QCR Holdings Posts Steady Q2 Earnings Amidst Derivative Activity

TL;DR

**QCRH is playing it safe with derivatives, showing steady growth; a solid, if unspectacular, regional bank bet.**

AI Summary

QCR Holdings Inc. reported a net income of $16.93 million for the quarter ended June 30, 2025, a slight increase from $16.88 million in the prior quarter. The company's retained earnings stood at $202.5 million as of June 30, 2025, up from $198.7 million on March 31, 2025, indicating steady profit retention. Common stock remained stable at $2.9 million, while additional paid-in capital increased to $382.4 million from $381.9 million in the previous quarter. Accumulated other comprehensive income showed a negative balance of -$10.3 million, a slight improvement from -$10.5 million in the prior quarter. The company engaged in various derivative activities, including interest rate swaps, caps, and floors, during the six months ended June 30, 2025, to manage interest rate risk. Revenue streams from investment advisory, fiduciary, deposit accounts, debit cards, and correspondent clearing services contributed to the overall financial performance. The strategic outlook appears focused on maintaining a stable capital structure and managing interest rate exposures through financial instruments.

Why It Matters

QCR Holdings' stable net income and growing retained earnings signal resilience in a challenging economic environment, which is positive for long-term investors seeking consistent returns. The company's active use of interest rate derivatives, such as swaps and caps, demonstrates a proactive approach to managing interest rate risk, a critical factor for regional banks. This strategic risk management could provide a competitive edge against peers less adept at navigating fluctuating interest rates, potentially attracting more sophisticated investors. For customers, this stability suggests a reliable financial partner, while employees benefit from a secure and growing institution. The broader market sees a regional bank effectively managing its balance sheet, contributing to overall financial sector stability.

Risk Assessment

Risk Level: medium — The company's accumulated other comprehensive income remains negative at -$10.3 million as of June 30, 2025, indicating potential unrealized losses on investments or hedging activities. While an improvement from -$10.5 million in the prior quarter, this persistent negative balance suggests ongoing exposure to market fluctuations. The reliance on interest rate derivatives, while a risk management tool, also introduces counterparty risk and complexity in valuation.

Analyst Insight

Investors should hold QCRH, recognizing its stable performance and proactive risk management through derivatives. Monitor future filings for significant changes in accumulated other comprehensive income and the effectiveness of its hedging strategies, as these will be key indicators of sustained financial health.

Revenue Breakdown

Key Numbers

• $16.93M — Net Income (Q2 2025 net income, a slight increase from $16.88M in Q1 2025.)
• $202.5M — Retained Earnings (As of June 30, 2025, up from $198.7M on March 31, 2025, indicating profit retention.)
• $382.4M — Additional Paid-In Capital (As of June 30, 2025, an increase from $381.9M in the prior quarter.)
• -$10.3M — Accumulated Other Comprehensive Income (As of June 30, 2025, a slight improvement from -$10.5M in the prior quarter, still negative.)
• 2025-06-30 — Report Period End Date (The end date for the second quarter financial reporting.)

Key Players & Entities

• QCR HOLDINGS INC (company) — filer of the 10-Q
• $16.93 million (dollar_amount) — net income for Q2 2025
• $16.88 million (dollar_amount) — net income for Q1 2025
• $202.5 million (dollar_amount) — retained earnings as of June 30, 2025
• $198.7 million (dollar_amount) — retained earnings as of March 31, 2025
• $2.9 million (dollar_amount) — common stock as of June 30, 2025
• $382.4 million (dollar_amount) — additional paid-in capital as of June 30, 2025
• $381.9 million (dollar_amount) — additional paid-in capital as of March 31, 2025
• -$10.3 million (dollar_amount) — accumulated other comprehensive income as of June 30, 2025
• -$10.5 million (dollar_amount) — accumulated other comprehensive income as of March 31, 2025

FAQ

Risk Factors

• Interest Rate Risk Management [medium — financial]: QCR Holdings Inc. actively engages in derivative activities, including interest rate swaps, caps, and floors, to manage interest rate risk. These instruments are used to mitigate potential adverse effects of fluctuating interest rates on the company's financial performance.

Industry Context

QCR Holdings Inc. operates within the commercial banking sector, a highly competitive industry influenced by interest rate environments and regulatory oversight. The company's focus on deposit accounts, lending, and fee-based services like investment advisory and correspondent clearing places it among regional banks seeking to balance traditional banking with diversified revenue streams.

Regulatory Implications

As a financial institution, QCR Holdings Inc. is subject to stringent regulatory requirements from bodies like the Federal Reserve and FDIC. Compliance with capital adequacy, risk management, and consumer protection laws is paramount and can impact operational flexibility and profitability.

What Investors Should Do

1. Monitor interest rate sensitivity and derivative effectiveness.
2. Analyze growth drivers across diverse revenue segments.
3. Evaluate the trend in Accumulated Other Comprehensive Income.

Key Dates

• 2025-06-30: Quarterly Report Filing (10-Q) — Provides updated financial performance and position for the second quarter of 2025.

Glossary

Retained Earnings

The cumulative amount of net income that a company has kept over time, rather than distributing it as dividends. (Indicates the company's ability to generate and retain profits, as shown by the increase from $198.7 million to $202.5 million.)

Additional Paid-In Capital

The amount of capital a company receives from selling stock above its par value. (Shows an increase to $382.4 million from $381.9 million, reflecting potential stock issuance or other equity transactions.)

Accumulated Other Comprehensive Income

A component of shareholders' equity that includes unrealized gains and losses on certain investments and foreign currency translations. (The negative balance of -$10.3 million, though slightly improved, suggests potential unrealized losses impacting equity.)

Interest Rate Swaps

A derivative contract where two parties exchange interest rate payments, typically fixed for floating or vice versa. (Used by QCR Holdings Inc. to manage exposure to interest rate fluctuations.)

Interest Rate Caps

A derivative that sets a maximum interest rate on a floating-rate loan or debt. (Employed by the company to limit potential increases in interest expenses.)

Interest Rate Floors

A derivative that sets a minimum interest rate on a floating-rate loan or debt. (Used by the company to ensure a minimum interest income on certain assets.)

Year-Over-Year Comparison

The provided data focuses on the sequential quarter (Q1 2025 to Q2 2025) rather than year-over-year comparisons. Net income saw a marginal increase from $16.88 million to $16.93 million. Retained earnings continued their upward trend, indicating consistent profit retention. Additional paid-in capital experienced a slight rise, while accumulated other comprehensive income showed a minor improvement from its negative balance. No new significant risks were highlighted in the summary, suggesting a stable risk profile compared to the prior period.

Key Financial Figures

• $1.00 — ange on which registered Common Stock, $1.00 Par Value QCRH The Nasdaq Global Ma

Filing Documents

• qcrh-20250630x10q.htm (10-Q) — 11177KB
• qcrh-20250630xex31d1.htm (EX-31.1) — 9KB
• qcrh-20250630xex31d2.htm (EX-31.2) — 9KB
• qcrh-20250630xex32d1.htm (EX-32.1) — 6KB
• qcrh-20250630xex32d2.htm (EX-32.2) — 7KB
• 0001558370-25-010884.txt ( ) — 42105KB
• qcrh-20250630.xsd (EX-101.SCH) — 95KB
• qcrh-20250630_cal.xml (EX-101.CAL) — 116KB
• qcrh-20250630_def.xml (EX-101.DEF) — 483KB
• qcrh-20250630_lab.xml (EX-101.LAB) — 768KB
• qcrh-20250630_pre.xml (EX-101.PRE) — 665KB
• qcrh-20250630x10q_htm.xml (XML) — 13710KB

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 10 Note 1. Summary of Significant Accounting Policies 10 Note 2. Investment Securities 12 Note 3. Loans/Leases Receivable 16 Note 4. Securitizations and Variable Interest Entities 25 Note 5. Derivatives and Hedging Activities 25 Note 6. Income Taxes 29 Note 7. Earnings Per Share 30 Note 8. Fair Value 30 Note 9. Business Segment Information 33 Note 10. Regulatory Capital Requirements 35 Note 11. Commitments 36 Note 12. Subsequent Events 36 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction 37 General 37 Critical Accounting Policies and Critical Accounting Estimates 37 Executive Overview 37 Strategic Financial Metrics 39 Strategic Developments 40 GAAP to Non-GAAP Reconciliations 41 Net Interest Income - (Tax Equivalent Basis) 43 Results of Operations 47 Interest Income 47 Interest Expense 48 2 Table of Contents Provision for Credit Losses 48 Noninterest Income 49 Noninterest Expense 52 Income Taxes 54 Financial Condition 54 Investment Securities 55 Loans/Leases 55 Allowance for Credit Losses on Loans/Leases and OBS Exposures 57 Nonperforming Assets 59 Deposits 60 Borrowings 61 Stockholders' Equity 62 Liquidity and Capital Resources 63 Special Note Concerning Forward-Looking Statements 64 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 67 Item 4

Controls and Procedures

Controls and Procedures 69 Part II OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 70 Item 1A

Risk Factors

Risk Factors 70 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 70 Item 3 Defaults Upon Senior Securities 70 Item 4 Mine Safety Disclosures 70 Item 5 Other Information 70 Item 6 Exhibits 71

Signatures

Signatures Throughout this Quarterly Report on Form 10-Q, we use certain acronyms and abbreviations, as defined in Note 1 to the Consolidated Financial Statements. 3 Table of Contents QCR HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) As of June 30, 2025 and December 31, 2024 June 30, December 31, 2025 2024 (dollars in thousands) Assets Cash and due from banks $ 104,769 $ 91,732 Federal funds sold 27,000 27,150 Interest-bearing deposits at financial institutions 118,704 143,442 Securities held to maturity, at amortized cost, net of allowance for credit losses 909,035 835,797 Securities available for sale, at fair value 271,517 281,109 Securities trading, at fair value 82,900 83,529 Total securities 1,263,452 1,200,435 Loans receivable held for sale 1,162 2,143 Loans/leases receivable held for investment 6,923,762 6,782,261 Gross loans/leases receivable 6,924,924 6,784,404 Less allowance for credit losses ( 88,732 ) ( 89,841 ) Net loans/leases receivable 6,836,192 6,694,563 Bank-owned life insurance 111,097 109,575 Premises and equipment, net 181,773 159,153 Restricted investment securities 32,891 35,412 Other real estate owned, net 62 661 Goodwill 138,595 138,595 Intangibles 9,738 11,061 Derivatives 184,982 186,781 Other assets 233,076 227,470 Total assets $ 9,242,331 $ 9,026,030 Liabilities and Stockholders' Equity Liabilities: Deposits: Noninterest-bearing $ 952,032 $ 921,160 Interest-bearing 6,366,321 6,140,027 Total deposits 7,318,353 7,061,187 Short-term borrowings 1,350 1,800 Federal Home Loan Bank advances 225,383 285,383 Subordinated notes 233,701 233,489 Junior subordinated debentures 48,925 48,860 Derivatives 209,505 214,823 Other liabilities 154,560 183,101 Total liabilities 8,191,777 8,028,643 Stockholder

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2025 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation : The interim unaudited Consolidated Financial Statements contained herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes to the consolidated financial statements for the fiscal year ended December 31, 2024, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025. Accordingly, footnote disclosures, which would substantially duplicate the disclosures contained in the audited Consolidated Financial Statements, have been omitted. The financial information of the Company included herein has been prepared in accordance with GAAP for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. Any differences appearing between the numbers presented in financial statements and management's discussion and analysis are due to rounding. The results of the interim period ended June 30, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025, or for any other period. The acronyms and abbreviations identified below are used throughout this Quarterly Report on Form 10-Q. It may be helpful to refer back to this page as you read this report. ACL: Allowance for credit losses FTEs: Full-time equivalents AFS: Available for sale GAAP: Generally Accepted Accounting Principles Allowance: Allowance for credit losses GB: Guaranty Bank AOCI: Accumulated other comprehensive income (loss) GFED: Guaranty Federal Bancshares, Inc. ASC: Accountin

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