QCR HOLDINGS INC
For the period ended Sep 30, 2024. Filed Nov 8, 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.
Sep 30, 2024 · Filed Nov 8, 2024
QCRH$100.85-0.3%Stored close · as of Nov 6, 2026
Contents
Strategic Developments
The Company has taken the following actions during the third quarter of 2024 to support its corporate strategy:
| ● | The Company completed a LIHTC loan securitization through a Freddie Mac sponsored M series transaction in the third quarter of 2024. The securitization consisted of tax exempt LIHTC loans with a total outstanding principal balance of $232.4 million and a total carrying value of $230.7 million. The Company recorded a net loss on the transactions of $473 thousand, which is reported in capital markets revenue on the Company’s consolidated statements of income. The Company plans to continue to utilize securitizations as a liquidity and concentration management tool, and to provide additional capacity to produce LIHTC loans and the related capital markets revenue. |
| ● | The Company experienced a decrease in the amount of loans and leases in the third quarter of 2024 of 1.5% on an annualized basis as a result of the securitization. Included in total loans and leases was $165.9 million of LIHTC loans held for sale in anticipation of the Company’s next loan securitization. Excluding the impact of the loans securitized during the third quarter, loan growth is 10.5% annualized. |
| ● | Correspondent banking has continued to be a core line of business for the Company. The Company is competitively positioned with experienced staff, software systems and processes to continue growing in the four states currently served – Iowa, Wisconsin, Missouri and Illinois. The Company acted as the correspondent bank through QCBT for 188 downstream banks with total noninterest bearing deposits of $109.3 million and total interest-bearing deposits of $714.6 million as of September 30, 2024. By comparison, the Company acted as the correspondent bank for 180 downstream banks with total noninterest bearing deposits of $93.0 million and total interest-bearing deposits of $308.2 million as of September 30, 2023. This line of business provides a strong source of deposits, fee income, high-quality loan participations and bank stock loans. The Company also manages off-balance sheet liquidity held at the Federal Reserve on behalf of the downstream banks of $438.1 million as of September 30, 2024, as compared to $258.4 million as of September 30, 2023. |
| ● | The Company is focused on executing interest rate swaps on select commercial loans, including LIHTC permanent loans. These interest rate swaps allow commercial borrowers to pay a fixed interest rate while the Company receives a variable interest rate as well as an upfront nonrefundable fee dependent on the pricing. Management believes that these swaps help position the Company more favorably for various interest rate environments. The Company will continue to review opportunities to execute these swaps at all of its subsidiary banks as appropriate for applicable borrowers and the Company. Levels of capital markets revenue from swap fee income are influenced by prevailing interest rates. Capital markets revenue, primarily from swap fee income, totaled $16.3 million for the third quarter of 2024 as compared to $15.6 million for the same period of the prior year. Capital markets revenue, primarily from swap fee income, totaled $50.5 million for the first nine months of 2024 as compared to $55.1 million for the same period of the prior year. |
Part I
Item 2
| ● | Over many years, the Company has been successful in expanding its wealth management client base. Trust and investment advisory and management fees continue to be a significant contributor to noninterest income. Assets under management increased by $343.9 million for the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024, and increased by $941.1 million for the first nine months of 2024. Income is generated primarily from fees charged based on assets under administration for corporate and personal trusts and for custodial services. The majority of trust fees are determined based on the value of the investments managed. The Company expects trust and investment advisory and management fees to be negatively impacted during periods of lower market valuations and positively impacted during periods of higher market valuations. The Company has recently expanded its wealth management client base into the Springfield, Missouri market and the Des Moines, Iowa metropolitan market. |
| ● | Noninterest expense for the first nine months of 2024 totaled $154.1 million as compared to $149.6 million in the first nine months of 2023. The increase was primarily due to increased professional and data processing fees due to information technology investment growth as well as restructuring and goodwill impairment expenses related due to the decision to discontinue offering new loans and leases through m2. |
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