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QCRH: First Quarter Is Better Than It First Appears

By Ann Heffron, CFA, CPA


QCRH’s 2014 first quarter diluted EPS of $0.40 was a couple of pennies shy of our $0.42 estimate. Despite this, it was a better quarter than we expected in several important ways.

Click here to download a free copy of the QCRH (QCRH) research report: QCRH 6-12-14

First, the net interest margin of 3.11% was 9 basis points higher than the 3.02% we had been estimating, while loan growth of over 2% was almost double our projection.

Second, improved asset quality led to loan loss provision that came in about $0.25 million below our $1.350 million estimate.

Third, the effective tax rate was 10.8% versus our 25.0% estimate.

Finally, our estimate of average shares outstanding was about 200,000 shares too high.

On the negative side, the $0.26 million gain on the sale of government-guaranteed loans was more than $0.6 million below what we had estimated. Moreover, total noninterest expense of $16.1 million was about $0.5 million greater than our $15.6 million estimate.

We are reducing our net earnings estimate after preferred stock dividends to $13.8 million from $14.5 million, while our diluted EPS estimate falls to $1.70 from $1.75. A significant factor causing this reduction is the increase in the SBLF preferred dividend rate to 9% from 5% during 2014’s first quarter and a delay in the date of redemption for the remaining $14.9 million of SBLF preferred stock to the fourth quarter from the second quarter.

Our initial 2015 diluted EPS estimate for 2015 is $1.85, a 9% increase from 2014.

QCR Holdings, Inc. (QCRH or the Company) is a multibank holding company, which was founded in 1993 and is headquartered in Moline, Illinois, with $2.4 billion in total assets at March 31, 2014 and 14 offices. QCRH provides a broad range of business and retail lending products and investment services through four 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; Rockford Bank and Trust Company (RB&T), based in Rockford, Illinois; and Community National Bank (CNB), based in Waterloo, Iowa following the May 2013 acquisition of Parent Community National Bancorporation by QCRH.


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