QCR (US:QCRH)2023-03-01 22:06Financial 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].