Jeffrey Allen Rulis

Jeffrey Allen Rulis asked if recent loan payoffs were driven by credit-related balance reductions, sought clarification on the drivers of strong deposit growth, and questioned the outlook for net interest margin given deposit costs and potential rate cuts.

Answer

Bryan McDonald, President and Chief Executive Officer, explained that some Q4 payoffs are from adversely classified credits where customers decided to sell assets. He attributed deposit success to a combination of seasonal factors and effective execution in securing operating relationships. Don Hinson, Chief Financial Officer, indicated that while deposit costs might see further help from rate cuts, loan yields are expected to be relatively flat, leading to muted NIM improvement compared to the prior quarter.

Jeffrey Allen Rulis sought clarification on QCR Holdings' projected double-digit loan growth for 2026, specifically whether it represents gross production or is net of securitizations and construction loan sales. He also asked if the developing partnerships for securitizations would lead to a more continuous, less lumpy channel for LIHTC loan sales.

Answer

President and CEO Todd Gipple clarified that the projected 10-15% growth rate for 2026 refers to gross loan production, with more precise net figures to be provided in the January call. Regarding the partnerships, he stated that QCR Holdings is not interested in a 'forward flow' arrangement for real-time loan movement, preferring to retain flexibility to use securitizations and sales as strategic tools to manage the LIHTC business, capital, and concentrations, which will result in a more lumpy, rather than fluent, channel.