QCR Holdings, Inc. Announces Record Net Income of $32.9 Million for the Fourth Quarter and Record Net Income of $113.6 Million for the Full Year 2023
*Fourth Quarter Highlights*· *Record fourth quarter net income of $32.9 million, or $1.95 per diluted share*
· *Record Capital Markets Revenue of $37.0 million*
· *Improved NIM, which increased by 1 basis point from the prior quarter *
· *Significant increase in tangible book value (non-GAAP) per share of $3.48, or 35% annualized*
· *TCE/TA ratio (non-GAAP) improved by 70 basis points to 8.75%*
· *Completion of first two securitizations of $265 million of low-income housing tax credit loans*
*Full Year Highlights*
· *Record annual net income of $113.6 million, or $6.73 per diluted share*
· *Record adjusted net income (non-GAAP) of $115.1 million, or $6.82 per diluted share*
· *Record Capital Markets Revenue of $92.1 million, an increase of $50.8 million, or 123%*
· *Loan and lease growth of 11% prior to loan securitizations *
· *Deposit growth of 9%*
· *Tangible book value (non-GAAP) per share increased $6.99, or 19%*
· *Increased TCE/TA ratio (non-GAAP) by 82 basis points to 8.75%*MOLINE, Ill., Jan. 23, 2024 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ: QCRH) (the “Company”) today announced record quarterly net income of $32.9 million and diluted earnings per share (“EPS”) of $1.95 for the fourth quarter of 2023, compared to net income of $25.1 million and diluted EPS of $1.49 for the third quarter of 2023. For the full year, the Company reported net income of $113.6 million, or $6.73 per diluted share.
Adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) for the fourth quarter of 2023 were $33.3 million and $1.97, respectively. For the third quarter of 2023, adjusted net income (non-GAAP) was $25.4 million and adjusted diluted EPS (non-GAAP) was $1.51. For the fourth quarter of 2022, net income and diluted EPS were $30.9 million and $1.81, respectively, and adjusted net income (non-GAAP) and adjusted diluted EPS (non-GAAP) were $31.1 million and $1.83, respectively.
*For the Quarter Ended* *December 31,* *September 30,* *December 31,*
$ in millions (except per share data) *2023* *2023* *2022*
Net Income $ 32.9 $ 25.1 $ 30.9
Diluted EPS $ 1.95 $ 1.49 $ 1.81
Adjusted Net Income (non-GAAP)* $ 33.3 $ 25.4 $ 31.1
Adjusted Diluted EPS (non-GAAP)* $ 1.97 $ 1.51 $ 1.83
*Adjusted non-GAAP measurements of financial performance exclude non-core and/or nonrecurring income and expense items that management believes are not reflective of the anticipated future operation of the Company’s business. The Company believes these measurements provide a better comparison for analysis and may provide a better indicator of future performance. See GAAP to non-GAAP reconciliations.
“We are pleased to deliver record fourth quarter and full year results highlighted by significant fee income and robust loan growth,” said Larry J. Helling, Chief Executive Officer. “In addition, we completed our first two securitizations of low-income housing tax credit loans, grew core deposits by 6%, and maintained our strong asset quality.”
“We enter 2024 with a solid deposit and loan pipeline, a strong balance sheet, excellent credit quality and well-managed expenses. We remain focused on building our franchise through relationship banking and executing on our differentiated business model, all with the view of delivering attractive returns to our shareholders,” said Mr. Helling.
*Net Interest Income Grew to $55.7 Million and NIM Expanded*
Net interest income for the fourth quarter of 2023 totaled $55.7 million, an increase of $0.5 million from the third quarter. Acquisition-related net accretion totaled $673 thousand for the fourth quarter of 2023, compared to $539 thousand in the third quarter. Net interest income was $65.2 million for the fourth quarter of 2022.
In the fourth quarter of 2023, net interest margin (“NIM”) was 2.90% and NIM on a tax-equivalent yield (“TEY”) basis (non-GAAP) was 3.32%, up from 2.89% and 3.31% in the prior quarter, respectively. Adjusted NIM TEY (non-GAAP) of 3.29%, was also up from 3.28% in the third quarter.
“Our adjusted NIM on a tax equivalent yield basis improved by one basis point on a linked-quarter basis to 3.29% and was above the midpoint of our guidance range,” said Todd A. Gipple, President and Chief Financial Officer. “During the quarter, our loan and investment yields continued to expand and we experienced a more modest increase in our cost of funds with a slowing in the shift of the composition of our deposits from noninterest and lower beta deposits to higher beta deposits. We are pleased to see continued stabilization in our deposit mix and the expansion of our NIM.”
*Noninterest Income of $47.7 Million, Including a Record $37.0 Million of Capital Markets Revenue*
Noninterest income for the fourth quarter of 2023 totaled $47.7 million, up significantly from $26.6 million for the third quarter of 2023. The Company generated a record $37.0 million of capital markets revenue in the quarter, up from $15.6 million in the prior quarter. Wealth management revenue was $4.1 million for the quarter, up from $3.8 million in the prior quarter.
“Capital markets revenue surged late in the fourth quarter and was $37 million for the quarter, achieving a total of $92 million to close out the year,” added Mr. Gipple. “Our clients took advantage of the significant decrease in long-term interest rates late in the quarter to lock-in attractive long-term financing terms. Capital markets revenue from swap fees continues to benefit from the strong demand for affordable housing. Even with the strong results in the fourth quarter, our LIHTC lending and capital markets revenue pipelines remain healthy. As a result, we are increasing our capital markets revenue guidance for the next twelve months to be in a range of $50 to $60 million.”
*Noninterest Expenses of $60.9 Million Impacted by Strong Capital Markets Outperformance*
Noninterest expense for the fourth quarter of 2023 totaled $60.9 million, compared to $51.1 million for the third quarter of 2023 and $49.7 million for the fourth quarter of 2022. The linked-quarter increase was primarily due to higher incentive-based compensation related to our record fourth quarter and full year performance.
*Continued Strong Loan Growth*
During the fourth quarter of 2023, the Company’s loans and leases held for investment grew $213.4 million to a total of $6.5 billion, or 13% on an annualized basis. For the full year, total loans and leases grew $669.5 million, or 11%, when excluding the $265 million in loan securitizations that we completed in the fourth quarter.
“Our strong performance is a testament to our differentiated relationship-based community banking model as well as the underlying economic resiliency across our markets,” added Mr. Helling. “Given our current pipeline and the ongoing strength of our markets, we are targeting loan growth for the full year 2024 between 8% and 10%, prior to the loan securitizations that we have planned for 2024.”
*Asset Quality Remains Excellent *
Nonperforming assets (“NPAs”) totaled $34.2 million at the end of the fourth quarter, a slight improvement from $34.7 million at the end of the third quarter. The ratio of NPAs to total assets improved to 0.40% on December 31, 2023, compared to 0.41% on September 30, 2023. In addition, the Company’s criticized loans and classified loans to total loans and leases on December 31, 2023 also improved to 2.93% and 1.03%, respectively, as compared to 2.98% and 1.05% as of September 30, 2023.
The Company recorded a total provision for credit losses of $5.2 million during the quarter which included $2.5 million of provision for loans and leases and $2.7 million of provision for unfunded commitments. The provision for credit losses on unfunded commitments was driven by the surge in commitments in our LIHTC lending business. As of December 31, 2023, the allowance for credit losses to total loans/leases held for investment was 1.33%.
*Stable Core Deposits and Increased Liquidity*
During the fourth quarter of 2023, the Company’s core deposits, which exclude brokered deposits, decreased slightly by $4.2 million in the fourth quarter, but grew by $346.0 million, or 6%, for the full year. Our Correspondent Bank deposit portfolio typically falls temporarily in the fourth quarter as our clients position their balance sheets at year-end. Total Correspondent Bank deposits declined 9% at quarter-end and have since rebounded, increasing $188 million, or 35%, by mid-January.
Total uninsured and uncollateralized deposits remain very low at 18% of total deposits as of the end of the fourth quarter, as compared to 20% as of the end of the third quarter. The Company maintained approximately $3.1 billion of available liquidity sources at year-end, which includes $1.2 billion of immediately available liquidity.
*Continued Strong Capital Levels *
As of December 31, 2023, the Company’s total risk-based capital ratio was 14.15%, the common equity tier 1 ratio was 9.57% and the tangible common equity to tangible assets ratio (non-GAAP) was 8.75%. By comparison, these respective ratios were 14.48%, 9.68% and 8.05% as of September 30, 2023. The Company remains focused on growing capital and targeting capital levels in the top quartile of the Company’s peer group.
The Company’s tangible book value per share (non-GAAP) increased by $3.48, or 35% annualized during the fourth quarter. Accumulated other comprehensive income (“AOCI”) increased $25.4 million during the quarter due to an increase in the value of the Company’s available for sale securities portfolio and certain derivatives resulting from the change in long-term interest rates during the quarter. In addition, the combination of strong earnings and a modest dividend contributed to the improvement in tangible book value per share (non-GAAP).
*Conference Call Details*
The Company will host an earnings call/webcast tomorrow, January 24, 2024, at 10:00 a.m. Central Time. Dial-in information for the call is toll-free: 888-346-9286 (international 412-317-5253). Participants should request to join the QCR Holdings, Inc. call. The event will be available for replay through January 31, 2024. The replay access information is 877-344-7529 (international 412-317-0088); access code 1087284. A webcast of the teleconference can be accessed on the Company’s News and Events page at www.qcrh.com. An archived version of the webcast will be available at the same location shortly after the live event has ended.
*About Us*
QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company serving the Quad Cities, Cedar Rapids, Cedar Valley, Des Moines/Ankeny and Springfield communities through its wholly owned subsidiary banks. The banks provide full-service commercial and consumer banking and trust and wealth management services. Quad City Bank & Trust Company, based in Bettendorf, Iowa, commenced operations in 1994, Cedar Rapids Bank & Trust Company, based in Cedar Rapids, Iowa, commenced operations in 2001, Community State Bank, based in Ankeny, Iowa, was acquired by the Company in 2016, Springfield First Community Bank, based in Springfield, Missouri, was acquired by the Company in 2018, and Guaranty Bank, also based in Springfield, Missouri, was acquired by the Company and merged with Springfield First Community Bank on April 1, 2022, with the combined entity operating under the Guaranty Bank name. Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Quad City Bank & Trust Company offers equipment loans and leases to businesses through its wholly owned subsidiary, m2 Equipment Finance, LLC, based in Brookfield, Wisconsin, and also provides correspondent banking services. The Company has 36 locations in Iowa, Missouri, Wisconsin and Illinois. As of December 31, 2023, the Company had $8.5 billion in assets, $6.5 billion in loans and $6.5 billion in deposits. For additional information, please visit the Company’s website at www.qcrh.com.
*Special Note Concerning Forward-Looking Statements. *This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “bode,” “predict,” “suggest,” “project,” “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should,” “likely,” “might,” “potential,” “continue,” “annualized,” “target,” “outlook,” as well as the negative forms of those words, or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economies(including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threats thereof (including the Israeli-Palestinian conflict and the Russian invasion of Ukraine), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the FASB or the PCAOB; (iv) changes in local, state and federal laws, regulations and governmental policies concerning the Company’s general business and any changes in response to the recent failures of other banks; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out and the recent potential additional rate increases by the Federal Reserve); (vi) increased competition in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies, and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or employees; (x) changes in consumer spending; (xi) unexpected outcomes of existing or new litigation involving the Company; (xii) the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; (xiii) fluctuations in the value of securities held in our securities portfolio; (xiv) concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients; (xv) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversity their exposure; (xvi) the level of non-performing assets on our balance sheets; (xvii) interruptions involving our information technology and communications systems or third-party servicers; (xviii) breaches or failures of our information security controls or cybersecurity-related incidents, and (xix) the ability of the Company to manage the risks associated with the foregoing as well as anticipated. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.
Contact:
Todd A. Gipple
President
Chief Financial Officer
(309) 743-7745
tgipple@qcrh.com
*QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) * *As of* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *2023* *2023* *2023* *2023* *2022* (dollars in thousands)
*CONDENSED BALANCE SHEET*
Cash and due from banks $ 97,123 $ 104,265 $ 84,084 $ 64,295 $ 59,723
Federal funds sold and interest-bearing deposits 140,369 80,650 175,012 253,997 124,270
Securities, net of allowance for credit losses 1,005,528 896,394 882,888 877,446 928,102
Loans receivable held for sale (1) 2,594 278,893 295,057 140,633 1,480
Loans/leases receivable held for investment 6,540,822 6,327,414 6,084,263 6,049,389 6,137,391
Allowance for credit losses (87,200 ) (87,669 ) (85,797 ) (86,573 ) (87,706 )
Intangibles 13,821 14,537 15,228 15,993 16,759
Goodwill 139,027 139,027 139,027 138,474 137,607
Derivatives 188,978 291,295 170,294 130,350 177,631
Other assets 497,832 495,251 466,617 452,900 453,580
*Total assets* *$* * 8,538,894* *$* * 8,540,057* *$* * 8,226,673* *$* * 8,036,904* *$* * 7,948,837*
Total deposits $ 6,514,005 $ 6,494,852 $ 6,606,720 $ 6,501,663 $ 5,984,217
Total borrowings 718,295 712,126 418,368 417,480 825,894
Derivatives 214,098 320,220 195,841 150,401 200,701
Other liabilities 205,900 184,476 183,055 165,866 165,301
Total stockholders' equity 886,596 828,383 822,689 801,494 772,724
*Total liabilities and stockholders' equity* *$* * 8,538,894* *$* * 8,540,057* *$* * 8,226,673* *$* * 8,036,904* *$* * 7,948,837*
*ANALYSIS OF LOAN PORTFOLIO*
Loan/lease mix: (2)
Commercial and industrial - revolving $ 325,243 $ 299,588 $ 304,617 $ 307,612 $ 296,869
Commercial and industrial - other 1,390,068 1,381,967 1,308,853 1,322,384 1,371,590
Commercial and industrial - other - LIHTC 91,710 105,601 93,700 97,947 80,103
Total commercial and industrial 1,807,021 1,787,156 1,707,170 1,727,943 1,748,562
Commercial real estate, owner occupied 607,365 610,618 609,717 616,922 629,367
Commercial real estate, non-owner occupied 1,008,892 955,552 963,814 982,716 963,239
Construction and land development 477,424 472,695 437,682 448,261 448,986
Construction and land development - LIHTC 943,101 921,359 870,084 759,924 743,075
Multi-family 284,721 282,541 280,418 229,370 236,043
Multi-family - LIHTC 711,422 874,439 820,376 740,500 727,760
Direct financing leases 31,164 34,401 32,937 35,373 31,889
1-4 family real estate 544,971 539,931 535,405 532,491 499,529
Consumer 127,335 127,615 121,717 116,522 110,421
Total loans/leases $ 6,543,416 $ 6,606,307 $ 6,379,320 $ 6,190,022 $ 6,138,871
Less allowance for credit losses 87,200 87,669 85,797 86,573 87,706
*Net loans/leases* *$* * 6,456,216* *$* * 6,518,638* *$* * 6,293,523* *$* * 6,103,449* *$* * 6,051,165*
*ANALYSIS OF SECURITIES PORTFOLIO*
Securities mix:
U.S. government sponsored agency securities $ 14,973 $ 16,002 $ 18,942 $ 19,320 $ 16,981
Municipal securities 853,645 764,017 743,608 731,689 779,450
Residential mortgage-backed and related securities 59,196 57,946 60,958 63,104 66,215
Asset backed securities 15,423 16,326 17,393 17,967 18,728
Other securities 41,115 43,272 43,156 46,535 46,908
Trading securities 22,368 - - - -
Total securities (3) $ 1,006,720 $ 897,563 $ 884,057 $ 878,615 $ 928,282
Less allowance for credit losses 1,192 1,169 1,169 1,169 180
*Net securities* *$* * 1,005,528* *$* * 896,394* *$* * 882,888* *$* * 877,446* *$* * 928,102*
*ANALYSIS OF DEPOSITS*
Deposit mix:
Noninterest-bearing demand deposits $ 1,038,689 $ 1,027,791 $ 1,101,605 $ 1,189,858 $ 1,262,981
Interest-bearing demand deposits 4,338,390 4,416,725 4,374,847 4,033,193 3,875,497
Time deposits 851,950 788,692 765,801 679,946 744,593
Brokered deposits 284,976 261,644 364,467 598,666 101,146
*Total deposits* *$* * 6,514,005* *$* * 6,494,852* *$* * 6,606,720* *$* * 6,501,663* *$* * 5,984,217*
*ANALYSIS OF BORROWINGS*
Borrowings mix:
Term FHLB advances $ 135,000 $ 135,000 $ 135,000 $ 135,000 $ -
Overnight FHLB advances 300,000 295,000 - - 415,000
Other short-term borrowings 1,500 470 1,850 1,100 129,630
Subordinated notes 233,064 232,958 232,852 232,746 232,662
Junior subordinated debentures 48,731 48,698 48,666 48,634 48,602
*Total borrowings* *$* * 718,295* *$* * 712,126* *$* * 418,368* *$* * 417,480* *$* * 825,894*
(1) Loans with a fair value of $0 million, $278.0 million, $291.0 million and $139.2 million have been identified for securitization and are included in LHFS at December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023 respectively.
(2) Loan categories with significant LIHTC loan balances have been broken out separately. Total LIHTC balances within the loan/lease portfolio are $1.8 billion as of December 31, 2023.
(3) As of December 31, 2023, trading securities included two securities purchased from Freddie Mac following the loan sale and securitization of $130 million of tax exempt LIHTC loans and $135 million of taxable LIHTC loans sponsored by Freddie Mac in 2023.
*QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) * *For the Quarter Ended* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *2023* *2023* *2023* *2023* *2022* (dollars in thousands, except per share data)
*INCOME STATEMENT*
Interest income $ 112,248 $ 108,568 $ 98,377 $ 94,217 $ 94,037
Interest expense 56,512 53,313 45,172 37,407 28,819
Net interest income 55,736 55,255 53,205 56,810 65,218
Provision for credit losses 5,199 3,806 3,606 3,928 -
*Net interest income after provision for credit losses* *$* * 50,537* *$* * 51,449* *$* * 49,599* *$* * 52,882* *$* * 65,218*
Trust fees $ 3,084 $ 2,863 $ 2,844 $ 2,906 $ 2,644
Investment advisory and management fees 1,052 947 986 879 918
Deposit service fees 2,008 2,107 2,034 2,028 2,142
Gains on sales of residential real estate loans, net 323 476 500 312 468
Gains on sales of government guaranteed portions of loans, net 24 - - 30 50
Capital markets revenue 36,956 15,596 22,490 17,023 11,338
Securities gains (losses), net - - 12 (463 ) -
Earnings on bank-owned life insurance 832 1,807 838 707 755
Debit card fees 1,561 1,584 1,589 1,466 1,500
Correspondent banking fees 465 450 356 391 257
Loan related fee income 845 800 770 651 614
Fair value gain (loss) on derivatives (582 ) (336 ) 83 (427 ) (267 )
Other 1,161 299 18 339 800
*Total noninterest income* *$* * 47,729* *$* * 26,593* *$* * 32,520* *$* * 25,842* *$* * 21,219*
Salaries and employee benefits $ 41,059 $ 32,098 $ 31,459 $ 32,003 $ 32,594
Occupancy and equipment expense 6,789 6,228 6,100 5,914 6,027
Professional and data processing fees 4,223 4,456 4,078 3,514 3,769
Acquisition costs - - - - (424 )
Post-acquisition compensation, transition and integration costs - - - 207 668
FDIC insurance, other insurance and regulatory fees 2,115 1,721 1,927 1,374 1,605
Loan/lease expense 834 826 652 556 411
Net cost of (income from) and gains/losses on operations of other real estate 38 3 - (67 ) (117 )
Advertising and marketing 1,641 1,429 1,735 1,237 1,562
Communication and data connectivity 449 478 471 665 587
Supplies 333 335 281 305 337
Bank service charges 761 605 621 605 563
Correspondent banking expense 300 232 221 210 210
Intangibles amortization 716 691 765 766 787
Payment card processing 836 733 542 545 599
Trust expense 413 432 337 214 166
Other 431 814 538 737 353
*Total noninterest expense* *$* * 60,938* *$* * 51,081* *$* * 49,727* *$* * 48,785* *$* * 49,697*
*Net income before income taxes* *$* * 37,328* *$* * 26,961* *$* * 32,392* *$* * 29,939* *$* * 36,740*
Federal and state income tax expense 4,473 1,840 3,967 2,782 5,834
*Net income* *$* * 32,855* *$* * 25,121* *$* * 28,425* *$* * 27,157* *$* * 30,906*
Basic EPS $ 1.96 $ 1.50 $ 1.70 $ 1.62 $ 1.83
Diluted EPS $ 1.95 $ 1.49 $ 1.69 $ 1.60 $ 1.81
Weighted average common shares outstanding 16,734,080 16,717,303 16,701,950 16,776,289 16,855,973
Weighted average common and common equivalent shares outstanding 16,875,952 16,847,951 16,799,527 16,942,132 17,047,976
*QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) * *For the Year Ended* *December 31, * *December 31,* *2023* *2022* (dollars in thousands, except per share data)
*INCOME STATEMENT*
Interest income $ 413,410 $ 292,571
Interest expense 192,404 61,451
Net interest income 221,006 231,120
Provision for credit losses (1) 16,539 8,284
*Net interest income after provision for credit losses* *$* * 204,467* *$* * 222,836*
Trust fees $ 11,697 $ 10,641
Investment advisory and management fees 3,864 3,858
Deposit service fees 8,177 8,134
Gains on sales of residential real estate loans, net 1,611 2,411
Gains on sales of government guaranteed portions of loans, net 54 119
Capital markets revenue 92,065 41,309
Securities losses, net (451 ) -
Earnings on bank-owned life insurance 4,184 2,056
Debit card fees 6,200 5,459
Correspondent banking fees 1,662 967
Loan related fee income 3,066 2,428
Fair value gain (loss) on derivatives (1,262 ) 1,975
Other 1,817 1,372
*Total noninterest income* *$* * 132,684* *$* * 80,729*
Salaries and employee benefits $ 136,619 $ 115,368
Occupancy and equipment expense 25,031 21,975
Professional and data processing fees 16,271 16,282
Acquisition costs - 3,715
Post-acquisition compensation, transition and integration costs 207 5,526
FDIC insurance, other insurance and regulatory fees 7,137 5,806
Loan/lease expense 2,868 1,829
Net cost of (income from) and gains/losses on operations of other real estate (26 ) (40 )
Advertising and marketing 6,042 4,958
Communication and data connectivity 2,063 2,213
Supplies 1,254 1,109
Bank service charges 2,592 2,282
Correspondent banking expense 963 840
Intangibles amortization 2,938 2,854
Payment card processing 2,656 1,964
Trust expense 1,396 775
Other 2,520 2,560
*Total noninterest expense* *$* * 210,531* *$* * 190,016*
*Net income before income taxes* *$* * 126,620* *$* * 113,549*
Federal and state income tax expense 13,062 14,483
*Net income* *$* * 113,558* *$* * 99,066*
Basic EPS $ 6.79 $ 5.94
Diluted EPS $ 6.73 $ 5.87
Weighted average common shares outstanding 16,732,406 16,681,844
Weighted average common and common equivalent shares outstanding 16,866,391 16,890,007
(1) Provision for credit losses for the year ended December 31, 2022 included $11.0 million related to the acquired Guaranty Bank non-PCD loans and $1.4 million related to acquired Guaranty Bank OBS exposures.
*QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) * *As of and for the Quarter Ended* *For the Year Ended* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *December 31,* *December 31,* *2023* *2023* *2023* *2023* *2022* *2023* *2022* (dollars in thousands, except per share data)
*COMMON SHARE DATA*
Common shares outstanding 16,749,254 16,731,646 16,713,853 16,713,775 16,795,942
Book value per common share (1) $ 52.93 $ 49.51 $ 49.22 $ 47.95 $ 46.01
Tangible book value per common share (Non-GAAP) (2) $ 43.81 $ 40.33 $ 39.99 $ 38.71 $ 36.82
Closing stock price $ 58.39 $ 48.52 $ 41.03 $ 43.91 $ 49.64
Market capitalization $ 977,989 $ 811,819 $ 685,769 $ 733,902 $ 833,751
Market price / book value 110.31 % 98.00 % 83.36 % 91.57 % 107.90 %
Market price / tangible book value 133.29 % 120.30 % 102.59 % 113.43 % 134.83 %
Earnings per common share (basic) LTM (3) $ 6.78 $ 6.65 $ 6.89 $ 6.06 $ 5.95
Price earnings ratio LTM (3) 8.61 x 7.30 x 5.96 x 7.24 x 8.35 x
TCE / TA (Non-GAAP) (4) 8.75 % 8.05 % 8.28 % 8.21 % 7.93 %
*CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY*
Beginning balance $ 828,383 $ 822,689 $ 801,494 $ 772,724 $ 737,072
Net income 32,855 25,121 28,425 27,157 30,906
Other comprehensive income (loss), net of tax 25,363 (19,415 ) (6,336 ) 9,325 9,959
Common stock cash dividends declared (1,004 ) (1,003 ) (1,003 ) (1,010 ) (1,013 )
Repurchase and cancellation of shares of common stock as a result of a share repurchase program - - (967 ) (7,719 ) (5,037 )
Other (5) 999 991 1,076 1,017 837
Ending balance *$* * 886,596* *$* * 828,383* *$* * 822,689* *$* * 801,494* *$* * 772,724*
*REGULATORY CAPITAL RATIOS (6):*
Total risk-based capital ratio 14.15 % 14.48 % 14.64 % 14.64 % 14.28 %
Tier 1 risk-based capital ratio 10.16 % 10.30 % 10.34 % 10.23 % 9.95 %
Tier 1 leverage capital ratio 10.03 % 9.92 % 10.06 % 9.73 % 9.61 %
Common equity tier 1 ratio 9.57 % 9.68 % 9.70 % 9.57 % 9.29 %
*KEY PERFORMANCE RATIOS AND OTHER METRICS *
Return on average assets (annualized) 1.53 % 1.21 % 1.44 % 1.37 % 1.58 % 1.39 % 1.37 %
Return on average total equity (annualized) 15.35 % 11.95 % 13.97 % 13.67 % 16.32 % 13.78 % 13.24 %
Net interest margin 2.90 % 2.89 % 2.93 % 3.18 % 3.62 % 2.97 % 3.49 %
Net interest margin (TEY) (Non-GAAP)(7) 3.32 % 3.31 % 3.29 % 3.52 % 3.93 % 3.35 % 3.73 %
Efficiency ratio (Non-GAAP) (8) 58.90 % 62.41 % 58.01 % 59.02 % 57.50 % 59.52 % 60.93 %
Gross loans and leases / total assets 76.63 % 77.36 % 77.54 % 77.02 % 77.23 % 76.63 % 77.23 %
Gross loans and leases / total deposits 100.45 % 101.72 % 96.56 % 95.21 % 102.58 % 100.45 % 102.58 %
Effective tax rate 11.98 % 6.82 % 12.25 % 9.29 % 15.88 % 10.32 % 12.75 %
Full-time equivalent employees (9) 996 987 1009 969 973 996 973
*AVERAGE BALANCES *
Assets $ 8,535,732 $ 8,287,813 $ 7,924,597 $ 7,906,830 $ 7,800,229 $ 8,165,805 $ 7,206,180
Loans/leases 6,483,572 6,476,512 6,219,980 6,165,115 6,043,359 6,337,551 5,604,074
Deposits 6,485,154 6,342,339 6,292,481 6,179,644 6,029,455 6,325,790 5,676,546
Total stockholders' equity 852,163 837,734 816,882 794,685 757,419 825,557 748,032
(1) Includes accumulated other comprehensive income (loss).
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets. See GAAP to Non-GAAP reconciliations.
(3) LTM : Last twelve months.
(4) TCE / TCA : tangible common equity / total tangible assets. See GAAP to non-GAAP reconciliations.
(5) Includes mostly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.
(6) Ratios for the current quarter are subject to change upon final calculation for regulatory filings due after earnings release.
(7) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations.
(8) See GAAP to Non-GAAP reconciliations.
(9) The increase in full-time equivalent employees in the second quarter of 2023 and the subsequent decline in the third quarter of 2023 includes 19 summer interns.
*QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) *
*ANALYSIS OF NET INTEREST INCOME AND MARGIN* *For the Quarter Ended* *December 31, 2023* *September 30, 2023* *December 31, 2022* Average Balance Interest Earned or Paid Average Yield or Cost Average Balance Interest Earned or Paid Average Yield or Cost Average Balance Interest Earned or Paid Average Yield or Cost (dollars in thousands)
Fed funds sold $ 18,644 $ 257 5.47 % $ 21,526 $ 284 5.23 % $ 30,754 $ 296 3.82 %
Interest-bearing deposits at financial institutions 72,439 986 5.40 % 86,807 1,205 5.51 % 62,581 504 3.20 %
Investment securities - taxable 365,686 4,080 4.45 % 344,657 3,788 4.38 % 347,224 3,286 3.77 %
Investment securities - nontaxable (1) 650,069 8,380 5.15 % 600,693 6,974 4.64 % 624,706 6,788 4.35 %
Restricted investment securities 40,625 670 6.45 % 43,590 659 5.91 % 39,954 628 6.15 %
Loans (1) 6,483,572 105,830 6.48 % 6,476,512 103,428 6.34 % 6,043,359 88,088 5.78 %
Total earning assets (1) $ 7,631,035 $ 120,203 6.26 % $ 7,573,785 $ 116,338 6.10 % $ 7,148,578 $ 99,590 5.53 %
Interest-bearing deposits $ 4,465,279 $ 37,082 3.29 % $ 4,264,208 $ 33,563 3.12 % $ 3,968,081 $ 17,655 1.77 %
Time deposits 982,356 10,559 4.26 % 999,488 10,003 3.97 % 746,819 3,476 1.85 %
Short-term borrowings 1,101 15 5.18 % 1,514 20 5.28 % 19,591 211 4.28 %
Federal Home Loan Bank advances 360,000 4,841 5.26 % 425,870 5,724 5.26 % 351,033 3,507 3.91 %
Subordinated debentures 232,994 3,308 5.68 % 232,890 3,307 5.68 % 232,689 3,312 5.69 %
Junior subordinated debentures 48,710 708 5.68 % 48,678 695 5.59 % 48,583 657 5.29 %
Total interest-bearing liabilities $ 6,090,440 $ 56,513 3.68 % $ 5,972,648 $ 53,312 3.54 % $ 5,366,796 $ 28,818 2.13 %
Net interest income (1) $ 63,690 $ 63,026 $ 70,772
Net interest margin (2) 2.90 % 2.89 % 3.62 %
Net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.32 % 3.31 % 3.93 %
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.29 % 3.28 % 3.61 % *For the Year Ended* *December 31, 2023* *December 31, 2022* Average Balance Interest Earned or Paid Average Yield or Cost Average Balance Interest Earned or Paid Average Yield or Cost (dollars in thousands)
Fed funds sold $ 19,110 $ 998 5.22 % $ 14,436 $ 410 2.84 %
Interest-bearing deposits at financial institutions 80,924 4,137 5.11 % 63,448 1,089 1.72 %
Investment securities - taxable 346,579 14,927 4.30 % 335,255 12,078 3.59 %
Investment securities - nontaxable (1) 611,924 28,272 4.62 % 575,457 24,281 4.22 %
Restricted investment securities 39,273 2,346 5.89 % 35,554 2,068 5.73 %
Loans (1) 6,337,551 390,967 6.17 % 5,604,074 268,985 4.80 %
Total earning assets (1) $ 7,435,361 $ 441,647 5.94 % $ 6,628,224 $ 308,911 4.66 %
Interest-bearing deposits $ 4,191,913 $ 121,662 2.90 % $ 3,715,017 $ 35,359 0.95 %
Time deposits 1,010,827 37,784 3.74 % 568,245 7,003 1.23 %
Short-term borrowings 2,781 152 6.44 % 8,637 299 3.46 %
Federal Home Loan Bank advances 323,904 16,740 5.10 % 286,474 6,954 2.39 %
Other borrowings - - 0.00 % 1,068 53 4.96 %
Subordinated debentures 232,837 13,230 5.68 % 165,685 9,200 5.55 %
Junior subordinated debentures 48,662 2,836 5.75 % 45,497 2,583 5.60 %
Total interest-bearing liabilities $ 5,810,924 $ 192,404 3.31 % $ 4,790,623 $ 61,451 1.28 %
Net interest income (1) $ 249,243 $ 247,460
Net interest margin (2) 2.97 % 3.49 %
Net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.35 % 3.73 %
Adjusted net interest margin (TEY) (Non-GAAP) (1) (2) (3) 3.32 % 3.60 %
(1) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% tax rate.
(2) See "Select Financial Data - Subsidiaries" for a breakdown of amortization/accretion included in net interest margin for each period presented.
(3) TEY : Tax equivalent yield. See GAAP to Non-GAAP reconciliations. *QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) * *As of**
* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *2023* *2023* *2023* *2023* *2022* (dollars in thousands, except per share data)
*ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES ON LOANS/LEASES*
Beginning balance $ 87,669 $ 85,797 $ 86,573 $ 87,706 $ 90,489
Change in ACL for writedown of LHFS to fair value (1) 266 175 (2,277 ) (1,709 ) -
Credit loss expense 2,519 3,260 3,313 2,458 1,013
Loans/leases charged off (3,354 ) (1,816 ) (1,947 ) (2,275 ) (3,960 )
Recoveries on loans/leases previously charged off 100 253 135 393 164
*Ending balance* *$* * 87,200* *$* * 87,669* *$* * 85,797* *$* * 86,573* *$* * 87,706*
*NONPERFORMING ASSETS *
Nonaccrual loans/leases $ 32,753 $ 34,568 $ 26,062 $ 22,947 $ 8,765
Accruing loans/leases past due 90 days or more 86 - 83 15 5
Total nonperforming loans/leases 32,839 34,568 26,145 22,962 8,770
Other real estate owned 1,347 120 - 61 133
Other repossessed assets - - - - -
*Total nonperforming assets* *$* * 34,186* *$* * 34,688* *$* * 26,145* *$* * 23,023* *$* * 8,903*
*ASSET QUALITY RATIOS*
Nonperforming assets / total assets 0.40 % 0.41 % 0.32 % 0.29 % 0.11 %
ACL for loans and leases / total loans/leases held for investment 1.33 % 1.39 % 1.41 % 1.43 % 1.43 %
ACL for loans and leases / nonperforming loans/leases 265.54 % 253.61 % 328.16 % 377.03 % 1000.07 %
Net charge-offs as a % of average loans/leases 0.05 % 0.02 % 0.03 % 0.03 % 0.06 %
*INTERNALLY ASSIGNED RISK RATING (2)*
Special mention (rating 6) $ 124,460 $ 127,202 $ 116,910 $ 125,048 $ 98,333
Substandard (rating 7)/Classifed loans (3) 67,313 69,369 63,956 70,866 66,021
Doubtful (rating 8)/Classifed loans (3) - - - - -
Criticized loans (4) $ 191,773 $ 196,571 $ 180,866 $ 195,914 $ 164,354
Classified loans as a % of total loans/leases 1.03 % 1.05 % 1.00 % 1.14 % 1.08 %
Criticized loans as a % of total loans/leases 2.93 % 2.98 % 2.84 % 3.16 % 2.68 %
(1) Certain loans were identified for securitization and transferred from loans to LHFS. The fair values of the loans were less than their carrying values at the date of transfer, resulting in a change to the loan ACL.
(2) Amounts exclude the government guaranteed portion, if any. The Company assigns internal risk ratings of Pass (Rating 2) for the government guaranteed portion.
(3) Classified loans are defined as C&I and CRE loans with internally assigned risk ratings of 7 or 8, regardless of performance.
(4) Criticized loans are defined as C&I and CRE loans with internally assigned risk ratings of 6, 7, or 8, regardless of performance.
*QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) * *For the Quarter Ended* *For the Year Ended* *December 31,* *September 30,* *December 31,* *December 31,* *December 31,* *SELECT FINANCIAL DATA - SUBSIDIARIES* *2023* *2023* *2022* *2023* *2022* (dollars in thousands) *TOTAL ASSETS* Quad City Bank and Trust (1) $ 2,448,957 $ 2,433,084 $ 2,312,013 m2 Equipment Finance, LLC 345,682 336,180 306,396 Cedar Rapids Bank and Trust 2,419,146 2,442,263 2,185,500 Community State Bank 1,426,202 1,417,250 1,297,812 Guaranty Bank 2,281,296 2,242,638 2,146,474 *TOTAL DEPOSITS* Quad City Bank and Trust (1) $ 1,878,375 $ 1,973,989 $ 1,730,187 Cedar Rapids Bank and Trust 1,748,516 1,722,905 1,686,959 Community State Bank 1,169,921 1,132,724 1,071,146 Guaranty Bank 1,771,371 1,722,861 1,587,477 *TOTAL LOANS & LEASES* Quad City Bank and Trust (1) $ 1,983,679 $ 2,005,770 $ 1,828,267 m2 Equipment Finance, LLC 350,641 341,041 309,930 Cedar Rapids Bank and Trust 1,698,447 1,750,986 1,644,989 Community State Bank 1,099,262 1,098,479 988,370 Guaranty Bank 1,762,027 1,751,072 1,677,245 *TOTAL LOANS & LEASES / TOTAL DEPOSITS* Quad City Bank and Trust (1) 106 % 102 % 106 % Cedar Rapids Bank and Trust 97 % 102 % 98 % Community State Bank 94 % 97 % 92 % Guaranty Bank 99 % 102 % 106 % *TOTAL LOANS & LEASES / TOTAL ASSETS* Quad City Bank and Trust (1) 81 % 82 % 79 % Cedar Rapids Bank and Trust 70 % 72 % 75 % Community State Bank 77 % 78 % 76 % Guaranty Bank 77 % 78 % 78 % *ACL ON LOANS/LEASES AS A PERCENTAGE OF LOANS/LEASES* Quad City Bank and Trust (1) 1.48 % 1.43 % 1.46 % m2 Equipment Finance, LLC 3.80 % 3.52 % 3.11 % Cedar Rapids Bank and Trust 1.39 % 1.40 % 1.49 % Community State Bank 1.23 % 1.22 % 1.38 % Guaranty Bank 1.18 % 1.20 % 1.37 % *RETURN ON AVERAGE ASSETS * Quad City Bank and Trust (1) 0.67 % 0.97 % 1.36 % 0.92 % 1.55 % Cedar Rapids Bank and Trust 3.78 % 2.28 % 2.73 % 3.17 % 2.63 % Community State Bank 1.11 % 1.38 % 1.75 % 1.34 % 1.40 % Guaranty Bank (5) 1.41 % 1.23 % 2.06 % 1.16 % 1.36 % *NET INTEREST MARGIN PERCENTAGE (2)* Quad City Bank and Trust (1) 3.41 % 3.37 % 3.56 % 3.37 % 3.61 % Cedar Rapids Bank and Trust 3.84 % 3.78 % 4.37 % 3.83 % 3.93 % Community State Bank (3) 3.74 % 3.88 % 4.06 % 3.87 % 3.77 % Guaranty Bank (4) 3.07 % 3.06 % 4.58 % 3.18 % 4.18 % *ACQUISITION-RELATED AMORTIZATION/ACCRETION INCLUDED IN NET* *INTEREST MARGIN, NET* Cedar Rapids Bank and Trust $ - $ - $ 98 $ (8 ) $ 158 Community State Bank (1 ) (1 ) 505 $ 67 628 Guaranty Bank 706 572 5,118 $ 2,243 7,932 QCR Holdings, Inc. (6) (32 ) (32 ) (33 ) $ (129 ) (137 )
(1) Quad City Bank and Trust amounts include m2 Equipment Finance, LLC, as this entity is wholly-owned and consolidated with the Bank. m2 Equipment Finance, LLC is also presented separately for certain (applicable) measurements.
(2) Includes nontaxable securities and loans. Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% federal tax rate.
(3) Community State Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 3.74% for the quarter ended December 31, 2023, 3.88% for the quarter ended September 30, 2023 and 3.73% for the quarter ended December 31, 2022.
(4) Guaranty Bank's net interest margin percentage includes various purchase accounting adjustments. Excluding those adjustments, net interest margin (Non-GAAP) would have been 2.95% for the quarter ended December 31, 2023, 2.97% for the quarter ended September 30, 2023 and 3.58% for the quarter ended December 31, 2022.
(5) Adjusted ROAA excluding non-core adjustments for the Guaranty Bank acquisition (non-GAAP) would have been 1.91% for the year ended December 31, 2022.
(6) Relates to the trust preferred securities acquired as part of the Guaranty Bank acquisition in 2017 and the Community National Bank acquisition in 2013.
*QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) * *As of* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,*
*GAAP TO NON-GAAP RECONCILIATIONS* *2023* *2023* *2023* *2023* *2022* (dollars in thousands, except per share data)
*TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (1)*
Stockholders' equity (GAAP) $ 886,596 $ 828,383 $ 822,689 $ 801,494 $ 772,724
Less: Intangible assets 152,848 153,564 154,255 154,467 154,366
Tangible common equity (non-GAAP) $ 733,748 $ 674,819 $ 668,434 $ 647,027 $ 618,358
Total assets (GAAP) $ 8,538,894 $ 8,540,057 $ 8,226,673 $ 8,036,904 $ 7,948,837
Less: Intangible assets 152,848 153,564 154,255 154,467 154,366
Tangible assets (non-GAAP) $ 8,386,046 $ 8,386,493 $ 8,072,418 $ 7,882,437 $ 7,794,471
*Tangible common equity to tangible assets ratio (non-GAAP)* *8.75* *%* *8.05* *%* *8.28* *%* *8.21* *%* *7.93* *%*
(1) This ratio is a non-GAAP financial measure. The Company's management believes that this measurement is important to many investors in the marketplace who are interested in changes period-to-period in common equity. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to stockholders' equity and total assets, which are the most directly comparable GAAP financial measures.
*QCR Holding, Inc.*
*Consolidated Financial Highlights*
*(Unaudited) *
*GAAP TO NON-GAAP RECONCILIATIONS* *For the Quarter Ended* *For the Year Ended* *December 31,* *September 30,* *June 30,* *March 31,* *December 31,* *December 31,* *December 31,*
*ADJUSTED NET INCOME (1)* *2023* *2023* *2023* *2023* *2022* *2023* *2022* (dollars in thousands, except per share data)
Net income (GAAP) $ 32,855 $ 25,121 $ 28,425 $ 27,157 $ 30,906 $ 113,558 $ 99,066
Less non-core items (post-tax) (2):
Income:
Securities gains (losses), net - - 9 (366 ) - (356 ) -
Fair value gain (loss) on derivatives, net (460 ) (265 ) 66 (337 ) (211 ) (997 ) 1,560
Total non-core income (non-GAAP) $ (460 ) $ (265 ) $ 75 $ (703 ) $ (211 ) $ (1,353 ) $ 1,560
Expense:
Acquisition costs (2) - - - - (517 ) - 3,198
Post-acquisition compensation, transition and integration costs - - - 164 529 164 4,366
Separation agreement - - - - - - -
CECL Day 2 provision for credit losses on acquired non-PCD loans (3) - - - - - - 8,651
CECL Day 2 provision for credit losses provision on acquired OBS exposure (3) - - - - - - 1,140
Total non-core expense (non-GAAP) $ - $ - $ - $ 164 $ 12 $ 164 $ 17,355
*Adjusted net income (non-GAAP) (1)* *$* * 33,315* *$* * 25,386* *$* * 28,350* *$* * 28,024* *$* * 31,129* *$* * 115,075* *$* * 114,861*
*ADJUSTED EARNINGS PER COMMON SHARE (1)*
Adjusted net income (non-GAAP) (from above) $ 33,315 $ 25,386 $ 28,350 $ 28,024 $ 31,129 $ 115,075 $ 114,861
Weighted average common shares outstanding 16,734,080 16,717,303 16,701,950 16,776,289 16,855,973 16,732,406 16,681,844
Weighted average common and common equivalent shares outstanding 16,875,952 16,847,951 16,799,527 16,942,132 17,047,976 16,866,391 16,890,007
*Adjusted earnings per common share (non-GAAP):*
*Basic* *$* * 1.99* *$* * 1.52* *$* * 1.70* *$* * 1.67* *$* * 1.85* *$* * 6.88* *$* * 6.89*
*Diluted* *$* * 1.97* *$* * 1.51* *$* * 1.69* *$* * 1.65* *$* * 1.83* *$* * 6.82* *$* * 6.80*
*ADJUSTED RETURN ON AVERAGE ASSETS AND AVERAGE EQUITY (1)*
Adjusted net income (non-GAAP) (from above) $ 33,315 $ 25,386 $ 28,350 $ 28,024 $ 31,129 $ 115,075 $ 114,861
Average Assets $ 8,535,732 $ 8,287,813 $ 7,924,597 $ 7,906,830 $ 7,800,229 $ 8,165,805 $ 7,206,180
*Adjusted return on average assets (annualized) (non-GAAP)* *1.56* *%* *1.23* *%* *1.43* *%* *1.42* *%* *1.60* *%* *1.41* *%* *1.59* *%*
*Adjusted return on average equity (annualized) (non-GAAP)* *15.64* *%* *12.12* *%* *13.88* *%* *14.11* *%* *16.44* *%* *13.94* *%* *15.36* *%*
*NET INTEREST MARGIN (TEY) (4)*
Net interest income (GAAP) $ 55,736 $ 55,255 $ 53,205 $ 56,810 $ 65,218 $ 221,006 $ 231,120
Plus: Tax equivalent adjustment (5) 7,954 7,771 6,542 6,057 5,554 28,237 16,340
Net interest income - tax equivalent (Non-GAAP) $ 63,690 $ 63,026 $ 59,747 $ 62,867 $ 70,772 $ 249,243 $ 247,460
Less: Acquisition accounting net accretion 673 539 134 828 5,688 2,173 8,581
Adjusted net interest income $ 63,017 $ 62,487 $ 59,613 $ 62,039 $ 65,084 $ 247,070 $ 238,879
Average earning assets $ 7,631,035 $ 7,573,785 $ 7,283,286 $ 7,247,605 $ 7,148,578 $ 7,435,361 $ 6,628,224
*Net interest margin (GAAP)* *2.90* *%* *2.89* *%* *2.93* *%* *3.18* *%* *3.62* *%* *2.97* *%* *3.49* *%*
*Net interest margin (TEY) (Non-GAAP)* *3.32* *%* *3.31* *%* *3.29* *%* *3.52* *%* *3.93* *%* *3.35* *%* *3.73* *%*
*Adjusted net interest margin (TEY) (Non-GAAP)* *3.29* *%* *3.28* *%* *3.28* *%* *3.47* *%* *3.61* *%* *3.32* *%* *3.60* *%*
*EFFICIENCY RATIO (6)*
Noninterest expense (GAAP) $ 60,938 $ 51,081 $ 49,727 $ 48,785 $ 49,697 $ 210,531 $ 190,016
Net interest income (GAAP) $ 55,736 $ 55,255 $ 53,205 $ 56,810 $ 65,218 $ 221,006 $ $ 231,120
Noninterest income (GAAP) 47,729 26,593 32,520 25,842 21,219 132,684 80,729
Total income $ 103,465 $ 81,848 $ 85,725 $ 82,652 $ 86,437 $ 353,690 $ 311,849
*Efficiency ratio (noninterest expense/total income) (Non-GAAP)* *58.90* *%* *62.41* *%* *58.01* *%* *59.02* *%* *57.50* *%* *59.52* *%* *60.93* *%*
(1) Adjusted net income, adjusted earnings per common share, adjusted return on average assets and average equity are non-GAAP financial measures. The Company's management believes that these measurements are important to investors as they exclude non-core or non-recurring income and expense items, therefore, they provide a more realistic run-rate for future periods. In compliance with applicable rules of the SEC, these non-GAAP measures are reconciled to net income, which is the most directly comparable GAAP financial measure.
(2) Non-core or nonrecurring items (post-tax) are calculated using an estimated effective federal tax rate of 21% with the exception of acquisition costs which have an estimated effective federal tax rate of 13.62%.
(3) The CECL Day 2 provision for credit losses on acquired non-PCD loans and OBS exposures resulted from the Guaranty Bank acquisition on April 1, 2022.
(4) Interest earned and yields on nontaxable securities and loans are determined on a tax equivalent basis using a 21% effective federal tax rate.
(5) Net interest margin (TEY) is a non-GAAP financial measure. The Company's management utilizes this measurement to take into account the tax benefit associated with certain loans and securities. It is also standard industry practice to measure net interest margin using tax-equivalent measures. In compliance with applicable rules of the SEC, this non-GAAP measure is reconciled to net interest income, which is the most directly comparable GAAP financial measure. In addition, the Company calculates net interest margin without the impact of acquisition accounting net accretion as this can fluctuate and it's difficult to provide a more realistic run-rate for future periods.
(6) Efficiency ratio is a non-GAAP measure. The Company's management utilizes this ratio to compare to industry peers. The ratio is used to calculate overhead as a percentage of revenue. In compliance with the applicable rules of the SEC, this non-GAAP measure is reconciled to noninterest expense, net interest income and noninterest income, which are the most directly comparable GAAP financial measures.