• Net Income: $114 million or $6.71 per diluted share for the full year 2024; adjusted net income of $119 million or $7.03 per diluted share.
• Adjusted ROAA: 1.35% for the full year 2024.
• Adjusted ROAE: 12.61% for the full year 2024.
• Total Loan Growth: 10% for the year, with a net growth of 4% after securitizations.
• Total Core Deposits Growth: $474 million or 8% for the year.
• Net Interest Income: Increased by $11 million, representing 5% growth for the year.
• Noninterest Income: $116 million for the year, with $71 million from capital markets revenue.
• Wealth Management Revenue Growth: 15% increase for the year.
• Core Noninterest Expenses: Decreased by more than 2% for the full year.
• Allowance for Credit Losses: 1.32% of total loans held for investment at the end of 2024.
• Provision for Credit Losses: $17 million for the year.
• Net Interest Margin (NIM): Expanded by 6 basis points in Q4.
• Noninterest Expense for Q4: $53.5 million.
• Tangible Common Equity (TCE) Ratio: Increased by 31 basis points to 9.55% at quarter end.
• Total Risk-Based Capital Ratio: Increased 23 basis points to 14.10% at quarter end.
• Common Equity Tier 1 Ratio: Increased by 24 basis points to 10.03% at quarter end.
• Tangible Book Value Per Share Growth: $1.21 increase, representing 10% annualized growth for the quarter.
• Effective Tax Rate: 9% for the quarter.

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

Release Date: January 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) delivered record net income of $114 million for the full year 2024, with adjusted net income reaching $119 million.
• The company experienced significant growth in net interest income, driven by strong margin expansion and robust loan growth.
• Wealth Management business saw exceptional growth, with assets under management increasing by $1 billion or 20% from the previous year.
• Total core deposits grew by $474 million or 8% for the year, enhancing liquidity and reducing reliance on higher-cost funding sources.
• The company successfully executed two additional LIHTC loan securitizations, enhancing balance sheet flexibility and capital markets revenue.

Negative Points

• Nonperforming assets increased by $11 million or 33% during the year, reflecting a normalizing credit environment.
• The expiration of certain interest rate caps is expected to reduce net interest margin by 4 basis points in the first quarter of 2025.
• Criticized loan balances increased modestly in the fourth quarter, indicating some credit quality challenges.
• The company recorded a $3 million loss on derivatives due to an increase in long-term interest rates.
• Higher incentive-based compensation due to strong performance increased noninterest expenses in the fourth quarter.

Q & A Highlights

Q: Can you provide guidance on the swap fee income for 2025 and its expected cadence? A: (Larry Helling, CEO) The pipeline remains robust, consistent with historical levels. However, higher long-term rates could slow things a bit. Historically, the first quarter is lighter than the rest of the year. We aim for consistency, but the pipeline is strong, and our fourth-quarter guidance is solid.

Q: How do you foresee the net interest margin (NIM) evolving, especially with the expiration of interest rate caps? A: (Todd Gipple, CFO) We expect a static to 5 basis point increase in Q1, despite a 4 basis point hit from expiring interest rate caps. We anticipate further NIM expansion from deposit cost management and loan repricing. The yield curve's slope will significantly impact future margins.

Q: How do you plan to fund the projected 8% to 10% loan growth for 2025? A: (Todd Gipple, CFO) We aim to fund growth primarily through core deposits, reducing our loan-to-deposit ratio to the low 90s. Our strong core deposit growth in 2024 supports this strategy, alongside securitizations that enhance liquidity and margin.

Q: What is the expected impact of potential Fed rate cuts on your NIM? A: (Todd Gipple, CFO) Each 25 basis point rate cut is expected to lift NIM by 2 to 3 basis points, translating to $1.5 million to $2 million in net interest income annually. We remain liability sensitive, benefiting from strong deposit betas.

Q: Can you discuss your capital strategy, including buybacks and M&A priorities? A: (Larry Helling, CEO) Given current uncertainties, we plan to retain capital and are not prioritizing buybacks or M&A. Our focus is on organic growth, which offers strong prospects compared to peers.

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