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QCRH: Third Quarters EPS Beats Our Estimate by $0.03 and Series E Preferred Stock Is Being Converted to Common

By Ann Heffron, CFA, CPA

QCR Holdings, Inc. (QCRH) reported 2013 third quarter diluted EPS of $0.51, including a couple of offsetting items: a pretax $417,000 gain on the sales of securities and a pretax $389,000 charge for CNB acquisition costs. This beat our $0.48 diluted EPS estimate by $0.03, principally due to an effective tax rate that was about 4 points lower than the 25.5% we had expected, due to adjustments related to tax-exempt municipal securities.

Click here to download a free copy of the QCRH research report: QCRH 12-16-13

We note that results included the CNB acquisition for the full quarter, adding $592,000 to QCRH’s bottom line.

Compared to the year-ago quarter, the third quarter reflected an 18% gain in net interest income to $17.3 million, mostly due to the CNB acquisition.

Results were also boosted by a 44% gain in noninterest income to $5.9 million on the back of a strong 40%-plus jump in trust department fees to $1.3 million (which includes $298,000 from CNB) and in deposit service fees to $1.2 million (including $239,000 from CNB), a 10% increase in investment management & advisory fees to $0.6 million, and a $1.2 million positive swing in the combined contribution from gains on securities sales plus losses from sales of OREO to a gain of $0.4 million from a loss of $0.8 million in the year-ago quarter.

While we are increasing our 2013 diluted EPS estimate by $0.03 to $2.03 from $2.00, reflecting the overage in the third quarter, we are reducing our 2014 EPS estimate to $1.80 from $2.15 previously, due solely to the conversion of the Series E preferred stock into 2.1 million common shares, expected to be completed by the end of 2013’s fourth quarter.

Indeed, our 2014 net earnings estimate of $14.5 million represents a 28% gain over 2013’s estimated $11.4 million in net income.

QCR Holdings, Inc. (QCRH or the Company) is a multibank holding company, which was founded in 1993 and is headquartered in Moline, <_st13a_state _w3a_st="on">Illinois, with $2.5 billion in total assets at September 30, 2013 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, Iowa, and <_st13a_place _w3a_st="on">Minnesota. 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, based in Waterloo, <_st13a_state _w3a_st="on">Iowa following the May 2013 acquisition of Parent Community National Bancorporation by QCRH.

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