - Noninterest expense decreased to $207.6 million in 2024 from $210.5 million in 2023, primarily due to lower salaries and benefits expenses [250]. - Total noninterest income decreased by 12.9% to $115.5 million in 2024 from $132.7 million in 2023 [277]. - Salaries and employee benefits decreased by 6.2% to $128.2 million in 2024 compared to $136.6 million in 2023 [295]. - Total noninterest expense decreased by 1.4% to $207.6 million in 2024 from $210.5 million in 2023 [295]. Loan and Deposit Growth - Loan growth was robust at 10% prior to loan securitizations, while deposit growth was strong at 8% [243]. - The Company grew loans and leases by 3.7% in 2024, or 9.6% excluding $386.5 million in loan securitizations [248]. - Total loans/leases grew by 3.7% in 2024, or 10.9% when excluding $386.5 million in loan securitizations [321]. - Deposits grew by $547.2 million, or 8.4%, during 2024, primarily due to an increase in interest-bearing deposits and time deposits [353]. Asset Management - Assets under management increased by $1.1 billion in 2024, with 469 new relationships adding $1.5 billion in new assets [248]. - The Company's total provision for credit losses was $17.1 million for 2024, an increase of $559 thousand from 2023, influenced by loan growth and increased net charge-offs [272]. - The total assets of the Company reached $8,837.4 million as of December 31, 2024 [269]. - The Company's securities portfolio increased by $194.9 million, or 19%, during 2024, while the net loan/lease portfolio increased by $238.3 million, or 3.7% [311]. Credit Quality - The Company’s allowance for credit losses (ACL) was deemed adequate as of December 31, 2024, but potential economic declines could increase losses [232]. - The allowance for credit losses (ACL) for loans/leases increased to $89.8 million as of December 31, 2024, from $87.2 million in 2023, reflecting a provision of $18.7 million in 2024 compared to $11.6 million in 2023 [331]. - Nonperforming assets (NPAs) rose to $45.6 million as of December 31, 2024, an increase of $11.4 million from $34.2 million in 2023, with the ratio of NPAs to total assets at 0.50% [348]. - Criticized loans decreased by 17% to $158.6 million in 2024, while classified loans increased by 26% to $84.9 million [338]. Interest Rate Risk - The Company’s net interest income is susceptible to interest rate risk, with significant increases in market rates potentially adversely affecting net interest income [404]. - As of December 31, 2024, the exposure of net interest income to a 300 basis point downward parallel shock is 4.8%, compared to 2.1% in 2023 [413]. - The established policy limit for a 200 basis point upward parallel shift in net interest income is a decline of 10%, with the actual exposure at (3.2)% for 2024 and (2.3)% for 2023 [413]. - The Company engages a national consulting firm to monitor and control its interest rate risk exposure, which is considered one of the most significant market risks [415]. Operational Efficiency - The efficiency ratio was 59.78% in 2024, slightly up from 59.52% in 2023 [259]. - The TCE/TA ratio improved to 9.55% in 2024 from 8.75% in 2023 [256]. - The average yield on interest-earning assets increased to 5.98% in 2024 from 5.56% in 2023 [261]. - The average balance of gross loans/leases receivable was $6,764.8 million in 2024, with an interest yield of 6.65% [269]. Internal Controls and Audit - The Company received an unqualified opinion on the effectiveness of its internal control over financial reporting as of December 31, 2024 [419]. - The audits were conducted in accordance with PCAOB standards to ensure financial statements are free of material misstatement [421]. - A critical audit matter was communicated that relates to accounts or disclosures material to the financial statements, involving complex judgments [422].