QCRH: Another Strong Quarter with Improving Asset Quality Trends
By Ann Heffron, CFA
QCR Holdings, Inc. (QCRH) posted third quarter diluted EPS of $0.44, up 83% from the $0.24 EPS reported last year. Compared to the year-ago quarter, third quarter results were boosted by a gain in net interest income from 8% growth in average interest-earning assets and a significantly reduced loan loss provision, partly offset by a moderate drop in noninterest income stemming from higher losses on the sales of OREO, a rise in noninterest expense due to a 7% increase in compensation expense, partly offset by a large drop in loan/lease expense, and a 1.8% increase in the effective tax rate.
However, diluted EPS came in $0.07 below our $0.51 per share estimate, principally the result of a loan loss provision that was $0.4 million larger than our $1.1 million estimate, higher-than-expected average diluted shares outstanding that cost about $0.02 per share relative to our estimate, and net revenue that was $0.2 million worse than our estimate ($0.1 million each for both net interest income and noninterest income), partly offset by an effective tax rate that was 290 basis points better than our 27.4% estimate.
The Company continued to significantly reduce problem assets. Nonperforming loans fell $3.4 million, or 12%, sequentially to $23.9 million, while foreclosed assets dropped $4.0 million, or 44%, to $5.1 million. As a percentage of total loans and OREO, nonperforming assets fell 66 basis points sequentially to 2.33% from 2.98% at the end of the second quarter and 102 basis points year over year from 3.35%.
QCR Holdings, Inc. (QCRH or the Company) is a multibank holding company, which was founded in 1993 and is headquartered in Moline, Illinois, with $2.0 billion in total assets at September 30, 2012 and 10 offices. QCRH provides a broad range of business and retail lending products and investment services through three wholly owned, full-service banking subsidiaries that are located in Illinois and Iowa. These subsidiaries include Quad City Bank and Trust Company (:QCBT), based in Bettendorf, Iowa; Cedar Rapids Bank and Trust Company (:CRBT), based in Cedar Rapids, Iowa; and Rockford Bank and Trust Company (RB&T), based in Rockford, Illinois.
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