QCR (QCRH) - 2025 Q2 - Quarterly Results

QCR Holdings, Inc. Second Quarter 2025 Earnings Release Second Quarter 2025 Financial Highlights 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][46] - 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] Management Discussion and Analysis Management highlighted strong performance driven by NII growth, a surge in capital markets revenue, and excellent asset quality Net Interest Income and Margin 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] Noninterest Income 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] Noninterest Expense 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] - 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] Loan and Deposit Activity 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] - The company guides for gross loan growth of 8% to 10% in the second half of 2025[18] - Total deposits declined slightly by $19.0 million in Q2, but core deposits have grown by $311 million (9% annualized) year-to-date[20] Asset Quality 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] Capital and Shareholder Value 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][46] 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 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 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 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 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 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 This section provides conference call details, forward-looking statement disclaimers, and non-GAAP financial reconciliations GAAP to Non-GAAP Reconciliations 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] 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 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] - A wide range of factors could cause actual results to differ, including economic conditions, regulatory changes, and credit risk[32]