QCR Holdings, Inc. :QCRH-US: Earnings Analysis: Q3, 2017 By the Numbers : December 19, 2017

QCR Holdings, Inc. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of QCR Holdings, Inc. – Enterprise Financial Services Corp, West Bancorporation, Inc., MidWestOne Financial Group, Inc., Hawthorn Bancshares, Inc. and UMB Financial Corporation (EFSC-US, WTBA-US, MOFG-US, HWBK-US and UMBF-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 35.26 million, Net Earnings of USD 7.85 million.
  • Net interest income margins widened from 69.59% to 80.99% compared to the same period last year.
  • Net loan assets changed 13.35% compared to same period last year and 4.84% from previous period, total deposits changed 11.54% compared to same period last year and 0.84% from previous period.
  • Year-on-year change in operating cash flow of -23.78% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to the contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 35.26 34.83 34.95 36.31 33.96
Revenue Growth (%YOY) 3.82 25.71 27.53 42.17 22.21
Earnings (mil) 7.85 8.77 9.18 8.53 6.11
Earnings Growth (%YOY) 28.59 31.3 44.11 25.71 -5.88
Net Margin (%) 22.28 25.17 26.28 23.49 17.98
EPS 0.58 0.65 0.68 0.64 0.46
Return on Equity (%) 2.54 2.92 3.16 3.01 2.2
Return on Assets (%) 0.9 1.03 1.1 1.04 0.82

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Market Share Versus Profits

Revenues History
Earnings History

QCRH-US’s change in revenue this period compared to the same period last year of 3.82% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that QCRH-US is holding onto its market share. Also, for comparison purposes, revenues changed by 1.23% and earnings by -10.40% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by the following factors: (1) Year-on-year improvements in net interest income margins from 69.59% to 80.99% and (2) improvement in loan loss provisions. As a result, net interest income after provisions margins improved from 64.85% to 75.08% compared to the same period last year. Loan loss provisions as a percentage of net interest income were 7.31% this period and 6.80% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s improvement in net interest income margins was influenced by both the relative increase in the levels of net loan assets and the level of total deposits as a percentage of equity. On an absolute basis, net loan assets changed 13.35% compared to the same period last year and 4.84% from the previous period. Total deposits changed 11.54% compared to the same period last year and 0.84% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

QCRH-US’s change in operating cash flow of -23.78% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s operating margins narrowed from 41.38% to 30.37%. In spite of this, the company’s earnings grew. This rise was influenced primarily by the presence of one-time items, which contributed to an improvement in pretax margins from 23.46% to 27.73%.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for QCR Holdings, Inc.

Company Profile

QCR Holdings, Inc. operates as a multi-bank holding company, which provides commercial banking services. Its principal business consists of deposits and investing those deposits in loans or leases and securities. It operates through the following segments: Commercial Banking, Wealth Management, and All Other. The Commercial Banking segment is geographically divided by markets into the secondary segments which are the three subsidiary banks wholly-owned by the company: Quad City Bank & Trust Co., Cedar Rapids Bank & Trust Co. and Rockford Bank & Trust Co. These subsidiaries offers similar products and services, but are managed separately due to different pricing, product demand, and consumer markets. The Wealth Management segment represents the trust and asset management and investment management and advisory services offered at the company’s three subsidiary banks. The All Other segment includes the operations of all other consolidated subsidiaries and defined operating segments that fall below the segment reporting thresholds. This segment includes the corporate operations of the parent company and the real estate holding operations. The company was founded by Douglas M. Hultquist and Michael A. Bauer in February 1993 and is headquartered in Moline, IL.

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