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
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Provision for Credit Losses
The ACL is established through provision expense to provide an estimated ACL. The following table shows the components of the provision for credit losses for the three months ended March 31, 2024 and 2023.
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| · · Three Months Ended · · | ||||||||
| · · March 31, · · March 31, · · | ||||||||
| · 2024 · 2023 · · | ||||||||
| | | (dollars in thousands) | | | ||||
| | | | | | | | | |
| Provision for credit losses - loans and leases | | $3,736 | | $2,458 | | | ||
| Provision for credit losses - off-balance sheet exposures | | | (322) | | | 481 | | |
| Provision for credit losses - available for sale securities | | (445) | | 989 | | | ||
| Total provision for credit losses | | $2,969 | | $3,928 | | | ||
| | | | | | | | | |
The Company had total provision for credit losses on loans and leases of $3.7 million for the first quarter of 2024, which was up from $2.5 million for the same period of 2023, primarily driven by loan growth during the quarter. The provision related to OBS was negative $322 thousand for the first quarter of 2024 compared to $481 thousand for the first quarter of 2023. The decrease was due to a decrease in the balance of unfunded commitments as there was a surge in commitments in the LIHTC lending business at December 31, 2023 that began to fund during the first quarter of 2024. There was no provision related to HTM securities for the first quarter of 2024 or 2023. There was a negative provision of $445 thousand on AFS securities for the first quarter of 2024 with the change in fair value of a debt investment in a failed bank. This was a legacy investment acquired as part of the 2022 GFED acquisition in which an allowance was established for the entire balance of the bond in March 2023 and due to favorable changes in market conditions during 2024, partially recovered in value and was then sold during the quarter.
The ACL for loans and leases is established based on a number of factors, including the Company's historical loss experience, delinquencies and charge-off trends, economic and other forecasts, the local, state and national economies and risk associated with the loans/leases and securities in the portfolio, as described in more detail in the “Critical Accounting Policies and Critical Accounting Estimates” section of this discussion.
The Company had an ACL for loans/leases held for investment of 1.33% of total gross loans/leases held for investment at March 31, 2024, compared to 1.33% at December 31, 2023 and 1.43% at March 31, 2023. Management has evaluated the allowance needed on the loans acquired prior to the adoption of ASU 2016-13 on January 1, 2021, factoring in the remaining discount, which was $3.5 million and $5.2 million at March 31, 2024 and March 31, 2023, respectively.
Additional discussion of the Company's allowance can be found in the “Financial Condition” section of this Report.
Part I
Item 2
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