QCR HOLDINGS INC
For the period ended Mar 31, 2024. Filed May 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 9, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
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Investment Securities
The composition of the Company’s securities portfolio is managed to meet liquidity needs while prioritizing the impact on interest rate risk, maximizing return and minimizing credit risk. Over the years, the Company has further invested in tax-exempt municipal securities made up of 89% general obligation bonds and 11% revenue bonds. The majority are privately placed tax-exempt debt issuances by municipalities located in the Midwest (with some in or near the Company's existing markets) and diversified across many issuers. The Company monitors the investments and concentration closely. Of the general obligation and revenue bonds in the Company's portfolio, the majority are unrated bonds that represent small, private issuances that require a thorough underwriting process before investment and are generated by our specialty finance group.
Trading securities had a fair value of $22.3 million as of March 31, 2024 and $22.4 million as of December 31, 2023 and consisted of retained beneficial interests acquired in conjunction with loan securitizations completed by the Company in 2023. The change in market value on trading securities for the three months ended March 31, 2024 was a net gain of $19 thousand. See also Note 4 to the Consolidated Financial Statements for details of these securitizations.
Part I
Item 2
Following is a breakdown of the Company's securities portfolio by type, the percentage of net unrealized gains (losses) to carrying value on the total portfolio, and the portfolio duration:
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| · · As of · | ||||||||||||||||||
| · · March 31, 2024 · · · December 31, 2023 · · March 31, 2023 | ||||||||||||||||||
| · Amount · % · · Amount · % · · Amount · % · | ||||||||||||||||||
| | | (dollars in thousands) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
| U.S. govt. sponsored agency securities | | $14,442 | 1% | | $14,973 | 1% | | $19,320 | 2% | |||||||||
| Municipal securities | | 884,469 | 86% | | 853,442 | 85% | | 731,509 | 80% | |||||||||
| Residential mortgage-backed and related securities | | 56,071 | 6% | | 59,196 | 6% | | 63,104 | 7% | |||||||||
| Asset-backed securities | | | 14,285 | | 1% | | | 15,423 | | 2% | | | 17,967 | | 2% | |||
| Other securities | | 40,539 | 4% | | 40,125 | 4% | | 45,546 | 5% | |||||||||
| Trading securities | | 22,258 | 2% | | 22,369 | 2% | | 45,546 | 5% | |||||||||
| | | $1,032,064 | 100% | | $1,005,528 | 100% | | $922,992 | 101% | |||||||||
| | | | | | | | ||||||||||||
| Securities as a % of total assets | | 12.00% | | | 11.78% | | | 10.92% | | |||||||||
| Net unrealized losses as a % of Amortized Cost | | (6.98)% | | | (4.96)% | | | (9.07)% | | |||||||||
| Duration (in years) | | 6.2 | | | | 6.2 | | | | 5.6 | | | | |||||
| Annual yield on investment securities (tax equivalent) | | | 5.14% | | | | | 4.30% | | | | | 4.27% | | | |||
Due to continued increases in intermediate and long-term interest rates during 2023, which directly impact the fair value of the Company’s AFS portfolio, the AFS portfolio declined $8.7 million, or 2.9%, from March 31, 2023 to March 31, 2024, partly due to net unrealized losses increasing by $510 thousand and sales of securities in 2023 and the first quarter of 2024.
The Company has not invested in non-agency commercial or residential mortgage-backed securities or pooled trust preferred securities. See Note 2 to the Consolidated Financial Statements for additional information regarding the Company's investment securities.
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