• Net Income: $26 million for the first quarter of 2025.
• Earnings Per Diluted Share: $1.52 reported, $1.53 adjusted.
• Net Interest Income: $60 million, a $1 million decrease from the previous quarter.
• Adjusted Net Interest Margin (NIM): Increased by 1 basis point on a tax equivalent basis.
• Annualized Loan Growth: 4% when adding back the impact of m2 equipment finance loans runoff.
• Core Deposit Growth: 20% annualized, totaling $332 million.
• Non-Interest Income: $17 million, including $7 million from capital markets revenue.
• Wealth Management Revenue Growth: 14% annualized for the quarter.
• Non-Interest Expenses: Decreased by $7 million or 13% to $47 million.
• Allowance for Credit Losses: 1.32% of total loans held for investment.
• Provision for Credit Losses: $4 million, a decrease of $915,000 from the prior quarter.
• Tangible Book Value Per Share Growth: Increased by $1.43, representing 11% annualized growth for the quarter.
• Effective Tax Rate: 1% for the quarter, down from 9% in the prior quarter.

• Warning! GuruFocus has detected 4 Warning Signs with QCRH.

Release Date: April 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• QCR Holdings Inc (NASDAQ:QCRH) experienced robust deposit growth with a 20% annualized increase, enhancing liquidity and reducing reliance on wholesale funding.
• The company reported strong performance in its wealth management business, with a 14% annualized revenue growth driven by new client accounts and assets under management.
• QCR Holdings Inc (NASDAQ:QCRH) maintained excellent asset quality, with non-performing assets remaining well below historic averages and a decrease in total criticized loan balances.
• The company's tangible book value per share increased significantly, growing by 11% annualized for the quarter.
• QCR Holdings Inc (NASDAQ:QCRH) demonstrated disciplined expense management, with non-interest expenses decreasing by 13% due to lower capital markets revenue and variable compensation.

Negative Points

• The company suspended its full-year loan growth guidance due to heightened economic uncertainty, projecting only a 4% to 6% annualized growth rate for the second quarter.
• Macroeconomic uncertainty affected the LIHTC lending business, causing project delays and resulting in lower capital markets revenue for the first quarter.
• Net interest income decreased by $1 million from the fourth quarter, although it grew slightly when adjusted for fewer days in the quarter.
• The provision for credit losses was $4 million for the quarter, a decrease from the prior quarter, but net charge-offs increased by $825,000.
• QCR Holdings Inc (NASDAQ:QCRH) faces challenges from potential tariff impacts on clients, although the direct exposure is limited to a few companies.

Q & A Highlights

Q: Can you explain the revised loan growth outlook for the second quarter and the impact of LIHTC projects on future growth? A: Larry Helling, CEO, explained that the first-quarter loan growth was modest due to elevated payoffs from clients selling real estate or businesses. The revised guidance of 4% to 6% for the second quarter reflects economic uncertainties and macroeconomic factors. While the LIHTC projects are expected to drive growth, the timing is uncertain due to ongoing economic conditions.

Q: With the prospect of lower growth, should we expect a lower provision for credit losses? A: Todd Gipple, President and CFO, indicated that a lower provision is likely, given the success in maintaining asset quality and the low level of criticized and classified loans. If loan growth remains muted, the provision expense might trend down.

Q: What is the outlook for non-capital markets revenue and the impact of fair value losses? A: Todd Gipple noted that non-capital markets revenue is expected to grow at 6% or better, with wealth management outperforming. The fair value loss was primarily due to unhedged caps, with a modest adjustment of $156,000 in Q1.

Q: How is the uncertainty in Washington affecting the LIHTC business, and what could spur a rebound? A: Larry Helling explained that uncertainty in Washington caused a pause in LIHTC projects, but the situation is improving as developers move forward with projects. The LIHTC pipeline is starting to gain momentum, and the business is expected to normalize, although the exact timing remains unclear.

Q: What are the expectations for securitizations if LIHTC business accelerates? A: Todd Gipple stated that if LIHTC production increases, the company plans to execute a large securitization, potentially in the $350 million range, to manage concentrations and enhance capital flexibility. The timing will depend on the pace of LIHTC growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.