QCR Holdings, Inc. Q4 2025 Earnings Call Summary

1Key Financial Results and Metrics

Record Adjusted Net Income: $37 million or $2.21 per diluted share for Q4; full-year adjusted net income of $130 million or $7.64 per diluted share.

Net Interest Income: Increased by $4 million (22% annualized) in Q4 and $23 million (10% for the year), driven by net interest margin (NIM) expansion.

NIM: Increased by 6 basis points to near the upper end of guidance, supported by a 14% increase in average earning assets and improved cost of funds.

Loan Growth: Total loans grew by $304 million (17% annualized) in Q4; traditional loans increased by $92 million (8% annualized).

Core Deposits: Grew by $64 million (4% annualized) in Q4, with average deposit balances rising by $237 million (13% annualized).

Asset Quality: Total criticized loans decreased by $5 million in Q4, marking a 12% reduction for the year.

2Strategic Updates and Business Highlights

Business Segments: Strong performance across traditional banking, wealth management, and LIHTC lending platforms. Wealth management added nearly 500 new client relationships and over $1 billion in new assets under management.

Digital Transformation: Progressing with core system conversions, enhancing service capabilities and operational efficiency.

LIHTC Lending: Exceptional performance driven by strong demand for affordable housing and new developer partnerships. Legislative support for tax credits bolsters future growth potential.

Capital Markets Revenue: Raised guidance to $55 million to $70 million for the next four quarters, reflecting strong pipeline and market conditions.

3Forward Guidance and Outlook

Loan Growth Guidance: Expect gross annualized growth of 8% to 10% in Q1 2026, ramping up to 10% to 15% for the remainder of the year.

NIM Outlook: Anticipate further core margin expansion of 3 to 7 basis points in Q1 2026, assuming no additional Fed rate cuts.

Noninterest Expenses: Expected to be in the range of $55 million to $58 million for Q1 2026, with a commitment to keep growth below 5%.

4Bad News, Challenges, or Points of Concern

Seasonality in Capital Markets: Q1 is typically slower for capital markets revenue, which may affect overall performance.

Competition in LIHTC: While growth is expected, competition remains a concern, particularly from equity providers that may influence developer choices.

Loan-to-Deposit Ratio: The company aims to lower this ratio but acknowledges it may take time to improve the mix of core deposits.

Expense Management: Although expenses are controlled, ongoing investments in technology and talent could pressure margins in the short term.

5Notable Q&A Insights

Capital Markets Revenue: Management highlighted the historical seasonality of Q1 revenue, setting expectations for a slower start.

Securitization Plans: Targeting $300 million to $350 million in loan securitizations by mid-2026, with timing dependent on market conditions.

Deposit Gathering Strategy: Focus on improving noninterest-bearing deposits through targeted retail and commercial strategies, with a long-term goal of increasing this metric.

M&A Opportunities: Management is actively pursuing market share from competitors, particularly in light of recent M&A activity in Iowa. Overall, QCR Holdings reported strong financial performance in 2025, driven by growth across its core business segments, while also outlining strategic initiatives and addressing potential challenges ahead.