QCR Holdings Inc. 10-Q Summary: Quarter Ended June 30, 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026, for QCR Holdings, Inc. (QCRH), a Delaware corporation operating four commercial banking subsidiaries (Quad City Bank & Trust, Cedar Rapids Bank & Trust, Community State Bank, and Guaranty Bank) and a wealth management subsidiary. The company is headquartered in Moline, Illinois, and operates primarily in Iowa, Illinois, Missouri, and Wisconsin.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Income | $36.3 million | $29.0 million | $69.6 million | $54.8 million |
| Diluted EPS | $2.19 | $1.71 | $4.18 | $3.22 |
| Net Interest Income | $67.9 million | $62.1 million | $135.4 million | $122.1 million |
| Noninterest Income | $29.4 million | $22.1 million | $52.4 million | $39.0 million |
| Noninterest Expense | $53.2 million | $49.6 million | $105.3 million | $96.1 million |
| Total Assets | $9.52 billion | $9.18 billion | $9.52 billion | $9.18 billion |
| Total Deposits | $7.42 billion | $7.32 billion | $7.42 billion | $7.32 billion |
| Net Loans/Leases | $6.95 billion | $6.84 billion | $6.95 billion | $6.84 billion |
| Stockholders' Equity | $1.15 billion | $1.05 billion | $1.15 billion | $1.05 billion |
Key Ratios:
- Return on Average Assets (ROAA): 1.51% (Q2 2026)
- Net Interest Margin (TEY): 3.55% (Q2 2026)
- Efficiency Ratio: 54.6% (Q2 2026)
- Allowance for Credit Losses (ACL) to Gross Loans: 1.24%
- Nonperforming Assets (NPAs) to Total Assets: 0.41%
Material Changes vs. Prior Period
- Profitability Growth: Net income increased 25% year-over-year (YoY) for the quarter and 27% YoY for the six-month period. Diluted EPS rose 28% YoY.
- Revenue Drivers: Noninterest income surged 33% YoY in Q2, primarily driven by a 56% increase in capital markets revenue (swap fees and LIHTC production) to $15.4 million. Net interest income grew 9% YoY due to higher average earning assets and improved yields.
- Expense Management: Noninterest expenses increased 7% YoY, largely due to higher variable compensation tied to capital markets performance and increased occupancy costs related to digital transformation and new branch openings.
- Balance Sheet Shifts: Total assets grew 3.7% YoY. While net loans grew, the company executed $443.6 million in LIHTC loan offtake transactions and securitizations, which temporarily reduced the loan portfolio balance. Deposits remained relatively stable, with a strategic reduction in higher-cost brokered deposits.
- Asset Quality: Nonperforming assets decreased to $39.5 million (0.41% of assets) from $42.7 million in the prior year. The ACL coverage ratio for nonaccrual loans improved to 222.76%.
Guidance, Outlook, and Risks
- Strategic Outlook: Management continues to target 9% annual loan growth funded by core deposits and 6% annual fee income growth. The company emphasizes its correspondent banking business, serving 188 downstream banks, as a stable source of low-cost deposits and fee income.
- Capital Markets: The company expects capital markets revenue to remain a significant income source, driven by strong demand for affordable housing (LIHTC) and interest rate swap activity.
- Share Repurchases: The company repurchased 149,639 shares in Q2 2026 at an average price of $90.01. A total of 1,153,616 shares remain available under the current repurchase program.
- Risks and Contingencies:
- Interest Rate Risk: The balance sheet is moderately liability-sensitive. Management monitors exposure through simulation models, which currently show results within policy limits for various rate shock scenarios.
- Legal Proceedings: A class-action lawsuit regarding insufficient funds fees filed against Community State Bank in June 2025 was resolved in June 2026 with no material cost to the company.
- Concentration Risk: Approximately 44% of the Commercial Real Estate (CRE) portfolio consists of LIHTC loans. While all are currently performing, this represents a significant concentration.
Investor Verification Checklist
- LIHTC Pipeline: Verify the sustainability of the 56% YoY growth in capital markets revenue and the depth of the Low-Income Housing Tax Credit (LIHTC) loan pipeline.
- Deposit Stability: Review the composition of the $7.4 billion deposit base, specifically the reliance on correspondent banking deposits ($1.0 billion) and the trend in brokered deposits.
- Expense Trajectory: Monitor the efficiency ratio (currently 54.6%) to ensure variable compensation and digital transformation costs do not erode future margins.
- Asset Quality Trends: Track the ratio of criticized loans (1.91% of total loans) and the specific performance of the large LIHTC CRE portfolio.
- Securitization Impact: Assess the impact of the $281.9 million Freddie Mac securitization and retained beneficial interests on future earnings and liquidity.