QCR Holdings, Inc. Announces Net Income of $26.7 Million for the First Quarter of 2024

First Quarter 2024 Highlights

• Net income of $26.7 million, or $1.58 per diluted share
• Capital Markets Revenue of $16.5 million
• Annualized core deposit growth, excluding brokered deposits, of 20.3%
• Increase in tangible book value (non-GAAP) per share of $1.12, or 10.2% annualized
• TCE/TA ratio (non-GAAP) improved by 19 basis points to 8.94%

MOLINE, Ill., April 23, 2024 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced quarterly net income of $26.7 million and diluted earnings per share (“EPS”) of $1.58 for the first quarter of 2024, compared to net income of $32.9 million and diluted EPS of $1.95 for the fourth quarter of 2023.

Adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) for the first quarter of 2024 were $26.9 million and $1.59, respectively. For the fourth quarter of 2023, adjusted net income (non-GAAP) was $33.3 million and adjusted diluted EPS (non-GAAP) was $1.97. For the first quarter of 2023, net income and diluted EPS were $27.2 million and $1.60, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $28.0 million and $1.65, respectively.

*Adjusted non-GAAP measurements of financial performance exclude non-core and/or nonrecurring income and expense items that management believes are not reflective of the anticipated future operation of the Company’s business. The Company believes these adjusted measurements provide a better comparison for analysis and may provide a better indicator of future performance. See GAAP to non-GAAP reconciliations.

“We delivered strong first quarter results, highlighted by significant fee income and continued growth in both our core deposit and loan balances,” said Larry J. Helling, Chief Executive Officer. “In addition, we continued to benefit from well-managed expenses, improved upon our already excellent asset quality and further strengthened our capital levels.”

“Our bankers grew core deposits significantly during the quarter, adding to our strong and diversified deposit franchise. As a result, our ratio of loans held for investment to deposits improved to 93.6%,” added Mr. Helling.

Net Interest Income of $54.7 million

Net interest income for the first quarter of 2024 totaled $54.7 million, a decrease of $1.0 million from the fourth quarter of 2023. Several non-client factors drove this decrease, including the maturity of $125 million of interest rates caps on the Company’s indexed deposits and the conversion of $65 million of subordinated debt to a higher floating rate, which contributed a combined $1.3 million of additional interest expense. In addition, loan discount accretion decreased by $310 thousand and there was one less day in the quarter which had an impact of approximately $600 thousand decrease in net interest income. However, the Company’s net interest income driven by core activity saw growth of approximately $1.2 million during the first quarter, led by continued expansion in loan and investment yields.

In the first quarter of 2024, net interest margin (“NIM”) was 2.82% and NIM on a tax-equivalent yield (“TEY”) basis (non-GAAP) was 3.25%, down from 2.90% and 3.32% in the prior quarter, respectively. Adjusted NIM TEY (non-GAAP) of 3.24%, was also down 5 basis points from 3.29% in the fourth quarter of 2023.

“Our adjusted NIM, on a tax equivalent yield basis, declined by 5 basis points from the fourth quarter of 2023 to 3.24% and was at the low end of our guidance range,” said Todd A. Gipple, President and Chief Financial Officer. “The decrease resulted primarily from non-client factors which collectively contributed to 7 basis points of NIM dilution. However, we were able to partially offset this non-client impact with core NIM expansion of 2 basis points. Notably, our core NIM expansion was less than expected due to additional shifts in our deposit composition. Looking ahead, considering the forward yield curve and assuming a static funding mix, we anticipate that the expansion in loan and investment yields will generally offset any further increase in our funding costs.”

Strong Noninterest Income Including $16.5 Million of Capital Markets Revenue

Noninterest income for the first quarter of 2024 totaled $26.9 million, down from the record results of $47.7 million in the fourth quarter of 2023. The Company generated $16.5 million of capital markets revenue in the quarter, as compared to the record $37.0 million in the prior quarter. Wealth management revenue was $4.3 million for the quarter, up 16% on an annualized basis from $4.1 million in the prior quarter.

“Our capital markets revenue was $16.5 million in the first quarter as our LIHTC lending and revenue from swap fees continues to benefit from the strong demand for affordable housing,” added Mr. Gipple. “Our LIHTC lending and capital markets revenue pipelines remain healthy.”

Well-Controlled Noninterest Expenses of $50.7 Million

Noninterest expense for the first quarter of 2024 totaled $50.7 million, compared to $60.9 million for the fourth quarter of 2023 and $48.8 million for the first quarter of 2023. The linked-quarter decrease was primarily due to lower incentive-based compensation related to our record fourth quarter and full year performance.

Exceptional Core Deposit Growth and Increased Liquidity

During the first quarter of 2024, the Company’s core deposits, which exclude brokered deposits, increased by $316.2 million, or 20.3% on an annualized basis, to $6.5 billion from $6.2 billion in the fourth quarter of 2023. “The exceptional deposit growth experienced in the first quarter reflects our commitment to expanding our market share with existing clients and establishing new relationships within the communities we serve,” added Mr. Helling.

Total uninsured and uncollateralized deposits remain very low at 20% of total deposits as of the end of the first quarter 2024, as compared to 18% as of the end of the fourth quarter of 2023. The Company increased its liquidity and maintained approximately $3.2 billion of available liquidity sources as of March 31, 2024, which includes $1.3 billion of immediately available liquidity.

Continued Strong Loan Growth

During the first quarter of 2024, the Company’s total loans and leases grew $104.9 million to $6.6 billion, or 6.4% on an annualized basis. During the quarter, the Company designated $275 million of low-income housing tax credit loans as loans held for sale in anticipation of the Company’s next loan securitization.

“Our ongoing strong performance validates our differentiated relationship-based community banking model as well as the underlying economic resiliency across our markets,” added Mr. Helling. “Given our current pipeline and the continued strength of our markets, we are maintaining our loan growth target for the full year 2024 of 8% to 10%, prior to the loan securitizations that we have planned for the year.”

Asset Quality Remains Excellent

Nonperforming assets (“NPAs”) totaled $31.3 million at the end of the first quarter, an 8.5% reduction from $34.2 million at the end of the fourth quarter of 2023. The ratio of NPAs to total assets also improved to 0.36% on March 31, 2024, compared to 0.40% on December 31, 2023. In addition, the Company’s criticized loans and classified loans to total loans and leases on March 31, 2024 improved to 2.75% and 1.07%, respectively, as compared to 2.99% and 1.08%, respectively as of December 31, 2023.

The Company recorded a total provision for credit losses of $3.0 million during the quarter and the allowance for credit losses to total loans held for investment was static quarter over quarter at 1.33%.

Continued Strong Capital Levels

As of March 31, 2024, the Company’s total risk-based capital ratio was 14.30%, the common equity tier 1 ratio was 9.91% and the tangible common equity to tangible assets ratio (“TCE”) (non-GAAP) was 8.94%. By comparison, these respective ratios were 14.29%, 9.67% and 8.75% as of December 31, 2023. The Company remains focused on growing capital and targeting TCE (non-GAAP) in the top quartile of the Company’s peer group.

The Company’s tangible book value per share (non-GAAP) increased by $1.12, or 10.2% annualized, during the fourth quarter. Accumulated other comprehensive income (“AOCI”) decreased $5.4 million during the quarter primarily due to a decrease in the value of the Company’s available for sale securities portfolio and certain derivatives resulting from the change in long-term interest rates. However, the combination of strong earnings and a modest dividend contributed to the improvement in tangible book value per share (non-GAAP).

Conference Call Details

The Company will host an earnings call/webcast tomorrow, April 24, 2024, at 10:00 a.m. Central Time. Dial-in information for the call is toll-free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be available for replay through May 1, 2024. The replay access information is 877-344-7529 (international 412-317-0088); access code 3766140. A webcast of the teleconference can be accessed on the Company’s News and Events page at . An archived version of the webcast will be available at the same location shortly after the live event has ended.

About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny and Springfield communities through its wholly owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018, and Guaranty Bank, also based in Springfield, Missouri, was acquired by the Company and merged with Springfield First Community Bank in 2022, with the combined entity operating under the Guaranty Bank name. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company offers equipment loans and leases to businesses through its wholly owned subsidiary, m2 Equipment Finance, LLC, based in Waukesha, Wisconsin, and also provides correspondent banking services. The Company has 36 locations in Iowa, Missouri, Wisconsin and Illinois. As of March 31, 2024, the Company had $8.6 billion in assets, $6.6 billion in loans and $6.8 billion in deposits. For additional information, please visit the Company’s website at .

Special Note Concerning Forward-Looking Statements. This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “bode”, “predict,” “suggest,” “project”, “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should,” “likely,” “might,” “potential,” “continue,” “annualized,” “target,” “outlook,” as well as the negative forms of those words, or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

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 forward-looking 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, acts of war or other threats thereof (including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board; (iv) changes in local, state and federal laws, regulations and governmental policies concerning the Company’s general business as a result of the upcoming 2024 presidential election or any changes in response to failures of other banks; (vi) increased competition in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies, and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or employees; (x) changes in consumer spending; (xi) unexpected outcomes of existing or new litigation involving the Company; (xii) the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; (xiii) fluctuations in the value of securities held in our securities portfolio; (xiv) concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients; (xv) the concentration of large deposits from certain clients who have balances above current Federal Deposit Insurance Corporation insurance limits and may withdraw deposits to diversity their exposure; (xvi) the level of non-performing assets on our balance sheets; (xvii) interruptions involving our information technology and communications systems or third-party servicers; (xviii) breaches or failures of our information security controls or cybersecurity-related incidents, and (xixi) the ability of the Company to manage the risks associated with the foregoing as well as anticipated. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

Contact:

Todd A. Gipple

President

Chief Financial Officer

(309) 743-7745