QCR Holdings ((QCRH)) has held its Q4 earnings call. Read on for the main highlights of the call.
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QCR Holdings recently held its earnings call, reflecting a generally positive sentiment. The company reported record net income and strong growth in both loans and deposits, alongside significant improvements in wealth management and capital markets revenue. However, the call also highlighted concerns about increasing nonperforming assets and the impact of interest rate cap expirations.
Record Net Income for 2024
QCR Holdings achieved a milestone with record net income of $114 million, equating to $6.71 per diluted share for the year 2024. When adjusted, net income was $119 million, or $7.03 per diluted share, marking a significant financial accomplishment for the company.
Strong Loan and Deposit Growth
The company experienced robust loan growth of 10%, largely fueled by low-income housing tax credit (LIHTC) lending and conventional commercial lending. Core deposits also saw an increase, rising by $474 million or 8% throughout the year.
Wealth Management Expansion
Assets under management grew by $1 billion, representing a 20% increase, which in turn resulted in a 15% boost in total wealth management revenue, underscoring the company’s successful expansion in this sector.
Capital Markets Revenue
QCR Holdings reported noninterest income of $116 million, with capital markets revenue contributing $71 million. Notably, a gain of $1.4 million was realized from the securitization of LIHTC loans.
Improvement in Tangible Book Value
The tangible book value per share saw a growth of $1.21, translating to a 10% annualized increase for the quarter, indicating healthy financial performance.
Increase in Nonperforming Assets
There was a rise in nonperforming assets by $11 million, or 33% for the year, with a slight uptick in the fourth quarter, attributed to three loans across distinct industries.
Interest Rate Cap Expiration
The expiration of interest rate caps is projected to decrease the net interest margin by 4 basis points in the first quarter of 2025, a factor that the company is cautiously monitoring.
Challenges in LIHTC Securitization Gains
The company faced challenges with LIHTC loan securitization, realizing a gain of $1.4 million, which fell short of the anticipated floor of $2 million, highlighting an area needing attention.
Forward-Looking Guidance for 2025
Looking ahead to 2025, QCR Holdings provided optimistic guidance, forecasting gross loan growth between 8% to 10% and net loan growth of 1% to 3% after accounting for planned loan securitizations. The company also aims to lower the loan-to-deposit ratio to the low 90s over the coming years. Additionally, they project their adjusted net interest margin to remain stable or increase slightly, despite anticipated reductions from expired interest rate caps. Capital markets revenue from swap fees is expected to range from $50 million to $60 million, while noninterest expenses are projected to be between $52 million and $55 million in Q1 2025, with continued investments in digital transformation.
In summary, QCR Holdings’ earnings call paints a picture of a company enjoying strong financial health with record income and growth in key areas. However, it also faces challenges such as rising nonperforming assets and potential margin impacts from interest rate cap expirations. The forward guidance is promising, indicating a focus on maintaining growth and managing expenses effectively.
