QCR Holdings, Inc. Announces Fourth Quarter Results and Record Net Income of $113.9 Million for the Full Year 2024

Fourth Quarter Highlights

• Net income of $30.2 million, or $1.77 per diluted share
• Adjusted net income of $32.8 million, or $1.93 per diluted share (non-GAAP)
• Record quarterly net interest income of $61.2 million
• Expanded NIM by 5 basis points and adjusted NIM (TEY) (non-GAAP) by 6 basis points to 3.40%
• Significant capital markets revenue of $20.6 million, including a $1.4 million gain on fourth securitization
• Tangible book value per share (non-GAAP) grew $1.21, or 10% annualized
• TCE/TA ratio (non-GAAP) improved by 31 basis points to 9.55%

• Record annual net income of $113.9 million, or $6.71 per diluted share
• Record adjusted net income (non-GAAP) of $119.3 million, or $7.03 per diluted share (non-GAAP)
• Significant capital markets revenue of $71.1 million
• Robust loan growth of 10% prior to loan securitizations and strong deposit growth of 8%
• Tangible book value per share (non-GAAP) increased $6.40, or 15%
• TCE/TA ratio (non-GAAP) improved by 80 basis points to 9.55%

Adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) for the fourth quarter of 2024 were $32.8 million and $1.93, respectively. For the third quarter of 2024, adjusted net income (non-GAAP) was $30.3 million and adjusted diluted EPS (non-GAAP) was $1.78. For the fourth quarter of 2023, net income and diluted EPS were $32.9 million and $1.95, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $33.3 million and $1.97, respectively. Adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) for the full year of 2024 were $119.3 million and $7.03, respectively.

"We delivered our strongest results of the year in the fourth quarter, generating record full year results. Our exceptional performance was highlighted by significant growth in net interest income, driven by margin expansion, and robust loan growth,” said Larry J. Helling, Chief Executive Officer. "Additionally, we produced another strong year of capital markets and wealth management revenue while controlling our core operating expenses and maintaining excellent asset quality. We also successfully executed on our fourth low-income housing tax credit securitization during the fourth quarter.”

"We begin 2025 with a solid pipeline of loans and deposits, strong credit quality, and well-managed expenses. Our focus remains on growing our franchise through relationship-driven banking and executing on our unique business model which delivers exceptional operational performance for our shareholders,” said Mr. Helling.

Record Net Interest Income and Continued NIM Expansion

Net interest income for the fourth quarter of 2024 totaled $61.2 million, an increase of $1.5 million from the third quarter of 2024. Acquisition-related net accretion totaled $471 thousand for the fourth quarter of 2024, compared to $463 thousand in the third quarter of 2024. Net interest income was $55.7 million for the fourth quarter of 2023.

In the fourth quarter of 2024, net interest margin ("NIM”) was 2.95% and NIM on a tax-equivalent yield ("TEY”) basis (non-GAAP) was 3.43%, up from 2.90% and 3.37% in the prior quarter, respectively. Adjusted NIM TEY (non-GAAP) of 3.40% was also up from 3.34% in the third quarter of 2024.

"Our adjusted NIM on a tax equivalent yield basis improved by 6 basis points to 3.40% in the fourth quarter near the top end of our guidance range,” said Todd A. Gipple, President and Chief Financial Officer. "We were successful in significantly reducing our cost of interest-bearing deposits in the fourth quarter by 33 basis points, contributing to a significant decrease in our funding costs. Our ability to aggressively react to the recent Fed interest rate cuts has contributed meaningfully to our NIM expansion.” Looking forward, the Company expects to continue growing its NIM in the first quarter of 2025. "We project our adjusted NIM on a tax equivalent yield basis for the first quarter of 2025 to be in the range from static to an increase of 5 basis points,” said Mr. Gipple.

Significant Capital Markets and Wealth Management Revenue

Noninterest income for the fourth quarter of 2024 totaled $30.6 million, up from $27.2 million for the third quarter of 2024. The Company generated strong capital markets revenue of $20.6 million up from $16.3 million in the prior quarter. Capital markets revenue in the fourth quarter included a $1.4 million gain from the Company's fourth low-income housing tax credit ("LIHTC”) securitization, compared to a $473 thousand loss in the third quarter of 2024. Wealth management revenues also increased during the fourth quarter with $4.8 million in revenue, up from $4.5 million in the prior quarter, or 25% annualized.

"Our capital markets business delivered strong results, fueled by swap fees generated through our LIHTC lending program. The strong demand for affordable housing continues to support the sustainability of our LIHTC lending initiatives," said Mr. Gipple. "Our LIHTC lending pipeline and related capital markets revenue remains solid. As a result, we expect our capital markets revenue from swap fees for the next twelve months to be in a range of $50 to $60 million. Furthermore, our wealth management business continues to expand, driven by new client acquisitions and growth in assets under management.”

Noninterest Expenses Impacted by Higher Incentive Compensation but Efficiency Ratio Improves

Noninterest expense for the fourth quarter of 2024 totaled $53.5 million which was consistent with the prior quarter, and lower than $60.9 million in the fourth quarter of 2023. The fourth quarter included higher incentive-based compensation related to strong fourth quarter and record full year performance as well as investments in the digital transformation of the Company's core systems.

"Our core expenses, while impacted by higher incentive compensation and system conversion expenses during the fourth quarter, remained well-controlled for the full year, decreasing $5.1 million, or 2% from the prior year,” said Mr. Gipple. The Company's efficiency ratio (non-GAAP) improved to 58.26% and the adjusted efficiency ratio (non-GAAP) improved to 56.25% in the fourth quarter of 2024. For the first quarter of 2025 we expect noninterest expense to be in the range of $52 to $55 million, an increase of 4% which aligns with the Company's 9/6/5 strategic model.

Continued Strong Loan Growth

During the fourth quarter of 2024, loans and leases held for investment grew $120.5 million, or 7% annualized from the prior quarter to a total of $6.8 billion. For the full year, prior to loan securitizations of $387 million, the Company's total loans and leases grew $628 million, or 10% from the prior year.

"Our solid performance reflects the strength of our unique, relationship-driven community banking model and the economic resilience within our markets”, added Mr. Helling. "With our current pipeline and the continued strength of our markets, we anticipate gross loan growth between 8% and 10% for the full year 2025. When factoring in the loan securitization that we have planned for 2025 and the continuing runoff of m2 Equipment Finance loans, we are targeting net loan growth between 1% and 3% for the year.”

Asset Quality Remains Excellent

Nonperforming assets ("NPAs”) totaled $45.6 million at the end of the fourth quarter of 2024, an increase of $9.9 million from $35.7 million at the end of the third quarter of 2024. The increase in NPAs was primarily due to three loans in discrete industries. These changes are reflective of the credit environment normalizing from historically low levels.

The ratio of NPAs to total assets was 0.50% on December 31, 2024, compared to 0.39% on September 30, 2024. In addition, the Company's criticized loans and classified loans to total loans and leases on December 31, 2024, were 2.34% and 1.25% compared to 2.20% and 1.03%, respectively, as of September 30, 2024. At December 31, 2024, approximately 43% of the Company's total NPAs are comprised of just four relationships. The Company's largest NPA of $9.7 million was fully paid off in mid-January of 2025. This successful outcome reduced total NPAs down to $35.9 million, or 0.40% of total assets on a proforma basis, consistent with December 31, 2023.

The Company recorded a total provision for credit losses of $5.2 million during the fourth quarter of 2024, representing a $1.7 million increase from the prior quarter driven by strong loan growth and an increase in criticized loan balances. As of December 31, 2024, the allowance for credit losses to total loans/leases held for investment was 1.32%, an increase of 2 basis points from the prior quarter.

Strong Core Deposit Growth and Increased Liquidity

During the fourth quarter of 2024, core deposits, which exclude brokered deposits, increased $75.6 million or 5% annualized. For the full year total core deposits grew $474 million or 8% from the prior year, outpacing net loan growth and increasing immediate liquidity.

Total uninsured and uncollateralized deposits remain quite low at $1.3 billion, or 19% of total deposits as of the end of the fourth quarter of 2024, compared to 21% as of the end of the third quarter of 2024. Total available liquidity as of quarter end was approximately $4 billion, which included $1.7 billion in instantly accessible liquidity.

Capital Levels Increased

As of December 31, 2024, the Company's total risk-based capital ratio was 14.10%, its common equity tier 1 ratio was 10.03% and its tangible common equity to tangible assets ratio ("TCE”) (non-GAAP) was 9.55%. By comparison, these ratios were 13.87%, 9.79% and 9.24%, respectively, as of September 30, 2024. We remain focused on growing capital and targeting TCE in the top quartile of the Company's peer group.

The Company's tangible book value per share (non-GAAP) increased by $1.21, or 10% annualized during the fourth quarter, of 2024. For the full year the tangible book value per share (non-GAAP) increased by $6.40, or 15% from the prior year. The combination of strong earnings and a modest dividend contributed to the improvement in tangible book value per share (non-GAAP). Accumulated other comprehensive income ("AOCI”) decreased $9.6 million during the fourth quarter of 2024 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 during the quarter.

Conference Call Details

The Company will host an earnings call/webcast tomorrow, January 23, 2025, 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 January 30, 2025. The replay access information is 877-344-7529 (international 412-317-0088); access code 8346661. A webcast of the teleconference can be accessed on the Company's News and Events page at www.qcrh.com. 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 four 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; and Guaranty Bank (formerly known as Springfield Fist Community Bank), based in Springfield, Missouri, was acquired by the Company in 2018. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. The Company has 36 locations in Iowa, Missouri, Wisconsin and Illinois. As of December 31, 2024, the Company had $9.0 billion in assets, $6.8 billion in loans and $7.1 billion in deposits. For additional information, please visit the Company's website at www.qcrh.com.

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, but are not limited to: (i) the strength of the local, state, national and international economies and financial markets (including effects of inflationary pressures and supply chain constraints); (ii) effects on the U.S. economy resulting from the implementation of policies proposed by the new presidential administration, including tariffs, mass deportations and tax regulations; (iii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics, acts of war or threats thereof (including the Russian invasion of Ukraine and ongoing conflicts in the Middle East), or other adverse 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; (iv) new or revised accounting policies and practices, as may be adopted by state and federal regulatory agencies, the FASB, the Securities and Exchange Commission (the "SEC”) or the PCAOB; (v) changes in local, state and federal laws, regulations and governmental policies concerning the Company's general business and any changes in response to the bank failures in 2023; (vi) the imposition of tariffs or other governmental policies impacting the value of products produced by the Company's commercial borrowers; (vii) 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; (viii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (ix) unexpected results of acquisitions which may include failure to realize the anticipated benefits of the acquisitions and the possibility that transaction costs may be greater than anticipated; (x) the loss of key executives and employees, talent shortages and employee turnover; (xi) changes in consumer spending; (xii) unexpected outcomes and costs of existing or new litigation or other legal proceedings and regulatory actions involving the Company; (xiii) the economic impact on the Company and its customers of climate change, natural disasters and exceptional weather occurrences such as tornadoes, floods and blizzards; (xiv) fluctuations in the value of securities held in our securities portfolio, including as a result of changes in interest rates; (xv) credit risk and risks from concentrations (by type of borrower, geographic area, collateral and industry) within our loan portfolio and large loans to certain borrowers (including CRE loans); (xvi) the overall health of the local and national real estate market; (xvii) the ability to maintain an adequate level of allowance for credit losses on loans; (xviii) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and who may withdraw deposits to diversify their exposure; (xix) the ability to successfully manage liquidity risk, which may increase dependence on non-core funding sources such as brokered deposits, and may negatively impact the Company's cost of funds; (xx) the level of non-performing assets on our balance sheets; (xxi) interruptions involving our information technology and communications systems or third-party servicers; (xxii) the occurrence of fraudulent activity, breaches or failures of our third-party vendors' information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud; (xxiii) changes in the interest rates and repayment rates of the Company's assets; (xxiv) the effectiveness of the Company's risk management framework, and (xxv) 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 SEC.

Contact:

Todd A. Gipple                                

President                                

Chief Financial Officer                        

(309) 743-7745                                

[email protected]