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QH

QCR HOLDINGS INC (QCRH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was resilient on core banking metrics: adjusted diluted EPS of $1.53 and adjusted NIM (TEY) expanded to 3.41%, while expenses flexed materially below plan; EPS slightly beat Street, but revenue missed given lighter capital markets activity .
  • Noninterest income fell sharply to $16.9M as LIHTC-related capital markets revenue normalized ($6.5M vs. $20.6M in Q4), offset by strong wealth management growth (+14% annualized) .
  • Deposits were a key positive: core deposits rose $332.2M (20% annualized), enabling a $56M reduction in brokered deposits and $140M cut in overnight FHLB advances; TCE/TA increased 15 bps to 9.70% and TBV/share rose $1.43 .
  • Guidance pivot: full-year loan growth suspended amid macro uncertainty; near-term outlook calls for Q2 adjusted NIM (TEY) static to +4 bps, noninterest expense $50–$53M, tax rate 6–8%, and capital markets revenue $50–$60M over the next four quarters .
  • Potential catalysts: sustained margin expansion, deposit beta management, and timing of next LIHTC securitization (~$350M contemplated; could be 4Q25 or early 2026 depending on pipeline normalization) .

What Went Well and What Went Wrong

  • What Went Well

    • “Margin expansion” continued: adjusted NIM (TEY) up 1 bp despite cap impacts; absent caps, adjusted NIM (TEY) expanded 5 bps .
    • Robust deposit growth: core deposits +$332.2M (20% annualized), reduced wholesale funding and improved loan-to-deposit ratio to 92.96% .
    • Expense flexibility: noninterest expense fell 13% QoQ to $46.5M, well below guidance, reflecting variable compensation alignment with revenue .

  • What Went Wrong

    • Noninterest income reset: capital markets revenue declined to $6.5M from $20.6M in Q4 amid LIHTC deal delays tied to macro/policy uncertainty .
    • Revenue miss vs consensus: S&P Global revenue fell short on lighter capital markets; Street will likely trim near-term fee forecasts (see Estimates Context).
    • Loan growth moderation and payoffs: total loans/leases grew $38.9M; elevated client-driven payoffs and m2 runoff led to muted net growth; full-year loan growth guidance suspended .

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Net Interest Income ($USD Millions)$54.699 $59.722 $61.204 $59.986
Noninterest Income ($USD Millions)$26.858 $27.157 $30.625 $16.892
Total Income ($USD Millions)$81.557 $86.879 $91.829 $76.878
Provision for Credit Losses ($USD Millions)$2.969 $3.484 $5.149 $4.234
Diluted EPS ($)$1.58 $1.64 $1.77 $1.52
Adjusted Diluted EPS ($)$1.59 $1.78 $1.93 $1.53
Net Interest Margin (TEY) %3.25% 3.37% 3.43% 3.42%
Adjusted NIM (TEY) %3.24% 3.34% 3.40% 3.41%
Efficiency Ratio % (Non-GAAP)62.15% 61.65% 58.26% 60.54%
Effective Tax Rate %4.20% 6.86% 8.91% 1.18%

Consensus vs Actuals (S&P Global)

MetricQ4 2024Q1 2025
EPS Actual ($)$1.93 $1.53
EPS Consensus Mean ($)*1.76251.512
EPS Surprise ($ / %)+0.17 / +9.6%+0.02 / +1.2%
Revenue Actual ($USD Millions)*86.6872.64
Revenue Consensus Mean ($USD Millions)*99.9994.26
Revenue Surprise ($ / %)-13.31 / -13.3%-21.62 / -22.9%

Values retrieved from S&P Global.*

Segment/Subsidiary Snapshot

SubsidiaryTotal Deposits ($USD Millions) Q4 2024Total Deposits ($USD Millions) Q1 2025Total Loans & Leases ($USD Millions) Q4 2024Total Loans & Leases ($USD Millions) Q1 2025
Quad City Bank & Trust (incl. m2)$2,126.566 $2,397.047 $2,048.926 $2,041.181
Cedar Rapids Bank & Trust$1,882.487 $1,883.952 $1,761.467 $1,790.065
Community State Bank$1,256.938 $1,238.307 $1,159.389 $1,197.005
Guaranty Bank$1,824.139 $1,840.774 $1,814.622 $1,794.915
m2 Equipment Finance (standalone)N/AN/A$320.237 $284.983

Key KPIs

KPIQ1 2024Q4 2024Q1 2025
Brokered Deposits ($USD Millions)$261.562 $358.315 $302.332
Overnight FHLB Advances ($USD Millions)$70.000 $140.000 $0
TBV/Share ($)$44.93 $50.21 $51.64
TCE/TA (Non-GAAP) %8.94% 9.55% 9.70%
Capital Markets Revenue ($USD Millions)$16.457 $20.552 $6.516
Wealth Mgmt Revenue ($USD Millions)$4.300 $4.776 $4.940
Criticized Loans / Total Loans %2.75% 2.34% 2.06%
NPAs / Total Assets %0.36% 0.50% 0.53%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted NIM (TEY)Q1 2025 vs Q4 2024Static to +5 bps Delivered +1 bp; absent caps +5 bps Achieved plan within range
Adjusted NIM (TEY)Q2 2025Static to +4 bps Static to +4 bps Maintained
Noninterest ExpenseQ1 2025$52–$55M Actual $46.5M Below plan (positive)
Noninterest ExpenseQ2 2025$52–$55M (implied prior) $50–$53M Lowered
Loan GrowthFY 2025Gross 8–10%; Net 1–3% (with securitization, m2 runoff) Full-year guidance suspended; Q2 annualized 4–6% Suspended; near-term 4–6%
Capital Markets RevenueNext 12 months (Q4 view)$50–$60M Next 4 quarters $50–$60M Maintained (window updated)
Effective Tax RateQ2 2025N/A6–8% New near-term guide
DividendQ1 2025N/A$0.06 per share, payable Apr 3, 2025 Declared
SecuritizationTimingTargeted late-2025 (start of Q4 suggested) No defined timeline; likely Q4 2025 or early 2026, size ~$350M Timing flexibility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2025)Trend
Margin ExpansionAdjusted NIM (TEY) +8 bps in Q3; guided Q4 +2–7 bps Adjusted NIM (TEY) +1 bp; absent caps +5 bps; guide Q2 static to +4 bps Continued grind higher
Deposit Betas & Funding MixCost of interest-bearing deposits -33 bps in Q4 Strong betas; CDs ~$400M repricing ~-40 bps; cost of funds beta 41% vs asset yields 26% Ongoing tailwind
LIHTC / Capital MarketsStrong Q4 swap fees; $1.4M gain on securitization Q1 LIHTC delayed (HUD staffing uncertainty); pipeline normalizing; guide $50–$60M next 4 quarters Near-term soft, medium-term steady
Securitization StrategyOngoing; used to manage growth and capital Planning one larger deal (~$350M), consider selling B-piece; frees ~40 bps CET1 Structural lever
Tariffs / MacroMacro risks noted in forward-looking Detailed tariff exposure review; only ~$6M high-risk credits; clients shifting away from China Monitored; contained risk
BuybacksNot highlightedConsider re-engaging; 760k shares authorization remaining; cautious given uncertainty Optionality

Management Commentary

  • CEO perspective: “Our first quarter results were highlighted by margin expansion, robust deposit growth, and disciplined expense management… bolstered by continued loan growth while maintaining our excellent asset quality” .
  • CFO on margin: “Our adjusted NIM… increased one basis point… overpowering the dilution from the impact of expired interest rate caps… absent the caps, adjusted NIM TEY expanded by five basis points” .
  • On LIHTC/Capital Markets: “Our capital markets business was affected by macroeconomic uncertainty… we continue to expect our capital markets revenue to be in a range of $50 to $60 million over the next four quarters” .
  • On expenses: “Expenses were well below the guided range of $52 to $55 million highlighting our expense flexibility” .
  • On taxes: “Effective tax rate… 1%… expect… 6% to 8% for the second quarter of 2025” .

Q&A Highlights

  • Loan growth/provision: Guidance trimmed to 4–6% annualized for Q2 as payoffs and uncertainty weighed; provision likely lower with improved criticized metrics .
  • Margin cadence: New fundings ~7.21% vs roll-off 6.85% (36 bps delta); CDs ($400M) to reprice ~-40 bps; each 25 bp Fed cut adds 2–3 bps to NIM .
  • LIHTC pipeline & HUD: Deal timing disrupted by HUD workforce uncertainty; signs of normalization; developers moving forward; 4-quarter revenue guide intact .
  • Securitization timing/size: Prefers one ~$350M deal; selling B-piece to free CET1 (~40 bps); likely Q4 2025 or early 2026 depending on production .
  • Tariff exposure: Detailed review shows only ~$6M high-risk credits; most manufacturing clients already diversified away from China .
  • Buybacks: Will be deliberate; 760k shares authorization remains .

Estimates Context

  • EPS: Q1 2025 adjusted diluted EPS was $1.53 vs S&P Global consensus of $1.512, a modest beat (+$0.02, +1.2%). Q4 2024 EPS also beat ($1.93 vs $1.7625). Values retrieved from S&P Global.*
  • Revenue: S&P Global revenue printed $72.64M vs $94.26M consensus in Q1 (miss), and $86.68M vs $99.99M in Q4 (miss). Values retrieved from S&P Global.*
  • Street implications: Expect near-term noninterest income cuts (LIHTC swaps), with partial offset from continued margin expansion and expense discipline. Clarify that the company’s “Total income” ($76.88M in Q1) differs from S&P’s revenue construct, which drives consensus comparisons .

Key Takeaways for Investors

  • Deposit-led funding mix improvement is a structural tailwind for NIM; management is executing on deposit betas and CD repricing while maintaining growth .
  • Capital markets (LIHTC) normalization is likely through Q2; medium-term revenue durability supported by backlog and 4-quarter $50–$60M guide .
  • Expense flexibility is real: variable compensation ties costs to revenue; Q2 guide ($50–$53M) suggests disciplined opex runway .
  • Capital build continues: TCE/TA 9.70%, CET1 10.26%; securitization remains an effective lever to free capital (~40 bps CET1 on ~$350M) .
  • Watch yield curve slope: management noted curve shape as key to back-half margin trajectory independent of Fed cuts .
  • Governance/transition: CEO succession to Todd Gipple post May 22; continuity of model and performance focus expected .
  • Trading setup: near-term sentiment hinges on capital markets recovery pace; core margin and deposit dynamics provide downside support. Bold any EPS beats but expect Street to trim fee forecasts until LIHTC throughput visibly improves.

Additional Relevant Q1 Press Releases

  • Dividend: $0.06 per share payable April 3, 2025 .
  • CEO transition: Larry J. Helling to retire; Todd A. Gipple to become CEO post annual meeting .

Bolded surprises above reflect consensus vs actual outcomes derived from S&P Global data.*